Response:
As you know, on December 5, 2018, we announced that our Board of Directors had accepted the resignation of our former CEO and appointed Tim Archer as
President and CEO and a member of the Board of Directors. This occurred as an independent committee of our Board investigated allegations of misconduct in the workplace and conduct inconsistent with our core values. No financial misconduct was
involved, nor were there issues relating to the integrity of the Companys financial systems or controls.
At this sensitive time, the independent
members of the Board believed that consistency and stability in the Companys leadership was key to maintaining internal and external stakeholder confidence. The business outlook at the time indicated that the Company faced a challenging
environment in the semiconductor equipment industry in 2019. In addition, the independent members of the Board believed that intense competition for proven technology company CEOs and CFOs heightened retention risks for the Companys
leadership.
As a result, the independent members of the Board immediately implemented the Companys existing CEO succession plan. The independent
members of the Board believed not only that Mr. Archer was the right person for the CEO role, but that retaining and promoting him into the CEO role would provide important stability for our stockholders and other stakeholders, including
employees, customers and suppliers.
The independent members of the Board also took steps to retain the Companys CFO, Douglas Bettinger and, in the
absence of a chief operating officer, asked him to assume additional operational responsibilities. The independent members of the Board considered Mr. Bettingers retention to be important not only to support Mr. Archer in his new
role, but also to provide continuity at the Companys interface with its stockholders, and to send a clear message of stability to the Companys internal and external stakeholders.
Special equity awards were granted to Messrs. Archer and Bettinger. The amounts and vesting schedules for the awards were determined in consultation with the
Compensation Committees compensation consultant, and are consistent with prevailing market practice for awards of this type, including the four-year vesting schedule.
The independent members of the Board granted Mr. Archer a $5,000,000 equity award, consisting of 50% service-based restricted stock units (RSUs) and 50%
stock options. The award had a four-year vesting schedule, a year longer than the Companys normal three-year vesting schedule for long-term incentive awards, to further incentivize retention. This special award was made in recognition of
Mr. Archers promotion and of the importance to retain Mr. Archers services at a time of unanticipated CEO
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Lam Research Corp.
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