UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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

(Amendment No.     )

Filed by the Registrant  ☑                            Filed by a Party other than the Registrant  ☐

Check the appropriate box:

MKS INSTRUMENTS, INC.

2 TECH DRIVE, SUITETech Drive, Suite 201

ANDOVER, MASSACHUSETTSAndover, Massachusetts 01810

NOTICE OF 20172020 ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 10, 201712, 2020

To our Shareholders:

NOTICE IS HEREBY GIVEN that the 2017The 2020 Annual Meeting of Shareholders of MKS INSTRUMENTS, INC., a Massachusetts corporation, will be held on Wednesday,Tuesday, May 10, 201712, 2020 at 10:00 a.m., local time,Eastern Time, at MKS Instruments, Inc., 2 Tech Drive, Suite 201, Andover, Massachusetts 01810. At the meeting, shareholders will consider and vote on01810 for the following matters:purposes:

The shareholders will also act on any other business as may properly come before the meeting.

We provide access to our proxy materials over the Internet under the U.S. Securities and Exchange Commission’s “notice and access” rules. As a result, we mail to our shareholders a Notice of Internet Availability of Proxy Materials, which we refer to as the Notice. We are mailing the Notice on or about March 27, 2020, and it contains instructions on how to access the proxy statement and our Annual Report for the fiscal year ended December 31, 2019, which we refer to as the 2019 Annual Report, over the Internet. The Notice also contains instructions on how each of our shareholders can receive a paper copy of our proxy materials, including this proxy statement, our 2019 Annual Report, and a form of proxy card or voting instruction card. All shareholders who do not receive the Notice, including shareholders who have previously requested to receive paper copies of proxy materials, will receive a paper copy of the proxy materials by mail unless they have previously requested delivery of proxy materials electronically.

The Board of Directors has fixed the close of business on March 8, 20174, 2020 as the record date for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting and any adjournment or postponement thereof. Our stock transfer books will remain open forYour vote is important no matter how many shares you own. Whether you expect to attend the purchasemeeting or not, please vote your shares by using the Internet as described in the instructions included in your Notice, by calling the toll-free telephone number, or, if you received a paper copy of the proxy materials, by completing, signing, dating and sale of our Common Stock.returning your proxy card or voting instruction card. Your prompt response is necessary to ensure that your shares are represented at the meeting. You can change your vote and revoke your proxy any time before the polls close at the meeting by following the procedures described in the accompanying proxy statement.

If you would like to attend the Annual Meeting and your shares are held by a broker, bank or other nominee, you must bring to the Annual Meeting a letter from the nominee confirming your beneficial ownership of such shares. In order to vote your shares at the Annual Meeting, you must obtain from the nominee a proxy issued in your name. You must also bring a form of personal identification.

By Order of the Board of Directors,

RICHARD S. CHUTEKATHLEEN F. BURKE

Secretary

Andover, Massachusetts

March 24, 201727, 2020

IMPORTANTTABLE OF CONTENTS

WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE PROMPTLY SIGN, DATE AND RETURN THE ENCLOSED PROXY. PROMPTLY SIGNING, DATING AND RETURNING THE PROXY WILL SAVE US THE EXPENSE AND EXTRA WORK OF ADDITIONAL SOLICITATION. AN ADDRESSED ENVELOPE FOR WHICH NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES IS ENCLOSED FOR THAT PURPOSE. SENDING IN YOUR PROXY WILL NOT PREVENT YOU FROM VOTING YOUR STOCK AT THE ANNUAL MEETING IF YOU DESIRE TO DO SO, AS YOUR PROXY IS REVOCABLE AT YOUR OPTION.

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MKS INSTRUMENTS, INC.

2 TECH DRIVE, SUITETech Drive, Suite 201

ANDOVER, MASSACHUSETTSAndover, Massachusetts 01810

PROXY STATEMENT

This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors of MKS Instruments, Inc., a Massachusetts corporation, for use at the 20172020 Annual Meeting of Shareholders to be held on May 10, 201712, 2020 at 10:00 a.m., local time,Eastern Time, at MKS Instruments, Inc., 2 Tech Drive, Suite 201, Andover, Massachusetts 01810, and at any adjournment or postponement thereof, (the “Annual Meeting”).which we refer to as the 2020 Annual Meeting. References in this proxy statement to “we,” “us,” the “Company” or “MKS” refer to MKS Instruments, Inc. and its consolidated subsidiaries.

All proxies will be voted in accordance with the applicable shareholder’s instructions. If no choice is specified in the proxy, the shares will be voted in favor of the matters set forth in the accompanying Notice of 20172020 Annual Meeting of Shareholders. Any proxy may be revoked by a shareholder at any time before its exercise by delivery of written revocation to the Secretary of MKS. Attendance at the 2020 Annual Meeting will not in itself be deemed to revoke a proxy unless the shareholder gives affirmative notice at the 2020 Annual Meeting that the shareholder intends to revoke the proxy and vote in person.

We provide access to our proxy materials over the Internet under the “notice and access” rules of the U.S. Securities and Exchange Commission, which we refer to as the SEC. As a result, we mail to our shareholders a Notice of Internet Availability of Proxy Materials, which we refer to as the Notice. We are mailing the Notice on or about March 27, 2020, and it contains instructions on how to access the proxy statement and our Annual Report for the fiscal year ended December 31, 2019, which we refer to as the 2019 Annual Report, over the Internet. The Notice also contains instructions on how each of our shareholders can receive a paper copy of our proxy materials, including this proxy statement, our 2019 Annual Report, and a form of proxy card or voting instruction card. All shareholders who do not receive the Notice, including shareholders who have previously requested to receive paper copies of proxy materials, will receive a paper copy of the proxy materials by mail unless they have previously requested delivery of proxy materials electronically.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 12, 2020

This proxy statement and the 2019 Annual Report to Shareholders are available for viewing, printing and downloading athttp://investor.mksinst.com/financial-information/annual-reports.

A COPY OF OUR ANNUAL REPORT ON FORM10-K FOR THE YEAR ENDED DECEMBER 31, 2019 AS FILED WITH THE SEC, EXCLUDING EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ANY SHAREHOLDER UPON WRITTEN REQUEST TO: INVESTOR RELATIONS DEPARTMENT, MKS INSTRUMENTS, INC., 2 TECH DRIVE, SUITE 201, ANDOVER, MA 01810. EXHIBITS WILL BE PROVIDED UPON WRITTEN REQUEST AND PAYMENT OF AN APPROPRIATE PROCESSING FEE.

VOTING OF SECURITIES AND VOTES REQUIRED

At the close of business on March 8, 2017,4, 2020, the record date for the determination of shareholders entitled to notice of, and to vote at, the 2020 Annual Meeting, there were issued and outstanding and entitled to vote 53,861,49154,871,406 shares of our common stock, no par value per share, (the “Common Stock”).which we refer to as our Common Stock. Each outstanding share entitles the record holder to one vote on each matter submitted at the 2020 Annual Meeting.

In order to transact business at the 2020 Annual Meeting, we must have a quorum. Under our Amended and RestatedBy-Laws, the holders of a majority of the shares of Common Stock issued and outstanding and entitled to vote at the 2020 Annual Meeting shall constitute a quorum for the transaction of business at the 2020 Annual Meeting. Shares of Common Stock held by shareholders present in person or represented by proxy (including “brokernon-votes” and shares that abstain or do not vote with respect to a particular proposal to be voted upon) will be counted for purposes of determining whether a quorum exists at the 2020 Annual Meeting. If a quorum is not present, the meeting will be adjourned until a quorum is obtained.

The affirmative vote of the holders of a plurality of the votes cast on the matter is required for the election of directors (Proposal One); provided, however, any director nominee who receives a greater number of withhold votes than affirmative votes, (a “Majoritywhich we refer to as a Majority Withhold Vote”)Vote, in an uncontested election must offer to tender to the Board of Directors his or her resignation promptly following the certification of election results. The Board of Directors must accept or reject a resignation within 90 days following the certification of election results and publicly disclose its decision. Accordingly, the nominees who receive the highest number of votes of the shares present, in person or by proxy, and entitled to vote shall be elected to the available Class III Director positions, and in the event any nominee receives a Majority Withhold Vote, the resignation policy will apply as summarized here and as set forth in Section B.4 of our Corporate Governance Guidelines which are posted on our website atinvestor.mksinst.com in the Corporate Governance tab. The advisory vote on executive compensation (Proposal Two), the advisory vote regarding the frequency of advisory votes on executive compensation (Proposal Three) and the ratification of PricewaterhouseCoopers LLP (Proposal Four)Three) require the affirmative vote of the holders of a majority of the votes cast on the matter. ProposalsProposal Two and Three areis anon-binding proposals.proposal.

Shares held by shareholders who abstain from voting as to a particular matter, and “brokernon-votes,” which are shares held in “street name” by banks, brokers or nominees, who indicate on their proxies that they do not have discretionary authority to vote such shares as to a particularnon-routine matter, including the election of directors the advisory vote on executive compensation and the advisory vote regarding the frequency of the advisory votes on executive compensation, will not be counted as votes in favor of, or as votes cast for, a matter. Accordingly, abstentions and brokernon-votes will have no effect on the voting on a matter that requires the

affirmative vote of a certain percentagemajority of the shares votingvotes cast on the matter. If the shares you own are held in street name by a bank or brokerage firm, your bank or brokerage firm, as the record holder of your shares, is required to vote your shares according to your instructions. In order to vote your shares, you will need to follow the directions your bank or brokerage firm provides you.

THE NOTICE OF ANNUAL MEETING, THIS PROXY STATEMENT AND OUR ANNUAL REPORT

A copy of (i) our Annual Report to Shareholders for the year ended December 31, 2016, which contains consolidated financial statements and other information of interest to shareholders, (ii) this Proxy Statement and this Notice, and (iii) information on how to obtain directions to be able to attend the meeting and vote in person can be accessed on our website atinvestor.mksinst.com/annualproxy.cfm or by calling(800) 227-8766.

A COPY OF OUR ANNUAL REPORT ON FORM10-K FOR THE YEAR ENDED DECEMBER 31, 2016 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, OR THE SEC, EXCLUDING EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ANY SHAREHOLDER UPON WRITTEN REQUEST TO: INVESTOR RELATIONS DEPARTMENT, MKS INSTRUMENTS, INC., 2 TECH DRIVE, SUITE 201, ANDOVER, MA 01810. EXHIBITS WILL BE PROVIDED UPON WRITTEN REQUEST AND PAYMENT OF AN APPROPRIATE PROCESSING FEE.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the beneficial ownership of Common Stock by (i) each shareholder known to us to be the beneficial owner of more than 5% of the outstanding shares of Common Stock; (ii) the executive officers named in the Summary Compensation Table below; (iii) each of our current directors and our director nominee; and (iv) all of our directors and executive officers as a group. Unless otherwise indicated in the footnotes to the table, all equity amounts set forth in the table are as of January 1, 2017; and the address for each of our directors and executive officers is: c/o MKS Instruments, Inc., 2 Tech Drive, Suite 201, Andover, Massachusetts 01810.

