UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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Entegris, Inc.

 

 

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ENTEGRIS, INC.

129 Concord Road

Billerica, Massachusetts 01821

NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS

To Be Held on April 29, 2020

The 2020 Annual Meeting of Stockholders of Entegris, Inc. will be held at the Company’s headquarters at 129 Concord Road, Billerica, Massachusetts on Wednesday, April 29, 2020, at 10:00 a.m., local time, to consider and act upon the following matters:

 

1.

To elect eight (8) Directors to serve until the 2021 Annual Meeting of Stockholders.

 

2.

To ratify the appointment of KPMG LLP as Entegris’ independent registered public accounting firm for 2020.

 

3.

To approve, on an advisory basis, the Company’s Executive Compensation.

 

4.

To approve the 2020 Stock Plan.

 

5.

To transact such other business as may properly come before the meeting and at any adjournment or postponement thereof.

Stockholders of record at the close of business on March 6, 2020 are entitled to notice of and to vote at the Annual Meeting and any adjournments or postponements thereof.

 

By order of the Board of Directors,

Bertrand Loy President and Chief Executive Officer

Dated: March 18, 2020

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE VOTE IN ONE OF THE FOLLOWING THREE WAYS: (1) BY COMPLETING, SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE ENCLOSED STAMPED ENVELOPE BY MAIL, (2) BY COMPLETING A PROXY USING THE TOLL-FREE TELEPHONE NUMBER LISTED ON THE PROXY CARD, OR (3) BY COMPLETING A PROXY ON THE INTERNET AT THE INTERNET ADDRESS LISTED ON THE PROXY CARD.

Important Notice Regarding the Availability of Proxy Materials for the 2020 Annual Meeting of Stockholders to be Held on April 29, 2020 – the Proxy Statement, Form of Proxy and the Annual Report are available at http://investor.entegris.com/financials.cfm

ENTEGRIS, INC.

129 Concord Road

Billerica, Massachusetts 01821

Proxy Statement for the 2020 Annual Meeting of Stockholders

To Be Held on April 29, 2020

This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Entegris, Inc., a Delaware corporation (“Entegris” or the “Company”), for use at the 2020 Annual Meeting of Stockholders to be held at the Company’s headquarters at 129 Concord Road, Billerica, Massachusetts on Wednesday, April 29, 2020 at 10:00 a.m., local time, and at any adjournment or adjournments of that meeting. You may obtain directions to the location of the Annual Meeting of Stockholders by contacting our Investor Relations Department either through the Internet at investor.Entegris.com/contactus.cfm or via email at irelations@entegris.com. This proxy statement, the foregoing Notice of Annual Meeting of Stockholders, the enclosed form of proxy and the Company’s 2019 Annual Report on Form 10-K are first being mailed or given to stockholders on or about March  18, 2020.

PROXIES

A stockholder giving a proxy may revoke it at any time before it is voted by executing and delivering to Entegris another proxy bearing a later date, by delivering a written notice to the Secretary of the Company stating that the proxy is revoked, or by voting in person at the 2020 Annual Meeting. Any properly completed proxy forms returned in time to be voted at the Annual Meeting will be voted in accordance with the instructions indicated thereon. If no instructions are indicated on the proxy, the proxy will be voted IN FAVOR of the election of the eight named nominees as directors and in accordance with the recommendations of the Board of Directors with respect to other matters to come before the 2020 Annual Meeting. In addition, the proxy confers discretionary authority to vote on any other matter properly presented at the 2020 Annual Meeting which is not known to the Company as of the date of this proxy statement, unless the proxy directs otherwise.

Stockholders may vote by proxy in one of the following three ways: (1) by completing, signing and dating the enclosed proxy card and returning it in the enclosed postage paid envelope by mail, (2) by completing a proxy using the toll-free telephone number listed on the proxy card in accordance with the specified instructions, or (3) by completing the proxy card via the Internet at the Internet address listed on the proxy card in accordance with the specified instructions.

All costs of the solicitation of proxies will be borne by Entegris. In addition to solicitations by mail, the Company’s directors, officers and regular employees, without additional remuneration, may solicit proxies by telephone, personal meetings and the Internet, including e-mail and text message. Brokers, dealers, banks, fiduciaries and nominees will be requested to forward proxy soliciting material to the owners of stock held in their names, and Entegris will reimburse them for their reasonable direct and indirect out-of-pocket expenses incurred in connection with the distribution of proxy materials.

VOTING SECURITIES AND VOTES REQUIRED

The record date for the determination of stockholders entitled to notice of and to vote at the 2020 Annual Meeting was the close of business on March 6, 2020 (the “Record Date”). On the Record Date, there were 135,009,044 shares of common stock, $0.01 par value per share, the Company’s only class of voting securities, outstanding and entitled to vote. Each share of common stock is entitled to one vote. Under the Company’s By-Laws, the holders of a majority of the shares of common stock issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum for the transaction of business

 

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at the meeting. Shares of common stock represented in person or by proxy (including “broker non-votes” and shares which abstain or do not vote with respect to one or more of the matters presented for stockholder approval) will be counted for purposes of determining whether a quorum is present. The affirmative vote of the holders of a majority of votes cast by the stockholders entitled to vote at the meeting is required for the election of directors (see “Corporate Governance – Majority Voting for Directors” below) and for the approval of the other matters listed in the Notice of Meeting. Under the Company’s bylaws, shares whose ballot is marked as withheld, shares otherwise present at the meeting but for which there is an abstention, and shares otherwise present at the meeting as to which the shareholder gives no authority or direction are not counted as votes cast. Accordingly, abstentions and “broker non-votes” will not be included in vote totals and will not affect the outcome of the voting on the election of the directors or the other matters listed in the Notice of Meeting.

PROPOSAL 1 – ELECTION OF DIRECTORS

At each annual meeting of stockholders, directors are elected for a term expiring at the next annual meeting of stockholders to succeed those directors whose terms are expiring. The persons named in the enclosed proxy will vote to elect as directors the nominees designated by the Board of Directors, whose names are listed below, unless the proxy is marked otherwise. Each of the nominees has indicated his or her willingness to serve, if elected. However, if a nominee should be unable to serve, the shares of common stock represented by proxies may be voted for a substitute nominee designated by the Board. There are no family relationships between or among any officers or directors of Entegris.

Nominees for Election

The following table sets forth the nominees standing for election at the 2020 Annual Meeting, the year each nominee was first appointed or elected as a director of Entegris or a predecessor public corporation, the principal occupation of that nominee during at least the past five years, that nominee’s age, any other public company boards on which that nominee serves or has served in the past five years, and that nominee’s experience, qualifications, attributes or skills to serve on the Board. In addition to the information presented below regarding each nominee’s specific experience, qualifications, attributes and skills that led the Board to conclude that he or she should serve as a director, Entegris believes that all of its director nominees also have a reputation for integrity, trust, respect, competence and adherence to high ethical standards. They each have demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to Entegris and the Board. In the table below, in determining the year first appointed or elected as a director of Entegris, service with predecessor public company Entegris, Inc., a Minnesota corporation (“Entegris Minnesota”), is included in the case of Mr. Olson and Mr. Sullivan, and service with predecessor public company Mykrolis Corporation

 

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(“Mykrolis”) is included in the case of Mr. Bradley. Entegris Minnesota and Mykrolis merged into the Company effective August 6, 2005 (the “Merger”).

 

Name		Year Became Director		Background and Qualifications
Michael A. Bradley		2001		Mr. Bradley, 71, has served as a director of the Company since the Merger in 2005. Mr. Bradley served as a director of Mykrolis from 2001 until the Merger. From 2004 until his retirement in February 2014, Mr. Bradley served as the Chief Executive Officer of Teradyne, Inc., a global supplier of automatic test systems and equipment for semiconductor, military/aerospace, data storage and automotive applications. Prior to that, he served as President of Teradyne, Inc. from 2003 to 2013 and as President, Semiconductor Test Division of Teradyne from 2001 to 2003. Mr. Bradley served as the Chief Financial Officer of Teradyne, Inc. from 1999 until 2001 and as a Vice President of Teradyne from 1992 to 2001. Prior to that, Mr. Bradley held various finance, marketing, sales and management positions with Teradyne and worked in the audit practice group of the public accounting firm of Coopers and Lybrand. Since 2004, Mr. Bradley has served as a director of Teradyne, Inc. and, since November 2012, Mr. Bradley has served as a director of Avnet, Inc., a global distributor of electronic components. He received his A.B. degree from Amherst College and an M.B.A. from the Harvard Business School.   The Board of Directors has concluded that, by reason of his experience as Chief Executive Officer of Teradyne, Inc. and in his other senior executive positions with Teradyne, which has given him extensive experience within the semiconductor industry, and by reason of his experience as a director of both Mykrolis and the Company, Mr. Bradley should serve as a director of the Company.
R. Nicholas Burns		2011		Mr. Burns, 64, has served as a director of the Company since May 2011. He is currently the Goodman Family Professor of The Practice of Diplomacy and International Relations, Kennedy School, Harvard University. Ambassador Burns served in the United States Foreign Service for twenty-seven years until his retirement in April 2008. He served as Under Secretary of State for Political Affairs from 2005 to 2008. From 2001 to 2005 he was U.S. Ambassador to NATO. From 1997 to 2001, he was U.S. Ambassador to Greece. He is Director of the Aspen Strategy Group and Senior Counselor at the Cohen Group. He is on the Board of Directors of The Atlantic Council and a number of other non-profit organizations. From October 2014 to January 2017, he served as a member of Secretary of State John Kerry’s Foreign Affairs Advisory Board. Mr. Burns holds a B.A. in History from Boston College and an M.A. in International Relations from the Johns Hopkins School of Advanced International Studies.   The Board of Directors has concluded that, by reason of his distinguished career as a diplomat and his expertise in world affairs, Mr. Burns should serve as a director of the Company.

 

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Name		Year Became Director		Background and Qualifications
James F. Gentilcore		2013		Mr. Gentilcore, 67, was elected to the Board of Directors in December 2013. Until December 2018, Mr. Gentilcore served as the Executive Chairman of the board of directors of PQ Corporation, a performance chemicals and services company, having served as a member of its board of directors since 2016. Previously, Mr. Gentilcore served as President and Chief Executive Officer of PQ Corporation from July 2016 until August 2018. Mr. Gentilcore served as an Executive Advisor to CCMP Capital, a global private equity firm, from April 2014 to June 2016. He served as the Chief Executive Officer of Edwards Group Limited, a global industrial technology company, from March 2013 until January 2014, and as a director from December 2007 until January 2014, when Edwards Group was acquired by Atlas Copco AB. From January 2009 until its sale in March 2011, Mr. Gentilcore was the President, Chief Executive Officer and a director of EPAC Technologies Inc., a logistics technology solutions company. Mr. Gentilcore also served as Chief Operating Officer of Brooks Automation Inc., a provider of life science and semiconductor manufacturing automation solutions, from November 2005 until November 2007, after leading the merger between Brooks and Helix Technology Corp., where he had been the Chief Executive Officer from December 2004 until October 2005. Prior to that, Mr. Gentilcore was the Chief Operating Officer of Advanced Energy Industries, Inc. Earlier in his career, he spent 10 years in the electronics materials industry with Air Products Inc., serving in various business development and operational roles. His global experience includes several Asia-based joint ventures and acquisitions and many U.S. based technology acquisitions. He has significant experience in growing technology and industrial companies, mergers and acquisitions in the public and private sector and post-merger integration and brings 40 years of technology industry leadership to our board of directors. Mr. Gentilcore previously served as a member of the board of directors of Milacron Holdings Corp., a global leader in the plastic technology and processing industry, from February 2014 to November 2019, and of KMG Chemicals Inc., a leading supplier of electronic chemicals, from May 2014 to December 2016. Mr. Gentilcore holds an M.B.A. from Lehigh University and a B.Sc. in Engineering from Drexel University.   The Board of Directors has concluded that, by reason of his 40 years of experience in the technology industry, his experience as Chief Executive Officer of two major companies serving the semiconductor industry and his broad experience with mergers and post-merger integration, Mr. Gentilcore should serve as a director of the Company.

 

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Name		Year Became Director		Background and Qualifications
James P. Lederer		2015		Mr. Lederer, 59, was elected to the Board of Directors in April 2015. He served as an Executive Vice President and Officer of Qualcomm Technologies, Inc., a wireless technology company, and General Manager of Qualcomm CDMA Technologies (QCT), its semiconductor division, from 2008 until his retirement in January 2014. Prior to that role, he held a variety of senior management positions at Qualcomm, Inc., including Senior Vice President, Finance and Business Operations; Vice President, Finance; Senior Director, Finance; and Director, Corporate Strategic Finance. Mr. Lederer joined Qualcomm in 1997 and prior to joining Qualcomm, Mr. Lederer held a variety of management positions at Motorola, General Motors and Scott Aviation. Since March 2018, Mr. Lederer has served as a director of Lattice Semiconductor Corporation, a manufacturer of high-performance programmable logic devices. Mr. Lederer holds a B.S. degree in Business Administration and an M.B.A. from the State University of New York at Buffalo, where he also serves on the Dean’s Advisory Council for the School of Management.   The Board of Directors has concluded that, by reason of his over twenty years of experience in the semiconductor industry and his ten years of experience as a senior executive officer of Qualcomm, Mr. Lederer should serve as a director of the Company.
Bertrand Loy		2012		Mr. Loy, 54, has been our Chief Executive Officer, President and a director since November 2012. From July 2008 to November 2012, Mr. Loy served as our Executive Vice President and Chief Operating Officer. From August 2005 until July 2008, he served as our Executive Vice President in charge of our global supply chain and manufacturing operations. He served as the Vice President and Chief Financial Officer of Mykrolis from January 2001 until August 2005. Prior to that, Mr. Loy served as the Chief Information Officer of Millipore Corporation, a life science products company, during 1999 and 2000. From 1995 until 1999, he served as the Division Controller and Head of Manufacturing for Millipore’s Laboratory Water Division. From 1989 until 1995, Mr. Loy served Sandoz Pharmaceuticals (now Novartis), a pharmaceutical company, in a variety of strategic planning and finance positions located in Europe, Central America and Japan. Mr. Loy served as a director of BTU International, Inc., a supplier of advanced thermal processing equipment, from June 2010 until its acquisition in January 2015. He has served on the board of directors of Harvard Bioscience, Inc., a scientific equipment company, since November 2014 and is now its lead independent director. Since July 2013, he has also been on the board of directors of SEMI, the global industry association representing the electronics manufacturing supply chain and currently acts as the chairman of the association. Mr. Loy graduated from the Ecole Superieure des Sciences Economiques et Commerciales (ESSEC) business school in Cergy-Pontoise, France.   The Board of Directors has concluded that, by reason of his extensive experience operating the Company, his five years of experience as the Chief Financial Officer of Mykrolis and his experience as a director of BTU International, Inc., Harvard Bioscience, Inc. and SEMI, Mr. Loy should serve as a director of the Company.

