We have a formal policy regarding communications with the Board, of Directors, our Stockholder & Interested Party Communications Policy, which is found on our website at https://investors.ontoinnovation.com/governance/governance-documents/.

Stockholders may communicate with the Board, of Directors, any of the Company’s Board Committeescommittees (Audit, Compensation or Nominating & Governance) or any of the Company’s directors by writing to:

Onto Innovation Inc.

Office of the General Counsel

550 Clark Drive

P.O. Box 860

Budd Lake, New Jersey 07828

and such communications will be forwarded to the intended recipient(s) to the extent appropriate. Prior to forwarding any communication, the General Counsel will review it and, in his or her discretion, will not forward a communication deemed to be of a commercial nature or otherwise inappropriate.

PROPOSAL 1

ELECTION OF DIRECTORS

The Board currently has twelve (12)nine (9) members.  Effective subsequent toas of the 2020conclusion of the 2021 Annual Meeting of Stockholders, the authorized number of directors for the Board shall be reduced to ten (10)seven (7) members. All current directors are standing for election at the Annual Meeting with the exception of John R. WhittenJeffrey A. Aukerman and Timothy J. Stultz, Ph.D.Vita A. Cassese.

The Company’s Amended and Restated Certificate of Incorporation provides that at each annual meeting of stockholders, each director of the Company shall be elected to hold office, and shall serve, until the expiration of the term for which he or she is elected and until his or her successor is duly elected and qualified or until his or her death, resignation, or removal; except that if any such election shall not be so held, such election shall take place at a stockholders' meeting called and held in accordance with the DGCL.

Based on the recommendation of the Nominating & Governance Committee, the ten (10)seven (7) director nominees approved by the Board for inclusion in this proxy statement are:

Each nominee is currently serving as a director of Onto Innovation. In making its recommendations, the Nominating & Governance Committee considered a number of factors, including its criteria for Board membership, which include the minimum qualifications that must be possessed by a director candidate in order to be nominated for a position on our Board. Each nominee has indicated that he or she will serve if elected. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the Company’s ten (10)seven (7) nominees.  In the event that any nominee of the Company becomes unable or unavailable to serve as a director at the time of the Annual Meeting (which we do not anticipate), the proxy holders will vote the proxies for any substitute nominee who is designated by the current Board of Directors to fill the vacancy.  Alternatively, the Board, of Directors, in its discretion, may elect to reduce the number of directors serving on the Board.  We do not have any reason to believe that any of the nominees will be unable or will decline to serve as a director.

A priority of the Nominating & Governance Committee and the Board as a whole is making certain that the composition of the Board reflects the desired professional experience, skills and backgrounds in order to present an array of viewpoints and perspectives, help develop and execute strategy for the future and effectively represent the long-term interests of stockholders. Further, the Board recognizes the importance of Board refreshment in order to continue to achieve an appropriate balance of tenure, turnover, diversity and skills on the Board.

Pursuant to the Company’s Bylaws, our directors are elected by the affirmative vote of the majority of the votes cast (provided, however, that if the number of nominees exceeds the number of directors to be elected, directors will be elected by a plurality voting standard). In order for a director in an uncontested election to be elected, the number of votes cast “for” his/her election must exceed the number of votes cast “against” his/her election (with “abstentions” and “broker non-votes” not counted as a vote cast either “for” or “against” that director’s election). If a nominee forwho is an incumbent director in an uncontested election receives a greater number of “Withhold” votes for election than “For” votes in an uncontested election and is not elected, our Summary of Corporate Governance SummaryPolicies provides that such director must promptly tender a resignation to the Board. Our Nominating & Governance Committee would then make a recommendation to the Board on whether to accept or reject the tendered resignation, or whether other action should be taken. Within ninety (90) days after the date of the certification of the election results, our Board will act on any such tendered resignation and publicly disclose (in a press release, a filing with the SEC or other broadly disseminated means of communication) its decision regarding the tendered resignation and the rationale behind the decision.

Our Board and its Nominating & Governance Committee believe that all of the directors and nominees are highly qualified and have demonstrated leadership skills and have experience and judgment in areas that are relevant to our business. We believe that their ability to challenge and stimulate management and their dedication to the affairs of the Company collectively serve the interests of the Company and its stockholders.

The ten (10)seven (7) nominees for director are set forth below. All information is as of the record date.

Except as discussed below, each nominee and each incumbent director has been engaged in the principal occupation set forth above during the past five (5) years. There are no family relationships between any directors or executive officers of the Company.  Messrs. Aukerman, Berlinghieri, Miller, Plisinski and Whitten, along with Ms. Cassese, all former members of the Rudolph Board of Directors, were appointed to the Board on October 22, 2019 pursuant to the Agreement and Plan of Merger, dated as of June 23, 2019 (the “Merger Agreement”), among Nanometrics, Rudolph and PV Equipment Inc., after recommendation by the previous Board of Directors of Rudolph. The Nominating & Governance Committee thereafter considered the professional experience, skills and backgrounds of the nominees (including Messrs. Aukerman, Berlinghieri, Miller and Plisinski and Ms. Cassese) and recommended the nominees to the full Board.

The following reflects additional information regarding the background and qualifications of our directors,director nominees, including the experience and skills that support the Board’s determination that each director should serve on our Board.

Mr. Aukerman is a certified public accountant and has extensive public accounting and consulting experience, serving many public and private equity sponsored public reporting companies in the manufacturing, distribution and services industries.  From July 1987 to May 2014, Mr. Aukerman was employed by Deloitte & Touche LLP, which, together with its affiliates, is an audit, consulting, tax and advisory services firm, and served as an audit partner for the most recent fifteen (15) years.  He also served in various capacities for the firm, including as an audit function professional practice director for the Cleveland, Ohio office and a regional leader of internal control subject matter specialists.  Mr. Aukerman graduated magna cum laude with a B.S.B.A. in Accounting from Youngstown State University.

Specific Qualifications, Attributes, Skills and Experience

Relevant Senior Leadership / CEO Experience

High Level of Financial Experience

From July 2005 to December 2013, Mr. Berlinghieri served as Chief Executive Officer and President of MKS Instruments, Inc., a critical subsystem and instrument provider to the semiconductor industry. From April 2004 to July 2005, Mr. Berlinghieri served as President and Chief Operating Officer and prior to that served as Vice President and Chief Operating Officer from July 2003 to April 2004 for MKS Instruments, Inc.

Specific Qualifications, Attributes, Skills and Experience

Relevant Senior Leadership / CEO Experience

High Level of Financial Experience

Broad International Exposure

Extensive Knowledge of Company Business/Industry

Innovation/Technology Experience

From May 2013 until September 2015, Mr. Brown was the Chief Executive Officer of Cymer Light Source, following the merger of Cymer, Inc. with ASML Holding Ltd., prior to which Mr. Brown served as President and Chief Operating Officer of Cymer, Inc. from September 2005 until May 2013. From 1984 to 2005, Mr. Brown was employed at Applied Materials, Inc., where he held numerous high-level management positions including group vice president and senior advisor to the president, vice president and general manager of the Intel business unit, as well as managing director heading up their largest

product division, Global Operations. Prior to Applied Materials Inc., Mr. Brown held key engineering positions at TRW Corporation and Burroughs Corporation.  Mr. Brown received a master’s degree in business administration from National University and a bachelor’s degree in industrial studies from San Diego State University.

Specific Qualifications, Attributes, Skills and Experience

Relevant Senior Leadership / CEO Experience

High Level of Financial Experience

Broad International Exposure

Extensive Knowledge of Company Business/Industry

Innovation/Technology Experience

Ms. Cassese currently serves as the CEO of Mardon Management Advisors, a technology and analytics advisory firm. Ms. Cassese has over 30 years of experience in operating and strategic management roles at Pfizer, Inc., Ms. Cassese’s last held position at Pfizer, Inc. was chief information officer of its Worldwide Pharmaceuticals Group.  Ms. Cassese serves as a mentor for the Masters in Technology program at Columbia University and has been a guest lecturer at New York University's Stern School of Business, MIT Sloan School of Business, and Boston University. Ms. Cassese earned a B.A. in Mathematics from the College of Mount Saint Vincent and an MBA from New York University’s Stern School of Business.