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To our knowledge, there are no voting trusts or similar arrangements among any of the foregoing persons or entities with respect to the voting of shares of Common Stock.

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PROPOSAL ONE

– ELECTION OF DIRECTORS

Our Amended and RestatedBy-Laws provide for a Board of Directors that is divided into three classes. The term of the Class I Directors expires at the 20182021 Annual Meeting of Shareholders, the term of the Class II Directors expires at the 20192022 Annual Meeting of Shareholders and the term of the Class III Directors expires at the 20172020 Annual Meeting. Our Board of Directors, upon the recommendation of our Nominating and Corporate Governance Committee, has nominated John R. Bertucci, Gregory R. BeecherJoseph B. Donahue and Rick D. HessJanice K. Henry to serve as Class III Directors for a term to expire at the 20202023 Annual Meeting. Messrs. Bertucci and Beecher currently serve as directors.Meeting of Shareholders. Each nominee has consented to being named herein and, if elected, to serve as a director until his or her successor is duly elected and qualified. Robert R. Anderson, who currently serves as a Class III Director, is not standing forre-election to the Board of Directors.    

Shares represented by all proxies received by the Board of Directors and not so marked as to withhold authority to vote for an individual director will be voted (unless one or more nominees are unable or unwilling to serve) for the election of the nominees named below. The Board of Directors expects that each of the nominees named below will be available for election, but if anyeither of them is not a candidate at the time the election occurs, it is intended that such proxies will be voted for the election of a substitute nominee to be designated by the Board of Directors.

BOARD RECOMMENDATION

THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE ELECTION OF JOHN R. BERTUCCI, GREGORY R. BEECHERJOSEPH B. DONAHUE AND RICK D. HESSJANICE K. HENRY TO SERVE AS CLASS III DIRECTORS IS IN THE BEST INTERESTS OF MKS AND OUR SHAREHOLDERS AND THEREFORE RECOMMENDS A VOTE “FOR” ALLBOTH NOMINEES.

DIRECTORS

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DIRECTORS

The Board of Directors, upon the recommendation of the Nominating and Corporate Governance Committee, has nominated John R. Bertucci, Gregory R. Beecher and Rick D. Hess to serve as Class III Directors. Set forth below are the names and ages of each member of our Board of Directors (including those who areand our two director nominees, for election as Class III Directors)Joseph B. Donahue and Mr. Hess,Janice K. Henry, the positions and offices held, principal occupation and business experience during at least the past five years, the names of other publicly held companies on which the individual currently serves, or in the past five years has served, as a director and the year each member of our Board of Directors joined our Board. We have also included information about each director’sindividual’s specific experience, qualifications, attributes, or skills that led the Board of Directors to conclude that he or she should serve as a director of MKS. Information with respect to the number of shares of Common Stock beneficially owned by each director,individual, directly or indirectly, as of January 1, 20172020, appears in this proxy statement under the heading “Security Ownership of Certain Beneficial Owners and Management.” RobertJohn R. Anderson isBertucci, Gregory R. Beecher and Rick D. Hess, who currently serve as Class III Directors, are not standing forre-election to the Board of Directors and, accordingly, histheir tenure as a directordirectors will end as of the date of our 20172020 Annual Meeting.Meeting on May 12, 2020. For this reason, their biographical information and qualifications have been omitted below.

John R. Bertucci

Mr. Bertucci has served as our director since 1970, and has been Chairman of the Board of Directors since November 1995. Mr. Bertucci served as Executive Chairman from July 2005 until December 2006. Mr. Bertucci served as our Chief Executive Officer from November 1995 to July 2005 and served as President from 1974 to May 1999 and again from November 2001 to April 2004. From 1970 to 1974, he was our Vice President and General Manager. Mr. Bertucci holds an M.S. in Industrial Administration and a B.S. in Metallurgical Engineering from Carnegie Mellon University and served on its Audit Committee and Executive Committee from 2007 to 2016. Mr. Bertucci has served as a member of the Board of Trustees of Carnegie Mellon University since May 2002. He also serves as a member of the Board of Trustees or the Board of Directors of threenon-profit organizations. Mr. Bertucci’s 35 years of experience working for MKS, including a combined 28 years as our President, gives him a unique insight into the challenges and strategies relevant to the semiconductor industry as a whole, and to our Company in particular.

Gregory R. Beecher

Mr. Beecher has served as our director since August 2006. Mr. Beecher has served as Chief Financial Officer of Teradyne, Inc., a semiconductor and system level test equipment provider, since 2001. Mr. Beecher

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was an audit partner with PricewaterhouseCoopers LLP from October 1993 to March 2001, working with numerous semiconductor equipment and instrument providers, along with other technology-related enterprises, and advising on complex accounting issues. Mr. Beecher has an M.S. in Accounting from Northeastern University. Mr. Beecher has served as a director and Chairman of the Audit Committee of Xyleco, Inc. a privately held company, since October 2016. Mr. Beecher served as a director of Hittite Microwave Corporation, a publicly traded developer of high performance integrated circuits, modules and subsystems, from June 2013 to May 2014. Mr. Beecher’s extensive financial background, including his previous experience at a public accounting firm, and his current role as Chief Financial Officer of a publicly held company, provides valuable insights for the Board of Directors and the Audit Committee.

Richard S. Chute

Mr. Chute has served as our director since 1974. Mr. Chute was a member of the law firm of Hill & Barlow, a Professional Corporation, from 1971 to January 2003, with an extensive corporate practice, and is currently an attorney in private practice. From October 2004 to November 2016, Mr. Chute served as a director and Chairman of the Audit Committee of Massachusetts Audubon Society, Inc., currently serving on its Advisory Council and as a member of its Administration and Finance Committee. Mr. Chute has also served as a director and member of the Nominating and Audit Committees of Manomet, Inc., anon-profit organization, since November 1993. He has served on over 15 othernon-profit and private company boards. Mr. Chute’s extensive legal experience provides him with a unique perspective, which is particularly valuable in Mr. Chute’s current roles as Secretary of the Company and strong leadership as Chair of the Compensation Committee. Also, Ms. Mora provides valuable insights on cyber security based on her oversight of Information Technology at Draper Labs, a leader in cyber security threat detection.

Michelle M. Warner

Director Skills, Experience and Background

MKS is a global provider of instruments, systems, subsystems and process control solutions that measure, monitor, deliver, analyze, power and control critical parameters of advanced manufacturing processes to improve process performance and productivity for our customers. Many of the markets for our products are cyclical and highly competitive. As we discuss below under Corporate Governance – Director Candidates, the Nominating and Corporate Governance Committee.Committee is responsible for evaluating the appropriate skills, experience and background that MKS seeks in Board members in the context of our business and the existing composition of the Board. This evaluation includes numerous factors, such as integrity, business acumen, knowledge of our business and industry, effectiveness, experience, diligence, conflicts of interest and the ability to act in the interests of all shareholders.

Listed below are the skills and experience that we consider important for our directors given our current business and organizational structure. The continuing directors’ and director nominees’ biographies and the matrix below note each director’s and director nominee’s relevant experience, qualifications and skills relative to this list.

Gerald G. ColellaSkills/Competencies

Mr. Colella has

A significant portion of our sales are derived from products sold to semiconductor capital equipment manufacturers and semiconductor device manufacturers. In addition, our products are used in the industrial technologies, life and health sciences, as well as research and defense markets. Directors who have education and experience in semiconductor technology and other industrial technologies are valuable for their perspectives on our research and development efforts, competing technologies, the products and processes we develop, our manufacturing and assembly and the markets in which we compete.

Directors with a background in mergers and acquisitions, and business development provide insights into developing and implementing strategies for growing our business. Useful experience in this area includes skills in assessing and analyzing the “fit” of a proposed acquisition with our long-term strategy, valuing transactions and assessing management’s integration plans with existing operations.

Directors who have served as our director,in senior leadership positions are important to us because they have the experience and perspective to analyze, shape, and oversee the execution of important operational and policy issues.

Directors with public company board experience understand the dynamics and operation of a corporate board, the relationship of a public company board to the Chief Executive Officer and President since January 2014. From February 2013 until December 2013, Mr. Colella servedother executive officers, the legal and regulatory landscape in which public companies must operate, and how to oversee an ever-changing mix of strategic, operational, and compliance-related matters.

We are a global organization with manufacturing, research and development, and sales offices in many countries. We sell our products to thousands of customers worldwide and a significant portion of our revenues are from sales to customers in international markets. Our manufacturing facility locations include Austria, China, France, Germany, Israel, Italy, Mexico, Romania, Singapore, South Korea, the United Kingdom and the United States. Because of these factors, directors with international experience can provide valuable business, regulatory and cultural perspectives regarding many important aspects of our business.

Functional Background

Knowledge of financial markets, financing operations, and accounting and financial reporting processes is very important as it assists our directors in understanding, advising on, and overseeing our capital structure, financing and investing activities as well as our Presidentfinancial reporting and Chief Operating Officer. He servedinternal controls.

Our products incorporate sophisticated technologies to measure, monitor, deliver, analyze, power and control complex semiconductor and advanced manufacturing processes, thereby enhancing uptime, yield and throughput for our customers. We have developed, and continue to develop, new products to address industry trends. Directors with education and experience in engineering, and research and development provide valuable perspectives regarding our research and development efforts, competing technologies, the products and processes we develop, our manufacturing and assembly and the markets in which we compete.

Directors with a regulatory, legal or governance background can assist the Board in fulfilling its oversight responsibilities regarding our compliance, engagement with regulatory authorities, and governance structure.

Directors with marketing, brand management and sales experience can provide expertise and guidance as Vice Presidentwe seek to grow sales, expand the markets in which we compete, and Chief Operating Officerstrengthen our brands.

As we operate in many cyclical markets, with rapid demand changes, and have a broad footprint of international manufacturing operations, understanding of and experience with manufacturing and other operational processes are valuable assets to our Board.

The markets we serve increasingly rely on digitization and electronic connectivity as growth drivers, including, for example, the Internet of Things, or IoT. Further, we rely on various information technology networks and systems, some of which are managed by third parties, to process, transmit and store electronic information and to carry out and support a variety of business activities, and the safety and security of our digital information is paramount to our success. Directors who have a sophisticated understanding of global digitization, and/or cybersecurity literacy can assist with the Board’s oversight of driving future growth and securing our digital information in the rapidly evolving digital landscape.

Personal Demographics

Representation of a mix of ages, gender and racially diverse perspectives expand the Board’s understanding of the needs and perspectives of our customers, suppliers, employees and stockholders. In addition, we consider the tenure each director has on our Board.