 

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Name		Year Became Director		Background and Qualifications
Paul L.H. Olson		2003		Mr. Olson, 69, has been a director of the Company since the Merger in 2005. He has served as the independent Chair of the Board of the Company since May 2011. He served as lead director of the Entegris Minnesota board of directors from March 2003 until the Merger. Mr. Olson served as the Chief Executive Officer and a director of nuBridges, Inc., a software business headquartered in Atlanta, Georgia, from 2008 until its merger with Liaison Technologies, Inc. in 2011. Thereafter, he served on the board of directors of Liaison Technologies, Inc., serving as a member of its audit committee until 2014. He served as Executive Vice President of Bethel University from 2002 to 2008. Prior to 2000, Mr. Olson was a founding executive of Sterling Commerce, Inc., an electronic commerce software company. Prior to his role with Sterling Commerce, he held executive positions with Sterling Software, Inc., a systems management software company, and Michigan National Corp., a bank holding company. Mr. Olson is a member of the board of directors of several private companies and non-profit organizations, including WMC Industries, Inc. (where he is lead director), Macalester College (where he serves as Treasurer and Chair of the Finance Committee), and SiteDocs, Inc. Mr. Olson served as an advisor to Data Dimensions, Inc., a business process outsourcing company, and to Thoma Bravo Equity Partners, a private equity firm. Mr. Olson holds a BA degree from Macalester College, an MBA from the University of St. Thomas and a doctorate degree from the University of Pennsylvania.   The Board of Directors has concluded that by reason of his extensive graduate education, his many years of business and institutional management experience and his experience as Chief Executive Officer of two different software companies and by reason of his experience as a director of both Entegris Minnesota and the Company, Mr. Olson should serve as a director of the Company.
Azita Saleki-Gerhardt		2017		Ms. Saleki-Gerhardt, 56, was elected to the Board of Directors in August 2017. Dr. Saleki-Gerhardt currently serves as the Executive Vice President, Operations at AbbVie Inc., a global, research-driven biopharmaceutical company committed to developing innovative advanced therapies for some of the world’s most complex and critical conditions, having previously served as Senior Vice President, Operations from 2013 to 2019. AbbVie was formed in 2013 as a spin-off from Abbott Laboratories. Prior to this role, Dr. Saleki-Gerhardt spent more than twenty years at Abbott Laboratories in a variety of senior management roles, including President, Global Pharmaceuticals Operations from 2011 to 2012, Divisional Vice President, Quality Assurance, Global Pharmaceutical Operations from 2008 to 2010, and Divisional Vice President, Manufacturing Science and Technology, Global Pharmaceutical Operations from 2004 to 2007. Dr. Saleki-Gerhardt holds a B.A. degree, an M.S. degree and a Ph.D., each in pharmaceutics and each from the University of Wisconsin, Madison.   The Board of Directors has concluded that, by reason of her extensive business and management experience and her experience as a senior executive officer responsible for the international manufacturing and distribution network of a global biopharmaceutical company, Dr. Saleki-Gerhardt should serve as a director of the Company.

 

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Name		Year Became Director		Background and Qualifications
Brian F. Sullivan		2003		Mr. Sullivan, 58, has served as a director of the Company since the Merger in 2005. Mr. Sullivan served as a director of Entegris Minnesota from December 2003 until the Merger. Mr. Sullivan has served as Chair and CEO of Celcuity Inc., a biotechnology company he co-founded, since 2012. Mr. Sullivan was Chair and CEO of SterilMed, Inc., a medical device reprocessing company, from 2003 until he retired from that company in 2011 in conjunction with its sale to Johnson & Johnson. Mr. Sullivan co-founded Recovery Engineering, Inc., a water treatment systems company, in 1986, and was its Chair and Chief Executive Officer until it was sold in 1999 to Proctor & Gamble Co. Mr. Sullivan served as a member of the board of directors of Virtual Radiologic Corporation from 2008 until that company was sold in 2010, and serves as a director of several private companies and non-profit organizations. Mr. Sullivan holds an A.B. degree from Harvard University.   The Board of Directors has concluded that, by reason of his extensive and varied business and management experience and his experience as Chief Executive Officer of three diverse businesses, and by reason of his experience as a director of both Entegris Minnesota and the Company, Mr. Sullivan should serve as a director of the Company.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE

STOCKHOLDERS VOTE FOR THE ABOVE NOMINEES.

 

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CORPORATE GOVERNANCE

Entegris’ Board of Directors believes that adherence to good corporate governance principles is essential to running our business efficiently, to maintaining our integrity in the marketplace and to ensuring that the Company is managed for the long-term benefit of its stockholders. The Board recognizes that maintaining and ensuring good corporate governance is a continuous process. To this end, our Board of Directors has adopted the Entegris, Inc. Corporate Governance Guidelines, the Entegris, Inc. Code of Business Ethics (which is applicable to all employees, including executive officers, as well as to directors to the extent relevant to their service as directors) and a charter for each committee of the Board. The Corporate Governance Guidelines, the Code of Business Ethics and the Charters of the Audit & Finance Committee, the Management Development & Compensation Committee and the Governance & Nominating Committee, as amended from time to time, are available on the Company’s website at http://www.Entegris.com under “Investors – Corporate Governance” and will be provided in printed form to any stockholder who requests them from us.

Director Independence

The Company’s Corporate Governance Guidelines provide that a substantial majority of the directors shall be independent. Currently, with the exception of our Chief Executive Officer, our Board of Directors is comprised entirely of independent directors. The Board has determined that each of Michael A. Bradley, R. Nicholas Burns, James F. Gentilcore, James P. Lederer, Paul. L. H. Olson, Azita Saleki-Gerhardt and Brian F. Sullivan is “independent” as determined under the Nasdaq Stock Market, Inc. Marketplace Rules. The Entegris, Inc. Corporate Governance Guidelines also provide that there will be an executive session, comprised exclusively of independent directors, at each regularly scheduled Board of Directors meeting.

Board Leadership Structure

Our Board of Directors has adopted a leadership structure whereby the Chairman of the Board is an independent director. We believe that having a Chairman independent of management provides strong leadership for the Board and helps ensure critical and independent thinking with respect to the Company’s strategy and performance. Our Chief Executive Officer is also a member of the Board of Directors as the management representative on the Board. We believe this is important to make information and insight concerning the Company’s business directly available to the directors in their deliberations. Our Board believes that having separate positions, with an independent, non-executive director serving as Chairman, is the appropriate leadership structure for our Company at this time and demonstrates our commitment to good corporate governance.

Our Chairman of the Board is responsible for the smooth functioning of our Board of Directors, enhancing its effectiveness by guiding Board processes and presiding at Board meetings and executive sessions of the independent directors. Our Chairman also presides at stockholder meetings and ensures that directors receive appropriate information from our Company to fulfill their responsibilities. Our Chairman is an ex officio member of each standing Board committee in a non-voting capacity, providing guidance and taking an active role in evaluating our executive officers. Our Chairman also acts as a liaison between our Board and our executive management, promoting clear and open communication between management and the Board.

Board of Directors’ Role in Risk Oversight

Our Board of Directors has responsibility for the oversight of risk management. Our Board, either as a whole or through its committees, regularly discusses with management our major risk exposures, their potential impact on our Company and the steps we take to manage them. While our Board is ultimately responsible for risk

 

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oversight at our Company, our Board standing committees assist the Board in fulfilling its oversight responsibilities in certain areas of risk. In particular, our Audit & Finance Committee focuses on financial risk, including internal controls, and receives periodic risk assessment reports from our Internal Audit Department. Our Governance & Nominating Committee focuses on the management of risks associated with Board organization, membership and structure, succession planning for our directors and corporate governance. Finally, our Management Development & Compensation Committee assists the Board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs, and risks related to succession planning for our executive officers.

Risk Assessment with Respect to Compensation Policies and Practices

At its December 2019 meeting, the Management Development & Compensation Committee (the “Compensation Committee”) reviewed the various design elements of our compensation program to determine whether it encourages excessive or inappropriate risk-taking. The scope of this review included aspects of executive compensation, as well as consideration of the items of our compensation policies and practices that affect all employees. In general, the process used by the Compensation Committee to complete its risk evaluation was as follows:

 

•

The Compensation Committee identified the compensation-related risks that the Company may face;

 

•

The Compensation Committee identified the material design elements of our compensation policies and practices with respect to all employees; and

 

•

The Compensation Committee then evaluated whether there is a relationship between any of those design elements and any of our most significant risks. More specifically, the Compensation Committee evaluated whether any of the design elements of our compensation policies and practices encourages our employees to take excessive or inappropriate risks that are reasonably likely to have a material adverse impact on the Company.

After completing its evaluation, the Compensation Committee concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. More specifically, the Compensation Committee concluded that our compensation program is designed to encourage employees to take actions and pursue strategies that support our best interests and the best interests of our stockholders, without promoting excessive or inappropriate risk.

The design elements of our executive compensation program (which are described in detail in the “Compensation Discussion and Analysis” section below) do not include unusual or problematic compensatory schemes that have been linked to excessive risk-taking. Furthermore, the design elements of our compensation program that directly tie compensatory rewards to our performance include various counter-balances designed to offset potentially excessive or inappropriate risk-taking. For example, there is a balance between the fixed components of the program and the performance-based components.

Similarly, with respect to the performance-based components, there is a balance between annual and longer-term incentives. Thus, the overall program is not too heavily weighted towards incentive compensation, in general, or short-term incentive compensation, in particular. The financial incentives are not based simply upon revenue. Rather, they are tied to performance metrics such as adjusted EBITA (net income before interest income, interest expense, income tax expense, intangible amortization, acquisition and integration costs, acquired inventory step-up amortization, and restructuring costs but excluding acquisition operating income) as a percentage of revenue and quantitatively measured strategic objectives, which more closely align the interests of management with the interests of our stockholders. The performance metrics for incentive payments are established annually and reflect goals that are a stretch, but not so high that they require performance outside of what the Compensation Committee believes is reasonable or could motivate management to take actions in which we assume unreasonable levels of risk. In addition, there are caps on how much performance-based

 

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compensation may be earned in a particular performance period, and the Board of Directors has adopted a policy for clawback of performance-based compensation that was paid out in the event of an accounting restatement resulting from material noncompliance with financial reporting requirements under the federal securities laws. Furthermore, the Company maintains stock ownership guidelines for its executive officers, including the named executive officers, in order to promote a close alignment of the interests of those executive officers with those of Entegris stockholders. The Compensation Committee also maintains an ongoing dialogue with our management to track progress on performance-based goals in order to foresee and avoid any excessive or inappropriate risk-taking that may otherwise be driven by a desire to maximize performance-based compensation.

Related Party Transactions

The Board of Directors has adopted a policy that prohibits any business transaction with a value of $60,000 or more between Entegris and any of our directors, nominees for director, executive officers or their immediate families. In addition, as part of our annual disclosure documentation process, we circulate questionnaires to our directors, nominees for director and executive officers requiring disclosure of any business transaction with a value of $60,000 or more between Entegris and any of those persons or a member of his or her immediate family. The answers to these questionnaires are reviewed for compliance with this policy by management and discussed with the Audit & Finance Committee and our independent registered public accounting firm. Since January 1, 2019, there has been no such business transaction between Entegris and any director, nominee for director, executive officer or member of his or her immediate family.

Majority Voting for Directors

Since 2008, the Company has used a majority-voting standard in uncontested elections of directors. The Company’s By-Laws provide that, in an uncontested director election, a director nominee will be elected only if the number of votes cast “for” the nominee exceeds the number of votes cast “against” the nominee. Directors are elected by a plurality vote in any “contested” election, which is defined as an election where the number of nominees exceeds the number of directorships to be filled. The By-Laws prohibit the Board from nominating for election (or filling a vacancy or newly created directorship with) any candidate who has not agreed in advance to submit an irrevocable resignation that would take effect upon (a) the failure to receive the required majority vote for re-election in the next election, and (b) the Board’s acceptance of such resignation. The By-Laws impose a similar requirement on director candidates nominated by stockholders. All nominees for election as director listed above have agreed to tender such a resignation.

If an incumbent director does not receive the required vote for re-election, the Governance & Nominating Committee of the Board will make a recommendation to the Board as to whether to accept the director’s resignation; the Board will consider this recommendation and determine, within 90 days after certification of the election results, whether to accept the director’s resignation and will promptly disclose its decision (including the reasons underlying the decision) in a filing with the Securities and Exchange Commission (the “SEC”).

