DEF 14A
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

(Amendment No.     )

Filed by the Registrant

Filed by a Party other than the Registrant

Check the appropriate box:

 

 

Preliminary Proxy Statement

 

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

 

Definitive Proxy Statement

 

 

Definitive Additional Materials

 

 

Soliciting Material Pursuant to §240.14a-12

Applied Materials, Inc.

 

 

(Name of Registrant as Specified In Its Charter)

 

  

 

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

Payment of Filing Fee (Check all boxes that apply):

 

 

No fee required.

 

 

Fee paid previously with preliminary materials:

 

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.


Table of Contents

LOGO


Table of Contents
LOGO   

Applied Materials, Inc.

3050 Bowers Avenue

Santa Clara, California 95054

(408) 727-5555

January 25, 2023

Dear Fellow Shareholders:

On behalf of the Board of Directors, we are pleased to invite you to attend Applied Materials’ 2023 Annual Meeting of Shareholders, which will be held on Thursday, March 9, 2023, at 11:00 a.m. Pacific Time at our corporate offices at 3050 Bowers Avenue, Building 1, Santa Clara, California 95054.

We encourage you to read this Proxy Statement because it contains important information for voting your shares and sets forth how the Board oversaw your investment over the past year. This year’s Proxy Statement reflects our continued focus on our business strategy, an engaged and effective Board, sound corporate governance and executive compensation practices, our Environmental, Social, and Governance strategy, and our regular dialogue with and responsiveness to our shareholders.

Financial Performance and Business Strategy

In fiscal 2022, Applied Materials achieved record performance while continuing to navigate COVID-related restrictions, supply chain shortages, and a challenging geopolitical and macroeconomic environment. Our revenues increased 12% and earnings per share increased 16% year-over-year.

As we look ahead, we remain very positive about our long-term growth opportunities. Semiconductors are the foundation of digital transformation that will affect nearly every sector of the global economy in the coming years. Applied Materials has the industry’s broadest portfolio of products and technologies that enable improvements in chip power, performance, area, cost, and time-to-market (PPACt). Our highly differentiated materials engineering solutions accelerate our customers’ technology roadmaps and create exciting growth opportunities for Applied.

Making Possible a Better Future

We also continued to make strong progress towards our 10-year sustainability roadmap, which we introduced in 2020. Our strategy considers our direct impact and how we run our business (1X), our industry’s impact and those of our customers and suppliers (100X), and how our technology can be used to advance sustainability on a global scale (10,000X). Among our other achievements, we continued to increase our usage of renewable energy, reduce our operational greenhouse gas emissions in line with our 2030 goals, strengthen our culture of inclusion, and accelerate sustainable innovation, including improving the energy efficiency and longevity of our products.

An Independent, Diverse and Experienced Board

We continue to have an active and ongoing Board refreshment process, as a result of which we have added two new directors over the last three years, each of whom benefits Applied as the company continues to scale its operations to support future growth and furthers our Board’s commitment to maintain a composition that aligns with the Company’s evolving business and strategic needs. With a balance of tenures, a diversity of personal characteristics and experiences, and a range of skills – including relevant subject matter expertise – our Board is well-positioned to oversee Applied’s management team and support Applied’s long-term strategy.

Shareholder Engagement and Demonstrated Responsiveness

We are committed to effective corporate governance that is informed by our shareholders, promotes the long-term interests of our company and its shareholders, and strengthens the Board’s and management’s accountability.

We have a robust shareholder outreach program that focuses on issues of interest to our shareholders, particularly in the areas of governance, compensation, environmental sustainability, and human capital matters such as diversity and inclusion. Shareholder feedback continues to directly inform the Board’s decision-making on a variety of important matters, and this Proxy Statement includes enhancements that are direct responses to this feedback.

Thank you for your continued investment in and support of Applied Materials.

Sincerely,

 

LOGO

 

Thomas J. Iannotti

 

Chairman of the Board

  

LOGO

 

Gary E. Dickerson

 

President and Chief Executive Officer


Table of Contents

Notice of 2023 Annual Meeting of Shareholders

 

LOGO           When     

 

Thursday, March 9, 2023 at 11:00 a.m. Pacific Time

 

     

 

LOGO     

     Where     

 

Applied Materials, Inc., 3050 Bowers Avenue, Building 1, Santa Clara, California 95054

 

     
LOGO          
Who
Can Vote
 
 
  

 

Shareholders of record at the close of business on January 11, 2023 and holders of proxies for those shareholders

 

Items of Business

 

1.  To elect ten directors to serve for a one-year term and until their successors have been duly elected and qualified.

2.  To approve, on an advisory basis, the compensation of our named executive officers for fiscal year 2022.

3.  To approve, on an advisory basis, the frequency of holding an advisory vote on executive compensation.

4.  To ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2023.

5.  To consider two shareholder proposals, if properly presented at the Annual Meeting.

6.  To transact any other business that may properly come before the Annual Meeting or any adjournment or postponement of the Annual Meeting.

Your vote is important to us. You may vote via the Internet or by telephone, or if you requested to receive printed proxy materials, by signing, dating, and returning your proxy card. If you are voting via the Internet or by telephone, your vote must be received by 11:59 p.m. Eastern Time on Wednesday, March 8, 2023. For specific voting instructions, please refer to the information provided in the following Proxy Statement, together with your proxy card or the voting instructions you receive by e-mail or that are provided via the Internet.

If you received a Notice of Internet Availability of Proxy Materials on how to access the proxy materials via the Internet, a proxy card was not sent to you, and you may vote only via the Internet, unless you have requested a paper copy of the proxy materials, in which case, you may also vote by telephone or by signing, dating, and returning your proxy card. Shares cannot be voted by marking, writing on, and returning the Notice of Internet Availability. Any Notices of Internet Availability that are returned will not be counted as votes. Instructions for requesting a paper copy of the proxy materials are set forth on the Notice of Internet Availability.

By Order of the Board of Directors

Teri A. Little

Senior Vice President,

Chief Legal Officer and Corporate Secretary

Santa Clara, California

January 25, 2023

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on March 9, 2023: The Proxy Statement and Annual Report to Shareholders are available at www.proxyvote.com.


Table of Contents

Table of Contents

 

   

Page

2023 Proxy Statement Summary     i  

Annual Meeting of Shareholders

    i  

Proposals and Board Recommendations

    i  

Director Nominees

    ii  

Board Practices and Composition

    iii  

Corporate Governance

    iv  

Executive Compensation

    v  

Our Commitment to ESG

    xii  
Proposal 1 – Election of Directors     1  

Nominees

    1  
Board and Corporate Governance Practices     12  

Board Composition and Nominee Considerations

    12  

Nominee Skills and Experience

    12  

Board Matrix

    13  

Board Composition and Refreshment

    15  

Corporate Governance

    17  

Corporate Governance Guidelines

    17  

Board Leadership

    17  

Director Onboarding and Education

    18  

Board and Committee Evaluations

    18  

Board’s Role in Risk Oversight

    20  

Board’s Role in Oversight of Strategy

    21  

Management Succession Planning

    21  

Shareholder Rights

    22  

Shareholder Engagement

    22  

Shareholder Communications

    23  

Stock Ownership Guidelines

    24  

Standards of Business Conduct

    24  

Board Meetings and Committees

    24  
Director Compensation     26  

Compensation Program for Directors

    26  

Director Compensation for Fiscal 2022

    28  
Stock Ownership Information     29  

Principal Shareholders

    29  

Directors and Executive Officers

    30  

Delinquent Section 16(a) Reports

    31  
Proposal 2 – Approval, on an Advisory Basis, of the Compensation of Our Named Executive Officers     32  
Compensation Discussion and Analysis     33  

Executive Summary

    33  

Compensation Governance and Decision-Making Framework

    41  

Components of Total Direct Compensation

    42  

Additional Compensation Programs and Policies

    55  
   

Page

Human Resources and
Compensation Committee Report
    57  
Executive Compensation     58  

Summary Compensation Table for Fiscal 2022, 2021 and 2020

    58  

Grants of Plan-Based Awards for Fiscal 2022

    59  

Outstanding Equity Awards at Fiscal 2022 Year-End

    60  

Option Exercises and Stock Vested for Fiscal 2022

    62  

Non-Qualified Deferred Compensation

    62  

Employment Agreement

    63  

Potential Payments Upon Termination or Change of Control

    63  

CEO Pay Ratio

    65  

Certain Relationships and Related Transactions

    66  
Proposal 3 – Advisory Vote on the Frequency of an Advisory Vote on Executive Compensation     67  
Proposal 4 – Ratification of the Appointment of Independent Registered Public Accounting Firm     68  

Fees Paid to KPMG LLP

    68  

Policy on Audit Committee’s Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

    69  

Audit Committee Report

    69  
Proposal 5 – Shareholder Proposal Regarding Special Shareholder Meeting     71  

Shareholder Proposal

    71  

Board of Directors Statement in Opposition

    72  
Proposal 6 – Shareholder Proposal Regarding Executive Compensation Program and Policy     74  

Shareholder Proposal

    74  

Board of Directors Statement in Opposition

    75  
Questions and Answers About the Proxy Statement and Our 2023 Annual Meeting     76  
Other Matters     81  

Shareholder Proposals or Nominations for 2024 Annual Meeting

    81  

No Incorporation by Reference

    81  
Appendix A: Unaudited Reconciliation of Non-GAAP Adjusted Financial Measures     A-1  

Reconciliation of non-GAAP adjusted financial measures used in the Compensation Discussion and Analysis section and elsewhere in this Proxy Statement, other than as part of disclosure of target levels, can be found in Appendix A.

 

 

Cautionary Note Regarding Forward-Looking Statements

This Proxy Statement contains forward-looking statements, including those regarding anticipated growth and trends in our businesses and markets, industry outlooks and demand drivers, technology transitions, our business, strategies and financial performance, our investment and growth strategies, our development of new products and technologies, our sustainability goals and commitments, and other statements that are not historical fact, and actual results could differ materially. Risk factors that could cause actual results to differ are set forth in the “Risk Factors” section of, and elsewhere in, our 2022 Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. All forward-looking statements are based on management’s estimates, projections, and assumptions as of the date hereof, and we undertake no obligation to update any such statements.


Table of Contents

LOGO

 

Proxy Statement Summary

 

2023 Proxy Statement Summary

Your proxy is being solicited on behalf of the Board of Directors of Applied Materials, Inc. We are making this Proxy Statement available to shareholders beginning on January 25, 2023. This summary highlights information contained in detail elsewhere in this Proxy Statement. We encourage you to read the entire Proxy Statement for more information prior to voting.

Annual Meeting of Shareholders

 

Date and Time:   March 9, 2023, 11:00 a.m. Pacific Time
Location:   Applied Materials, Inc., 3050 Bowers Avenue, Building 1, Santa Clara, California 95054.
Record Date:   January 11, 2023
Voting:   Shareholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the proposals to be voted on.
Attendance:   Shareholders and their duly appointed proxies may attend the meeting.

Proposals and Board Recommendations

 

  

 

  For More Information   Board Recommendation

 

PROPOSAL 1 – Election of Directors

  Pages 1 to 11  

 

LOGO

  FOR each Nominee

Rani Borkar

  Gary E. Dickerson     Yvonne McGill

Judy Bruner

  Thomas J. Iannotti  

  Scott A. McGregor

Xun (Eric) Chen

Aart J. de Geus

 

Alexander A. Karsner

Kevin P. March

 

 

PROPOSAL 2 – Executive Compensation

  Page 32  

LOGO

  FOR

Approval, on an advisory basis, of the compensation of our named executive officers for fiscal year 2022

 

PROPOSAL 3 – Frequency of Vote on Executive Compensation

  Page 67  

LOGO

  FOR every ONE year

Approval, on an advisory basis, of the frequency of holding an advisory vote on executive compensation

 

PROPOSAL 4 – Ratification of Registered Accounting Firm

  Page 68 to 70  

LOGO

  FOR

Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2023

 

PROPOSAL 5 – Shareholder Proposal Regarding Special Shareholder Meeting

  Pages 71 to 73  

LOGO

  AGAINST

Shareholder proposal requesting that the Board take steps to give the owners of 10% of our outstanding common stock the power to call a special shareholder meeting

 

PROPOSAL 6 – Shareholder Proposal Regarding Executive Compensation Program and Policy

  Pages 74 to 75  

LOGO

  AGAINST

Shareholder proposal to improve the executive compensation program and policy to include the CEO pay ratio factor

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    i


Table of Contents

LOGO

 

         Proxy Statement Summary

 

Director Nominees

 

Name and Occupation

  Age   Director Since   Independent   Committees

Rani Borkar

Corporate Vice President, Azure Hardware Systems and Infrastructure, Microsoft Corporation

  61   2020  

LOGO

 

Compensation

Strategy and Investment

Judy Bruner

Executive Vice President, Administration and Chief Financial Officer, SanDisk Corporation (retired)

  64   2016  

LOGO

 

Audit (Chair)

Governance (Chair)

Xun (Eric) Chen

Managing Partner, SB Investment Advisers

  53   2015  

LOGO

 

Compensation

Strategy and Investment

Aart J. de Geus

Chairman of the Board of Directors, Chief Executive Officer, Synopsys, Inc.

  68   2007  

 

LOGO

  Strategy and Investment

Gary E. Dickerson

President and Chief Executive Officer, Applied Materials, Inc.

  65   2013    

 

   

 

Thomas J. Iannotti

Senior Vice President and General Manager, Enterprise Services, Hewlett-Packard Company (retired)

  66   2005  

LOGO

  Compensation (Chair)

Alexander A. Karsner

Senior Strategist, X (parent company: Alphabet Inc.)

  55   2008  

LOGO

 

Compensation

Governance

Kevin P. March

Senior Vice President, Chief Financial Officer, Texas Instruments, Incorporated (retired)

  65   2022  

LOGO

  Audit

Yvonne McGill

Senior Vice President, Corporate Controller and Infrastructure Solutions Group Chief Financial Officer, Dell Technologies, Inc.

  55   2019  

LOGO

 

Audit

Governance

Scott A. McGregor

President and Chief Executive Officer, Broadcom Corporation (retired)

  66   2018  

LOGO

 

Strategy and Investment (Chair)

Audit

 

ii    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Proxy Statement Summary

 

Board Practices and Composition

Ensuring the Board is composed of directors who possess a wide variety of relevant skills, professional experience and backgrounds, bring diverse viewpoints and perspectives, and effectively represent the long-term interests of shareholders is a top priority of the Board and the Corporate Governance and Nominating Committee (the “Governance Committee”). Our Board composition reflects strong Board practices that support regular refreshment based on our board needs, evolving strategy, and proactive succession planning.

Director Nominee Expertise

 

 

LOGO

Key Attributes

 

 

LOGO

* Ethnically diverse means a director who self-identifies as one or more of the following (defined by Nasdaq as an Underrepresented Minority): Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native or Native Hawaiian or Pacific Islander.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    iii


Table of Contents

LOGO

 

         Proxy Statement Summary

 

Board Practices Support Thoughtful Board Composition

 

Board Composition to Support Company Strategy

 

The Board and the Governance Committee regularly evaluate the size and composition of the Board to ensure appropriate alignment with the Company’s evolving business and strategic needs.

 

Policy on Board Diversity

 

The Board is committed to having a Board that reflects diverse perspectives, including those based on gender, ethnicity, skills, experience at policy-making levels in areas that are relevant to the Company’s global activities, and functional, geographic, or cultural background. The Board has adopted a Policy on Board Diversity as part of its Corporate Governance Guidelines, which highlights its commitment to actively seek out women and ethnically diverse director candidates.

 

Annual Board Evaluations

 

The Board conducts an annual self-assessment of the Board, Board Committees, and individual directors to evaluate effectiveness.

 

Board Refreshment

 

The Board believes the fresh perspectives brought by new directors are critical to a forward-looking and strategic Board when appropriately balanced by the deep understanding of Applied’s business provided by longer-serving directors.

 

Director Succession Planning

 

The Governance Committee reviews the short-term and long-term strategies and interests of Applied to determine what current and future skills and experience are required of the Board in exercising its oversight function.

Corporate Governance

We are committed to effective corporate governance that is informed by our shareholders, promotes the long-term interests of our shareholders, and strengthens Board and management accountability.

Governance Highlights

 

LOGO

  Annual Election of Directors

LOGO

  Independent Chair of the Board

LOGO

  Highly Independent Board (9 of 10 Director
nominees) and Committees

LOGO

  Annual Board, Committee, and Individual
Evaluations

LOGO

  Robust Board Succession Planning

LOGO

  Policy on Board Diversity

LOGO

  Active Shareholder Engagement Practices

LOGO

  Shareholder Right to Call a Special Meeting

LOGO

  Shareholder Right to Act by Written Consent

LOGO

  Shareholder Proxy Access

LOGO

  No Poison Pill

LOGO

  No Supermajority Vote Requirements

LOGO

  Majority Voting for Directors

LOGO

  Regular Executive Sessions of Independent Directors

LOGO

  Stock Ownership Guidelines for Directors and Executives

LOGO

  Clawback Policy for Annual and Long-Term Incentive Plans
 

 

iv    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Proxy Statement Summary

 

Shareholder Engagement

We believe that strong corporate governance should include regular engagement with our shareholders to enable us to understand and respond to shareholder concerns. We have a robust shareholder outreach program led by a cross-functional team that includes members of our Investor Relations, Global Rewards, ESG, and Legal functions. Independent members of our Board are also involved, as appropriate. In the fall, we proactively solicit feedback on our executive compensation program, corporate governance practices, and sustainability and diversity and inclusion initiatives, as well as any matters voted on at our prior annual meeting. After the filing of our proxy statement, we engage again with our shareholders about important topics to be addressed at our annual meeting. Following our annual meeting, our Human Resources and Compensation Committee (the “HRCC”) and Governance Committee review the results of the meeting and investor feedback, as well as evaluate emerging trends in corporate governance and other areas. See “Shareholder Engagement” on page 22 for more information.

Executive Compensation

Company Overview

Applied Materials is the leader in the materials engineering solutions used to produce virtually every new chip and advanced display in the world. Our expertise in modifying materials at atomic levels and on an industrial scale enables customers to transform possibilities into reality. At Applied Materials, our innovations Make Possible® a Better Future.

We develop, design, produce and service semiconductor and display equipment for manufacturers that sell into highly competitive and rapidly changing end markets. Our competitive positioning is driven by the ability of our talented workforce to identify major technology inflections early, and to develop highly differentiated materials engineering solutions for our customers to enable those technology inflections. Through our broad portfolio of products, technologies and services, innovation leadership and focused investments in research and development, we are enabling our customers’ success and creating significant value for our shareholders. Applied’s ability to hire, develop and retain a world-class global workforce is based on our commitment to creating a Culture of Inclusion that embraces different backgrounds, perspectives, and experiences to build stronger, more resilient teams. Consistent with our core values, we enable our employees to do their best work by providing quality training, learning and career development opportunities; promoting diversity, equity and a connected and inclusive culture; and upholding a high standard of ethics and respect for human rights.

In addition to our other accomplishments, we continue to make strong progress towards our 10-year road map for environmental and social responsibility, which we introduced in 2020. At Applied, making a positive contribution is at the foundation of our culture and our vision to Make Possible® a Better Future. Our 1x, 100x and 10,000x sustainability framework refers to the holistic goals and commitments we’ve set for our operations, how we work with customers and suppliers, and how our technology can be used to advance sustainability on a global scale. More details of Applied’s ESG vision and strategy, including a copy of the Company’s most recent Sustainability Report, can be found at https://www.appliedmaterials.com/company/corporate-responsibility.

Our Performance Highlights

Over the past several years, our broad portfolio of products and services has made Applied a more resilient company that can perform well in a variety of market environments. In 2022, we delivered strong financial performance while navigating COVID-related restrictions, supply chain shortages and a challenging geopolitical and macroeconomic environment. Key highlights include:

 

  »  

Record revenue of $25.8 billion, with record annual bookings in Semiconductor Systems and Applied Global Services, and a 62% increase in our year-end backlog at a company level – to a record $19 billion.

 

  »  

Record GAAP EPS of $7.44, and record non-GAAP adjusted EPS of $7.70 (see Appendix A for a reconciliation of non-GAAP adjusted measures).

 

  »  

Returned 151% of free cash flow to shareholders, including $6.1 billion in share repurchases and $873 million in dividends.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    v


Table of Contents

LOGO

 

         Proxy Statement Summary

 

Highlights of five-year performance achievements across key financial measures

 

 

LOGO

Non-GAAP adjusted operating margin and non-GAAP adjusted EPS are performance targets under our long-term incentive and bonus plans. See Appendix A for non-GAAP reconciliations.

Key financial highlights for our reporting segments in fiscal 2022 include the following:

 

  »  

Semiconductor Systems segment: we delivered record annual revenue of $18.8 billion.

 

  »  

Applied Global Services segment: we grew revenue to a record $5.5 billion, and over the past 12 months, we increased the number of installed base tools by 8% and the number of tools covered by comprehensive long-term service agreements by 16%.

 

  »  

Display and Adjacent Markets segment: we delivered revenue of $1.3 billion and maintained profitability during an industry down cycle.

Strategic and Operational Highlights

Applied’s strategy is to deliver highly differentiated materials engineering products and services that enable major technology inflections and drive our customers’ success.

 

 

LOGO

Semiconductors are at the foundation of the digital transformation that will affect almost every sector of the economy over the coming years. Long-term megatrends including the Internet of Things (IoT), big data and artificial intelligence (AI) are fueling a new era of growth for semiconductors and driving the need for next-generation silicon technologies. Applied Materials has focused its strategy and investments to deliver innovations that accelerate improvements in the power, performance, area, cost, and time-to-market (PPACt) of semiconductor devices. Key strategic and operational accomplishments during fiscal 2022 include:

 

  »  

We introduced a new Integrated Materials Solution (IMS) that re-engineers the deposition of transistor wiring to significantly reduce electrical resistance, which has become a critical bottleneck to further improvements in chip performance and power.

 

  »  

We continued developing co-optimized and IMS products for 3D gate-all-around transistors and backside power distribution networks – two major materials engineering-enabled inflections that grow Applied’s total available market.

 

vi    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Proxy Statement Summary

 

  »  

We strengthened our capabilities for advanced packaging, which helps chipmakers achieve improvements in PPACt, and where Applied has grown its equipment business to nearly a billion dollars.

 

  »  

In our services business, the renewal rate for long-term service agreements is well over 90%, which demonstrates the value customers see in our subscription services.

 

  »  

We continued to make substantial progress towards our 10-year roadmap for environmental and social responsibility, as described in more detail on page xiv.

Total Shareholder Return Performance

In fiscal 2022, our total shareholder return performance was negatively impacted by global macro-economic conditions, including monetary tightening measures taken by central banks around the world to address inflation as well as industry headwinds, including trade restrictions on sales of a subset of our products to customers in China. However, as shown below, for the five year period beginning with fiscal 2018 Applied has substantially outperformed the S&P 500 Index, reflecting the company’s ability to create unique and innovative materials engineering solutions that accelerate its customers’ technology roadmaps.

Fiscal 2018 – Fiscal 2022 Total Shareholder Return vs. S&P 500 and Proxy Peers1

 

 

LOGO

 

1

Reflects results from October 30, 2017 through October 30, 2022. Proxy peer data reflects companies set forth on page 42, weighted by market capitalization.

