LAM RESEARCH CORP

Annual Incentive Program Components

The components of our annual incentive program, each of which plays a role in determining actual payments made, are described in Figure 32 below. For calendar year 2023, the committee approved the addition of a new component to our annual incentive program, the Profitability Performance Factor.

Figure 32. Annual Incentive Program Components

The Funding Factor is set by the committee to create a maximum payout amount from which annual incentive program payouts may be made. To determine each NEO’s AIP result, the committee assesses the results of each of the performance factors. The committee maintains discretion to adjust the performance factor results upward or downward, subject to the overall maximum established by the Funding Factor, although it did not exercise any such discretion in determining CY2023 or CY2024 payouts.

The metrics and goals for the annual incentive program are set annually in connection with our annual business planning cycle, and are directly connected to our annual business plans and goals. The interplay between our corporate planning cycle and our compensation planning and evaluation cycle is summarized in Figure 33 below.

Figure 33. Annual Planning and Compensation Decision Cycle

Goals are set depending on the business environment and the Company’s annual objectives and strategies, encompassed in the Annual Operating Plans for the Company and the organizations managed by each of the NEOs, to ensure that they remain stretch goals regardless of changes in the business environment, which can vary significantly from year-to-year in our industry. Accordingly,

Lam Research Corporation 2024 Proxy Statement 43

as business conditions improve, Corporate Performance Factor and Profitability Performance Factor goals are calibrated to require better performance, and if business conditions deteriorate, these goals are calibrated to incentivize stretch performance under more difficult conditions.

As shown in Figure 34, over the four years through calendar year 2022, the committee raised the Corporate Performance Factor goal year-over-year each year as our outlook and the industry outlook improved. For calendar year 2023, the weakened industry outlook for wafer fabrication equipment spending prompted the committee to establish a Corporate Performance Factor goal that was below that of the prior year, reflecting the increased difficulty of achieving similar profitability on a significantly smaller revenue base. This goal was intended to be challenging to achieve relative to the Company's annual operating plan for calendar year 2023.

Figure 34. Corporate Performance Factor Goals for Calendar Years 2019-2023

We believe that, over time, outstanding business results create stockholder value. Consistent with this belief, multiple performance-based metrics (non-GAAP operating margin, non-GAAP gross margin, product market share, and strategic, operational, and organizational metrics embodied in organizational Annual Operating Plans) are established for our NEOs as part of the annual incentive program. We believe the metrics and goals set under this program have been effective to motivate our NEOs and the organizations they lead, and to achieve pay-for-performance results.

The specific metrics and goals and the relative weightings for the Performance Factors are determined by the committee considering the recommendation of our CEO, other than the metrics and goals for the Individual Performance Factor, which are determined by our CEO, or in the case of the CEO, by the committee. In addition, the committee establishes individual target award opportunities for each NEO as a percentage of base salary. Specific target award opportunities are determined based on job scope and responsibilities, as well as an assessment of Peer Group data. Awards have a maximum payment amount defined as a multiple of the target award opportunity.

Beginning in calendar year 2023, in light of the focus by the Board, committee, and management team on the profitability of the Company, the committee determined to add a Profitability Performance Factor to the 2023 annual incentive program, with the metric of non-GAAP gross margin 6; this new Performance Factor was in addition to the Corporate Performance Factor, which has a metric of non-GAAP operating margin 7, and the Individual Performance Factor, which is based primarily on NEOs' performance to corporate-level Annual Operating Plan goals and individual contributions during the performance period. Each Performance Factor was weighted equally. The committee selected non-GAAP operating margin as the Corporate Performance Factor metric because the committee believes it is the performance metric that best reflects core operating results. Non-GAAP operating margin is considered useful to investors for analyzing business trends and comparing performance to prior periods. The committee selected non-GAAP gross margin as the Profitability Performance Factor metric because the committee believes it is the performance metric that has the largest impact on the overall profitability of the Company. Non-GAAP gross margin is considered useful to investors for analyzing the core profitability of the Company's business and comparing performance to prior periods. By excluding certain costs and expenses that are not indicative of core results, non-GAAP results are more useful for analyzing business trends over multiple periods. For an illustration of the Individual Performance Factor components, reference “Figure 37. Individual Performance Factor Components for Calendar Year 2023” below.

Calendar Year 2023 Annual Incentive Program Parameters and Payout Decisions

In February 2023, the committee set the calendar year 2023 target award opportunities, established the metrics and goals for the Funding Factor, the Corporate Performance Factor, and the Profitability Performance Factor, determined that the three Performance Factors should be weighted equally, and established the metrics and goals for the Individual Performance Factors for each then-employed NEO. In February 2024, the committee considered the actual results under these factors and made payout decisions for the calendar year 2023 program.

2023 Annual Incentive Program Target Award Opportunities. The annual incentive program target award opportunities for calendar year 2023 for each NEO were as set forth below in Figure 35 in accordance with the principles described above under “Executive Compensation Governance and Procedures - Peer Group Practices and Survey Data.” The target award opportunities (as a percentage of base salary) for each of our NEOs remained the same for calendar year 2023 relative to the prior year. The committee also set a maximum award opportunity, which for calendar year 2023 was equal to 2.50 times the target award opportunity. The maximum award of 2.50 times target for calendar year 2023 was increased from prior years, when it was set at 2.25 times target. The committee’s decision to increase the maximum award for calendar year 2023 was based on the committee’s view that this change would encourage outperformance relative to the Company's profitability goals and was in the best interests of the Company and its stockholders. The committee also considered that the design of the Profitability Performance Factor element of the program would result in payouts increasing or decreasing more rapidly in the event of outperformance or underperformance relative to the goal for calendar year 2023, thereby increasing both the risk and potential reward associated with the program as compared to prior year programs that only incorporated the Corporate Performance Factor and Individual Performance Factor. The committee's view was that balancing that increased risk with the potential for larger maximum awards would serve the committee's and the program's objective of incentivizing and rewarding outperformance.