Board Skills Matrix

Listed below are the skills and competencies that we consider important for our directors and director nominees to ensure effective oversight of the Company’s business. The continuing directors’ and director nominees’ biographies note each continuing director’s and director nominee’s relevant experience, qualifications and skills relative to this list.

Current Members

Nominees

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SKILLS/COMPETENCIES

•  Industry Experience

✓

✓

✓

✓

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✓

✓

✓

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•  M&A Business Development Experience

✓

✓

✓

✓

✓

✓

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✓

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•  CEO/COO/CFO Experience

✓

✓

✓

✓

✓

✓

✓

✓

✓

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•  Experienced Director

✓

✓

✓

✓

✓

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•  International Experience

✓

✓

✓

✓

✓

✓

✓

✓

✓

FUNCTIONAL BACKGROUND

•  Accounting/Finance

✓

✓

✓

•  Engineering/R&D

✓

✓

✓

✓

✓

•  Regulatory/Legal/Governance

✓

✓

✓

•  Marketing/Sales

✓

✓

✓

•  Operations

✓

✓

✓

✓

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•  Digitization/Cybersecurity/IoT

✓

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✓

PERSONAL DEMOGRAPHICS

•  Tenure (years)

50

2

14

6

3

4

8

1

0

0

0

•  Age

79

52

62

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66

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59

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•  Gender (Female/Male/Nonbinary)

M

M

M

M

M

F

F

F

M

F

M

•  Racial Diversity(Caucasian/Non-Caucasian)

C

N

C

C

C

C

C

C

N

C

C

Demographic Ratio Graphs

The following demographic ratio graphs show data for our continuing directors and director nominees.

PROPOSAL TWO – ADVISORY VOTE ON EXECUTIVE COMPENSATION

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, enables our shareholders to vote to approve, on anon-binding, advisory basis, the compensation of our 2019 Named Executive Officers as disclosed in this proxy statement under the heading “Executive Compensation” including “Compensation Discussion and Analysis,” the tabular disclosure regarding such compensation, and the accompanying narrative disclosure. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our 2019 Named Executive Officers and the philosophy, policies and practices of executive compensation described in this proxy statement. The advisory vote is not a vote on our compensation practices fornon-executive employees or our Board of Directors. The Dodd-Frank Act requires the Company to hold the advisory vote on executive compensation at least once every three years, but we have elected to submit the advisory vote to shareholders annually.

As described in detail under the heading “Executive Compensation — Compensation Discussion and Analysis,” our executive compensation programs are designed to attract, motivate, and retain our executive officers, who are critical to our success. Under these programs, our executive officers are rewarded for the achievement of specific short-term and long-term goals. Please see the “Compensation Discussion and Analysis” for additional details about our executive compensation philosophy and programs, including information about the compensation of our 2019 Named Executive Officers.

The Compensation Committee continually reviews the compensation programs for our executive officers to ensure they achieve the desired goals of aligning our executive compensation structure with our shareholders’ interests and current market practices.

Our Board of Directors is asking shareholders to approve anon-binding advisory vote on the following resolution:

RESOLVED, that the compensation paid to the Company’s 2019 Named Executive Officers, as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in this proxy statement, is hereby approved.

This vote on the compensation of our 2019 Named Executive Officers is advisory, and therefore not binding on the Company, the Compensation Committee or our Board of Directors. Our Board of Directors and our Compensation Committee value the opinions of our shareholders and to the extent there is any significant vote against the 2019 Named Executive Officers’ compensation as disclosed in this proxy statement, we will consider our shareholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.

THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSAL TO APPROVE, ON ANON-BINDING ADVISORY BASIS, THE EXECUTIVE COMPENSATION CONTAINED IN THIS PROXY STATEMENT IS IN THE BEST INTERESTS OF MKS AND OUR SHAREHOLDERS AND THEREFORE RECOMMENDS A VOTE “FOR” THIS PROPOSAL.

PROPOSAL THREE – RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

Our Audit Committee has selected PricewaterhouseCoopers LLP, or PwC, as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020. PwC was our independent registered public accounting firm for the fiscal year ended December 31, 2019.

Representatives of PwC are expected to be present at the 2020 Annual Meeting and will have the opportunity to make a statement if they so desire and will be available to respond to appropriate questions from January 2010 until February 2013 and servedshareholders. In the event that the ratification of the selection of PwC as our Vice President and Chief Business Officer from April 2005 until January 2010. In addition, Mr. Colella also served as our Acting Group Vice President, PRG Products from July 2007 to March 2010. From October 1997 to April 2005, he served as our Vice President, Global Business and Service Operations, from March 1996 to October 1997, he served as our Director of Materials Planning and Logistics and from 1994 to 1996, he served as our Materials Planning and Logistics Manager. Mr. Colella joined MKS in 1983. He holds a B.A. in Secondary Education fromindependent registered public accounting firm is not obtained at the University of Massachusetts and an M.B.A. from Southern New Hampshire University. Mr. Colella’s over 30 years of experience within the Company gives him particularly deep insight into the organization.

Peter R. Hanley

Dr. Hanley has served as our director since March 2008. From December 2009 until November 2010, Dr. Hanley served as an occasional consultant to Novellus Systems, Inc., or Novellus (now Lam Research Corporation), a leading developer of semiconductor manufacturing equipment. From January 2004 until December 2007, Dr. Hanley served as a part-time employee of Novellus, engaged primarily in executive training. Dr. Hanley served as President of Novellus from May 2001 to December 2003. Prior to that, he served as Novellus’ Executive Vice President of Worldwide Sales from June 1992 until May 2001. Prior to joining Novellus, Dr. Hanley served from 1985 to 1992 at Applied Materials, Inc., a leader in the semiconductor capital equipment industry, most recently as Group Vice President of Worldwide Sales and Service and previously as Vice President and General Manager of their Etch Products Division. Before joining Applied Materials, Inc., Dr. Hanley served from 1978 to 1984 at Varian Associates, a leader in the semiconductor capital equipment industry, most recently as Vice President of Technology and previously as Vice President and General Manager of their Extrion Ion Implantation Division. Dr. Hanley has served as a member of the Advisory Board of Orbotech Ltd., a publicly held provider of yield-enhancing and production solutions, since 2014. Dr. Hanley holds a B.S. in Mechanical Engineering from Northeastern University and a Ph.D. in Applied Physics from Cornell University. Dr. Hanley’s substantial background in the semiconductor industry for almost 40 years, including senior management roles at Novellus and Applied Materials, two of MKS’ largest customers, provides2020 Annual Meeting, the Board of Directors with insights into the industry’s sales and marketing challenges and opportunities.

THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSAL TO RATIFY THE SELECTION OF PWC AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2020 IS IN THE BEST INTERESTS OF MKS AND OUR SHAREHOLDERS AND THEREFORE RECOMMENDS A VOTE “FOR” THIS PROPOSAL.

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Rick D. Hess

Mr. Hess has served since July 2014 as Executive Vice President of Analog Devices, Inc., a publicly held semiconductor company, specializing in data conversion and signal processing technology. Before joining Analog Devices, Mr. Hess served as the Chief Executive Officer of Hittite Microwave Corporation from February 2013 to July 2014. From 2011 to 2013, he was Vice President at American Superconductor Corporation, a provider of technologies and solutions for the electrical power infrastructure industry. From 2006 to 2010, Mr. Hess was President and Chief Executive Officer of Konarka Technologies, Inc., a developer of advanced photovoltaic cells on flexible plastic. From 2004 to 2006, he was President and Chief Executive Officer of Integrated Fuel Cell Technologies, Inc., a developer of fuel cell systems. From 1989 to 2004, Mr. Hess held several positions atM/A-COM, a semiconductor provider of high frequency components and systems for the wireless, defense, public safety and automotive markets, including President from 1999 to 2004. Mr. Hess had previously founded Stable Energy Sources, a manufacturer of microwave subsystems and components serving military and industrial markets. Mr. Hess served as a member of the Board of Directors of Hittite Microwave Corporation from 2005 until 2014 (when it was acquired by Analog Devices). Mr. Hess received a B.S. in Electrical Engineering from Purdue University and an M.S. in Electrical Engineering from Johns Hopkins University. Mr. Hess’30-plus years in executive leadership roles in the microwave, semiconductor, energy and manufacturing industries, including his current role as Executive Vice President of Analog Devices, Inc., qualify him to serve as a member of our Board of Directors.

Jacqueline F. Moloney

Ms. Moloney has served as our director since May 2016. Ms. Moloney has served since 2015 as the Chancellor of the University of Massachusetts Lowell, a public university with over 17,000 students and served as its Executive Vice Chancellor from 2007 to 2015. Ms. Moloney has been a tenured professor at the University since 1994 and served as the Dean of Online and Continuing Education from 1994 to 2007. Since 2008, Ms. Moloney has served as a director and member of the audit, strategic planning, marketing, investment, technology and executive committees of Enterprise Bank Corp, Inc., a publicly held bank. She holds an Ed.D. from the University of Massachusetts Lowell. Ms. Moloney has over 30 years of experience as a leader innon-profit organizations. She has a deep history of working with business and industry and she established the first incubators at the University of Massachusetts Lowell which are the home to approximately 50 early stage companies. She provides valuable knowledge and insight on emerging strategic planning and management and business trends.

Elizabeth A. Mora

Ms. Mora has served as our director since May 2012. Ms. Mora has served since March 2016 as the Chief Administrative Officer of The Charles Stark Draper Laboratory, Inc., anon-profit engineering research and development laboratory serving the national interest in applied research, engineering development, advanced technical education, and technology transfer and from 2008 to February 2016 served as the Chief Financial Officer. From 1997 until 2008, she worked for Harvard University, ultimately serving as Chief Financial Officer and Vice President for Finance at the University, and previously serving as Associate Vice President, Research Administration and the Director of the Office of Sponsored Research. Prior to joining Harvard, Ms. Mora worked for Coopers and Lybrand (now PricewaterhouseCoopers LLP) from 1989 to 1997 and was one of the founding members of its National Regulatory Consulting Practice. Ms. Mora is a Certified Public Accountant and has an M.B.A. from the Simmons College Graduate School of Management. She has served since 2016 as a director, and since January 2017 as Chairman of the Corporate Responsibility Committee, of GCP Applied Technologies, Inc., a publicly held company that provides construction and packaging technology products. Ms. Mora’s extensive financial background, including her current role as Chief Administrative Officer of a prominent research and development organization, provides valuable insights for the Board of Directors and the Audit Committee.