Key Compensation Actions

Performance-Based Compensation Decisions. The HRCC approved an aggressive set of performance goals for the executive officers for fiscal 2022, including financial targets that would represent record performance for Applied, as well as equally challenging operational targets. During fiscal 2022, Applied delivered exceptional financial and operational results in a challenging environment and made meaningful progress towards our long-term strategic goals that remain focused on enabling strong longer-term revenue and EPS growth. However, given an unprecedented set of challenges, including supply chain constraints and new export control regulations, the Company did not meet some of its stretch objectives for the year, resulting in bonus payouts for the executive officers that were, on average, below target. No adjustments were made during the year to the performance goals or to the Company’s results in determining incentive payouts.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    vii


Table of Contents

LOGO

 

         Proxy Statement Summary

 

As part of our multi-year incentive program, for the period of fiscal 2020 through 2022, the HRCC approved aggressive goals for non-GAAP adjusted operating margin and relative total shareholder return. The results for this three-year performance period meaningfully exceeded target, resulting in above-target vesting of performance share unit awards for our executive officers.

Chief Financial Officer Transition. In March 2022, we welcomed our new Chief Financial Officer, Brice Hill, who brings extensive experience in semiconductor devices, manufacturing and computing from the edge to the cloud. Mr. Hill was previously the Executive Vice President and CFO of Xilinx through its acquisition by Advanced Micro Devices, Inc. Prior to that, he worked at Intel Corporation for more than two decades, including as Chief Financial Officer and Chief Operating Officer of the Technology, Systems and Core Engineering Group, responsible for Intel’s manufacturing, R&D and product engineering. In connection with hiring Mr. Hill, the HRCC approved a new-hire compensation package structured to provide appropriate incentives for him to join Applied, but not intended to represent ongoing compensation for his role. Concurrent with Mr. Hill’s appointment to the CFO role, Robert J. Halliday, who served as Applied’s interim CFO since September 2021, resumed his prior role as Corporate Vice President and Advisor. Mr. Halliday’s compensation, as shown on page x, reflected the interim nature of his service as CFO.

Applied Global Services Leadership Transition. In August 2022, we announced the decision by Ali Salehpour, our former Senior Vice President, Services, Display and Flexible Technology, to retire from the Company. Mr. Salehpour remained with Applied until January 2023 as Advisor to the Company’s Chief Executive Officer to ensure a smooth transition of his role and responsibilities.

Following Mr. Salehpour’s announcement, Timothy M. Deane was appointed as head of the Applied Global Services (“AGS”) organization, leading the services business supporting customers in all market segments. Mr. Deane has been with Applied since 1995, most recently as the head of Field Operations and Business Management for the Semiconductor Products Group. The structure and amount of Mr. Deane’s compensation for fiscal 2022 primarily reflects his prior role.

 

viii    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Proxy Statement Summary

 

Primary Compensation Elements and Executive Compensation Highlights for Fiscal 2022

The primary elements of our compensation program are base salary, annual incentive bonuses and long-term incentive awards. Other elements of compensation include a 401(k) savings plan, deferred compensation benefits and other benefits programs that are generally available to all employees. Primary elements and highlights of our fiscal 2022 compensation program for our NEOs (except for Messrs. Hill, Deane and Halliday) were as follows:

 

Element of Pay   Structure   Highlights     

Base Salary

 

(see page 43)

 

 

»Fixed cash compensation for performing expected day-to-day responsibilities

 

»Reviewed annually and adjusted as appropriate, based on scope of responsibility, performance, time in role, experience, and competitive market for executive talent

 

 

 

»Reflecting (i) continued strong performance across the business, driven by our executive leadership and (ii) the continuing growth in the size and complexity of the Company, in fiscal 2022 the HRCC approved salary increases ranging from 2% to 9%

 

»This excludes the salary for our CEO, which the HRCC has not increased since December 2018

   

Annual

 

Incentive

 

Bonuses

 

(see page 43)

 

»Variable cash compensation

 

»Based on performance compared to pre-established financial, operational, strategic, and individual performance objectives

 

»Includes assessment of the Company’s progress towards ESG goals

 

»Financial and non-financial metrics provide a comprehensive assessment of executive performance

 

»Performance metrics evaluated annually to maintain continued alignment with strategy and market practice

 

»NEO annual incentives determined through a three-step performance assessment process:

 

LOGO

 

 

»No increase in target bonus as a percentage of base salary from fiscal 2021 to fiscal 2022 for any of the NEOs

 

»The initial performance hurdle for fiscal 2022 was $7.00 of non-GAAP adjusted EPS, meaningfully above Applied’s actual result for fiscal 2021. Actual non-GAAP adjusted EPS for fiscal 2022 was $7.70

 

»As the initial performance hurdle was met, annual bonuses for the NEOs (with the exception of Mr. Deane) were based on (i) the Company’s results as compared to the objective and quantifiable business and strategic goals in the corporate scorecard and (ii) an assessment of individual performance results as compared to quantitative and strategic objectives

 

  Mr. Deane’s annual bonus payout was based on the performance of the Semiconductor Products Group (“SPG”), reflecting his role for the majority of fiscal 2022

 

»Resulting payouts ranged from 71% to 111% of target for our NEOs

 

  Corporate scorecard modifiers ranged from 0.66x to 0.74x (see corporate scorecard information on pages 46 and 47) and the SPG modifier was 0.93x

 

  Individual performance modifiers ranged from 1.0x to 1.2x (see individual performance factor details on page 48)

 

   

Long-Term

 

Incentives

 

(see page 50)

 

 

»Delivered in part through performance share units (PSUs), to establish rigorous long-term performance alignment

 

»Balance of award delivered in restricted stock units (RSUs) to provide a strong tie to shareholder value creation and enhance retention

 

»PSUs vest based 50% on achievement of 3-year non-GAAP adjusted operating margin goal and 50% on 3-year TSR relative to the members of the S&P 500 Index

 

»PSUs vest at end of 3-year performance period, based on achievement of performance goals; RSUs vest ratably over 3 years

 

 

 

»The target mix of long-term incentive awards consists of 75% PSUs and 25% RSUs for the CEO and 50% PSUs and 50% RSUs for the other NEOs

 

»Non-GAAP adjusted operating margin is a key measure of our Company’s long-term success

 

»Relative TSR incentivizes management to outperform the market in any business environment

 
 
   

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    ix


Table of Contents

LOGO

 

         Proxy Statement Summary

 

Pay Mix

In fiscal 2022, a significant portion of our executives’ compensation consisted of variable compensation and long-term incentives. As illustrated below, 95% of CEO compensation for fiscal 2022 consisted of variable compensation elements, and 88% of CEO compensation was delivered in long-term incentive awards with multi-year vesting.

 

Fiscal 2022 Compensation Mix1
CEO    All Other NEOs2
LOGO   

 

LOGO

 

1

Represents total direct compensation for fiscal 2022, including the grant date fair value of annual long-term incentive awards.

 

2

Excludes Messrs. Hill, Deane and Halliday, whose fiscal 2022 compensation is not representative of ongoing NEO compensation.

Summary of 2022 Total Direct Compensation

The following table summarizes elements of annual total direct compensation for our NEOs for fiscal 2022, consisting of (1) base salary, (2) actual annual incentive bonus payout and (3) long-term incentive awards (the grant date fair value of stock awards). This table excludes amounts not considered by the HRCC to be reflective of ongoing annual total direct compensation, such as: (a) the value of a sign-on bonus and a new-hire long-term incentive award for Mr. Hill, (b) the value of special RSU awards granted to Mr. Deane in December 2021 and upon his appointment as head of AGS in September 2022, (c) the value of a cash payment awarded to Mr. Halliday in recognition of his successful term as interim CFO and (d) certain other amounts required by the SEC to be reported in the Summary Compensation Table (see page 58 of this Proxy Statement).

 

Name and Principal Position

  

Salary

($)

    

Annual
Incentive
Bonus

($)

    

Annual
Long-Term
Incentive
Award

($)

    

Total

($)

 

Gary E. Dickerson

President and Chief Executive Officer

     1,030,000        1,358,055        17,783,334        20,171,389  

Brice Hill (1)

Senior Vice President, Chief Financial Officer and Enterprise Enablement Group

     441,346        523,723               965,069  

Prabu G. Raja

Senior Vice President, Semiconductor Products Group

     679,615        819,791        5,372,622        6,872,028  

Omkaram Nalamasu

Senior Vice President, Chief Technology Officer

     592,308        568,080        3,727,899        4,888,287  

Timothy M. Deane (2)

Group Vice President, Applied Global Services

     433,350        412,458        860,734        1,706,542  

Robert J. Halliday (3)

Corporate Vice President, Advisor; Former Interim Chief Financial Officer

     409,231        435,325               844,556  

Ali Salehpour (4)

Former Senior Vice President, Services, Display and Flexible Technology

     653,461        630,028        4,577,886        5,861,375  

 

x    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Proxy Statement Summary

 

(1)

Mr. Hill joined Applied in March 2022. The base salary and annual incentive bonus shown for Mr. Hill are prorated based on his partial-year service during fiscal 2022. Amounts shown exclude a new-hire RSU award with grant date fair value of $8,351,018 and a sign-on bonus of $2,000,000. Mr. Hill did not receive an annual long-term incentive award in fiscal 2022.

 

(2)

Mr. Deane’s compensation for fiscal 2022 primarily reflects service in his prior role. Amounts shown exclude an RSU award granted in December 2021 with grant date fair value of $981,171 and an RSU award granted in September 2022 upon his appointment as head of AGS with grant date fair value of $965,215.

 

(3)

Mr. Halliday served as interim CFO until resuming his role as Corporate Vice President and Advisor upon Mr. Hill’s appointment as CFO in March 2022. The base salary and annual incentive bonus shown are prorated for service in, and compensation for, those roles. Amounts shown exclude a cash payment of $2,150,000 in recognition of Mr. Halliday’s successful service as the Company’s interim CFO.

 

(4)

Mr. Salehpour retired from Applied in January 2023. RSU and PSU awards that were unvested at the time of Mr. Salehpour’s departure will vest consistent with the terms for a qualifying retirement under his existing award agreements.

Pay and Performance

The HRCC sets aggressive performance goals for the CEO and for the entire Executive Leadership Team. The following chart shows the connection between Applied’s TSR and the total direct compensation for our CEO over the last five fiscal years. During this period, our shareholder returns significantly outpaced the increase in our CEO’s total direct compensation.

 

 

LOGO

 

(1)

Consists of annual base salary, actual annual incentive bonus payout and long-term incentive award (grant date fair value of annual long-term incentive awards). Total direct compensation shown above excludes other amounts required by the SEC to be reported in the Summary Compensation Table and also excludes the grant date fair value of a non-recurring Value Creation Award granted in fiscal 2021. However, the HRCC takes the value of that award into consideration when making compensation decisions for Mr. Dickerson.

 

(2)

Reflects the total shareholder return on our common stock during the period from October 29, 2018 through October 28, 2022 (the last business day of fiscal 2022), assuming $100 was invested on October 29, 2018 and assuming reinvestment of dividends.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    xi


Table of Contents

LOGO

 

         Proxy Statement Summary

 

Our Commitment to ESG

Our Approach

Applied is committed to growing its business in a sustainable and socially responsible manner. We are focusing our resources and capabilities on addressing the sweeping technological challenges in the era of Artificial Intelligence and big data, and working with our customers and suppliers to build a safer, more equitable, and sustainable future.

At the heart of Applied’s values is a commitment to operate with responsibility and integrity while making positive contributions to our industry and the world around us. To drive change and innovation, we invest in our research and development, operations, supply chain, and interactions with our local communities. We are committed to advancing sustainability, not only through improvements in our own operations but also through investing in technological innovation. We are also committed to transparency and have aligned our disclosures and objectives with the United Nations Sustainable Development Goals and leading Environmental, Social, and Governance reporting standards and frameworks such as those developed by the Sustainability Accounting Standards Board (SASB), Global Reporting Initiative (GRI), Task Force on Climate-related Financial Disclosure (TCFD) and CDP (formerly the Carbon Disclosure Project).

To learn more about Applied’s approach to sustainability, please refer to our annually published Sustainability Report, which can be found at https://www.appliedmaterials.com/company/corporate-responsibility.

Sustainability Framework

Our sustainability framework covers our direct impact and the impact of our value chain (customers and suppliers), as well as how we can advance sustainability on a global scale. Our 10-year sustainability strategy, which we introduced in 2020, considers the magnitude of our opportunities, including social and environmental impacts in our operations (1X), how we work with customers and suppliers (100X), and how our technology can be used to advance sustainability on a global scale (10,000X).

 

 

LOGO

 

xii    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Proxy Statement Summary

 

Our Sustainability Strategy, Initiatives and Commitments

 

       
       LOGO         

Lead with Purpose

through a values-based approach
to innovation, decision-making
and community action

            LOGO     

Invest in People

to build a deep-rooted Culture of
Inclusion and foster a diverse and
skilled talent pipeline

 

» Our immediate priority is to protect the health and safety of our workers, customers, and neighboring communities. In response to the continuing uncertainty and disruptions of the COVID-19 crisis, our business continuity teams directed a comprehensive response across all the regions where we operate.

 

» We worked alongside governments and trade associations to keep critical facilities operating and to minimize global supply chain disruptions.

 

» We engaged a third-party partner to conduct an equity audit of our community involvement and investments to identify and proactively address unintentional barriers arising from bias, norms, or systemic structures. Building on the outcomes of this audit, we made a public declaration to center our community investments in equity.

 

» We furthered our strong stance on corporate governance by continuing to sharpen our governance policies and procedures to protect our business and stakeholders amid evolving global threats.

 

        

 

» We value diversity of thought, race, ethnicity, national origin, gender, gender identity, sexual orientation, age, culture and expertise because they strengthen our business and power the innovations that define our enterprise.

 

» Amid complex social challenges, we continued to implement our multiyear strategy to foster a meaningful Culture of Inclusion that helps address systemic race and gender barriers with the objective to become the destination employer in our industry.

 

» We implemented and enlisted our leadership group in an inclusive leadership program that is designed to raise consciousness and strengthen cultural competency.

 

» Our commitment to invest in Applied’s people is underpinned by goals to increase women’s representation at Applied globally and in the U.S., increase underrepresented minorities’ representation in our U.S. workforce, and maintain ambitious occupational health and safety total case incident rates (TCIR).

 

» We implemented a new alternative workplace location process, enabling flexibility for our employees when personal circumstances arise.

 

» Our commitment to protecting human rights was furthered by our first human rights salience assessment, building on our Human Rights Statement of Principles published in 2021.

 

   
       
LOGO  

Protect our Planet

by respecting the Earth’s finite
resources while enabling growth in
our business and the data economy

         LOGO  

Innovate for Progress

to empower transformative
innovation that improves technology
in harmony with resources

 

» We have the opportunity to accelerate the sustainable transformation of our industry and of worldwide technology use. We have achieved our goal of 100% renewable electricity in the U.S., primarily through a virtual power purchase agreement (VPPA) in White Mesa, Texas.

 

» Our recent work to quantify our 2019 Scope 3 emissions inventory enabled Applied to set science-based targets in alignment with the Paris Climate Agreement.

 

» Our commitment to protect the planet is underpinned by goals to move to 100% renewable electricity and reduce our Scope 1 and 2 CO2 emissions by 50% by 2030 (as compared to our 2019 baseline).

 

        

 

» We are taking an end-to-end, data-driven approach to identify opportunities to innovate across our full network of manufacturing, logistics, and supply chain—and focusing where we can have the greatest impact.

 

» Our commitment to innovate for progress is underpinned by our 3x30 goals pertaining to energy consumption, chemical consumption and tool footprint for semiconductor products.

 

» Our Supply Chain Certification for Environmental and Social Sustainability (SuCCESS2030) initiative offers training and resources to help our suppliers deliver on our ESG expectations, and we conduct periodic supplier audits and assessments to verify their compliance.

 

» We are investing in more sustainable and right-sized packaging solutions that use less material and have multiple useful lives.

 

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    xiii


Table of Contents

LOGO

 

         Proxy Statement Summary

 

For more information on Applied’s recent progress toward meeting the goals underpinning our sustainability strategy, please refer to our 2021 Sustainability Report available at https://www.appliedmaterials.com/company/corporate-responsibility.

Our 2022 ESG Accomplishments

To ensure that Applied is able to meet its ambitious long-term ESG goals, we established a set of interim objectives for fiscal 2022. As described in more detail on page 46, the Company’s level of achievement of these objectives was added to the corporate scorecard, which informs bonus payouts for our executive officers. As the world continued to adapt to the impacts of COVID-19 and global supply chain disruptions challenged the resilience of every industry, Applied made strong progress toward our 10-year sustainability roadmap, which we introduced in 2020. Key achievements included that we:

 

LOGO

  Reduced our Scope 1 and 2 emissions, achieved our goal of 100% renewable electricity in the U.S. and remained on track to achieve our 2030 environmental goals  

LOGO

  Quantified our Scope 3 emissions inventory for semiconductor products for our 2019 baseline and reported our carbon impact and risks in-line with the TCFD

LOGO

  Established Scope 1, 2 and 3 science-based targets, with SBTi ratification expected by mid-2023  

LOGO

  Joined the Semiconductor Climate Consortium, which aims to accelerate reduction of greenhouse gas emissions across the semiconductor value chain, as well as the RE100, a global initiative bringing together large businesses committed to 100% renewable electricity

LOGO

  Advanced our 3x30 and SuCCESS2030 goals, including accelerating sustainable innovation, improving the longevity of our products, and enabling our suppliers to better meet our ESG expectations  

LOGO

  Strengthened our Culture of Inclusion by providing comprehensive diversity training to all senior leaders and a majority of employees worldwide and increased the representation of women and underrepresented minorities at Applied

LOGO

  Conducted our first human rights salience assessment, which builds on our Human Rights Statement of Principles  

LOGO

  Completed an equity audit of our community involvement and investments, and committed to put equity at the center of all future community engagements

Sustainability and ESG Oversight and Management

Our Board and management actively oversee sustainability matters to foster accountability. The Board’s Governance Committee oversees the Company’s overall ESG strategy, policies, and performance. We have established executive leadership of a company-wide strategy on ESG matters and reporting and are focused on integrating sustainability into our operations and company culture through initiatives aligned to company strategy that address a broad set of stakeholders, including shareholders, customers, employees, suppliers, governments, and our local communities.

Our ESG Leadership Council, which includes leaders from across all of Applied’s ESG-focused delivery teams, oversees implementation of our ESG strategy. To ensure accountability, the Council regularly reports progress to Applied’s Executive Leadership Team as part of the strategic review process, and quarterly to the Governance Committee. The Council is supported by employees and leaders from across all business units and functions that are responsible for delivering progress toward our ESG strategy. Our Senior Director of ESG, Corporate Sustainability and Reporting leads the Council and ESG efforts across our business and has primary responsibility for the quarterly reports to the Governance Committee and Executive Leadership Team. The Governance Committee’s ESG oversight process also includes presentations by internal and third-party experts to discuss topics such as renewable energy, the ESG data assurance process, our 3x30 program and other relevant topics.

Our Environmental, Health, and Safety (“EHS”) organization is dedicated to maintaining a safe and healthful working environment, demonstrating environmental leadership, and meeting or exceeding regulatory compliance. The Head of EHS also reports directly to the Governance Committee on a quarterly basis.

We have a team fully dedicated to supporting our work in designing a culture of inclusion, and the HRCC oversees our corporate culture and human capital management programs, including our diversity and inclusion practices and initiatives. The HRCC approved the ESG objectives for our annual bonus program to incentivize our leadership team to maintain progress toward all our 2030 ESG goals.

 

xiv    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         PROPOSAL 1 – Election of Directors

 

Proxy Statement

PROPOSAL 1 – Election of Directors

Nominees

Applied’s Board of Directors is elected each year at the Annual Meeting of Shareholders. Applied currently has 11 directors. Adrianna C. Ma’s service on our Board will end upon completion of her current term in March 2023. The Board has authorized a reduction in the size of the Board from 11 to ten directors, effective upon the election of directors at the Annual Meeting. Upon the recommendation of the Governance Committee, the Board has nominated the ten individuals listed below for election at the Annual Meeting, each of whom currently serves as a director of Applied. These nominees bring a wide variety of relevant skills, professional experience, and backgrounds, as well as diverse viewpoints and perspectives to represent the long-term interests of shareholders and to fulfill the leadership and oversight responsibilities of the Board.

If any nominee listed below becomes unable to stand for election at the Annual Meeting, the persons named as proxies may vote for any person designated by the Board to replace the nominee. Alternatively, the proxies may vote for the remaining nominees and leave a vacancy that the Board may fill later, or the Board may reduce the authorized number of directors. As of the date of this Proxy Statement, the Board is not aware of any nominee who is unable or will decline to serve as a director.

Each director elected at the Annual Meeting will serve until Applied’s 2024 Annual Meeting of Shareholders or until they are succeeded by another qualified director who has been elected, or, if earlier, until their death, resignation, or removal.

 

    LOGO  

The board recommends that you vote for each of the following director nominees

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    1


Table of Contents

LOGO

 

         PROPOSAL 1 – Election of Directors

 

LOGO

 

 

  

Rani Borkar

 

Corporate Vice President, Azure Hardware Systems and Infrastructure, Microsoft Corporation

 

 

Ms. Borkar brings extensive semiconductor industry experience to our Board in technology, strategy and innovation, and global business operations and services. Ms. Borkar has served as Corporate Vice President, Azure Hardware Systems and Infrastructure, at Microsoft Corporation, a global technology provider, since June 2019. She also served as Microsoft’s Corporate Vice President, Microsoft Cloud Capacity, Supply Chain and Provisioning, from 2017 to June 2019. From 2016 to 2017, Ms. Borkar was Vice President, OpenPOWER Development at IBM Corporation, a global technology and consulting company. Prior to IBM, Ms. Borkar worked at Intel Corporation for 27 years, most recently as Intel’s Corporate Vice President and General Manager, Product Development Group.

 

Key skills and qualifications

 

Industry and Technology Experience: Ms. Borkar has gained over 30 years of experience in our industry and related technologies. This experience includes her current leadership role at Microsoft Azure and prior roles at IBM and Intel. Ms. Borkar also serves as a board member of the Global Semiconductor Alliance, a leading semiconductor and technology industry organization which strives to establish a profitable and sustainable semiconductor ecosystem.

 

Strategy and Innovation; Growth and Emerging Technologies; Global Business: Each role in Ms. Borkar’s career has featured increased responsibility and accountability for strategic planning and oversight in a broad range of global, high-growth businesses. As the head of Azure Hardware Systems and Infrastructure, she leads organizations that architect, invent, and sustain the silicon, platforms, and systems that power Azure. She is responsible for the vision, strategy, and architecture of silicon development as well as global capacity deployment for Microsoft’s cloud data center infrastructure. Ms. Borkar’s other relevant experience includes her role as Corporate Vice President at Intel, leading Intel’s silicon product development strategy while managing a large and diverse global engineering organization.

 

Service, Operations, and Manufacturing: Under Ms. Borkar’s leadership in her current role, Microsoft’s engineers focus on developing technologies to drive end-to-end business value for Azure’s products and solutions. Her experience with and understanding of service management and service offerings for technology companies, manufacturing operations and other operational processes provide important insights to our Board.

