ELECTION OF DIRECTORS (PROPOSAL 1)

On May 29, 2020, Jerry S. Rawls resigned from the Board pursuant to the requirement in the Company’s Corporate Governance Guidelines that a director tender his or her resignation upon conclusion of the last regularly scheduled Board meeting prior to the director completing his or her 75th year. As a result of Mr. Rawls’s resignation, Mr. Pelaez was reassigned by the Board from his prior position as a Class One director to a position as a Class Three director, effective May 29, 2020.

The current term of our Class Three Directors expires at the Annual Meeting. Accordingly, three directors have been nominated for election to Class Three positions, for a term of three years or until such time as their respective successors are elected and qualified, or until death, resignation or removal. Any Board vacancy may be filled by the remaining directors then in office, and any director so elected will serve for the predecessor’s remaining term, or until his or her death, resignation or removal.

The persons named as proxies for this Annual Meeting were selected by the Board and have advised the Board that, unless authority is withheld, they intend to vote the shares represented by validly submitted proxies as follows:

Each of the nominees has consented to serve if elected. However, if any of them is unable or unwilling to serve as a director, the Board may designate a substitute nominee, in which case the persons named as proxies will vote for any substitute nominee proposed by the Board.

DIRECTOR CONDITIONAL RESIGNATION POLICY

Each incumbent director nominee has submitted an irrevocable conditional resignation, which is effective if the nominee receives a greater number of votes “AGAINST” than votes “FOR” that person’s election. If this occurs, the Corporate Governance and Nominating Committee will recommend to the Board whether to accept or reject the resignation, or if other action should be taken. The Board will act on the resignation, taking into account the Committee’s recommendation, and publicly disclose its decision and the underlying rationale, within 90 days after the date the election results are certified. The incumbent director will remain as a member of the Board during this process.

INFORMATION REGARDING THE COMPANY’S BOARD

The professional and personal experience, qualifications, attributes and skills of each director nominee and the Company’s other current directors are described below and reflect the qualities that the Company seeks in its Board members. In addition to the specific examples, the Board and the Company believe that the broad-based business knowledge, commitment to ethical and moral values, personal and professional integrity, sound business judgment, and commitment to corporate citizenship demonstrated by the nominees make them exceptional candidates for these positions.

CLASS THREE DIRECTORS STANDING FOR ELECTION

Joseph J. Corasanti. Mr. Corasanti presently serves as vice chair of the Board of Directors of SRC, Inc., a non-profit research and development company. Previously, Mr. Corasanti held a number of management roles at CONMED Corporation, a medical technology company, serving as President and Chief Executive Officer from 2006 to July 2014; President and Chief Operating Officer from 1999 to 2006; Executive Vice President/General Manager from 1998 to 1999; and General Counsel and Vice President-Legal Affairs from 1993 to 1998. He also served as a director of CONMED from 1994 to 2014. From 1990 to 1993, he was an Associate Attorney with the Los Angeles office of the law firm of Morgan, Wenzel & McNicholas. Mr. Corasanti holds a B.A. degree in Political Science from Hobart College and a J.D. degree from Whittier College School of Law. Mr. Corasanti’s past executive positions and his prior public company board experience have provided him with leadership skills and experience in a variety of matters that he contributes to our Board. His experience and skill set, including his legal background and acquisition experience, are valuable to our Board.

Patricia Hatter. Ms. Hatter has served as the Senior Vice President – Global Customer Services at Palo Alto Networks, Inc., a multinational cybersecurity company, since August 2019. From July 2017 to August 2019, Ms. Hatter worked as a strategic advisor to various private companies. Ms. Hatter previously served as the General Manager and Senior Vice President – Services and Interim Chief Information Officer of McAfee, LLC, a global computer security software company, from January 2017 to July 2017, and was the Chief Information Officer and Senior Vice President – Operations, at McAfee, LLC, from 2010 to June 2015. Ms. Hatter additionally served as the Chief Information Officer – Intel Security and General Manager – Security & Software at Intel Corporation, a leader in the semiconductor industry, from June 2015 to January 2016. Ms. Hatter also held various leadership roles at Cisco Systems, Inc., and AT&T Corporation. Ms. Hatter previously served on the board of directors of Barrick Gold Corporation, an international mining

company, from April 2018 until January 2019, and the board of directors of Qualys, Inc., a leading provider of cloud-based security and compliance solutions, from October 2018 until August 2019. Ms. Hatter holds B.S. and M.S. degrees in Mechanical Engineering from Carnegie Mellon University. Among the attributes that qualify Ms. Hatter to serve as a member of our Board are her experience in executive roles at various cybersecurity and technology companies and her prior experience on boards of directors of public companies.

Marc Y.E. Pelaez. Mr. Pelaez is a Rear Admiral, United States Navy (retired). Rear Admiral Pelaez is currently a private consultant to defense and commercial companies. He was Vice President of Engineering, and later Vice President of Business and Technology Development, for Newport News Shipbuilding, from 1996 until 2001, when it was acquired by Northrop Grumman Corporation. From 1993 to 1996, Rear Admiral Pelaez served as Chief of Naval Research. He served as the Executive Assistant to the Assistant Secretary of the Navy (Research, Development, and Acquisition) from 1990 to 1993. From 1968 to 1990, he held numerous positions, including command assignments, in the United States Navy. He is a graduate of the United States Naval Academy. Rear Admiral Pelaez has a broad background and understanding of technology and technology development, a seasoned knowledge of military procurement practices, and management leadership and consulting skills developed throughout his military and civilian careers.

CONTINUING DIRECTORS

EXISTING CLASS ONE DIRECTORS WHOSE TERMS EXPIRE IN 2021

Vincent D. Mattera, Jr. Dr. Mattera initially served as a member of the II-VI Board from 2000 until 2002. Dr. Mattera joined the Company as Vice President in 2004 and served as Executive Vice President from January 2010 to November 2013, when he became Chief Operating Officer. He was re-appointed to the Board in 2012. In November 2014, Dr. Mattera became the President and Chief Operating Officer. In September 2016, Dr. Mattera became the Company’s third President and Chief Executive Officer in 45 years and served as the Company’s President through June 2019, when the roles of President and Chief Executive Officer were separated. During his career at II-VI he has assumed successively broader management roles, including as a lead architect of the Company’s diversification strategy. He has provided vision, energy and dispatch to the Company’s growth initiatives, including overseeing the acquisition-related integration activities in the United States, Europe, and Asia – especially in China – thereby establishing additional platforms. These have contributed to a new positioning of the Company into large and transformative global growth markets while increasing considerably the global reach of the Company, deepening the technology and IP portfolio, broadening the product roadmap and customer base, and increasing the potential of the Company.

