LRCX Lam Research Corporation

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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LAM RESEARCH CORPORATION

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September 28, 2022

Dear Lam Research Stockholders,

We cordially invite you to attend the Lam Research Corporation 2022 Annual Meeting of Stockholders. The annual meeting will be held on Tuesday, November 8, 2022, at 9:30 a.m. Pacific Standard Time. This year’s annual meeting will be a virtual meeting. You may attend the annual meeting, vote, and submit your questions during the live webcast of the annual meeting by visiting virtualshareholdermeeting.com/LRCX2022 and entering the 16-digit control number included in our Notice of Internet Availability or on your proxy card.

At this year’s annual meeting, stockholders will be asked to elect the nine nominees named in the attached proxy statement as directors to serve until the next annual meeting of stockholders, and until their respective successors are elected and qualified; to cast an advisory vote to approve our named executive officer compensation, or “Say on Pay”; and to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2023. The Board of Directors recommends that you vote in favor of each director nominee and each of these proposals. Management will not provide a business update during this meeting; please refer to our latest quarterly earnings report for our most recently-provided outlook.

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

Sincerely yours,

Abhijit Y. Talwalkar
Chairman of the Board

 

Lam Research Corporation

 

To assist you in reviewing the proposals to be acted upon at the annual meeting, we call your attention to the following summarized information about the Company, the proposals and voting recommendations, the Company’s director nominees, highlights of the directors’ key qualifications, skills and experiences, board composition, corporate governance, executive compensation, and environmental, social and governance (“ESG”) matters. For more complete information about these topics, please review the complete proxy statement before voting. We also encourage you to read our latest annual report on Form 10-K, which is available at investor.lamresearch.com, and our latest ESG report, which is available at lamresearch.com/company/environmental-social-governance. The content of any website or report referred to in this proxy statement is not a part of nor incorporated by reference in this proxy statement unless expressly noted.

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

This proxy statement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include any statements that are not statements of historical fact, including statements regarding our ESG plans and goals. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the expectations expressed, including the risks and uncertainties described in our filings with the U.S. Securities and Exchange Commission (“SEC”), including specifically the Risk Factors described in our annual report on Form 10-K and our quarterly reports on Form 10-Q. You should not place undue reliance on forward-looking statements. We undertake no obligation to update any forward-looking statements.

About Lam Research Corporation

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

Our customer base includes leading semiconductor memory, foundry, and integrated device manufacturers that make products such as non-volatile memory, dynamic random-access memory (DRAM), and logic devices. Their continued success is part of our commitment to driving semiconductor breakthroughs that define the next generation. Our core technical competency is integrating hardware, process, materials, software, and process control enabling results on the wafer.

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

Demand from cloud computing, the Internet of Things, or “IoT,” and other markets is driving the need for increasingly powerful and cost-efficient semiconductors. At the same time, there are growing technical challenges with traditional two-dimensional scaling. These trends are driving significant inflections in semiconductor manufacturing, such as the increasing importance of vertical scaling strategies like three-dimensional architectures as well as multiple patterning to enable shrinks.

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

Lam Research Corporation 2022 Proxy Statement 1

 

(1)

Independence determined in accordance with Nasdaq rules.

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(2)

Membership shown will continue through November 7, 2022, on which date certain membership changes will take effect. See “Governance Matters−Corporate Governance−Board Committees” for details.

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Lam Research Corporation 2022 Proxy Statement 3

 

 

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Figure 8. ESG Highlights

We have a responsibility to contribute to a better world. When we think beyond ourselves, we get better results, advance our industry, and empower progress. To that end, we strive to incorporate environmental, social and governance (“ESG”) considerations into everything we do−from our operations and workplace practices, to how we source our materials and design our products. Our ESG strategy is composed of six key pillars, which are described in greater detail beginning on page 19 and in our annual ESG report, available at lamresearch.com/company/environmental-social-governance. We have set goals aligned with our strategy; these goals are highlighted below, together with some of our progress to date in each area. We aim to achieve the majority of these goals by calendar year 2025, unless otherwise stated. In the table below, references to specific years are to calendar, not fiscal, years.

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Updated in 2021 to reflect change in methodology for measuring engagement benchmark.

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Updated in 2021 to clarify goal is at or below 0.4.

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Lam Research Corporation 2022 Proxy Statement 7

 

(1)

Includes shares subject to outstanding stock options that are now exercisable or will become exercisable within 60 days after September 9, 2022, as well as RSUs, that will vest within that time period, as follows:

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The terms of any outstanding stock options that are now exercisable or will become exercisable within 60 days after September 9, 2022, and RSUs that will vest within that time period, are reflected in “Figure 55. Outstanding Equity Awards at Fiscal Year 2022 Year-End,” except as described in the following sentences. Richard A. Gottscho, Ph.D., Ava M. Hahn and Scott G. Meikle, Ph.D. have options covering 6,122, 1,443 and 6,495 shares, respectively, which are unexercised and exercisable within 60 days of September 9, 2022. The grants for Drs. Gottscho and Meikle and Ms. Hahn have terms consistent with the terms reflected in “Figure 55. Outstanding Equity Awards at Fiscal Year 2022 Year-End.”

As discussed in “Governance Matters−Director Compensation” below, the non-employee directors receive an annual equity award as part of their compensation. These awards generally vest on October 31, 2022, subject to continued service on the board as of that date, with immediate delivery of the shares upon vesting. For 2022, Messrs. Ahmed, Brandt, Cannon, and Talwalkar; Mses. Lego, Mayer, Mehra and Varon; and Dr. Tsai each received awards of 377 RSUs.

(2)

All information regarding The Vanguard Group (“Vanguard”) is based solely on information disclosed in amendment number 10 to Schedule 13G filed by Vanguard with the SEC on February 10, 2022. According to the Schedule 13G filing, of the 11,504,998 shares of Lam common stock reported as beneficially owned by Vanguard as of December 31, 2021, Vanguard did not have sole voting power with respect to any shares, had shared voting power with respect to 239,081 shares, had sole dispositive power with respect to 10,919,612 shares, and had shared dispositive power with respect to 585,386 shares of Lam common stock.

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(3)

All information regarding BlackRock Inc. (“BlackRock”) is based solely on information disclosed in amendment number 14 to Schedule 13G filed by BlackRock with the SEC on February 1, 2022 on behalf of BlackRock and certain subsidiaries. According to the Schedule 13G filing, of the 11,100,869 shares of Lam common stock reported as beneficially owned by BlackRock as of December 31, 2021, BlackRock had sole voting power with respect to 9,555,057 shares, did not have shared voting power with respect to any shares, had sole dispositive power with respect to 11,100,869 shares, and did not have shared dispositive power with respect to any shares of Lam common stock.

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(4)

All information regarding FMR LLC (“FMR”) is based solely on information disclosed in amendment number two to Schedule 13G filed by FMR with the SEC on February 9, 2022 on behalf of FMR, Abigail P. Johnson, certain of FMR’s subsidiaries and affiliates, and other companies. According to the Schedule 13G filing, of the 7,027,554 shares of Lam common stock reported as beneficially owned by FMR as of December 31, 2021, FMR had sole voting power with respect to 956,458 shares, did not have shared voting power with respect to any shares, had sole dispositive power with respect to 7,027,554 shares, and did not have shared dispositive power with respect to any shares of Lam common stock.

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Corporate Governance

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

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A copy is available on the Investors section of our website at investor.lamresearch.com/corporate-governance.