 

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Board and Committee Meetings

The Board of Directors has a standing Audit & Finance Committee, Management Development & Compensation Committee and Governance & Nominating Committee, each of which is described in more detail below. The current members of each of the committees of the Board of Directors are as follows:

 

AUDIT AND FINANCE COMMITTEE

MANAGEMENT DEVELOPMENT & COMPENSATION COMMITTEE

GOVERNANCE AND NOMINATING COMMITTEE

Paul L. H. Olson

Bertrand Loy

Michael A. Bradley

R. Nicholas Burns

James F. Gentilcore

James P. Lederer

Azita Saleki-Gerhardt

Brian F. Sullivan

  = Chairperson     = Member          = Chairman of the Board          = Independent Director

The Board of Directors has a standing Audit & Finance Committee, which provides the opportunity for direct contact between the Company’s independent registered public accounting firm and the directors. As noted above, the Board has adopted a written charter for the Audit & Finance Committee, a copy of which is posted on the Company’s web site http://www.Entegris.com under “Investors – Corporate Governance”. The responsibilities of the Audit & Finance Committee include the selection, appointment, compensation and oversight of the Company’s independent registered public accounting firm, as well as reviewing the scope and results of audits and reviewing the Company’s internal accounting control policies and procedures. The Audit & Finance Committee held six meetings during 2019. Each of the members of the Audit & Finance Committee has been determined by the Board of Directors to be “independent” as defined under the Nasdaq Stock Market, Inc. Marketplace Rules applicable to audit committee members (including under the heightened standards for audit committee members) and to comply with the independence requirements contemplated by Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Board of Directors has determined that each of the members of the Audit & Finance Committee possess the attributes of an “audit committee financial expert” as that term is defined in the rules of the SEC.

The Board of Directors has a standing Management Development & Compensation Committee, which reviews executive compensation and management development programs, provides recommendations to the Board regarding Entegris’ compensation programs and administers the Company’s equity compensation plans. The Board of Directors has adopted a written charter for the Management Development & Compensation Committee, a copy of which is posted on the Company’s web site http://www.Entegris.com under “Investors – Corporate Governance”. The responsibilities of the Management Development & Compensation Committee include determining the compensation of the named executive officers (except the CEO) and the compensation policies impacting other executive officers, providing recommendations to the Board on CEO compensation, reviewing and recommending changes to equity incentive and other employee benefit plans, reviewing the administration of such plans, reviewing the Company’s management development programs and strategies and reviewing and recommending annual compensation for the Board. The Management Development & Compensation Committee held five meetings during 2019. The charter for the Management Development & Compensation Committee does not authorize the delegation of these responsibilities. Each of the members of the Management Development & Compensation Committee has been determined by the Board of Directors to be “independent” as defined under the Nasdaq Stock Market, Inc. Marketplace Rules applicable to compensation committee members.

 

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The Board of Directors has a standing Governance & Nominating Committee, which provides recommendations to the Board regarding Entegris’ corporate governance and corporate responsibility programs and recommends nominees to be elected to the board of directors. The Board of Directors has adopted a written charter for the Governance & Nominating Committee, a copy of which is posted on the Company’s web site http://www.Entegris.com under “Investors – Corporate Governance”. The responsibilities of the Governance & Nominating Committee include the periodic review of corporate governance guidelines and matters related to corporate responsibility, review of matters relating to the size, composition, required skills and structure of the Board of Directors and committees thereof, the review and evaluation of potential candidates for nomination to the Board, recommendation to the Board of a slate of nominees for election as directors each year and the determination to accept or reject resignations of directors who fail to receive a majority vote for their re-election to the Board as described above. The Governance & Nominating Committee held two meetings during 2019. Each of the members of the Governance & Nominating Committee has been determined by the Board of Directors to be “independent” as defined under the Nasdaq Stock Market, Inc. Marketplace Rules applicable to nominating committee members.

The Board of Directors held twelve meetings during 2019. Each director attended at least 75% of the aggregate number of meetings of the Board of Directors and of all committees on which he or she served that were held during the period for which he or she was a director or member of any such committee.

Director Nomination Process

The Governance & Nominating Committee is responsible for managing the process for nomination of new directors. The committee may identify potential candidates for first-time nomination as a director using a variety of sources, such as recommendations from our management, current directors, stockholders or contacts in communities served by Entegris, or by conducting a formal search using an outside search firm selected and engaged by the Governance & Nominating Committee. Following the identification of a potential director-nominee, the Governance & Nominating Committee commences an inquiry to obtain information concerning the background of a potential new director-nominee. Included in this inquiry is an initial review of the candidate with respect to the following factors: (1) whether the individual meets the minimum qualifications for first-time director nominees specified in the Corporate Governance Guidelines; (2) whether the individual would be considered independent under applicable rules of Nasdaq and the SEC; and (3) whether the individual would meet any additional requirements imposed by law or regulation on the members of the Audit & Finance Committee and/or the Management Development & Compensation Committee of the Board.

The Governance & Nominating Committee evaluates candidates for director nominees in the context of the current composition of the Board, taking into account all factors it considers appropriate, including but not limited to the characteristics of independence, skills, experience, availability for service to Entegris, tenure of incumbent directors on the Board and the anticipated needs of the Board of Directors. The Governance & Nominating Committee believes that the assessment of potential nominees to be recommended by the Governance & Nominating Committee should include consideration of the following factors: (i) a capacity for, or a record of, making valuable contributions to the business community, (ii) personal qualities of leadership, character, judgment and a reputation in the community at large of integrity, trust, respect, competence and adherence to high ethical standards, (iii) experience in the semiconductor/microelectronics industry or in other industries in which the Company operates; (iv) whether the candidate is free of conflicts and has the time required for preparation, participation and attendance at all meetings; (v) candor and willingness to operate on a team and to seek consensus; (vi) diversity with respect to race, ethnicity, gender, and geography; and (vii) relevant knowledge and diversity of background and experience in such things as business, manufacturing, technology, finance and accounting, marketing, international business, government and the like. The Board is committed to actively seeking out women and minority candidates as well as candidates with diverse backgrounds, experiences and skills as part of each Board search the Company undertakes. In addition, at least one member of the Board should have accounting or related financial management expertise, as determined in

 

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the business judgment of the Board. The Governance & Nominating Committee will consider potential nominees recommended by our stockholders for such committee’s consideration, taking into account the same considerations as are taken into account for other potential nominees. Stockholders may recommend candidates by writing to the Chair, Governance & Nominating Committee in care of the Company’s Corporate Secretary at Entegris, Inc., 129 Concord Road, Billerica, MA 01821. Our By-Laws provide for additional procedures and requirements for stockholders wishing to nominate a director for election as part of the official business to be conducted at an annual stockholders meeting, as described further under “Stockholder Proposals and Nominees for 2021 Annual Meeting” below. In addition, as noted above, our By-Laws require that all nominees, as a condition to being nominated, agree to submit an irrevocable resignation that would take effect upon (a) the failure to receive the required vote for re-election in the next election, and (b) the Board’s acceptance of such resignation.

Communications with the Independent Directors

Stockholders and other interested parties may communicate directly with a member or members of the Board of Directors or the non-management directors either individually or as a group by addressing their correspondence to the director or directors, c/o our Corporate Secretary, at the address listed above, with a request to forward the same to the intended recipient(s). All such communications will be reviewed by the Company’s Corporate Secretary and, if they are relevant to the Company’s operations, policies and philosophies, they will be forwarded to the Chairman of the Board (Mr. Olson). The Chairman of the Board will provide to the directors copies or summaries of any such stockholder communications as he considers appropriate.

Director Attendance at Annual Meetings

Members of the Board of Directors are encouraged to attend the Annual Meetings of Stockholders. Seven current directors then in office attended the 2019 Annual Meeting of Stockholders.

Director Compensation

The Management Development & Compensation Committee regularly assesses the Company’s director compensation program in relation to industry practice. At its April 2019 meeting, the Management Development & Compensation Committee, after consultation with its independent compensation advisory firm Frederic W. Cook & Co., Inc. (“FW Cook”) and a general review of compensation practices for directors among the peer group described below, decided to recommend no changes to its existing director compensation program, except for a slight increase in the cash retainer paid to the independent Chairman of the Board. For 2019, the Board of Directors adopted the following compensation arrangements for all non-employee directors: an annual cash retainer of $75,000. The Chairman of the Board (Mr. Olson) receives an additional annual cash fee of $60,000 and the committee chairs receive an additional annual cash fee of $20,000 for the Chair of the Audit & Finance Committee, $15,000 for the Chair of the Management Development & Compensation Committee and $10,000 for the Chair of the Governance and Nominating Committee. All non-employee directors are also provided an annual equity award of $145,000 worth of restricted stock units valued on the date of each Annual Meeting, with restrictions lapsing on the earlier of the date of the next Annual Meeting or the first anniversary of the award date. In addition, non-employee directors are reimbursed for their out-of-pocket expenses incurred in connection with services as a director. All of the foregoing cash fees are based on a June 2019 through May 2020 fiscal period and are paid quarterly in advance. Mr. Loy receives no compensation for his service as a director.

 

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Fiscal Year 2019 Director Summary Compensation Table

The table below summarizes the compensation paid by the Company to directors for the fiscal year ended December 31, 2019.

 

(a)		(b)				(c)				(d)				(e)				(f)
Name(1)		Fees Earned or Paid in Cash ($)				Stock Awards ($)(2)				Option Awards ($)(3)				All Other Compensation ($)				Total ($)
Michael A. Bradley		$	75,000			$	144,973			$	—			$	—			$	219,973
R. Nicholas Burns		$	85,000			$	144,973			$	—			$	—			$	229,973
James F. Gentilcore		$	90,000			$	144,973			$	—			$	—			$	234,973
James P. Lederer		$	95,000			$	144,973			$	—			$	—			$	239,973
Paul L. H. Olson		$	133,750			$	144,973			$	—			$	—			$	278,723
Azita Saleki-Gerhardt		$	75,000			$	144,973			$	—			$	—			$	219,973
Brian F. Sullivan		$	75,000			$	144,973			$	—			$	—			$	219,973

 

(1)	Bertrand Loy, the Company’s President and Chief Executive Officer, is not included in this table since he is an employee of the Company, he receives no compensation for his services as a director and he is included in the Summary Compensation Table under “Compensation of Executive Officers” below.

(2)	Reflects the aggregate grant date fair value of awards of restricted stock units to each director during 2019, calculated in accordance with FASB ASC Topic 718, excluding estimated forfeitures. As of December 31, 2019, each director held 3,569 outstanding restricted stock units.

(3)	As of December 31, 2019, no director held any outstanding stock options.

Stock Ownership Guidelines for Directors

During 2019, the Board of Directors maintained stock ownership guidelines for non-employee directors to align director interests with those of Entegris stockholders. This alignment is a critical objective of the equity awards discussed above. Under these guidelines, each director is required to hold Entegris Common Stock with a value equal to five (5) times the annual cash retainer for directors generally in effect at the time of each annual determination. Determination of compliance with these guidelines is made as of January 15^th of each year. Compliance is calculated based on the average of the prior calendar year’s month end closing prices on Nasdaq for Entegris Common Stock. Shares of Entegris Common Stock that are owned by a director outright as well as vested deferred shares/units count towards compliance with these guidelines. Directors have five (5) years following their initial election to the Entegris Board of Directors or the date on which the Stock Ownership Guidelines were adopted to achieve the minimum holding required by the guidelines. As of January 15, 2020, all directors were in compliance with the stock ownership guidelines or were within the five-year compliance grace period.

COMPENSATION OF EXECUTIVE OFFICERS

Set forth below is summary information concerning certain compensation earned, paid or awarded during fiscal years 2019, 2018 and 2017 by the Company to our Chief Executive Officer, our Chief Financial Officer and to the three other most highly compensated executive officers who were serving as executive officers at the end of fiscal 2019. Throughout this proxy statement we refer to these individuals collectively as the named executive officers.

 

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COMPENSATION DISCUSSION AND ANALYSIS

Objectives of Executive Compensation Policies

The Company’s executive compensation policies are designed so that: (i) total compensation is tied to individual performance, (ii) total compensation will vary with the Company’s performance in achieving financial and other strategic objectives, and (iii) long-term incentive compensation is closely aligned with stockholders’ interests. Further, the Company’s executive compensation policies provide that the proportion of variable compensation increases as an employee’s level of responsibility increases so that compensation for senior executives is aligned more closely with the Company’s performance. For these reasons, the Company’s executive compensation policies prioritize pay-for-performance, competitive compensation, employee retention and alignment with stockholders’ interests. The overall objectives of the executive compensation policies are to:

 

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attract, retain, motivate and reward high-caliber executives;

 

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foster teamwork and support the achievement of Entegris’ financial and strategic goals through performance based financial incentives;

 

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promote the achievement of strategic objectives which lead to long-term growth in stockholder value;

 

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encourage strong financial performance by establishing competitive goals for target performance and leveraging incentive programs through stock-based compensation; and

 

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align the interests of executive officers with those of Entegris and its stockholders by making incentive compensation dependent upon Company performance.

For 2019, the Management Development & Compensation Committee of the Board (the “Compensation Committee”), which is comprised solely of independent non-employee directors, as described under “Corporate Governance” above, retained the services of the independent compensation advisory firm FW Cook to assist with the review and evaluation of the Company’s compensation policies and to suggest new or alternative compensation arrangements where appropriate. The use of an independent consultant provides additional assurance that our programs are reasonable and consistent with the Company’s objectives. The Compensation Committee selected FW Cook based on its national reputation as an expert in compensation practices, its industry knowledge, and its familiarity with the Company and its past compensation practices. FW Cook reports to and takes direction from the Compensation Committee. The assignment of projects by management to FW Cook requires the prior approval of the Compensation Committee. During 2019, FW Cook performed services primarily for the Compensation Committee under its direction and performed only incidental consulting services for Entegris.

In addition, in establishing its executive compensation policies for a given year, the Compensation Committee considers the results of the most recent shareholder advisory vote on executive compensation and determines whether any changes are appropriate. At the 2019 Annual Meeting of Stockholders, approximately 97.7% of the votes cast on the advisory vote on executive compensation were cast “for” the approval of the compensation paid in 2018 to the named executive officers. The Compensation Committee determined that no significant change in the Company’s compensation policies should be made or recommended to the Board as a result of this advisory vote.