Specific Qualifications, Attributes, Skills and Experience

Relevant Senior Leadership / CEO Experience

High Level of Financial Experience

Broad International Exposure

Innovation/Technology Experience

Mr. Deuster served as Chief Executive Officer of Collectors Universe, Inc., a public company that provides authentication and grading services to the global collectibles market, from 2012 to 2017. Mr. Deuster served as Chairman and Chief Executive Officer of Newport Corporation, a public company that is a global supplier of laser, optical and motion control products, from May 1996 until his retirement in October 2007. Mr. Deuster served in various senior management positions at Applied Power, Inc. (now Actuant Corporation) and General Electric Company’s Medical Systems Division.  Mr. Deuster received a B.S. in Electrical Engineering from Marquette University in 1973. Mr. Deuster holds a Masters Professional Director Certification from the American College of Corporate Directors (“ACCD”), a public company director education and credentialing organization.

Specific Qualifications, Attributes, Skills and Experience

Relevant Senior Leadership / CEO Experience

High Level of Financial Experience

Broad International Exposure

Extensive Knowledge of Company Business/Industry

Innovation/Technology Experience

Mr. Miller served as the Rudolph non-executive Chairman from August 2018 through the Merger Date.  From June 1981 to November 2015, Mr. Miller served in various positions, most recently as President, with DuPont Electronics & Communications, an electronic materials company.  Mr. Miller holds a B.S. in Electrical Engineering from the University of Virginia.

Specific Qualifications, Attributes, Skills and Experience

Relevant Senior Leadership / CEO Experience

High Level of Financial Experience

Broad International Exposure

Extensive Knowledge of Company Business/Industry

Innovation/Technology Experience

Mr. Plisinski has served as the Company’s Chief Executive Officer since the Merger Date and was previously Chief Executive Officer of Rudolph beginning in November 2015.  Prior to his appointment as Rudolph’s CEO, Mr. Plisinski served as Rudolph’s Executive Vice President and Chief Operating Officer from October 2014 to November 2015 and as Vice President and General Manager, Data Analysis and Review Business Unit from February 2006 when Rudolph merged with August Technology Corporation (“August Technology”) until October 2014. From February 2004 to February 2006, Mr. Plisinski served as August Technology’s Vice President of Engineering and, from July 2003 to February 2004, as its Director of Strategic Marketing for review and analysis products. Mr. Plisinski joined August Technology as part of the acquisition of Counterpoint Solutions, a supplier of optical review and automated metrology equipment to the semiconductor industry, where he was both sole founder and President from June 1999 to July 2003. Mr. Plisinski has a B.S. in Computer Science from the University of Massachusetts and has completed the Advanced Management Program from Harvard Business School.

Specific Qualifications, Attributes, Skills and Experience

Relevant Senior Leadership / CEO Experience

High Level of Financial Experience

Broad International Exposure

Extensive Knowledge of Company Business/Industry

Innovation/Technology Experience

Mr. Rhine served as the Chairman of the Board of Directors of Nanometrics from August 2009 through the Merger Date. From July 2006 to February 2008, Mr. Rhine served as Nanometrics’ Chief Strategy Officer and from March 2007 to August 2007, as Nanometrics Chief Executive Officer. From 2000 to 2006, Mr. Rhine served as Chairman and Chief Executive Officer of Accent Optical Technologies, Inc. (acquired by Nanometrics in July 2006) and as its President from January 2003 to April 2005 and from August 2000 to September 2001. Prior to 2000 Mr. Rhine was an executive at Applied Materials, Lam Research Corporation, Asyst Technologies and Air Products and Chemicals.  Mr. Rhine holds a B.S. degree in Chemical Engineering and an M.B.A. in Finance from The Pennsylvania State University. Mr. Rhine is a member of the National Association of Corporate Directors (“NACD”) and the ACCD.American College of Corporate Directors (“ACCD”).

Specific Qualifications, Attributes, Skills and Experience

Relevant Senior Leadership / CEO Experience

High Level of Financial Experience

Broad International Exposure

Extensive Knowledge of Company Business/Industry

Innovation/Technology Experience

Mr. Seams served as Chief Executive Officer of Deca Technologies from June 2013 to August 2016. Prior to Deca Technologies, Mr. Seams served as Executive Vice President of sales and marketing at Cypress Semiconductor and held various technical and operational management positions in its manufacturing, development and operations. Prior to joining Cypress in 1990, Mr. Seams worked in process development for Advanced Micro Devices and Philips Research Laboratories. Mr. Seams earned his bachelor’s degree in electrical engineering from Texas A&M University and his master’s degree in electrical and computer engineering from the University of Texas at Austin. Mr. Seams has a Professional Certificate in Advanced Computer Security from Stanford University and is a senior member of the Institute of Electrical and Electronics Engineers. Mr. Seams is a member of the ACCD as well as a member and Certified Director of the NACD.

Specific Qualifications, Attributes, Skills and Experience

Relevant Senior Leadership / CEO Experience

High Level of Financial Experience

Broad International Exposure

Extensive Knowledge of Company Business/Industry

Innovation/Technology Experience

Ms. Tsingos served as the Executive Vice President and Chief Financial Officer of Bio-Rad Laboratories from December 2002 through May 2019. Prior to Bio-Rad, Ms. Tsingos held executive positions at Autodesk, The Cooper Companies, and Attest Systems. Ms. Tsingos earned her Bachelor of Arts in International Studies from the American University in Washington D.C. and an M.B.A in International Business from the George Washington University. In 2010, Ms. Tsingos was awarded the prestigious Bay Area CFO of the Year.

Specific Qualifications, Attributes, Skills and Experience

Relevant Senior Leadership / CEO Experience

High Level of Financial Experience

Broad International Exposure

Directors who are employees of the Company receive no compensation for their services as members of the Board of Directors.Board. Director compensation for non-employee members of the Board is a mix of cash and equity-based compensation, which is largely comprised of the equity component to align the interests of our directors with the Company’s long-term performance and stockholder interests.  The components of the compensation for 2020 Board service of directors who are not employees of the Company are as follows:

Any initial equity grants and/or annual equity grants typically vest on the first anniversary of the grant date.  Equity awards granted to Rudolph directors in 2019 wereare granted under and subject to the terms of the Rudolph Technologies,Onto Innovation Inc. 20182020 Stock Plan.  Equity awards granted to Nanometrics directors in 2019 were granted under and subject to the terms of the Nanometrics Incorporated 2005 Equity Incentive Plan.

Prior to the 2019 Merger, Nanometrics non-employee directors received an annual retainer fee of $60,000. In addition, the Chairman of the Board, Audit Committee Chairman, Compensation Committee Chairman and Nominating & Governance Committee Chairman received an incremental $30,000, $20,000, $20,000 and $10,000 annual retainer, respectively, for serving in such capacities. Committee members, other than the chairpersons, received an incremental $10,000 annual retainer for service on the Audit or Compensation Committee and an incremental $7,500 annual retainer for service on the Nominating & Governance Committee. All retainer fees were paid annually, as of the date of Nanometrics annual stockholders meeting, and in advance of the provision of services to which the retainer relates.

Prior to the 2019 Merger, Rudolph non-employee directors received an annual retainer fee of $70,000.  In addition, the Chairman of the Board and the Chairmen of the Audit Committee, Compensation Committee and Nominating & Governance Committee received an incremental $40,000 and $15,000 annual retainer, respectively, for serving in such capacities.  Rudolph directors were not paid in 2019 to serve on the committees of the Board of Directors with the exception of those directors serving as committee chairs during 2019. The foregoing compensation was paid on a quarterly basis to the Rudolph directors.  No fees were paid to Rudolph directors for special subcommittee work in 2019.Plan (the “2020 Stock Plan”).