Robert J. Phillippy

Mr. Phillippy has served as our director since July 2016. Mr. Phillippy has served since July 2016 as an independent consultant, advising technology companies on a range of strategic, operational and organizational

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issues. From September 2007 until April 2016 he was the President, Chief Executive Officer and a director of Newport Corporation, which develops, manufactures and supplies lasers, optics and photonics technologies. Mr. Phillippy joined Newport in 1996 and served in various executive management positions prior to his appointment as Chief Executive Officer in 2007. From April 2016 to June 2016 Mr. Phillippy remained employed by Newport to assist in the integration. Mr. Phillippy has over 30 years of experience in technology-related industries, including various sales and marketing management positions at Square D Company, an electrical equipment manufacturer, from 1984 to 1996. Mr. Phillippy holds an M.B.A. from Northwestern University—Kellogg School of Management. In addition, he holds a B.S. in Electrical Engineering from the University of Texas at Austin. Since February 2017, he has served as a director of ESCO Technologies, Inc., a publicly held company that manufactures highly-engineered filtration and fluid control products for the aviation, space and process markets worldwide. Mr. Phillippy brings to the Board of Directors extensive knowledge of Newport, having served as its Chief Executive Officer for over eight years, extensive experience in mergers and acquisitions as well as in new product innovation and international business development.

Agreements as to Nomination

Mr. Bertucci resigned from his employment with MKS effective December 31, 2006. Mr. Bertucci’s employment agreement provided that if Mr. Bertucci resigned from his employment, then, subject to applicable law, our Amended and RestatedBy-Laws, our Restated Articles of Organization and the directors’ fiduciary duties, the Board of Directors shall nominate Mr. Bertucci for election as a Class III director and consider Mr. Bertucci for appointment as Chairman of the Board of Directors, until such time as Mr. Bertucci is no longer eligible for nomination as a director.

CORPORATE GOVERNANCE

Board Independence

The Board of Directors has determined that Mr. Hess and all of the members of the Board of Directors, other than Mr. Colella and Mr. Phillippy,Dr. Lee, are independent as defined under the rules of the NASDAQNasdaq Stock Market, (“NASDAQ”).or Nasdaq.

Board Leadership Structure

Since 2005, we have separated the roles of Chief Executive Officer and Chairman of the Board of Directors in recognition of the differences between the two roles. The Chief Executive Officer is responsible for setting the strategic direction forof the Company and theday-to-day leadership and performance of the Company, while the Chairman of the Board of Directors provides guidance to the Chief Executive Officer, sets the agenda for Board meetings and presides over meetings of the full Board of Directors. Mr. Bertucci, who has been our Chairman of the Board of Directors since 1995, will not be standing forre-election to the Board and, accordingly, his tenure as a director and Chairman will end as of the date of our 2020 Annual Meeting on May 12, 2020. Mr. Colella, our former Chief Executive Officer and current member of our Board of Directors, will assume the role as Chairman at that time.

In addition, the Board of Directors has established the position of Lead Director. Our Corporate Governance Guidelines provide that during any period in which the Chairman of the Board of Directors is not an independent director, and in such other instances as the Board of Directors may determine from time to time, a Lead Director shall be elected by and from the independent directors. While we are not currently obligated under our Corporate Governance Guidelines to have a Lead Director, as our Chairman of the Board of Directors is independent, we will be required to have currently elected to continue to do so.a Lead Director in May 2020 when Mr. Colella, our former Chief Executive Officer and anon-independent member of our Board of Directors, assumes the role of Chairman. Mr. Beecher, who has served asbeen our Lead Director since 2012.2012, will not be standing forre-election to the Board and, accordingly, his tenure as a director and Lead Director will end as of the date of our 2020 Annual Meeting on May 12, 2020. The Board will appoint a new Lead Director at that time.

The primary role of the Lead Director is to serve as a liaison between the independent directors and the Chairman of the Board of Directors and/or the Chief Executive Officer and to represent the interests of the independent directors, as appropriate. Pursuant to our Corporate Governance Guidelines, which are posted on our website atinvestor.mksinst.com in the Corporate Governance tab, the Lead Director shall, among other matters:

Company’s policies with respect to financial risk assessment and financial risk management. Management regularly reports to the Maydan Technology Center at Applied Materials. Prior to Applied Materials, Dr. Lee served from 1997 until 2002 as the Research Director of the Silicon Fabrication Research Department at Lucent Technologies, Inc., a voice, data and video communications provider, and from 1991 until 1997 as a Member of the Technical Staff in the Plasma Processing Research Group within Bell Labs. Dr. Lee holds a B.S. from Princeton University and both an M.S.C.E.P. and Ph.D. from the Massachusetts Institute of Technology, all in Chemical Engineering.

Brian C. Quirk, Senior Vice President of Global Operations, Age 58

Mr. Quirk has served as our Senior Vice President of Global Operations since January 2014. From May 2006 until December 2013, Mr. Quirk served as our Vice President of Global Operations. Prior to joining MKS, Mr. Quirk served as Vice President of Global Operations and Supply Chain at Brooks Automation, Inc., a provider of automation vacuum and instrumentation solutions. Prior to that, Mr. Quirk held executive leadership roles in global operations at Teradyne, Inc., a semiconductor and system level equipment provider, GenRad, Inc. (acquired by Teradyne, Inc.), a manufacturer of electronic automatic test equipment and related software, and Stratus Computer, Inc. (now known as Stratus Technologies, Inc.), a producer of fault tolerant computer servers. Mr. Quirk has a B.S. in Business Management from Bentley University and an M.B.A. from Suffolk University.

Dennis L. Werth, Senior Vice President of Business Units, Age 62

Mr. Werth has served as our Senior Vice President of Business Units since MKS acquired Newport Corporation in April 2016. Mr. Werth joined Newport Corporation in February 2005, most recently serving as Senior Vice President and General Manager of the Photonics Group from January 2013 until April 2016, and previously as Vice President of the Precision Components and Systems Business. Prior to joining Newport, Mr. Werth served as Senior Director and General Manager of Oriel Instruments, a supplier of products for the making and measuring of light, which was later acquired by Newport Corporation, from January 2004 until February 2005. Prior to joining Oriel, Mr. Werth was the Chief Operating Officer of Isowave, a supplier of advanced optical materials and fiber optic components, from July 2001 to December 2003. From November 1996 to June 2001, he served as Business Segment Leader, Electronic Components and Electronic Article Surveillance, at Allied Signal, Inc., a diversified manufacturer, which merged with Honeywell, Inc. in 1999. Prior to joining Allied Signal, from May 1985 to June 1996, Mr. Werth held various management positions of increasing responsibility at Amoco Corporation, most recently serving as Vice President of Marketing and Business Development of that company’s ATx Telecom Systems, Inc. subsidiary (formerly Amoco Laser Company, which Mr. Werthco-founded in 1987 and which was sold to Scientific Atlanta in June 1996).

Our executive officers are appointed byAudit Committee on these areas. The Compensation Committee assists the Board of Directors on an annual basis and serve until their successors are duly appointed and qualified. There are no family relationships among any of our executive officers or directors.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Introduction

The purpose of this section of our proxy statement is to provide an overview of our executive compensation program, our compensation philosophy and objectives, and the material decisions we madein fulfilling its oversight responsibilities with respect to each elementthe management of our executive compensation program. Throughout this proxy statement, we refer to the following “Named Executive Officers:”

Following this Compensation Discussion and Analysis, you will find a series of tables containing specific information about the compensation earned or paid in 2016 to our Named Executive Officers.

Executive Summary

Our Business

MKS Instruments, Inc. is a global provider of instruments, subsystems and process control solutions that measure, control, power, deliver, monitor and analyze critical parameters of advanced manufacturing processes to improve process performance and productivity. Our products are derivedrisks arising from our core competencies in automationcompensation policies and control, gas composition analysis, lasers, materials delivery, optics, photonics, pressure, power, reactive gas and vacuum. We also provide services relating to the maintenance and repair of our products, software, service and maintenance, installation services and training. Our primary served markets are manufacturers of capital equipment for semiconductor manufacturing, electronic thin films, life and health sciences, process and industrial technologies,programs as well as researchsuccession planning. The Nominating and defense.

Company Performance in 2016 and Financial Highlights

2016 was a transformational year for MKS. In April 2016, we completed the strategic acquisition of Newport Corporation (“Newport”), a global leader in lasers, optics and photonics, for aggregate consideration of approximately $1 billion. This acquisition increased our addressable share in our core semiconductor market and has given us critical mass to expand into other adjacent, technology intensive and growing markets including life and health sciences, process and industrial technologies, and research and defense. The acquisition of Newport, which comprises our Light & Motion Division, has extended our expertise into the broad area of light generation, delivery and control including lasers, optics and photonics, which expands our market into additional semiconductor applications including lithography, metrology and inspection.

We also continued to make significant progress to improve our profitability. While maintaining emphasis on leading-edge technology and product development, our focus has been, and continues to be, on improving operational efficiency, eliminating inefficiencies and managing cost across the organization. In integrating Newport, we have followed these same basic principles. For example, we have evaluated the Light & Motion Division’s supply chain to consolidate spending and leverage the true pricing power of our Company and have achieved considerable savings.

In order to successfully capitalize on the growth opportunities that the Newport acquisition provides us, we need talented leadership to continue to drive performance. Over the last year, we continued to strengthen our

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management team and structure, including promoting Mr. Werth, former Newport Senior Vice President and General Manager of Newport’s Photonics Group, to our executive team to lead our new Light & Motion Division, and promoting Dr. Lee, our former Senior Vice President of Business Units to become our Senior Vice President and Chief Operating Officer.

In addition, MKS accomplished the following in 2016:

Overview of 2016 Executive Compensation Decisions

In 2016, our CompensationCorporate Governance Committee in consultation with its independent compensation consultant, Meridian Compensation Partners, LLC (“Meridian”), reviewed and analyzed executive officer compensation twice, at the beginning of the year in accordance with past practice and then a second timemid-year following the completion of the acquisition of Newport. When reviewing executive compensation the second time, our Compensation Committee significantly modified MKS’ peer group companies to better align the group with the newly combined company’s revenues and market capitalization. Our Compensation Committee made this decisionmid-year given the additional burdens placed on the executive team to integrate and operate a significantly larger and more complex combined company.

Following completion of the Newport acquisition in April 2016, our Compensation Committee also approved a new hire compensation package for Mr. Werth, former Senior Vice President and General Manager of Newport’s Photonics Group, who joined our executive team at the time of the closing of the Newport acquisition to lead our new Light & Motion Division, created as a result of the Newport acquisition.

Also following completion of the Newport acquisition, Meridian, at the request of our Compensation Committee, conducted a peer review of severance pay practices following achange-in-control. Based on data provided by Meridian, the Compensation Committee determined that the severance pay packages in the event of termination following achange-in-control (i.e. double-trigger) then offered to our Named Executive Officers, other than our Chief Executive Officer, were below market. See “Severance andChange-in-Control Provisions” below and “Executive Compensation—Potential Payments Upon Termination orChange-in-Control” for more information about the changes the Compensation Committee made to these severance pay packages.

