VEECO INSTRUMENTS INC

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The methodology and the material assumptions, adjustments, and estimates that we used to identify the median of the total annual compensation of all our employees, as well as to determine the total annual compensation of the “median employee,” were as follows:

We determined that, as of October 1, 2023, our employee population consisted of approximately 1,209 individuals working at Veeco and its subsidiaries. 893 of these individuals (approximately 74%) are located in the United States, and 1,198 are full-time (or full-time equivalent) employees, with the remainder employed on a part-time (less than 30 hours per week) basis.

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To identify the “median employee” from our employee population, we considered the annual base salary paid to our employees as of October 1, 2023, as reflected in our payroll records, together with the target amounts of any bonuses for 2023 and the grant date fair market value of equity awards granted in 2023 to arrive at a consistently applied compensation measure. In making this determination, we annualized the compensation of all permanent employees included in the sample who were hired in 2023 but did not work for us or our subsidiaries for the entire fiscal year.

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Using this methodology, we determined that the “median employee” was a salaried employee located in our San Jose, California office, with aggregate salary for the year ending December 31, 2023 and target bonus for 2023 in the aggregate amount of $116,262.

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With respect to the total annual compensation of the “median employee,” we identified and calculated the elements of such employee’s compensation for 2023 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in total annual compensation of $112,373.

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With respect to the total annual compensation of our CEO, we used the amount reported in the “Total” column of the Summary Compensation Table included in this Proxy Statement and incorporated by reference under Item 11 of Part III of our Annual Report on Form 10-K for the year ended December 31, 2023.

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Pay Versus Performance

As required by Item 402(v) of Regulation S-K, we are providing the following information regarding the relationship between executive compensation and our financial performance for each of the last four completed calendar years. In determining the “compensation actually paid” to our NEOs, we are required to make various adjustments to amounts that have been reported in the Summary Compensation Table in previous years since the required valuation methods for this section differ from those required in the Summary Compensation Table. The table below summarizes compensation values both previously reported in our Summary Compensation Tables and the adjusted values required in this section for calendar years 2020, 2021, 2022, and 2023.

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(1)

The PEO (principal executive officer) for each year presented was identified as Dr. Miller, the Company’s CEO.

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(2)

The Non-PEO NEOs for each year presented were identified as Mr. Kiernan, Drs. Devasahayam and Porshnev, and Ms. Wilkerson.

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(3)

A reconciliation of Total Compensation per the Summary Compensation Table to Compensation Actually Paid is as follows:

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(a)

Each NEO received time-based restricted stock awards in each of the periods presented. The fair value of time-based restricted stock awards is dependent on the Company’s stock price. The Company’s closing stock price as of the dates listed are as follows:

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(b)

Our NEOs received PRSUs during each of the periods presented, that are subject to the achievement of designated performance criteria, based on three-year total shareholder return. These PRSUs are valued based upon the Monte Carlo simulation method. Please see below for the per share fair value as of each respective date:

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(c)

Granted to Dr. Miller only.

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(d)

Granted to Drs. Miller, Devasahayam, and Porshnev, and Mr. Kiernan.

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(e)

Granted to Drs. Miller, Devasahayam, and Porshnev, Mr. Kiernan, and Ms. Wilkerson.

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(4)

The values disclosed in this TSR column represent the measurement period value of an investment of $100 in respective stock or index as of December 31, 2019, and then valued again on each of December 31, 2020, 2021, 2022, and 2023.

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Relationship between Pay, TSR, Net Income, and Adjusted Operating Income

The graph below reflects the relationships between the PEO and Average Non-PEO NEO Compensation Actually Paid (“CAP”), and the Company’s cumulative indexed Total Shareholder Return, or TSR (assuming an initial fixed investment of $100), and our Peer Group TSR (assuming an initial fixed investment of $100), for the fiscal years ended December 31, 2020, 2021, 2022, and 2023:

The graph below reflects the relationships between the PEO and Average Non-PEO NEO Compensation Actually Paid (“CAP”) and the Company’s reported GAAP Net Income and Adjusted Operating Income for the fiscal years ended December 31, 2020, 2021, 2022, and 2023:

The Company’s most important performance measures for each of the PEO and non-PEO NEOs is discussed under the 2023 Management Bonus Plan (the “2023 Plan”) subsection of the Compensation Discussion and Analysis section of this proxy. As more fully described in this subsection, the 2023 Plan was based on the financial performance of the Company as measured by Adjusted Operating Income. This financial metric was selected because it closely aligns operating performance with earnings per share, a key driver of shareholder value. Under the 2023 Plan, 25% of each participant’s bonus was based on individual performance which, for each of the PEO and non-PEO NEOs, factored financial goals incorporating revenue, gross margin, bookings and expenses.