LAM RESEARCH CORP
For the period ended Nov 4, 2025. Filed Sep 24, 2025.
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Nov 4, 2025 · Filed Sep 24, 2025
Contents
Long-Term Incentive Program
Design
Our LTIP is designed to attract and retain top talent, provide competitive levels of compensation, align pay with achievement of business objectives and with stock performance over a multi-year period, reward our NEOs for outstanding Company performance, and create stockholder value over the long-term.
Under the current long-term incentive program, at the beginning of each multi-year performance period, target award opportunities (expressed as a U.S. dollar value), performance metrics, and the mix of vehicles used are established for the program.
Beginning with the 2022/2024 long-term incentive program and prior to our 2025/2027 long-term incentive program, of the total target award opportunity for the CEO and NEOs who are executive vice presidents (“EVPs”), 60% was awarded in Market-based PRSUs, 20% was awarded in stock options, and 20% was awarded in service-based RSUs; while for NEOs who are senior vice presidents (“SVPS”), 55% was awarded in Market-based PRSUs, 15% was awarded in stock options, and 30% was awarded in service-based RSUs.
For our 2025/2027 long-term incentive program, the committee determined to shift the mix of awards away from stock options such that the calendar year 2025 program would only include Market-based PRSUs and service-based RSUs. For the 2025/2027 long-term incentive program, the committee determined to maintain the weighting of Market-based PRSUs at 60% for the CEO and NEOs who are executive vice presidents and 55% for NEOs who are senior vice presidents, with the remainder delivered in service-based RSUs. The committee resolved to take this approach to improve the resilience of our executive compensation design given significant stock price volatility in both the semiconductor equipment industry and broader market, and to generally align the proportion of long-term incentives allocated to performance-based awards with our Peer Group practices.
In addition, after evaluating the LTIP design relative to prevalent market practices, the committee determined that the design would be improved by changing the manner in which relative TSR performance is measured. The prior LTIP design had compared the Company’s TSR performance relative to the performance of the Performance Index, which resulted in oversensitivity to the performance of a small number of heavily weighted components of the index, particularly in the scenario where those index components significantly over- or under-perform the other components of the index, as in the recent exceptional stock price performance of a small number of companies related to artificial intelligence.
Consequently, for our 2025/2027 long-term incentive program, the committee determined to compare the Company’s relative TSR performance using a TSR percentile rank approach that would better reflect the Company’s TSR performance relative to the other companies making up the Performance Index, and would pay NEOs for that performance. While the relative TSR measurement approach was changed, the Performance Index was not changed. This measurement approach is described in more detail in Figure 41 below,
Lastly, the committee determined that for our 2025/2027 long-term incentive program, the maximum payout will be capped at 100% of target if the Company’s absolute TSR is negative for the performance period.
Under the 2025/2027 long-term incentive program, service-based RSUs vest on an annual basis over three years, while Market-based PRSUs cliff vest after three years. Cliff, rather than annual, vesting provides for both retention and for aligning NEOs with longer-term stockholder interests.
Equity Vehicles
The equity vehicles used in our 2025/2027 long-term incentive program are as follows:
Figure 40. 2025/2027 LTIP Equity Vehicles
| Equity Vehicles | Vesting | Terms |
| Market-based PRSUs • CEO/EVPs: 60% of Target Award Opportunity• SVPs: 55% of Target Award Opportunity | • Awards cliff vest three years from the February 28, 2025 grant date (the “Grant Date”) subject to satisfaction of a minimum performance requirement and continued employment. • Awards that vest at the end of the performance period are distributed in shares of our common stock. | • The target number of Market-based PRSUs granted is determined by dividing the applicable percentage of the target opportunity by the 30 trading day average of the closing price of our common stock prior to the Grant Date, $81.35, rounded down to the nearest share. • The number of shares represented by the Market-based PRSUs that can be earned over the performance period is determined according to the performance parameters described in Figure 41 below. |
| Service-based RSUs • CEO/EVPs: 40% of Target Award Opportunity • SVPs: 45% of Target Award Opportunity | • Awards vest one-third on the first, second, and third anniversaries of the Grant Date, subject to continued employment.• Awards are distributed in shares of our common stock upon vesting. | • The number of RSUs granted is determined by dividing the applicable percentage of the target opportunity by the 30 trading day average of the closing price of our common stock prior to the Grant Date, $81.35, rounded down to the nearest share. |
Figure 41. 2025/2027 Market-based PRSU Performance Parameters
| Parameter | Terms |
| Performance Period | Three years from the first business day in February (February 3, 2025 through February 2, 2028). |
| Performance Index | PHLX Semiconductor Sector Total Return Index, or “XSOX index” |
| Number of Shares | • Based on our TSR performance compared to the TSR performance of the components of the XSOX index, on a percentile rank basis. The TSR performance is measured using the average closing price for the 50 trading days prior to the dates the performance period begins and ends, assuming that any dividends paid are reinvested on the ex-dividend date. Percentile rank is rounded down to the nearest one tenth of a percentile using conventional rounding. • A table reflecting the potential payouts is shown below in Figure 42• The final shares awarded cannot exceed 100% of the target if our TSR is negative over the performance period. |
Figure 42. Market-based PRSU Potential Payouts
| Lam’s TSR Percentile Rank Compared to XSOX Index | Market-based PRSUs That Can Be Earned (% of Target)(1) |
|---|---|
| 75th percentile or more | 150 |
| 50th percentile | 100 |
| 25th percentile | 50 |
| Less than 25th percentile | 0 |
| (1) | The results of the vesting criteria (reflecting the number of Market-Based PRSUs that can be earned) are linearly interpolated between the stated percentiles and percentages. The result of the vesting criteria is rounded down to the nearest whole number. |
Target Award Opportunity
Under the long-term incentive program, the committee sets a target award opportunity for each participant based on the NEO’s position and responsibilities, Company and individual performance, and an assessment of competitive compensation data. The target award opportunities for each participant are expressed in a U.S. dollar value. The calendar year 2025/2027 target amounts for each NEO are shown below. These target award opportunities were increased from calendar 2024/2026 target opportunities after taking into consideration our NEOs’ contributions and responsibilities, and our desire to continue to incentivize outperformance and to provide appropriate incentive opportunities in a highly competitive market.