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Our Approach To Ensuring Board Effectiveness

As part of the Board’s commitment to responsible corporate governance, we have developed a number of practices that together serve to ensure that, over time, the Board continues to function in an effective manner that serves the long-term interests of the Company and its stockholders. Several of the practices that we consider to be most important are summarized in Figure 11 below, and the practices themselves are described in greater detail below.

Lam Research Corporation 2022 Proxy Statement 9

 

Figure 11. Board Effectiveness Practices

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

Board composition, diversity and refreshment. The Board and the nominating and governance committee regard board refreshment as important, and strive to maintain an appropriate balance of tenure, turnover, diversity, and skills to meet the needs of the Company and the Board. In consideration of the Company’s evolving strategic priorities and as part of its refreshment planning, the nominating and governance committee regularly evaluates the Board’s composition, skills and experiences, diversity, and committee assignments to ensure that the Board functions effectively. See “Proxy Statement Summary−Figure 4. Director Nominee Key Qualifications, Skills and Experiences Highlights” and “Proxy Statement Summary−Figure 5. Director Nominee Composition Highlights” for additional information regarding the key qualifications, skills and experiences considered by the Board and the nominating and governance committee in nominating our nominees. Since 2019, the Board has gained four new independent directors, all of whom are diverse, as shown in Figure 12.

Figure 12. Refreshment of Independent Directors Since 2019

The Board is committed to diversity, and for many years, the composition of the Board has reflected that commitment. The Board believes that board diversity is important to serving the long-term interests of the Company’s stockholders. In identifying potential director candidates outside the Company, the nominating and governance committee is committed to actively seeking out qualified candidates who reflect diverse backgrounds, skills and experiences, including diversity of gender identity, LGBTQ+ identity, race and ethnicity, to include in the pool from which Board nominees are chosen, and any third-party search firms retained for a related search will

 

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be instructed to include such candidates in initial lists of candidates they prepare. Every year since 2006, the Board has had at least two female directors, and the total number of female directors increased to three in 2019 and to four in 2021. We began asking directors to self-identify their ethnicity/race beginning in 2020 and their gender identity and LGBTQ+ identity beginning in 2022, and have reported those metrics. As illustrated in “Proxy Statement Summary−Figure 5. Director Nominee Composition Highlights”, 67% of our nominees are diverse, either as to gender or as to ethnicity/race, and 44% of our nominees are diverse with respect to ethnicity/​race. The diversity of our current Board is presented according to the categories defined in Nasdaq Rule 5605(f) (and their related definitions) in our board diversity matrix, shown in Figure 13. In addition, over a number of years, the Board has appointed directors who have expanded the experiences, areas of substantive expertise, and geographic and industry diversity of the Board, as illustrated by the information provided in their biographies under “Voting Proposals−Proposal No. 1: Election of Directors−2022 Nominees for Director” below.

(1)

As of September 9, 2022

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The Board is also committed to the pursuit of Board refreshment and balanced tenure. The Board believes that new perspectives and ideas are important to a forward-looking and strategic board, as is the ability to benefit from the valuable experience and familiarity of longer-serving directors who can leverage their experience with the Company and with the industry and business environment in which the Company operates. Our corporate governance guidelines do not impose a term limit on Board service; however, the Board regularly assesses the directors’ tenure mix and strives to maintain a balance that will ensure both fresh perspectives and experience on the Board. In addition, our corporate governance guidelines impose an age limitation for directors to be nominated to the Board, as described below under “Board Nomination Policies and Procedures−Board Membership Criteria” below.

The Board also considers refreshment and tenure with respect to the leadership and membership of its standing committees, and the nominating and governance committee evaluates short-term and long-term roadmaps for committee membership and leadership on a regular basis. When reviewing committee assignments, the nominating and governance committee considers the rotation of chairs and members with a view toward balancing the benefits derived from the diversity of experience and viewpoints of the various directors. The nominating and governance committee also considers individual directors’ skills, experiences and qualifications, prior committee experience, and other positions and commitments.

Director onboarding and education. To ensure that new directors are able to effectively participate in and contribute to the Board as quickly as possible, we provide a comprehensive orientation and onboarding program for our new directors. Upon joining the Board, new directors participate in an orientation program which includes introductions to other Board members and our senior management team, and in depth learning about our industry, business, technology, operations, culture, people, performance, strategic plans, risk management and corporate governance practices, among other topics. The onboarding process also includes tours of one or more of our manufacturing or lab facilities. Due to the COVID-19 pandemic, these in-person tours have been paused, and are expected to resume when circumstances permit. In addition, each new director is partnered with a longer-tenured director to facilitate their integration into the Board. First time directors (i.e. those without prior public company board experience) are encouraged to attend an outside course shortly after joining the Board.

Our Board is also committed to ongoing education. Our corporate governance guidelines provide that directors are expected to participate in educational events sufficient to maintain their understanding of their duties as directors and to enhance their ability to fulfill their responsibilities. In addition to any external educational opportunities that the directors find useful, the Company and the board leadership are expected to facilitate such participation by arranging for appropriate educational presentations from time to time.

Board Nomination Policies and Procedures

Board membership criteria. Under our corporate governance guidelines, the nominating and governance committee is responsible for recommending nominees to the independent directors, and the independent directors nominate the slate of directors for approval

 

Lam Research Corporation 2022 Proxy Statement 11

 

by our stockholders. In making its recommendations, whether for new or incumbent directors, the nominating and governance committee assesses the appropriate balance of experience, skills, and characteristics required for the Board at the time.

Our corporate governance guidelines set out a non-exclusive list of factors to be considered by the nominating and governance committee in recommending nominees, which were selected by the Board to ensure proper board composition and effectiveness. These factors are reviewed and updated by the Board on a regular basis. In May 2022, the factors were updated to include additional diversity attributes. The factors include, but are not limited to:

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experience;

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business acumen;

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wisdom;

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integrity;

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judgment;

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the ability to make independent analytical inquiries;

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the ability to understand the Company’s business environment;

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the candidate’s willingness and ability to devote adequate time to board duties;

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diversity with respect to any attribute(s) the Board considers appropriate, including geography, gender identity, LGBTQ+ identity, age, and ethnicity or race;

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specific skills, background, or experience considered necessary or desirable for board or committee service;

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specific experiences with other businesses or organizations that may be relevant to the Company or its industry; and

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the interplay of a candidate’s experiences and skills with those of other Board members.

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In addition, our corporate governance guidelines provide that a director may not be nominated for re-election or reappointment to the Board after having attained the age of 75 years. To be nominated, a new or incumbent candidate must provide an irrevocable conditional resignation that will be effective upon (1) the director’s failure to receive the required majority vote at an annual meeting at which the nominee faces re-election and (2) the Board’s acceptance of such resignation.

Upon the recommendations of the nominating and governance committee, the independent members of the Board have nominated nine of our current directors for re-election to serve on the Board. One current director, Catherine P. Lego, was not nominated and, as previously disclosed in a current report on Form 8-K, is retiring from the Board effective November 7, 2022. The size of the Board will be reduced to nine prior to the annual meeting. Each nominee’s key qualifications, skills, and attributes considered most relevant to the nomination of the candidate to serve on the Board are reflected in their biography under “Voting Proposals−Proposal No. 1: Election of Directors−2022 Nominees for Director” below. For a summary of the key qualifications, skills, and attributes of the nominees to the Board, see “Proxy Statement Summary−Figure 4. Director Nominee Key Qualifications, Skills and Experiences Highlights.”