Evaluation of Compensation against External Data

For the 2019 compensation programs, the Compensation Committee evaluated each element of target total direct compensation (the sum of base salary, target annual incentive and grant date present value of long-term incentives) against corresponding compensation data from comparable companies collected by FW Cook. The Compensation Committee compared the Company’s compensation practices and target compensation levels to that provided to executives among a group of companies that were evaluated by FW Cook and the Compensation Committee as being comparable to Entegris. In mid-2018, the Compensation Committee, working with FW

 

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Cook, reviewed and revised the peer group to align the peer median revenue and market capitalization more closely with those of Entegris (which had been growing at a faster rate than the previous peers’ median revenue and market capitalization) and to ensure that the peer group size measures continued to be appropriately aligned with Entegris, which in June 2018 had grown as a result of the acquisition of the SAES Pure Gas business. The revised 21 company peer group shown below was approved by the Compensation Committee to inform its decisions with respect to target total direct compensation levels for 2019:

 

Advanced Energy Industries, Inc.		FLIR Systems, Inc.		Nordson
Cabot Microelectronics Corporation		Graco Inc.		Rayonier Advanced Materials Inc.
Coherent, Inc.		II-VI Incorporated		Teradyne, Inc.
Cree, Inc.		Innospec Inc.		TTM Technologies, Inc.
Cypress Semiconductor		Materion Corporation		Versum Materials, Inc.
Diodes Incorporated		Microsemi Corporation		Watts Water Technologies, Inc.
Ferro Corporation		MKS Instruments, Inc.		W.R. Grace

This group was selected from among companies operating in similar or related industries with median revenues, operating income and market capitalization approximating those of the Company. The Compensation Committee selected peer companies in the same or related industries on the basis of revenues, operating income and market capitalization because it believes that these metrics are commonly used to compare the relative size of companies.

Information concerning the compensation practices of these companies was drawn from their proxy statements or other public filings. The Compensation Committee annually reviews the peer group with the assistance of FW Cook to ensure that it remains appropriate.

FW Cook supplemented this data with compensation survey data from technology companies and a broader, general industry compensation survey to develop a composite market perspective on competitive pay levels. As a general matter, the Compensation Committee intends to set target total direct compensation for the named executive officers at the market median with deviations as appropriate for individual executives to reflect factors such as tenure, performance and criticality to the Company.

Based upon the Compensation Committee’s review of the compensation arrangements discussed below, the compensation levels of the above peer companies, general market pay practices for executives and its assessments of individual and corporate performance, the Compensation Committee believes that the Company’s executive compensation policies for 2019 were appropriate. While executive officers, principally the Senior Vice President for Human Resources, worked closely with the Compensation Committee and with FW Cook to design Entegris’ compensation programs for 2019, the Compensation Committee ultimately decides which policies to adopt and directs and approves the design of all compensation programs as well as the specific compensation paid to each of the named executive officers other than the Chief Executive Officer. Discussions concerning Chief Executive Officer compensation are conducted between FW Cook and the Compensation Committee without executive officer involvement.

 

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Elements of Compensation

The 2019 Entegris compensation program for senior executives, including the named executive officers listed in the Summary Compensation Table below, consisted of a number of elements which are summarized in the following table. Due to Entegris’ focus on short-term incentive compensation and long-term incentive compensation, illustrated in the table below, a meaningful portion of each executive officer’s target total direct compensation is dependent on the Company’s performance. Approximately 57% of the Chief Executive Officer’s target total direct compensation and an average of approximately 49% of the target total direct compensation of the other named executive officers is “at risk”, i.e., dependent on the Company’s performance.

 

Compensation Element		Description and Purpose of the Compensation Element		Fiscal 2019 Commentary
Base Salary		Rewards core competence in the executive role relative to required skills, experience and contributions to the Company with fixed compensation generally targeted at the median level, based on competitive market practice.		The Company awarded increases to the base salaries of the named executive officers during fiscal 2019 to bring their base salaries into general alignment with the market median level.
Short-Term Incentive Compensation (Entegris Incentive Plan)		Rewards achievement of Company financial performance criteria to: •  Incentivize the achievement of annual financial performance metrics that will drive our long-term success; and •  Incentivize achievement of pre-established business objectives.		In 2019, Entegris Incentive Plan awards were again based on the Company’s performance with respect to adjusted EBITA as a percentage of revenue (weighted 75%) and on the achievement of specified key business objectives for the year (weighted 25%). During 2019, the Company’s performance exceeded the target level for the adjusted EBITA metric and met some of the key business objectives, qualifying for a combined weighted-average award of 106% of target.
Long-Term Incentive Compensation		The Company awards its executive officers with time-vested restricted stock units and stock options, which both vest ratably over four years, and performance share units that provide the opportunity to earn shares of the Company based on the Company’s total shareholder return (TSR) as compared with the TSR achieved by the companies that comprise the Philadelphia Semiconductor Index over a three-year period. The purposes of our long-term incentive awards are to: •  Promote executive ownership of our stock; •  Promote retention of executives in a normally competitive labor market over the longer term; •  Encourage management focus on critical performance metrics creating value for stockholders; and •  Align the program with peer group and market practices, where appropriate.		No changes to the type and mix of long-term incentive awards were made for 2019. Named executive officers received time-vested restricted stock units (weighted 40% on a value basis), time-vested stock options (weighted 30%) and relative total shareholder return PSUs (weighted 30%), as described under Long-Term Incentive Compensation below.

 

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Compensation Element		Description and Purpose of the Compensation Element		Fiscal 2019 Commentary
Retirement Benefits		The Company provides both qualified and non-qualified tax-deferred retirement savings plans to: •  Encourage employee long-term commitment to the Company; •  Promote employee savings for retirement; and •  Make total retirement benefits available to executives commensurate with other employees as a percentage of compensation.		There were no changes to the participation in the Company’s retirement plans and no change to the benefits provided.
Welfare Benefits		Executives participate in employee benefit plans generally available to employees to provide a broad-based total compensation program designed to be competitive in the labor market.		In 2019, there were no changes from historical practice.
Perquisites		The Company provides no perquisites to executive officers.		In 2019, there were no changes from historical practice.
Change in Control Termination Benefits		Change in control agreements provide for “double-trigger” benefits and are designed to retain executives and provide continuity of management in the event of an actual or threatened change in control of the Company.		In 2019, there were no other changes from historical practice.

The use of these compensation elements enables us to reinforce our pay-for-performance philosophy and to strengthen our ability to attract and retain high-quality executives. The Compensation Committee believes that this combination of compensation elements provides an appropriate mix of fixed and variable pay and achieves an appropriate balance between short-term financial and operational performance and long-term shareholder value. The Compensation Committee determines the amount of compensation under each component of executive compensation granted to the executive officers to emphasize performance-based compensation tied to financial metrics approved by the Compensation Committee and to achieve the appropriate balance between cash compensation and equity compensation, as well as to reflect the level of responsibility of the executive officer. There is no pre-established policy or target for the allocation between either cash and non-cash or short-term and long-term incentive compensation. With respect to fiscal 2019, the total compensation paid or awarded to the named executive officers included both short-term cash incentive compensation and equity based long-term incentive compensation.

In addition, the Compensation Committee has in the past analyzed, and expects that, from time to time, it will analyze, tally sheets prepared for each senior executive, including the named executive officers, as a benchmark for its compensation decisions. Typically, these tally sheets have been prepared by our human resources and finance departments. Each of these tally sheets presents the dollar amount of each major component of the named executive officers’ compensation, including current cash compensation (base salary and short-term incentive compensation), accumulated deferred compensation balances and outstanding equity awards. The overall purpose of the tally sheets is to bring together in one place all of the elements of actual and potential future compensation of our named executive officers, as well as information about wealth accumulation, so that the Compensation Committee may analyze both aggregate total amount of actual and projected compensation as well as internal pay equity and other decisions regarding executive compensation.

 

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When making compensation decisions, the Compensation Committee also looks at the target total direct compensation of our Chief Executive Officer and the other named executive officers relative to that provided to similarly-situated executives based on the market data provided by FW Cook. The Compensation Committee believes, however, that a benchmark should be a point of reference for measurement, but not the determinative factor for our executives’ target compensation. The purpose of the comparison is merely to supplement and not to supplant the analyses of internal pay equity, wealth accumulation potential and the individual performance of the executive officers that we consider when making compensation decisions. Because the comparative compensation information is just one of the several analytical tools that are used in setting executive compensation, the Compensation Committee has discretion in determining whether to use this information and/or the nature and extent of its use.

Base Salary

In general, base salary for each employee, including the named executive officers, is established based on the individual’s job responsibilities, performance and experience; the Company’s overall budget for merit increases; and the competitive environment. Each year, we survey the compensation practices of companies serving the semiconductor and other industries deemed relevant as well as general market pay practices for executives in the United States and in other countries in which we have significant employee populations in order to assess the competitiveness of the compensation we offer. In addition, for senior executives, including the named executive officers, the Compensation Committee evaluates base salary against corresponding compensation data from our peer group. In fiscal 2019, we continued to target base salary at the median of the peer group and survey reference points compiled by FW Cook.

As noted above, the Compensation Committee believes that our success is dependent on our ability to hire and retain high-caliber executives in critical functions, and the pursuit of this objective may require us to recruit individual executives who have significant compensation and retention packages in place with other employers. In order to attract such individuals to Entegris, we may be required to negotiate compensation packages that deviate from the general principle of targeting base pay at the market median. Similarly, we may determine to provide compensation outside of the normal cycle to individuals to address retention issues.

Short-Term Incentive Compensation

Entegris has for a number of years maintained a short-term variable incentive compensation program, the Entegris Incentive Plan (“EIP”), which generally provides for a potential cash award based upon the achievement of annual financial criteria and operating performance objectives in accordance with a sliding scale established by the Compensation Committee, with a fractional award for performance above the threshold level, a full award for target performance and a premium award of up to 200% of target for extraordinary performance. In addition to the financial criteria and operating performance objectives, awards under the EIP are conditioned on the Company achieving an operating profit. During 2019, the Chief Executive Officer was eligible to receive a target incentive compensation payment equal to 110% of his base salary, and the named executive officers listed in the “Summary Compensation Table” below other than the Chief Executive Officer continued to be eligible to receive target incentive compensation payments ranging from 60% to 75% of their base salaries. The EIP is administered by, and all awards are made at the discretion of, the Compensation Committee. The target incentive compensation payments to our named executive officers, as a percentage of base salary, approximated the median of target incentive compensation payments of similarly situated executives of our peer group companies.

Under this plan, with respect to 2019, an incentive pool is established based upon the level of the attainment of financial objectives established by the Compensation Committee. For 2019, the EIP awards were based on: (i) the achievement of adjusted EBITA (net income before interest income, interest expense, income tax expense, intangible amortization, acquisition and integration costs, acquired inventory step-up amortization, and restructuring costs but excluding acquisition operating income) as a percentage of revenue within a range established by the Compensation Committee (from a threshold of 14.5% of revenue to a maximum of 26.5% of

 

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revenue) with target performance established at 20.5%, weighted at 75% and providing for awards ranging from 0% of target for threshold or below threshold performance to a maximum of 200% of target for performance at the top of the range; and (ii) the achievement of critical business objectives (relating to growing revenue faster than our markets and quality-based operational excellence), weighted at 25% and providing for awards ranging from 0% for threshold or below threshold performance (depending on the particular objective) to 200% of target if all critical business objectives were achieved at the maximum level specified. For 2019, the Compensation Committee approved an EIP payout of 106% of target, based on achievement of adjusted EBITA at 22.0% of revenue (125.8% of target (before any weighting)) and achievement of critical business objectives at 120% of target (before any weighting), then adjusted pursuant to the discretion of the Compensation Committee. One named executive officer’s participation in the EIP was based on divisional performance, where the executive’s payout was modified by the relative performance of the executive’s division compared to the performance of the other divisions.

The EIP awards for the named executive officers for fiscal 2019, 2018 and 2017 are reflected in the column entitled “Non-Equity Incentive Plan Compensation” in the “Summary Compensation Table” and the 2019 EIP award is also reflected in the “Fiscal Year 2019 Grants of Plan Based Awards” table below.

Long-Term Incentive Compensation

During 2019, executives and certain key employees were eligible to receive equity grants and awards under the Entegris 2010 Stock Plan, as amended, which is administered by the Compensation Committee. Restricted stock unit awards, stock option awards and performance share unit awards, as described below, were the three equity vehicles used by Entegris for long-term incentive awards to executive officers during 2019. The 2019 long-term incentive awards to the named executive officers are listed in the “Fiscal Year 2019 Grants of Plan Based Awards” table below under the columns entitled (in the case of performance share unit awards) “Estimated Future Payouts Under Equity Incentive Plan Awards”, (in the case of restricted stock unit awards) “All Other Stock Awards: Number of Shares of Stock or Units” and (in the case of stock option awards) “All Other Option Awards: Number of Securities Underlying Options”.

The Compensation Committee believes that long-term incentive awards to executive officers, including the named executive officers, should be comprised of a mixture of restricted stock units, stock options and performance share units. Accordingly, for 2019 the Compensation Committee approved equity awards for executive officers comprised, as a percentage of the total annual grant value, of 40% restricted stock units, 30% stock options and 30% performance share units, which has been unchanged since 2015. The total annual grant value of long-term equity incentive awards granted to our named executive officers in 2019 approximated the market median. A description of the terms of each type of equity award and the reasons why the Compensation Committee believes each is an appropriate long-term incentive equity vehicle follows.

 

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Restricted Stock Units. Forty percent of the 2019 equity award to executive officers consisted of restricted stock units, with restrictions lapsing in four equal installments on February 19th of the first through the fourth years following the date of award. The award of restricted stock units is designed to enable the Company to retain executive officers and other key employees during turbulent economic times and in a competitive labor market. In addition, non-executive employees receiving equity awards in 2019 received restricted stock units, with the restrictions lapsing ratably over four years in accordance with the foregoing schedule.

 

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Stock Options. Thirty percent of the 2019 equity awards to executive officers consisted of stock options that vest in four equal installments on February 19th of the first through the fourth years following the date of grant and have a seven-year term. The Compensation Committee believes that the award of stock options is an effective mechanism to align the interests of our executive officers with those of Entegris stockholders, which is expected to lead to an increase in the long-term value of Entegris. This is because stock options only provide value to the awardee if the price of the Company’s stock appreciates, which creates a strong performance orientation, consistent with our pay-for-performance

 

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philosophy. All stock options granted in 2019 were granted with an exercise price equal to the fair market value of Entegris Common Stock on the date of grant.