 

 

INDEPENDENT

 

Age: 61

 

Director Since: 2020

 

Board Committees

 

  Human Resources and Compensation

 

  Strategy and Investment

 

Other Current Public Company Directorships

 

  None

 

Former Public Company Directorships (within last five years)

 

  None

 

Other Directorships and Memberships

 

  Board member, Global Semiconductor Alliance

 

 

 

2    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         PROPOSAL 1 – Election of Directors

 

 

LOGO

 

 

  

Judy Bruner

 

Executive Vice President, Administration and Chief Financial Officer, SanDisk Corporation (retired)

 

 

 

 

Ms. Bruner has deep financial, accounting, and strategic planning expertise, as well as global operations and leadership experience, that provides valuable insights and contributions to our Board. Ms. Bruner is the former Executive Vice President, Administration and Chief Financial Officer of SanDisk Corporation, a supplier of flash storage products, a role she held from 2004 until its acquisition by Western Digital in 2016. Previously, she was Senior Vice President and Chief Financial Officer of Palm, Inc., a provider of handheld computing and communications solutions, from 1999 until 2004. Prior to Palm, Inc., Ms. Bruner held financial management positions at 3Com Corporation, Ridge Computers and Hewlett-Packard Company.

 

Key skills and qualifications

 

Financial and Accounting; Strategy and Innovation; Global Business: Ms. Bruner’s career has been distinguished by roles of increasing responsibility in and oversight of financial management. These roles included serving as Chief Financial Officer at SanDisk Corporation and Palm, Inc. Ms. Bruner’s experience also included setting corporate strategy and diversifying businesses into new product areas that are less cyclical and less capital intensive, while focusing on the core business. Her prior roles in finance also included positions at 3Com, Ridge Computers, and Hewlett-Packard.

 

Industry and Technology: Ms. Bruner’s career has been centered in the technology sector, giving her particular insight into the challenges and opportunities of our sector and industry, as well as our end markets. Ms. Bruner’s extensive experience in the semiconductor industry at SanDisk provided an understanding of the capital intensity, business cycles, customers and engineering requirements of the semiconductor equipment business, which she brings to our Board.

 

Risk Management; Cybersecurity: In Ms. Bruner’s role at SanDisk, she was responsible for the firm’s enterprise risk management and information technology, including cybersecurity. As a director, Ms. Bruner oversees enterprise risk management and cybersecurity at all the companies on which she currently serves as a board member, including at Rapid7, a security data and analytics solutions provider. She brings valuable insights from this experience to our Board to facilitate its oversight and considerations of these important topics.

 

 

INDEPENDENT

 

Age: 64

 

Director Since: 2016

 

Board Committees

 

  Audit (Chair)

 

  Corporate Governance and Nominating (Chair)

 

Other Current Public Company Directorships

 

  Qorvo, Inc.

 

  Rapid7, Inc.

 

  Seagate Technology plc

 

Former Public Company Directorships (within last five years)

 

  Varian Medical Systems, Inc.

 

 

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    3


Table of Contents

LOGO

 

         PROPOSAL 1 – Election of Directors

 

 

LOGO

 

 

  

Xun (Eric) Chen

 

Managing Partner, SB Investment Advisers

 

 

 

 

 

 

Dr. Chen has extensive experience establishing, working for and investing in companies in the technology sector and related industries. Since 2018, Dr. Chen has been a Managing Partner of SB Investment Advisers (“SBIA”), an investment adviser focused on investments in the technology sector. Prior to joining SBIA, Dr. Chen was the Chief Executive Officer and Co-Founder of BaseBit Technologies, Inc., a technology company in the Silicon Valley. He served as CEO of BaseBit since it was founded in 2015, except from 2016 until 2017, when BaseBit was a portfolio company of Team Curis Group, a group of integrated biotechnology and data technology companies and laboratories, during which time Dr. Chen served as CEO of Team Curis Group. From 2008 to 2015, Dr. Chen served as a managing director of Silver Lake, and prior to Silver Lake, he was a senior vice president and member of the executive committee of ASML Holding N.V. Dr. Chen joined ASML following its 2007 acquisition of Brion Technologies, Inc., a company he co-founded in 2002 and served as Chief Executive Officer. Prior to Brion Technologies, Dr. Chen was a senior vice president at J.P. Morgan.

 

Key skills and qualifications

 

Industry and Technology; Strategy and Innovation; Growth and Emerging Technologies: Dr. Chen’s career has focused on the technology sector, and he provides his expertise on our industry, technologies and end markets in the boardroom. Dr. Chen is currently a Managing Partner at SBIA, an investment advisor focused on the technology market. His other relevant experiences have included serving as a managing director at Silver Lake, a leading private investment firm focused on technology-enabled and related growth industries, and founding and serving as CEO of Brion Technologies, a firm working in computational lithography for integrated circuits in semiconductor manufacturing.

 

Global Business: The Board values Dr. Chen’s perspective gained through his various leadership roles at firms with global operations. For example, prior to joining SBIA, Dr. Chen was the CEO and Co-Founder of BaseBit, a technology company focused on leveraging the power of Big Data, AI technologies, and privacy computing. Dr. Chen grew BaseBit’s presence globally, including throughout the Asia Pacific Region. Prior to this, Dr. Chen worked at ASML Holding N.V., an industrial manufacturer for chipmakers in the semiconductor industry that is headquartered in The Netherlands and has 60 locations globally.

 

 

INDEPENDENT

 

Age: 53

 

Director Since: 2015

 

Board Committees

 

  Human Resources and Compensation

 

  Strategy and Investment

 

Other Current Public Company Directorships

 

  None

 

Former Public Company Directorships (within last five years)

 

  None

 

 

 

4    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         PROPOSAL 1 – Election of Directors

 

LOGO

 

 

  

Aart J. de Geus

 

Chairman and Chief Executive Officer, Synopsys, Inc.

 

 

 

 

Dr. de Geus has extensive executive leadership experience and provides the Board his deep expertise in our industry, technology, and corporate strategy. Dr. de Geus currently serves as Chief Executive Officer and Chairman of the Board of Directors of Synopsys, Inc., the leading provider of electronic design automation software, design IP and related services for semiconductor design companies. Since founding Synopsys in 1986, Dr. de Geus has held various positions at the company, including Chief Executive Officer or co-Chief Executive Officer since 1994, Chairman of the Board since 1998, Senior Vice President of Engineering and Senior Vice President of Marketing. Prior to founding Synopsys, Dr. de Geus was employed by General Electric, where he was the Manager of the Advanced Computer-Aided Engineering Group.

 

Key skills and qualifications

 

Industry and Technology; Strategy and Innovation; Global Business; Risk Management: As the leading founder of Synopsys, Dr. de Geus has grown Synopsys for over three and a half decades and has held senior roles in engineering and marketing before becoming Chief Executive Officer. He has been involved in all aspects of executive leadership at Synopsys, including determining corporate strategy, overseeing enterprise risk management, closing well over a hundred strategic acquisitions and transactions, and expanding the operations globally. Synopsys now has offices and development centers in North America, Europe, Armenia, Israel, India, Japan, Vietnam, South Korea and China.

 

Growth and Emerging Technologies; Government Policy and Sustainability: Dr. de Geus has expanded Synopsys from a start-up synthesis company to a global high-tech leader in electronic design automation. He has long been considered one of the world’s leading experts on logic synthesis and simulation, frequently keynotes major conferences, is a member of the National Academy of Engineering and the recipient of numerous awards including the IEEE Robert N. Noyce Medal, the Global Semiconductor Alliance Dr. Morris Chang Exemplary Leadership Award, and the Silicon Valley Leadership Group Lifetime Achievement Award. As a longtime CEO, Dr. de Geus has experience in government policy, such as the CHIPS Act and evolving international export controls, as well as driving sustainability initiatives in the context of regulatory requirements and stakeholder input.

 

 

INDEPENDENT

 

Age: 68

 

Director Since: 2007

 

Board Committees:

 

  Strategy and Investment

 

Other Current Public Company Directorships:

 

  Synopsys, Inc.

 

Former Public Company Directorships (within last five years):

 

  None

 

Other Directorships and Memberships

 

  Executive Board Member and Past Chairman, Silicon Valley Leadership Group

 

 

  Board Member, Global Semiconductor Alliance

 

 

  Governing Council Member, Electronic System Design Alliance

 

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    5


Table of Contents

LOGO

 

         PROPOSAL 1 – Election of Directors

 

LOGO

 

 

 

  

Gary E. Dickerson

 

President and Chief Executive Officer, Applied Materials, Inc.

 

 

 

 

Mr. Dickerson has been President of Applied Materials since 2012 and Chief Executive Officer and a member of the Board of Directors since 2013. Mr. Dickerson joined Applied following its acquisition in 2011 of Varian Semiconductor Equipment Associates, Inc., a supplier of semiconductor manufacturing equipment. Mr. Dickerson had served as Chief Executive Officer and a director of Varian since 2004. Prior to joining Varian in 2004, Mr. Dickerson served 18 years with KLA-Tencor Corporation, a supplier of process control and yield management solutions for the semiconductor and related industries, where he held a variety of roles, including President and Chief Operating Officer. Mr. Dickerson started his semiconductor career in manufacturing and engineering management at General Motors’ Delco Electronics Division and AT&T Technologies, Inc.

 

Key skills and qualifications

 

Industry and Technology; Strategy and Innovation; Global Business; Risk Management: Mr. Dickerson has over three decades of experience in executive-level positions at large multi-national companies in the semiconductor and technology industries, including nearly two decades as a chief executive officer at Varian and Applied. Mr. Dickerson’s knowledge of our industry, technologies and end markets provides important insight and leadership to the oversight, planning and execution of our business strategy and operations. At Applied, this has resulted in the company being the world’s leading semiconductor and display equipment company with over $25 billion in annual revenues and operations in 24 countries at 120 locations.

 

Growth and Emerging Technologies; Service, Sales, and Operations; Government Policy and Sustainability: Throughout Mr. Dickerson’s career, he has held roles responsible for identifying and developing emerging technologies and service offerings for the semiconductor industry. This includes his first roles in manufacturing and engineering management with General Motors’ Delco Electronics Division and AT&T Technologies, 18 years at KLA-Tencor, progressing from roles in product development and general management of products, sales and services business units to his appointment as President and Chief Operating Officer, and to his leadership and contributions as Chief Executive Officer at Varian and Applied. Mr. Dickerson has government policy experience in guiding Applied through the geopolitical and regulatory environment, as well as from his service as a board of member of the U.S.-China Business Council. Mr. Dickerson’s experience in sustainability stems from his deep involvement in developing Applied’s ESG roadmap and championing its ESG initiatives. Mr. Dickerson draws on these experiences to provide leadership and insight in guiding our core semiconductor business, and as we develop new technologies and services to enable significant value creation for our customers and Applied.

 

 

EXECUTIVE DIRECTOR

 

Age: 65

 

Director Since: 2013

 

Board Committees

 

  None

 

Other Current Public Company Directorships

 

  None

 

Former Public Company Directorships (within last five years)

 

  None

 

Other Directorships and Memberships

 

  Board Member, U.S. – China Business Council

 

 

 

 

 

6    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         PROPOSAL 1 – Election of Directors

 

LOGO

 

  

Thomas J. Iannotti

 

Senior Vice President and General Manager, Enterprise Services, Hewlett-Packard Company (retired)

 

 

 

 

Mr. Iannotti serves as the Chairman of the Board of Applied. Mr. Iannotti has extensive leadership experience at global firms where he gained invaluable expertise in service management, offerings for technology companies, and operational processes. He served as Senior Vice President and General Manager, Enterprise Services, for Hewlett-Packard Company, a technology solutions provider to consumers, businesses, and institutions globally, from 2009 until his retirement in 2011. Prior to that role, Mr. Iannotti held various executive positions at Hewlett-Packard, including Senior Vice President and Managing Director, Enterprise Business Group, Americas. Mr. Iannotti also worked at Digital Equipment Corporation, a vendor of computer systems and software, and at Compaq Computer Corporation, a supplier of personal computing systems, following its acquisition of Digital Equipment Corporation.

 

Key skills and qualifications

 

Industry and Technology; Strategy and Innovation; Global Business: Mr. Iannotti has had a distinguished three-decade career managing large, complex global businesses in the electronics and technology industries. He held numerous executive positions at Hewlett-Packard, with his final role as Senior Vice President and General Manager, Enterprise Services, responsible for driving profitable revenue growth and customer satisfaction across the globe. Mr. Iannotti also chaired the Americas Leadership Team responsible for managing cross-business group strategies and developing partnerships with key Hewlett-Packard stakeholders. His other relevant experience included working at Digital Equipment Corporation, a vendor of computer systems and software, and at Compaq Computer Corporation, a supplier of personal computing systems.

 

Service, Operations and Manufacturing; Risk Management: While at Hewlett-Packard, Mr. Iannotti was integral in setting and executing operational and service strategies for the Enterprise Services group, which supported and provided services and products for all of the company’s offerings. Mr. Iannotti’s roles also involved oversight and management of risk, and he has served as the lead independent director of the board of directors of a large, public global services company. These experiences provide important input to our Board and are an integral part of successful planning and execution of our long-term vision, including the Board’s oversight of Applied’s enterprise risk management program.

 

 

Chairman of the Board

 

INDEPENDENT

 

Age: 66

 

Director Since: 2005

 

Board Committees

 

  Human Resources and Compensation (Chair)

 

Other Current Public Company Directorships

 

  None

 

Former Public Company Directorships (within last five years)

 

  Atento S.A.

 

 

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    7


Table of Contents

LOGO

 

         PROPOSAL 1 – Election of Directors

 

LOGO

 

  

Alexander A. Karsner

 

Senior Strategist, X (parent company: Alphabet Inc.)

 

 

Mr. Karsner has extensive global executive leadership experience as well as deep expertise in technology innovation, private equity, public policy and regulation, corporate strategy and sustainability. He is currently a Senior Strategist at X (the Moonshot Factory), the innovation lab of Alphabet Inc., and Executive Chairman of Manifest Energy Inc., an energy technology development and investment firm he founded in 2009. Mr. Karsner is also Founder of Elemental, which innovates market-based solutions for conservation and the environment.

 

Key skills and qualifications

 

Global Business: Mr. Karsner has over 30 years of experience in executive leadership positions with numerous organizations with significant global operations, including his current role at X and public company board experience at ExxonMobil. Mr. Karsner was the Founder and Managing Director of Enercorp., a company involved in international project development, management and financing of energy infrastructure.

 

Industry and Technology; Growth and Emerging Technologies; Strategy and Innovation: Mr. Karsner currently serves as Senior Strategist at X, which has catalyzed technologies for autonomous vehicles, drone delivery and industrial robotics. From 2016 to 2019, Mr. Karsner served as Managing Partner of Emerson Collective, an investment platform funding venture and private equity portfolios, as well as non-profit, philanthropic investments advancing education, immigration, health and the environment. As a private equity investor, venture partner and strategic advisor, Mr. Karsner’s portfolios have included some of the most innovative startups over the last 15 years, such as Nest (AI), Tesla (mobility), Recurrent (solar), Codexis (biotech), Boom (aerospace) and Carbon (3-D printing).

 

Government Policy and Sustainability: Mr. Karsner has extensive experience in government policy and relations, and offers our Board valuable insight into the regulatory environment. From 2006 to 2008, he served as Assistant Secretary for Energy Efficiency and Renewable Energy at the U.S. Department of Energy, responsible for multi-billion dollar federal applied science R&D programs and national labs. In this role, he helped assemble significant bipartisan coalitions to implement the Energy Policy Act and enact the Energy Independence and Security Act and the America Competes Act. Mr. Karsner was a U.S. Principal representative to the United Nations Framework Convention on Climate Change and a delegate to the bilateral U.S.-China and U.S.-India Track II dialogues on Climate Change, and is a member of the Council on Foreign Relations and the Trilateral Commission. Mr. Karsner also serves on the boards of the Welch Institute of Material Science at Rice University and Conservation International. He is a member of the boards of advisors of the Energy Futures Initiative, MIT Media Lab and the Precourt Institute for Energy at Stanford University. With these experiences, Mr. Karsner brings a valuable perspective to our Board’s oversight of ESG, government relations and public policy engagement strategies.

 

 

INDEPENDENT

 

Age: 55

 

Director Since: 2008

 

Board Committees

 

  Corporate Governance and Nominating

 

  Human Resources and Compensation

 

Other Current Public Company Directorships

 

  Exxon Mobil Corporation

 

Former Public Company Directorships (within last five years)

 

  Broadscale Acquisition Corp.

 

Other Directorships and Memberships

 

  Advisory Board Member of: Energy Futures Initiative; Precourt Institute for Energy, Stanford University; MIT Media Lab

 

  Board Member of: Conservation International; Welch Institute of Material Science, Rice University

 

 

 

8    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         PROPOSAL 1 – Election of Directors

 

LOGO

 

  

Kevin P. March

 

Senior Vice President, Chief Financial Officer of Texas Instruments, Incorporated (retired)

 

 

 

 

Mr. March brings deep semiconductor industry experience, strong financial expertise, and executive leadership to our Board. Mr. March joined Texas Instruments Incorporated, a global semiconductor company, in 1984 and built a career of varying positions of increasing responsibility over his 33-year tenure at the company. He was appointed Controller in 2002 and was named Chief Financial Officer in 2003.

 

Key skills and qualifications

 

Industry and Technology; Strategy and Innovation; Service, Operations and Manufacturing; Global Business: Mr. March was a longtime executive of Texas Instruments, with extensive experience in the semiconductor industry. Mr. March held numerous roles in finance, operations and business management across corporate and business unit functions during his career at Texas Instruments. Mr. March’s leadership was instrumental in shaping Texas Instruments into a focused semiconductor company, including his role in the formation of the company’s global Analog Semiconductor segment, which became the world’s largest analog semiconductor business.

 

Finance and Accounting; Risk Management: From 2003 to 2017, Mr. March served as Senior Vice President and Chief Financial Officer of Texas Instruments, where he led its finance organization and developed the company’s capital management strategy. At Texas Instruments, Mr. March was also responsible for the company’s assessment and management of strategic, financial and operational risks, including facilitating the oversight of risk management processes by the company’s board of directors. Given the breadth and scope of its businesses and range of strategic, operational, financial and compliance risks, Mr. March’s experience at Texas Instruments positions him well to provide Applied with guidance across our risk landscape.

 

 

INDEPENDENT

 

Age: 65

 

Director Since: 2022

 

Board Committees:

 

  Audit

 

Other Current Public Company Directorships

 

  None

 

Former Public Company Directorships (within last five years)

 

  None

 

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    9


Table of Contents

LOGO

 

         PROPOSAL 1 – Election of Directors

 

 

LOGO

 

  

Yvonne McGill

 

Senior Vice President, Corporate Controller and Infrastructure Solutions Group Chief Financial Officer, Dell Technologies, Inc.

 

 

 

 

 

 

Ms. McGill has extensive executive leadership experience and provides the Board deep industry expertise, financial acumen, and strategic planning experience. She has been Senior Vice President, Corporate Controller and Infrastructure Solutions Group Chief Financial Officer since 2020, and previously was Chief Financial Officer and Senior Vice President, Infrastructure Solutions Group since 2018 and Senior Vice President, Global Financial Planning and Analysis since 2015 at Dell Technologies, Inc., a leading global end-to-end technology provider.

 

Key skills and qualifications

 

Finance and Accounting; Strategy and Innovation; Risk Management: Since joining Dell in 1997, Ms. McGill has served in various finance leadership roles, including her current role of Corporate Controller and Infrastructure Solutions Group Chief Financial Officer. At Dell, Ms. McGill has been responsible for the vision, strategy and performance of the Infrastructure Solutions Group’s finance organization, as well as financial functions, including accounting, tax, treasury and investor relations. Prior to Dell, Ms. McGill worked at ManTech International Corporation and Price Waterhouse. Ms. McGill is a Certified Public Accountant (inactive).

 

Industry and Technology; Global Business: During her over 25-year career at Dell, Ms. McGill has gained experience across the company’s comprehensive portfolio of IT hardware, software and service solutions spanning both traditional infrastructure and emerging, multi-cloud technologies. Ms. McGill’s deep knowledge and expertise in the technology sector, including with regards to our end-users and the markets in which we compete, offer valuable insights to our Board.

 

 

INDEPENDENT

 

Age: 55

 

Director Since: 2019

 

Board Committees:

 

  Audit

 

  Corporate Governance and Nominating

 

Other Current Public Company Directorships

 

  None

 

Former Public Company Directorships (within last five years)

 

  None

 

 

10    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         PROPOSAL 1 – Election of Directors

 

 

LOGO

 

  

Scott A. McGregor

 

President and Chief Executive Officer, Broadcom Corporation (retired)

 

 

 

 

Mr. McGregor brings to our Board executive leadership and deep experience working in the semiconductor and technology industries over many decades. Mr. McGregor served as President and Chief Executive Officer and as a member of the board of directors of Broadcom Corporation, a world leader in wireless connectivity, broadband and networking infrastructure, from 2005 until the company was acquired by Avago Technologies Limited in 2016. Mr. McGregor joined Broadcom from Philips Semiconductors (now NXP Semiconductors), where he was President and Chief Executive Officer. He previously served in a range of senior management positions at Santa Cruz Operation Inc., Digital Equipment Corporation (now part of HP), Xerox Corporation’s Palo Alto Research Center (PARC) and Microsoft, where he was the architect and development team leader for Windows 1.0.

 

Key skills and qualifications

 

Industry and Technology; Global Business: Mr. McGregor was CEO of Philips Semiconductors (now NXP Semiconductors), headquartered in the Netherlands, where he oversaw one of the world’s largest semiconductor suppliers. Mr. McGregor was also President and CEO of Broadcom, where he was responsible for guiding the strategic direction of the company, business development and day-to-day operations.

 

Growth and Emerging Technologies; Strategy and Innovation: Throughout his career, Mr. McGregor held strategic roles developing new technologies and growing businesses in new directions. Mr. McGregor started his career at Xerox PARC working on user interface design for the world’s first personal computers. He then joined Microsoft and led the team that created the first version of Microsoft Windows. After pivoting to the semiconductor industry, Mr. McGregor continued to lead through technological innovation at both Broadcom and Philips, expanding each company’s footprint and offerings. At Broadcom, Mr. McGregor led revenue growth from $2.4 billion to over $8 billion during his tenure as CEO.

 

Financial and Accounting; Cybersecurity; Risk Management: As CEO of Broadcom and Philips for approximately 15 years, Mr. McGregor had oversight responsibility for financing activities, risk management and cybersecurity at large companies within the semiconductor industry. As a result of these experiences, as well as oversight of cybersecurity as a board member at Equifax, Mr. McGregor brings invaluable insights in these areas to our Board.

 

 

INDEPENDENT

 

Age: 66

 

Director Since: 2018

 

Board Committees:

 

  Audit

 

  Strategy and Investment (Chair)

 

Other Current Public Company Directorships

 

  Equifax, Inc.

 

Former Public Company Directorships (within last five years)

 

  Luminar Technologies, Inc.

 

 

 

 

 

 

Chairman Emeritus

James C. Morgan became Chairman Emeritus in 2009, following his retirement as our director and Chairman of the Board. Mr. Morgan spent more than 31 years as a director and employee of Applied, including over 20 years as Chairman of the Board.