Prior to joining II-VI as an executive, Dr. Mattera had a continuous 20-year career in the Optoelectronic Device Division of AT&T Bell Laboratories, Lucent Technologies and Agere Systems, during which he led the development and manufacturing of semiconductor laser-based materials and devices for optical and data communications networks. Dr. Mattera has 36 years of leadership experience in the compound semiconductor materials and device technology, operations and markets that are core to II-VI’s business and strategy. Dr. Mattera holds a B.S. degree in chemistry from the University of Rhode Island (1979), and a Ph.D. in chemistry from Brown University (1984). He completed the Stanford University Executive Program in (1996). His 17-year tenure at II-VI underpins a valuable historical knowledge about the Company’s operational and strategic issues. We believe that Dr. Mattera’s expertise and experience qualify him to provide the Board with continuity and a unique perspective about the Company.

Michael L. Dreyer. Mr. Dreyer served as the Chief Operations Officer of Silicon Valley Bank from September 2015 to April 2019. Before joining Silicon Valley Bank, Mr. Dreyer was President and Chief Operating Officer of Monitise Americas, LLC, a subsidiary of Monitise plc, a company providing mobile banking and payment services, from 2014 to September 2015. Mr. Dreyer also was the global head of

technology and Chief Information Officer at VISA Inc. from 2005 to 2014. Previously, Mr. Dreyer was Chief Information Officer of Inovant, LLC, a company providing electronic payment processing services. He has also held executive positions at VISA USA as Senior Vice President of Processing and Emerging Products, and Senior Vice President of Commercial Solutions. Additionally, Mr. Dreyer held senior positions at American Express Co, Prime Financial, Inc., Federal Deposit Insurance Corporation (FDIC), Downey Savings, Bank of America, and the Fairmont Hotel Management Company. Mr. Dreyer served as a member of the board of directors of Finisar Corporation (“Finisar”) from December 2015 through September 24, 2019 (the effective date of the Company’s acquisition of Finisar), and is currently a director of F5 Networks, Inc., a developer and provider of software defined application services. Mr. Dreyer received an M.B.A., and a B.A. in psychology, from Washington State University. Mr. Dreyer brings to the Board extensive executive and leadership experience, as well as expertise in various aspects of the financial and banking industries.

Howard H. Xia. Dr. Xia currently serves as a consultant to the telecommunications industry. Dr. Xia served as General Manager of Vodafone China Limited, a wholly-owned subsidiary of Vodafone Group Plc, a telecommunications company, from 2001 to 2014. From 1994 to 2001, he served as a Director, Technology Strategy for Vodafone AirTouch Plc and AirTouch Communications, Inc. He served as a Senior Staff Engineer at Telesis Technology Laboratory from 1992 to 1994, and was a Senior Engineer at PacTel Cellular from 1990 to 1992. Dr. Xia holds a B.S. degree in Physics from South China Normal University, and an M.S. in Physics and Electrical Engineering and a Ph.D. in Electrophysics, from Polytechnic School of Engineering of New York University. Dr. Xia’s extensive knowledge of, and experience in, the telecommunications industry, his knowledge of international business, including with China, and strong leadership skills make him a valuable member of our Board. In particular, his experience and knowledge of telecommunications in Asia contribute to the Board’s breadth of knowledge in this area.

EXISTING CLASS TWO DIRECTORS WHOSE TERMS EXPIRE IN 2022

Enrico Digirolamo. Mr. Digirolamo is currently a senior advisor to technology companies and manufacturing firms. From 2013 to 2017, Mr. Digirolamo served as Chief Financial Officer and Senior Vice President of Covisint Corporation, a leading cloud computing company for the internet of Things and Identity platforms. Mr. Digirolamo was with Allstate Insurance from 2010 to 2013, where he served as Senior Vice President, Sales and Marketing and Finance. From 2008 to 2010, Mr. Digirolamo served as Vice President and Chief Financial Officer for General Motors in Europe. During a 31-year career with General Motors, Mr. Digirolamo held a variety of senior executive positions throughout the corporation, including 12 years outside the United States. Mr. Digirolamo served on the board of directors of Metromedia International Group from 2010 to 2017; Premier Trailer Leasing, Inc., from 2012-2013; and Identifix from 2013-2014. Mr. Digirolamo holds a B.S. degree from Central Michigan University, and an M.B.A. from Eastern Michigan University, and completed the Senior Executive Program at the International Institute for Management Development in Lausanne, Switzerland. He is a member of the Dean’s Leadership Roundtable at Central Michigan University, and a member of the Detroit Opera House board of directors and board of trustees. Mr. Digirolamo has extensive experience leading complex global businesses and has a broad financial, general management, and board oversight background.

Francis J. Kramer. Mr. Kramer joined the Company in 1983, served as its President from 1985 to 2007, its President and Chief Executive Officer from 2007 to November 2014, and its Chairman and Chief Executive Officer from November 2014 to September 2016. He now serves as the Company’s Chairman of the Board. Mr. Kramer holds a B.S. degree in Industrial Engineering from the University of Pittsburgh and an M.S. degree in Industrial Administration from Purdue University. Mr. Kramer served as a director of Barnes Group Inc., an aerospace and industrial manufacturing company, from 2012 to September 2016. Mr. Kramer provides our Board and the Company with guidance on growth strategy, in particular on the profitable execution of the strategy to achieve sustainable competitive advantage. He contributes considerable business development experience, and has significant operations experience that is relevant to the Company’s strategy.

Shaker Sadasivam. Dr. Sadasivam is the Co-Founder, President and Chief Executive Officer of Auragent Bioscience, LLC. He also serves on the boards of four private companies, FTC Solar, Inc., Sfara, Dclimate Inc., and Sea Pharma, LLC, and is a member of the Board of Trustees of the Chesterfield Montessori School in Chesterfield, MO. In 2016, Dr. Sadasivam retired as President and Chief Executive Officer of SunEdison Semiconductor Limited, a leading manufacturer of advanced semiconductors for electronics, a position he held from 2013. From 2009 to 2013, he served as Executive Vice President and President, Semiconductor Materials Business Unit of SunEdison, Inc. (a predecessor to SunEdison Semiconductor Limited, formerly known as MEMC Electronic Materials, Inc.). From 2002 to 2009, Dr. Sadasivam served as Senior Vice President Research and Development of SunEdison, Inc. Dr. Sadasivam holds B.S. and M.S. degrees in Chemical Engineering from the University of Madras and Indian Institute of Technology, an M.B.A. from Olin School of Business, Washington University, and a Ph.D. in Chemical Engineering from Clarkson University. Dr. Sadasivam brings to the Board his extensive experience related to the semiconductor industry, and insight into areas including operations, product development and engineering management.