Nomination procedure. The nominating and governance committee sets specific qualifications for new directors, and identifies, screens, evaluates, and recommends qualified candidates for appointment or election to the Board. The committee considers recommendations from a variety of sources, including search firms, Board members, executive officers, and stockholders. Nominations for election by the stockholders are made by the independent members of the Board. New candidates to join the Board typically meet with our chair, our lead independent director (if applicable), members of the nominating and governance committee, additional board members, and our president and CEO, as well as representatives of the Company’s executive team, prior to being considered for recommendation by the nominating and governance committee for appointment to the Board. See “Voting Proposals−Proposal No. 1: Election of Directors−2022 Nominees for Director” below for additional information regarding the 2022 candidates for election to the Board.

The nominating and governance committee will consider for nomination persons properly nominated by stockholders in accordance with the Company’s bylaws and nomination procedures. Our bylaws provide that under certain circumstances, a stockholder, or group of up to 20 stockholders, who have maintained continuous ownership of at least three percent (3%) of our common stock for at least three years may nominate and include a specified number of director nominees in our annual meeting proxy statement that cannot exceed the greater of two or 20% of the aggregate number of directors then serving on the Board (rounded down). Information regarding the nomination procedures is provided in the “Voting and Meeting Information−Other Meeting Information−Stockholder-Initiated Proposals and Nominations for 2023 Annual Meeting” section below. Subject to then-applicable law, stockholder nominations for director will be evaluated by the Company’s nominating and governance committee in accordance with the same criteria as are applied to candidates identified by the committee or other sources.

Director Independence Policies

Board independence requirements. Our corporate governance guidelines require that a majority of the Board members be independent. The nominating and governance committee annually reviews the independence of each director, including with respect to the Board and each individual committee, and recommends to the Board director independence determinations made with respect to continuing and prospective directors. No director will qualify as “independent” unless the Board affirmatively determines that the

 

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director qualifies as independent under the Nasdaq rules and has no relationship that would interfere with the exercise of independent judgment as a director. In addition, no non-employee director may serve as a consultant or service provider to the Company without the approval of a majority of the independent directors (and any such director’s independence must be reassessed by the full Board following such approval).

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

Board committee independence. All members of the Board’s audit, compensation and human resources, and nominating and governance committees must be non-employee or outside directors and independent in accordance with applicable Nasdaq criteria as well as Rule 16b-3 of the Exchange Act. See “Board Committees” below for additional information regarding these committees.

Lead independent director. Our corporate governance guidelines authorize the Board to designate a lead independent director from among the independent members. As described below under “Leadership Structure of the Board,” an independent director, Mr. Talwalkar, currently serves as chairman of the Board, and as a result the Board has not designated a lead independent director.

Executive sessions of independent directors. The Board and its audit, compensation and human resources, and nominating and governance committees hold meetings of the independent directors and committee members, without management present, as part of each regularly scheduled meeting and at any other time at the discretion of the Board or committee, as applicable.

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

Leadership Structure of the Board

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

Under our corporate governance guidelines, the Board’s leadership structure includes a chair and may also include a separate lead independent director. Currently, Mr. Talwalkar, an independent director, serves as chairman of the Board, and as a result, the Board has not designated a lead independent director.

The chair’s duties include (1) preparing the agenda for the Board meetings with input from the CEO, the Board, and the committee chairs; (2) upon invitation, attending meetings of any of the Board committees of which they are not a member; (3) conveying to the CEO, together with the chair of the compensation and human resources committee, the results of the CEO’s performance evaluation; (4) reviewing proposals submitted by stockholders for action at meetings of stockholders and, depending on the subject matter, determining the appropriate body, among the Board or any of the Board committees, to evaluate each proposal, and making recommendations to the Board regarding action to be taken in response to such proposal; (5) as requested by the Board, providing reports to the Board on the chair’s activities; (6) coordinating and developing the agenda for, and moderating executive sessions of the Board’s independent directors; (7) conveying to the CEO, as appropriate, discussions from executive sessions of the Board’s independent directors; and (8) performing such other duties as the Board may reasonably request from time to time.

Other Governance Practices

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

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

Limitations on director commitments, including other board and committee memberships and leadership. The Board believes that it is critical that directors dedicate sufficient time to their service on the Board. Under our corporate governance guidelines, the nominating and governance committee considers a director’s other board and committee leadership positions and memberships that may affect a director’s ability to contribute effectively to the Board, and evaluates director commitments at least annually. In particular, our corporate governance guidelines provide that Board members may not serve on more than four public

 

Lam Research Corporation 2022 Proxy Statement 13

 

company boards (including service on the Company’s Board). Non-employee directors who are executive officers at other public companies may not serve on more than two public company boards (including the Company’s Board). In addition, non-employee directors may not serve on more than three audit committees of public company boards (including the Company’s audit committee), unless approved by the nominating and governance committee. Finally, the Company’s CEO may not serve on more than one other public company board. All of our directors are currently in compliance with the limitations on director commitments in our corporate governance guidelines.

Director and executive stock ownership. Under the corporate governance guidelines, each non-employee director is expected to own at least the lesser of five times the value of the annual cash retainer (not including any committee chair or other supplemental retainers for directors) or 5,000 shares of Lam common stock, by the fifth anniversary of their initial election to the Board. The requirements are specified in the alternative of shares or dollars to allow for stock price volatility. The dollar alternative is translated into a number of shares by dividing the applicable multiple of the annual cash retainer by the average closing price of our common stock for the 30 trading days through June 30 of the most recently-completed fiscal year as of the measurement date. Guidelines for stock ownership by designated members of the executive management team are described below under “Compensation Matters−Executive Compensation and Other Information−Compensation Discussion and Analysis.” All of our directors and designated members of our executive management team were in compliance with the Company’s applicable stock ownership guidelines at the end of fiscal year 2022 or have a period of time remaining under the guidelines to meet the requirements.

Communications with board members. Any stockholder who wishes to communicate directly with the Board, with any Board committee, or with any individual director regarding the Company may write to the Board, the committee, or the director c/o Secretary, Lam Research Corporation, 4650 Cushing Parkway, Fremont, California 94538. Subject to certain exceptions specified in our corporate governance guidelines, the Secretary will forward communications to the appropriate director(s).

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

Meeting Attendance

Our Board held a total of five meetings during fiscal year 2022. The number of committee meetings held is shown below under “Board Committees”. All of the directors attended at least 75% of the aggregate number of Board meetings and meetings of Board committees on which they served during their tenure in fiscal year 2022.

We expect our directors to attend the annual meeting of stockholders each year unless unusual circumstances make attendance impractical. All but one of the individuals who were directors as of the 2021 annual meeting of stockholders attended that meeting.

Board Committees

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

Audit Committee

Membership as of September 9, 2022: Michael R. Cannon, Catherine P. Lego, Bethany J. Mayer, and Leslie F. Varon (Chair)
Meetings held in fiscal year 2022: Nine

Key responsibilities:

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oversee the Company’s accounting and financial reporting processes, internal audit program, and the audits of its financial statements, including the system of internal controls;

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oversee the Company’s investment policies and performance,

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review the Company’s hedging strategy and tax strategies;

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oversee the Company’s ethics and compliance program;

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oversee the Company’s cybersecurity and information security policies and internal controls; and

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review and oversee potential related party and conflict of interest situations, transactions required to be disclosed pursuant to Item 404 of Regulation S-K of the SEC, and any other transaction involving an executive or Board member.