Mr. Morgan first joined Applied in 1976 and served as Chief Executive Officer from 1977 to 2003. As Chairman Emeritus, Mr. Morgan does not attend any Board or Committee meetings, has no voting rights and receives no retainer or meeting fees.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    11


Table of Contents

LOGO

 

         Board and Corporate Governance Practices

 

Board and Corporate Governance Practices

Board Composition and Nominee Considerations

Nominee Skills and Experience

The Board values having directors who possess a wide variety of relevant skills, professional experience and backgrounds, bring diverse viewpoints and perspectives, and effectively represent the long-term interests of shareholders. Listed below are certain of the key skills and experience that the Board considers important for our directors to have in light of our current business in order to contribute to the effective leadership and exercise of oversight responsibilities by the Board.

 

LOGO

 

Industry and

Technology

  Experience with and knowledge of our industry and technologies, as well as our end markets, facilitate a deeper understanding within the Board of our equipment and service products and the markets in which we compete.

LOGO

 

Executive

Leadership

  Experience in executive-level positions at large multi-national companies, including public company board experience, contribute practical insight into our business strategy and operations.

LOGO

 

Growth and

Emerging

Technologies

  Experience identifying and developing emerging technologies are important to our growth strategies and provide important insights as we develop new technologies and our business grows into new areas.

LOGO

  Global Business   Experience in a leadership role at an organization with substantial global operations can provide valuable business and cultural perspectives.

LOGO

 

Financial and

Accounting

  Experience with financial markets, financing operations, and accounting and financial reporting processes provide important oversight of our capital structure, financing activities, and financial reporting and internal controls.

LOGO

 

Service,

Operations and

Manufacturing

  Experience with and understanding of service management and service offerings for technology companies, manufacturing operations and other operational processes contributes to understanding our business and also can provide important insights on the operations of our customers.

LOGO

 

Strategy and

Innovation

  Experience in setting and executing corporate strategy and with strategic transactions is important to the successful planning and execution of our long-term vision.

LOGO

  Cybersecurity   Experience managing cybersecurity, information and data security risks or cybersecurity threats can provide important input to the Board in its oversight of the Company’s cybersecurity risks.

LOGO

 

Risk

Management

  Experience overseeing enterprise risk management or business continuity planning in a large organization, or other experience in managing risk at the enterprise level or in a senior compliance or regulatory role, provide important input to the Board in its oversight of the Company’s enterprise risk management program.

LOGO

 

Government

Policy and

Sustainability

  Experience working with government policy offers us insight into the regulatory environment in which we operate and experience with sustainability initiatives contributes to the Board’s oversight of our ESG strategy.

 

12    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Board and Corporate Governance Practices

 

Board Matrix

The matrix below summarizes certain of the key experiences, qualifications, skills, and attributes that our director nominees bring to the Board to enable effective oversight. This matrix is intended to provide a summary of our director nominees’ qualifications and is not a complete list of each director nominee’s strengths or contributions to the Board. Additional details on each director nominee’s experiences, qualifications, skills, and attributes are set forth in their biographies.

 

                 
  Skills and Experience   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO

Industry and Technology

                   

Executive Leadership

                   

Growth and Emerging Technologies

     

 

         

 

     

 

   

 

 

Global Business

                   

Financial and Accounting

   

 

     

 

   

 

   

 

   

 

   

 

     

Service, Operations and Manufacturing

     

 

   

 

   

 

       

 

     

 

   

 

Strategy and Innovation

                   

Cybersecurity

   

 

     

 

   

 

   

 

   

 

   

 

   

 

   

 

 

Risk Management

   

 

     

 

         

 

     

Government Policy and Sustainability

   

 

   

 

   

 

       

 

     

 

   

 

   

 

  Tenure and Independence

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

Tenure (years)

  2   6   7   15   9   17   14   1   3   5

Independence

           

 

         

  Demographics

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

Age

  61   64   53   68   65   66   55   65   55   66

Gender Identity

  F   F   M   M   M   M   M   M   F   M

African American or Black

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

Alaskan Native or Native American

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

Asian

     

 

     

 

   

 

   

 

   

 

   

 

   

 

   

 

Hispanic or Latinx

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

Native Hawaiian or Pacific Islander

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

White

   

 

     

 

             

LGBTQ+

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    13


Table of Contents

LOGO

 

         Board and Corporate Governance Practices

 

Diversity. Our Board values having a Board that reflects diverse perspectives, including those based on gender, ethnicity, skills, experience at policy-making levels in areas that are relevant to the Company’s global activities, and functional, geographic, or cultural backgrounds. Our Board has adopted a Policy on Board Diversity within our Corporate Governance Guidelines, which reflects the Board’s commitment to actively seek out women and ethnically diverse director candidates and to consider the factors above, among others, in the context of the current composition of the Board and needs of the Company, when identifying and evaluating director candidates.

The ten director nominees for election at our 2023 Annual Meeting bring to our Board a variety of different backgrounds, skills, professional and industry experience, and other attributes and perspectives that contribute to the overall diversity of our Board.

Independence. The Board’s Governance Committee expects each non-employee director to be free of relationships, interests or affiliations that could give rise to conflicts of interest or interfere with the director’s exercise of independent judgment. Applied’s Corporate Governance Guidelines require that a majority of our directors must be independent, and that our Audit, HRCC and Governance Committees must consist solely of independent directors. Director independence is determined under Nasdaq listing standards and SEC rules. The Board has affirmatively determined that, other than Mr. Dickerson, our Chief Executive Officer, all members of the Board who served during 2022 and all director nominees are independent under applicable Nasdaq listing standards and SEC rules.

Tenure. The Board believes that new ideas and perspectives are critical to a forward-looking and strategic Board, as are the valuable experiences and deep understanding of Applied’s business and industries that longer-serving directors offer. Our Corporate Governance Guidelines do not impose a term limit on Board service, but our directors are not typically nominated for re-election after they reach the age of 72. Feedback from the annual Board evaluations and discussions regarding individual performance between each non-employee director and our Chair are important considerations of director tenure. As a result of our ongoing Board refreshment efforts, we have added two new directors to the Board over the last three years, which has resulted in a balanced range of tenures, ensuring both continuity and fresh perspectives among our director nominees. Our nominees have an average tenure of eight years, which is comparable with the average tenure for independent directors of other S&P 500 companies.

Key Attributes of the Board

 

LOGO

* Ethnically diverse means a director who self-identifies as one or more of the following (defined by Nasdaq as an Underrepresented Minority): Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native or Native Hawaiian or Pacific Islander.

 

14    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Board and Corporate Governance Practices

 

Board Composition and Refreshment

Identification of New Director Candidates. Identifying and recommending individuals for nomination and election to our Board is a principal responsibility of our Governance Committee, which performs this function through an ongoing process.

The Governance Committee regularly considers the size and composition of the Board and assesses whether the composition appropriately aligns with the Company’s evolving business and strategic needs. The focus is on ensuring that the Board is composed of directors who possess a wide variety of relevant skills, professional experience and backgrounds, bring diverse viewpoints and perspectives, and effectively represent the long-term interests of shareholders. In accordance with the Policy on Board Diversity, including our commitment to having a Board that reflects diverse perspectives, the Governance Committee actively seeks out women and ethnically diverse director candidates, as well as candidates diverse in skills, experience at policy-making levels in areas that are relevant to our global activities, and functional, geographic, or cultural background.

In its consideration of potential director candidates, the Governance Committee reviews the short-term and long-term strategies and interests of the Company to determine what current and future skills and experiences are required of the Board in exercising its oversight function. Specific search criteria evolve over time to reflect the Company’s dynamic business and strategic needs and the changing composition of the Board, and may include factors such as:

 

  »  

Operating experience or thought leadership in key markets, industries, technologies, or business models that are aligned with the Company’s strategic growth plans;

 

  »  

Business or cultural background in regions where the Company does significant business;

 

  »  

Senior executive leadership and management experience; and

 

  »  

Subject matter expertise in such areas as corporate finance and financial reporting, governance, compensation, risk management, and marketing.

The Governance Committee also considers succession planning in light of anticipated retirements, and for Board and Committee Chair roles, to maintain relevant expertise and depth of experience.

In addition, all director candidates are also expected to possess or demonstrate:

 

  »  

Sound judgment, analytical and inquisitive perspective, and practical wisdom;

 

  »  

Strategic mindset and an engaged and collaborative approach;

 

  »  

Independence, personal and professional ethics, integrity and values; and

 

  »  

Commitment to representing the long-term interests of Applied’s shareholders.

The Governance Committee may retain a search firm to assist in identifying and evaluating new candidates for director nominees and may also consider referrals from directors, shareholders, or other sources. Mr. March, who joined our Board in October 2022, was identified and vetted as a potential candidate by a third-party search firm for consideration by the Governance Committee. The Governance Committee evaluates and interviews potential Board candidates and makes appointment recommendations to the full Board. All members of the Board may interview candidates.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    15


Table of Contents

LOGO

 

         Board and Corporate Governance Practices

 

Regular Review of Board Composition Drives Refreshment

 

 

LOGO

Recent Board Refreshment. As a result of the foregoing process, the Board has added two new directors over the last three years, each of whom has brought valuable and diverse backgrounds and perspectives to the Board. The most recent appointment was Mr. March in October 2022. Mr. March is a retired, longtime executive of Texas Instruments, Inc. who most recently served as Senior Vice President and Chief Financial Officer of the company from 2003 to 2017. Mr. March joined Texas Instruments in 1984 and held numerous roles in finance, operations and business management across corporate and business unit functions during his 33-year career at the company. Mr. March brings decades of finance and business operations expertise and strong semiconductor industry experience to our Board.

Re-nomination of Directors for Election at Annual Meeting. In considering whether to recommend re-nomination of a director for election at our Annual Meeting, the Governance Committee considers factors such as:

 

  »  

The extent to which the director’s skills, qualifications and experience continue to contribute to the success of our Board, taking into account current core competencies of the Board, and the mix of desired skills and experience;

 

  »  

Feedback from the annual Board evaluations and individual discussions between each director and our Chair;

 

  »  

Attendance and participation at, and preparation for, Board and Committee meetings;

 

  »  

Shareholder feedback, including the support received by director nominees elected at our 2022 Annual Meeting;

 

  »  

Outside board, employment and other affiliations, including any actual or perceived conflicts of interest; and

 

16    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Board and Corporate Governance Practices

 

  »  

Considerations under the Board’s Policy on Board Diversity and the extent to which the director continues to contribute to the diversity of our Board.

Based on the Governance Committee’s recommendation, the Board selects director nominees and recommends them for election by Applied’s shareholders.

Shareholder Recommendations or Nominations. The evaluation procedures described above apply to all candidates for director nomination, including candidates submitted by shareholders. Shareholders wishing to recommend a candidate for consideration by the Governance Committee should submit the candidate’s name, biographical data and a description of their qualifications in light of the criteria listed above to Teri A. Little, Corporate Secretary, Applied Materials, Inc., 3225 Oakmead Village Drive, M/S 1268, P.O. Box 58039, Santa Clara, CA 95052, or by e-mail at corporatesecretary@amat.com.

Shareholders wishing to nominate a director should follow the specific procedures set forth in our Bylaws.

Corporate Governance

Corporate Governance Guidelines

Applied’s Corporate Governance Guidelines establish the governance framework within which the Board conducts its business and fulfills its responsibilities. These guidelines and other important governance materials are available on our website at: https://www.appliedmaterials.com/us/en/about/corporate-governance/corporate-governance-documents.html. The Board regularly reviews our Corporate Governance Guidelines in light of legal and regulatory requirements, evolving best practices and other developments.

Board Leadership

Our corporate governance framework provides the Board flexibility to determine the appropriate leadership structure for the Company and whether the roles of Chair and CEO should be separated or combined. In making this determination, the Board considers many factors, including the needs of the business, the Board’s assessment of its leadership needs from time to time, and the best interests of shareholders. If the role of Chair is filled by a director who does not qualify as an independent director, the independent directors will designate a Lead Independent Director. As discussed below, our Chair is currently an independent director. However, if Applied were to designate a Lead Independent Director in the future, our Corporate Governance Guidelines set forth the roles and authority such individual would have, including, among other things, presiding at all meetings of the Board at which the Chair is not present, including executive sessions of the independent directors, having the authority to call meetings of the independent directors, and serving as a liaison for consultation and direct communication with shareholders.

The Board believes that it is currently appropriate to separate the roles of Chair and CEO. The CEO is responsible for setting our strategic direction and the day-to-day leadership of our business, while the Chair, along with the rest of our independent directors, ensures that the Board’s time and attention are focused on effective oversight of the matters most critical to Applied. Mr. Iannotti, an independent director, currently serves as the Chair of the Board. Mr. Iannotti has significant experience and knowledge of Applied, including having worked with two CEOs and different management teams at Applied, and the Board believes that his deep knowledge of the Company and industry, as well as his strong leadership and governance experience, enables him to lead the Board effectively and independently.

As the independent Board Chair, Mr. Iannotti’s roles include:

 

  »  

Presiding at all meetings of the Board, including executive sessions of the independent directors

 

  »  

Having the authority to call meetings of the Board and of the independent directors

 

  »  

Serving as a liaison between the CEO and the independent directors

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    17


Table of Contents

LOGO

 

         Board and Corporate Governance Practices

 

  »  

Approving information sent to the Board and advising management on the Board’s information needs

 

  »  

Approving meeting agendas and meeting schedules

 

  »  

Having the authority to retain outside advisors and consultants who report directly to the Board

 

  »  

Presiding at all meetings of shareholders

 

  »  

Serving as a liaison for direct communication with shareholders

 

  »  

Providing direct guidance to the CEO, including advising on executing the Company’s long-term strategy

 

  »  

Leading, along with the members of the HRCC and the other independent directors, the annual performance review of the CEO

 

  »  

In conjunction with the relevant committees of the Board, reviewing and assessing director performance and compensation, and the size and composition of the Board

The Chairs of all the Board’s Committees – Audit, Governance, HRCC and Strategy and Investment – are also independent directors.

Director Onboarding and Education

When new directors join our Board, they participate in a comprehensive onboarding program to learn about our industry, business, strategies, and policies. The multi-day onboarding program includes meetings with senior executives to discuss our businesses, strategy and operations, and our corporate functions, such as finance, technology, information systems and legal, and a tour of the Maydan Technology Center, our state-of-the-art R&D facility. New directors also meet with the executives and staff supporting the Committees on which they sit, as well as the Committees’ external consultants and advisors. Each new director is also partnered with an experienced fellow director “mentor” to facilitate the integration of the new director to the Board.

For continued education regarding our business and industry, we provide presentations by internal and external experts during Board meetings on topics such as technology inflections, industry trends, changes in the geopolitical and macroeconomic landscape, and the ESG landscape, with particular focus on the implications and impact to the Company. Our Board and Committees also regularly review developments in corporate governance to continue enhancing the Board’s effectiveness. We encourage directors to participate in external continuing director education programs and provide reimbursement for expenses associated with this participation. Throughout the year, Board members also attend Company events, including Analyst Day, our Engineering and Technology (ET) Conference, and Diversity Day. These interactions, along with meetings with leaders below the CEO Executive Leadership Team level throughout the year, provide directors additional visibility to provide oversight of the Company’s culture, strategies, and operations.

Board and Committee Evaluations

Our Board recognizes that a thorough, constructive evaluation process enhances our Board’s effectiveness and is an essential element of good corporate governance. Each year, the Governance Committee, in consultation with our independent Board Chair, reviews and determines the design, scope, content, and execution of the evaluation process, including whether to engage a third party to facilitate the evaluation.

 

18    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Board and Corporate Governance Practices

 

The evaluation process consists of assessments of the Board, each standing committee of the Board and individual directors. Written questionnaires solicit feedback on a range of issues, including Board and Committee structure and composition; meeting process and dynamics; execution of key responsibilities; interaction with management; and information and resources.

Following completion of the written questionnaires, aggregated results, including all written comments, together with data analyzing results compared to the prior year, are provided to the Chair, who meets with each director individually to discuss additional input on these topics and to provide individual feedback. Committee chairs lead a discussion of evaluation results for their respective Committees and a summary of Board and Committee evaluation results is discussed with the full Board, including suggestions for updating policies and practices per evaluation results. Director suggestions for improvements to the evaluation questionnaires and process are considered for incorporation for the following year.

2022 Board Evaluation Process

 

 

LOGO

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    19


Table of Contents

LOGO

 

         Board and Corporate Governance Practices

 

Board’s Role in Risk Oversight

One of the Board’s most important functions is overseeing risk management for the Company. While Applied’s management team is responsible for the day-to-day management of risk, the Board is responsible for ensuring that the risk-management processes designed and implemented by management are functioning as intended. Applied’s risk oversight framework illustrated below shows the close interaction between the full Board, individual committees, and senior management.

 

 

 

LOGO

Applied has implemented an enterprise risk management (“ERM”) program, overseen by the Audit Committee, which provides an enterprise-wide perspective on Applied’s risks. The Board has established a management committee to oversee and monitor the ERM program. This ERM Committee, comprising members of Applied’s senior management, is led by our CFO and Chief Legal Officer, with representatives from the Company’s largest business segment and supply chain operations.

 

20    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Board and Corporate Governance Practices

 

The risks identified by the ERM program are reported to the Board, with a focus on the most significant risks facing the Company, including strategic, operational, financial, legal and compliance risks. Oversight responsibility for a particular risk may fall within an area of responsibility and expertise of one of the Board Committees. Management presents regular analyses of risk mitigation strategies to the Board or the respective Committee with oversight responsibility for the relevant risk. The ERM Committee reports to the Audit Committee at least semi-annually and provides a broader annual risk mitigation update to the full Board.

Risk Assessment of Compensation Programs. We have assessed our compensation policies, plans, and practices, and determined that they do not create risks that are reasonably likely to have a material adverse effect on Applied. To make this determination, our management reviewed Applied’s compensation policies, plans, and practices, and assessed the following aspects: design, payment methodology, potential payment volatility, relationship to our financial results, length of performance period, risk-mitigating features, performance measures and goals, oversight and controls, and plan features and values compared to market practices. Management reviewed its analysis with the HRCC, which agreed with this determination. Applied also has in place various controls to mitigate risks relating to compensation policies, plans, and practices, such as executive stock ownership guidelines and a clawback policy that enables the recovery of certain incentive compensation payments in certain circumstances.

Board’s Role in Oversight of Strategy

The Board and its Committees actively engage with management to provide guidance on and oversight of Applied’s business strategy throughout the year. The Board dedicates one meeting annually to focus on Applied’s long-term strategy, which include strategic plans from members of senior management on the priorities and implementation strategies for their respective lines of business. These strategic plans guide Applied’s actions to manage risk and deliver shareholder value. The Board’s expanded strategy sessions also include presentations by internal experts to discuss technologies and markets relevant to our core businesses as well as adjacent and emerging technologies. In addition, various elements of strategy are discussed at every Board meeting, as well as at many meetings of the Board’s Committees, including the Strategy and Investment Committee. In order to assess performance against our strategic plans, the Board receives regular updates on progress and execution, and provides direction to senior management throughout the year.

To enhance its oversight of Applied’s strategy and process for considering long-term trends within the Company’s industries, the Board also leverages Applied’s Growth Technical Advisory Board, which is composed of leading academic and industry luminaries with a diverse set of backgrounds in fields such as science, technology, government and education. This Advisory Board, which includes a former member of the Applied Board, provides Applied and the Board with additional, independent insights on how major industries will continue to evolve in a technology-centric world.

Management Succession Planning

The Board and the HRCC recognize that developing the capabilities of Applied’s executives is vital to our ability to capitalize on our opportunities and increase long-term shareholder value. Accordingly, the HRCC’s most important goal is to oversee the Company’s programs that foster executive capability and retention, with emphasis on leadership development, management capabilities, and succession plans.

We build our leadership capability using a multi-step approach to succession planning for our most critical roles, including CEO, executive, and technology leadership positions. Our executive succession planning process is a carefully designed, thoughtful, and long-term approach overseen by the HRCC and the Board. With the guidance of the HRCC, the Board also maintains a CEO emergency succession plan. We plan, and prepare as many years in advance as possible, for anticipated transitions to ensure leadership continuity and positive outcomes for the Company. Another key component of succession planning is leadership assessment and development of potential successors, including

moving leaders into new, increasingly complex roles that complement their professional development. In addition, diversity of our succession pipelines is a priority of our Board and the Company, and we strive to ensure a diverse succession slate.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    21


Table of Contents

LOGO

 

         Board and Corporate Governance Practices

 

Management reports quarterly either to the HRCC or the full Board on executive leadership development and succession planning. The reports include updates regarding succession and development programs for the CEO and other senior executives, with an eye toward ensuring development of the talent needed to lead Applied today and in the future and readiness of succession candidates who can assume top management positions without undue interruption. Board members have opportunities throughout the year to engage with members of senior management and other high-potential leaders in a variety of formal and informal settings, including Board meetings and events, preparatory meetings, analyst meetings, and internal and external business and technology conferences. The HRCC and Board also regularly discuss individual executive transitions as the need arises over the course of the year. The Board’s goal is to have a long-term and continuing process for effective senior leadership capability, development, and succession, and to ensure that there are readily available choices when the time is right.

Shareholder Rights

In addition to direct engagement through our recurring shareholder engagement program discussed below, we have instituted a number of mechanisms that allow shareholders to advance their points of view, including:

Right to Call a Special Meeting. Our Bylaws permit shareholders holding at least 20% of our outstanding shares of common stock to call a special meeting.

Right to Act by Written Consent. Our Certificate of Incorporation permits shareholders holding at least 20% of our outstanding shares of common stock to initiate the process for shareholders to take action by written consent without a meeting.

Proxy Access. Our Bylaws permit proxy access. Any shareholder (or group of up to 20 shareholders) owning 3% or more of Applied’s common stock continuously for at least three years may nominate up to two individuals or 20% of our Board, whichever is greater, as director candidates for election to the Board, and require us to include such nominees in our annual meeting proxy statement.

Majority Voting. Under our Bylaws, in any uncontested election of directors (an election in which the number of nominees does not exceed the number of directors to be elected), any nominee who receives a greater number of votes cast “for” their election than votes cast “against” their election will be elected.

Our Bylaws provide that in the event an incumbent director receives more “against” than “for” votes, they shall tender their resignation after certification of the shareholder vote. Our Governance Committee, composed entirely of independent directors, will consider the offer of resignation, taking into consideration all factors it deems relevant, and recommend to the Board the action to be taken. The Board must take action on the recommendation within 90 days following certification of the shareholder vote. No director who tenders an offer of resignation may participate in the vote on the Governance Committee’s recommendation or the Board’s determination of whether to accept the resignation offer. Applied will publicly disclose the Board’s decision, including, if applicable, the reasons for rejecting an offer to resign.

Shareholder Engagement

We believe that strong corporate governance should include regular engagement with our shareholders to enable us to understand and respond to shareholder concerns.

Investor Relations. Our senior management team, including our CEO, CFO, and members of our Investor Relations team, maintain regular contact with a broad base of investors, including through quarterly earnings calls, individual meetings, and other channels for communication, to understand their concerns. In 2022, senior management participated in 112 meetings with investors, including 108 meetings with our CFO and 18 with our CEO.