Lam Research Corporation 2025 Proxy Statement 49
Figure 43. 2025/2027 LTIP Target Award Opportunities
| Named Executive Officer | Target Award Opportunity(1)(2) |
|---|---|
| Timothy M. Archer | 24,100,000 |
| Douglas R. Bettinger | 6,800,000 |
| Patrick J. Lord | 5,500,000 |
| Ava A. Harter | 3,500,000 |
| Seshasayee (Sesha) Varadarajan | 5,650,000 |
| (1) | Target award opportunities (expressed as a U.S. dollar value) are approved by the committee and converted to awards on the grant date as described in Figure 40 using the 30 trading day average of the closing price of our common stock prior to the Grant Date. Target award opportunities differ from the amounts shown in “Executive Compensation Tables” following this CD&A, which represent the grant date fair value of the awards determined in accordance with ASC 718. |
| (2) | The three-year performance period for the 2025/2027 LTIP began on February 3, 2025 and ends on February 2, 2028. |
Calendar Year 2025 LTIP Decisions
Calendar Year 2025 decisions for the 2025/2027 long-term incentive program. On February 28, 2025, the committee made a grant under the 2025/2027 long-term incentive program of Market-based PRSUs and service-based RSUs on the terms set forth in Figures 40 and 41 with a combined value equal to the NEO’s total target award opportunity, as shown below.
Figure 44. 2025/2027 LTIP Award Grants
| Named Executive Officer | Target Award Opportunity ($) | Market-based PRSUs Award (#)(1) | Service-based RSUs Award (#) |
|---|---|---|---|
| Timothy M. Archer | 24,100,000 | 177,750 | 118,500 |
| Douglas R. Bettinger | 6,800,000 | 50,153 | 33,435 |
| Patrick J. Lord | 5,500,000 | 40,565 | 27,043 |
| Ava A. Harter | 3,500,000 | 23,663 | 19,360 |
| Seshasayee (Sesha) Varadarajan | 5,650,000 | 38,199 | 31,253 |
| (1) | The number of Market-based PRSUs awarded is reflected at target. The final number of shares that may be earned will be 0% to 150% of target. |
Calendar Year 2022/2024 LTIP Award Payouts
In February 2025, the committee determined the payouts for the calendar year 2022/2024 LTIP Awards of Market-based PRSUs. The number of shares represented by the Market-based PRSUs earned over the performance period was based on our stock price performance compared to the market price performance of the XSOX index as described in Figures 45 and 46 below.
Figure 45. 2022/2024 Market-based PRSU Performance Parameters
| Parameter | Terms |
| Performance Period | Three years from the first business day in February (February 1, 2022 through January 31, 2025). |
| Performance Index | PHLX Semiconductor Sector Total Return Index, or “XSOX index” |
| Number of Shares | • Based on our TSR performance compared to the market price performance of the Performance Index, subject to a ceiling as shown in Figure 46 below. The TSR performance or market price performance is measured using the closing price for the 50 trading days prior to the dates the performance period begins and ends, assuming that any dividends paid on our common stock are reinvested on the ex-dividend date (consistent with the treatment of dividends in the Performance Index).• Potential payouts are as shown in Figure 46 below. The result of the vesting formula is rounded down to the nearest whole number. |
Figure 46. 2022/2024 Market-based PRSU Potential Payouts
| Lam’s TSR % Change Performance Compared to XSOX Index % Change Performance | Market-based PRSUs That Can Be Earned (% of Target)(1) |
|---|---|
| + 25% or more | 150 |
| 10% | 120 |
| 0% (equal to index) | 100 |
| - 10% | 80 |
| - 25% | 50 |
| - 50% or less | 0 |
| (1) | The results of the vesting formula (reflecting the number of Market-based PRSUs that can be earned) are linearly interpolated between the stated percentages. |
Based on the parameters set forth in Figures 45 and 46 above, the Company’s stock price performance over the three-year performance period was equal to 17.07% and the performance of the XSOX index (based on market price) over the same three-year performance period was equal to 38.60%. Lam’s stock price underperformed the XSOX index by 21.53%, which resulted in a performance payout of 56.94% of the target number of Market-based PRSUs granted to each NEO. Based on such results, the committee made the following payouts to each NEO for the 2022/2024 LTIP Award of Market-based PRSUs.
Figure 47. 2022/2024 LTIP Market-based PRSU Award Payouts
| Named Executive Officer | Target Market-based PRSUs (#) | Actual Payout of Market-based PRSUs (56.94% of Target Award Opportunity) (#) |
|---|---|---|
| Timothy M. Archer | 152,000 | 86,548 |
| Douglas R. Bettinger | 38,000 | 21,637 |
| Patrick J. Lord | 30,400 | 17,309 |
| Ava A. Harter | — | — |
| Seshasayee (Sesha) Varadarajan | 25,540 | 14,542 |
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.