In November 2016, our Compensation Committee approved a new compensation package for one of our existing Named Executive Officers, Dr. Lee, former Senior Vice President of Business Units, in connection with his promotion to Senior Vice President and Chief Operating Officer of our Company.

The discussion that follows details the compensation decisions made by the Compensation Committee in connection with the above events.

2016 Compensation Outcomes

Our executive compensation program is designed to reward our Named Executive Officers for performance and to align their interests with those of our shareholders. As a result of our strong financial results in 2016, our

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Named Executive Officers, other than Mr. Werth, received 128% of their target variable cash compensation tied tonon-GAAP operating income and 130% of their target performance-based equity compensation tied tonon-GAAP cash flow from operations, in each case excluding the effect of the Newport acquisition. We believe these financial performance metrics are important to our shareholders because each is an indicator of how well we manage the operations and capital of our Company.

In 2016, we also introduced an individual performance component to our variable cash incentive compensation for all of our Named Executive Officers, other than our Chief Executive Officer, and assigned it a weighting of 20% of total variable cash compensation. We believe assigning individual performance objectives to our executive officers by which they can be measured by their accomplishments in their individual areas of responsibility benefits our shareholders over the long term. The Named Executive Officers who were assigned individual performance goals achieved, on average, 183% of their target variable cash compensation tied to individual performance. Our Compensation Committee did not assign an individual performance component to our Chief Executive Officer’s cash incentive compensation because it believes our Chief Executive Officer should be held accountable for the Company’s overall performance.

Mr. Werth, whose variable cash compensation and performance-based equity compensation were tied to the financial performance of the Light & Motion Division, received 106% of his target variable cash compensation, which related only to the second half of 2016, and 99% of his target performance-based equity compensation. In addition, our Compensation Committee awarded Mr. Werth additional time-based equity compensation in February 2017 equal to 7% of his target performance-based equity compensation awarded in 2016, due to his strong performance following the Newport acquisition.

When our Compensation Committee set 2016 executive compensation in early 2016, long-term equity incentive compensation comprised 61% of total target compensation for our Chief Executive Officer and 50% of total target compensation, on average, for our other Named Executive Officers. Total target compensation is defined as the sum of base salary, target annual cash incentive compensation and target long-term equity incentive compensation. When our Compensation Committee reset 2016 executive compensation after the closing of the Newport acquisition, it increased salary and cash incentive compensation but not long-term compensation. As a result, long-term equity incentive compensation comprised 58% of total target compensation for our Chief Executive Officer and 46% of total target compensation, on average, for our other Named Executive Officers. These percentages exclude theone-time equity grants described below. By making equity a substantial component of executive officer compensation, we align our executive officers’ long-term interests with those of our shareholders. Also, at least 50% of each Named Executive Officer’s target long-term equity incentive compensation is based on a measure of Company performance.

Following the acquisition, our Compensation Committee awarded our Named Executive Officers certainone-time equity awards. It granted each of Messrs. Colella, Bagshaw, Lee and Quirk a performance-based equity award tied to the achievement of cost synergies from the Newport acquisition. Our Compensation Committee also granted Mr. Werth twoone-time equity awards – the first in exchange for forfeiting his rights to certain severance payments and benefits he was entitled to under his severance agreement with Newport, and the second award as a retention award that certain key Newport employees received in connection with the Newport acquisition. These two awards are discussed below under “Elements of Compensation—Dennis Werth’s Equity Incentive Compensation.”

Our annual cash incentive plan is designed to complement our long-term equity incentive plan by focusing on our Company’s annual financial performance as measured by adjusted operating income. In 2016, prior to the Newport acquisition, our target annual cash incentive compensation comprised 19.3% of total target compensation for our Chief Executive Officer and 19.9% of total target compensation, on average, for our other Named Executive Officers. When our Compensation Committee reset executive compensation after the closing of the Newport acquisition, our target annual cash incentive compensation comprised 21.3% of total target compensation for our Chief Executive Officer and 23.5% of total target compensation, on average, for our other Named Executive Officers.

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In 2016, prior to the Newport acquisition, base salary accounted for 19.3% of total target compensation for our Chief Executive Officer and 29.8% of total target compensation, on average, for our other Named Executive Officers. When our Compensation Committee reset executive compensation after the closing of the Newport acquisition, base salary accounted for 20.3% of total target compensation for our Chief Executive Officer and 30.4% of total target compensation, on average, for our other Named Executive Officers. In 2016, prior to the Newport acquisition, our Chief Executive Officer had 80.7% of his total target compensation opportunity tied to annual and long-term incentive compensation and our other Named Executive Officers, on average, had 70.2% of their total target compensation opportunity tied to annual and long-term incentive compensation. When our Compensation Committee reset executive compensation after the closing of the Newport acquisition, our Chief Executive Officer had 79.7% of his total target compensation opportunity tied to annual and long-term incentive compensation and our other Named Executive Officers, on average, had 69.6% of their total target compensation opportunity tied to annual and long-term incentive compensation.

Compensation Philosophy and Objectives

The primary objective of our executive compensation program is to attract, retain and motivate the critical talent that is required to execute our business strategy and lead us to achieve our long-term growth and earnings goals. This section summarizes our compensation philosophy and objectives relating to our Named Executive Officers.

At our 2016 Annual Meeting of Shareholders, held on May 2, 2016 (the “2016 Annual Meeting”), we submitted to our shareholders an advisory vote on executive compensation. Although this annual advisory“say-on-pay” vote isnon-binding, the Compensation Committee has considered, and will continue to consider, the outcome of this vote each year when making compensation decisions for our Named Executive Officers. At the 2016 Annual Meeting, our shareholders overwhelmingly approved the compensation of our Named Executive Officers, with approximately 97% of the votes cast voting in favor of the“say-on-pay” proposal.

The Compensation Committee considered the results of the 2016say-on-pay vote, and based upon the strong shareholder support, does not believe that our executive compensation program requires material changes. The Compensation Committee will continue to consider the views of our shareholders in connection with our executive compensation program and will consider changes based upon evolving best practices, market compensation information and changing regulatory requirements. The Compensation Committee believes that the 2016 shareholder vote was an endorsement of our compensation and the pay decisions made in relation to our performance.

Our executive compensation program is guided by the following principles:

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Elements of Compensation

The following summarizes the compensation elements for our Named Executive Officers. We target each of the various compensation elements, including salary, annual cash incentive compensation, and long-term equity incentive compensation, to be within a competitive range around median levels for the individual position in the market. However, this is merely one factor that the Compensation Committee considers and we do not set any specific element or total compensation exactly to the median and, in certain cases, the Company will and does pay total compensation closer to the 25^th and 75^th percentiles when appropriate. In considering the compensation of our Named Executive Officers relative to the market, we also look qualitatively at the individual’s overall performance, tenure and potential with MKS. Currently, all of our Named Executive Officers are paid within the competitive range of our peer group.

Base Salary

Base salaries are designed to provide executives with a level of predictability and stability with respect to a portion of their total compensation package. Base salaries are a relatively small component in the overall pay packages of our Named Executive Officers because we believe the significant majority of executive compensation should be variable and based on performance. When our Compensation Committee set 2016 annual executive compensation in early 2016, it approved a salary increase of 7% for our Chief Executive Officer and a salary increase of 4%, on average, for our other Named Executive Officers. When our Compensation Committee reviewed and analyzed 2016 executive compensation after the closing of the Newport acquisition, our Compensation Committee approved a salary increase of 10% for our Chief Executive Officer and a salary increase of 7%, on average, for Messrs. Bagshaw and Quirk, whose roles and responsibilities expanded significantly as a result of the acquisition. These increases were based in part on the compensation data collected from the significantly modified peer group of companies the Compensation Committee selected after the Newport acquisition and which is described below under “Compensation Consultant; Market Comparison.”

Dr. Lee received a 6% salary increase in July 2016 as his role and responsibilities increased when he assumed management of the Company’s Integrated Solutions Business. Dr. Lee received an additional 7% salary increase in November 2016 when he was promoted to Senior Vice President and Chief Operating Officer of the Company.

When Mr. Werth joined the executive team from Newport Corporation in April 2016 to lead the newly created Light & Motion Division, the Compensation Committee set his salary at $400,000.

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Annual Cash Incentive Compensation

Our annual cash incentive compensation program provides a short-term incentive to reward management for reaching our annual earnings goals and, in certain cases, individual performance objectives, and to reinforce ourpay-for-performance philosophy. We believe that our program provides significant incentive for our Named Executive Officers to exceed our financial goals. Our annual cash incentive compensation program consists of our stockholder-approved executive cash incentive plan (the “162(m) Plan”) and our annual cash incentive plan.

Pursuant to the terms of the 162(m) Plan, our Compensation Committee established an “umbrella” formula to determine aggregate funding for the plan based on the achievement of a specific,pre-determined Company financial performance goal. Under the umbrella formula, each Named Executive Officer, other than Mr. Werth who joined the Company in April 2016 in connection with the Newport acquisition, was allocated a share of an incentive pool based on the Company’s adjusted operating income for the 2016 fiscal year (defined as GAAP operating income adjusted for restructuring charges, acquisition or divestiture related costs and the effect of acquisitions and divestitures). The Compensation Committee exercises negative discretion from this 162(m) pool by applying the goals of our annual cash incentive plan as described below.

Under our annual cash incentive plan, each Named Executive Officer, other than Mr. Werth who was paid pursuant to a separate cash incentive plan described below, was eligible to receive a performance bonus based on a specified percentage of eligible earnings, which is defined as eligibleW-2 earnings received during the 2016 calendar year (i.e., base salary, including regular, holiday, vacation and sick pay, but excluding bonus payments). Bonus payouts were based 80% on a corporate financial performance objective and 20% on individual performance objectives for all Named Executive Officers other than the Company’s Chief Executive Officer, whose annual executive bonus continued to be based entirely on Company financial performance.

In 2016, each Named Executive Officer, other than Mr. Werth, was eligible to receive 50% of his target bonus attributable to the Company performance objective if the minimum threshold was achieved. If we had achieved our target results, each such Named Executive Officer would have been eligible to receive 100% of his target bonus attributable to the Company performance objective, up to a maximum of 200% for achievement in excess of the target results, with proportional payouts for performance between these levels. In the event the minimum threshold for the corporate financial performance objective was not met, but would have been met but for the payment of these bonuses, then in such case a pro rata portion of the bonus would be paid to each such Named Executive Officer, but only to the extent that the corporate financial performance objective after such payment was no less than the minimum corporate financial performance objective.

In 2016, individual performance was measured using specific “management by objective” goals (“MBOs”) that were aligned to our strategic objectives and priorities and each Named Executive Officer’s business unit or function. Our Compensation Committee decided to incorporate MBOs into the annual executive bonus program to enhance each Named Executive Officer’s focus on business objectives, such as operational objectives and strategic initiatives, which are key to the long-term success of the Company. Our Chief Executive Officer develops these individual performance objectives for his direct reports which focus on the measurable accomplishments in their individual areas of responsibility that will benefit our shareholders over the long term.