Shareholder Outreach Program. In addition, we have a robust shareholder outreach program, which is a recurring, year-round effort, led by a cross-functional team that includes members of our Investor Relations, Global Rewards, ESG, and Legal functions, with participation of our independent directors, where appropriate. This engagement enables us to build meaningful relationships over time with our shareholders.

 

22    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Board and Corporate Governance Practices

 

LOGO

We engage with a significant cross-section of our shareholder base, including large institutional investors, pension funds, and other investors. Topics of discussion include key business, Board, governance, executive compensation, environmental, sustainability, and diversity and inclusion matters, as well as other subjects of interest to our shareholders. Based on feedback from shareholders, we have over the last few years adopted proxy access, a special meeting right, and the right for shareholders to act by written consent, and implemented changes to our executive compensation programs.

During our off-season outreach in 2022, we contacted over 50 of our largest shareholders, who collectively hold approximately 57% of our outstanding shares, and engaged in active discussions on these topics with investors who requested meetings, representing approximately 35% of our shares outstanding. Shareholder feedback during these engagements has been widely positive, with no significant concerns raised about Applied’s governance, compensation or sustainability practices. In direct response to shareholder feedback, last year we added a skills matrix and disclosed individual director diversity data in our Proxy Statement, and this year we are including enhanced biographies of our Board nominees and the skills and qualifications that they bring to the Board.

 

Key Themes Discussed with Shareholders in 2022

ESG  

»  Applied’s strategy, initiatives, and Board oversight related to ESG matters

»  Shareholders’ ESG focus areas

 

»  Alignment of sustainability initiatives with corporate strategy; Applied’s commitment to diversity and inclusion

Executive Compensation  

»  Compensation program, recent actions, metrics, ESG considerations, and link between pay and performance

Board Refreshment and

Composition

 

»  Applied’s commitment to Board diversity, including with respect to gender and race/ethnicity

 

»  Thoughtful Board processes for refreshment, succession planning, and tenure

Corporate Governance  

»  Governance practices, including Board leadership structure and shareholder rights

»  Appropriate response to shareholder proposal seeking reduced threshold for shareholders to call special meeting (see page 72)

Shareholder Communications

Any shareholder wishing to communicate with any of our directors regarding Applied may write to the director, c/o Teri A. Little, Corporate Secretary, Applied Materials, Inc., 3225 Oakmead Village Drive, M/S 1268, P.O. Box 58039, Santa Clara, CA 95052, or by e-mail at corporatesecretary@amat.com. The Board has instructed the Corporate Secretary to review correspondence directed to the Board and, at the Corporate Secretary’s discretion, forward items that she deems appropriate for the Board’s consideration.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    23


Table of Contents

LOGO

 

         Board and Corporate Governance Practices

 

Stock Ownership Guidelines

The Board has adopted stock ownership guidelines to align the interests of our directors and executive officers with those of our shareholders. The guidelines provide that non-employee directors should each own Applied stock with a value of at least five times the annual base retainer for non-employee directors. Applied’s Chief Executive Officer should own Applied stock with a value of at least six times his annual base salary. Each Section 16 officer on the CEO Executive Leadership Team should own Applied stock with a value of at least three times their annual base salary. Unearned performance awards and unexercised options (or portions thereof) are not included for purposes of satisfying the applicable ownership requirement. Under our guidelines, directors and officers may not sell any shares of Applied stock if their ownership is, or following the sale, would fall, below the applicable guideline. As of December 31, 2022, all of our directors and executive officers were in compliance with the stock ownership guidelines.

Standards of Business Conduct

Applied’s Standards of Business Conduct embody our commitment to ethical and legal business practices. The Board expects Applied’s directors, officers, and all other members of its workforce to act ethically at all times and to acknowledge their commitment to Applied’s Standards of Business Conduct. The Standards of Business Conduct are available on our website at: https://www.appliedmaterials.com/us/en/about/corporate-governance/corporate-governance-documents.html.

Board Meetings and Committees

The Board met eight times in fiscal 2022. Each director attended over 75% of all Board and applicable committee meetings held during fiscal 2022. Directors are strongly encouraged to attend the Annual Meeting of Shareholders, and all of the directors serving on our Board at the time attended our virtual 2022 Annual Meeting of Shareholders.

The Board has three principal committees performing the functions required by applicable SEC rules and Nasdaq listing standards to be performed by independent directors: the Audit Committee, the HRCC, and the Governance Committee. Each of these committees meets regularly and has a written charter approved by the Board that is reviewed annually by the respective committee and by the Board. The Board also has a Strategy and Investment Committee, whose role and responsibilities are described in Applied’s Corporate Governance Guidelines.

At each regularly scheduled Board meeting, the Chair of each committee reports on any significant matters addressed by the committee since the last regularly-scheduled Board meeting. Each director who serves on the Audit Committee, HRCC, or Governance Committee is an independent director under applicable Nasdaq listing standards and SEC rules.

Copies of the current charters for the Audit, HRCC and Governance Committees can be found on our website at: https://www.appliedmaterials.com/us/en/about/corporate-governance/corporate-governance-documents.html.

 

  Audit Committee    Meetings in Fiscal 2022: 22   

 

  Members:

 

  Judy Bruner, Chair*

 

  Kevin P. March*

 

  Yvonne McGill*

 

  Scott A. McGregor*

 

Primary responsibilities:

 

»  Oversee financial statements, internal control over financial reporting and auditing, accounting, and financial reporting processes

 

»  Oversee the qualifications, independence, performance, and engagement of our independent registered public accounting firm

 

»  Oversee disclosure controls and procedures, and internal audit function

 

»  Review and pre-approve audit and permissible non-audit services and fees

 

»  Oversee tax, trade, legal, regulatory, and ethical compliance

 

»  Review and approve related-person transactions

 

»  Oversee financial-related risks, enterprise risk management program, and cybersecurity

 

  * Audit Committee Financial
Expert

 

 

24    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Board and Corporate Governance Practices

 

  Human Resources and Compensation Committee    Meetings in Fiscal 2022: 4   

 

  Members:

 

  Thomas J. Iannotti, Chair

 

  Rani Borkar

 

  Xun (Eric) Chen

 

  Alexander A. Karsner

 

Primary responsibilities:

 

»  Oversee human resources, compensation and employee benefits programs, policies, and plans

 

»  Review and advise on management succession planning and executive organizational development

 

»  Determine compensation policies for executive officers and employees

 

»  Review the performance, and determine the compensation, of executive officers

 

»  Approve and oversee equity-related incentive plans and executive bonus plans

 

»  Review compensation policies and practices as they relate to risk management practices

 

»  Approve the compensation program for Board members

 

»  Oversee human capital management, including the Company’s culture and diversity and inclusion programs and initiatives

 

 

  Corporate Governance and Nominating Committee      Meetings in Fiscal 2022: 5   

 

  Members:

 

  Judy Bruner, Chair

 

  Alexander A. Karsner

 

  Yvonne McGill

  

Primary responsibilities:

 

»  Oversee the composition, structure, and evaluation of the Board and its committees

 

»  Identify and recommend qualified candidates for election to the Board

 

»  Establish procedures for director candidate nomination and evaluation

 

»  Oversee corporate governance policies and practices, including Corporate Governance Guidelines

 

»  Review and approve director service on the board of directors of other companies and oversee director education

 

»  Review shareholder proposals and recommend to the Board actions to be taken in response to each proposal

 

»  Review strategy, policies, performance, and reporting related to the Company’s management of environmental, social, and governance (ESG) issues not delegated to other committees

 

»  Review conflict of interest matters for the Board

 

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    25


Table of Contents

LOGO

 

         Director Compensation

 

Director Compensation

Compensation Program for Directors

We compensate our non-employee directors for their service on the Board with a combination of cash and equity awards. Directors who are employees of Applied do not receive any compensation for their service as directors. In March 2022, the HRCC, comprised solely of independent directors, approved changes to the compensation program for non-employee directors after consideration of market data and based on the recommendation of its independent compensation consultant. These changes, which were effective beginning with the second fiscal quarter of 2022, included increasing the annual base retainer from $80,000 to $85,000 and increasing the fair market value of the annual grant of restricted stock units from $225,000 to $240,000. Prior to these changes, the compensation for our non-employee directors was last changed in fiscal 2020.

Retainer and Meeting Fees

Each non-employee director receives an annual cash retainer for their service on the Board, as well as additional cash retainers if they serve as the Chair of the Board, as a member of a committee, or as the chair of a committee. Annual retainers are paid quarterly and are prorated based on the director’s service during the fiscal year. The following table sets forth cash compensation for non-employee directors in effect during fiscal 2022.

 

 

 

    
Effective through
Q1 FY2022
 
 
    
Effective as of
Q2 FY2022
 
 

Annual Base Retainer (prorated and paid quarterly)

   $ 80,000      $ 85,000  

  Additional Annual Retainers for Committee Service (prorated and paid quarterly):

    

 

 

 

 

 

    

 

 

 

 

 

Audit Committee

   $ 25,000      $ 25,000  

Human Resources and Compensation Committee

   $ 12,500      $ 12,500  

Corporate Governance and Nominating Committee

   $ 10,000      $ 10,000  

Strategy and Investment Committee

   $ 10,000      $ 10,000  

  Additional Annual Retainers for Chair and Committee Chairs (prorated and paid quarterly):

    

 

 

 

 

 

    

 

 

 

 

 

Chair of the Board

   $ 150,000      $ 150,000  

Audit Committee Chair

   $ 25,000      $ 25,000  

Human Resources and Compensation Committee Chair

   $ 20,000      $ 20,000  

Corporate Governance and Nominating Committee Chair

   $ 12,500      $ 12,500  

Strategy and Investment Committee Chair

   $ 12,500      $ 12,500  

In addition, upon the determination of the Chair of the Board, non-employee directors may receive $2,000 per meeting for service on any ad-hoc committee of the Board. Non-employee directors are reimbursed for travel and other reasonable out-of-pocket expenses related to attendance at Board and committee meetings, business events on behalf of Applied, and seminars and programs on subjects related to their Board responsibilities.

 

26    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Director Compensation

 

Equity Compensation

Initial Grant. Upon initial appointment (by the Board) or election (by the shareholders) to the Board other than at an annual meeting of shareholders, a non-employee director receives a non-discretionary grant of restricted stock units with respect to a number of shares of Applied common stock with a fair market value on the date of grant equal to $240,000 (rounded down to the nearest whole share), pro-rated based on the period starting on the day of initial appointment or election and ending on the day of the next scheduled annual meeting of shareholders.

Annual Grant. Each non-employee director elected at an annual meeting receives on that date a non-discretionary grant of restricted stock units with respect to a number of shares of Applied common stock with a fair market value on the date of grant equal to $240,000 (rounded down to the nearest whole share). A non-employee director who is initially appointed or elected to the Board on the day of an annual meeting of shareholders receives only an annual grant. Each of our non-employee directors who was re-elected at the 2022 Annual Meeting received a grant of 1,920 restricted stock units on that date.

Vesting. Grants made to our non-employee directors vest in full on the earlier of March 1 of the year following the date of grant or the date of the next annual meeting, provided the non-employee director remains on the Board through the scheduled vesting date. Vesting of these grants is accelerated in full upon a non-employee director’s earlier termination of service on the Board due to disability or death, or upon a change of control of Applied if the director ceases to be a non-employee director (and does not become a member of the board of directors of any successor corporation or its parent). Non-employee directors may elect in advance to defer receipt of vested shares until their termination of service on the Board.

Limit on Awards. Under our amended and restated Employee Stock Incentive Plan, grants of equity awards to any individual non-employee director may not exceed a fair market value totaling more than $400,000 in any fiscal year.

Charitable Matching Contributions

Non-employee directors are eligible to participate in The Applied Materials Foundation Matching Gift Program, under which The Applied Materials Foundation will annually match up to $3,000 of a non-employee director’s donations to eligible non-profit and educational organizations, and will match an unlimited amount of donations to our annual food drive. In addition, non-employee directors are eligible to participate in a matching program under the Applied Materials, Inc. Political Action Committee, under which the Company annually will match up to $2,500 of a non-employee director’s contributions for the benefit of eligible non-profit organizations and kindergarten to 12th grade public and non-profit private schools in the U.S. These maximum matching amounts and other terms are the same as those that apply to Applied’s employees.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    27


Table of Contents

LOGO

 

         Director Compensation

 

Director Compensation for Fiscal 2022

 

Name

   Fees Earned
or Paid in
Cash
($)
     Stock
Awards
($)(1)(2)
     All Other
Compensation
($)(3)
     Total
($)
 

Rani Borkar

     101,751        238,061               339,812  

Judy Bruner

     156,250        238,061               394,311  

Xun (Eric) Chen

     106,250        238,061               344,311  

Aart J. de Geus

     93,750        238,061               331,811  

Thomas J. Iannotti

     266,250        238,061        3,500        507,811  

Alexander A. Karsner

     106,250        238,061               344,311  

Adrianna C. Ma

     99,045        238,061        3,000        340,106  

Kevin P. March

     3,324        92,237               95,561  

Yvonne McGill

     118,750        238,061               356,811  

Scott A. McGregor

     131,250        238,061               369,311  

 

(1)

Amounts shown do not reflect compensation actually received by the directors. Instead, these amounts represent the grant date fair value of stock awards granted in fiscal 2022 (consisting of 1,920 restricted stock units granted to each director other than Mr. March on March 10, 2022 and 1,178 restricted stock units granted to Mr. March on October 20, 2022 upon his initial appointment to the Board), as determined pursuant to FASB Accounting Standards Codification 718 (“ASC 718”). The assumptions used to calculate the value of stock awards are set forth in Note 13 of the Notes to Consolidated Financial Statements included in Applied’s Annual Report on Form 10-K for fiscal 2022 filed with the SEC on December 16, 2022.

 

(2)

Each director other than Mr. March had 1,920 restricted stock units outstanding at the end of fiscal 2022. Mr. March had 1,178 restricted stock units outstanding at the end of fiscal 2022. In addition, certain directors had restricted stock units that had vested in previous years and for which settlement was deferred until the date of their termination of service from the Board, as follows: Dr. Chen, 21,849 units; and Ms. Ma, 34,363 units.

 

(3)

Amounts shown represent The Applied Materials Foundation’s and/or the Company’s matching contribution of the director’s donations/contributions to eligible non-profit organizations.

 

28    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Stock Ownership Information

 

Stock Ownership Information

Principal Shareholders

The following table shows the number of shares of our common stock beneficially owned as of December 31, 2022 by each person known by Applied to own 5% or more of our common stock. In general, “beneficial ownership” refers to shares that an entity or individual had the power to vote or the power to dispose of, and shares that such entity or individual had the right to acquire within 60 days after December 31, 2022.

 

 

 

   Shares Beneficially Owned  

Name

   Number     Percent(1)  

The Vanguard Group

100 Vanguard Blvd.
Malvern, PA 19355

     73,139,429 (2)      8.67%  

BlackRock, Inc.

55 East 52nd Street
New York, NY 10055

     71,870,124 (3)      8.52%  

 

(1)

Percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by 843,610,226 shares of common stock outstanding as of December 31, 2022.

 

(2)

The amended Schedule 13G filed with the SEC by The Vanguard Group (“Vanguard”) on February 9, 2022 indicates that as of December 31, 2021, Vanguard had sole dispositive power over 69,390,652 shares, shared dispositive power over 3,748,777 shares and shared voting power over 1,532,589 shares.

 

(3)

The amended Schedule 13G filed with the SEC by BlackRock, Inc. (“BlackRock”) on February 1, 2022 indicates that as of December 31, 2021, BlackRock had sole dispositive power over 71,870,124 shares and sole voting power over 62,805,952 shares.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    29


Table of Contents

LOGO

 

         Stock Ownership Information

 

Directors and Executive Officers

The following table shows the number of shares of our common stock beneficially owned as of December 31, 2022 by: (1) each director and director nominee, (2) each named executive officer and (3) the current directors and executive officers as a group. In general, “beneficial ownership” refers to shares that a director or executive officer had the power to vote or the power to dispose of, and shares that such individual had the right to acquire within 60 days after December 31, 2022.

 

      Shares Beneficially Owned  
  Name    Number(1)         Percent(2)  

  Directors, not including the CEO:

                

  Rani Borkar

     4,438 (3)      *  

  Judy Bruner

     29,380 (4)      *  

  Xun (Eric) Chen

     40,245 (5)      *  

  Aart J. de Geus

     106,281 (6)      *  

  Thomas J. Iannotti

     56,784 (6)      *  

  Alexander A. Karsner

     11,347 (6)      *  

  Adrianna C. Ma

     38,801 (7)      *  

  Kevin P. March

     1,178 (8)      *  

  Yvonne McGill

     11,820 (6)      *  

  Scott A. McGregor

     19,075 (6)      *  

  Named Executive Officers:

    

 

 

 

 

 

   

 

 

 

 

 

  Gary E. Dickerson

     1,272,395       *  

  Brice Hill

     600       *  

  Robert J. Halliday

     95,375       *  

  Prabu G. Raja

     325,737       *  

  Omkaram Nalamasu

     150,036       *  

  Timothy M. Deane

     56,840 (9)      *  

  Ali Salehpour

     492,803 (10)      *  

  Current Directors and Executive Officers, as a Group (17 persons)

     2,135,358 (11)      *  

 

*

Less than 1%

 

(1)

Except as subject to applicable community property laws and as specified in the footnotes below, the persons named in the table have sole voting and investment power with respect to all of their shares of common stock.

 

(2)

Percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of 843,610,226 shares of common stock outstanding as of December 31, 2022, plus the number of shares of common stock that such person or group had the right to acquire within 60 days after December 31, 2022.

 

(3)

Includes 2,518 shares of common stock held in a family trust for which Ms. Borkar shares voting and investment power and 1,920 restricted stock units that are scheduled to vest within 60 days after December 31, 2022.

 

(4)

Includes 27,460 shares of common stock held in a family trust for which Ms. Bruner shares voting and investment power and 1,920 restricted stock units that are scheduled to vest within 60 days after December 31, 2022.

 

(5)

Includes (a) 377 shares of common stock held in family trusts for which Dr. Chen is deemed to share voting and investment power, (b) 21,849 restricted stock units that have vested and which, pursuant to Dr. Chen’s election to defer, will be converted to shares of Applied common stock and paid to him on the date of his termination of service from the Applied Board and (c) 1,920 restricted stock units that are scheduled to vest within 60 days after December 31, 2022 and which, pursuant to Dr. Chen’s election to defer, will be converted to shares of Applied common stock and paid to him on the date of his termination of service from the Applied Board.

 

(6)

Includes 1,920 restricted stock units that are scheduled to vest within 60 days after December 31, 2022.

 

(7)

Includes (a) 34,363 restricted stock units that have vested and which, pursuant to Ms. Ma’s election to defer, will be converted to shares of Applied common stock and paid to her on the date of her termination of service from the Applied Board and (b) 1,920 restricted stock units that are

 

30    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Stock Ownership Information

 

  scheduled to vest within 60 days after December 31, 2022 and which, pursuant to Ms. Ma’s election to defer, will be converted to shares of Applied common stock and paid to her on the date of her termination of service from the Applied Board.

 

(8)

Consists of 1,178 restricted stock units that are scheduled to vest within 60 days after December 31, 2022.

 

(9)

Includes 12,915 restricted stock units that are scheduled to vest within 60 days after December 31, 2022.

 

(10)

Includes 12,542 restricted stock units that are scheduled to vest within 60 days after December 31, 2022.

 

(11)

Includes (a) 31,373 restricted stock units that are scheduled to vest within 60 days after December 31, 2022 and (b) 56,212 restricted stock units that have vested and which, pursuant to each director’s election to defer, will be converted to shares of Applied common stock and paid to the director on the date of the director’s termination of service from the Applied Board.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires our directors, executive officers, and persons who beneficially own more than 10% of our common stock to report their ownership of Applied equity securities and any subsequent changes in that ownership to the SEC. We have reviewed all forms filed electronically with the SEC. Based on that review and on written information given to us by our executive officers and directors, we believe that all required reports were timely filed during fiscal 2022 and fiscal 2021, except for (a) six Forms 4 to report thirteen transactions on behalf of Dr. Chen’s family trusts that were not filed on a timely basis; these transactions were executed by an investment advisor for managed accounts, and Dr. Chen was unaware of the transactions at the time they occurred; and (b) a Form 4 to report one transaction in 2022 for Dr. Nalamasu that was filed late.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    31


Table of Contents

LOGO

 

         PROPOSAL 2 – Approval, on an Advisory Basis, of

         the Compensation of Our Named Executive Officers

 

PROPOSAL 2 – Approval, on an Advisory Basis, of the Compensation of Our Named Executive Officers

Pursuant to Section 14A of the Securities Exchange Act of 1934 (the “Exchange Act”), we are asking shareholders to approve, on a non-binding, advisory basis, the compensation of our NEOs, as described in this Proxy Statement. We seek this approval each year. Our annual “say-on-pay” proposals have been supported by our shareholders each year since we began providing this vote in 2011, and received the support of 83% of votes cast in 2022.

Our Board of Directors believes that our compensation policies and practices promote a performance-based culture and align our executives’ interests with those of our shareholders through a strong emphasis on at-risk compensation tied to the achievement of performance objectives and shareholder value. Our executive compensation program is also designed to attract and retain highly-talented executives who are critical to the successful implementation of Applied’s strategic plan.

Pay and Performance. We align compensation with our business objectives, performance, and shareholder interests. See pages 39 and 50 for charts illustrating the connection between key financial and Company performance metrics and the compensation paid to our CEO during the last five fiscal years.

Significant Portion of CEO Pay Consists of Variable Compensation and Long-Term Incentives. In fiscal 2022, 95% of our CEO’s compensation comprised variable compensation elements, and 88% of his overall compensation was delivered in equity with multi-year vesting. Performance objectives include financial and market objectives relating to adjusted operating margin, relative TSR, adjusted gross margin and wafer fabrication equipment market share, as well as other strategic and operational objectives, as described on pages 46 and 47.

Please see the “Compensation Discussion and Analysis” section for further discussion of our executive compensation program and the fiscal 2022 compensation of our NEOs.

We are asking our shareholders to approve the compensation of our NEOs as described in this Proxy Statement by voting in favor of the following resolution:

“RESOLVED, that the shareholders approve, on a non-binding, advisory basis, the compensation paid to the Company’s named executive officers as disclosed in the Company’s Proxy Statement for the 2023 Annual Meeting of Shareholders pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis section, the Summary Compensation Table, other compensation tables, narrative discussion and related disclosure.”

Even though this say-on-pay vote is advisory and therefore will not be binding on the Company, the HRCC and the Board value the opinions of our shareholders, and will consider the results of the vote when making future compensation decisions for our NEOs.

 

    LOGO   The board recommends that you vote for the approval, on an advisory basis, of the compensation of our named executive officers for fiscal year 2022, as disclosed in this proxy statement

 

32    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Compensation Discussion and Analysis

 

Compensation Discussion and Analysis

Executive Summary

Our Business and Strategy

Applied Materials is the leader in the materials engineering solutions used to produce virtually every new chip and advanced display in the world. Our expertise in modifying materials at atomic levels and on an industrial scale enables customers to transform possibilities into reality. At Applied Materials, our innovations Make Possible® a Better Future.