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

 

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Effective November 7, 2022, Sohail U. Ahmed will become a member of the audit committee and Ms. Lego will no longer be a member.

Compensation and Human Resources Committee

Membership as of September 9, 2022: Sohail U. Ahmed, Eric K. Brandt (Chair), Abhijit Y. Talwalkar and Lih Shyng (Rick L.) Tsai
Meetings held in fiscal year 2022: Five

Key responsibilities:

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review and approve the Company’s executive officer compensation philosophy, objectives and strategies;

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•

recommend to the independent members of the Board corporate goals and objectives under our compensation plans;

​

•

recommend to the independent members of the Board compensation packages and compensation payouts for the CEO, and approve the compensation packages and compensation payouts for our other executive officers;

​

•

oversee incentive, equity-based plans, and other compensatory plans in which our executive officers and/or directors participate;

​

•

produce an annual report on executive compensation for inclusion, as required, in our annual proxy statement;

​

•

oversee management’s determination as to whether our compensation policies and practices, including those related to pay equity laws, create risks that are reasonably likely to have a material adverse effect on the Company; and

​

•

discharge certain responsibilities of the Board with respect to organization and people matters, including executive succession planning, employee engagement programs, and assisting the Board in overseeing ESG matters relating to our workforce, including inclusion and diversity.

​

The Board concluded that all members of the compensation and human resources committee are non-employee directors who are independent in accordance with Rule 16b-3 of the Exchange Act and the Nasdaq criteria for director and compensation committee member independence.

Effective November 7, 2022, Jyoti K. Mehra will become a member of the compensation and human resources committee and Mr. Ahmed will no longer be a member.

Nominating and Governance Committee

Membership as of September 9, 2022: Eric K. Brandt, Michael R. Cannon (Chair), Catherine P. Lego, and Abhijit Y. Talwalkar
Meetings held in fiscal year 2022: Four

Key responsibilities:

•

identify individuals qualified to serve as members of the Board and recommend nominees for election as directors;

​

•

recommend committee membership and leadership assignments;

​

•

review our corporate governance guidelines and other governing documents and recommend amendments to the Board;

​

•

oversee self-evaluations of the Board and individual directors;

​

•

assist the Board in overseeing ESG matters not assigned to other committees, including our overall ESG strategy and goals, ESG report, and sustainability initiatives;

​

•

oversee the Company’s political activities and review our policy regarding political contributions and spending; and

​

•

review the independence of the Board and its committees and recommend director independence determinations to the Board.

​

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

Effective November 7, 2022, Bethany J. Mayer will become a member of the nominating and governance committee and Ms. Lego will no longer be a member.

Board’s Role and Engagement

General. The Board oversees the management of the business and affairs of the Company. In this oversight role, the Board serves as the ultimate decision-making body of the Company, except for those matters reserved for the stockholders. Board agendas facilitate dialogue between the Board and management regarding drivers of long-term stockholder value and key strategic and operational risks. The Board’s and its committees’ agendas include both regular, recurring topics as well as time for special agenda topics that are scheduled on an as-needed basis by the Board or committee chairs, as applicable.

The Board and its committees have the primary responsibilities for:

•

overseeing the Company’s business strategies, and approving the Company’s capital allocation plans and priorities, annual operating plan, and major corporate actions as set forth in the below sub-bullets;

​

 

Lam Research Corporation 2022 Proxy Statement 15

 

◦

a strategic plan is presented to the Board for discussion on an annual basis;

​

◦

an operating plan is presented to the Board for discussion on an annual basis, and updates are presented at each quarterly Board meeting; and

​

◦

capital allocation plans and priorities and other major corporate actions are presented and discussed as part of regular management updates and as special agenda topics, as appropriate.

​

•

appointing, annually evaluating the performance of, and approving the compensation of, our CEO;

​

•

reviewing with our CEO the performance of the Company’s other executive officers and approving their compensation;

​

•

reviewing and approving CEO and top leadership succession planning;

​

•

advising and mentoring the Company’s senior management;

​

•

overseeing the Company’s internal controls over financial reporting and disclosure controls and procedures;

​

•

overseeing the Company’s material risks and enterprise risk management processes and programs;

​

•

overseeing the Company’s ethics and compliance programs, including the Company’s code of ethics, with updates presented to the audit committee quarterly and to the full Board annually;

​

•

overseeing the Company’s information security programs (including cybersecurity), with updates presented to the audit committee quarterly and to the full Board annually;

​

•

overseeing the Company’s human capital management, with updates presented quarterly to the compensation and human resources committee and the full Board;

​

•

overseeing ESG matters, with updates presented semiannually to the nominating and governance committee and the Company’s ESG progress and reporting reviewed by the full Board annually; and

​

•

overseeing the Company’s political activities, with updates presented annually to the nominating and governance committee.

​

Risk Oversight. The Board is actively engaged in risk oversight. Management regularly reports to the Board on its risk assessments and risk mitigation strategies for the major risks of our business. Generally, the Board exercises its oversight responsibility directly; however, in specific cases, such responsibility has been delegated to committees of the Board, as described above in “Board Committees” and in the charters of the respective committees. Committees that have been charged with risk oversight regularly report to the Board on those risk matters within their areas of responsibility. Risk oversight responsibility has been allocated between the Board and its committees as summarized in Figure 14 and described in more detail below.

Figure 14. Risk Oversight

•

Our audit committee oversees risks related to the Company’s accounting and financial reporting, internal controls, annual financial statement audits, independent registered public accounting firm, internal audit function, related party transactions, ethics and compliance program, investment policy and portfolio, hedging strategies, and tax strategies. The audit committee also oversees our information security program (including cybersecurity), with the responsibility of recommending such Board action as it deems appropriate.

​

•

Our nominating and governance committee oversees risks related to corporate governance, board effectiveness, director independence, Board and committee composition, political activities, and ESG matters not assigned to other committees.

​

•

Our compensation and human resources committee oversees risks related to the Company’s equity and executive compensation programs and plans, executive succession plans, employee engagement programs, and ESG matters relating to the Company’s workforce, including inclusion and diversity.

​

Information Security (including Cybersecurity) Oversight. Our Board recognizes the important role of information security in safeguarding our valuable intellectual property (“IP”) along with the data of our customers, employees, and suppliers. The Board,

 

16

 

which includes members with cybersecurity expertise, oversees our strategy and approach to addressing information security risk, both directly and through the audit committee. Our global information security program is led by our chief information security officer, who reports on information security risks at least quarterly to the audit committee and at least annually to the full Board.

Political Activity Oversight. In 2022, we expanded the role of our nominating and governance committee to include oversight of the Company’s political activities. The committee’s responsibilities include ensuring that the Company’s political activities align with Company policy. The committee is also responsible for reviewing the Company’s policy regarding political activities and spending at least annually, and for reviewing payments to trade associations and other third parties that may be used for political purposes. Our political activities are led by our Vice President of Global Government Affairs, who reports to the nominating and governance committee at least annually. For more details regarding our political activities, please refer to our public policy engagement and political activity statement located on the Investors section of our website at investor.lamresearch.com/corporate-governance.

Stockholder Engagement

We believe that engagement with our stockholders is an important part of effective corporate governance. Our senior management, including our president and CEO, chief financial officer (“CFO”) and members of our Investor Relations team, maintain regular contact with a broad base of investors through quarterly earnings calls, meetings, investor day events, industry conferences, and other investor and industry events. In addition, we regularly engage with major stockholders on governance matters, including executive compensation and ESG topics. The outreach is generally conducted outside of our proxy solicitation period and, depending on the topics, includes members of our Legal, Investor Relations and Human Resources functions, and may also include members of the Board. During the proxy solicitation period, we may also engage with our stockholders about topics to be addressed at our annual meeting of stockholders. Our process for engaging with stockholders on governance topics and annual meeting proposals is summarized in Figure 15 below.