 

•

Performance Share Units. Thirty percent of the 2019 equity awards to executive officers consisted of performance share units, which provide the opportunity to earn shares of the Company based on the Company’s TSR as compared with the TSR achieved by the companies that comprise the Philadelphia Semiconductor Index over a three-year period following the date of award. Early in 2019, each recipient of a performance share award received a target allocation of performance share units; the final number of shares which may be earned ranges from 0% to 150% of target. The number of shares actually earned at the end of the performance period is based on a pre-established payout curve, which provides for earnouts of 50%, 100% and 150% of target for performance at the 25th, 50th and 75th percentiles, respectively, with linear interpolation between such levels (no shares are earned for performance below the 25th percentile). Performance share awards are also subject to the following limitations: (i) if the Company’s absolute TSR is negative, then the maximum number of shares that may be earned is the target performance share allocation; and (ii) in no event may the value of shares earned on the vesting date exceed 300% of the initial grant date fair value of the target share allocation at award. Performance share units earned over the three-year performance period will be fully vested on the last day of the performance period and are required to be settled as soon as practicable following certification by the Compensation Committee of the number of shares earned. The Compensation Committee included performance share units as a component of the 2019 long-term incentive award for executive officers because the Compensation Committee believes that relative TSR is an important metric for our stockholders’ evaluation of the Company’s performance against the performance of other companies; the performance share units thus create an additional alignment with stockholder interests through an objective performance metric. In addition, based on the Compensation Committee’s review of peer company market data, it believes that TSR-based performance share units frequently represent a significant portion of equity incentives used by companies that compete with us in attracting, hiring, motivating and retaining executives. In February 2020, with respect to the performance share units awarded in 2017, which had terms generally similar to those of the 2019 awards described above, the Compensation Committee certified that Entegris’ TSR during the period was at the 96th percentile versus companies in the Philadelphia Semiconductor Index, resulting in the vesting of shares at 123% of target, which reflected the application of the 300% of target value cap described above. Had the value cap not applied, shares would have vested at the maximum level (150% of target).

Stock Ownership Guidelines

The Company maintains stock ownership guidelines for its executive officers, including the named executive officers, in order to assure the continuation of the close alignment of the interests of those executive officers who are elected by the Board of Directors with those of Entegris stockholders. This alignment is a critical objective of the long-term incentive compensation discussed above. The guidelines provide that the Chief Executive Officer should attain and maintain beneficial ownership of Entegris stock having a value equal to six times his annual base salary; Executive Vice Presidents should attain and maintain beneficial ownership of Entegris stock with a value equal to four times their respective annual base salaries, the Chief Financial Officer should attain and maintain beneficial ownership of Entegris stock with a value equal to three times his annual base salary, Senior Vice Presidents should attain and maintain beneficial ownership of Entegris stock with a value equal to two times their annual base salary and other executive officers should attain and maintain beneficial ownership of Entegris stock with a value equal to their annual base salary. Since Mr. Graves is both our Chief Financial Officer and an Executive Vice President, he is held to the higher ownership standard of four times base salary. For purposes of the stock ownership guidelines, beneficial ownership of Entegris stock includes direct holdings, indirect holdings by immediate family and 401(k) and employee stock ownership plans, restricted stock, restricted stock units and the net share value of in-the-money vested and unvested stock options. The guidelines also provide that executives should achieve this beneficial ownership of Entegris stock within five

 

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years of their appointment to these positions and thereafter maintain that level of ownership. As of February 1, 2020, all the named executive officers serving at the end of 2019 were in compliance with the stock ownership guidelines or were within the five-year compliance grace period.

Anti-Hedging Policy

During 2014, the Board of Directors adopted a policy against hedging, pledging and speculative transactions in the Company’s stock. This policy covers directors, Executive Officers, employees and consultants and prohibits directly or indirectly engaging in any hedging or monetization transactions with respect to the Company’s securities; pledging, hypothecating, or otherwise encumbering shares of the Company’s common stock or other equity securities as collateral for indebtedness, or engaging in short-term or speculative transactions in the Company’s securities, including short-term trading where the Company’s securities are sold within six months following the purchase (or vice versa) and short sales of the Company’s securities (i.e., the sale of a security that the seller does not own).

Clawback Policy

In December 2018, the Board of Directors adopted an incentive compensation clawback policy. The Compensation Committee determined that it may be appropriate to recoup or “claw back” certain annual cash and long-term equity incentive compensation in specified situations. The Company may recoup paid incentive compensation in the event of an accounting restatement resulting from material noncompliance with financial reporting requirements under the federal securities laws. The Compensation Committee may, in its discretion, seek to recoup the difference between the incentive compensation paid and the lower amount that would have been paid based upon accurate information or restated financial results. The Compensation Committee has flexibility to update the policy to be consistent with any subsequent SEC rules on this topic. In addition, the Company now includes a specific reference to this clawback right in its equity award agreements.

Tax Deductibility

The Company structures its compensation policies so that the compensation it pays is deductible by the Company for federal income tax purposes whenever it is reasonably possible to do so, while also meeting its compensation objectives, though recent changes to tax law, described below, make it more difficult to pay deductible compensation to certain individuals. In any event, certain non-deductible compensation may be paid, and the Board of Directors and the Compensation Committee reserve the authority to award non-deductible compensation to executives in appropriate circumstances or to modify compensation initially intended to be deductible if it determines that such modifications are consistent with the Company’s best interests.

At the time the Compensation Committee made its 2019 compensation decisions, Section 162(m) of the Internal Revenue Code placed a one million dollar limit on the amount of compensation that the Company could deduct for tax purposes for any year with respect to any executive who serves as the Chief Executive Officer or Chief Financial Officer of the Company at any time during the year, and any of the Company’s executive officers who were the three other most highly compensated executive officers for the year, as well as any employee who was in one of these positions in a prior year. Under the prior tax law, the one million dollar limit did not apply to performance-based compensation, as defined under Section 162(m). However, the performance-based compensation exception under Section 162(m) was repealed by tax reform legislation signed into law on December 22, 2017 for taxable years beginning after December 31, 2017, such that compensation paid to current and former named executive officers, including the Chief Executive Officer and Chief Financial Officer, as well as compensation paid to the current and former three other most highly paid compensated executive officers, in excess of one million dollars will not be deductible unless it qualifies for transition relief applicable to certain compensation arrangements in place as of November 2, 2017. The Compensation Committee will continue to focus on performance-based compensation, though certain of the requirements of Section 162(m) will no longer be relevant, and thus will not be taken into consideration when setting future compensation.

 

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Chief Executive Officer Compensation

The Compensation Committee evaluates the compensation package of the Chief Executive Officer of Entegris in accordance with the objectives and methodology described above. In evaluating the Chief Executive Officer’s target total direct compensation for 2019, the Compensation Committee also considered compensation levels of chief executive officers in the market pay analysis conducted by FW Cook, individual performance and Entegris’ recent financial performance.

In connection with Mr. Loy’s promotion to Chief Executive Officer in 2012, the Company entered into an Executive Employment Agreement with Mr. Loy employing him as President and Chief Executive Officer (the “CEO Agreement”). As of December 31, 2019, under the CEO Agreement, Mr. Loy receives a base salary of $875,000 per year (which reflects increases in each of 2019, 2018, 2016 and 2015) and variable compensation pursuant to the EIP at a target performance equal to 110% of base salary. Mr. Loy is eligible to participate in the Company’s Long-Term Incentive Program and to receive equity awards from time to time as determined by the Board of Directors. The CEO Agreement is subject to annual automatic renewal unless the Board sends notice of non-renewal sixty (60) days prior to expiration of the renewal term. In the event that Mr. Loy’s employment is terminated by the Board without cause as defined in the CEO Agreement (generally, conviction of or plea of no contest to certain felonies, an ongoing failure to perform his duties, gross negligence, dishonesty, willful malfeasance or gross misconduct in connection with his employment, or willful failure to follow lawful directives) or by Mr. Loy for “good reason” as defined in the CEO Agreement (generally, removal from office, material diminution of his duties, authority or compensation, material relocation, breach of the CEO Agreement by the Company, or failure to require a successor corporation to assume the CEO Agreement), or if the Company elects not to renew the CEO Agreement, then Mr. Loy is entitled to accrued but unpaid compensation; a severance benefit of salary continuation for a period of two (2) years following termination, which, assuming a termination date of December 31, 2019, would be $1,750,000; outplacement services of up to $15,000; the continuation of health and dental benefits for Mr. Loy and his immediate family for the entirety of such severance pay period, which, assuming a termination date of December 31, 2019, would have a value of $38,274, calculated in the same manner as column (d) in the table in “Potential Payments upon Termination or Change in Control” below; and all equity awards outstanding as of the date of termination will continue to vest in accordance with each award’s original vesting schedule and vested awards will continue to be exercisable during such severance period and for a period of 90 days thereafter, which, assuming a termination date of December 31, 2019, would have a value of $14,433,888 calculated in the same manner as columns (e) and (f) in the table in “Potential Payments upon Termination or Change in Control” below. In the event that Mr. Loy’s employment is terminated by reason of death or disability, then all unvested equity awards outstanding as of the date of such termination vest, the value of which, assuming a termination date of December 31, 2019, is shown in columns (e) and (f) in the table in “Potential Payments upon Termination or Change in Control” below, and Mr. Loy or his representative have a period of one year following termination to exercise vested stock options. In addition, the CEO Agreement imposes non-competition, non-solicitation and confidentiality covenants on Mr. Loy, which continue for the duration of the above-referenced severance period. As a condition to the continued receipt of benefits, Mr. Loy must, among other things, execute a release of claims against the Company, comply with his contractual obligations to the Company, cooperate with the Company in certain proceedings, not disparage the Company and return all Company property. In addition, as described under “Potential Payments Upon Termination or Change in Control” below, Mr. Loy has an agreement providing him with certain severance benefits in the event that his employment is terminated after a Change in Control of the Company.

 

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Benefits

We provide benefit programs to executive officers and to other employees. The following table generally identifies such benefit plans and identifies those U.S. employees who may be eligible to participate:

 

Benefit Plan		Executive Officers		Certain Managers		Full Time Employees
401(k) Plan		✓		✓		✓
Medical/Dental Plans		✓		✓		✓
Life and Disability Insurance1		✓		✓		✓
Employee Stock Purchase Plan		✓		✓		✓
Supplemental Executive Retirement Plan (SERP)		✓		✓		Not Offered
Deferred Compensation Plan		✓		✓		Not Offered
Change of Control Agreements		✓		Not Offered		Not Offered

 

(1)	All Entegris officers receive company-paid Long-Term Disability coverage that provides a monthly benefit of 60% of qualified salary to a maximum of $15,000 per month.

Personal Benefits

The Company does not offer the named executive officers perquisites other than the life and disability insurance described above and relocation expenses and allowances.

Retirement Plans

During 2019, Entegris offered retirement benefits to its U.S. employees through the tax-qualified Entegris, Inc. 401(k) Savings and Profit Sharing Plan (2017 Restatement), hereafter referred to as the 401(k) Plan, which generally provides for an employer match for employee contributions. Executive officers participated in the 401(k) Plan on the same terms as those available for other eligible employees in the U.S. The 401(k) Plan provides a long-term savings vehicle that allows for pre-tax and/or post-tax Roth contributions by employees and tax-deferred earnings. The Company made matching contributions to the 401(k) Plan equal to 100% of such employee contributions on the first 3% of eligible compensation and 50% of the next 2% of eligible compensation, not to exceed the annual IRS limit.

In connection with the 401(k) Plan we also maintain a Supplemental Executive Retirement Plan. Under this non-qualified retirement plan, certain senior executives, including the named executive officers, are allowed certain salary deferral benefits that would otherwise be lost by reason of restrictions imposed by the Internal Revenue Code limiting the amount of compensation which may be deferred under tax-qualified plans. Compensation that may be deferred into the non-qualified retirement plan include employee and matching employer contributions that are in excess of the maximum deferral amount allowed under the terms of the 401(k) Plan. Participant accounts are credited with an investment return equivalent to that provided by the investment vehicles elected by the participant, which may be allocated among the same investment funds as are offered with respect to the 401(k) Plan accounts.

The individual participant balances in the 401(k) Plan and the above non-qualified retirement plan reflect a combination of: (1) the annual amount contributed by the Company or by the employee to the 401(k) Plan and the non-qualified retirement plan and the amount of his or her cash compensation that the employee elects to defer; (2) the annual contributions and/or deferred amounts being invested at the direction the employee (the same investment choices are available to all participants); and (3) the continuing reinvestment of the investment returns until the accounts are paid out. This means that similarly situated employees, including the named executive officers, may have materially different account balances because of a combination of these factors. See the “Non-Qualified Deferred Compensation Table” below for more information on account balances and earnings under this non-qualified retirement plan for the named executive officers.

 

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2019 Summary Compensation Table

The following table summarizes the reportable compensation, in accordance with Item 402(c) of Regulation S-K under the Securities Act of 1933, for the named executive officers for the fiscal years ended December 31, 2019, 2018 and 2017. Because of the Company’s emphasis on performance-based compensation, the Company did not pay any non-incentive plan bonuses to its named executive officers in 2019 and, as a result, the sum of salary and non-incentive plan bonuses for the named executive officers for 2019 ranged from only 16% of total compensation (in the case of our Chief Executive Officer) to 35% of total compensation.