MEETINGS AND STANDING COMMITTEES OF THE BOARD OF DIRECTORS

The Company’s Board held four regularly scheduled meetings, and eleven special meetings during fiscal year 2020. Each quarterly meeting took place over a two-day period. In fiscal year 2020, each director attended at least 75% of the aggregate of (a) the total number of meetings of the Board and (b) the total number of meetings for the committees of which he or she was a member.

The Board has four standing committees: Audit; Compensation; Corporate Governance and Nominating; and Subsidiary. All Committees have written charters that may be found on the Company’s website at www.ii-vi.com/corporate-governance-documents.

DIRECTOR INDEPENDENCE AND CORPORATE GOVERNANCE POLICIES

The Rules of the Nasdaq Stock Market require that a majority of the Company’s Board be Independent Directors (as defined in the Nasdaq Rules). Our Corporate Governance Guidelines further provide that a substantial majority of the members of the Company’s Board must qualify as independent. The Board has determined that all of the continuing directors or nominees for election as director are independent within the meaning of the Nasdaq Rules, other than Mr. Kramer and Dr. Mattera. In its annual review of director independence, the Board considers all commercial, banking, consulting, legal, accounting or other business relationships any director may have with the Company to determine whether any director has a material relationship with the Company. The Board considers a “material relationship” to be one that impairs or inhibits, or has the potential to impair or inhibit, a director’s exercise of critical and disinterested judgment on behalf of the Company. When assessing the “materiality” of a director’s relationship with the Company, the Board considers all relevant facts and circumstances, from both the standpoint of the director in his or her individual capacity, and from the standpoint of the director’s family and other affiliations.

NOMINATION OF CANDIDATES FOR DIRECTOR

The Company considers director candidates from several sources, including existing directors, members of the Company’s management team, shareholders, and third-party search firms. The Company’s current bylaws describe the procedures by which shareholders may recommend candidates for election to the Board. In general, such nominations must be made by a shareholder in good standing, be in writing and be received by our Chairman of the Board no later than the close of business on the 120th day, and no earlier than the close of business on the 150th day, before the anniversary date of the mailing date of the Company’s proxy statement in connection with the previous year’s annual meeting. In addition, nominations must include information regarding both the nominating shareholder and the director nominee, including their relationship to each other; any understanding between them regarding the nomination; the shares owned by the nominating shareholder; and other information concerning the proposing shareholder and/or nominee that is required for inclusion in a proxy statement filed with the SEC. Further, to be eligible for election as a director of the Company, the nominee must deliver within the timeframe noted above a written questionnaire detailing his or her background and qualifications, and a written representation and agreement as set forth in the Company’s bylaws. The form for this representation and agreement will be provided by the Secretary of the Company upon written request.

The Corporate Governance and Nominating Committee considers a variety of factors when determining whether to recommend a nominee for election to the Board, including those factors set forth in the Company’s Corporate Governance and Nominating Committee Charter. In general, candidates nominated for election to the Board should possess the following qualifications:

Potential candidates are initially screened and interviewed by the Corporate Governance and Nominating Committee and/or a third-party search firm.

Although the Board does not have a formal diversity policy, the Corporate Governance and Nominating Committee’s practice is to review the skills and attributes of individual Board members and candidates given the current make-up of the full Board, to ensure that the Board includes individuals who will serve the Company’s governance and strategic needs. We consider all dimensions of diversity, including age, gender,

national origin, career path, industry background, and education, in determining what mix of individuals will provide the Board a diverse portfolio of experience, knowledge, talents and perspectives. Candidates are also evaluated as to their broad-based business knowledge and contacts, prominence, commitment to ethical and moral values, personal and professional integrity, sound reputation in their respective fields, as well as a global business perspective and commitment to corporate citizenship. All members of the Board may interview the final candidates. The same evaluation procedures apply to all candidates for nomination, including candidates submitted by shareholders.

SIZE OF THE BOARD

As provided in the Company’s bylaws, the Board is composed of no less than five and no more than eleven members, with the exact number determined by the Board based on its current composition and requirements. At present, the Board consists of nine members.

In accordance with the terms of our outstanding 6.00% Series A Mandatory Convertible Preferred Stock, no par value per share (“Mandatory Convertible Preferred Stock”), whenever any dividends on any shares of the Mandatory Convertible Preferred Stock have not been declared or paid for the equivalent of six or more dividend periods, whether or not for consecutive periods (a “nonpayment”), the authorized number of directors will, at the next annual or special meeting of the Company’s shareholders, automatically be increased by two. At such time, the holders of record of such shares of Mandatory Convertible Preferred Stock, voting together as a single class with holders of record of any and all other series of voting preferred stock then outstanding, will be entitled, at the next annual or special meeting of shareholders, to vote for the election of a total of two additional members of the Board (collectively, the “Preferred Stock Directors”); provided that the election of any Preferred Stock Directors will not cause the Company to violate the corporate governance requirements of The Nasdaq Global Select Market (or any other exchange or automated quotation system on which its securities may be listed or quoted) that requires listed or quoted companies to have a majority of independent directors. As of the date of this proxy statement, the Company has declared and paid the applicable dividend on all shares of the Mandatory Convertible Preferred Stock for each completed dividend period.

BOARD STRUCTURE AND LEAD INDEPENDENT DIRECTOR

As part of the Board’s ongoing succession planning and leadership transition processes, the Board separated the roles of Chairman and CEO in 2016, so as to enhance the stability of leadership and provide continued decisive leadership and seamless operation of the Company. Accordingly, Francis J. Kramer currently serves as Chairman, and Dr. Vincent D. Mattera, Jr. serves as CEO.

Regardless of whether, in the future, the roles of Chairman and CEO are combined or remain separated, the Company intends to retain the position of Lead Independent Director, which is currently held by Rear Admiral Pelaez. The primary responsibilities of the Lead Independent Director include:

BOARD’S ROLE IN THE OVERSIGHT OF RISK MANAGEMENT

The Audit Committee has been designated to take the lead in overseeing the Company’s risk management at the Board level. The Audit Committee schedules time for periodic review of risk assessment and activities being undertaken by management throughout the year as part of its duties. The Audit Committee receives reports from Company management, internal audit, and other advisors, and strives to provide serious and thoughtful attention to the Company’s risk management processes and system, the nature of the material

risks the Company faces, and the adequacy of the Company’s policies and procedures that respond to and mitigate these risks. Although the Audit Committee leads these efforts, risk management is periodically reviewed with the full Board, and feedback is sought from each director as to the most significant risks that the Company faces. Risk management is also reviewed and assessed by the Subsidiary Committee, and cyber security risk is reviewed and assessed by the Corporate Governance and Nominating Committee. Risks that are identified are brought to the attention of the full Board.