Figure 15. Stockholder Governance Engagement Cycle

Through these engagements, we receive valuable input from our stockholders which helps us to evaluate key initiatives from additional perspectives. We share the opinions and information received from our stockholders with the Board. Over the last few years, we have heard from stockholders about their views on subjects such as executive compensation, ESG considerations, culture, leadership transitions, returning capital to stockholders, director tenure, board refreshment, director skills and experiences, board and workforce diversity, director time commitments, and political activities. Understanding the feedback shared with us, we have maintained our focus on board diversification, board refreshment based on skills and experiences, workforce diversity, and pay for performance; have added additional areas of board oversight, including oversight over political activities; and have enhanced our proxy statement and annual ESG report disclosures.

We engaged in extensive stockholder outreach on governance topics and annual meeting proposals in 2021, prior to and after the proxy solicitation period, as illustrated in Figure 16 below. We have summarized our governance outreach efforts, and described the topics discussed, in Figure 16 below, as well as in “Compensation Discussion and Analysis−Overview of Executive Compensation−2021 Say on Pay Voting Results and Stockholder Outreach”:

 

Lam Research Corporation 2022 Proxy Statement 17

 

Figure 16. 2021 Stockholder Governance Outreach Summary

Culture and Human Capital Management

We endeavor to be a great place to work globally by investing in a multi-faceted strategy that is rooted in building an inclusive and diverse workplace. The Board is actively engaged in overseeing our culture and the management of human capital, both directly and through its compensation and human resources committee. The compensation and human resources committee’s responsibilities include organizational and people matters, including reviewing executive officer succession plans as described below, reviewing employee engagement programs, and reviewing and assisting the Board in overseeing ESG matters relating to our workforce, including inclusion and diversity and the workforce portion of our annual ESG report.

One of the Board’s primary responsibilities is to oversee the performance, development and succession of our executive talent; however, the Board’s involvement in people development extends beyond the executive team. The Board and the compensation and human resources committee engage with management across a broad range of human capital related topics. To support employees’ well-being and ensure Lam is a place where everyone feels valued and can do their best work, we have focused on inclusion and diversity; recruitment and development; employee engagement; providing a comprehensive compensation and benefits package; and health and safety. Since calendar year 2020, all of our named executive officers have had compensation goals related to culture, talent, and inclusion and diversity, to help ensure the members of our executive team are aligned with our corporate goals in these areas and are accountable for the results achieved (see “Compensation Matters−Executive Compensation and Other Information–Compensation Discussion and Analysis” below for more details).

Employee engagement (i.e. satisfaction) and voice are critical to Lam’s culture. We conduct a global survey on a regular basis to gather input from employees on culture, inclusion and diversity, career opportunity, and manager effectiveness. We also solicit employee feedback through in-person and online employee forums, engagement sessions, all-employee meetings, conversations with managers, and our human resource support and employee relations programs. These surveys and engagements provide management and the Board with valuable employee feedback and help ensure the executive leadership team is focused on and held accountable for fostering and promoting a culture and workplace environment that are consistent with Lam’s core values and with achieving our human capital goals. Based on employee feedback, we launched an inclusion and diversity program, expanded resources available for professional development, facilitated the creation of additional employee resource groups, created new job rotation and mentoring programs, and expanded our management training offerings. In 2021, we added inclusion and diversity as one of our core values, and launched and

 

18

 

continued a variety of initiatives to cultivate a more inclusive workplace, including by further integrating inclusive features into our global benefits and wellness offerings, with a focus on increasing support for families and parents.

The health, safety, and well-being of our employees are important to our success, and we invest in education, awareness, monitoring, and prevention programs to help recognize and control safety hazards. Throughout the COVID-19 pandemic, our focus and priority have remained on the health, safety, and well-being of our employees. We have taken a holistic approach in response to the pandemic to safeguard our employees. We implemented and adapted our health and safety procedures consistent with government guidelines and best practices for the health and safety of on-site workers, enabling staff to work remotely to the extent practicable. We distributed relief and recovery funds to employees, offered enhanced benefits to support the physical, mental and financial health of our employees, and provided other employee assistance programs to those experiencing disruptions due to the pandemic.

The Board believes that visits to Company facilities and direct engagement with employees enable it to assess the Company’s culture first-hand. Since 2017, the Board has visited our facilities in Fremont, Livermore, Tualatin, Taiwan and South Korea, and met directly with employees in small groups at all these locations in order to engage with and hear directly from them. During the pandemic, these in-person meetings were paused, but they have recently resumed.

We aim to maintain and cultivate a workplace where every person has equal opportunities to thrive. We are committed to equal opportunity and non-discrimination in our employment practices, including equitable compensation for work performed. The charter of our compensation and human resources committee includes oversight responsibility for our compensation policies and practices related to pay equity laws. We maintain robust employment policies and procedures to reinforce our commitment to equal opportunity, non-discrimination, and pay equity. Our policies and procedures prohibit discrimination, harassment or retaliation in any aspect of employment, including recruiting, hiring, promotion, or compensation. Our most recent EEO-1 report can be found in the ESG section of our website at lamresearch.com/company/environmental-social-governance. Our EEO-1 report shall not be deemed “filed” with the SEC for purposes of federal securities law, and it shall not, under any circumstances, be incorporated by reference into any of the Company’s past or future SEC filings. The EEO-1 report shall not be deemed soliciting material.

For further details about our human capital management, please see our 2022 Annual Report on Form 10-K, as well as our most recent ESG report.

Environmental, Social and Governance Matters

An important part of advancing the industry and empowering progress is being a socially responsible company. Our core values underpin our commitments to sustainable growth and to making a positive contribution to people and the planet. We are committed to responsible and sustainable business practices and continuous improvement in our own operations, in our partnerships with our customers, across our supply chain and in our engagements with our other stakeholders. We invest in ESG across our business and integrate ESG principles into our day-to-day operations. Our ESG strategy is composed of six key pillars, as outlined below. This framework focuses our attention on our most important topics and pressing challenges, while helping us to deliver value to our stakeholders.

Governance. Our ESG governance framework is illustrated in Figure 17 below. While our Board is actively engaged in ESG oversight, the nominating and governance committee has the primary responsibility for our ESG priorities. For workforce-related issues, the compensation and human resources committee holds responsibility. The audit committee is responsible for oversight on ethics and compliance and information security. Our executive leadership provides regular updates to the Board and its committees and engages them to discuss ESG strategy, gain alignment on goals, and report on progress. Our CEO and members of the CEO staff participate in our ESG executive steering committee, which is responsible for guiding our ESG strategy, approving and supporting initiatives, and holding business leaders accountable. Our cross-functional ESG leadership team is responsible for proposing goals, developing and executing strategy, and embedding ESG into our operations management system. In 2021, we formed a new net zero leadership team that is responsible for working with business units to integrate climate considerations into decision-making processes, driving progress on our net zero strategy, and tracking performance against our climate goals (described in more detail under “Sustainable Operations” below). In addition, we have topic-specific working groups to address key issues.