We develop, design, produce and service semiconductor and display equipment for manufacturers that sell into highly competitive and rapidly changing end markets. Our competitive positioning is driven by the ability of our talented workforce to identify major technology inflections early, and to develop highly differentiated materials engineering solutions for our customers to enable those technology inflections. Through our broad portfolio of products, technologies and services, innovation leadership and focused investments in research and development, we are enabling our customers’ success and creating significant value for our shareholders. Applied’s ability to hire, develop and retain a world-class global workforce is based on our commitment to creating a Culture of Inclusion that embraces different backgrounds, perspectives, and experiences to build stronger, more resilient teams. Consistent with our core values, we enable our employees to do their best work by providing quality training, learning and career development opportunities; promoting diversity, equity and a connected and inclusive culture; and upholding a high standard of ethics and respect for human rights.

In addition to our other accomplishments, we continue to make strong progress towards our 10-year road map for environmental and social responsibility, which we introduced in 2020. At Applied, making a positive contribution is at the foundation of our culture and our vision to Make Possible® a Better Future. Our 1x, 100x and 10,000x sustainability framework refers to the holistic goals and commitments we’ve set for our operations, how we work with customers and suppliers, and how our technology can be used to advance sustainability on a global scale. More details of Applied’s ESG vision and strategy, including a copy of the Company’s most recent Sustainability Report, can be found at https://www.appliedmaterials.com/company/corporate-responsibility.

Our Performance Highlights

Over the past several years, our broad portfolio of products and services has made Applied a more resilient company that can perform well in a variety of market environments. In 2022, we delivered strong financial performance while navigating COVID-related restrictions, supply chain shortages and a challenging geopolitical and macroeconomic environment. Key highlights include:

 

  »  

Record revenue of $25.8 billion, with record annual bookings in Semiconductor Systems and Applied Global Services, and a 62% increase in our year-end backlog at a company level – to a record $19 billion.

 

  »  

Record GAAP EPS of $7.44, and record non-GAAP adjusted EPS of $7.70 (see Appendix A for a reconciliation of non-GAAP adjusted measures).

 

  »  

Returned 151% of free cash flow to shareholders, including $6.1 billion in share repurchases and $873 million in dividends.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    33


Table of Contents

LOGO

 

         Compensation Discussion and Analysis

 

Highlights of five-year performance achievements across key financial measures

 

 

LOGO

Non-GAAP adjusted operating margin and non-GAAP adjusted EPS are performance targets under our long-term incentive and bonus plans. See Appendix A for non-GAAP reconciliations.

Key financial highlights for our reporting segments in fiscal 2022 include the following:

 

  »  

Semiconductor Systems segment: we delivered record annual revenue of $18.8 billion.

 

  »  

Applied Global Services segment: we grew revenue to a record $5.5 billion, and over the past 12 months, we increased the number of installed base tools by 8% and the number of tools covered by comprehensive long-term service agreements by 16%.

 

  »  

Display and Adjacent Markets segment: we delivered revenue of $1.3 billion and maintained profitability during an industry down cycle.

Strategic and Operational Highlights

Applied’s strategy is to deliver highly differentiated materials engineering products and services that enable major technology inflections and drive our customers’ success.

 

 

LOGO

Semiconductors are at the foundation of the digital transformation that will affect almost every sector of the economy over the coming years. Long-term megatrends including the Internet of Things (IoT), big data and artificial intelligence (AI) are fueling a new era of growth for semiconductors and driving the need for next-generation silicon technologies. Applied Materials has focused its strategy and investments to deliver innovations that accelerate improvements in the power, performance, area, cost, and time-to-market (PPACt) of semiconductor devices. Key strategic and operational accomplishments during fiscal 2022 include:

 

  »  

We introduced a new Integrated Materials Solution (IMS) that re-engineers the deposition of transistor wiring to significantly reduce electrical resistance, which has become a critical bottleneck to further improvements in chip performance and power.

 

  »  

We continued developing co-optimized and IMS products for 3D gate-all-around transistors and backside power distribution networks – two major materials engineering-enabled inflections that grow Applied’s total available market.

 

  »  

We strengthened our capabilities for advanced packaging, which helps chipmakers achieve improvements in PPACt, and where Applied has grown its equipment business to nearly a billion dollars.

 

  »  

In our services business, the renewal rate for long-term service agreements is well over 90%, which demonstrates the value customers see in our subscription services.

 

34    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Compensation Discussion and Analysis

 

  »  

We continued to make substantial progress towards our 10-year roadmap for environmental and social responsibility, as described in more detail on page xiv.

Total Shareholder Return Performance

In fiscal 2022, our total shareholder return performance was negatively impacted by global macro-economic conditions, including monetary tightening measures taken by central banks around the world to address inflation as well as industry headwinds, including trade restrictions on sales of a subset of our products to customers in China. However, as shown below, for the five year period beginning with fiscal 2018 Applied has substantially outperformed the S&P 500 Index, reflecting the company’s ability to create unique and innovative materials engineering solutions that accelerate its customers’ technology roadmaps.

Fiscal 2018 – Fiscal 2022 Total Shareholder Return vs. S&P 500 and Proxy Peers1

 

 

LOGO

 

1 

Reflects results from October 30, 2017 through October 30, 2022. Proxy peer data reflects companies set forth on page 42, weighted by market capitalization.

Key Compensation Actions

Performance-Based Compensation Decisions. The HRCC approved an aggressive set of performance goals for the executive officers for fiscal 2022, including financial targets that would represent record performance for Applied, as well as equally challenging operational targets. During fiscal 2022, Applied delivered exceptional financial and operational results in a challenging environment and made meaningful progress towards our long-term strategic goals that remain focused on enabling strong longer-term revenue and EPS growth. However, given an unprecedented set of challenges, including supply chain constraints and new export control regulations, the Company did not meet some of its stretch objectives for the year, resulting in bonus payouts for the executive officers that were, on average, below target. No adjustments were made during the year to the performance goals or to the Company’s results in determining incentive payouts.

As part of our multi-year incentive program, for the period of fiscal 2020 through 2022, the HRCC approved aggressive goals for non-GAAP adjusted operating margin and relative total shareholder return. The results for this three-year performance period meaningfully exceeded target, resulting in above-target vesting of performance share unit awards for our executive officers.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    35


Table of Contents

LOGO

 

         Compensation Discussion and Analysis

 

Chief Financial Officer Transition. In March 2022, we welcomed our new Chief Financial Officer, Brice Hill, who brings extensive experience in semiconductor devices, manufacturing and computing from the edge to the cloud. Mr. Hill was previously the Executive Vice President and CFO of Xilinx through its acquisition by Advanced Micro Devices, Inc. Prior to that, he worked at Intel Corporation for more than two decades, including as Chief Financial Officer and Chief Operating Officer of the Technology, Systems and Core Engineering Group, responsible for Intel’s manufacturing, R&D and product engineering. In connection with hiring Mr. Hill, the HRCC approved a new-hire compensation package structured to provide appropriate incentives for him to join Applied, but not intended to represent ongoing compensation for his role. Concurrent with Mr. Hill’s appointment to the CFO role, Robert J. Halliday, who served as Applied’s interim CFO since September 2021, resumed his prior role as Corporate Vice President and Advisor. Mr. Halliday’s compensation, as shown on page 38, reflected the interim nature of his service as CFO.

Applied Global Services Leadership Transition. In August 2022, we announced the decision by Ali Salehpour, our former Senior Vice President, Services, Display and Flexible Technology, to retire from the Company. Mr. Salehpour remained with Applied until January 2023 as Advisor to the Company’s Chief Executive Officer to ensure a smooth transition of his role and responsibilities.

Following Mr. Salehpour’s announcement, Timothy M. Deane was appointed as head of the Applied Global Services (“AGS”) organization, leading the services business supporting customers in all market segments. Mr. Deane has been with Applied since 1995, most recently as the head of Field Operations and Business Management for the Semiconductor Products Group. The structure and amount of Mr. Deane’s compensation for fiscal 2022 primarily reflects his prior role.

 

36    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Compensation Discussion and Analysis

 

Primary Compensation Elements and Executive Compensation Highlights for Fiscal 2022

The primary elements of our compensation program are base salary, annual incentive bonuses and long-term incentive awards. Other elements of compensation include a 401(k) savings plan, deferred compensation benefits and other benefits programs that are generally available to all employees. Primary elements and highlights of our fiscal 2022 compensation program for our NEOs (except for Messrs. Hill, Deane and Halliday) were as follows:

 

Element of Pay   Structure   Highlights

Base Salary

 

(see page 43)

 

 

»Fixed cash compensation for performing expected day-to-day responsibilities

 

»Reviewed annually and adjusted as appropriate, based on scope of responsibility, performance, time in role, experience, and competitive market for executive talent

 

 

»Reflecting (i) continued strong performance across the business, driven by our executive leadership and (ii) the continuing growth in the size and complexity of the Company, in fiscal 2022 the HRCC approved salary increases ranging from 2% to 9%

 

»This excludes the salary for our CEO, which the HRCC has not increased since December 2018

 

   

Annual

 

Incentive

 

Bonuses

 

(see page 43)

 

»Variable cash compensation

 

»Based on performance compared to pre-established financial, operational, strategic, and individual performance objectives

 

»Includes assessment of the Company’s progress towards ESG goals

 

»Financial and non-financial metrics provide a comprehensive assessment of executive performance

 

»Performance metrics evaluated annually to maintain continued alignment with strategy and market practice

 

»NEO annual incentives determined through a three-step performance assessment process:

 

 

 

LOGO

 

»No increase in target bonus as a percentage of base salary from fiscal 2021 to fiscal 2022 for any of the NEOs

 

»The initial performance hurdle for fiscal 2022 was $7.00 of non-GAAP adjusted EPS, meaningfully above Applied’s actual result for fiscal 2021. Actual non-GAAP adjusted EPS for fiscal 2022 was $7.70

 

»As the initial performance hurdle was met, annual bonuses for the NEOs (with the exception of Mr. Deane) were based on (i) the Company’s results as compared to the objective and quantifiable business and strategic goals in the corporate scorecard and (ii) an assessment of individual performance results as compared to quantitative and strategic objectives

 

  Mr. Deane’s annual bonus payout was based on the performance of the Semiconductor Products Group (“SPG”), reflecting his role for the majority of fiscal 2022

 

»Resulting payouts ranged from 71% to 111% of target for our NEOs

 

  Corporate scorecard modifiers ranged from 0.66x to 0.74x (see corporate scorecard information on pages 46 and 47) and the SPG modifier was 0.93x

 

  Individual performance modifiers ranged from 1.0x to 1.2x (see individual performance factor details on page 48)

 

   

Long-Term

 

Incentives

 

(see page 50)

 

 

»Delivered in part through performance share units (PSUs), to establish rigorous long-term performance alignment

 

»Balance of award delivered in restricted stock units (RSUs) to provide a strong tie to shareholder value creation and enhance retention

 

»PSUs vest based 50% on achievement of 3-year non-GAAP adjusted operating margin goal and 50% on 3-year TSR relative to the members of the S&P 500 Index

 

»PSUs vest at end of 3-year performance period, based on achievement of performance goals; RSUs vest ratably over 3 years

 

 

»The target mix of long-term incentive awards consists of 75% PSUs and 25% RSUs for the CEO and 50% PSUs and 50% RSUs for the other NEOs

 

»Non-GAAP adjusted operating margin is a key measure of our Company’s long-term success

 

»Relative TSR incentivizes management to outperform the market in any business environment

   

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    37


Table of Contents

LOGO

 

         Compensation Discussion and Analysis

 

Pay Mix

In fiscal 2022, a significant portion of our executives’ compensation consisted of variable compensation and long-term incentives. As illustrated below, 95% of CEO compensation for fiscal 2022 consisted of variable compensation elements, and 88% of CEO compensation was delivered in long-term incentive awards with multi-year vesting.

 

Fiscal 2022 Compensation Mix1
CEO    All Other NEOs2

 

 

LOGO

 

  

LOGO

 

 

1

Represents total direct compensation for fiscal 2022, including the grant date fair value of annual long-term incentive awards.

 

2

Excludes Messrs. Hill, Deane and Halliday, whose fiscal 2022 compensation is not representative of ongoing NEO compensation.

Summary of 2022 Total Direct Compensation

The following table summarizes elements of annual total direct compensation for our NEOs for fiscal 2022, consisting of (1) base salary, (2) actual annual incentive bonus payout and (3) long-term incentive awards (the grant date fair value of stock awards). This table excludes amounts not considered by the HRCC to be reflective of ongoing annual total direct compensation, such as: (a) the value of a sign-on bonus and a new-hire long-term incentive award for Mr. Hill, (b) the value of special RSU awards granted to Mr. Deane in December 2021 and upon his appointment as head of AGS in September 2022, (c) the value of a cash payment awarded to Mr. Halliday in recognition of his successful term as interim CFO and (d) certain other amounts required by the SEC to be reported in the Summary Compensation Table (see page 58 of this Proxy Statement).

 

Name and Principal Position

  

Salary

($)

    

Annual
Incentive
Bonus

($)

    

Annual
Long-Term
Incentive
Award

($)

    

Total

($)

 

Gary E. Dickerson

President and Chief Executive Officer

     1,030,000        1,358,055        17,783,334        20,171,389  

Brice Hill (1)

Senior Vice President, Chief Financial Officer and Enterprise Enablement Group

     441,346        523,723               965,069  

Prabu G. Raja

Senior Vice President, Semiconductor Products Group

     679,615        819,791        5,372,622        6,872,028  

Omkaram Nalamasu

Senior Vice President, Chief Technology Officer

     592,308        568,080        3,727,899        4,888,287  

Timothy M. Deane (2)

Group Vice President, Applied Global Services

     433,350        412,458        860,734        1,706,542  

Robert J. Halliday (3)

Corporate Vice President, Advisor; Former Interim Chief Financial Officer

     409,231        435,325               844,556  

Ali Salehpour (4)

Former Senior Vice President, Services, Display and Flexible Technology

     653,461        630,028        4,577,886        5,861,375  

 

38    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Compensation Discussion and Analysis

 

(1)

Mr. Hill joined Applied in March 2022. The base salary and annual incentive bonus shown for Mr. Hill are prorated based on his partial-year service during fiscal 2022. Amounts shown exclude a new-hire RSU award with grant date fair value of $8,351,018 and a sign-on bonus of $2,000,000. Mr. Hill did not receive an annual long-term incentive award in fiscal 2022.

 

(2)

Mr. Deane’s compensation for fiscal 2022 primarily reflects service in his prior role. Amounts shown exclude an RSU award granted in December 2021 with grant date fair value of $981,171 and an RSU award granted in September 2022 upon his appointment as head of AGS with grant date fair value of $965,215.

 

(3)

Mr. Halliday served as interim CFO until resuming his role as Corporate Vice President and Advisor upon Mr. Hill’s appointment as CFO in March 2022. The base salary and annual incentive bonus shown are prorated for service in, and compensation for, those roles. Amounts shown exclude a cash payment of $2,150,000 in recognition of Mr. Halliday’s successful service as the Company’s interim CFO.

 

(4)

Mr. Salehpour retired from Applied in January 2023. RSU and PSU awards that were unvested at the time of Mr. Salehpour’s departure will vest consistent with the terms for a qualifying retirement under his existing award agreements.

Pay and Performance

The HRCC sets aggressive performance goals for the CEO and for the entire Executive Leadership Team. The following chart shows the connection between Applied’s TSR and the total direct compensation for our CEO over the last five fiscal years. During this period, our shareholder returns significantly outpaced the increase in our CEO’s total direct compensation.

 

 

LOGO

 

(1)

Consists of annual base salary, actual annual incentive bonus payout and long-term incentive award (grant date fair value of annual long-term incentive awards). Total direct compensation shown above excludes other amounts required by the SEC to be reported in the Summary Compensation Table and also excludes the grant date fair value of a non-recurring Value Creation Award granted in fiscal 2021. However, the HRCC takes the value of that award into consideration when making compensation decisions for Mr. Dickerson.

 

(2)

Reflects the total shareholder return on our common stock during the period from October 29, 2018 through October 28, 2022 (the last business day of fiscal 2022), assuming $100 was invested on October 29, 2018 and assuming reinvestment of dividends.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    39


Table of Contents

LOGO

 

         Compensation Discussion and Analysis

 

Other Key Compensation Practices

We are committed to executive compensation practices that drive performance, mitigate risk, and align the interests of our leadership team with those of our shareholders. Below is a summary of best practices that we have implemented because we believe they are in the best interests of Applied and our shareholders, and practices that we avoid because we believe they run counter to those interests.

 

WHAT WE DO     

 

  WHAT WE DO NOT DO

 

LOGO

 

 

Pay for Performance – Significant majority of NEO target compensation is performance-based and tied to pre-established performance goals aligned with our short- and long-term objectives.

   

 

LOGO

 

 

No Guaranteed Bonuses – Our annual bonus plans are performance-based and do not include any guaranteed minimum payment levels.

 

   

 

 

LOGO

 

 

Mitigation of Risk – Use of varied performance measures and of payout limits in incentive programs mitigates risk that executives will be motivated to pursue results with respect to any one performance measure to the detriment of Applied as a whole.

   

 

LOGO

 

 

No Hedging or Pledging – Our insider trading policy prohibits all directors, NEOs and other employees from engaging in hedging or other speculative trading, and prohibits directors and NEOs from pledging their shares.

 

   

 

 

LOGO

 

 

Compensation Recoupment Policy – Both our annual cash bonus plan and our stock incentive plan contain “clawback” provisions providing for reimbursement of incentive compensation from NEOs in certain circumstances.

   

 

LOGO

 

 

No Excessive Perquisites – We do not provide material perquisites or other personal benefits to our NEOs or directors, except for security purposes or in connection with business-related relocation.

 

   

 

 

LOGO

 

 

Stock Ownership Guidelines – All senior officers and directors are subject to stock ownership guidelines to ensure their interests are aligned with shareholders’ interests.

   

 

LOGO

 

 

No Dividends on Unvested Long-Term Incentive Awards – We do not pay dividends or dividend equivalents on unvested long-term incentive awards.

 

   

 

 

LOGO

 

 

Double-Trigger Change-in-Control Provisions – For vesting to accelerate, long-term incentive awards for all NEOs require a “double-trigger” of both a change-in-control and subsequent termination of employment.

   

 

LOGO

 

 

No Executive Pensions – We do not offer any executive pension plans.

 

   

 

 

LOGO

 

 

Annual Say-On-Pay Vote – We seek annual shareholder feedback on our executive compensation program.

     

 

LOGO

 

 

No Tax Gross-Ups – We do not pay tax gross-ups, except in connection with business-related relocation or expatriate assignments.

 

40    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

          Compensation Discussion and Analysis

 

Compensation Governance and Decision-Making Framework

Overview of Compensation Program Philosophy and Governance Framework

Our executive compensation program has three principal objectives:

 

  »  

To attract, reward and retain highly-talented executive officers and other key employees;

 

  »  

To motivate these individuals to achieve short-term and long-term goals that enhance shareholder value; and

 

  »  

To support our core values and culture.

We seek to achieve these objectives by:

 

  »  

Providing compensation that is competitive with the practices of other leading high-technology companies; and

 

  »  

Linking rewards to Company and individual performance by:

 

   

Setting challenging performance goals for executive officers and other key employees;

 

   

Balancing retention needs with performance objectives; and

 

   

Providing a high proportion of total target compensation in the form of long-term incentive awards to motivate executive officers and other key employees to increase long-term value in alignment with shareholders’ interests.

The HRCC uses these principles to set appropriate base salary levels and to design and determine annual incentive bonuses and long-term incentive awards. The HRCC also considers Applied’s business strategy and objectives, external factors such as the geopolitical and economic environment, competitive practices and trends, and corporate factors, including the overall cost of the compensation program.

The HRCC further considers the results of the annual advisory “say-on-pay” vote and shareholder feedback. At our Annual Meeting in 2022, our “say-on-pay” proposal received a substantial majority (83%) of votes cast, reflecting continuing strong support for our ongoing executive compensation program. Following the Annual Meeting and throughout the remainder of 2022, we continued our extensive shareholder outreach efforts and specifically solicited feedback on our executive compensation program. A broad group of Applied management participated in the outreach through a series of virtual meetings and conference calls, with active independent director participation either directly on the calls or through oversight of the shareholder engagement program. During those discussions, we continued to receive broadly positive investor feedback on the compensation program structure and design. In these discussions, we also discussed the Value Creation Awards granted to certain executives in fiscal 2021, and re-emphasized that the HRCC does not expect to grant similar awards in the coming years. In consideration of this vote at our Annual Meeting and the shareholder feedback gathered through our outreach efforts, the HRCC approved an executive compensation program structure for fiscal 2022 that is generally unchanged from the fiscal 2021 program.

Fiscal 2022 Peer Group

The HRCC regularly reviews the structure and amount of compensation paid by our peer group, which consists of high-technology companies whose businesses are comparable to ours and with whom we are likely to compete for executive talent, as a reference point for evaluating our compensation program.

For the composition of the fiscal 2022 peer group, the HRCC considered companies that met the following criteria: (1) innovative technology companies with product manufacturing, (2) companies whose revenues and market capitalization were approximately one-fourth to five times that of Applied, (3) publicly-traded companies with global operations that disclose executive compensation pursuant to SEC rules, and (4) companies that represent: (i) industry competitors, (ii) competitors for key talent, (iii) customers or suppliers, and/or (iv) comparable alternatives for shareholder investment. Based on this assessment, the HRCC determined to leave the fiscal 2021 peer group unchanged for fiscal 2022. Each of the companies in the resulting peer group meets most or all of the four screening criteria.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    41


Table of Contents

LOGO

 

         Compensation Discussion and Analysis

 

Data gathered on executive compensation practices across the peer group include base salary levels, bonus payouts, target and actual cash compensation, long-term incentive award values and total compensation levels. The HRCC uses this information as a reference point in informing its decision making, rather than targeting a specific percentile of the peer data for our NEOs. The executive compensation data for the peer companies is gathered from the sources described in “Role of Compensation Consultant” below.

Our fiscal 2022 peer group and related information are set forth below.

 

Fiscal 2022 Peer Group

Advanced Micro Devices, Inc.

 

Micron Technology, Inc.

Analog Devices, Inc.

 

Motorola Solutions, Inc.

Broadcom, Inc.

 

NetApp, Inc.

Cisco Systems, Inc.

 

NVIDIA Corp.

Corning Inc.

 

NXP Semiconductors N.V.

Intel Corporation

 

QUALCOMM, Inc

KLA Corp.

 

Texas Instruments, Inc.

Lam Research Corp.

 

Western Digital Corp.

Applied Materials Positioning Relative to Peers1

 

 

LOGO

 

1

As of the HRCC’s review in March 2022.

Components of Total Direct Compensation

Determining Total Direct Compensation

At the beginning of fiscal 2022, the HRCC evaluated total direct compensation – consisting of base salary, target annual incentive opportunity for the fiscal year and long-term incentive award value – for each NEO (other than Messrs. Hill and Deane who became executive officers during the course of fiscal 2022). As part of this annual evaluation, the HRCC considered the NEO’s scope of responsibility, performance, skill set, prior experience and achievements, advancement potential, impact on results and expected future contribution to our business. The HRCC also considered the compensation levels of each executive officer relative to other Applied officers, the need to attract and retain talent, business conditions, and compensation levels at our peer companies for comparable positions; however, no individual element of compensation is targeted to a peer percentile range. Following the end of fiscal 2022, the HRCC determined payouts for performance-based compensation programs, based on the performance of the Company and individual NEOs as compared to pre-established objectives.