The Board encourages management to promote a corporate culture that understands the importance of risk management and to incorporate it into the corporate strategy and day-to-day operations of the Company. The Company’s risk management approach also includes an ongoing effort to assess and analyze the most likely areas of future risk for the Company and to address them in its long-term planning process.

COMMUNICATION WITH DIRECTORS

Shareholders wishing to communicate with the Board may send written communications addressed to the Lead Independent Director, or to any member of the Board individually, in care of II-VI Incorporated, Attn: Secretary, 375 Saxonburg Boulevard, Saxonburg, Pennsylvania 16056. Any communication addressed to a director that is received by the Company at this address will be delivered or forwarded to the individual director as soon as practicable, except for advertisements, solicitations or other matters unrelated to the Company. The Company will forward communications received from shareholders that are addressed to the Board, to the chair of the Board committee whose function is most closely related to the subject matter of the communication.

DIRECTOR MANDATORY SERVICE CONCLUSION AND SUCCESSION PLANNING

The Board has instituted a policy for directors, as set forth in the Company’s Corporate Governance Guidelines. Under this policy, directors must tender to the Corporate Governance and Nominating Committee their resignation from the Board, to be effective at the end of the last regularly scheduled Board meeting prior to the director reaching the age of 76. The Corporate Governance and Nominating Committee considers each case and recommends to the Board the action to be taken. The Board in its discretion chooses to accept or reject the resignation. If rejected, the director’s resignation will be deemed to be re-submitted to the Corporate Governance and Nominating Committee annually thereafter, until such time as it is accepted by the Board. The Board has undertaken a succession planning process to proactively address future openings on the Board.

DIRECTOR OWNERSHIP REQUIREMENTS

The minimum beneficial share ownership amount for members of the Board is a number of shares having a value of $150,000. A new Board member will have three years from the date of joining the Board to comply with this ownership requirement. In the event of non-compliance, the Board will consider measures appropriate to the circumstances.

STANDING BOARD LIMITS

Board members are limited to serving on a maximum of four public company boards, including the Board.

CHANGE IN DIRECTOR OCCUPATION

Under the Company’s Corporate Governance Guidelines, when a director’s principal occupation or business association changes substantially during his/her tenure, the director must tender a resignation for consideration by the Corporate Governance and Nominating Committee. The Committee then will recommend to the Board any action needed regarding the proposed resignation. Each director is limited to one employee director role.

EXECUTIVE SESSIONS OF NON-EMPLOYEE DIRECTORS

Executive sessions of non-employee directors are held regularly, with the Lead Independent Director presiding.

DIRECTOR ATTENDANCE AT ANNUAL MEETING OF SHAREHOLDERS

Directors are expected to attend the Annual Meeting. All directors attended last year’s Annual Meeting. It is expected that all directors will attend the Company’s annual meetings absent good reason.

CODE OF BUSINESS CONDUCT AND ETHICS

The Board has approved and adopted a Code of Business Conduct and Ethics (the “Code of Conduct”) applicable to all directors, officers and employees of the Company and its subsidiaries. In addition, the Company has adopted a Code of Ethics for Senior Leaders. Designated senior leaders are required to sign the Code of Business Conduct and Ethics every year. These documents are available on the Company’s website at www.ii-vi.com/corporate-governance-documents. The Company will promptly disclose on its website any substantive amendments or waivers with respect to any provision of the Code of Conduct or the Code of Ethics for Senior Leaders.

Employees are required and encouraged to report suspected violations of our Code of Conduct. Reports are forwarded for review by the Audit Committee.

COMPANY POLICY REGARDING EMPLOYEE, OFFICER, AND DIRECTOR HEDGING

The Company’s insider trading policy prohibits the Company’s directors and executive officers, as well as any other employee of the Company who possesses material, non-public information about the Company, from engaging in any hedging transactions. The policy does not specifically define hedging transactions, but they are intended to include the purchase of financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), or other transactions that are intended to hedge or offset any decrease in the market value of Company securities held by the individual, whether such Company securities were acquired through equity compensation awards or otherwise.

REVIEW AND APPROVAL OF RELATED PARTY TRANSACTIONS

The Company’s policies and procedures regarding related party transactions are included in the Code of Conduct. The Code of Conduct specifically requires that all Company directors, officers and employees refrain from activities that might involve a conflict of interest. Additionally, the Code of Conduct requires each Company director, officer and employee to openly and honestly handle any actual, apparent or potential conflict between that individual’s personal and business relationships and the Company’s interests. Before making any investment, accepting any position or benefit, participating in any transaction or business arrangement, or otherwise acting in a manner that creates or appears to create a conflict of interest, such person must make a full disclosure of all relevant facts and circumstances to, and obtain the prior written approval of, the Company. Waivers under the Code of Conduct for any of the Company’s executive officers or directors are granted only by the Board or a properly designated committee of the Board. It is expected that only those matters that are in the best interest of the Company would be approved or waived under our Code of Conduct.

Our director compensation program is periodically reviewed by our Compensation Committee, with the help of the Company’s independent compensation advisor, to ensure the program remains competitive. As part of this review, the types and levels of compensation offered to our directors are compared to those offered by a select group of comparable companies. The comparable companies used are the same as those used for the Company’s named executive officers (the “Comparator Group”) and are listed in the “Compensation Discussion and Analysis” section of this proxy statement.

The components of our director compensation program for fiscal year 2020 are disclosed below. The Board is compensated based on a role-based compensation program, not on the number of meetings attended, with the exception of activities of the Subsidiary Committee. Attendance at Subsidiary Committee meetings is compensated on a per-meeting basis due to the fact that there is not a set number of meetings for which attendance is required. The Compensation Committee strives to set director compensation at levels that are competitive with our Comparator Group. Typically, the overall compensation level of the Company’s directors ranges between the upper end of the second quartile and the lower end of the third quartile of compensation provided by the Comparator Group.

DIRECTOR EQUITY PROGRAM

In addition to the cash compensation outlined above, directors receive annual equity awards, typically in August of each fiscal year. The Board sets the total dollar value of the annual equity awards and the mix of award types, taking into account the cash compensation structure, any applicable limits in the Company’s equity compensation plan, the recommendations of the Compensation Committee and its independent compensation advisor, and Comparator Group practices. The Company’s general practice has been to provide half of the equity award value in stock options and half in an award of restricted stock units. For fiscal year 2021 the directors’ annual equity award will only be restricted stock units (“RSUs”).