 

Lam Research Corporation 2022 Proxy Statement 19

 

Figure 17. Lam’s ESG Governance Structure

Our Workplace. As described above in the “Culture and Human Capital Management” section, guided by our core values, we strive to provide a work environment that fosters inclusion and diversity, ensures every voice is heard, and enables employees to achieve their full potential. We aim to maintain a collaborative, supportive, and opportunity-rich culture that enhances innovation and employee engagement. We strive to protect the health and safety of our personnel throughout our entire operation, including our offices, manufacturing sites, research and development (“R&D”) centers, and our field team working at customer sites.

Our Communities. One of our guiding principles is to “act with purpose for a better world.” We recently established an overarching social impact platform−“Powering Breakthroughs Together”−with an objective of making meaningful progress in three focus areas: enabling transformative learning; helping to build more resilient communities; and fostering more inclusive societies. We work together with philanthropic organizations and our employees to increase the impact of our activities. In 2021, the Lam Foundation−administered in partnership with the Silicon Valley Community Foundation−focused on delivering K-12 education in science, technology, engineering and math, or “STEM”, subjects, and quality of life programs that address human needs, youth support, health improvement, and disaster relief. As part of our COVID-19 relief and recovery efforts, we donated funds to our communities for both short-term assistance and longer-term recovery. We also donated funds in support of initiatives fighting social injustice, by contributing to organizations that are working to end systemic racism through education, reform, and legislation.

Sustainable Operations. Incorporating environmental sustainability into business leads to better products, more efficient operations, and added value for our customers. As the world tackles climate change and other critical environmental issues, we seek to do our part by responsibly managing our impact with global goals for energy efficiency, greenhouse gas emissions, water conservation, and waste reduction. We carefully monitor and manage our environmental impact across our business and work to implement cost-effective best practices, focusing our efforts where we believe we can have the biggest long-term impact. We look at impacts from procurement to manufacturing, during R&D and product design, and throughout a product’s lifecycle. We carefully manage our greenhouse gas emissions, set goals, and report progress annually to the CDP (formerly the Carbon Disclosure Project) and through our annual ESG report. Our ESG report for calendar year 2021 contains disclosures aligned with the Sustainability Accounting Standards Board, the Global Reporting Index, and the TCFD framework. In 2021, we announced two climate goals, including operating on 100% renewable energy by 2030 and achieving net zero emissions by 2050. We have since published additional details regarding the interim goals we have established along the net zero pathway. We also developed our net zero governance structure by establishing a net zero leadership team.

Product. We develop products and solutions with the belief that business success includes making a positive impact on society and the planet. For us, that means that environmental impact and social responsibility should inform our product design and research and development. As part of our net zero strategy, we intend to accelerate the integration of environmental considerations into the design, manufacturing, delivery, and performance of our products to help us meet our goals.

 

20

 

Responsible Supply Chain. We understand the importance of an ethical, responsible, resilient, and diverse supply chain, and we engage with our suppliers to address a wide range of issues including human rights, supplier diversity, environmental impact, and conflict mineral sourcing. We are a strong proponent of supply chain-related industry standards and uphold the guidelines published by the Responsible Business Alliance (the “RBA”). Since 2019, Lam has been an affiliate member of the RBA, the world’s largest industry coalition dedicated to corporate responsibility in global supply chains. All of our direct suppliers are expected to adhere to our Global Supplier Code of Conduct, which incorporates the RBA code of conduct and covers topics such as ethics, integrity, transparency, anti-corruption, conflict minerals, human trafficking, environmental sustainability, and social responsibility. Beyond general RBA membership, we participate in the multi-industry Responsible Labor Initiative and Responsible Mineral Initiative, which guide our approaches to protecting human rights and ensuring responsible sourcing of conflict minerals, respectively. In 2021, we began our engagement with suppliers to make progress toward our 2050 net zero emissions goal.

For more information about our ESG efforts, including climate-related efforts, please refer to our annual ESG report available in the ESG section of our website at lamresearch.com/company/environmental-social-governance. Our ESG report shall not be deemed “filed” with the SEC for purposes of federal securities law, and it shall not, under any circumstances, be incorporated by reference into any of the Company’s past or future SEC filings. The ESG report shall not be deemed soliciting material.

 

 

Figure 18. Director Annual Retainers

(1)

Each Director is entitled to an annual non-employee director cash retainer. Directors are also entitled to supplemental retainer fees if they have board leadership positions (e.g., chair) and/or are either committee chairs or members.

​

Each non-employee director also receives an annual equity award on the first Friday following the annual meeting. For the equity awards granted in November 2021, these had a targeted grant date value equal to $215,000 (the number of RSUs subject to the award is determined by dividing $215,000 by the 30 trading day average of the closing price of our common stock prior to the date of grant, rounded down to the nearest whole share). These awards generally vest on October 31 in the year following the grant and are subject to the terms and conditions of the Company’s 2015 Stock Incentive Plan, as amended (the “2015 Plan”), and the applicable award agreements. These awards immediately vest in full: (1) if a non-employee director dies or becomes subject to a “disability” ​(as determined pursuant to the 2015 Plan), (2) upon the occurrence of a “Corporate Transaction” ​(as defined in the 2015 Plan), or (3) on the date of the annual meeting, if the annual meeting during the year in which the award was expected to vest occurs prior to the vest date and the non-employee director is not re-elected or retires or resigns effective immediately prior to the annual meeting. Non-employee directors who commence service after the annual equity award has been granted receive on the first Friday following the first regularly scheduled, quarterly Board meeting attended a pro-rated award based on the number of regularly scheduled, quarterly Board meetings remaining in the year as of the effective date and time of the director’s appointment. The pro-rated awards are subject to the same vesting schedule, terms and conditions as the annual equity awards, except that if the award is granted on the first Friday following the regularly scheduled quarterly November Board meeting, the award vests immediately.

On November 12, 2021, each director at such time (other than our president and CEO) received a grant of 377 RSUs for service during calendar year 2022. Unless there is an acceleration event, the RSUs granted to each current director for service during calendar year 2022 will vest in full on October 31, 2022, subject to the director’s continued service on the Board. On November 12, 2021, Ms. Mehra, who was appointed to the Board effective November 9, 2021, also received a prorated grant of 80 RSUs for service during calendar year 2021 that vested immediately. The following table shows compensation for fiscal year 2022 for persons serving as directors during fiscal year 2022 other than Mr. Archer:

Figure 19. Director Compensation for Fiscal Year 2022

(1)

The amounts shown in this column represent the grant date fair value of unvested RSU awards granted during fiscal year 2022 in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 718, Compensation−Stock Compensation (“ASC 718”). However, pursuant to SEC rules, these values are not reduced by an estimate for the probability of forfeiture. The fair value of RSUs was calculated based on the fair market value of the Company’s common stock at the date of grant, discounted for dividends.

​

(2)

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

​

(3)

Mr. Ahmed received $97,500, representing his annual retainers for calendar year 2022 of $87,500 for service as a director and $10,000 for service as a member of the compensation and human resources committee.

​

(4)

On November 12, 2021, each non-employee director who was on the Board at such time received an annual grant for calendar year 2022 of 377 RSUs, based on the 30 trading day average of the closing price of Lam’s common stock prior to the grant date, $569.97, and the target value

​

 

22

 

of $215,000, rounded down to the nearest share. All of these RSUs (and no other non-employee director equity awards) were outstanding and unvested as of June 26, 2022.

(5)

Mr. Brandt received $127,500, representing his annual retainers for calendar year 2022 of $87,500 for service as a director, $30,000 for service as the chair of the compensation and human resources committee, and $10,000 for service as a member of the nominating and governance committee.