Figure 35. Annual Incentive Program Target Award Opportunities for Calendar Year 2023

2023 Annual Incentive Program Funding Factor, Corporate Performance Factor, and Profitability Performance Factor.

In February 2023, the committee set non-GAAP operating margin as the metric for the Funding Factor and Corporate Performance Factor, and set non-GAAP gross margin as the metric for the Profitability Performance Factor for calendar year 2023.

For the Funding Factor, the committee set the following parameters for calendar year 2023:

For the Corporate Performance Factor, the committee set the following parameters:

For the Profitability Performance Factor, the committee set the following parameters:

Lam Research Corporation 2024 Proxy Statement 45

The Company's actual non-GAAP operating margin and non-GAAP gross margin for calendar year 2023 were 29.0% and 46.3%, respectively, resulting in the achievement levels shown in Figure 36 below.

Figure 36. Funding Factor, Corporate Performance Factor, and Profitability Performance Factor Results for Calendar Year 2023

2023 Annual Incentive Program Individual Performance Factors. For calendar year 2023, as shown in Figure 37 below, the committee determined the Individual Performance Factor for each NEO (other than Mr. Archer) using a formula that took into consideration two elements: a weighted score for each NEO based on the Company's performance relative to corporate-level Annual Operating Plan goals, with weightings for each NEO based on the extent to which they (and the organizations managed by them) were expected to contribute to and be accountable for that corporate-level performance; and an individual score for each NEO reflecting the extent to which individual NEOs provided exceptional contributions during the year. The committee evaluated the Company's performance relative to corporate-level Annual Operating Plan Goals and each NEO's individual performance. The committee combined the corporate-level scores with each NEO's individual score to yield the Individual Performance Factors shown in Figure 37 below.

In determining Mr. Archer's Individual Performance Factor, the independent members of the Board evaluated the Company's performance against its corporate-level goals, Mr. Archer's individual performance, and the performance of the other members of the management team reporting to him, and determined to assign him an Individual Performance Factor equal to the average of the Individual Performance Factors of the other NEOs, as shown in Figure 37 below.

Figure 37. Individual Performance Factor Components for Calendar Year 2023

Lam Research Corporation 2024 Proxy Statement 47

Calendar Year 2023 Annual Incentive Program Payout Decisions. Based on the above results and decisions, for the calendar year 2023 annual incentive program, the committee approved the payouts for each NEO as shown below in Figure 38, which were less than the maximum payout available under the Funding Factor:

Figure 38. Annual Incentive Program Payouts for Calendar Year 2023

Calendar Year 2024 Annual Incentive Program Parameters

In February 2024, the committee set the target award opportunity for each NEO as a percentage of base salary, and set a maximum award opportunity equal to 2.50 times the target award opportunity. For calendar year 2024, target award opportunities for the NEOs remained unchanged compared to the prior year. The target award opportunity for each NEO is shown below.

Figure 39. Annual Incentive Program Target Award Opportunities for Calendar Year 2024

The committee approved non-GAAP operating margin as the annual metric for the Funding Factor and the Corporate Performance Factor, approved non-GAAP gross margin as the annual metric for the Profitability Performance Factor, and set the annual goals for the Funding Factor, the Corporate Performance Factor, and the Profitability Performance Factor. Consistent with the program design, the Corporate Performance Factor and Profitability Performance Factor goals are more difficult to achieve than the Funding Factor goal. Individual Performance Factor metrics and goals were also established for each NEO, based upon corporate-level Annual Operating Plan goals and individual performance. All Corporate, Profitability, and Individual Performance Factor goals were designed to be stretch goals.

For calendar year 2024, the committee set the levels of non-GAAP operating margin and non-GAAP gross margin necessary to achieve a Corporate Performance Factor or Profitability Performance Factor of 1.0, respectively, at levels higher than the Company's Annual Operating Plan goals for both metrics. In addition, the committee determined to cause Corporate Performance Factor and Profitability Performance Factor results to scale up and down more rapidly within the range of results between the levels associated with the Company's Annual Operating Plan goals for both non-GAAP operating margin and non-GAAP gross margin, and the levels corresponding to a 1.0 result for the Corporate Performance Factor and Profitability Performance Factor. The committee took this approach in order to reward outperformance for stretch achievements in pricing and cost initiatives, which also includes potential offsets for the impact of the Company’s planned investments in research and development targeting key technology inflections. These changes were intended to incentivize management to achieve a stretch result that would be better than the Company's Annual Operating Plan, by more quickly increasing the potential reward to executives for exceeding the annual operating plan.

In addition, the committee considered the current dynamic regulatory environment in which the Company was operating, and the potential material impacts that a significant regulatory change (e.g., additional export controls) could have on the Company's business and operating performance that could not be predicted at the time the committee established the CY2024 goals. Taking this into consideration, the committee determined that, should a regulatory change occur in calendar year 2024 that resulted in a material impact on the Company's business, the committee would consider whether to exercise either positive or negative discretion as a consequence of that change, relative to the Corporate Performance Factor and/or the Profitability Performance Factor results, provided the Funding Factor result is not exceeded.