For fiscal year 2020, the Board set the overall equity award value for directors at $170,000. For Mr. Dreyer and Mr. Rawls, who joined the Board after the start of the fiscal year (upon the closing of the Finisar transaction), their overall equity award value was prorated. For each director, half of the award value was granted as RSUs, with the number of RSUs determined by dividing the applicable dollar value by the closing price of our stock on the grant date. The other half of the award value was granted as stock options, with the number of options determined by dividing the applicable dollar value by an estimated accounting value. Note that in the table below, the stock option values are higher because the values in the table are based on the accounting grant date fair value rather than the estimated accounting value used to determine the number of stock options.

RSU awards granted to directors generally have the same terms as those granted to our employees, including annual vesting of one-third of the award over three years, but do not automatically vest upon a

director’s departure from the Board. Similarly, stock options granted to directors generally have the same terms as those granted to our employees, including vesting occurring in four equal annual installments, and a term of ten years, but do not automatically vest upon a director’s departure from the Board. The Compensation Committee may recommend, and the Board may approve, in its sole judgment, that a stock option or RSU award will vest upon departure from the Board, and for stock options with an exercise period not to exceed five years.

STOCK BENEFICIALLY OWNED BY DIRECTORS AND OFFICERS

The following table shows the number of shares of II-VI Common Stock beneficially owned by all directors, our named executive officers (as reflected in the “Summary Compensation Table”), and all of our directors and executive officers as a group, as of August 31, 2020. The beneficial ownership reflected in this table includes shares that could have been acquired within 60 days of that date through the exercise of stock options. The number of shares “beneficially owned” is defined by Rule 13d-3 under the Exchange Act. Unless otherwise indicated, each individual and member of the group has sole voting power and sole investment power with respect to shares owned. None of the shares reflected in the table below have been pledged as security.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who beneficially own more than 10% of a class of the Company’s registered equity securities to file with the SEC and deliver to the Company initial reports of ownership and reports of changes in ownership of such registered equity securities. Based solely on our review of such Section 16(a) reports and written representations that our directors and executive officers have furnished to us, we believe that all reporting persons complied with all applicable Section 16(a) filing requirements during our fiscal year 2020, except with respect to one Form 4 on behalf of Vincent D. Mattera, Jr. and one Form 4 on behalf of Marc Y.E. Pelaez. In both cases the Form 4 was to report their acquisition in a transaction exempt from Section 16(b) of 13 shares and 423 shares respectively of our common stock as merger consideration in exchange for the shares of the common stock of Finisar Corporation held by Dr. Mattera and Rear Admiral Pelaez at the time of the consummation of the Company’s acquisition of Finisar Corporation.

Biographical information for VINCENT D. MATTERA, JR. may be found in the “DIRECTORS” section of this proxy statement.

WALTER R. BASHAW II has served as the Company’s President since July 2019. Mr. Bashaw served as the Company’s Senior Vice President, Corporate Strategy and Development, Administration from October 2018 to July 2019. Previously, Mr. Bashaw served as the Company’s Interim General Counsel and Secretary from December 2015 until March 2017. Mr. Bashaw also previously was a Managing Shareholder and a Director of the law firm of Sherrard, German & Kelly, P.C. (“SGK”) in Pittsburgh, Pennsylvania until October 2018, and Of Counsel at SGK from October 2018 until June 2019. Mr. Bashaw graduated from The Pennsylvania State University with a B.S. degree in Logistics, and also holds a J.D. degree from the University of Pittsburgh School of Law.

MARY JANE RAYMOND has been Chief Financial Officer and Treasurer of the Company since March 2014. Previously, Ms. Raymond was Executive Vice President and Chief Financial Officer of Hudson Global, Inc., from 2005 to 2013. Ms. Raymond was the Chief Risk Officer and Vice President and Corporate Controller at Dun and Bradstreet, Inc., from 2002 to 2005. In addition, she was the Vice President, Merger Integration, at Lucent Technologies, Inc., from 1997 to 2002, and held several management positions at

Cummins Engine Company from 1988 to 1997. In 2019 Ms. Raymond was named to the Board of Directors and Audit Committee of Veeco, Inc. Ms. Raymond holds a B.A. degree in Public Management from St. Joseph’s University, and an M.B.A. from Stanford University.

GIOVANNI BARBAROSSA joined II-VI in October 2012 and has been the Chief Strategy Officer of the Company and the President of the Compound Semiconductors Segment since July 2019. Previously, he was the Chief Technology Officer of the Company and the President of the Laser Solutions Segment. Dr. Barbarossa was employed at Avanex Corporation from 2000 through 2009, serving in various executive positions in product development and general management, ultimately serving as President and Chief Executive Officer. When Avanex merged with Bookham Technology, forming Oclaro, Dr. Barbarossa became a member of the board of directors of Oclaro, and served as such from 2009 to 2011. Previously, he held senior management roles in the Optical Networking Division of Agilent Technologies and in the Network Products Group of Lucent Technologies. He was previously a Member of Technical Staff, then Technical Manager at AT&T Bell Labs, and a Research Associate at British Telecom Labs. Dr. Barbarossa graduated from the University of Bari, Italy, with a B.S. degree in Electrical Engineering, and holds a Ph.D. in Photonics from the University of Glasgow, U.K.

JO ANNE SCHWENDINGER was appointed to the position of General Counsel and Secretary of II-VI Incorporated in March 2017 and assumed the role of Chief Legal and Compliance Office and Secretary in November 2017. Prior to joining II-VI, from August 2016 to March 2017, Ms. Schwendinger was in the private practice of law at Blank Rome LLP, where she was a member of the firm’s Corporate Mergers & Acquisitions and Securities group. Before joining Blank Rome, Ms. Schwendinger held various positions, from 2000 to August 2016, at Deere & Company, including Regional General Counsel for Asia-Pacific and Sub-Saharan Africa. Ms. Schwendinger currently serves as the Vice-Chair of the global board of directors of the Association of Corporate Counsel. Ms. Schwendinger holds a Bachelor’s degree from the Université d’Avignon et des Pays de Vaucluse, and a Master’s degree from the Université de Strasbourg. Her J.D. degree is from the University of Pittsburgh School of Law.

core of our executive compensation program. We target TDC at the median level of pay of our Comparator Group for performance at target. Actual compensation received by the NEOs may be higher or lower than the competitive median depending on the NEO’s and our performance results.

Fiscal Year 2020 was a unique year given the uncertainty of the timing of the closing of the Finisar acquisition when the fiscal year began and its impact on our financial results. To respond to the uncertainty and provide management with the appropriate incentives, we elected to split the performance year into two separate six month periods.