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Listed below is a summary of each Named Executive Officer’s performance against his 2016 individual objectives.

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In 2016, payouts for corporate financial performance under the annual cash incentive plan were determined by multiplying a Named Executive Officer’s “Target Bonus Amount” by the “Corporate Performance Multiplier,” each as discussed below. Target Bonus Amount is the amount determined by multiplying each Named Executive Officer’s eligible earnings in 2016 by the Target Bonus Percentages determined by our Compensation Committee each year. When our Compensation Committee set 2016 annual executive compensation in early 2016, they did not approve any increases to Target Bonus Percentages for our Named Executive Officers. However, when our Compensation Committee reviewed and analyzed 2016 executive compensation after the closing of the Newport acquisition, our Compensation Committee approved a Target Bonus Percentage increase of 5 percentage points, effective January 1, 2016, for Messrs. Colella, Bagshaw and Quirk, whose roles and responsibilities expanded significantly as a result of the acquisition. These increases were based in part on the compensation data collected from the significantly modified peer group of companies the Compensation Committee selected after the Newport acquisition and which is described below under “Compensation Consultant; Market Comparison.”

Dr. Lee received a Target Bonus Percentage increase of fifteen percentage points in November 2016 when he was promoted to Senior Vice President and Chief Operating Officer of the Company. This increase took effect on November 1, 2016 resulting in the blended rate listed below for the 2016 year.

Listed below is the 2016 Target Bonus Percentage for each Named Executive Officer.

In 2016, the Corporate Performance Multiplier, which is a percentage, was based upon our achievement of adjusted operating income after bonus and excluding special items. Participants would not receive any portion of their Target Bonus Amount tied to Company financial performance if such adjusted operating income (before the calculation of bonus) was less than the minimum threshold of $66.6 million. The Corporate Performance Multiplier would be 50% of a Participant’s Target Bonus Amount if such adjusted operating income was $66.6 million, would be 100% if such adjusted income was $133.3 million, and would be the maximum 200% if such adjusted operating income was $266.5 million or more, with proportional payments for achievement in between these levels. In 2016, because our adjusted operating income after bonus and excluding special items was $170.7 million, participants were eligible to receive 128% of their Target Bonus Amounts tied to Company financial performance under this formula.

Listed below are our Chief Executive Officer’s and other Named Executive Officers’ earned cash bonus payouts based on the achievement of the Company performance metric weighted at 100% of target for Mr. Colella, and 80% of target and the individual performance objectives weighted at 20% of target for the other Named Executive Officers.

For 2016, our incentive pool was funded based on 20% of the Company’s adjusted operating income for the 2016 fiscal year (defined as GAAP operating income adjusted for restructuring charges, acquisition or divestiture related costs and the effect of acquisitions and divestitures), but not to exceed $6 million. Mr. Colella was allocated 40% of the incentive pool and the other Named Executive Officers were each allocated 15% of the pool. The Company’s adjusted operating income for 2016 was $170.7 million, which resulted in a bonus pool of $6 million under the terms of the 162(m) Plan, of which $2.3 million was distributed to our Named Executive Officers as described above.

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For 2017, executive bonuses will be similar to 2016 where Company performance will account for 80% of the Named Executive Officer’s cash bonus target and individual performance will account for the remaining 20% for all Named Executive Officers, other than the Company’s Chief Executive Officer, whose annual executive bonus will continue to be based entirely on Company performance. Company performance will be measured using the same financial metric as in previous years, adjusted operating income excluding special items, and individual performance will be measured using specific MBOs that are aligned to our strategic objectives and priorities and each Named Executive Officer’s division or function. The MBOs approved by the Compensation Committee for 2017 include, but are not limited to, improving operating processes and tools, achieving integration and synergy objectives, driving new product releases, increasing operational excellence through manufacturing and supply chain efficiencies and improving our information technology model.

Dennis Werth’s Cash Incentive Compensation

When Mr. Werth joined our executive team from Newport Corporation in April 2016 to lead the Light & Motion Division, the Compensation Committee set his Target Bonus Percentage at 75% of his 2016 salary as set forth in his new hire package. They also approved a bonus plan for Mr. Werth, the terms of which were similar to the one approved for all other Named Executive Officers described above except the financial performance metric was adjusted operating income for the Light & Motion Division for the second half of 2016. In addition, prior to the Newport acquisition, Mr. Werth had been eligible to earn a bonus under a Newport executive bonus plan covering the first half of the 2016 calendar year, which we paid in accordance with the terms of that bonus plan in July 2016.

For Mr. Werth’s second half 2016 cash incentive plan, the Corporate Performance Multiplier was based on the Light & Motion Division’s achievement of adjusted operating income excluding special items for the second half of 2016. Mr. Werth would not receive any portion of his Target Bonus if such adjusted operating income for such period was less than the minimum threshold of $16.6 million. The Corporate Performance Multiplier would be 50% of Mr. Werth’s Target Bonus Amount if such adjusted operating income was $16.6 million, would be 100% if such adjusted operating income was $39.6 million, and would be the maximum 200% if such adjusted operating income was $64.1 million or more, with proportional payments for achievement in between. In 2016, because the Light & Motion Division’s adjusted operating income excluding special items was $39.0 million for the second half of 2016, Mr. Werth was eligible to receive 99% of his Target Bonus Amount under this formula.

Our Compensation Committee has the authority to make other cash bonus awards to our Named Executive Officers as it deems appropriate. In January 2017, our Compensation Committee awarded Mr. Werth an additional 7% of his Target Bonus Amount for the second half of 2016 in recognition of his contributions following the closing of the Newport acquisition. As a result, Mr. Werth received an aggregate payout of 106% of his target annual incentive compensation for the second half of 2016.

In 2017, Mr. Werth will participate in the same annual cash incentive plan as all other Named Executive Officers, the details of which are summarized above.

Long-Term Equity Incentive Compensation

We provide our Named Executive Officers with long-term equity incentive compensation in the form of restricted stock units, or RSUs, approximately half of which are performance-based, in order to:

Annual Equity Award to the Named Executive Officers

When our Compensation Committee set 2016 annual executive compensation in early 2016, it awarded the following time-based and performance-based RSUs to our Chief Executive Officer and our other Named

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Executive Officers, other than Mr. Werth whose equity compensation is discussed below. These RSUs vest in three equal annual installments. The performance-based RSUs are subject to a one year performance metric described below.

With respect to performance-based RSUs, our goal is to select a corporate financial performance metric that best aligns with our corporate objectives. Recently, including in 2016, our corporate financial performance metric for performance-based RSUs has been adjusted cash flow from operations (defined as net income plus depreciation, amortization andnon-cash stock-based compensation and excluding special items set forth in Section 9(c)(i) through (xiv) of our 2014 Stock Incentive Plan) set at varying revenue levels. We believe this financial metric is an appropriate indicator of how well we manage the operations of our Company.

We use RSUs as our form of equity incentive compensation because we believe RSUs help to ensure that our executive officers’ interests are aligned with our shareholders in both a rising and a declining stock market. We believe RSUs are preferable to options, which have a relatively high accounting cost as compared to their potential value to the executive officer, and are preferable to restricted stock, which gives the executive officer voting and dividend rights prior to full vesting. Because RSUs are worth more than options on the date of grant, we are able to grant fewer of them than options, resulting in less dilution to shareholders’ holdings.

Mr. Werth did not receive performance-based RSUs when the other Named Executive Officers did due to the fact that he joined the Company as a result of the Newport acquisition which occurred after the 2016 equity awards were determined. His equity awards are discussed below under “Dennis Werth’s Equity Incentive Compensation.”

In 2016, our Named Executive Officers, other than Mr. Werth, would have forfeited all of their performance-based RSUs if our adjusted cash flow from operations was less than $29.6 million at a revenue level of $500 million, or if such cash flow was less than $176.8 million at a revenue level of $1.0 billion (with intermediate adjusted cash flow minimum thresholds at different revenue levels in between). However, if we did achieve these adjusted operating cash flow threshold levels at the respective revenue levels identified, our Named Executive Officers would receive 50% of their target performance-based RSUs. If our adjusted cash flow from operations was $39.9 million or more at a revenue level of $500 million, or was greater than $238.9 million at a revenue level of $1.0 billion (with proportional thresholds in between), then our Named Executive Officers would receive the maximum of 150% of their target performance-based RSUs. Proportional payments would be made for adjusted cash flow achievements between the minimum and maximum levels. In 2016, because our adjusted cash flow was $178.0 million, after removing the impact of acquisition related charges, charges for restructuring, asset impairment charges, othernon-standard gains or losses and the tax effects of the above adjustments, and our revenue level was $872.4 million excluding the impact of the Newport acquisition, our Named Executive Officers received 130% of their target performance-based RSUs. These performance-based RSUs, along with the time-based RSUs granted to our Named Executive Officers, vest in equal annual installments over three years from the original date of grant.

It is our practice to make an initial equity-based grant to all of our Named Executive Officers at the time they commence employment, in an amount that is consistent with amounts granted to other executive officers in the industry at similar levels of seniority. In addition, we typically make an annual grant of equity-based compensation to our Named Executive Officers during the first fiscal quarter of each year. Discretionary equity-based grants may be made throughout the year to provide an incentive to achieve a specific goal or to reward a significant achievement.

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Special Performance-Based Equity Award to our Named Executive Officers

In July 2016, our Compensation Committee awarded the following special performance-based RSUs to our Chief Executive Officer and our other Named Executive Officers, other than Mr. Werth, whose equity compensation is discussed below. These awards vest over two years if the Company achieves certain cost synergies in connection with the Newport acquisition by the end of year one and year two. Our Compensation Committee made these awards to further incentivize our executive team to achieve the cost synergies stockholders desire from the Newport acquisition.

Dennis Werth’s Equity Incentive Compensation

When Mr. Werth joined our executive team from Newport Corporation in April 2016 to lead the Light & Motion Division, he received the following three equity awards:

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Supplemental Retirement Benefits

We provide supplemental retirement benefits, including supplemental lifetime retiree medical benefits, to our current Chief Executive Officer and President, Mr. Colella, or, in the event of his death, to his spouse. These supplemental retirement benefits were designed to reward Mr. Colella’s long service with us and to serve as a significant incentive for Mr. Colella to remain with us because these benefits will vest in full upon Mr. Colella maintaining his employment with us until age 62, with specified exceptions. Mr. Colella, who first joined the Company in 1983 as our Materials Planning and Logistics Manager, served in numerous capacities over the course of the next thirty plus years to ultimately become our Chief Executive Officer and President.

Since 2011, it has been our policy not to offer these types of retirement benefits to other Named Executive Officers. While these benefits were attractive elements to retain certain of our most senior executive officers historically, the elimination of these benefits more closely meets our objective to align executive compensation with Company financial performance.