Target Cash Compensation

Base salaries and bonus opportunities are designed to attract, motivate, reward, and retain highly-talented executives, as well as to align pay with performance. Applied continues to focus the weighting of cash compensation more heavily toward performance-based incentives. At the beginning of each fiscal year (or at the time of an executive officer’s hire or appointment, as applicable), the HRCC determines each NEO’s target total cash compensation (salary and target bonus).

 

42    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

          Compensation Discussion and Analysis

 

Base Salaries

Base salaries represent an annual fixed level of cash compensation. Based on its review in early fiscal 2022, the HRCC determined to increase the base salary level for each NEO, excluding: Mr. Dickerson, given the HRCC’s belief that CEO compensation should be predominantly tied to long-term results; Mr. Halliday, who was serving as interim CFO; and Messrs. Hill and Deane, who were not yet executive officers. The HRCC believed that such increases were appropriate given the significant increase in the size and complexity of Applied and its businesses over the preceding years and the limited increases to NEO salaries during that time. Mr. Hill’s base salary was established at the time of his hire, Mr. Halliday’s base salary for service as Advisor was established at the time of his appointment to the role, and Mr. Deane’s base salary during fiscal 2022 reflected his prior role.

Annual Incentive Bonus Opportunities

Bonus Plan Overview. In fiscal 2022, all of our NEOs, except for Mr. Deane, participated in the Senior Executive Bonus Plan (the “Bonus Plan”). The Bonus Plan is a shareholder-approved bonus program designed to motivate and reward achievement of Applied’s business goals, in alignment with delivering shareholder value. The annual incentive bonus opportunity for each NEO under the Bonus Plan is directly linked to Applied’s achievement of financial and market performance, operational performance, and strategic objectives, in addition to individual performance. Company and individual goals are structured to incentivize management to drive strong operating performance, invest in innovation to drive future growth and create shareholder value. Our Bonus Plan is performance-based and does not include any guaranteed minimum payment levels. Due to the timing of his appointment as an executive officer, Mr. Deane did not participate in the Bonus Plan for fiscal 2022 and instead participated in the Applied Incentive Plan (“AIP”).

Determining Target Bonus Amounts. Target bonus amounts for the NEOs are expressed as a percentage of base salary. The HRCC approves the annual target bonus amount for each NEO, taking into consideration Mr. Dickerson’s recommendations regarding the annual target bonus amounts for each of the NEOs other than himself. In early fiscal 2022, Mr. Dickerson recommended that, for each NEO – other than Messrs. Hill and Deane, who were not executive officers at the time – the target bonus amounts as a percentage of base salary remain unchanged from fiscal 2021. Similarly, based on a comprehensive review and with input from its independent compensation consultant, the HRCC determined not to change Mr. Dickerson’s target bonus amount from fiscal 2021.

Mr. Hill’s target bonus opportunity was established at the time of his hire, Mr. Halliday’s target bonus opportunity for service as Advisor was established at the time of his appointment to the role, and Mr. Deane’s target bonus opportunity during fiscal 2022 reflected his prior role. Mr. Hill’s fiscal 2022 bonus opportunity was prorated to reflect his partial-year service and Mr. Halliday’s fiscal 2022 bonus opportunity was prorated to reflect his service as interim CFO for approximately the first four months of the fiscal year and Advisor for the remaining approximately eight months of the fiscal year.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    43


Table of Contents

LOGO

 

         Compensation Discussion and Analysis

 

Assessing Performance and Payout. The determination of fiscal 2022 performance and annual incentive bonuses for our NEOs who participated in the Bonus Plan consisted of three key steps, as illustrated below and described in more detail in the subsequent narrative.

 

 

LOGO

Initial Performance Hurdle. For fiscal 2022, the HRCC chose non-GAAP adjusted EPS as the initial performance hurdle under the Bonus Plan. EPS, an indicator of overall Company financial performance, is a measure of profits generated on a per-share basis that are available either to reinvest in the business or to distribute to shareholders, and has a strong link to share price valuation.

If Applied does not achieve a threshold non-GAAP adjusted EPS for the fiscal year (set at $7.00 for fiscal 2022), no bonus is payable. If this threshold is achieved, the maximum bonus that becomes payable for each NEO is the lowest of: (a) $5 million, (b) 3x the corporate bonus pool funding modifier multiplied by the target bonus, and (c) 3x the target bonus.

In fiscal 2022, Applied’s non-GAAP adjusted EPS was $7.70, resulting in achievement of the initial performance hurdle under the Bonus Plan. Adjusted EPS is a non-GAAP measure that excludes certain items from EPS determined in accordance with GAAP (see Appendix A for a reconciliation of non-GAAP adjusted EPS).

Non-GAAP adjusted EPS includes the impact of share-based compensation expenses.

Balanced Corporate Scorecard. If the initial performance hurdle is achieved, the HRCC then reviews the level of achievement of pre-defined objectives on the corporate scorecard and determines the appropriate scorecard result for the fiscal year. The scorecard is designed to measure achievement of financial and non-financial objectives that are considered by the HRCC to be key drivers of the Company’s near-term financial and operational success that will create shareholder value over the longer-term. The fiscal 2022 scorecard measured company performance in five broad categories: (1) Financial and Market Performance and Execution, (2) Products and Growth, (3) Services and Subscription, (4) Customers and Markets, and (5) People and Organization. These categories align with and support the Company’s strategy of strengthening our materials engineering capabilities to enable major technology inflections for our customers and positioning Applied for sustainable growth to support long-term value creation for our shareholders. Since fiscal 2021, the corporate scorecard has included ESG objectives, with performance measured based on Applied’s successfully making annual progress required to meet our long-term ESG goals. For fiscal 2022,

 

44    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

          Compensation Discussion and Analysis

 

the HRCC approved the addition of the Services and Subscription category, underscoring the Company’s focus on increasing the number of tools under comprehensive, long-term service contracts.

 

  Scorecard Category    Weighting
for CEO
  Link to Company Strategy and Performance
  Financial and Market   Performance and   Execution    50%  

Incentivizes achievement of financial, market share and TSR goals and focuses on delivering sustainable performance that increases shareholder value

 

Aligns with increased efficiency in operational process and quality and safety performance

  Products and Growth

   30%  

Reinforces strategy of developing new and differentiated products and positioning Applied and its products for future revenue and market share growth

  Services and Subscription

   10%  

Increases focus on continued profitable growth of the services business with an increasingly large portion being converted to subscriptions

  Customers and Markets

   5%  

Promotes focus on customer service by improving growth and efficiency at key accounts and applications

  People and Organization

   5%  

Drives progress towards achieving long-term ESG objectives and enhancing the diversity and inclusion of Applied’s talent

NEO Objectives and Weightings. Each NEO (other than Mr. Deane, whose bonus payout was determined under the AIP) was assigned individualized weightings for scorecard objectives to reflect the relative impact and contributions of that NEO and his business or organizational unit to Applied’s overall performance with respect to a particular objective. The corporate scorecard objectives and weightings for each NEO are set forth in the table below.

Goal Setting and Measurement. At the beginning of the fiscal year, the HRCC reviewed objectives and individual weightings proposed by management, and provided input on the corporate scorecard and weightings for each NEO (including weightings applicable to both the interim and the ongoing CFO, but excluding Mr. Deane whose annual bonus payout under the AIP was based on the performance of the Semiconductor Products Group, reflecting his role for the majority of fiscal 2022). Performance hurdles were set to measure achievement at 0, 0.5, 1.0, 1.5 and 2.0 levels, with a score of 1.0 indicating performance that met very high expectations and scores over 1.0 indicating extraordinary achievement. Scorecard objectives are intended to be very challenging to incentivize our NEOs to achieve performance levels that are higher than our externally communicated financial targets. Consequently, delivering results below the 100% target level can still represent very meaningful progress towards our long-term strategic goals. At the end of the fiscal year, scores were calculated based on actual performance against objectives and were presented to the HRCC to review, adjust and approve.

The following table shows the fiscal 2022 corporate scorecard objectives, their relative weightings for the NEO, the achievements based on performance against rigorous objectives and the resulting scores, as approved by the HRCC (see Appendix A for non-GAAP reconciliations). The HRCC approved an aggressive set of scorecard targets for the executive officers for fiscal 2022, including financial targets far above any levels that Applied had achieved in the past, as well as equally challenging operational targets, and a focus on continued progress towards positioning the company to achieve its long-term objectives. During fiscal 2022, Applied delivered exceptional financial and operational performance and made meaningful progress towards our long-term strategic goals focused on enabling strong longer-term revenue and EPS growth. However, due to COVID-related restrictions, supply chain constraints and a challenging geopolitical and macroeconomic environment during fiscal 2022, the Company did not fully meet some of the aggressive goals set for the year.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    45


Table of Contents

LOGO

 

         Compensation Discussion and Analysis

 

Beginning with the fiscal 2021 corporate scorecard, the HRCC added a broader ESG objective – beyond the Company’s existing focus on diversity and inclusion – to demonstrate Applied’s commitment to driving sustainability throughout our business and to provide a discrete incentive for management to execute on our ESG strategy. While the Company’s ESG goals are long-term in nature, the HRCC believes that it is important to annually review, measure and assess progress towards those goals. As a result, the HRCC included ESG objectives in the annual incentive program, rather than in long-term incentive awards. More detail on the Company’s ESG framework and 2022 accomplishments can be found on pages xii through xiv.

 

Objectives   Weightings      Achievements  

LOGO

 
 

 

 

LOGO

   

LOGO

   

LOGO

   

LOGO

 

Financial and Market Performance and Execution

    50%       50%       50%       50%       

 

   

 

 

 

 

 

Grow wafer fabrication equipment market share (measured by VLSI Research)

    12%       12%       12%       12%      Delivered record revenue and increased company level backlog by 62%, but due to supply chain challenges, forecast modest share gains in CY22 – short of our aggressive goal     0.5  

Achieve targeted Service revenue growth

    2%       2%       2%       4%      Delivered record Service revenue, but with a growth rate below our aggressive goals     0.5  

Achieve targeted Free Cash Flow

    4%       4%       4%       2%      Generated Free Cash Flow below challenging target for the year, primarily due to supply chain constraints     0.0  

Achieve adjusted gross margin targets (gross margin reported externally)

    10%       10%       10%       10%      Delivered 46.6% non-GAAP adjusted gross margin, modestly below fiscal 2021     0.5  

Achieve adjusted operating margin goal (operating margin reported externally)

    10%       10%       10%       10%      Achieved 30.5% non-GAAP adjusted operating margin, a modest decrease from fiscal 2021     0.5  

Achieve TSR ranking target relative to peers

    8%       8%       8%       8%      Performed on par with peers during the fiscal year     1.0  

Improve operational, quality and safety performance

    4%       4%       4%       4%      Missed some key operational and quality metrics, in large part as a result of supply chain constraints     0.5  
             

Products and Growth

    30%       32.5%       37.5%       25%       

 

   

 

 

 

 

 

Deliver key milestones that demonstrate progress towards targeted fiscal 2024 performance for semiconductor businesses

    15%       20%       2.5%       5%      Achieved milestones towards 2024 revenue target for semiconductor businesses     1.0  

Achieve key milestones that demonstrate progress towards targeted fiscal 2024 performance for Integrated Materials Solutions business

    3.5%       5%       1.5%       1.5%      Achieved milestones towards 2024 targets for IMS business     1.0  

Deliver key milestones that demonstrate progress towards targeted fiscal 2024 performance for AIx application

    3.5%       5%       1.5%       3.5%      Made progress towards 2024 targets, but some results fell short of the aggressive milestones set for the year     0.5  

Deliver key milestones that demonstrate progress towards targeted fiscal 2024 performance for Display Business

    5%       0%       7%       12%      Made progress towards 2024 targets for Display business, but some results fell short of milestones set for the year     0.75  

 

46    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

          Compensation Discussion and Analysis

 

Objectives   Weightings      Achievements  

LOGO

 
 

 

 

LOGO

   

LOGO

   

LOGO

   

LOGO

 

Deliver key milestones that demonstrate progress towards targeted fiscal 2024 performance for new/adjacent market growth

    3%       2.5%       25%       3%      Developed pipeline of opportunities in new and adjacent growth areas     0.75  
             

Services and Subscription

    10%       7.5%       7.5%       15%       

 

   

 

 

 

 

 

Achieve key milestones that demonstrate progress towards targeted fiscal 2024 performance for Service business

    7.5%       5%       5%       10%      Achieved milestones towards 2024 targets for Service business     1.0  

Achieve key milestones that demonstrate progress towards targeted fiscal 2024 performance for Service business

    2.5%       2.5%       2.5%       5%      Delivered subscription revenue growth below aggressive goals     0.5  
             

Customers and Markets

    5%       5%             5%       

 

   

 

 

 

 

 

Achieve key milestones that demonstrate progress towards targeted fiscal 2024 performance at leading customers and accounts

    2.5%       2.5%             2.5%      Exceeded development and production tool of record goals, as well as application growth goals for systems and service     2.0  

Deliver key milestones that demonstrate progress towards targeted fiscal 2024 performance for ICAPS business

    2.5%       2.5%             2.5%      Met milestones towards 2024 targets for IoT, Communications, Automotive, Power and Sensors (ICAPS) business     1.0  
             

People and Organization

    5%       5%       5%       5%       

 

   

 

 

 

 

 

ESG objective – Demonstrate targeted progress towards increasing representation of women and underrepresented minorities

    2.5%       2.5%       2.5%       2.5%      Continued progress toward achieving our longer-term objectives, but fell short of near-term representation goals     0.5  

ESG objective – Demonstrate progress towards achieving other long-term ESG goals

    2.5%       2.5%       2.5%       2.5%      Met key milestones towards Company’s 2030 ESG goals     1.0  

Scores are based on achievement of goals tied to objective and quantifiable metrics aligned with Company strategy

 

 

Individual Performance Factor. Each NEO’s individual performance factor (“IPF”), including Mr. Deane, reflects an assessment of their individual performance and contributions. The IPF is only applied if the initial performance hurdle and at least some of the corporate scorecard objectives are achieved. The IPF modifies the initial bonus amount as determined based on achievement against the corporate scorecard objectives. IPF modifiers can range from 0 to 1.5.

In determining the fiscal 2022 IPF for each NEO, the HRCC took into consideration: (i) financial performance, which exceeded threshold performance on EPS, (ii) results on the corporate scorecard and associated goals, (iii) the leadership team’s ability to guide Applied through continued unprecedented disruption caused by the COVID-19 global pandemic and a challenging geopolitical and macroeconomic environment, and (iv) each executive’s capable leadership of his respective business unit or function.

The HRCC determined the IPF for each NEO, other than Mr. Dickerson, by taking into consideration Mr. Dickerson’s recommendation, which included his assessment of the achievement of strategic, financial, operational and organizational performance goals specific to the business or organizational unit for which the NEO was responsible, as well as the NEO’s leadership skills and current and expected contributions to the business.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    47


Table of Contents

LOGO

 

         Compensation Discussion and Analysis

 

For fiscal 2022, in light of the significant accomplishments by each NEO in leading his respective organization, and in Mr. Dickerson’s case, Applied, and in recognition of the significant teamwork required of the leadership team to deliver strong financial results despite navigating the continued unprecedented challenges of a global pandemic and a challenging geopolitical and macroeconomic environment, the HRCC determined an IPF for each NEO in a range between 1.0 and 1.2.

The following table shows the highlights of each NEO’s performance in fiscal 2022 that the HRCC considered in determining their respective IPFs.

 

NEO    Fiscal 2022 Individual Performance Highlights

Gary E. Dickerson

  

»  Led Applied to record performance for the year, growing revenue 12% and non-GAAP adjusted EPS by 13% year-over-year

 

  

»  Grew our year-end backlog at a company level to $19 billion, up 62% year-over-year

 

  

»  Drove the organization to make significant progress in key strategic areas that position Applied to deliver its targeted 2024 financial model

 

 

  

»  Positioned Applied as one of the semiconductor industry’s leaders in ESG

Brice Hill

  

»  Delivered annual revenue of $25.8 billion and non-GAAP adjusted EPS of $7.70 and returned over $6.98 billion to shareholders, including $6.1 billion in share repurchases and $873 million in dividends

 

  

»  Successfully managed external investor relationships and communications

 

 

  

»  Added responsibility in leading the Company’s enterprise enablement group, overseeing key support functions including Global Information Services, Global Indirect Procurement, and Global Contingent Workforce Organization

Prabu G. Raja

  

»  Delivered record annual performance with Semiconductor Systems revenue growth of 15% year-over-year, while navigating significant supply chain constraints and other ongoing geopolitical and macroeconomic challenges

 

  

»  Demonstrated strong momentum in key growth areas, specifically etch, CMP and packaging, while continuing to establish Applied as a clear leader in the DRAM market and maintaining leadership in Foundry-Logic

 

 

  

»  Brought highly enabling technologies to market through a combination of organic R&D and strategic partnerships

Omkaram Nalamasu

  

»  Identified disruptive opportunities and developed potential future growth platforms

 

  

»  Continued to identify external sources of investment to support and accelerate the Company’s innovation pipeline

 

 

  

»  Led the Applied Ventures group’s efforts in both investing for returns and incubating promising businesses in new and adjacent markets

Timothy M. Deane

  

»  Successfully led Field Operations and Business Management for the Semiconductor Products Group, delivering strong results during the year

 

 

  

»  Successfully transitioned to a new role leading Applied Global Services

Ali Salehpour

  

»  Delivered record Applied Global Services revenues of over $5.5 billion and revenues in the Display segment of over $1.3 billion

 

 

  

»  Increased the number of installed base tools covered by long-term service agreements by 91% since 2017, to nearly 12,000, and increased the average tenure of those agreements

Robert J. Halliday

  

»  Guided the Company through the fiscal 2021 year-end and fiscal 2022 goal setting processes as interim CFO, and played a key role in Mr. Hill’s integration to Applied

Actual Bonus Payouts. The illustration below shows the results for each of the three key steps in determining the NEOs’ fiscal 2022 annual incentive bonuses under the Bonus Plan. Despite our record financial performance and significant individual contributions by the NEOs, our results compared to the fiscal 2022 corporate scorecard objectives led to bonus payouts for our NEOs that were, on average, approximately 10% below target bonus amounts.

 

48    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

          Compensation Discussion and Analysis

 

Fiscal 2022 Annual Incentive Calculation

 

 

 

 
   Performance Measures     

 

 
  Fiscal 2022 Achievement

Initial Performance

Hurdle

   Fiscal 2022 non-GAAP adjusted EPS of $7.00   

LOGO

  Achieved non-GAAP adjusted EPS of $7.70

Corporate Scorecard

  

Assessment of performance against predefined financial, operational and strategic corporate goals:

 

»  Financial and Market Performance and Execution

 

»  Products and Growth

 

»  Services and Subscription

 

»  Customers and Markets

 

»  People and Organization

   LOGO  

Strong performance on core objectives that fell short of exceptionally challenging goals set for the year

 

Scorecard results achieved in a range from 0.66 to 0.74 based on varying weighting of objectives

Individual Performance

Modifier

   NEO performance against personal objectives and individual contribution to business performance   

LOGO

  IPF achieved in a range from 1.0 to 1.2

 

  

 

  

Average NEO bonus, as multiple

of target: 0.88

Applied Incentive Plan. Mr. Deane participated in the AIP during fiscal 2022. Determination of target bonus amounts, initial and secondary performance goals, funding of the plan and actual bonus amounts under the AIP is essentially similar to that under the Bonus Plan discussed above, except that Mr. Deane’s payout is based on the achievement of scorecard objectives for the Semiconductor Products Group.

The following table shows for each NEO: (1) the bonus-eligible base salary, (2) the target bonus amount expressed as a percentage of base salary, (3) the target bonus expressed as a dollar amount and (4) the actual fiscal 2022 bonus amount approved by the HRCC and paid to the NEO.

 

 NEO    (1)
Base Salary
($)
    

(2)

Target
Bonus as a
Percentage
of Base
Salary

(%)

    

(3)

Target
Bonus

($)

    

(4)

Actual
Bonus

($)

 

 Gary E. Dickerson

   $ 1,030,000        150%      $ 1,545,000      $ 1,358,055  

 Brice Hill (1)

   $    441,346        135%      $    595,817      $    523,723  

 Prabu G. Raja

   $    685,000        135%      $    924,750      $    819,791  

 Omkaram Nalamasu

   $    600,000        120%      $    720,000      $    568,080  

 Timothy M. Deane

   $    437,157        85%      $    371,583      $    412,458  

 Robert J. Halliday (2)

   $    409,231        112%      $    495,250      $    435,325  

 Ali Salehpour

   $    655,000        135%      $    884,250      $    630,028  

 

(1)

Mr. Hill commenced his employment with Applied in March 2022. His base salary, target bonus opportunity and actual bonus are prorated for partial-year service during fiscal 2022.

 

(2)

Mr. Halliday served as interim CFO until March 2022, and as Advisor for the remainder of fiscal 2022. His base salary, target bonus percentage, target bonus opportunity and actual bonus reflect approximately four months of service as interim CFO and approximately eight months of service as Advisor during the fiscal year.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    49


Table of Contents

LOGO

 

         Compensation Discussion and Analysis

 

Pay Driven by Operating Performance. Our process for determining annual bonus awards has resulted in strong pay and performance alignment. The chart below shows the actual annual bonus awards to our CEO as a percentage of his target bonus opportunity and our non-GAAP adjusted EPS achievements over the last five fiscal years.

CEO Actual Annual Bonus vs. Earnings Per Share

 

 

LOGO

Non-GAAP adjusted EPS is a performance target under our bonus plan. See Appendix A for non-GAAP reconciliations.

Long-Term Incentives

Overview. Applied’s long-term incentive compensation program is intended to help (1) focus participants on achieving our business objectives, (2) attract, retain, and motivate key talent, and (3) align our executives’ interests with shareholders’ interests to maximize long-term shareholder value.

Timing of Awards. The HRCC grants long-term incentive awards to NEOs under our shareholder-approved Employee Stock Incentive Plan (the “Stock Plan”). The HRCC has not granted, nor does it intend to grant, equity awards in anticipation of the release of material, nonpublic information that is likely to result in changes to the price of our common stock, such as a significant positive or negative earnings announcement. Similarly, Applied has not timed, nor does it intend to time, the release of material, nonpublic information based on equity award grant dates.

Fiscal 2022 Equity Awards

The HRCC believes that a meaningful portion of NEOs’ target compensation should be in the form of long-term incentives. These awards are intended to reward performance over a multi-year period, align the interests of executives with those of shareholders, instill an ownership culture, enhance the personal stake of executive officers in the growth and success of the Company, and provide an incentive for continued service at the Company.

Given the ongoing strong support received from our shareholders on our incentive programs, we continued our approach of making performance-based equity awards a substantial portion of the overall value of equity awards granted to our NEOs.