​

(6)

Mr. Cannon received $122,500, representing his annual retainers for calendar year 2022 of $87,500 for service as a director, $20,000 for service as the chair of the nominating and governance committee, and $15,000 for service as a member of the audit committee.

​

(7)

Ms. Lego received $112,500, representing her annual retainers for calendar year 2022 of $87,500 for service as a director, $15,000 for service as a member of the audit committee, and $10,000 for service as a member of the nominating and governance committee.

​

(8)

Ms. Mayer received $102,500, representing her annual retainers for calendar year 2022 of $87,500 for service as a director and $15,000 for service as a member of the audit committee.

​

(9)

Ms. Mehra received $106,250, representing her annual retainer for calendar year 2022 of $87,500 for service as a director, and prorated annual retainer for calendar year 2021 of $18,750 for service as a director.

​

(10)

On November 12, 2021, Ms. Mehra received a prorated annual grant for calendar year 2021 of 80 RSUs, based on the $624.42 per share closing price of Lam’s common stock and the target value of $52,500, rounded down to the nearest 10 shares.

​

(11)

Mr. Talwalkar received $257,500, representing his annual retainers for calendar year 2022 of $87,500 for service as a director, $150,000 for service as chairman, $10,000 for service as a member of the compensation and human resources committee, and $10,000 for service as a member of the nominating and governance committee.

​

(12)

Dr. Tsai received $97,500, representing his annual retainers for calendar year 2022 of $87,500 for service as a director and $10,000 for service as a member of the compensation and human resources committee.

​

(13)

Ms. Varon received $122,500, representing her annual retainers for calendar year 2022 of $87,500 for service as a director and $35,000 for service as the chair of the audit committee.

​

Other benefits. Any members of the Board enrolled in the Company’s health plans on or prior to December 31, 2012, can continue to participate after retirement from the Board in the Company’s Retiree Health Plans. The Board eliminated this benefit for any person who became a director after December 31, 2012. The most recent valuation of the Company’s accumulated post-retirement benefit obligation under ASC 715, Compensation-Retirement Benefits as of June 26, 2022, for eligible directors and the current directors who may become eligible, is shown below. Factors affecting the amount of post-retirement benefit obligation include current age, age at retirement, coverage tier (e.g., single, plus spouse, plus family), interest rate, and length of service.

Figure 20. Accumulated Post-Retirement Benefit Obligations

 

Lam Research Corporation 2022 Proxy Statement 23

Our CD&A is organized according to the following structure:

24

 

I. OVERVIEW OF EXECUTIVE COMPENSATION

To align with stockholders’ interests, our executive compensation program is designed to foster a pay-for-performance culture and achieve the executive compensation objectives described in “Executive Compensation Philosophy and Program Design−Executive Compensation Philosophy” below. We have structured our compensation program and payouts to reflect these goals. Highlights of our executive compensation program are listed in “Proxy Statement Summary−Figure 7. Executive Compensation Highlights” above. Our president and CEO’s compensation in relation to our revenue and net income, as well as the Company’s cumulative five-year total shareholder return on common stock compared against the cumulative returns of other indices, are shown below.

Figure 22. CEO Pay for Performance for Fiscal Years 2017-2022

(1)

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

​

The CEO Total Compensation for fiscal year 2019 represents Mr. Archer’s compensation for service as president and COO until December 5, 2018 and thereafter until the end of the 2019 fiscal year as president and CEO. For years prior to and after fiscal year 2019, the CEO Total Compensation relates to the compensation of the applicable CEO.

The graph below compares Lam’s cumulative five-year total shareholder return on common stock with the cumulative total returns of the Nasdaq Composite Total Return Index, the Standard & Poor’s (“S&P”) 500 (TR) Index, and the Philadelphia Semiconductor Sector Total Return Index. The graph tracks the performance of a $100 investment in our common stock and in each of the indices (with the reinvestment of all dividends) for the five years ended June 26, 2022.

 

Lam Research Corporation 2022 Proxy Statement 25

 

Figure 23. Comparison of Cumulative Five-Year Total Return

COMPARISON OF CUMULATIVE FIVE-YEAR TOTAL RETURN*
Among the Company, the Philadelphia Semiconductor Sector Total Return Index,
the Nasdaq Composite Total Return Index, and
the S&P 500 (TR) Index

*

$100 invested on June 25, 2017 in stock or June 30, 2017 in index, including reinvestment of dividends. Indices calculated on month-end basis.

​

*

Copyright © 2022 Standard & Poor’s, a division of S&P Global. All rights reserved.

​

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

•

our business, our industry environment, and our financial performance; and

​

•

our executive compensation philosophy and program design.

​

Our Business, Our Industry Environment, and Our Financial Performance

An overview of our business and industry environment is set forth in “Proxy Statement Summary” on page 1.

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

Figure 24. Executive Compensation Calendar-Year Orientation

 

26

 

In calendar year 2021, there were higher investments in wafer fabrication equipment spending relative to calendar year 2020, with all segments of the market growing, driven by increasing device manufacturing complexity and the robust secular demand for semiconductors in a number of areas including artificial intelligence, 5G networks, high-performance computing, and Internet of Things. We experienced industry-wide supply chain constraints that limited our level of output exiting the year, but Lam demonstrated resiliency despite these operational challenges, delivering record financial performance.

Highlights for calendar year 2021:

•

achieved revenue of approximately $16.5 billion for the calendar year, representing an approximately 39% increase over calendar year 2020;

​

•

generated operating cash flow of approximately $4.5 billion, which represents approximately 27% of revenues; and

​

•

generated sufficient cash flow to support payment of approximately $769 million in dividends to stockholders.

​

In the first half of calendar year 2022, wafer fabrication equipment spending continued to be strong, driven by increases in semiconductor demand and our customers’ technology-oriented investments. Ongoing supply chain constraints broadened and have impacted our production output levels, though we have seen improvements in both our operations and those of our suppliers.

Lam delivered solid results in the March and June 2022 quarters combined with revenues of approximately $8.7 billion, and operating cash flows of approximately $1.2 billion.

Executive Compensation Philosophy and Program Design

Executive Compensation Philosophy

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

•

provide competitive compensation to attract and retain top talent;

​

•

provide total compensation packages that are fair to employees and reward corporate, organizational, and individual performance;

​

•

align pay with business objectives while driving exceptional performance;

​

•

optimize value to employees while maintaining cost-effectiveness to the Company;

​

•

create stockholder value over the long-term;

​

•

align our annual program to annual performance and our long-term program to longer-term performance;

​

•

recognize that a long-term, high-quality management team is a competitive differentiator for Lam, enhancing customer trust/​market share and, therefore, stockholder value; and

​

•

provide rewards when results have been demonstrated.

​

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

•

performance that creates long-term stockholder value;

​

•

outstanding performance at the corporate, organization, and individual levels; and

​

•

retention of a long-term, high-quality management team.

​

Program Design

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

Our program design uses a mix of annual and long-term components, and a mix of cash and equity components. Our executive compensation program includes base salary; an annual incentive program (“AIP”); a long-term incentive program (“LTIP”); promotion, retention and/or new hire awards whenever necessary; as well as stock ownership guidelines and a compensation recovery policy. The primary elements of our executive compensation program are listed in Figure 25 below and are described in more detail in “III. Primary Components of NEO Compensation; CY2021 Compensation Payouts; CY2022 Compensation Targets and Metrics” below.