Newport Deferred Compensation Plan

In connection with the Newport acquisition, we assumed Newport’s Deferred Compensation Plan. Historically, Mr. Werth has made elections to defer a portion of his compensation into this plan. He did not make such an election in 2015 for 2016 compensation. In 2016, Newport employees who were eligible to participate in the plan were not permitted to make an election for the deferral of any of their salaries in 2017 but it is expected that these employees, including Mr. Werth, will have the opportunity to make an election to defer their 2017 annual incentive compensation to the extent earned and paid in 2018. It is expected that after this election, no further elections will be permitted under this plan.

Perquisites

We offer certain perquisites to our Named Executive Officers to allow executives to focus on corporate strategy and enhancing shareholder value and to provide competitive pay packages. These perquisites include car payments, health and life insurance reimbursements, golf club memberships, financial planning benefits and executive physicals. We believe offering these benefits is important to maintaining a competitive position in attracting and retaining key personnel and these benefits are consistent with market practices.

Severance andChange-in-Control Provisions

Each of our Named Executive Officers is entitled to certain payments and benefits in the event his employment terminates under specified circumstances as described in the applicable agreement. Following completion of the Newport acquisition, Meridian, at the request of our Compensation Committee, conducted a peer review of severance pay practices following achange-in-control. Based on data provided by Meridian, the Compensation Committee determined that the severance pay packages in the event of termination following achange-in-control (i.e., double trigger) then offered to our Named Executive Officers, other than our Chief Executive Officer, were below market and accordingly, approved certain changes as set forth below:

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For more information about these severance payments and benefits, see “Executive Compensation—Potential Payments Upon Termination orChange-in-Control.”

In exchange for these payments and benefits, each Named Executive Officer, other than Mr. Werth, whose agreement is governed by California law, is restricted from competing with the Company during and following the termination of employment for a twelve month period. In addition, RSU agreements with our Named Executive Officers, or in Mr. Werth’s case, solely with respect to his Waiver Award, provide for acceleration of vesting in the event the executive’s employment is terminated without cause or the executive resigns for good reason within 24 months after achange-in-control. The severance andchange-in-control provisions are designed to be competitive in the marketplace, to provide security for our Named Executive Officers in the event that we are acquired and his respective position is impacted and to provide an incentive for the Named Executive Officer to stay with us through such achange-in-control event. These provisions are also intended to protect us from competitive harm, by compensating our Named Executive Officers for agreeing to substantialnon-compete provisions after employment termination. See “Executive Compensation — Potential Payments Upon Termination orChange-in-Control” for more information about these agreements.

Compensation of our Chief Executive Officer

MKS entered into an employment agreement with Mr. Colella upon his becoming Chief Executive Officer and President in January 2014. The terms of Mr. Colella’s employment agreement reflect his role as the leader of our Company and the experience he brought to the position having served more than 30 years at MKS. For a detailed discussion of the material terms of Mr. Colella’s employment agreement, see “Executive Compensation — Potential Payments Upon Termination orChange-in-Control.”

Compensation of our Other Named Executive Officers

We have entered into employment agreements with each of our other Named Executive Officers. For a detailed discussion of the material terms of these executive employment agreements, see “Executive Compensation — Potential Payments Upon Termination orChange-in-Control.”

Compensation Consultant; Market Comparison

We engage a compensation consultant to serve as an independent advisor to the Compensation Committee regarding compensation for our directors and our executive officers. The Compensation Committee utilizes the compensation consultant in the following ways:

Since October 2014, the Compensation Committee has engaged Meridian as its compensation consultant. The Compensation Committee determined that the engagement of Meridian as a compensation consultant did not raise any conflicts of interest with MKS.

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When initially determining executive compensation for 2016, the Compensation Committee, with the assistance of Meridian, reviewed size and industry-appropriate broad survey data from the 2015 Radford Global Technology Survey for our Named Executive Officers, as well as publicly available compensation data from the following comparable peer companies:

These peer companies were selected because they compete in the semiconductor industry and were similar to MKS in terms of revenue and market capitalization. These were the same peer companies used to determine 2015 compensation.

In May 2016, following the closing of the Company’s acquisition of Newport, the Compensation Committee engaged Meridian to prepare a competitive compensation analysis for each of our executives on aposition-by-position basis based on estimated revenue and market capitalization of the combined company of $1.4 billion and$2.5-$3.0 billion, respectively. At that time, the peer group of companies listed above that our Compensation Committee used to determine 2016 executive compensation at the beginning of 2016 was substantially modified given the revenue and market capitalization of the combined company. The peer companies listed above with annual revenue below $550 million (Advanced Energy Industries, Inc., ESCO Technologies, Inc., Kulicke & Soffa Industries, Inc., Microsemi Corporation, MTS Systems Corporation, Photronics, Inc., Ultra Clean Holdings Inc., Veeco Instruments, Inc. and Xcerra Corp.) were removed, except for Brooks Automation, Inc. due to its similar business focus on vacuum solutions. Publicly available compensation data from the following comparable peer companies was used in determining revised executive compensation for 2016:

The revised list of peer companies was chosen based on similar industry, market capitalization and revenue, with a revenue range relative to the Company’s projected revenue of between .4 times and 2 times, which was the same range used to determine the original list of peer companies for setting 2016 compensation. Our Compensation Committee also considered size and industry-appropriate broad survey data from the 2016 Radford Global Technology Survey.

Role of our Chief Executive Officer

Our Chief Executive Officer reviews with the Compensation Committee the performance of all other Named Executive Officers and makes recommendations relating to compensation of such executive officers. Management develops proposed corporate financial goals for review and approval by the Compensation Committee for the annual cash incentive plan and long-term performance-based equity incentive compensation, develops proposals relating to potential changes in compensation programs for review and approval by the

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Compensation Committee and provides the Compensation Committee and its advisors with information necessary to evaluate and implement compensation proposals and programs. Our Chief Executive Officer does not participate in discussions regarding his own compensation.

Governance Policies

Stock Ownership Guidelines

Our Stock Ownership Guidelines, which are applicable to members ofassists the Board of Directors the Chief Executive Officer and any other person who is or was a Named Executive Officer while the guidelines are effective, provide that:

These guidelines are based, in each case, on values in effect as of December 31 of the applicable year.

We adopted the Stock Ownership Guidelines in 2013 and they provide for aphase-in period over five years to achieve the respective ownership goals. We modified these guidelines to increase the threshold for directors from three times the annual retainer to four times effective in 2017.

Clawback Policy

Our Clawback Policy, which is applicable to incentive-based compensation (specifically our cash incentive plan and our performance-based RSUs) that is awarded to Named Executive Officers, provides that in the event we are required to prepare an accounting restatement due to material noncompliance with financial reporting requirements, we will use reasonable efforts to recover any amount in excess of what would have been paid to such Named Executive Officers (or such former Named Executive Officers) under the accounting restatement for any such incentive-based compensation during the three-year period preceding the restatement.

Prohibition on Hedging and Pledging

Our Insider Trading Policy prohibits any of our directors or employees from engaging in transactions involving financial instruments that are designed to hedge or offset any decrease in the market value of our securities (includingpre-paid variable forward contracts, equity swaps, collars and exchange funds), and prohibits such individuals from purchasing our securities on margin or pledging such securities as collateral for a loan.

Impact of Accounting and Tax on Executive Compensation

Impact of Code Section 162(m)

Section 162(m) of the Internal Revenue Code of 1986, as amended (“Section 162(m)”), generally disallows a tax deduction to public companies for compensation in excess of $1 million per person paid to a company’s chief executive officer and the next three most highly-paid executive officers other than the chief financial officer. Certain compensation, including qualified performance-based compensation, will not be subject to the deduction limit if certain requirements are met. The Compensation Committee reviews the potential effect of Section 162(m) periodically. In May 2014, our shareholders approved the 2014 Stock Incentive Plan which permits the grant of Section 162(m) qualified performance-based RSUs and restricted stock. In May 2015, our shareholders approved our 162(m) Plan so that cash awards under such plan may qualify as performance-based

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compensation under Section 162(m). The Compensation Committee reserves the right to usefulfilling its judgment to authorize compensation payments which are not qualified as performance-based compensation under Section 162(m) and which may be in excess of the Section 162(m) limit when the Compensation Committee believes such payments are appropriate, after taking into consideration changing business conditions or the officer’s performance, and are in the best interests of our shareholders.

Impact of ASC 718

We account for stock-based compensation in accordance with the requirements of Financial Accounting Standards Board Accounting Standards Codification 718 (“ASC 718”). The Compensation Committee considers the impact of ASC 718 on our use of equity incentives as a key retention tool. The Compensation Committee regularly reviews its choice of equity instruments taking into account both tax and accounting considerations.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the “Compensation Discussion and Analysis” required by Item 402(b) of RegulationS-K with management. Based on such review and discussions, the Committee recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this proxy statement.

Respectfully submitted,

Robert R. Anderson, Chair

Peter R. Hanley

Elizabeth A. Mora

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Summary Compensation Table for 2016

The following table sets forth the aggregate amounts of compensation earned by our Named Executive Officers in the years ended December 31, 2016, 2015 and 2014.

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Grants of Plan-Based Awards in Fiscal Year 2016

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Outstanding Equity Awards at 2016 FiscalYear-End

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Option Exercises and Stock Vested in Fiscal Year 2016

Pension Benefits

Pursuant to an employment agreement, we provide supplemental retirement benefits to Mr. Colella or, in the event of Mr. Colella’s death, to his spouse. These supplemental retirement benefits are designed to reward Mr. Colella’s long-term service with us and to serve as a significant incentive for Mr. Colella to remain with us. In addition, these benefits are designed to provide for supplemental retirement benefits that are not available under our Company-wide employee benefits due to regulatory limitations on benefit accruals.

The benefits vest upon (a) Mr. Colella reaching both (i) specified ages, and (ii) 25 years of service with us, in each case while employed with us, or (b) upon Mr. Colella’s earlier death, disability, termination without cause (as defined in his employment agreement) or a qualifying termination in connection with a change-in-control (as defined in his employment agreement), and are forfeited in the event of termination for cause. When vested, the benefits provide for a lump sum payment of an aggregate amount calculated in accordance with actuarial tables, payable not sooner than six months after the date of termination (except in the case of death or disability). The actuarial calculations include assumptions for decreased benefit continuation for Mr. Colella’s surviving spouse in the event of Mr. Colella’s death. The supplemental retirement benefits are not subject to any deduction for social security or other offset amounts. The benefit amount is based upon the final average compensation, which is equal to the average of Mr. Colella’s three highest years of compensation (salary plus bonus) during the 10 years prior to Mr. Colella’s year of retirement (or other qualifying termination). The benefits for Mr. Colella vest 80%, 90% and 100% at the ages of 60, 61 and 62, respectively.