For the fiscal year ended December 31, 2019,26, 2020, the directors, excluding the directors who are named executive officers,employees, received total compensation indicated in the table below.  There were no option awards, non-equity incentive plan compensation, or pension and nonqualified deferred compensation earnings granted to such directors.  They did not earn any type of compensation during the year other than what is disclosed in the following table:

The Company has established guidelines related to stock ownership and retention for its non-employee directors. Currently, the guidelines require that each non-employee director of the Company own shares of Company Common Stock valued at a minimum of three (3) times the amount of the director’s total cash compensation which includes the annual cash retainer as well as any additional fee paid to those individuals who are Committee Chairs, Lead Director or Chairman of the Board.retainer.  For a new director, the stock holding requirement is to be attained within five (5) years of his or her initial election or appointment to the Board.

PROPOSAL 2

ADVISORY VOTE ON EXECUTIVE OFFICER COMPENSATION

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, enables our stockholders to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with SEC rules. Consistent with the recommendation of the Board of Directors and the preference of our stockholders as reflected in the non-binding advisory vote on the frequency of future advisory votes on named executive officer compensation held at the Nanometrics 2017 Annual Meeting of Stockholders, the Company currently holds an annual “say on pay” vote.  In accordance with this policy, this year we are requesting our stockholders to approve an advisory resolution on the Company’s executive officer compensation as reported in this Proxy Statement, and as required by Section 14A(a)(1) of the Exchange Act.

Our executive officer compensation arrangements are designed to enhance stockholder value on an annual and long-term basis.  These arrangements are consistent with our compensation philosophy and pay-for-performance principles and, as such, have been designed to provide competitive compensation packages that enable the Company to attract and retain talented executives,executive officer officers, motivate executive officers to achieve the Company’s short- and long-term business strategies and objectives,  align the interests of executivesexecutive officers with those of stockholders, and are consistent with current market practices and good corporate governance principles.  Please read the Compensation Discussion and Analysis beginning on page 4934 of this proxy statement and the tabular and additional narrative disclosures on executive officer compensation beginning on page 7155 of this proxy statement for additional details about our executive officer compensation arrangements, including information about the fiscal year 20192020 compensation of our named executive officers.

We are asking our stockholders to indicate their support for our compensation arrangements as described in this proxy statement.

For the reasons discussed above, the Board recommends that stockholders vote in favor of the following resolution:

“RESOLVED, that the Company’s stockholders APPROVE, on an advisory basis, the compensation paid to the Company’s named executive officers, as disclosed in the proxy statement for this meeting pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion and other related tables and disclosures.”

Because your vote is advisory, it will not be binding upon or overrule any decisions of the Board, nor will it create any additional fiduciary duty on the part of the Board.  This advisory vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and our compensation philosophy, policies and practices described in this proxy statement, and does not seek to have the Board or Compensation Committee take any specific action. However, the Board and the Compensation Committee value the viewviews expressed by our stockholders in their vote on this proposal and will take into account the outcome of the vote when considering executive officer compensation matters in the future.

The affirmative vote, in person or by proxy, of a majority of the shares present or represented at the meeting and entitled to vote will be required to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement.

PROPOSAL 3

APPROVAL OF ONTO INNOVATION INC. 2020 STOCK PLAN

The Board of Directors is requesting that our stockholders approve a new stock plan, the Onto Innovation Inc. 2020 Stock Plan (the “2020 Stock Plan”).  The Board has adopted the 2020 Stock Plan, subject to stockholder approval at the Annual Meeting.  If approved by our stockholders, the 2020 Stock Plan will become effective as of May 12, 2020 and will expire ten (10 years from such date, unless terminated earlier.

The 2020 Stock Plan is structured to allow the Board to award equity incentives to eligible directors, officers, employees and consultants in order to assist the Company in attracting, retaining and motivating the best available personnel for the successful conduct of the Company’s business.  The Company believes that linking compensation to corporate performance motivates employees and consultants to improve stockholder value.  The Company has, therefore, consistently included equity incentives as a significant component of compensation for its officers, employees, directors and consultants.  With the high demand for highly skilled employees and consultants, especially in the technology industries, management believes it is critical to the Company’s success to maintain competitive compensation programs.  The Board believes that the approval of the 2020 Stock Plan would be in the best interests of the Company and its stockholders.

We currently maintain the Nanometrics Incorporated 2005 Equity Incentive Plan (the “Nanometrics 2005 Stock Plan”) and the Rudolph Technologies, Inc. 2018 Stock Plan (the “Rudolph 2018 Stock Plan”).  The Nanometrics 2005 Stock Plan currently expires on May 23, 2023 while the Rudolph 2018 Stock Plan currently expires on May 16, 2028.  We are seeking stockholder approval of the 2020 Stock Plan so that we can maintain and administer one equity incentive plan for all eligible participants following the 2019 Merger and continue to provide our officers, employees, directors and consultants with equity-based compensation that aligns their interests with the interests of our stockholders.

To ensure that the Company has an adequate number of shares available for compensation to its directors, executive officers and other employees and consultants, we are asking our stockholders to approve the 2020 Stock Plan with a total share reserve of 3,500,000 shares, as described below under “Share Reserve Under the 2020 Stock Plan”.

The following are key governance highlights of the 2020 Stock Plan:

Under the 2020 Stock Plan, the number of shares of Company common stock available for issuance to eligible participants will be 3,500,000, subject to stockholder approval, plus any shares subject to awards under the Nanometrics 2005 Stock Plan or the Rudolph 2018 Stock Plan that would again become available for new awards under the terms of either such plan if such plan were still in effect and without regard to any termination thereof.

As of the effective date of the 2020 Stock Plan, no additional grants may thereafter be issued under either the Nanometrics 2005 Stock Plan or the Rudolph 2018 Stock Plan.  As of March 13, 2020, 1,280,597 shares remained available for grant under the Nanometrics 2005 Stock Plan and 2,393,656 shares under the Rudolph 2018 Stock Plan.

The following table presents information about the number of shares that were subject to various outstanding equity awards under the Nanometrics 2005 Stock Plan or the Rudolph 2018 Stock Plan and the shares remaining available for issuance under these two (2) plans.  On March 13, 2020, the total number of shares outstanding was 50,381,691 and our closing stock price was $27.98.

In determining whether to approve the 2020 Stock Plan, including the share reserve under the 2020 Stock Plan, the following considerations were taken into account:

The following is a summary of the principal features of the 2020 Stock Plan and its operation.  This summary is qualified in its entirety by reference to the 2020 Stock Plan itself set forth in Appendix A.

The 2020 Stock Plan provides for the grant of equity awards to employees, directors and consultants.  Options granted under the 2020 Stock Plan may either be “incentive stock options” as defined in Code Section 422 or nonstatutory stock options, as determined by the Board.

The general purposes of the 2020 Stock Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to the employees, directors and consultants of the Company and to promote the success of the Company’s business.

The 2020 Stock Plan will be administered by the Compensation Committee (“Committee”) or the Board, as applicable (in either case, the “Administrator”).

The 2020 Stock Plan provides that nonstatutory stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, performance units and performance shares may be granted to employees, directors and consultants of the Company and any parent or subsidiary.  Incentive stock options may be granted only to employees of the Company and any parent or subsidiary.  The Administrator will determine which eligible persons will be granted awards. As of March 13, 2020, there were twelve (12) outside directors (which will be reduced to ten (10) on the date of the Annual Meeting), approximately 1,300 employees and consultants eligible to participate in the 2020 Stock Plan.

The maximum aggregate number of shares that may be awarded and sold under the 2020 Stock Plan is 3,500,000 shares.  If, after the effective date of the 2020 Stock Plan, any shares subject to awards granted under the Nanometrics 2005 Stock Plan or the Rudolph 2018 Stock Plan would again become available for new awards under the terms of such plan if it were still in effect and without regard to any termination of such plan, then those shares will be available for the purpose of granting awards under the 2020 Stock Plan. The shares issued pursuant to awards under the 2020 Stock Plan may be authorized but unissued or reacquired Common Stock.  No awards have been granted under the 2020 Stock Plan.