 

(a)		(b)				(c)				(d)				(e)				(f)				(g)				(h)				(i)
Name and Principal Position		Year				Salary ($)				Bonus ($)				Stock Awards(2) ($)				Option Awards(3) ($)				Non-Equity Incentive Plan Compensation(4) ($)				All Other Compensation(5) ($)				Total ($)
Bertrand Loy President & Chief Executive Officer			2019 2018 2017			$ $ $	867,789 844,808 832,000			$ $ $	—   —   —			$ $ $	2,388,380 1,854,896 1,715,027			$ $ $	1,023,595 795,094 734,958			$ $ $	1,020,250 1,186,600 1,086,592			$ $ $	126,035 70,789 67,203			$ $ $	5,426,049 4,752,187 4,435,780
Gregory B. Graves Executive Vice President & Chief Financial Officer			2019 2018 2017			$ $ $	464,231 442,789 425,000			$ $ $	—   —   —			$ $ $	840,013 699,968 636,272			$ $ $	359,974 300,027 272,727			$ $ $	373,650 461,025 416,288			$ $ $	55,756 34,363 30,898			$ $ $	2,093,624 1,938,172 1,781,185
Todd J. Edlund Executive Vice President and Chief Operating Officer			2019 2018 2017			$ $ $	484,904 457,116 450,000			$ $ $	—   —   —			$ $ $	840,013 664,936 497,552			$ $ $	359,974 285,062 213,444			$ $ $	393,525 471,270 440,775			$ $ $	55,146 35,916 32,715			$ $ $	2,133,562 1,914,300 1,634,486
Susan Rice(1) Senior Vice President, Human Resources			2019 2018 2017			$ $ $	370,673 360,000 102,462			$ $ $	—   —   —			$ $ $	367,478 319,834 649,930			$ $ $	157,495 137,151 —			$ $ $	238,500 295,056 200,172			$ $ $	35,496 20,653 —			$ $ $	1,169,642 1,132,694 952,564
Stuart Tison Senior Vice President and General Manager, Specialty Chemicals and Engineered Materials			2019			$	342,788			$	—			$	262,516			$	112,476			$	228,480			$	30,619			$	976,879

 

(1)	Ms. Rice joined the Company on September 5, 2017.

(2)

The amounts in column (e) reflect: (i) the grant date fair value computed in accordance with FASB ASC Topic 718 for awards of restricted stock units made pursuant to the Company’s long-term incentive program during each of the fiscal years ended December 31, 2019, 2018 and 2017 (for a discussion of the assumptions underlying these valuations, please see Note 13 to the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which accompanies this Proxy Statement); and (ii) the grant date fair value for performance share units awarded in 2019, 2018 and 2017, determined in accordance with FASB ASC Topic 718. Assuming the highest level of performance is achieved under the performance share units granted in 2019, the maximum possible value of the performance share units to the named executive officers on the date of grant, using the grant date fair value, is: (a) in the case of Mr. Loy – $1,535,375; (b) in the case of Mr. Graves – $540,092; (c) in the case of Mr. Edlund – $540,092; (d) in the case of Ms. Rice – $236,249; and (e) in the case of Mr. Tison – $168,797.

(3)

The amounts in column (f) consist of the grant date fair value, computed in accordance with FASB ASC Topic 718 with respect to stock option awards granted in 2019, 2018 and 2017. For a discussion of the assumptions underlying these valuations, please see Note 13 to the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which accompanies this Proxy Statement.

(4)	The amounts in column (g) were payable under the Entegris Incentive Plan with respect to the Company’s performance during the indicated fiscal year and were paid in February of the succeeding year.

(5)

The amounts in column (h) for 2019 represent: (a) employer matching contributions under the Entegris, Inc. 401(k) Savings and Profit Sharing Plan (2017 Restatement) of $11,200 to each of Mr. Loy, Mr. Graves, Mr. Edlund, Ms. Rice and Mr. Tison; (b) employer matching contributions to the Entegris, Inc. Supplemental Executive Retirement Plan for Key Salaried Employees as follows: Mr. Loy – $70,976; Mr. Graves – $26,215; Mr. Edlund – $27,461; Ms. Rice – $15,688 and Mr. Tison – $12,432; (c) the dollar value of group term life insurance premiums paid by the Company of $480 to each of Mr. Loy, Mr. Graves, Mr. Edlund, Ms. Rice and Mr. Tison; (d) the dollar value of dividends accrued during the year on unvested restricted stock unit awards and performance share awards as follows: Mr. Loy – $41,937; Mr. Graves – $15,335; Mr. Edlund – $14,279; Ms. Rice – $5,300 and Mr. Tison – $4,611 and (e) the dollar value of executive short term disability premiums paid by the Company as follows; Mr. Loy – $1,443; Mr. Graves – $2,525; Mr. Edlund – $1,726; Ms. Rice – $2,827 and Mr. Tison – $1,897.

 

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Fiscal Year 2019 Grants of Plan-Based Awards

During the fiscal year ended December 31, 2019, the following plan-based awards were granted to the named executive officers:

 

								Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)												Estimated Future Payouts Under Equity Incentive Plan Awards(#)(2)												All Other Stock Awards: Number of Shares of Stock or Units (#)(3)				All Other Option Awards: Number of Securities Underlying Options (#)(4)				Exercise or Base Price of Option Awards ($/Sh)				Grant Date Fair Value of Stock and Option Awards
Name		Award Type		Grant Date				Thresh- hold ($)				Target ($)				Maxi- mum ($)				Thresh- hold (#)				Target (#)				Maxi- mum (#)
(a)				(b)				(c)				(d)				(e)				(f)				(g)				(h)				(i)				(j)				(k)				(l)
Bertrand Loy		Entegris Incentive Plan						$	—			$	962,500			$	1,925,000				—				—				—				—				—			$	—			$	—
		Restricted Stock Units			2/5/2019			$	—			$	—			$	—				—				—				—				40,948				—			$	—			$	1,364,797
		Performance Share Units			2/5/2019			$	—			$	—			$	—				16,014				32,027				48,041				—				—			$	—			$	1,023,583
		Stock Options			2/5/2019			$	—			$	—			$	—				—				—				—				—				115,140			$	33.33			$	1,023,595
Gregory B. Graves		Entegris Incentive Plan			—			$	—			$	352,500			$	705,000				—				—				—				—				—			$	—			$	—
		Restricted Stock Units			2/5/2019			$	—			$	—			$	—				—				—				—				14,400				—			$	—			$	479,952
		Performance Share Units			2/5/2019			$	—			$	—			$	—				5,633				11,266				16,899								—			$	—			$	360,061
		Stock Options			2/5/2019			$	—			$	—			$	—				—				—				—				—				40,492			$	33.33			$	359,974
Todd J. Edlund		Entegris Incentive Plan			—			$	—			$	371,250			$	742,500				—				—				—				—				—			$	—			$	—
		Restricted Stock Units			2/5/2019			$	—			$	—			$	—				—				—				—				14,400				—			$	—			$	479,952
		Performance Share Units			2/5/2019			$	—			$	—			$	—				5,633				11,266				16,899				—				—			$	—			$	360,061
		Stock Options			2/5/2019			$	—			$	—			$	—				—				—				—				—				40,492			$	33.33			$	359,974
Susan Rice		Entegris Incentive Plan			—			$	—			$	225,000			$	450,000				—				—				—				—				—			$	—			$	—
		Restricted Stock Units			2/5/2019			$	—			$	—			$	—				—				—				—				6,300				—			$	—			$	209,979
		Performance Share Units			2/5/2019			$	—			$	—			$	—				2,464				4,928				7,392				—				—			$	—			$	157,499
		Stock Options			2/5/2019			$	—			$	—			$	—				—				—				—				—				17,716			$	33.33			$	157,495
Stuart Tison		Entegris Incentive Plan			—			$	—			$	210,000			$	420,000				—				—				—				—				—			$	—			$	—
		Restricted Stock Units			2/5/2019			$	—			$	—			$	—				—				—				—				4,500				—			$	—			$	149,985
		Performance Share Units			2/5/2019			$	—			$	—			$	—				1,761				3,521				5,282				—				—			$	—			$	112,531
		Stock Options			2/5/2019			$	—			$	—			$	—				—				—				—				—				12,652			$	33.33			$	112,476

 

(1)	Awards under the Entegris Incentive Plan. See “Compensation Discussion and Analysis – Short-Term Incentive Compensation” above.

(2)

These stock awards are performance share units which provide the opportunity to earn shares of the Company based on the Company’s TSR as compared with the TSR achieved by the companies that comprise the Philadelphia Semiconductor Index over the three-year period following the date of award. See “Compensation Discussion and Analysis – Long-Term Incentive Compensation” above. The indicated grant date fair value of these stock awards at target is calculated in accordance with FASB ASC Topic 718, excluding estimated forfeitures. Performance share units include dividend equivalent rights under which amounts equivalent to any ordinary cash dividends declared by the Company during the vesting period will accrue and will become payable under the same vesting conditions and settlement terms as the underlying shares.

 

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(3)

These stock awards are grants of restricted stock units. The restricted stock units granted on February 5, 2019 vest ratably over four years on February 19th of 2020, 2021, 2022 and 2023. The indicated grant date fair value of these stock awards is calculated in accordance with FASB ASC Topic 718, excluding estimated forfeitures. Restricted stock units include dividend equivalent rights under which amounts equivalent to any ordinary cash dividends declared by the Company during the vesting period will accrue and will become payable under the same vesting conditions and settlement terms as the underlying shares.

(4)

The indicated awards are stock option grants with an exercise price equal to the closing price on the Nasdaq of our stock on the indicated date of grant and that vest ratably over four years on each February 19th of 2020, 2021, 2022 and 2023. The indicated grant date fair value of these stock awards is calculated in accordance with FASB ASC Topic 718, excluding estimated forfeitures.

Employment Agreements. The Company has entered into an Executive Change in Control Termination Agreement with each named executive officer, as described under “Potential Payments upon Termination or Change in Control” below. Please see that discussion for a detailed description of the terms of these agreements. In addition, as described under “Chief Executive Officer Compensation” above, in 2012, Mr. Loy entered into an Executive Employment Agreement with the Company. Please see that discussion for a detailed description of the terms of Mr. Loy’s agreement.

Mr. Graves entered into a severance protection agreement with the Company in 2011, which was amended in 2016. Under the terms of this severance protection agreement, in the event of the termination of Mr. Graves’ employment by Entegris or a successor other than for cause (defined in a manner similar to the definition in the CEO Agreement), or if he terminates his own employment for “good reason” (defined in a manner similar to the definition in the CEO Agreement) he is entitled to severance equal to two times base pay as salary continuation, which, assuming a termination date of December 31, 2019, would be $940,000, outplacement services of $15,000, the continuation of his health benefits for two years, which, assuming a termination date of December 31, 2019, would have a value of $29,741, calculated in the same manner as column (d) in the table in “Potential Payments upon Termination or Change in Control” below, and the vesting of all outstanding unvested equity awards, the value of which, assuming a termination date of December 31, 2019, is shown in columns (e) and (f) in the table in “Potential Payments upon Termination or Change in Control” below. This agreement also imposes non-competition, non-solicitation and confidentiality covenants on Mr. Graves for the duration of the severance period. As a condition to the continued receipt of benefits, Mr. Graves must, among other things, execute a release of claims against the Company. The severance protection agreement also provides for vesting of unvested equity awards (but not before 12 months following the relevant date of grant) and an extended exercise period in the event of Mr. Graves’ retirement at age 57 with ten years of service. All options that vest before or upon retirement will be exercisable for four years or, if earlier, until expiration.

 

27

Outstanding Equity Awards at 2019 Fiscal Year End

The following table lists the number of securities underlying stock options, restricted stock units and performance share awards outstanding as of December 31, 2019; there were no other awards designated in units or other rights outstanding as of the end of the fiscal year:

 

		Option Awards																				Stock Awards
(a)		(b)				(c)				(d)				(e)				(f)				(g)				(h)				(i)				(j)
Name		Number of Securities Underlying Unexercised Options (#) Exercisable				Number of Securities Underlying Unexercised Options (#) Unexercisable(1)				Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options				Option Exercise Price ($)				Option Expiration Date				Number of Shares of Stock That Have Not Vested(2) (#)				Market Value of Shares of Stock That Have Not Vested(3) ($)				Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested(4) (#)				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares That Have Not Vested(3) ($)
Bertrand Loy			170,988				—				—			$	13.49				2/19/2022				—			$	—				—			$	—
			193,446				64,482				—			$	12.20				2/19/2023				—			$	—				—			$	—
			69,996				69,996				—			$	21.60				2/19/2024				—			$	—				—			$	—
			27,044				81,132				—			$	31.10				2/19/2025				—			$	—				—			$	—
			—				115,140				—			$	33.33				2/19/2026				—			$	—				—			$	—
			—				—				—			$	—				—				—			$	—				44,829			$	2,245,480
			—				—				—			$	—				—				—			$	—				40,621			$	2,034,710
			—				—				—			$	—				—				—			$	—				48,041			$	2,406,349
			—				—				—			$	—				—				20,080			$	1,005,807				—			$	—
			—				—				—			$	—				—				22,686			$	1,136,342				—			$	—
			—				—				—			$	—				—				25,560			$	1,280,300				—			$	—
			—				—				—			$	—				—				40,948			$	2,051,085				—			$	—
Gregory B. Graves			—				22,029				—			$	12.20				2/19/2023				—			$	—				—			$	—
			—				25,974				—			$	21.60				2/19/2024				—			$	—				—			$	—
			10,205				30,615				—			$	31.10				2/19/2025				—			$	—				—			$	—
			—				40,492				—			$	33.33				2/19/2026				—			$	—				—			$	—
			—				—				—			$	—				—				—			$	—				16,633			$	833,130
			—				—				—			$	—				—				—			$	—				15,330			$	767,864
			—				—				—			$	—				—				—			$	—				16,899			$	846,471
			—				—				—			$	—				—				6,860			$	343,617				—			$	—
			—				—				—			$	—				—				8,416			$	421,557				—			$	—
			—				—				—			$	—				—				9,645			$	483,118				—			$	—
			—				—				—			$	—				—				14,400			$	721,296				—			$	—
Todd J. Edlund			9,739				—				—			$	13.49				2/19/2022				—			$	—				—			$	—
			46,266				15,422				—			$	12.20				2/19/2023				—			$	—				—			$	—
			20,328				20,328				—			$	21.60				2/19/2024				—			$	—				—			$	—
			9,696				29,088				—			$	31.10				2/19/2025				—			$	—				—			$	—
			—				40,492				—			$	33.33				2/19/2026				—			$	—				—			$	—
			—				—				—			$	—				—				—			$	—				13,009			$	651,642
			—				—				—			$	—				—				—			$	—				14,563			$	729,463
			—				—				—			$	—				—				—			$	—				16,899			$	846,471
			—				—				—			$	—				—				4,803			$	240,582				—			$	—
			—				—				—			$	—				—				1,875			$	93,919				—			$	—
			—				—				—			$	—				—				6,580			$	329,592				—			$	—
			—				—				—			$	—				—				9,162			$	458,925				—			$	—
			—				—				—			$	—				—				14,400			$	721,296				—			$	—
Susan Rice			4,665				13,995				—			$	31.10				2/19/2025				—			$	—				—			$	—
			—				17,716				—			$	33.33				2/19/2026				—			$	—				—			$	—
			—				—				—			$	—				—				—			$	—				7,005			$	350,865
			—				—				—			$	—				—				—			$	—				7,392			$	370,265
			—				—				—			$	—				—				12,620			$	632,136				—			$	—
			—				—				—			$	—				—				4,407			$	220,747				—			$	—
			—				—				—			$	—				—				6,300			$	315,567				—			$	—
Stuart Tison			6,654				6,654				—			$	21.60				2/19/2024				—			$	—				—			$	—
			3,217				9,651				—			$	31.10				2/19/2025				—			$	—				—			$	—
			—				12,652				—			$	33.33				2/19/2026				—			$	—				—			$	—
			—				—				—			$	—				—				—			$	—				4,263			$	213,554
			—				—				—			$	—				—				—			$	—				4,830			$	241,910
			—				—				—			$	—				—				—			$	—				5,282			$	264,550
			—				—				—			$	—				—				2,049			$	102,634				—			$	—
			—				—				—			$	—				—				2,053			$	102,635				—			$	—
			—				—				—			$	—				—				2,158			$	108,094				—			$	—
			—				—				—			$	—				—				3,036			$	152,073				—			$	—
			—				—				—			$	—				—				4,500			$	225,405				—			$	—