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The table below sets forth the present value as of December 31, 2016 of the accumulated benefits under Mr. Colella’s supplemental pension arrangement. None of our other Named Executive Officers are eligible for supplemental retirement benefits.

PENSION BENEFITS

Non-Qualified Deferred Compensation

The table below sets forth certain information relating to Mr. Werth’s participation in Newport Corporation’s Deferred Compensation Plan during the year ended December 31, 2016, including (i) the aggregate dollar amounts of interest and other earnings accrued on Mr. Werth’s account and (ii) the total balance of Mr. Werth’s account as of December 31, 2016. In 2016, Mr. Werth did not make any contributions to, or withdrawals or received distributions from, the Deferred Compensation Plan, and we did not make any contributions to the plan on behalf of Mr. Werth. We assumed this plan in connection with the Newport acquisition. No other Named Executive Officer is eligible to participate in this plan. In 2016, Newport employees, including Mr. Werth, who were eligible to participate in the plan were not permitted to make an election for the deferral of any of their salaries in 2017 but we expect that these employees, including Mr. Werth, will have the opportunity to make an election to defer their 2017 annual incentive compensation to the extent earned and paid in 2018. We expect that after this election, no further elections will be permitted under this plan.

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Potential Payments Upon Termination orChange-in-Control

This section, including the tables below, summarizes the estimated payments and other benefits that each Named Executive Officer would be eligible to receive if his employment had terminated on December 31, 2016, under the circumstances set forth below.

Mr. Colella

On October 22, 2013, in connection with Mr. Colella’s appointment as Chief Executive Officer and President, we entered into a new employment agreement with him, effective as of January 1, 2014, (the “Employment Agreement”) which superseded his previous employment agreement dated April 25, 2005, as amended. Below is a summary of the material terms of Mr. Colella’s Employment Agreement.

Under the Employment Agreement, in addition to his base salary, Mr. Colella is eligible to participate in the Company’s annual cash incentive compensation program, with a targeted goal of 100% (which was subsequently increased by our Compensation Committee to 105%) of base salary subject to meeting performance goals to be determined by our Compensation Committee, and long-term equity incentive plan, subject to meeting vesting and/or performance goals to be determined by our Compensation Committee. Mr. Colella’s employment term ismonth-to-month, with termination upon 30 days’ notice by either party, or upon death, disability, or at the Company’s election if Mr. Colella fails to perform his duties or commits any other act constituting cause (as defined below).

In the event Mr. Colella’s employment is terminated by the Company without cause, he is entitled to aone-year continuation of each of the following: base salary, payment of any annual cash incentive plan bonus earned for the prior calendar year but not yet paid, reimbursement for premiums he pays (if any) for continuation of life insurance if he elects the Company’s group life insurance conversion feature, and payment for continuation of medical, dental or vision insurance. Payment of such benefits is conditioned upon execution of a release by Mr. Colella and his full compliance with the restrictive covenants described below.

In the event Mr. Colella’s employment is terminated due to death or total disability, or Mr. Colella voluntarily terminates his employment (other than for “good reason” as defined below within two years of achange-in-control (as defined in his Employment Agreement)), we will pay his base salary accrued through the last date of employment, plus any annual cash incentive plan bonus earned for the prior calendar year, but not yet paid.

In the event Mr. Colella’s employment is terminated without cause or is terminated by Mr. Colella for good reason, in either case upon or at any time within two years of achange-in-control, Mr. Colella will receive a lump sum payment equal to 36 months of his base salary and 36 months of the target bonus amount, payment of any annual cash incentive plan bonus earned for the prior calendar year, but not yet paid, and continued participation in the Company’s medical, dental, vision and life insurance plans for 36 months. In the event such payments are determined to be subject to an excise tax imposed by Section 4999 of the Internal Revenue Code, such payments will be payable in full or, if applicable, reduced so that no portion of the payments is subject to the excise tax, whichever of the foregoing amounts results in receipt by Mr. Colella on anafter-tax basis of the greater amount, taking into account all applicable taxes, including the penalty tax. Mr. Colella is not entitled to anygross-up payment for any such excise tax due on such payments.

The Employment Agreement requires Mr. Colella to return all or a portion of any incentive pay, and any severance payments computed by reference thereto, for the performance period(s) in which his termination of employment occurs and any performance period ending within the 36 month period prior to his termination of employment, if it is later determined that these awards were calculated on the basis of inaccurate information that results in a restatement of our financial statements, or for other required reasons.

The Employment Agreement provides that Mr. Colella may not, during the term of his employment and for a period of one year after termination of employment (or two years in the event Mr. Colella terminates his employment other than for good reason), (i) engage in any competitive business or activity, (ii) work for any person who was our executive, officer or agent, or establish any business or partnership with such person that is

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competitive to the Company, (iii) give, sell or lease any competitive services or goods to any of our customers; or (iv) have any material financial interest in or be a director, officer, partner, executive or consultant to, or exceed specified shareholding limitations in, any of the Company’s competitors.

Mr. Colella is also subject tonon-solicitation restrictions. During the term of his employment and for a period of two years after termination, Mr. Colella may not solicit any customer to become a customer, distributor or supplier of any other person or entity or to cease doing business with the Company; or solicit or hire any of our executives, officers or agents to terminate such person’s employment or engagement with the Company or to work for a third party.

In addition, the Employment Agreement continues to provide Mr. Colella with the same supplemental retirement benefits as were provided under his original employment agreement, which was superseded by the Employment Agreement. The benefits vest (a) upon Mr. Colella reaching both (i) specified ages, and (ii) 25 years of service with the Company, in each case while employed by the Company, or (b) upon his earlier death, disability, termination without cause (defined as conviction for the commission of a felony, material breach of any employment or other agreements between the executive and the Company, or willful failure by the executive to perform his materialoversight responsibilities to the Company) or a qualifying termination for “good reason” within three years of achange-in-control (as defined in the agreement), and are forfeited in the event of termination prior to vesting as described above, termination for cause or upon violation of the noncompetition, nondisclosure, or nonsolicitation provisions contained in the Employment Agreement. When vested, subject to his execution of and compliance with a customary release, the supplemental retirement benefit provides for a lump sum payment to Mr. Colella (or in the event of his death, his spouse) of an aggregate amount calculated based upon actuarial assumptions, payable not sooner than six months after the date of termination (except in the case of death). The benefit amount is determined based upon the actuarial equivalent value of an annuity equal to 50% of Mr. Colella’s final average compensation, which is equal to the average of his three highest years of compensation (salary plus bonus) during the 10 calendar years prior to the year of retirement (or other qualifying termination). The actuarial calculations include assumptions for decreased benefit continuation (determined as a 50% survivor annuity) for Mr. Colella’s surviving spouse in the event of Mr. Colella’s death. The benefits for Mr. Colella vest 80%, 90% and 100% in the event of Mr. Colella’s voluntary retirement at the ages of 60, 61 and 62, respectively. In the event that any payment under the supplemental retirement benefit would subject Mr. Colella to any excise tax, interest or penalties imposed under Internal Revenue Code Section 4999, we have agreed to make Mr. Colellagross-up payments for such amounts.

The Employment Agreement also continues to provide Mr. Colella and his spouse with the same retiree medical benefits as were provided under his original employment agreement. Accordingly, subject to his execution of and compliance with a customary release, Mr. Colella will receive retiree medical benefits for life, in the event he (i) retires by at least age 62, (ii) is terminated without cause or terminates his employment for good reason, in each case within three years after achange-in-control, or (iii) terminates employment due to death or disability. Mr. Colella (or his surviving spouse) would pay an annual contribution of $1,500, and, in the event of his retirement before age 65, would pay a decreasing percentage of the costs of the benefit (from 30% to 10%) until he reaches age 65. The retiree medical benefit is coordinated with any continuation of medical benefits described above to avoid duplication of benefits.

Mr. Colella’s RSU agreements provide for the full acceleration of vesting of all shares (or, in the case of performance-based RSUs that are still subject to performance criteria, the target number of RSUs) if he is terminated without cause or resigns with good reason within two years following achange-in-control (as defined in the applicable agreements), and also provides for the full acceleration of vesting of all shares (or, in the case of performance-based RSUs that are still subject to performance criteria, the actual number of RSUs to vest based upon satisfaction of performance criteria) upon retirement, death or disability. Retirement, in this context, for RSUs awarded prior to 2015, means a voluntary termination of employment by the executive after he is at least age 60 and has a combination of years of age plus years of service (full years of employment since the executive’s original hire date with the Company or one of its subsidiaries) with us equal to 70 or more. Retirement, in this context for RSUs awarded in 2015 and after, means a voluntary termination of employment by the executive after he is at least age 60 and has at least 10 years of service with us.

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For purposes of the foregoing description of Mr. Colella’s benefits under his Employment Agreement, “cause” means that the executive has refused to perform the services required of him under his employment agreement or has failed or refused to comply with any of the covenants in the employment agreement, or any of the following: (i) willful or gross neglect of his duties, (ii) material breach of his employment agreement or of any of the rules, regulations, policies or procedures of the Company, or material violation of the Company’s code of conduct, (iii) commission of a felony or other act of material dishonesty, including but not limited to fraud, embezzlement, misappropriation of Company property, moral turpitude, or breach of fiduciary duty that could possibly have a material adverse effect on the Company, (iv) unlawful use of controlled substances on the Company’s premises or while performing his duties and responsibilities or indictment related to the commission of any criminal act, (v) failure or refusal to reasonably cooperate with any Company investigation or government/regulatory authority having jurisdiction over the executive and the Company, or (vi) engaging in willful or gross misconduct which is materially injurious to the Company, financially or otherwise, or the Company’s reputation.

Under Mr. Colella’s RSU agreements, “cause” means conviction for the commission of a felony, willful failure by the executive to perform his responsibilities to the Company, or willful misconduct by the executive.

Subject to compliance with certain procedural requirements, “good reason” under both the Employment Agreement and Mr. Colella’s RSU agreements means voluntary separation from service within 90 days following (i) a material diminution in positions, duties and responsibilities from those described in the executive’s employment agreement, (ii) a reduction in the executive’s base salary (other than as part of a general salary reduction program affecting senior executives), (iii) a material reduction in the aggregate value of the executive’s pension and welfare benefits from those in effect prior to thechange-in-control (other than as proportionate to the reductions applicable to other senior executives pursuant to a cost-saving plan that includes all senior executives), (iv) a material breach of any provision of the employment agreement by the Company, or (v) the Company’s requiring the executive to be based at a location causing a one way commute in excess of 60 miles from the executive’s primary residence.

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Potential Payments Upon Termination orChange-in-Control — Gerald G. Colella

The following table sets forth the estimated benefits that Mr. Colella would have been entitled to receive upon termination of his employment effective December 31, 2016.