If an award terminates, expires or becomes unexercisable without having been exercised in full, or, with respect to restricted stock, restricted stock units, performance units or performance shares, is terminated or forfeited in whole or in part due to failure to vest, the shares (or forfeited shares) which were subject to such terminated, expired, unexercised or forfeited award will become available for future issuance under the 2020 Stock Plan.  To the extent that an award under the 2020 Stock Plan is paid out in cash, rather than shares, such cash payment will not result in reduction of the shares available for issuance under the 2020 Stock Plan.

Shares used to pay the exercise price of an award or to satisfy the tax withholding obligations related to an award will not again become available for future grant under the 2020 Stock Plan.  Upon exercise of a SAR settled in shares, all shares subject to

the SAR (not the number of net shares actually issued pursuant to the SAR upon any exercise) will cease to be available under the 2020 Stock Plan.

For any calendar year, (i) the value of awards granted to an outside director under the 2020 Stock Plan may not exceed $600,000 and (ii) the value of awards granted to any individual participant other than an outside director under the 2020 Stock Plan may not exceed $5,000,000, in each case calculating the value of any such awards based on the grant date fair value of such awards for financial reporting purposes.  For purposes of applying this annual limit, any award of performance units, performance shares or any other award subject to performance-based vesting criteria will be taken into account assuming target performance achievement under the terms of such award.

All awards granted to all participants under the 2020 Stock Plan will be subject to a minimum vesting period of not less than one (1) year from the date of grant; provided, the Administrator may provide for the grant of awards to participants without regard to the minimum vesting requirement with respect to a maximum of five percent (5%) of the total number of shares authorized for issuance under the 2020 Stock Plan.

In connection with an entity’s merger or consolidation with the Company or any subsidiary or the direct or indirect acquisition by the Company or any subsidiary of an entity’s property or stock, the Committee may grant awards in substitution or exchange for any options or other stock or stock-based awards granted before such merger or consolidation by such entity or its affiliate.  Substitute awards may be granted on such terms and conditions as the Committee deems appropriate, notwithstanding any limitations on awards in the 2020 Stock Plan.  Substitute awards will generally not count against the aggregate share reserve.  Additionally, in the event that a company acquired by the Company or any subsidiary, or with which the Company or any subsidiary otherwise combines, has shares available under a pre-existing plan approved by its stockholders and not adopted in contemplation of such acquisition or combination as determined by the Administrator, the shares available for grant pursuant to the terms of such pre-existing plan may be used under certain circumstances for awards under the 2020 Stock Plan and shall not reduce the shares authorized for grant under the 2020 Stock Plan.

Stock option awards may be granted to employees, directors or consultants of the Company at any time and from time to time as determined by the Administrator in its discretion, except incentive stock options may be granted only to employees of the Company.  The exercise price of options granted under the 2020 Stock Plan is determined by the Administrator and must not be less than 100% of the fair market value of the Common Stock at the time of grant.  Options granted under the 2020 Stock Plan expire as determined by the Administrator, but in no event later than ten (10) years from date of grant.  No option may be exercised by any person after its expiration.  Incentive stock options granted to stockholders owning more than 10% of the voting stock of the Company must have an exercise price per share no less than 110% of the fair market value at the time of grant and the term of such option may be no more than five years from the date of grant.  The fair market value of the Common Stock is generally determined with reference to the closing sale price for the Common Stock (or the closing bid if no sales were reported) on the day of determination.

Options become exercisable at such times as are determined by the Administrator and as set forth in the individual award agreements.  An option is exercised by giving notice to the Company in the form determined by the Administrator, specifying the number of full shares of Common Stock to be purchased and tendering payment of the purchase price.  The 2020 Stock Plan permits payment to be made by cash, check, other shares of Common Stock, delivery of a properly executed exercise notice together with any other documentation as the Administrator and the participant’s broker (if applicable) may require to effect an exercise of the option and delivery to the Company of the sale or other proceeds (as permitted by applicable law) required to pay the exercise price, withholding shares otherwise issuable in connection with the exercise of the option, such

other consideration and method of payment authorized by the Administrator in its discretion or permitted by the award agreement, or any combination thereof.

Restricted stock awards may be granted to employees, directors or consultants of the Company at any time and from time to time as determined by the Administrator in its discretion.  Each restricted stock grant will be evidenced by an award agreement that will specify the number of shares granted and such other terms and conditions as the Administrator will determine in accordance with the terms of the 2020 Stock Plan.

Subject to the terms of the 2020 Stock Plan, the Administrator will have complete discretion to determine (i) the number of shares subject to a restricted stock award granted to any participant, and (ii) any vesting conditions that must be satisfied.  The Administrator may provide that awards of restricted stock earn dividends paid with respect to such shares.  Any such dividends will be accumulated and credited to an account for the participant, with interest in the Administrator’s discretion, and will be subject to the same terms and conditions, including vesting restrictions, as the award with respect to which the dividends are credited.  To the extent an award of restricted stock is forfeited in whole or in part, any accrued dividends with respect to such award will be forfeited at the same time and to the same extent as such award.  No dividends or accrued interest, if any, earned with respect to an award of restricted stock may be paid before the underlying award vests.

Restricted stock units may be granted to employees, directors or consultants of the Company at any time and from time to time as determined by the Administrator.  Each restricted stock unit grant will be evidenced by an award agreement that will specify such terms and conditions as the Administrator will determine in accordance with the terms of the 2020 Stock Plan.

Restricted stock units result in a payment to a participant only if the vesting criteria the Administrator establishes are satisfied.  The Administrator may set vesting criteria based on the achievement of Company-wide, business unit, or individual goals (including continued employment), or any other basis determined by the Administrator in its discretion.  The restricted stock units will vest at a rate determined by the Administrator.  Upon satisfying the applicable vesting criteria, the participant will be entitled to a payout as specified in the award agreement or as otherwise determined by the Administrator.  The Administrator, in its sole discretion, may pay earned restricted stock units in shares, cash, or a combination thereof.  On the date set forth in, and otherwise subject to the terms and conditions of the award agreement, or as provided by the Administrator, all unearned restricted stock units will be terminated and forfeited to the Company.  Additionally, the Administrator is authorized to grant participants dividend equivalents based on the dividends declared on shares that are subject to any outstanding restricted stock unit.  Any such dividend equivalents will be accumulated and credited to an account for the participant, with interest in the Administrator’s discretion, and will be subject to the same terms and conditions, including vesting restrictions, as the award with respect to which the dividend equivalents are credited.  To the extent an award of restricted stock units is forfeited in whole or in part, any accrued dividend equivalents with respect to such award will be forfeited at the same time and to the same extent as such award.  No dividend equivalents or accrued interest, if any, earned with respect to restricted stock units may be paid before the underlying award vests.

SARs may be granted to employees, directors or consultants of the Company at any time and from time to time as determined by the Administrator in its discretion.  Each SAR grant will be evidenced by an award agreement that will specify the exercise price, the term of the SAR, the conditions of exercise, and such other terms and conditions as the Administrator will determine in accordance with the terms of the 2020 Stock Plan.

The Administrator will have discretion to determine the terms and conditions of SARs granted under the 2020 Stock Plan; provided that no SAR may have a term of more than 10 years from the date of grant and that the exercise price of a SAR may not have an exercise price below 100% of the fair market value of the Common Stock on the grant date.  No SAR can be exercised by any person after its expiration.

Upon exercise of a SAR, the holder of the SAR will be entitled to receive payment from us in an amount determined by multiplying (i) the difference between the fair market value of a share on the date of exercise over the exercise price, times (ii) the number of shares with respect to which the SAR is exercised.

At the discretion of the Administrator and as set forth in the applicable award agreement, payment to the holder of a SAR may be in cash, shares of Common Stock or a combination thereof.