 

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(1)

These options vest as follows in the order in which the options are listed in the above table: Mr. Loy – 64,482 shares on February 19, 2020; 34,998 shares on February 19th of each of 2020 and 2021; 27,044 shares on February 19th of each of 2020, 2021 and 2022 and 28,785 shares on February 19th of each of 2020, 2021, 2022 and 2023; Mr. Graves – 22,029 shares on February 19, 2020; 12,987 shares on February 19th of each of 2020 and 2021; 10,205 shares on February 19th of each of 2020, 2021 and 2022; and 10,123 shares on February 19th of each of 2020, 2021, 2022 and 2023; Mr. Edlund – 15,422 shares on February 19, 2020; 10,164 shares on February 19th of each of 2020 and 2021; 9,696 shares on February 19th of each of 2020, 2021; and 2022; and 10,123 shares on February 19th of each of 2020, 2021, 2022 and 2023; Ms. Rice – 4,665 shares on February 19th of each of 2020, 2021 and 2022; and 4,429 shares on February 19th of each of 2020, 2021, 2022 and 2023; and Mr. Tison – 3,327 shares on February 19th of each of 2020 and 2021; 3,217 shares on February 19th of each of 2020, 2021 and 2022; and 3,163 shares on February 19th of each of 2020, 2021, 2022 and 2023.

(2)

Restrictions on the indicated restricted stock units lapse as follows in the order in which the awards are listed in the above table: Mr. Loy – 20,080 shares on February 19, 2020; 11,343 shares on February 19th of each of 2020 and 2021; 8,520 shares on February 19th of each of 2020, 2021 and 2022; and 10,237 shares on February 19th of each of 2020, 2021, 2022 and 2023; Mr. Graves – 6,860 shares on February 19, 2020; 4,208 shares on February 19th of each of 2020 and 2021; 3,215 shares on February 19th of each of 2020, 2021 and 2022; and 3,600 shares on February 19th of each of 2020, 2021, 2022 and 2023; Mr. Edlund – 4,803 shares on February 19, 2020; 1,875 shares on August 15, 2020; 3,290 shares on February 19th of each of 2020 and 2021; 3,054 shares on February 19th of each of 2020, 2021 and 2022; and 3,600 shares on February 19th of each of 2020, 2021, 2022 and 2023; Ms. Rice – 6,310 shares on November 15th of each of 2020 and 2021; 1,469 shares on February 19th of each of 2020, 2021 and 2022; and 1,575 shares on February 19th of each of 2020, 2021, 2022 and 2023; and Mr. Tison – 2,049 shares on February 19, 2020; 2,053 on August 15, 2020; 1,079 shares on February 19th of each of 2020 and 2021; 1,012 shares on February 19th of each of 2020, 2021 and 2022; and 1,125 shares on February 19th of each of 2020, 2021, 2022 and 2023.

(3)

The indicated value is calculated using the closing price for the Company’s common stock on the last trading day of 2019 ($50.09). The indicated value includes any dividend equivalents (in the case of performance share units granted in 2017 and 2018, on a dividends-reinvested basis) accrued through December 31, 2019 with respect to the unvested shares. Shares issuable in respect of reinvested dividend equivalents are included in the number of unearned, unvested shares in column (i) and are valued at the per share price indicated above. The indicated value includes aggregate dividend equivalents payable in cash upon vesting of the underlying awards for performance share units granted in 2019 and all restricted stock units in the amount of: (a) in the case of Mr. Loy – $29,820; (b) in the case of Mr. Graves – $10,822; (c) in the case of Mr. Edlund – $10,576; (d) in the case of Ms. Rice – $4,830; and (e) in the case of Mr. Tison – $3,393.

(4)

These performance share units provide the opportunity to earn shares of the Company on a scale of from 0 to 150% of the number of units originally granted, plus any accrued dividends, based on the Company’s TSR as compared with the TSR achieved by the companies that comprise the Philadelphia Semiconductor Index over a three-year performance period and are fully vested when earned, subject to a cap equal to 300% of the value of the original grant. The shares indicated are based on the Company achieving maximum performance goals. See “Compensation Discussion and Analysis – Long-Term Incentive Compensation” above. For performance share units granted in 2017 and 2018, the number of shares includes shares issuable in connection with the reinvestment of dividend equivalents accrued through December 31, 2019 with respect to unvested shares.

Fiscal Year 2019 Option Exercises and Stock Vested

The following table provides information regarding stock options exercised by, and the number of shares of stock vested with respect to, the named executive officers during the fiscal year ended December 31, 2019:

 

		Option Awards								Stock Awards
Name		Number of Shares Acquired on Exercise (#)				Value Realized on Exercise(1) ($)				Number of Shares Acquired on Vesting(2) (#)				Value Realized on Vesting(3) ($)
(a)		(b)				(c)				(d)				(e)
Bertrand Loy			—			$	—				117,709			$	4,212,189
Gregory B. Graves			63,141			$	1,407,424				41,053			$	1,467,961
Todd J. Edlund			29,377			$	632,804				31,449			$	1,134,111
Susan Rice			—			$	—				7,779			$	363,547
Stuart Tison			—			$	—				7,953			$	287,919

 

(1)	Value realized upon exercise of option awards is based on the difference between the exercise price and the closing value of the Company’s stock on the date of exercise (or sale price if the shares were sold on the date of exercise).

(2)	Represents restricted stock units and performance share units that vested during the fiscal year.

(3)	Value realized on vesting of stock awards is based on the closing value of the Company’s common stock on the date of vesting plus the dollar value of dividend equivalents payable upon vesting of the underlying award.

 

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Nonqualified Deferred Compensation

Pursuant to the Company’s Supplemental Executive Retirement Plan, certain executives, including the named executive officers, may defer eligible compensation in excess of the maximum deferral amount allowed under the terms of the Company’s 401(k) Plan. Deferral elections are made by eligible executives each year for amounts to be contributed in the following year. Compensation that may be deferred into this non-qualified retirement plan includes employee and matching employer contributions that are in excess of the maximum deferral amount allowed under the terms of the 401(k) Plan. Payment of distributions to the participant under this non-qualified retirement plan may be made only upon the retirement, death, disability or other termination of employment with the Company and shall, generally, be paid in a lump sum six months following the date of such termination. No distributions from this non-qualified retirement plan may be made to a participant while still employed by Entegris. Participants are 100% vested with respect to participant and employer matching contributions. Participant accounts under this non-qualified retirement plan are credited with an investment return equivalent to that provided by the investment vehicles elected by the participant, which may be allocated among the same investment funds as are offered with respect to the 401(k) Plan accounts.

Fiscal Year 2019 Nonqualified Deferred Compensation Table

The following table lists the deferred contributions by the named executive officers, by the Company for the benefit of the named executive officers and the aggregate earnings, withdrawals and account balances for the named executive officers during the fiscal year ended December 31, 2019 under the Entegris, Inc. Supplemental Executive Retirement Plan (SERP):

 

Name		Executive Contributions in Last FY ($)				Registrant Contributions in Last FY(1) ($)				Aggregate Earnings in Last FY(2) ($)				Aggregate Withdrawals/ Distributions ($)				Aggregate Balance at Last FYE(3) ($)
(a)		(b)				(c)				(d)				(e)				(f)
Bertrand Loy		$	60,745			$	70,976			$	395,014			$	—			$	2,012,503
Gregory B. Graves		$	18,569			$	26,215			$	139,116			$	—			$	889,524
Todd J. Edlund		$	33,943			$	27,461			$	26,971			$	—			$	339,488
Susan Rice		$	7,413			$	15,688			$	2,186			$	—			$	34,940
Stuart Tison		$	—			$	12,432			$	15,374			$	—			$	94,569

 

(1)

The employer matching contribution reflected in column (c) is established by an offset formula which includes contributions to the employee’s 401(k) account in the calculation of the employer matching contribution under this non-qualified retirement plan. The amounts listed for each of the named executive officers in column (c) is detailed with respect to each named executive officer in footnote 5 to the Summary Compensation Table above in clause (b) of that footnote.

(2)

The amounts listed for each of the named executive officers in column (d) is determined by the size of the non-qualified retirement plan account of the respective named executive officers and by their respective investment elections under the SERP from among the same investment funds that are offered under the Company’s 401(k) plan.

(3)

The amounts in column (f) represent the fully vested balance as of December 31, 2019 and include amounts deferred in previous years. These amounts include contributions reported in the summary compensation table for years 2018 and 2017 as follows: Mr. Loy, $59,789 and $56,403, respectively; Mr. Graves, $23,363 and $20,098, respectively; Mr. Edlund, $24,916 and $21,915, respectively; Ms. Rice, $9,653 and $0, respectively; and Mr. Tison, $11,289 and $0, respectively.

The Company also maintains a Deferred Compensation Plan that permits eligible participants, subject to certain restrictions, to defer a specified portion of his or her base salary, incentive compensation and stock compensation for a fixed period specified by the eligible participant at the time the deferral election is made. Eligible participants are those employees who qualify as highly compensated within the meaning of ERISA and

 

30

who have been designated as eligible by the Management Development & Compensation Committee of the Company’s Board of Directors. Amounts deferred under this plan receive notional earnings based on the investment performance of investments selected by the eligible participant from among the same selection of investment funds as are offered under the Company’s 401(k) plan. During 2019, none of the named executive officers participated in this plan.

Potential Payments Upon Termination or Change In Control

There are currently in effect Executive Change in Control Termination Agreements with Mr. Loy, Mr. Graves, Mr. Edlund, Ms. Rice and Mr. Tison to provide them with certain severance benefits in the event of a “Change of Control” of Entegris. In general, a Change in Control shall be deemed to have occurred when (1) any person becomes the beneficial owner, directly or indirectly, of 30% or more of the Company’s then outstanding Common Stock, (2) if those members who constituted a majority of the Board of Directors cease to be so or (3) if an agreement for the merger or other acquisition of the Company is consummated. If during the two-year period following a Change in Control the executive’s employment is terminated by the Company without cause (as defined in the agreement – generally gross dereliction of duty, fraud, embezzlement or theft, material breach of fiduciary duty or certain non-competition, non-solicitation and confidentiality obligations, or conviction of a felony or crime involving moral turpitude) or if the executive terminates employment for “good reason” (as defined in the agreement – generally certain adverse changes to the terms or conditions of the executive’s employment), a so-called “double trigger”, then the executive will become immediately entitled to:

 

(i)	payment of all unpaid compensation and expenses earned or incurred prior to the date of termination;

 

(ii)

a lump-sum severance payment equal to the sum of two times (or, in the case of Mr. Loy, three times) the executive’s base salary plus two times (or, in the case of Mr. Loy, three times) the greater of the highest annual bonus during the three years prior to termination or target bonus for the year of termination;

 

(iii)

medical, dental and life insurance benefits for executive and executive’s family members for a period of two years (or, in the case of Mr. Loy, three years) following the date of termination;

 

(iv)	immediate vesting of all unvested equity awards, and, in the case of stock options, the ability to exercise stock options for a period of up to one year following such termination (or, if earlier, until the expiration date of the options); and

 

(v)	up to $15,000 of outplacement services.

Estimate of Change in Control Severance Benefits. The following table estimates potential payments following a change in control if our named executive officers were terminated by us without “cause” or if the named executive officer terminated “for good reason” on December 31, 2019:

 

Name		Salary ($)				Cash Variable Compensation Payment(1)				Insurance and other Benefits(2)				Net Value of Acceleration of Vesting of In-The Money Options (3)				Aggregate Value of Acceleration of Vesting of Restricted Stock, Restricted Stock Units and Performance Share Units(4)				Total
(a)		(b)				(c)				(d)				(e)				(f)				(g)
Bertrand Loy		$	2,625,000			$	3,559,800			$	72,411			$	7,907,852			$	9,214,787			$	23,379,850
Gregory B. Graves		$	940,000			$	922,050			$	44,741			$	2,834,703			$	2,937,899			$	7,679,393
Todd J. Edlund		$	990,000			$	942,540			$	44,741			$	2,394,511			$	2,801,742			$	7,173,534
Susan Rice		$	750,000			$	590,112			$	40,450			$	562,685			$	924,171			$	2,867,418
Stuart Tison		$	700,000			$	495,300			$	51,637			$	584,892			$	1,031,300			$	2,863,129

 

31

 

(1)	Amounts for Mr. Loy, Mr. Graves, Mr. Edlund, Ms. Rice and Mr. Tison are based upon the variable compensation paid in 2018, which was the highest variable compensation paid to each such named executive officer for the three fiscal years immediately preceding 2019.