The primary objectives of our fiscal year 2020 executive compensation program were:

Compensation Decisions Aligned to Our Performance

Recap of the Company’s Performance in Fiscal Year 2020. Fiscal Year 2020 was a transformative year for the Company. The Company achieved record results across multiple performance metrics. Our vertically integrated business model allowed us to make significant progress on strategic business initiatives, including our component strategy. Key milestones include:

Reconciliations for the adjusted net income and free cash flow amounts referenced above are set forth in Appendix A to this proxy statement.

Recap of fiscal year 2020 incentive compensation payout. The performance achievements above resulted in the following incentive compensation payouts for our NEOs, demonstrating the strong link between NEO compensation and Company performance:

ELEMENTS OF TOTAL DIRECT COMPENSATION

TDC combines both fixed and variable elements, with variable elements based on Company performance. The Company pays incentive compensation only after the Compensation Committee has certified the Company’s operating results and approves the awards. In certifying the results, the Committee ensures that it has received a report of the audit of our financial performance by the Company’s Independent Accountants, along with the report of the Audit Committee, with respect to the Company’s audited financial statements.

To achieve our compensation objective of driving continuous improvements in performance, we set TDC so that:

The graphics below show that variable compensation makes up approximately 83% and 65% of the fiscal year 2020 target TDC of our CEO and NEOs, respectively.

CEO Compensation Mix		NEO Compensation Mix

The following chart summarizes the key elements of TDC for our NEOs for fiscal year 2020.

FISCAL YEAR 2020 TOTAL DIRECT COMPENSATION DECISIONS AND RESULTS

Base Salary

The Compensation Committee annually reviews NEO base salaries. Dr. Mattera entered into a new employment agreement with the Company in January 2020 that adjusted his TDC opportunity to reflect the size and complexity of the Company following the closing of the Finisar transaction. In accordance with our market-competitive compensation objectives, his fiscal year 2020 base salary was increased to approximately the 50^th percentile of the Comparator Group. For other NEOs, the Compensation Committee approved annual merit increases in base salary in August 2019, based on its assessment of current market data for similar positions in the Comparator Group and individual performance. The Compensation Committee’s approval was then reviewed and ratified by the Board. The increases in NEO base salaries for fiscal year 2020 that appear in the chart below reflect these adjustments.

Short-Term Incentives

We provided our NEOs with annual cash incentive award opportunities for fiscal year 2020 under two programs: (1) Bonus Incentive Program, and (2) Goal Results Incentive Program. Actual payouts under these programs for fiscal year 2020 are included under the “Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table.

Bonus Incentive Program

The BIP is a Company-wide bonus program that has been successfully used by the Company throughout most of its history to tie the interests of our employees, regardless of position, to the operating earnings of the Company. The BIP encourages a Company-wide focus on operating income, which we believe is a major driver of shareholder value. The performance metric for BIP is bonus operating profit (“BOP”). BOP is operating income, without the impact of cash and equity based variable compensation. The Company-wide target BOP is set by the Compensation Committee. Due to the uncertainty of the timing of the closing of the Finisar acquisition, the Compensation Committee elected to split fiscal year 2020 in half for purposes of measuring performance. Target BOP for the first half of the fiscal year excluded Finisar’s results. Target BOP for the second half of the fiscal year was established by the Compensation Committee in November 2019 and included combined results of the Company and Finisar. BIP performance for the first half of the fiscal year was calculated separately from the second half of the year.

The BOP target and adjusted results for first half fiscal year 2020 were:

For purposes of calculating BOP for the first half of fiscal year 2020, the Compensation Committee excluded certain incremental and one-time costs incurred through December 31, 2019, that were associated with the acquisition of Finisar.

The BOP target and adjusted results for second half fiscal year 2020 were:

The Compensation Committee did not to make any adjustments to BOP for the second half of fiscal year 2020.

Based on these results, the NEO BIP payouts for fiscal year 2020 (as compared to fiscal year 2019) were:

Goals Results Incentive Program

The GRIP is designed to link the achievement of Company performance measures to our broader business strategy that we believe will help drive creation of long-term shareholder value. For fiscal year 2020, the GRIP performance measures were based on the achievement of revenue, net income, and free cash flow targets set by the Compensation Committee and approved by the Board.

As in prior fiscal year years, revenue and net income goals were set such that, if both goals were achieved below their threshold levels, no payout would be earned, and if both goals were achieved above their maximum levels, a maximum payout would be earned.

As with the BIP, the Compensation Committee elected to split the fiscal year in half for purposes of measuring performance. Separate GRIP matrices were established for each half of the fiscal year. The first half GRIP matrix excluded Finisar results. The second half GRIP matrix was established by the Compensation Committee in November 2019 and included combined results of the Company and Finisar. The first half and second half GRIP payouts were calculated separately.

For fiscal year 2020 a free cash flow modifier was introduced to emphasize the importance of generating free cash flow following the completion of the Finisar acquisition. Results under the free cash flow modifier could increase or decrease the payout determined under the applicable revenue/net income matrix. We believe free cash flow is an appropriate metric because it relates directly to the Company’s operating performance, including the management of working capital and overall leverage. Free cash flow is defined as cash flow from operations minus capital expenditures. The fiscal year 2020 free cash flow modifier was determined based on second half fiscal year 2020 free cash flow performance. The modifier was then applied to the first half and second half GRIP matrix results. The resulting calculation was the total GRIP payout.

The targets and performance for revenue and net income for the first half GRIP for fiscal year 2020 were:

As with BIP, for purposes of calculating the net income for the first half of the fiscal year the Compensation Committee used adjusted net income, which excluded certain incremental and one-time costs incurred through December 31, 2019, that were associated with the Finisar acquisition.

The targets and performance for revenue and net income for the second half of fiscal year 2020 were:

As with BIP, the Compensation Committee did not make any adjustments to net income for the second half of fiscal year 2020.

The targets and performance for free cash flow for fiscal year 2020 were based on a six-month measurement period from January 1, 2020 through June 30, 2020:

The Compensation Committee deducted variable compensation (including BIP and GRIP) from free cash flow for the second half of fiscal year 2020, to arrive at total free cash flow.

After application of the free cash flow modifier, GRIP paid at 193% of target. The chart below shows the calculation of fiscal year 2020 GRIP.

Total GRIP payouts to our NEOs for fiscal year 2020 (as compared to fiscal year 2019) were:

Long-Term Incentives

Equity Grants Made in Fiscal Year 2020. The equity compensation for our NEOs for fiscal year 2020, consistent with recent practice, was made up of a balanced mix of (a) stock options (30%), (b) RSUs (30%), and (c) PSUs (40%). Equity awards were targeted based on the Compensation Committee’s assessment of market data and individual performance. Equity grants for the CEO represented approximately 65% of his TDC, and for the other NEOs approximately 60% of their TDC. The CEO’s awards were granted in January 2020 in connection with finalizing his new employment agreement after the Finisar transaction closing. The awards for all other NEOs of were made in August 2019, near the beginning of the 2020 fiscal year. We refer to these awards as the “2020 awards.”