Performance units and performance shares may be granted to employees, directors or consultants of the Company at any time and from time to time, as determined by the Administrator in its sole discretion.  The Administrator will have complete discretion in determining the number of performance units/shares granted to each participant.  The Administrator may provide that awards of performance shares and performance units earn dividends or dividend equivalents, as applicable, and accrued interest in its discretion.  To the extent an award of performance units or performance shares is terminated, cancelled or forfeited in whole or in part, due to failure to meet performance conditions or otherwise, any dividends, dividend equivalents and accrued interest will be terminated, cancelled or forfeited at the same time and to the same extent as such award. No dividends, dividend equivalents or accrued interest, if any, earned with respect to a performance unit award or a performance share award may be paid before the underlying award vests.

The Administrator will set performance objectives or other vesting provisions (including, without limitation, continued status as a service provider to the Company) in its discretion which, depending on the extent to which they are met, will determine the number or value of performance units or performance shares that will be paid out.  Each award of performance units and performance shares will be evidenced by an award agreement that will specify the time period during which the performance objectives or other vesting provisions must be met (the “performance period”), vesting period and such other terms and conditions as the Administrator will determine in its discretion in accordance with the terms of the 2020 Stock Plan.  The Administrator may set performance objectives based upon the achievement of Company-wide, divisional, or individual goals, or any other basis determined by the Administrator in its discretion.

After the applicable performance period has ended, the holder of performance units or performance shares will be entitled to receive a payout of the number of performance units or performance shares earned by the participant over the performance period, to be determined as a function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved.  The Administrator may pay earned performance units and performance shares in the form of cash, in shares, or in a combination thereof.  After the grant of performance units or performance shares, the Administrator may reduce or waive any performance objectives or other vesting provisions for such performance unit or performance share.

On the date set forth in, and otherwise subject to the terms and conditions of, the award agreement, or as otherwise provided by the Administrator, all unearned or unvested performance units and performance shares will be forfeited to the Company.

The 2020 Stock Plan gives the Administrator the authority to vary the terms of the individual award agreements.  Under the 2020 Stock Plan, unvested awards granted will generally be forfeited or expire upon a participant’s termination of employment unless the Committee exercises its discretion to modify the time at which stock options and SARs may be exercised or any restrictions will lapse or be removed or waived, notwithstanding any provision of the 2020 Stock Plan to the contrary.  Generally, with respect to stock options and SARs, if a participant ceases to provide ongoing service as an employee, director or consultant for any reason other than death or disability or termination for cause, then the participant will generally have the right to exercise his or her outstanding options and SARs for three (3) months after the date of termination, but only to the extent that the participant was entitled to exercise such option or SAR at the date of such termination.  If such termination is due to death or disability, the participant (or the participant’s legal representative) will generally have the right to exercise any existing unexercised option or SAR at any time within twelve (12) months following the termination date, but only to the extent that the participant was entitled to exercise such option or SAR at the date of such termination.  In no event will an option or SAR be exercisable beyond its term.  In the event of a participant’s termination for cause, then the participant’s options and/or SARs, whether vested or unvested, will immediately be forfeited upon termination.

A participant’s rights with respect to any award granted under the 2020 Stock Plan shall in all events be subject to (i) any right that the Company may have under any clawback or recoupment policy as may be in effect from time to time or any other clawback or recoupment agreement or arrangement applicable to a participant; or (ii) any right or obligation that the Company may have regarding the recoupment of incentive-based compensation under Exchange Act Section 10D and any applicable rules and regulations issued by the SEC.

Awards are intended to operate in such a manner that they are either exempt from the application of, or comply with, the requirements of Code Section 409A such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A, except as otherwise determined in the sole discretion of the Administrator, provided that no warranty of such exemption or compliance is made.  The 2020 Stock Plan and each award Agreement under the 2020 Stock Plan is intended to meet the requirements of Code Section 409A and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Administrator.

Unless determined otherwise by the Administrator, an award granted under the 2020 Stock Plan may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution or as otherwise permitted in the 2020 Stock Plan and may be exercised, during the lifetime of the participant, only by the participant.  If the Administrator makes an award granted under the 2020 Stock Plan transferable, such award shall be subject to the terms of the 2020 Stock Plan and the award agreement and will contain such additional terms and conditions as the Administrator deems appropriate.  Notwithstanding the foregoing, under no circumstance may unvested or unexercised awards be transferred for value or consideration.

In the event that any dividend (other than ordinary cash dividends) or other distribution (whether in the form of cash, shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of shares or other securities of the Company, or other change in the corporate structure of the Company affecting the shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the 2020 Stock Plan, will adjust, in such equitable manner as the Administrator deems appropriate, the number and class of shares issuable under the 2020 Stock Plan and/or the number, class and, if applicable, exercise price of shares subject to each outstanding award.

In the event of a liquidation or dissolution, the Administrator will notify each participant as soon as practicable prior to the effective date of such proposed transaction.  To the extent that an award has not been previously exercised (with respect to options and SARs) or vested (with respect to other awards), an award will terminate immediately prior to the consummation of such proposed action.

In the event of a Change-in-Control, notwithstanding any other provision of the 2020 Stock Plan or an award, each outstanding award shall be treated as the Administrator determines in its discretion without a participant’s consent, including, without limitation, that awards may be assumed, or substantially equivalent awards may be substituted, by the acquiring or succeeding entity or an affiliate thereof (a “successor”) with appropriate adjustments as to the number and kind of shares and prices; upon written notice to a participant, the participant’s awards will terminate immediately prior to the consummation of such Change-in-Control; awards will vest and become exercisable, realizable, or payable, or restrictions applicable to an award will lapse,

in whole or in part, prior to or upon consummation of such Change-in-Control, and, to the extent the Administrator determines, terminate upon the effectiveness of such Change-in-Control; awards will terminate in exchange for an amount of cash and/or property, if any, equal to the amount (if any) that would have been attained upon the exercise of such award or realization of the participant’s rights as of the date of the occurrence of the transaction; the replacement of such award with other rights or property selected by the Administrator in its sole discretion; or any combination of the foregoing.

In the event of a Change-in-Control, with respect to awards held by participants other than outside directors, if the successor elects not to assume or substitute an Award, as determined by the Administrator in accordance with the terms of the 2020 Stock Plan, the participant will fully vest in and have the right to exercise all of his or her outstanding stock options and SARs; all restrictions on restricted stock and restricted stock units will lapse; and, with respect to performance units, performance shares and any other awards subject to performance-based vesting conditions, all performance goals or other vesting conditions will be deemed achieved at target.

With respect to awards granted to an outside director that are assumed or substituted by a successor, if, on the date of or following such assumption or substitution, the participant’s status as a Director or a director of the successor, as applicable, is terminated other than upon a voluntary resignation by the participant (unless such resignation is at the request of the successor), then the participant will fully vest in and have the right to exercise options and/or SARs as to all of the shares underlying such award for a period of one year following such termination (but in no event later than the expiration of the term of such option as set forth in the award agreement); all restrictions on restricted stock and restricted stock units will lapse; and, with respect to performance units, performance shares and any other awards subject to performance-based vesting conditions, all performance goals or other vesting conditions will be deemed achieved at target.

The 2020 Stock Plan will become effective on the date approved by stockholders and will have a ten-year term commencing on that date, subject to any earlier termination by the Board.  The Board may amend, alter, suspend or terminate the 2020 Stock Plan or any part thereof from time to time, except that stockholder approval will be required for any amendment to the 2020 Stock Plan to the extent required by any applicable laws, regulations of the securities exchange on which the shares are then listed, or otherwise in the Board’s discretion.  The Administrator may waive any conditions or restrictions of or amend, modify or terminate outstanding awards under the 2020 Stock Plan notwithstanding any plan provision to the contrary. As a general matter, no amendment, alteration, suspension or termination of the 2020 Stock Plan or an outstanding award may impair the rights of any participant under any then outstanding award without the participant’s written consent, with the exception of certain compliance amendments.