(2)

Reflects the premiums to be paid by the Company to provide the named executive officer with health and dental benefits substantially similar to those they were receiving as of December 31, 2019 (with an assumed 5% premium increase per year on medical insurance), the premiums to be paid by the Company to provide the named executive officer with continuation of group term life insurance and the cost paid by the Company for the outplacement allowance referred to above.

(3)

Reflects the net value of in-the-money unvested stock options based on the closing price of the Company’s stock on the last trading day of 2019. The net value of in-the-money vested and unvested stock options based on the closing price of the Company’s stock on the last trading day of 2019, is: (a) in the case of Mr. Loy – $24,003,433; (b) in the case of Mr. Graves – $3,028,496; (c) in the case of Mr. Edlund – $5,267,249; (d) in the case of Ms. Rice – $651,274; and (e) in the case of Mr. Tison – $835,556.

(4)

Reflects the value of restricted stock units and performance share units, which are calculated assuming the Company achieves maximum performance (150% of target performance), prorated as of December 31, 2019, subject to valuation caps and valued based on the closing price of the Company’s stock on the last trading day of 2019 ($50.09), plus accrued dividends. The value of accrued dividends is: (a) in the case of Mr. Loy – $29,820; (b) in the case of Mr. Graves – $10,822; (c) in the case of Mr. Edlund – $10,576; (d) in the case of Ms. Rice – $4,830; and (e) in the case of Mr. Tison – $3,393.

The change in control agreements for Mr. Graves and Mr. Edlund also provide for a tax “gross-up” payment to the executive of an amount sufficient to satisfy, on an after-tax basis, any excise tax payable by such executive under Section 4999 of the Internal Revenue Code of 1986 as a result of any payments or benefits received by him. We estimate that, based on the value of the payments and acceleration of vesting that would occur upon an assumed change in control and simultaneous termination of employment on December 31, 2019, calculated in accordance with IRS guidance, neither Mr. Graves nor Mr. Edlund would be subject to any excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended, and therefore would not be entitled to receive any gross-up payment in connection with such change-in-control benefits. The calculation of any applicable excise tax is complex and depends on many variables, including the executive’s historical compensation prior to termination and the value of termination benefits, which depends in part on the value of our common stock on the date of termination. Accordingly, this estimate of a gross-up payment may not apply to termination of employment on any subsequent date, and the amount of any actual gross-up payment could be materially greater than such estimate. Pursuant to the Company’s policy, change in control agreements entered into after 2013 do not contain any change in control tax gross-up provisions.

The change in control agreements also include a confidentiality covenant and two-year post-termination non-competition and non-solicitation covenants by each named executive officer (or, in the case of Mr. Loy, three years).

Severance Benefits in Connection with Termination. As describe above in “Chief Executive Officer Compensation” and “Employment Agreements”, Mr. Loy and Mr. Graves have certain agreements with the Company that provide for severance in the event they are terminated by us without “cause” or if they are terminated “for good reason” or, in the case of Mr. Loy, if the Company does not renew the CEO Agreement. Please see those discussions for a detailed description of the terms of those agreements and a description of the estimated payments and benefits to which they may be entitled.

Treatment of Equity Awards in Connection with a Change in Control or Certain Other Terminations. With respect to performance share units, if the awards held by executives are assumed or continued in connection with a change in control, performance would be determined based on actual performance through the consummation of a change in control and the awards would continue to vest following such change in control based on continued service through the end of the performance period, except that if the executive is terminated without

 

32

cause or resigns with good reason during the 24 months following the change in control, the award would generally vest “double-trigger” upon such termination. If performance share units are not assumed or continued in connection with a change in control, awards held by executives would generally vest upon the consummation of the change in control, with performance determined based on actual performance through the consummation of the change in control. If, prior to a change in control, an executive dies, becomes permanently disabled or retires at age 65 with ten consecutive years of employment, the executive would generally be entitled to receive the performance shares to the extent earned at the end of the three-year performance period (or, if earlier, a change in control), but the amount payable would be prorated for the executive’s period of employment.

With respect to restricted stock units and stock options, if the awards are assumed or continued in connection with a change in control, the awards would generally vest “double-trigger” upon the executive’s termination without cause, or upon the executive’s resignation for good reason within 24 months after the change in control, and any such options would be exercisable for 24 months after termination (or, if earlier, until expiration of the option). If such restricted stock units and stock options held by executives are not assumed or continued in connection with a change in control, the awards would generally vest upon the consummation of the change in control. In addition, in the event of a “covered transaction” (which is generally defined as (i) a consolidation or merger in which Entegris is not the surviving corporation or which results in the acquisition of all of Entegris’ common stock by a single person or entity or group of persons acting in concert, (ii) a sale or transfer of all or substantially all of Entegris’ assets, or (iii) a dissolution or liquidation of Entegris), outstanding restricted stock units and stock options would vest in full upon the consummation of the covered transaction. Further, if an executive retires with the consent of the administrator, restricted stock units would generally vest upon retirement, and options would remain exercisable for four years (or, if earlier, until expiration of the option) and would continue to vest during such period.

The value of acceleration of vesting for the named executive officers in the foregoing scenarios would generally be the same as the amounts set forth in columns (e) and (f) in the table in “Potential Payments upon Termination or Change in Control” above, assuming the occurrence of a change in control and termination of employment on December 31, 2019 or the death, permanent disability or retirement of the executive on that date (with shares valued based on the closing price of the Company’s stock on the last trading day of 2019 ($50.09)), except that performance share units vesting on a prorated basis upon retirement, assuming retirement with the consent of the plan administrator on December 31, 2019, would have the following values: (a) in the case of Mr. Loy – $17,122,639; (b) in the case of Mr. Graves – $5,772,602; (c) in the case of Mr. Edlund – $5,196,254; (d) in the case of Ms. Rice – $1,486,856; and (e) in the case of Mr. Tison – $1,616,193.

CEO Pay Ratio

In 2019, to determine the pay ratio required by Item 402(u) of Regulation S-K, the Company first identified the median employee using our global employee population as of December 31, 2019, which included all global full-time, part-time, temporary, and seasonal employees that were employed on that date. The Company used “gross wages paid” as the consistently applied compensation measure across its global employee population, measured from January 1 through December 31, 2019, to calculate the median employee compensation. The Company annualized the compensation for any full-time and part-time employees that it hired in 2019 and that were employed on December 31, 2019. The Company determined this median employee’s annual total compensation using the Summary Compensation Table methodology as detailed in Item 402(c)(2)(x) of Regulation S-K, and compared it to the total compensation of our CEO, as detailed in the Summary Compensation Table for 2019 to arrive at the pay ratio disclosed below. The Company’s median employee’s 2019 annual total compensation was approximately $54,902 and the Company’s CEO’s 2019 annual total compensation was $5,426,049. As a result, pursuant to Item 402(u) of Regulation S-K, the Company’s 2019 CEO to median employee pay ratio is approximately 99:1.

 

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Management Development & Compensation Committee Interlocks and Insider Participation

The current members of the Management Development & Compensation Committee of the Company’s Board of Directors are James F. Gentilcore, Chair, R. Nicholas Burns, James P. Lederer, and Azita Saleki-Gerhardt. No member of the Management Development & Compensation Committee was at any time during fiscal year 2019 an officer or employee of either the Company or of any subsidiary, or was at any time formerly an officer of the Company, nor has any member of such committee had any relationship with Entegris requiring disclosure under Item 404 of Regulation S-K under the Securities Act of 1933.

During fiscal 2019, no executive officer of the Company served as a director or member of the compensation committee (or other committee serving an equivalent function) of any other entity, one of whose executive officers served as a director of or member of the Management Development & Compensation Committee of the Company.

MANAGEMENT DEVELOPMENT & COMPENSATION COMMITTEE REPORT

The Management Development & Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis as required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Company’s Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

The information in this report of the Management Development & Compensation Committee shall not be deemed to be “soliciting material”, “filed” with the SEC or subject to the liabilities of Section 18 of the Exchange Act and is not incorporated by reference into any filings of the Company with the SEC, irrespective of any general incorporation language contained in any such filing.

James F. Gentilcore, Chair

R. Nicholas Burns

James P. Lederer

Azita Saleki-Gerhardt

OWNERSHIP OF ENTEGRIS COMMON STOCK

Management Holdings of Entegris Common Stock

Except as noted therein, the following table sets forth information concerning the number of shares of Entegris Common Stock, $0.01 par value, beneficially owned, directly or indirectly, by each director or nominee for director of the Company; each of the named executive officers; and all directors and executive officers of the Company as a group as of March 6, 2020 or subject to acquisition by any of them within sixty days following that date. This information is based on information provided by each director, nominee for director and executive officer, and the listing of such securities is not necessarily an acknowledgment of beneficial ownership. Unless

 

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otherwise indicated by footnote, the director, nominee or executive officer held sole voting and investment power over such shares.

 

Name of Beneficial Owner		Amount And Nature of Shares Beneficially Owned(1)(2)				% of Class(3)
Michael A. Bradley			57,462				*
R. Nicholas Burns			43,361				*
James F. Gentilcore			26,157	(4)			*
James P. Lederer			22,527				*
Paul L.H. Olson			36,173				*
Azita Saleki-Gerhardt			11,556				*
Brian F. Sullivan			103,010				*
Bertrand Loy			1,209,968	(5)			*
Gregory B. Graves			60,005				*
Todd Edlund			224,391				*
Susan Rice			34,737				*
Stuart Tison			74,099				*
All Directors and Executive Officers as a Group (18) persons (including those listed above):			2,228,035	(6)			1.7	%

 

*	None of these officers or directors owns as much as 1.0% of Entegris common stock.

(1)

Included in the shares listed as beneficially owned are the following number of shares subject to acquisition through the exercise of stock options under Entegris stock option plans which the following named executive officers have the right to acquire within 60 days following March 6, 2020: Mr. Loy – 674,353 shares; Mr. Graves – 50,779 shares; Mr. Edlund – 95,675 shares; Ms. Rice 22,617 shares and Mr. Tison – 16,033 shares.

(2)

Includes restricted stock units that vest within 60 days following March 6, 2020 as follows: Mr. Bradley – 3,569 shares; Mr. Burns – 3,569 shares; Mr. Gentilcore – 3,569 shares; Mr. Lederer – 3,569 shares; Mr. Olson – 3,569 shares; Ms. Saleki-Gerhardt – 3,569 shares; and Mr. Sullivan – 3,569 shares.

(3)	Calculated based on 135,009,044 issued and outstanding shares of Entegris common stock as of March 6, 2020.

(4)	Includes 22,588 shares indirectly owned through a family trust.

(5)	Includes 91,000 shares indirectly owned through a family trust.

(6)	Includes 1,124,429.00 shares subject to acquisition by executive officers and directors within 60 days following March 6, 2020 including those described in footnotes 1 and 2 above.

 

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Other Principal Holders of Entegris Common Stock

Based on reports filed with the SEC through March 17, 2020, the following persons are believed by the Company to be the beneficial owners of more than 5% of Entegris common stock, the Company’s only class of voting securities, as of December 31, 2019:

 

Name and address of beneficial owner		Amount and nature of beneficial ownership				Percent of class(1)
T. Rowe Price Associates, Inc.			18,119,933	(2)			13.4	%
100 E. Pratt Street
Baltimore, MD 21202
The Vanguard Group			12,290,961	(3)			9.1	%
100 Vanguard Blvd.
Malvern, PA 19355
BlackRock, Inc.			8,676,654	(4)			6.4	%
55 East 52nd Street
New York, NY 10055
GMT Capital Corp.			8,074,480	(5)			6.0	%
2100 RiverEdge Parkway, Suite 840
Atlanta, GA 30328

 

(1)	Calculated based on 135,009,044 outstanding shares of Entegris common stock as of March 6, 2020.

(2)

Based on information set forth in the Schedule 13G/A filed with the SEC on February 14, 2020 by T. Rowe Price Associates, Inc., a registered investment advisor (“T. Rowe Price”), relating to Entegris common stock. T. Rowe Price reported having sole dispositive power with respect to 18,119,933 of such shares, shared dispositive power with respect to no shares, sole voting power with respect to 5,139,170 of such shares and shared voting power with respect to no shares.

(3)

Based on information set forth in the Schedule 13G/A filed with the SEC on February 12, 2020, by The Vanguard Group, a registered investment advisor (“Vanguard”), relating to Entegris common stock. Vanguard reported having sole dispositive power with respect to 12,210,149 of such shares, shared dispositive power with respect to 80,812 of such shares, sole voting power with respect to 77,795 of such shares and shared voting power with respect to 20,323 of such shares.

(4)

Based on information set forth in the Schedule 13G filed with the SEC on February 7, 2020, by BlackRock, Inc., a holding company (“BlackRock”), relating to Entegris common stock. BlackRock reported having sole dispositive power with respect to 8,676,654 of such shares, shared dispositive power with respect to no shares, sole voting power with respect to 8,123,564 of such shares and shared voting power with respect to no shares.

(5)

Based on information set forth in the Schedule 13G/A filed with the SEC on February 13, 2019 by GMT Capital Corp., an investment advisor (“GMT Capital”), relating to Entegris common stock, as owned by: (i) Bay Resource Partners, L.P. (“Bay I”) – 1,265,810 shares, (ii) Bay II Resource Partners, L.P. (“Bay II”) – 2,281,000 shares, (iii) Bay Resource Partners Offshore Master Fund, L.P. (“Offshore Fund”) – 4,182,010 shares, (iv) GMT Capital – 8,074,480 shares and (v) Thomas E. Claugus – 8,074,480 shares. GMT Capital, the general partner of Bay and Bay II, has the power to direct the affairs of Bay and Bay II, including the voting and disposition of shares. As the discretionary investment manager of the Offshore Fund and certain other accounts, GMT Capital has power to direct the voting and disposition of shares held by the Offshore Fund and such accounts. Mr. Claugus is the President of GMT Capital and in that capacity directs the operations of each of Bay and Bay II and the voting and disposition of shares held by the Offshore Fund and separate client accounts managed by GMT Capital.

 

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