The “Stock Awards” and “Option Awards” columns in the Summary Compensation Table and the Grants of Plan-Based Awards table later in this proxy statement include the grant date fair value and other details for the 2020 awards.

RSUs. We use RSUs to align management incentives with long-term shareholder value while also providing for long-term retention of management talent. RSUs are increasingly common in the marketplace and are becoming a more important component of our competitive compensation opportunity.

The fiscal year 2020 RSUs for the CEO were granted on January 28, 2020 (shortly after his new employment agreement was signed) with a fair market value of $36.08 per share, the closing price of the Company’s stock on that date. The fiscal year 2020 RSUs were granted to our NEOs other than the CEO on August 28, 2019, with a fair market value of $36.56 per share, the closing price of the Company’s stock on that date. The RSUs vest at the rate of one-third per year over a three-year period. RSUs granted to the NEOs for fiscal year 2020 were as follows:

PSUs. We believe that long-term awards tied directly to key elements of long-term shareholder value are a critical element of NEO compensation. Our PSUs are designed to reward the NEOs for driving long-term value tied to the execution of our strategy. Different from fiscal year 2019, for fiscal year 2020, rTSR was the only performance metric for PSUs. This was due to the uncertainty of the timing of the closing of the Finisar acquisition.

PSUs were granted on January 28, 2020 for the CEO (shortly after he entered into his new employment agreement) and on August 28, 2019 for the NEOs other than the CEO. PSUs have a three-year performance period. The number of PSUs actually earned is determined shortly after the end of the performance period based on the applicable performance results.

The fiscal year 2020 PSUs will be earned based on achieving cumulative rTSR for the thirty-six month period ending June 30, 2022, compared to returns on the Russell 2000 index, as follows:

Target award amounts for PSUs for fiscal year 2020 granted on January 28, 2020, for the CEO and August 28, 2019, for the NEOs are as follows:

Nonqualified Stock Options (“Stock Options”)

We use Stock Options to align management’s incentives with long-term shareholder value. We believe Stock Options encourage management to focus on strategic actions and initiatives intended to lead to long term stock price growth. The options do not have any tangible value if the stock price does not increase.

The fiscal year 2020 Stock Options for the CEO were granted on January 28, 2020 (shortly after his new employment agreement was signed), with a strike price of $36.08 per share (the closing price on the grant date). The fiscal year 2020 Stock Options were granted to the NEOs (other than the CEO) with a strike price of $36.56 per share, the closing price (and fair market value) of the Company’s stock on August 28, 2019. The stock options have a 10-year term and vest in four equal annual installments. Stock options granted to the NEOs for fiscal year 2020 were as follows:

rTSR PSUs Earned in Fiscal Year 2020

The NEOs were previously awarded PSUs in August 2017 under the II-VI Incorporated Second Amended and Restated 2012 Omnibus Incentive Plan (the “2012 Plan”) that were earned based on the Company’s rTSR for the 36-month performance period ended on June 30, 2020 (the “2017 rTSR Awards”). The Company’s stock outperformed the Russell 2000 50^th percentile by more than 40 percentage points for the performance period (the maximum goal for the award), and as a result the 2017 rTSR PSUs were earned at 200% of target.

Cash Flow from Operations PSUs Earned in Fiscal Year 2020

The NEOs were also previously awarded PSUs in August 2017 under the 2012 Plan that were earned based on the Company’s Cash Flow from Operations for the 36-month performance period ended on June 30, 2020 (the “2017 Cash Flow Awards”). The 2017 Cash Flow from Operations PSUs were earned at 200% of target:

PROCESS FOR SETTING COMPENSATION FOR FISCAL YEAR 2020

Compensation Committee Matters and Scope of Authority

The Compensation Committee recommends, and the Board approves, the compensation of executive officers of the Company, and provides oversight of the Company’s compensation philosophy. In determining fiscal year 2020 NEO compensation, the Compensation Committee was advised by Radford, its independent compensation advisor. Radford was retained by, and reported directly to, the Compensation Committee. Radford performed no other work for the Company, or for the members of the Board, other than its advisory services related to compensation. Radford had no prior relationship with our Chief Executive Officer or with any other executive officer or director.

Development of the Comparator Group

Our Comparator Group was constructed by the Compensation Committee with assistance from Radford, and includes companies we compete with for investor capital, talent and market share. Because the Company provides a wide range of products serving multiple end markets, the Compensation Committee believes that it is important to consider peers with Global Industry Classification Standard (“GICS”) codes that align with the Company’s multiple segments. The Comparator Group for fiscal year 2020 consisted of 20 manufacturing companies with GICS codes that reflect the Company’s lines of business:

Companies in the Comparator Group had revenues ranging from $1.1 billion to $5.0 billion, with median revenues of $2.1 billion. In structuring the Comparator Group, the Compensation Committee focused on (a) industry, (b) total revenue and profitability, (c) annual revenue growth, and (d) global footprint. The Comparator Group also had executive officer functions that are generally comparable to ours in terms of complexity and scope of responsibilities. For fiscal year 2020 compensation decisions, the Comparator Group consisted of:

The Compensation Committee’s Processes

The Compensation Committee utilizes a number of processes to assist it in ensuring that the Company’s executive compensation program achieves its objectives. Among those are:

Application of Judgment

The Compensation Committee believes that the application of its collective experience, and business judgment, and the objective market data provided by its independent compensation advisor, significantly contribute to the overall compensation administration process. While market data provides an important tool for analysis and decision-making, the Compensation Committee realizes that these data do not necessarily provide a complete picture of an executive’s competencies, track record, experience, performance contributions and value to the Company. Consequently, the Compensation Committee also gives serious consideration to an individual’s personal contribution to the Company, including his or her individual skill set, qualifications, experience and demonstrated performance. The Company values and seeks to reward performance that develops talent within the Company, embraces the sense of urgency that distinguishes the Company, and demonstrates the qualities of imagination, determination, and drive to resolve important new issues or longer-term challenges. These competencies are not easily correlated to typical compensation benchmarking data but deserve and receive consideration in reaching compensation decisions. The market data provided by our independent compensation advisor provide the Compensation Committee and senior management with the foundation for making compensation decisions. In addition, in fiscal year 2020 the Compensation Committee considered the unique requirements for the successful integration of Finisar following the acquisition.