Future grants under the 2020 Stock Plan will be made at the discretion of the Administrator and, accordingly, are not yet determinable.  In addition, the value of the awards granted under the 2020 Stock Plan will depend on a number of factors, including the fair market value of our common stock on future dates and the exercise decisions made by the participants.  Consequently, it is not possible to determine the benefits that might be received by participants receiving discretionary grants under the Plan.

Nanometrics granted awards under the Nanometrics 2005 Stock Plan and Rudolph granted awards under the Rudolph 2018 Stock Plan in 2019 each to the named executive officers, outside directors and to other eligible employees.  The 2019 grants to our named executive officers and to our outside directors are reflected in the 2019 Grants of Plan-Based Awards Table and the 2019 Director Compensation Table, respectively, in this proxy statement.  The closing market price of a share of Company common stock as reported on the New York Stock Exchange on December 31, 2019 was $36.54.

The following table sets forth, as of December 31, 2019, certain information related to our equity compensation plans.

No taxable income is reportable by the recipient when a nonstatutory stock option with an exercise price equal to the fair market value of the underlying stock on the date of grant is granted to a participant.  Upon exercise, the participant will recognize ordinary income in an amount equal to the excess of the fair market value (on the exercise date) of the shares purchased over the exercise price of the option.  Any taxable income recognized in connection with an option exercise by an employee of the Company is subject to tax withholding by the Company.  Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.

No taxable income is generally reportable by the recipient when an incentive stock option is granted or exercised.  If the participant exercises the option and then later sells or otherwise disposes of the shares more than two years after the grant date and more than one year after the exercise date, the difference between the sale price and the exercise price will be taxed as capital gain or loss.  If the participant exercises the option and then later sells or otherwise disposes of the shares before the end of the two or one year holding periods described above, he or she generally will have ordinary income at the time of the sale equal to the fair market value of the shares on the exercise date (or the sale price, if less) minus the exercise price of the option.

No taxable income is reportable by the recipient when a stock appreciation right with an exercise price equal to the fair market value of the underlying stock on the date of grant is granted to a participant.  Upon exercise, the participant will recognize ordinary income in an amount equal to the amount of cash received and the fair market value of any shares received.  Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.

A participant generally will not have taxable income at the time an award of restricted stock or restricted stock units is granted.  Instead, with respect to restricted stock, he or she will recognize ordinary income in the first taxable year in which the restricted shares are no longer subject to substantial risk of forfeiture in an amount equal to the excess of the fair market value of the shares on the vesting date over the amount, if any, the participant paid for the shares.  However, the recipient of a restricted stock award may elect to recognize income at the time he or she receives the award in an amount equal to the fair market value of the shares underlying the award (less any cash paid for the shares) on the date the award is granted. Upon settlement of a restricted stock unit, a participant will recognize ordinary income an amount equal to the fair market value of the shares received or, if the restricted stock unit is paid in cash, the amount payable.

A participant generally will not have taxable income at the time an award of performance units or performance shares is granted.  Instead, with respect to performance shares, he or she will recognize ordinary income in the first taxable year in which his or her interest in the shares underlying the award are no longer subject to substantial risk of forfeiture. Upon settlement of a performance unit, a participant will recognize ordinary income an amount equal to the fair market value of the shares received or, if the performance units are paid in cash, the amount payable.

The Company generally will be entitled to a tax deduction in connection with an award under the 2020 Stock Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonstatutory stock option).  Code Section 162(m) places a $1 million limit on the deductibility of compensation paid to certain covered employees.  Based on recent legislation effective for tax years commencing after December 31, 2017, this limit on deductibility applies to the Company’s chief executive officer, its chief financial officer, its three most highly compensated executive officers included as named executive officers in the proxy statement, and any individual who was a named executive officer for fiscal 2017 or thereafter.  In addition, the legislation eliminated the exception to the limit on deductibility for certain performance-based compensation.

THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON THE PARTICIPANT AND THE COMPANY AS OF THE DATE HEREOF WITH RESPECT TO AWARDS UNDER THE 2020 STOCK PLAN AND DOES NOT PURPORT TO BE COMPLETE, AND REFERENCE SHOULD BE MADE TO THE APPLICABLE PROVISIONS OF THE INTERNAL REVENUE CODE. IN ADDITION, THIS SUMMARY DOES NOT DISCUSS THE TAX CONSEQUENCES OF A PARTICIPANT’S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE. PARTICIPANTS SHOULD CONSULT THEIR OWN TAX ADVISORS.

The affirmative vote, in person or by proxy, of a majority of the shares present or represented at the meeting and entitled to vote will be required to approve the adoption of the 2020 Stock Plan.

PROPOSAL 4

APPROVAL OF THE ONTO INNOVATION INC.

2020 EMPLOYEE STOCK PURCHASE PLAN

The Board of Directors is requesting that our stockholders approve a new employee stock purchase plan, the Onto Innovation Inc. 2020 Employee Stock Purchase Plan (the “2020 ESPP”). The Board has adopted the 2020 ESPP, subject to stockholder approval at the Annual Meeting. If approved by our stockholders, the 2020 ESPP will become effective as of July 1, 2020 and will expire ten (10) years from such date, unless terminated earlier. The 2020 ESPP is intended to replace the Nanometrics 2003 Employee Stock Purchase Plan (the “2003 ESPP”). If the stockholders approve this Proposal 4, the 2003 ESPP will expire after the final share purchase is made on or about June 30, 2020. The Board has determined that it remains in the best interests of the Company and its stockholders to have an employee stock purchase plan and is asking the Company’s stockholders to approve the 2020 ESPP.

The following is a summary of the principal features of the 2020 ESPP and its operation. The summary is qualified in its entirety by reference to the 2020 ESPP as set forth in Appendix B.

The 2020 ESPP was adopted by the Board in March 2020, subject to stockholder approval at the Annual Meeting. The purpose of the 2020 ESPP is to provide eligible employees with an opportunity to purchase shares of Common Stock through payroll deductions, to enhance the employees’ sense of participation in the Company and its participating subsidiaries, and to provide an incentive for continued employment.

If the Company’s stockholders approve this proposal, the number of shares of the Company’s Common Stock to be reserved for issuance under the 2020 ESPP shall be 1,500,000, as may be adjusted for stock splits, stock dividends or other changes in capitalization, mergers, reorganizations and other transactions in accordance with plan terms.

The 2020 ESPP will be administered by the Board or a committee of members of the Board (in either case, the “Administrator”). Subject to the provisions of the 2020 ESPP, all questions of interpretation or application of the 2020 ESPP are determined by the Administrator and its decisions are final and binding upon all participants.

Each of the Company’s (or the Company’s participating subsidiaries’) employees who is customarily employed for at least twenty (20) hours per week and more than five (5) months in a calendar year by the Company or a designated subsidiary, (provided that, in certain jurisdictions outside the United States employees employed for less than twenty (20) hours per week or less than five (5) months in a calendar year if so required by local laws, as determined by the Company), on the first trading day of the applicable offering period is eligible to participate in the 2020 ESPP. As of March 13, 2020, there were approximately

1,300 employees eligible to participate under the terms of the 2020 ESPP. Notwithstanding the foregoing, no employee will be granted an option under the 2020 ESPP (i) to the extent that, immediately after the grant, such employee would own 5% or more of the total combined voting power of all classes of the Company’s capital stock or the capital stock of any Company parent or subsidiary, or (ii) to the extent that his or her rights to purchase stock under all of the Company’s employee stock purchase plans accrues at a rate which exceeds $25,000 worth of stock (determined at the fair market value of the shares at the time such option is granted) for each calendar year.

Each offering period under the 2020 ESPP will have a duration of approximately six (6) months, commencing on the first trading day on or after January 1^st and July 1^st of each year of the 2020 ESPP and terminating on the last trading day of the applicable period ending six (6) months later. On the last trading day of each offering period (the exercise date), shares of Common Stock may be purchased on behalf of the participant in accordance with the terms of the 2020 ESPP.