 

50    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

          Compensation Discussion and Analysis

 

The fiscal 2022 long-term incentive awards for NEOs (excluding the award granted to Mr. Hill in connection with his hire, as described on page 53, and awards granted to Mr. Deane during fiscal 2022, as described on page 54) consist of two forms of equity vehicles: performance share units and restricted stock units. The target vehicle mix of the awards for the fiscal 2022 grant remains unchanged from the previous year’s grants and consists of 75% PSUs and 25% RSUs for the CEO and 50% PSUs and 50% RSUs for the other NEOs. Mr. Halliday did not receive any long-term incentive awards during fiscal 2022.

 

CEO LTI Vehicle Mix   All Other NEO LTI Vehicle Mix

 

 

LOGO

 

 

 

 

LOGO

 

For fiscal 2022, in December 2021, the HRCC granted the number of PSUs and RSUs listed in the below table to our NEOs (excluding Messrs. Hill, Deane, and Halliday, as described above).

 

NEO   

Target Value
of Awards(1)

($)

     Equivalent
Target
Number of
PSUs(2)
     Equivalent
Number of
RSUs(2)
 

Dickerson

   $ 15,425,000        78,973        26,325  

Raja

   $ 4,900,000        16,725        16,725  

Salehpour

   $ 4,175,000        14,251        14,251  

Nalamasu

   $ 3,400,000        11,605        11,605  

 

(1)

Reflects target value of awards on the date of grant. Amounts shown in the “Stock Awards” column of the Summary Compensation Table represent grant date fair value determined pursuant to Accounting Standards Codification 718.

 

(2)

Number of units calculated by dividing target value of awards by $146.49, the closing price of Applied stock on December 2, 2021, the grant date.

Size of Annual Equity Awards. In determining the size of the awards, the HRCC considered each NEO’s award as a component of his total direct compensation. Target fiscal 2022 long-term equity awards were determined in light of each NEO’s scope of responsibility, performance, impact on results, expected future contributions to our business, compensation levels relative to other Applied officers, the need to attract and retain talent, and business conditions. In addition, the fiscal 2022 target award sizes provided sufficient performance-based equity incentives to align compensation with the long-term interests of our shareholders, were in line with market norms for the NEOs’ respective roles and were sufficient to provide incentive for them to achieve Applied’s performance goals over a multi-year period.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    51


Table of Contents

LOGO

 

         Compensation Discussion and Analysis

 

Performance Share Units. The PSU awards are designed to align NEO compensation – and therefore NEO decision making – with our strategic goals over the long term. The two metrics for the PSU portion of the long-term incentive program remain unchanged from the prior year’s grants. The fiscal 2022 PSUs, granted in December 2021, will vest three years from the grant date based on achievement of average non-GAAP adjusted operating margin for fiscal 2022 through fiscal 2024 and TSR relative to the S&P 500 over the performance period of the first day of fiscal 2022 through the last day of fiscal 2024, with equal weighting given to each metric. The HRCC selected the members of the S&P 500 Index as the peer set for the relative TSR metric because enough differences exist between Applied and other companies in the technology and/or semiconductor space to make identifying a comparable industry-specific peer group impractical and because the HRCC believes the S&P 500 represents an appropriate proxy for the investment alternatives available to the Company’s shareholders.

 

 

LOGO

The number of PSUs that will vest, if any, will be based on the achievement of threshold, target or maximum levels for each metric, as set forth below.

 

 

 

 

Percentage  

of Shares  

that May  

Vest Based on  

 
 Achievement Level  

Relative  

TSR  

    

Operating  

Margin  

 
 Threshold     0%          50%    
 Target     100%          100%    
 Maximum     200%          200%    

A TSR payout factor will be determined by calculating the Company’s TSR percentile rank within the S&P 500, with threshold, target and maximum levels based on Applied’s TSR ranking at the 25th, 50th and 75th percentile, respectively, of the S&P 500. The TSR calculation uses a 60-day trailing average stock price at the beginning and end of the performance period for measurement purposes. This approach minimizes the impact of a single beginning and ending point stock price for each performance cycle.

If the threshold level is not achieved for either metric, then no corresponding shares will vest. If achievement falls between threshold and target or target and maximum levels, the portion of the award that would vest will be determined based on straight-line interpolation.

In setting goals for the PSUs, the HRCC considered Applied’s historical results and relative performance, and established goals that are aligned with Applied’s financial and strategic objectives and will require exceptional results to achieve the maximum level.

The fiscal 2022 PSU and RSU awards are subject to retirement provisions which, in the event of a qualifying retirement based on age and years of service, provide for a partial payout of the PSU awards based on actual performance at the conclusion of the three-year performance period and partial accelerated vesting of RSU awards. The provisions are designed to maintain engagement and focus, as well as to provide a retention incentive, for our executive officers when they approach potential retirement decisions.

 

52    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

          Compensation Discussion and Analysis

 

Restricted Stock Units. The RSU awards are scheduled to vest ratably over three years, providing a link to shareholder value creation and maintaining retention value.

Payout of Fiscal 2020 Performance Share Unit Awards

The PSUs granted to our NEOs in fiscal 2020 were scheduled to vest three years from the grant date based on achievement of average non-GAAP adjusted operating margin for fiscal 2020 through fiscal 2022 and relative TSR percentile rank within the S&P 500 for fiscal 2020 through fiscal 2022, with equal weighting given to each metric. In setting the adjusted operating margin targets for the PSUs, the HRCC considered a number of factors, including the Company’s past performance, analyst expectations, then-current and expected macro-economic forces, the spectrum of potential outcomes, and competitor positioning. The number of PSUs that could vest was based on the achievement of threshold, target or maximum levels of each metric, and straight-line interpolation for achievement that fell between the levels. The threshold, target and maximum levels and actual results achieved for each metric, as well as the resulting payout factors for the fiscal 2020 PSUs, are shown below.

 

 

 

   Three-Year Average       

 

 
  Metric    Threshold      Target      Max      Result      Payout
Factor
 

  Operating Margin (1)

     22.5%        24.5%        27.5%        29.5%        200%  

  Relative TSR

    

25th

%ile

 

 

    

50th

%ile

 

 

    

75th

%ile

 

 

    

87th

%ile

 

 

     200%  

  Total

    

 

 

 

 

 

    

 

 

 

 

 

    

 

 

 

 

 

    

 

 

 

 

 

     200%  

 

(1)

See Appendix A for a reconciliation of non-GAAP adjusted operating margin.

The actual number of fiscal 2020 PSUs earned for each NEO (with the exception of Messrs. Halliday, Hill and Deane, who were not executive officers and did not receive PSUs in fiscal 2020) is shown below.

 

  NEO    Target
Number of
PSUs
     Number of
PSUs
Earned
 

  Dickerson

     174,942        349,884  

  Raja

     28,505        57,010  

  Salehpour

     36,041        72,082  

  Nalamasu

     20,998        41,996  

CFO Compensation

In March 2022, Mr. Hill joined the Company as our new Chief Financial Officer. In determining Mr. Hill’s new-hire compensation package, the HRCC considered a number of factors, including: the competitive market for experienced CFO talent, particularly for candidates with experience in the semiconductor industry; the magnitude, form and timing of his compensation at his prior employer; and the magnitude and structure of compensation necessary to incentivize Mr. Hill to join Applied.

After considering these factors, the HRCC approved a new-hire compensation package for Mr. Hill consisting of: an initial annual base salary of $675,000; a target bonus opportunity of 135% of his base salary – prorated for his partial-year service during fiscal 2022; a sign-on cash payment of $2,000,000 (“Sign-On Payment”); an RSU award with a grant date value of $8,500,000 (“New-Hire Grant”), vesting over a three-year period; and eligibility for an annual long-term incentive award, to be granted as part of the Company’s next regular annual grant cycle, with a target value of no less than $4,250,000. The Sign-On Payment, less any amounts withheld by the Company for taxes, will be subject to: (i) full repayment if Mr. Hill voluntarily resigns or the Company terminates his employment for cause (as defined under our Stock Plan) prior to completing 12 months of employment, or (ii) pro-rata repayment if Mr. Hill voluntarily resigns or the Company terminates his employment for cause after completing 12 months of employment but prior to completing 24 months of employment. The Sign-On Payment and the New-Hire Grant are not intended to represent ongoing compensation for Mr. Hill’s role. The HRCC expects to approve a comprehensive relocation package, consistent with the Company’s relocation program, for Mr. Hill during fiscal 2023. In the interim, Mr. Hill is subject to the Company’s business travel policies for travel from his home in Oregon to company headquarters in Santa Clara, California.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    53


Table of Contents

LOGO

 

         Compensation Discussion and Analysis

 

In March 2022, concurrent with the appointment of Mr. Hill, Mr. Halliday resumed his prior role as Corporate Vice President and Advisor. Based on his successful service as the Company’s interim CFO, and consistent with the approach approved by the HRCC in fiscal 2021, Mr. Halliday received a cash payment of $2,150,000 in March 2022. His compensation in his Advisor role consists of a base salary of $250,000 (reflecting an annual rate of $500,000, prorated for a partial work schedule) and a target bonus of 100% of base salary.

Applied Global Services Leadership Compensation

In August 2022, Mr. Salehpour notified the Company of his intention to retire in January 2023. From September 2022 and until his retirement, Mr. Salehpour served as an Advisor to the Company’s CEO to ensure an orderly transition. In his role as Advisor, Mr. Salehpour continued to receive the same compensation and benefits as previously in effect. Upon his retirement, Mr. Salehpour received a payment equal to approximately 18 months of the monthly premium cost under COBRA for him and his dependents, a portion of his unvested RSUs vested and he remained eligible for a partial payout of his unvested PSUs based on actual performance, consistent with the retirement provisions of his existing award agreements. Additionally, in connection with Mr. Salehpour’s agreement to be bound by certain conditions following his termination of employment, he will be entitled to receive a lump-sum cash payment of $655,000, less applicable payroll tax and other required withholdings, on the one-year anniversary of his separation.

In September 2022, Mr. Deane was appointed to lead Applied Global Services with no immediate change in his ongoing compensation but was granted a one-time RSU award with a grant date value of $1,000,000, vesting over a four-year period. Mr. Deane’s compensation for fiscal 2022 was determined at the beginning of the year, consistent with the process followed for the Company’s other senior leaders below the executive officer level. In early fiscal 2023, the HRCC approved ongoing compensation for Mr. Deane commensurate with his new role, consisting of an initial annual base salary of $600,000; a target bonus opportunity of 120% of his base salary; and an annual long-term incentive award with a target value of $2,800,000, consisting of 50% RSUs and 50% PSUs, consistent with the equity mix for other non-CEO NEOs.

Role and Authority of the Human Resources and Compensation Committee

The HRCC has a written charter approved by the Board that specifies the HRCC’s duties and responsibilities, which is available on our website at: https://www.appliedmaterials.com/us/en/about/corporate-governance/corporate-governance-documents.html#Documents. In accordance with its charter, the HRCC oversees our programs that foster executive and employee development and retention, with an emphasis on leadership development, management capabilities, succession plans, company culture and human capital management. The HRCC also determines executive and director compensation, and oversees significant employee benefits programs, policies, and plans.

Each member of the HRCC has been determined by the Board to be independent under Nasdaq and SEC rules. The HRCC may delegate any of its responsibilities to subcommittees. See “Board Meetings and Committees” on page 24 for more information about the HRCC.

Role of Compensation Consultant

The HRCC has the authority to engage independent advisors to assist it in carrying out its responsibilities. For fiscal 2022, the HRCC engaged Semler Brossy Consulting Group (“Semler Brossy”) as its independent executive compensation consultant. Semler Brossy, who reports directly to the HRCC and not to management, is independent from Applied, has not provided any services to Applied other than to the HRCC, and receives compensation from Applied only for services provided to the HRCC. The HRCC assessed the independence of Semler Brossy pursuant to SEC rules and concluded that the work of Semler Brossy for the HRCC has not raised any conflict of interest.

Semler Brossy reviews and advises on all principal aspects of the executive compensation program. Its main responsibilities are as follows:

 

  »  

Advise on alignment of pay and performance;

 

  »  

Review and advise on executive total compensation, including base salaries, short- and long-term incentives, associated performance goals, and retention and severance arrangements;

 

  »  

Advise on trends in executive compensation;

 

  »  

Provide recommendations regarding the composition of our peer group;

 

54    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

          Compensation Discussion and Analysis

 

  »  

Analyze market compensation practices based on peer group proxy statements, compensation survey data and other publicly available data; and

 

  »  

Perform any special projects requested by the HRCC.

The HRCC typically asks Semler Brossy to attend the HRCC’s meetings, including executive sessions at which management is not present. Semler Brossy communicates regularly with the HRCC Chair outside of committee meetings and also meets with management to gather information and review proposals.

Role of Executive Officers and Management in Compensation Decisions

In fiscal 2022, the HRCC invited Mr. Dickerson (as CEO) and other executives, including the heads of Global Human Resources and Global Rewards, to attend its meetings. The HRCC also regularly held executive sessions without management present. The CEO, together with the HRCC, assesses the performance of our NEOs and other executive officers. The CEO presents to the HRCC his evaluation of each executive officer’s performance over the past year and makes recommendations to the HRCC regarding base salaries, bonus targets and actual payments, performance goals and weightings, and long-term incentive awards for executive officers. The HRCC considers these recommendations in making its final determinations, in addition to considering input from Semler Brossy. The HRCC discusses the CEO’s compensation and makes final decisions regarding the CEO’s compensation when he is not present.

Additional Compensation Programs and Policies

Non-Qualified Deferred Compensation Plan

Our 2016 Deferred Compensation Plan (the “DCP”) allows our NEOs and other eligible employees to voluntarily defer on a pre-tax basis a portion of their eligible earnings. We do not provide matching or other employer contributions to our executive officers under this plan. Deferrals made prior to October 2015 under the DCP are credited with deemed interest and are subject to the distribution rules in place prior to the plan amendment in October 2015. Beginning in fiscal 2016, participants are permitted to notionally invest new deferrals in certain investment options available under the plan. Additionally, for new deferrals, the DCP provides distribution rules for in-service distributions or upon a qualifying separation from service, an elected future date, disability and change in control. See “Nonqualified Deferred Compensation” below for more information about the DCP.

Retirement and Other Benefits

During fiscal 2022, all full-time and part-time (working 20 or more hours a week) U.S. employees, including the NEOs, were eligible to participate in Applied’s 401(k) plan, a tax-qualified retirement plan. Eligible Applied 401(k) plan participants receive matching contributions from Applied. Other than the 401(k) plan and the DCP, we do not provide defined benefit pension plans or defined contribution retirement plans to the NEOs or other employees, except as required in certain countries outside the U.S. for legal or competitive reasons. Applied offers a number of other benefits programs to a broad base of eligible employees, including a tax-qualified employee stock purchase plan, medical, dental and vision insurance, long-term and short-term disability plans, life and accidental death and dismemberment plans, health and dependent care flexible spending accounts, business travel insurance, wellness programs, educational assistance, employee assistance program and certain other country-specific benefits.

Applied annually benchmarks its overall benefits programs, including the 401(k) plan, against those of our peers. Applied’s overall broad-based benefits programs are consistent with market practice, which the HRCC believes allows us to remain competitive in attracting and retaining talent.

Applied maintains a relocation program available to all eligible employees that is consistent with current practices among large global companies. Applied provides competitive relocation benefits to ensure it can fill positions critical to its business needs and provide career development opportunities for high-potential employees. Until Mr. Hill’s anticipated relocation to the Bay Area during fiscal 2023, the Company pays for his travel from his home in Oregon to the Company’s headquarters in Santa Clara, California. While these travel costs are required to be disclosed as compensation for Mr. Hill, we do not consider them to be a personal benefit.

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    55


Table of Contents

LOGO

 

         Compensation Discussion and Analysis

 

The safety and security of the Company’s CEO are important to Applied’s continued success. During fiscal 2022, the HRCC approved additional work in connection with the installation of a residential security system and related monitoring and maintenance services for Mr. Dickerson. While the costs of these services are required to be disclosed as compensation for Mr. Dickerson, we do not consider these security measures to be a personal benefit. The HRCC will continue to review the nature and cost of any future security provided to Mr. Dickerson.

The value of the benefits provided under the programs discussed above are not considered by the HRCC in determining an individual NEO’s total compensation.

Stock Ownership Guidelines

We have stock ownership guidelines to help align the interests of our Section 16 officers on the Executive Leadership Team with those of our shareholders. The guidelines provide that officers may not sell any shares of Applied stock if their ownership is, or following the sale would fall, below the following ownership levels:

 

Position

  

Ownership Level

CEO

  

6x base salary

Other Officers

  

3x base salary

Unearned performance awards and unexercised options (or portions thereof) are not included for purposes of satisfying the guidelines.

As of December 31, 2022, all of our officers were in compliance with the stock ownership guidelines.

Hedging and Pledging Prohibitions

Applied has an insider trading policy that, among other things, prohibits all of our employees (including officers) and directors from engaging in hedging or other speculative transactions relating to Applied shares. Prohibited transactions include short sales, derivative securities (such as put and call options, or other similar instruments) and other hedging transactions (such as equity swaps, prepaid variable forwards, or similar instruments), or any transactions that have, or are designed to have, the effect of hedging or offsetting any decrease in the market value of Applied securities. In addition, Section 16 officers and directors are prohibited from holding Applied securities in a margin account or otherwise pledging Applied securities as collateral for a loan.

Clawback Policy

We have a “clawback” policy that allows the Board to require reimbursement of incentive compensation from an executive officer in the event that intentional misconduct by the officer is determined to be the primary cause of a material negative restatement of Applied’s financial results. The compensation that may be recovered is the after-tax portion of any bonus paid to, and any performance-based equity awards earned by, the NEO within the 12 months after filing of the financial statements, if the compensation would not have been paid to the NEO had Applied’s financial results been reported properly. The policy applies to financial statements filed in a rolling three- year, look-back period. This clawback policy is in addition to any policies or recovery rights that are required under applicable laws, including the Sarbanes-Oxley Act and the Dodd-Frank Act.

Tax Deductibility

Section 162(m) of the Internal Revenue Code, as amended by the Tax Cuts and Jobs Act of 2017, restricts deductibility for federal income tax purposes of annual individual compensation in excess of $1 million to each NEO, effective for tax years beginning after 2017, subject to a transition rule for certain written binding contracts which were in effect on November 2, 2017, and which were not modified in any material respect on or after such date. While the HRCC considers the deductibility of compensation as a factor in making compensation decisions, it retains the flexibility to provide compensation that is consistent with the Company’s goals for its executive compensation program, even if such compensation is not tax-deductible.

 

56    |    APPLIED MATERIALS, INC. 2023 PROXY STATEMENT  


Table of Contents

LOGO

 

         Human Resources and Compensation Committee Report

 

Human Resources and Compensation Committee Report

The information contained in this report shall not be deemed to be “soliciting material” or “filed” with the SEC or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that Applied specifically incorporates it by reference into a document filed under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act.

The Human Resources and Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis for fiscal 2022. Based on the review and discussions, the Human Resources and Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in Applied’s Proxy Statement for its 2023 Annual Meeting of Shareholders.

This report is submitted by the Human Resources and Compensation Committee.

Thomas J. Iannotti (Chair)

Rani Borkar

Xun (Eric) Chen

Alexander A. Karsner

 

  APPLIED MATERIALS, INC. 2023 PROXY STATEMENT    |    57


Table of Contents

LOGO

 

         Executive Compensation

 

Executive Compensation

Summary Compensation Table for Fiscal 2022, 2021 and 2020

The following table shows compensation information for fiscal 2022, 2021 and 2020 for our NEOs.

 

Name and Principal Position

  Year    

Salary

($)(1)

   

Bonus

($)(2)

   

Stock
Awards

($)(3)

   

Non-Equity

Incentive Plan

Compensation

($)(4)

   

All Other

Compensation

($)

   

Total

($)

 

Gary E. Dickerson
President and Chief Executive Officer

   

2022

2021

2020

 

 

 

   

1,030,000

1,049,808

1,030,000

 

 

 

   


 

 

 

   

17,783,334

31,710,469

14,299,176

 

(6) 

 

   

1,358,055

2,039,400

1,786,406

 

 

 

   

228,583

465,882

179,405

(5) 

 

 

   

20,399,972

35,265,559

17,294,987

 

 

 

Brice Hill(7)
Senior Vice President, Chief Financial Officer and Enterprise Enablement Group

    2022       441,346       2,000,000       8,351,018       523,723       58,343 (8)      11,374,430  

Robert J. Halliday(9)
Corporate Vice President, Advisor; Former Chief Financial Officer

   

2022

2021

 

 

   

409,231

268,500

 

 

   

2,150,000

 

 

   


 

 

   

435,325

351,844

 

 

   

20,597

57,872

(10) 

 

   

3,015,153

678,216

 

 

Prabu G. Raja
Senior Vice President, Semiconductor Products Group

   

2022

2021

2020

 

 

 

   

679,615

648,135

567,000

 

 

 

   


 

 

 

   

5,372,622

9,400,928

3,359,304

 

(6) 

 

   

819,791

1,195,703

923,324

 

 

 

   

18,682

75,070

17,842

(11) 

 

 

   

6,890,710

11,319,836

4,867,470

 

 

 

Omkaram Nalamasu(12)
Senior Vice President, Chief Technology Officer

   

2022

2021

 

 

   

592,308

552,789

 

 

   


 

 

   

3,727,899

3,019,654

 

 

   

568,080

848,513

 

 

   

4,543

63,916

(13) 

 

   

4,892,830

4,484,872

 

 

Timothy M. Deane(14)
Group Vice President, Applied Global Services

    2022       433,350             2,807,119       412,458       16,703 (15)      3,669,630  

Ali Salehpour
Former Senior Vice President, Services, Display and Flexible Technology

   

2022

2021

2020

 

 

 

   

653,461

653,942

625,000

 

 

 

   


 

 

 

   

4,577,886

4,501,365

4,247,422

 

 

 

   

630,028

974,152

774,984

 

 

 

   

17,291

74,396

16,194

(16) 

 

 

   

5,878,666

6,203,855

5,663,600

 

 

 

 

(1)

Applied’s fiscal 2022 and 2020 each contained 52 weeks, and fiscal 2021 contained 53 weeks.

 

(2)

Amount shown for Mr. Hill reflects a sign-on bonus, which is subject to repayment by Mr. Hill if he voluntarily resigns or the Company terminates his employment for cause prior to completing 12 months of employment, or pro-rata repayment if Mr. Hill voluntarily resigns or the Company terminates his employment for cause after completing 12 months of employment but prior to completing 24 months of employment. Amount shown for Mr. Halliday reflects a cash payment in recognition of his successful service as the Company’s interim Chief Financial Officer.

 

(3)

Amounts shown do not reflect compensation actually received by the executive officer. Instead, the amounts reported represent the aggregate grant date fair value of target stock awards granted in the respective fiscal years, as determined pursuant to ASC 718 (but excluding the effect of estimated forfeitures for performance-based awards). For fiscal 2022, the grant date fair value of the maximum number of stock awards that may be earned by each NEO was as follows: Mr. Dickerson: $31,773,763; Mr. Hill: $8,351,018; Dr. Raja: $8,335,506; Dr. Nalamasu: $5,783,749; Mr. Deane: $2,807,119; and Mr. Salehpour: $7,102,489. See “Fiscal 2022 Equity Awards” on page 50 for more information regarding the stock awards. The assumptions used to calculate the value of awards are set forth in Note 13 of