 

 

Figure 25. Compensation Components

As illustrated below, our program design is weighted toward performance and stockholder value. The performance-based program components include annual incentive program cash payout opportunities and market-based equity and stock option awards under the LTIP.

Figure 26. NEO Compensation Target Pay Mix Averages

(1)

The Company’s LTIP design provides that the target award opportunity is awarded in a combination of Market-based PRSUs, stock options and service-based RSUs, with at least 10% of the award in each of these last two vehicles. In calendar year 2021, the percentages of the LTIP target award opportunity awarded in Market-based PRSUs, stock options and service-based RSUs were 50%, 10% and 40%, respectively. In calendar year 2022, for our CEO and NEOs who are executive vice presidents, the percentages of the LTIP target award opportunity awarded in Market-based PRSUs, stock options and service-based RSUs were 60%, 20% and 20%, respectively; while for NEOs who are senior vice presidents, the percentages of the LTIP target award opportunity awarded in Market-based PRSUs, stock options and service-based RSUs were 55%, 15% and 30%, respectively. See “III. Primary Components of Named Executive Officer Compensation; Calendar Year 2021 Compensation Payouts; Calendar Year 2022 Compensation Targets and Metrics−Long-Term Incentive Program−Design” for further information regarding the impact of such a target pay mix.

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(2)

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

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2021 Say on Pay Voting Results and Stockholder Outreach

We evaluate our executive compensation program and practices at least annually. Among other things, we consider the outcome of our most recent advisory vote on named executive officer compensation, or “Say on Pay,” and input we receive from our stockholders. As is described above in more detail in “Governance Matters−Corporate Governance−Stockholder Engagement,” we engage regularly with our stockholders, typically outside of our proxy solicitation period, on matters including executive compensation.

The primary components of our executive compensation program have remained consistent over the last several years and, in general, have received continuing support from our stockholders, as reflected in the voting results for our annual Say on Pay proposals shown in Figure 27 below. In 2019, our Say on Pay proposal received a lower than usual level of support, as a result of which we engaged in extensive stockholder outreach to better understand the views of our stockholders. We believe those engagement efforts and our continued stockholder outreach and engagement since that time, as well as the steps we have taken to address our stockholders’ questions and concerns, and improvements we have made to our disclosures regarding our executive compensation program, have led directly to the significant increase in support our Say on Pay proposals received in 2020 and 2021, when stockholders approved the proposal by a vote of 94% of votes cast.

Figure 27. Historical Say on Pay Votes (1)

(1)

Percentages represented are as a percentage of votes cast. For purposes of this figure, abstentions are treated as votes cast and have the effect of “Against” votes with respect to the Say on Pay proposal.

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In 2021, we engaged in extensive stockholder outreach regarding our executive compensation program prior to the proxy solicitation period, covering planned enhancements to our executive compensation disclosures in our 2021 proxy statement, and design considerations relating to our LTIP, among other topics. Figure 28 below summarizes what we heard from our stockholders, our perspective on those views, and how we have responded. Other than the changes described below and in this CD&A, our compensation and human resources committee determined to maintain our executive compensation program and practices in their current form for calendar year 2022, in light of our stockholders’ continuing support.

Figure 28. 2021 Executive Compensation Stockholder Outreach

 

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II.

EXECUTIVE COMPENSATION GOVERNANCE AND PROCEDURES

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Role of the Compensation and Human Resources Committee

Our Board has delegated certain responsibilities to the compensation and human resources committee, or for purposes of this CD&A, the “committee,” through a formal charter. The committee1 oversees the compensation programs in which our CEO and his direct reports who are executive or senior vice presidents participate. The independent members of our Board approve the compensation packages and payouts for our CEO. Our CEO is not present for any decisions regarding his compensation packages and payouts.

Committee responsibilities include, but are not limited to:

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reviewing and approving the Company’s executive compensation philosophy, objectives, and strategies;

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reviewing and approving the appropriate peer group companies for purposes of evaluating the Company’s compensation competitiveness;

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reviewing, and approving where appropriate, equity-based compensation plans;

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causing the Board to perform a periodic performance evaluation of our CEO;

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

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•

annually reviewing with our CEO the performance of the Company’s other executive officers in light of the Company’s executive compensation goals and objectives and approving the compensation packages and compensation payouts for such individuals;

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•

reviewing and recommending for appropriate Board action all cash, equity-based and other compensation packages, and compensation payouts applicable to the chair and other non-employee members of the Board;

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•

overseeing management’s determination as to whether the compensation policies and practices, including those related to pay equity laws, create risks that are reasonably likely to have a material adverse effect on the Company;

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reviewing the results of “Say on Pay” votes and considering whether any adjustments to the Company’s executive compensation program are appropriate; and

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•

establishing stock ownership guidelines applicable to the Company’s executive officers and recommending to the Board stock ownership guidelines applicable to the chair and other members of the Board.

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

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

Role of Committee Advisors

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

Representatives of Compensia regularly attend committee meetings (including executive sessions without management present), communicate with the committee chair outside of meetings, and assist the committee with its consideration of performance metrics and goals. Compensia reports to the committee, not to management. At the committee’s request, Compensia meets with members of management to gather and discuss information that is relevant to advising the committee. The committee may replace Compensia or hire additional advisors at any time. Compensia has not provided any other services to the committee or to our management, and has received no compensation from us other than with respect to the services described above. The committee assessed the independence of Compensia pursuant to SEC rules and Nasdaq listing standards, including the following factors: (1) the absence of other services provided by it to the Company; (2) the fees paid to it by the Company as a percentage of its total revenue; (3) its policies

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

 

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and procedures to prevent conflicts of interest; (4) the absence of any business or personal relationships with committee members; (5) the fact that it does not own any Lam common stock; and (6) the absence of any business or personal relationships with our executive officers. The committee assessed this information and concluded that the work of Compensia had not raised any conflict of interest.

Role of Management

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

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

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

Peer Group Practices and Survey Data

In establishing the total compensation levels of our executive officers, as well as the mix and weighting of individual compensation elements, the committee monitors compensation data from a group of comparably sized companies in the technology industry (the “Peer Group”), which may differ from peer groups used by stockholder advisory firms. The committee selects the companies constituting our Peer Group based on their comparability to our lines of business and industry, annual revenue, and market capitalization, and our belief that we are likely to compete with them for executive talent. Our Peer Group is focused on public semiconductor, semiconductor equipment and materials companies that file standard reports with the SEC as domestic issuers, and similarly-sized high-technology equipment and hardware companies with a global presence and a significant investment in research and development. The table below summarizes how the calendar year 2022 Peer Group companies compare to the Company:

Based on these criteria, the Peer Group and targets may be modified from time to time. Our Peer Group was reviewed in August and November 2021 for calendar year 2022 compensation decisions and, based on the criteria identified above, one company was added to the Peer Group (Intel Corporation) and three companies were removed (NetApp, Inc., Skyworks Solutions, Inc. and Xilinx, Inc.). These changes were made to ensure that our Peer Group continues to fit within our Peer Group criteria outlined above. Our Peer Group consists of the companies listed as follows:

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

Base pay levels for each executive officer are generally set with reference to market-competitive levels and in reflection of each officer’s skills, experiences, and performance. Variable pay target award opportunities and total direct compensation for each executive officer are generally designed to deliver market-competitive compensation for the achievement of stretch goals, with downside risk for underperforming and upside reward for overperforming. For those executive officers who are new to their roles, compensation arrangements may be designed to deliver below-market compensation for a period of time. However, the committee does not “target”

 

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