Eligible employees may participate in the 2020 ESPP by delivering a subscription agreement as provided by the Company prior to the beginning of an offering period authorizing payroll deductions pursuant to the 2020 ESPP. Such payroll deductions may not be less than 1% or exceed 15% of a participant’s compensation during the offering.

Under the terms of the 2020 ESPP, the purchase price of shares under the 2020 ESPP is 85% of the fair market value of a share of Common Stock on the exercise date, as may be adjusted in accordance with plan terms.

In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, each outstanding option under the 2020 ESPP may be assumed or an equivalent option will be substituted by the successor corporation or a parent or subsidiary of such successor corporation. In the event the successor corporation refuses to assume or substitute for the options, any offering period then in progress will be shortened by setting a new exercise date on which such offering period will end. The new exercise date will be prior to the proposed sale or merger. The Administrator will notify each participant in writing at least ten (10) business days prior to the new exercise date that the purchase date for the participant’s option has been changed to the new exercise date and that the participant’s option will be exercised automatically on the new exercise date unless the participant withdraws from the 2020 ESPP prior to such date.

The Administrator may amend, terminate or suspend the 2020 ESPP at any time and for any reason. Generally, no such termination can adversely affect options previously granted and stockholder approval will be sought for certain changes as required by applicable law.

Upon its approval by the stockholders, the 2020 ESPP will continue until the earlier to occur of (i) the termination of the 2020 ESPP by the Board, or (ii) July 1, 2030 (the date which is ten (10) years from the effective date of the 2020 ESPP).

The federal income tax consequences of an employee’s purchases under the 2020 ESPP will vary. The following discussion is only a summary of the general federal income tax rules applicable to the 2020 ESPP.  Employees should consult their own tax advisors since a taxpayer’s particular situation may be such that some variation of the rules described below will apply.

The 2020 ESPP and the right of participants to make purchases thereunder are intended to qualify under the provisions of Section 421 and 423 of the Code. Under those provisions, no income will be taxable to a participant at the time of grant of the option or purchase of shares.  However, a participant may become liable for tax upon the dispositions of shares acquired under the 2020 ESPP (or if he or she dies holding such shares), and the tax consequences will depend on how long a participant has held the shares prior to disposition.

If the shares are disposed of at least one (1) year after the shares were acquired under the 2020 ESPP and at least two (2) years after the first day of the offering period to which the shares relate, or if the employee dies while holding the shares, the following tax consequences will apply.  The lesser of (a) the excess of fair market value of the shares at the time of such disposition over

the purchase price of the shares (the “option price”) or (b) the excess of the fair market value of the shares at the time the option was granted over the option price will be treated as ordinary income to the participant. Any further gain upon disposition generally will be taxed at long-term capital gain rates. If the shares are sold and the sales price is less than the option price, there is no ordinary income and the participant has a long-term capital loss equal to the difference. No deduction in respect of the disposition of such shares will be allowed to the Company.

If the shares are sold or disposed of (including by way of gift) before the expiration of either the two-year or the one-year holding period described above, the following tax consequences will apply. The amount by which the fair market value of the shares on the date the option is exercised (which is the last trading day of the offering period and which is hereafter referred to as the “termination date”) exceeds the option price will be treated as ordinary income to the participant. This excess will constitute ordinary income in the year of sale or other disposition even if no gain is realized on the sale or a gratuitous transfer of the shares is made. The balance of any gain will be treated as capital gain and will qualify for long-term capital gain treatment if the shares have been held for more than one (1) year following the exercise of the option. Even if the shares are sold for less than their fair market value on the termination date, the same amount of ordinary income is attributed to a participant and a capital loss is allowed equal to the difference between the sales price and the value of such shares on such termination date. The Company, in the event of an early disposition, will be allowed a deduction for federal income tax purposes equal to the ordinary income realized by the disposing employee.

THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON THE PARTICIPANT AND THE COMPANY AS OF THE DATE HEREOF WITH RESPECT TO THE 2020 ESPP AND DOES NOT PURPORT TO BE COMPLETE, AND REFERENCE SHOULD BE MADE TO THE APPLICABLE PROVISIONS OF THE INTERNAL REVENUE CODE.  IN ADDITION, THIS SUMMARY DOES NOT DISCUSS THE TAX CONSEQUENCES OF A PARTICIPANT’S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE.

The affirmative vote, in person or by proxy, of a majority of the shares present or represented at the meeting and entitled to vote will be required to approve the 2020 ESPP.

The Board recommends a vote “FOR” the adoption of the

Onto Innovation Inc. 2020 Employee Stock Purchase Plan.

PROPOSAL 5

RATIFICATION OF APPOINTMENT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

Although ratification by stockholders is not required by law, the Board of Directors is submitting the Audit Committee’s selection of Ernst & Young LLP (“E&Y”) as the Company’s independent registered public accounting firm for fiscal year 20202021 for ratification as a matter of good corporate governance and recommends that the stockholders vote for ratification of such appointment. In the event of a negative vote on such ratification, the Board of Directors will reconsider its selection. Even if the selection is ratified, the Audit Committee may appoint a new independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change would be in the best interests of the Company and its stockholders.  E&Y has indicated that representatives of E&Y, the independent registered public accounting firm presented herein, will be in attendance at the Annual Meeting. Such representatives will have the opportunity to make a statement, if they desire to do so, and to respond to appropriate questions.

Prior to the 2019 Merger, E&Y was the independent registered public accounting firm of Rudolph, and PricewaterhouseCoopers LLP (“PwC”) was the independent registered accounting firm of Nanometrics.

As previously reported on our Current Report on Form 8-K filed with the SEC on November 13, 2019, PwC resigned on November 11, 2019, and E&Y was engaged by the Company as its independent registered public accounting firm for the year ending December 31, 2019. The decision to change the independent registered accounting firm was approved by the Audit Committee.

PwC’s reports on Nanometrics’ financial statements for the fiscal years ended December 29, 2018 and December 30, 2017 contained no adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principle.

During the fiscal years ended December 29, 2018 and December 30, 2017 and the subsequent interim period through November 11, 2019, there have been no disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) with PwC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PwC, would have caused PwC to make reference thereto in their reports on the financial statements for such years.

During the fiscal years ended December 29, 2018 and December 30, 2017 and subsequent interim period through November 11, 2019, there have been no reportable events (as defined in S-K 304(a)(1)(v)), except that as disclosed in the Company's Quarterly Report on Form 10-Q for the quarterly periods ended April 1, 2017, July 1, 2017 and September 30, 2017 (the “2017 Form 10-Qs”), management concluded that a material weakness existed related to ineffective controls over the existence of inventories subject to the cycle count programs.  The material weakness was remediated and described in Item 9A of the Company’s annual report on Form 10-K for the year ended December 30, 2017.

The Company requested that PwC furnish it with a letter addressed to the SEC stating whether or not it agrees with the above statements.  A copy of the letter from PwC, dated November 12, 2019, is filed as Exhibit 16.1 to such Form 8-K.

During the fiscal years ended December 29, 2018 and December 30, 2017, and the subsequent interim periods through November 11, 2019, neither Onto Innovation nor anyone on its behalf consulted with E&Y, regarding either: (i) the application of accounting principles to a specific transaction, completed or proposed, or the type of audit opinion that might be rendered on Onto Innovation’s financial statements, and neither a written report nor oral advice was provided to Onto Innovation that EY concluded was an important factor considered by Onto Innovation in reaching a decision as to any accounting, auditing or financial reporting issue, or (ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).

E&Y served as Rudolph’s independent registered public accounting firm since March 2008, and was selected as the accounting firm for the Company after the Merger Date.Date and served in this role during fiscal 2020. During this time, the firm has demonstrated:

Audit fees for the fiscal year ended December 31, 201826, 2020 were for the audit of Nanometrics’the Company’s annual financial statements including management’s assessment of internal controls over financial reporting, the review of Nanometrics’the Company’s quarterly financial statements and statutory and regulatory audits, consents and other services. These fees may include services that are normally provided by the independent registered public accounting firm in connection with regulatory filings or engagements including any comfort letters and consents for financings and filings made with the SEC.