COMPENSATION AND RISK

The Company’s compensation programs are designed to motivate and reward our employees and executive officers for their performance as well as Company performance, and for prudent risk-taking during the fiscal year and over the long term. The Compensation Committee periodically reviews our compensation policies and practices to ensure that they do not encourage our executives or other employees to take excessive risks or emphasize short-term results at the expense of long-term shareholder value. Based on these reviews, and a review of the Company’s internal controls, the Compensation Committee and management have concluded that our policies and practices are sound.

Compensation programs for our executives and other employees include the following risk mitigation features:

ADDITIONAL INFORMATION

Deferred Compensation

The II-VI Incorporated Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”) is designed to allow executive officers and certain employees of the Company to defer receipt of compensation into a trust fund for retirement or other qualified purposes. In connection with his promotion to Chief Executive Officer in 2016, Dr. Mattera received an annual $100,000 employer contribution credited to the Deferred Compensation Plan beginning on September 1, 2019. In addition, as a further retention incentive for Dr. Mattera, the new employment agreement entered into in January 2020 provides for increasing annual contributions to the Deferred Compensation Plan from June 2020 to June 2023 in the following amounts on each of the following dates, subject to Dr. Mattera’s continued service with the Company through those dates:

For a description of the Deferred Compensation Plan and more information regarding the amounts deferred under the Deferred Compensation Plan, see the “Nonqualified Deferred Compensation Table” and accompanying description, and the Summary Compensation Table.

Retirement Savings

The Company maintains a 401(k) Retirement Savings Plan for all eligible employees, including the NEOs. The Company matches employee contributions at a rate of $.50 per $1.00 of contributions, up to 8% of eligible compensation. Additionally, the Company may make discretionary profit-sharing contributions if the Company achieves specified levels of profitability. Company contributions to NEO accounts are set forth in the “All Other Compensation” column of the Summary Compensation Table.

Change in Control

Existing equity awards vest on an accelerated basis in the event of death, disability or retirement. Performance-based awards generally vest pro rata based on the months employed during the relevant performance period. In case of a change in control of the Company, if an award is assumed by the new company, and if the participant’s employment is involuntarily terminated, without cause or with good reason, within two years of the change in control, then the award will vest in full, with performance-based awards vesting at the greater of target or actual performance up to the change in control date. These acceleration provisions reflect market practices that appropriately value the employees’ contributions to the Company prior to the event triggering the accelerated vesting, and following a change in control, and help NEOs focus on delivering shareholder value without distractions.

The Company does not provide tax gross-ups on any excise taxes that may be triggered by change in control payments.

For additional information on payments on termination of employment or change in control, please refer to the “Potential Payments Upon Change in Control and Employment Termination” section of this proxy statement.

Perquisites and Other Benefits

The Company generally does not provide perquisites or personal benefits to its NEOs. As Chief Executive Officer, Dr. Mattera is eligible for supplemental disability benefits, and all NEO’s are eligible for an annual physical examination.

Employment Agreements

Dr. Mattera and Dr. Barbarossa each have an employment agreement with the Company. A summary description of each employment agreement is included beginning on page 42 of this proxy statement.

Executive Severance Plan

The other NEO’s participate in the Executive Severance Plan, which replaced their individual employment agreements. A summary description of the Executive Severance Plan is included beginning on page 45 of this proxy statement.

Tax Considerations

The Compensation Committee considers the impact that applicable tax laws may have with respect to executive compensation. In certain circumstances, applicable tax laws impose penalties on compensation, or may result in a loss of deduction to the Company for such compensation. Participation in, and compensation paid under, our plans, contracts and compensation arrangements may result in the deferral of compensation that is subject to the requirements of Section 409A (“Section 409A”) of the Internal Revenue Code of 1986 (the “Code”). While the Company intends for its plans, contracts and compensation arrangements to be structured and administered in a manner that complies with the requirements of Section 409A, to the extent that they fail to meet Section 409A, compensation earned under those arrangements may be subject to immediate taxation and tax penalties.

Section 162(m) of the Code limits the deductibility of compensation in excess of $1 million paid to any one NEO in any calendar year. Under the tax rules in effect before 2018, compensation that qualified as “performance-based” under Section 162(m) was deductible without regard to this $1 million limit. In 2017 and prior years, the Compensation Committee designed awards, including stock options and performance share awards, that were intended to qualify for this performance-based compensation exception. However, the Tax Cuts and Jobs Act, which was signed into law December 22, 2017, eliminated this performance-based

compensation exception effective January 1, 2018, subject to a special rule that “grandfathers” certain awards and arrangements that were in effect on or before November 2, 2017. As a result, compensation that the Compensation Committee structured in 2017 and prior years with the intent of qualifying as performance-based compensation under Section 162(m) that is paid on or after January 1, 2018, may not be fully deductible, depending on the application of the special grandfather rules. Moreover, from and after January 1, 2018, compensation awarded in excess of $1 million to our NEOs generally will not be deductible. While the Tax Cuts and Jobs Act will limit the deductibility of compensation paid to the NEOs, the Compensation Committee will, consistent with its past practice, design compensation programs that are intended to be in the best long-term interests of the Company and our shareholders, with deductibility of compensation being one of a variety of considerations taken into account.

2019 Say-on-Pay Vote and Shareholder Outreach

At the Company’s 2019 Annual Meeting of Shareholders, a non-binding, advisory proposal to approve the Company’s executive compensation paid to NEOs in the Company’s fiscal year 2019 received the affirmative vote of approximately 85% of the votes cast on the proposal.

The Company’s interaction with investors remained high in fiscal year 2020. The Company interacted with investors in person or virtually on 60 days, and spoke with shareholders who hold approximately 60% of our outstanding shares. Shareholders’ questions were focused on the close and management of the Finisar acquisition, our approach to managing increased leverage as a result of the acquisition, heightening issues in the area of trade, especially between the United States and China, and our ability to manage through COVID-19. On the pandemic, investors were particularly interested in our continuing ability to ship product, the adequacy of our supply chain, and our approach to ensuring employee safety. Other matters of interest to investors during the fiscal year included diversity on the board and in management, and how our products support the world’s increasing focus on sustainability. The recovery of the Company’s stock price during the year, and the maintenance of two of three of our credit ratings, indicate the success of our intensive outreach.

Fiscal Year 2021

The Compensation Committee carefully reviewed the incentive compensation approach for fiscal year 2021, in light of the completion of the Finisar acquisition during fiscal year 2020, and in light of ongoing global economic uncertainty caused by events, including COVID-19. Following is a summary of the features of the fiscal year 2021 short-term (cash) and long-term (equity incentive awards) compensation elements, which were approved by the Compensation Committee and the Board.