Audit fees for the year ended December 31, 2019 were for the aggregate fees billed for professional services rendered to the Company subsequent to the 2019 Merger and Nanometrics prior to the 2019 Merger for the audit of the annual financial statements and a review of financial statements included in the quarterly reports on Form 10-Q.  These fees may include services that are normally provided by the independent registered public accounting firm in connection with regulatory filings or engagements including any comfort letters and consents for financings and filings made with the SEC.

Audit related fees for the fiscal year ended December 26, 2020 were for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s annual financial statements and are not reported under “Audit Fees,” and consisted primarily of fees for employee benefit plan audits.  

Audit related fees paid to PwC for the fiscal year ended December 31, 20182019 were for professional services rendered to Nanometrics prior to the 2019 Merger that were reasonably related to the performance of the audit or review of Nanometrics’ financial statements. ThisAudit related fees paid to E&Y for the fiscal year ended December 31, 2019 were for professional services rendered to Rudolph prior to the 2019 Merger and to the Company after the 2019 Merger that were reasonably related to the performance of the audit or review of Nanometrics’ financial statements. In both instances, this category includes fees related to assistance in financial due diligence related to the 2019 Merger and general assistance with implementation of SEC requirements.

Tax fees may include fees for tax compliance, tax planning and tax advice. Tax fees for the yearfiscal years ended December 26, 2020 and December 31, 2019 were for tax advice.  

All other fees would consist of fees for products and services other than the services described above. For the fiscal year ended December 26, 2020, all other fees included payments for an assessment of key segregation of duties related considerations and risks in the SAP environment after the hyper care period post implementation, as well as payments for an accounting and auditing information tool.

For the fiscal year ended December 31, 2019, all other fees included payments for an accounting and auditing information tool.

Negotiation of the annual independent registered public accounting firm fees is the responsibility of the Audit Committee with the support of the Company’s CFO.  All of the Ernst & Young LLP fees listed in the chart above for 2020 were pre-approved by the Audit Committee of the Company, which concluded that the provision of such services by Ernst & Young LLP was compatible with the maintenance of that firm’s independence in the conduct of its audit functions.  All of the Ernst & Young LLP fees listed in the chart above for 2019 were pre-approved by the Audit Committee of Rudolph prior to the 2019 Merger and, after the Merger Date, the Company, each of which concluded that the provisionsprovision of such services by Ernst & Young LLP werewas compatible with the maintenance of that firm’s independence in the conduct of its audit functions. All of the PricewaterhouseCoopers LLP fees listed above were pre-approved by the Audit Committee of Nanometrics prior to the 2019 Merger, each of which concluded that the provisionsprovision of such services by PricewaterhouseCoopers LLP werewas compatible with the maintenance of that firm’s independence in the conduct of its audit functions.

The affirmative vote, in person or by proxy, of a majority of the shares present or represented at the meeting and entitled to vote will be required to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 26, 2020.January 1, 2022.

AUDIT COMMITTEE REPORT

The following is the Audit Committee’s report submitted to the Board of Directors for the fiscal year ended December 31, 2019.26, 2020.

As noted in the Company’sAudit Committee’s charter, management is responsible for the Company’s internal controls and the financial reporting process. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and for issuing a report thereon. Additionally, the independent registered public accounting firm is responsible for performing an independent audit of the Company’s internal controls over financial reporting and for issuing a report thereon. The Committee’s responsibility is to monitor and oversee these processes.

In this context, the Audit Committee of the Board of Directors has:

Based on the foregoing review and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.26, 2020.

EXECUTIVE OFFICER COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

On the Merger Date, Nanometrics and Rudolph combined to create Onto Innovation Inc. As Nanometrics was the legal acquirer of Rudolph, the compensation of Nanometrics executives for periods prior to and after the 2019 Merger is discussed and analyzed. The compensation of former Rudolph executives who are now executives of Onto Innovation is discussed and analyzed for periods subsequent to the 2019 Merger. Therefore, this CD&A primarily addresses legacy Nanometrics executive compensation programs and the decisions made by the legacy Nanometrics Compensation Committee, and, where necessary, legacy Rudolph executive compensation programs and the decisions made by the legacy Rudolph Compensation Committee. We also provide a discussion and analysis of the combined company executive compensation programs going forward, which reflect the decisions made by the Company’s Compensation Committee.

This Compensation Discussion and Analysis describes our compensation philosophy, process, plans and practices for our executive officers and contains a discussion of the material elements of compensation awarded to, earned by, or paid to the Company’s “Named Executive Officers” listed in the table below (“NEOs”), including:

Based on the foregoing, the Company’s NEOs for 20192020 are:

EXECUTIVE SUMMARY

We are a global leader in process control, combining global scale with an expanded portfolio of leading-edge technologies that include:include unpatterned wafer quality;quality, 3D metrology spanning the chip from nanometer-scale transistors to micron-level die-

interconnects;die-interconnects, macro defect inspection of wafers and packages;packages, metal interconnect composition;composition, factory analytics;analytics, and lithography for advanced semiconductor packaging. We also provide services relating to the maintenance and repair of our products, installation services and training. Semiconductor capital equipment is our primary served market.

On October 25, 2019, Nanometrics Incorporated and Rudolph Technologies, Inc. merged to form Onto Innovation Inc.  Onto Innovation accounts for the 2019 Merger as a reverse acquisition using the acquisition method of accounting in accordance with generally accepted accounting principles, with Rudolph being treated as the acquiring entity for accounting purposes. Because Rudolph is treated as the accounting acquirer in the 2019 Merger, the financial statements filed with the SEC in Onto Innovation’s Form 10-K include the financial results of Rudolph for all periods presented and the financial results of the former

Nanometrics for the periods on or after October 26, 2019.  Based on the foregoing, Onto Innovation reported revenue of $305.9 million as of year-end 2019.2019 as reflected in the table below.

The following reflects some of our financial accomplishments in fiscal 2020 as compared to fiscal 2019:

Our Board recognizes the fundamental interest our stockholders have in the compensation of our executive officers.  At the Nanometrics 20192020 Annual Meeting, 98%96.8% of stockholders present at the meeting voted in favor of itsthe advisory vote on executive compensation.  Similarly, at the Rudolph 2019 Annual Meeting, 97% of stockholders present at the meeting voted in favor of its advisory vote on executiveofficer compensation.

COMPENSATION PROGRAM OBJECTIVES, DESIGN AND PRACTICES

Rewarding continuous improvement in financial and operating results and the creation of stockholder value are key attributes of our compensation philosophy, which serves as the framework for the Company’s executive officer compensation program.  The Compensation Committee of the Board of Directors of the Company (referred to as the “Compensation Committee”), acts on behalf of the Board of Directors and, by extension, on behalf of our stockholders, to establish, implement and continually monitor adherence to our compensation philosophy. Accordingly, the Compensation Committee has developed a set of core objectives and principles that it has used to develop the executive officer compensation program. The specific objectives of our executive officer compensation program are to:

Consistent with the foregoing, the Compensation Committee believes that the most effective executive officer compensation program is one that is designed to reward the achievement of specific strategic and operating goals of the Company on both an annual and a long-term basis, and which aligns our executives’executive officers’ interests with those of our stockholders.  The Compensation Committee evaluates both performance and compensation to ensure that the Company maintains its ability to attract and retain superior employees in key positions.  Based on that evaluation, the Compensation Committee designs the compensation provided to key employees to remain competitive relative towith the compensation paid to similarly situated executivesexecutive officers at competitor companies. The Compensation Committee believes executive officer compensation packages provided by the Company to its executives,executive officers, including the NEOs, should include base salary, annual cash incentive opportunities, select perquisites and stock-based compensation, including equity incentive opportunities which reward performance as measured against pre-established goals.

The following principles support the objectives and design of the compensation program: