Proxy Statement (definitive) (def 14a)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF

THE SECURITIES EXCHANGE ACT OF 1934

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☐	Preliminary Proxy Statement

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☒	Definitive Proxy Statement

☐	Definitive Additional Materials

☐	Soliciting Material Pursuant to (S) 240.11 or (S) 240.14a-12

Rudolph Technologies, Inc.

(Exact name of Registrant as specified in its charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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PROXY STATEMENT

TABLE OF CONTENTS

	Page
Proxy Summary	1
Rudolph Technologies Proxy Statement	4
Questions and Answers About the Annual Meeting	4
Corporate Governance Principles and Practices	8
Proposal 1 – Election of Directors	15
Proposal 2 – Advisory Vote on Executive Compensation	25
Proposal 3 - Ratification of Appointment of Independent Registered Public Accounting Firm	26
Audit Committee Report	29
Executive Compensation	30
Compensation Committee Report on Executive Compensation	51
Executive Compensation Tables	52
CEO Pay Ratio	65
Security Ownership of Certain Beneficial Owners	66
Equity Compensation Plan Information	67
Section 16(a) Beneficial Ownership Reporting Compliance	67
Other Matters	67
Additional Information	68

April 2, 2019

From the Chairman’s Desk,

The Board of Directors of Rudolph Technologies is committed to increasing shareholder value while positioning the Company for long-term sustainable growth in the fast-paced electronics industry. This industry has produced dramatic and exciting technologies that enhance lives all over the world every day while next generation developments promise to be even more exiting! These developments require the kind of high value solutions for which Rudolph Technologies is known. We seek to strengthen our offerings by investing in research and development for our existing markets in semiconductor manufacturing, while exploring potential adjacent markets and acquisition opportunities for new technologies.

Growth in revenue and profitability are directly linked to increasing shareholder value. We can achieve this growth by driving higher yields and lower manufacturing costs for our customers. We accomplish this by leveraging a deep understanding of our customers’ challenges with leading-edge innovation and quality products and services. We believe our customers see our innovation and execution excellence as indicators that we are the best partner for collaboration to help them reach their continuously higher yield and performance targets.

Our employees are the core strength of Rudolph Technologies, providing inspiration for new solutions and product innovation, while working to ensure the quality of products and services that are provided every day. Furthermore, our customer-facing organization interacts with Rudolph Technologies’ customer base and exemplifies the core values of our Company. As we continue to grow, there will be increasing demands on our people and we look forward to enhancing and strengthening our existing organization with capable and talented employees who will help us develop new technologies, expand into new markets, and better serve our customers in order to realize this growth. Using the Company’s core values in their daily routine, the people of Rudolph Technologies have made us what we are and will drive us to even greater success!

The Board of Directors takes our role as stewards of our stockholders’ investments seriously and we are dedicated to making Rudolph Technologies the best that it can be.

Sincerely,

David B. Miller
Chairman of the Board

Forward Looking Statements

This proxy statement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”) which include Rudolph Technologies’ business momentum and future growth; the benefit to customers of Rudolph Technologies’ products and customer service; Rudolph Technologies’ ability to both deliver products and services consistent with our customers’ demands and expectations and strengthen its market position; as well as other matters that are not purely historical data. Rudolph Technologies wishes to take advantage of the “safe harbor” provided for by the Act and cautions that actual results may differ materially from those projected as a result of various factors, including risks and uncertainties, many of which are beyond Rudolph Technologies’ control. Such factors include, but are not limited to, the Company’s ability to leverage its resources to improve its position in its core markets; its ability to weather difficult economic environments; its ability to open new market opportunities and target high-margin markets; the strength/weakness of the back-end and/or front-end semiconductor market segments; and fluctuations in customer capital spending. Additional information and considerations regarding the risks faced by Rudolph Technologies are available in the Company’s Form 10-K report for the year ended December 31, 2018 and other filings with the Securities and Exchange Commission. As the forward-looking statements are based on Rudolph Technologies’ current expectations, the Company cannot guarantee any related future results, levels of activity, performance or achievements. Rudolph Technologies does not assume any obligation to update the forward-looking information contained in this proxy statement.

NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS

Date:	Wednesday, May 15, 2019
Time:	10:00 a.m., Eastern Time
Place:	Company principal executive offices located at 16 Jonspin Road, Wilmington, Massachusetts, 01887
Record Date:	Only stockholders of record at the close of business on March 18, 2019 are entitled to vote at the meeting and any adjournment or postponement thereof for which no new record date is set.
Items of Business:	1.	To elect the three Class II directors named herein to serve for three-year terms expiring upon the 2022 Annual Meeting of Stockholders or until their successors are duly elected and qualified;
	2.	To approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement;
	3.	To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2019; and
	4.	To transact such other business as may properly come before the meeting and any adjournment or postponement thereof.

These items of business are described more fully in the accompanying proxy statement. This year we will be providing access to our proxy materials via the internet in accordance with the Securities and Exchange Commission’s “Notice and Access” rules. On or about April 2, 2019, we will be mailing our Notice of Internet Availability of Proxy Materials to our stockholders, which contains instructions for our stockholders’ use of this process, including how to access our 2019 proxy statement and 2018 annual report to stockholders and how to vote online. In addition, the Notice of Internet Availability of Proxy materials contains instructions on how you may receive a paper copy of the 2019 proxy statement and 2018 annual report to stockholders.

Your vote is important. Regardless of whether you plan to participate in the Annual Meeting, we hope you will follow the instructions you received to vote your shares as soon as possible. Voting will ensure you are represented at the Annual Meeting, regardless of whether you attend the Annual Meeting. You may cast your vote via the internet, by mail or during the Annual Meeting. If you receive a paper copy of the proxy card by mail, you may also mark, sign, date, and return the proxy card promptly in the accompanying postage-prepaid envelope.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 15, 2019:

This notice, the proxy statement, and the 2018 Annual Report to Stockholders are available at:

https://www.rudolphtech.com/writable/files/2018ar_2019proxy.pdf

FOR THE BOARD OF DIRECTORS

Steven R. Roth

Secretary

Wilmington, Massachusetts

April 2, 2019

PROXY SUMMARY

This summary highlights information contained elsewhere in the proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.

Stockholder Voting Matters

Voting Matter	Board Vote Recommendation	Page Reference for more information
Proposal 1: Election of Directors	FOR each nominee	15
Proposal 2: Advisory Vote on Named Executive Officer Compensation	FOR	25
Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2109	FOR	26

Corporate Governance Highlights

Snapshot Of Board Composition

The following table presents a snapshot of the expected composition of the Rudolph Technologies Board of Directors immediately following the 2019 Annual Meeting, assuming the election of all nominees named in the proxy statement.

Board Characteristic		Rudolph Technologies
Total Number of Directors		8
Percentage of Independent Directors		87.5%
Average Age of Directors (years)		64.3
Average Tenure of Directors (years)		9.0
Separate Chairman and CEO roles		Yes
Independent Chairman		Yes
Audit Committee Financial Experts		2

Snapshot Of Board Governance And Compensation Policies

The following table presents a snapshot of the Rudolph Technologies Board Governance and Compensation Policies currently in effect.


Policy	Rudolph Technologies
Majority Voting for All Directors	Yes
Regular Executive Sessions of Independent Directors	Yes
Annual Board, Committee and Director Evaluations	Yes
Risk Oversight by Full Board and Committees	Yes
Independent Audit, Compensation and Nominating & Governance Committees	Yes
Code of Business Conduct and Ethics for Employees and Directors	Yes
Financial Code of Ethics	Yes
Stock Ownership Requirements for CEO & Directors	3x annual compensation
Stock Ownership Requirements for other NEOs	1x base salary
Stock Ownership Requirements for other executives	Specified number of shares
Anti-Hedging, Anti-Short Sale & Anti-Pledging Policy	Yes
Compensation Clawback Policy	Yes
No Future Tax Gross-Up Provisions	Yes
No Poison Pill	Yes
Stock Buyback Program	Yes
Double Trigger Change-in-Control Provisions for Executives	Yes
Retirement Age of 75 Years for Director Nomination/Appointment	Yes

Snapshot Of Board Governance And Compensation Policies Newly Implemented Or Adjusted In Past Year

The following presents a snapshot of the Rudolph Technologies Board Governance and Compensation Policies that were newly implemented or adjusted in the past year.

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Further refinement and enhancement to the Board’s assessment process in the ongoing effort to improve Board performance and stockholder return.

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In January 2018:

◦

Daniel H. Berry resigned his position as Chairman of the Compensation Committee;

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David B. Miller was elected as the new Chairman of the Compensation Committee;

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Compensation Committee membership was revised to include David B. Miller, Jeffery A. Aukerman and Thomas G. Greig; and

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Nominating & Governance Committee membership was revised to include Leo Berlinghieri, John R. Whitten and Daniel H. Berry.

•

In July 2018:

◦

Vita A. Cassese was appointed to the Board of Directors. Ms. Cassese was designated as a member of both the Audit Committee and the Compensation Committee;

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John R. Whitten resigned his position as Chairman of the Audit Committee but continues to serve as a member of this Committee; and

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Jeffrey A. Aukerman was elected as the new Chairman of the Audit Committee.

•

In August 2018:

◦

Thomas G. Greig resigned as Chairman of the Board of Directors; and

◦

David B. Miller was appointed the new non-executive Chairman of the Board of Directors.

•

The Company’s peer group for executive compensation for 2019 was revised as follows:

◦

Electro Scientific Industries, Inc. and Xcerra Corporation were removed due to each being acquired by another company.

•

The Company’s TSR peer group for executive long-term equity compensation was revised for 2019 as follows:

◦

Electro Scientific Industries, Inc. and Xcerra Corporation were removed due to each being acquired by another company.

◦

CyberOptics Corporation, Photronics, Inc. and Ultra Clean Holdings Inc. were added to the 2019 TSR peer group.

__________________________________________

PROXY STATEMENT

__________________________________________

The proxy detailed herein is solicited on behalf of the Board of Directors (the “Board” or “Board of Directors”) of Rudolph Technologies, Inc. (“Rudolph Technologies”, the “Company”, “we”, “us” or “our”) for use at the 2019 Annual Meeting of Stockholders to be held May 15, 2019 at 10:00 a.m. local time (the “Annual Meeting”), or at any adjournment or postponement thereof, for the purposes set forth herein and in the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at the Company’s principal executive offices, located at 16 Jonspin Road, Wilmington, Massachusetts 01887. The Company’s telephone number is (978) 253-6200.

On or about Tuesday, April 2 , 2019, we will furnish a Notice of Internet Availability of Proxy Materials (“Notice”) to our stock holders containing instructions on how to access the proxy materials online at:

https://www.rudolphtech.com/writable/files/2018ar_2019proxy.pdf

Instructions on how to vote online and to request a printed copy of the proxy materials may be found i n the Notice . If you received a Notice by mail, you will not receive a paper copy of the proxy materials, unless you request such materials by following the instructions contained in the Notice. Your vote is important, regardless of the extent of your holdings.

QUESTIONS AND ANSWERS AB OUT THE ANNUAL MEETING

What Is The Purpose Of The Annual Meeting?

At the Annual Meeting, stockholders will be asked to vote upon the matters set forth in the accompanying Notice of Annual Meeting, including:

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the election of directors;

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an advisory resolution on named executive officer compensation;

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the ratification of the appointment of our independent registered public accounting firm for 2019,

all of which is more fully described herein.

Will Other Matters Be Voted On At The Annual Meeting?

We are not currently aware of any other matters to be presented at the Annual Meeting other than those described in this proxy statement. If any other matters not described in the proxy statement are properly presented at the meeting, any proxies received by us will be voted in the discretion of the proxy holders.

Who Is Entitled To Vote?

If you were a stockholder of record as of the close of business on March 18, 2019, which is referred to in this proxy statement as the “record date,” you are entitled to receive notice of the Annual Meeting and to vote the shares of common stock that you held as of the close of business on the record date. Each stockholder is entitled to one (1) vote for each share of common stock held by such stockholder on the record date.

May I Attend The Meeting?

All stockholders of record as of the record date may attend the Annual Meeting.

To gain admission, you will need valid picture identification and proof that you are a stockholder of record of the Company as of the record date, or if you are a beneficial holder, proof from your bank, broker or other record holder of your shares that you are the beneficial owner of such shares. To obtain directions to attend the Annual Meeting and vote in person, please contact Investor Relations at 978-253-6200.

What Constitutes A Quorum?

The required quorum for the transaction of business at the Annual Meeting is a majority of the outstanding shares of Common Stock of the Company, $0.001 par value per share (“Common Stock”), present in person or by proxy and entitled to vote at the Annual Meeting. On the record date, 30,933,820 shares of the Company’s Common Stock were issued and outstanding. Abstentions and broker non-votes will be counted to determine whether there is a quorum present. If a quorum is not present, the Annual Meeting may be adjourned or postponed to a later date.

What Are “Broker Non-Votes”?

A broker non-vote occurs when a bank, broker or other registered holder of record holds shares for a beneficial owner, but is not empowered to vote on a particular proposal on behalf of such beneficial owner because the proposal is considered “non-routine” and the beneficial owner has not provided voting instructions on that proposal. The election of directors and the advisory vote on named executive officer compensation are treated as “non-routine” proposals. This means that if a brokerage firm holds your shares on your behalf, those shares will not be voted with respect to any of these proposals unless you provide instructions to that firm by voting your proxy. See below under “What Is the Vote Required for Election of Directors?” and “What Is the Vote Required for the Approval of Proposals Other Than Director Elections?” for a discussion of the impact of broker non-votes on each of the proposals that will be presented at the Annual Meeting. In order to ensure that any shares held on your behalf by a bank, broker or other registered holder of record are voted in accordance with your wishes, we encourage you to provide instructions to that firm or organization by voting your proxy.

Who Bears The Cost Of Soliciting Proxies?

The Company will bear the cost of soliciting proxies. In addition, the Company may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation material to such beneficial owners. Solicitation of proxies by mail may be supplemented by telephone, facsimile, e-mail or other electronic means or personal solicitation by directors, officers or regular employees of the Company. No additional compensation will be paid to such persons for such services. We do not currently plan to hire a proxy solicitor to help us solicit proxies from stockholders, brokers, bank nominees or other institutions, although we reserve the right to do so.

Why Did I Receive A “Notice Of Internet Availability Of Proxy Materials” But No Proxy Materials?

We are distributing the Company’s proxy materials to stockholders of record via the internet in accordance with the “Notice and Access” approach permitted by rules of the Securities and Exchange Commission (“SEC”). This approach benefits the environment, while providing a timely and convenient method of accessing the materials and voting. On or about April 2, 2019, the Company will begin mailing the Notice to participating stockholders. The Notice includes instructions on how to receive a paper copy of the proxy materials and the Company’s 2018 Annual Report, if you prefer.

How Do I Go About Voting?

Voting For Shares Registered Directly In The Name Of The Stockholder

If you hold shares in your name as a holder of record, you are considered the “stockholder of record” with respect to those shares. You can vote your shares online by following the instructions on the Notice. You may opt to vote your shares by requesting a full set of proxy materials be mailed to you and completing and returning the proxy in the postage-paid envelope provided. Stockholders of record may also vote in person at the Annual Meeting. If you are a stockholder of record with shares registered in your name, you can vote by one of the following methods:

•

Via the Internet - To vote by internet, go to www.voteproxy.com and follow the instructions on the secure website. The deadline for voting via the internet is 11:59 p.m. (EDT) on May 14, 2019.

•

By Mail – Stockholders who receive a paper proxy card may elect to vote by mail and should complete, sign and date their proxy card and mail it in the pre-addressed postage-paid envelope that accompanies the delivery of paper proxy cards. Proxy cards submitted by mail must be received by the time of the annual meeting in order for your shares to be voted.

Further instructions on how to vote online or by mail are contained in the Notice. Even if you plan to attend the meeting, we recommend that you vote your shares in advance so that your vote will be counted if you later decide not to attend the meeting. Each stockholder of record is entitled to one (1) vote for each share of Common Stock owned by such stockholder on all matters presented at the Annual Meeting. Stockholders do not have the right to cumulate their votes in the election of directors.

If you return a signed and dated proxy but do not indicate how the shares are to be voted, those shares will be voted in accordance with Rudolph Technologies’ Board of Director’s recommendations. A valid proxy also authorizes the individuals named as proxies to vote your shares in their discretion on any other matters, which, although not described in the proxy statement, are properly presented for action at our Annual Meeting. If you indicate on your proxy that you wish to “abstain” from voting on an item, your shares will not be voted on that item.

Voting By Proxy For Shares Registered In Street Name

If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the “beneficial owner” of shares held in “street name.” In that case, you may receive a separate voting instruction form, or you may need to contact your broker, bank, or other stockholder of record to determine whether you will be able to vote electronically via the internet. As the beneficial owner, you have the right to direct your broker, bank or other holder of record on how to vote your shares by submitting voting instructions to such person in accordance with the directions outlined in your proxy. To be clear, beneficial owners must obtain a legal proxy from the broker, bank or other holder of record authorizing the beneficial holder to vote such shares at the meeting.

May I Revoke My Proxy Instructions?

Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before it is voted. If you are a stockholder of record, you may change your vote after submitting your proxy by:

•

delivering a written notice of revocation or a duly executed proxy bearing a later date to the Secretary of the Company at the Company’s principal executive offices prior to the meeting, if you voted by mail;

•

submitting a timely and valid later vote online at www.voteproxy.com , if you voted online; or

•

attending the meeting and voting in person.

If you are a beneficial owner of shares, please contact your bank, broker or other holder of record for specific instructions on how to change or revoke your vote.

What Is The Vote Required For Election Of Directors?

Each director is elected by the vote of the majority of the votes cast. This means that in order for a director nominee to be elected to our Board of Directors, the number of votes cast “for” a director’s election must exceed the number of votes cast

“against” that director’s election (with “abstentions” and “broker non-votes” not counted as a vote cast either “for” or “against” that director’s election, although abstentions and broker non-votes count for quorum purposes). Our Bylaws provide for a majority-voting standard for uncontested elections and prov ide that any incumbent director nominee in an uncontested election who does not receive an affirmative majority of votes cast must promptly tender such director’s resignation to our Board of Directors. Further information regarding the process that will be followed if such an event occurs can be located under the heading “Proposal 1 — Election of Directors.”

What Is The Vote Required For The Approval Of Proposals Other Than Director Elections?

The proposal to approve, on an advisory basis, the compensation of our named executive officers and the proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2019 require the affirmative vote, in person or by proxy, of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter to constitute approval of these proposals. For such proposals, abstentions are counted for quorum purposes, but in effect count as negative votes, because they are shares represented in person or by proxy that are not voted in the affirmative. Broker non-votes are counted for quorum purposes but are not counted as part of the vote total and have no effect on the outcome of those proposals.

What Is Householding?

The Company has adopted a procedure approved by the SEC called “householding.” Under this procedure, when multiple stockholders of record share the same address, we may deliver only one (1) Notice to that address unless we have received contrary instructions from one or more of those stockholders. The same procedure applies to brokers and other nominees holding shares of our stock in “street name” for more than one (1) beneficial owner with the same address.

If a stockholder holds shares of stock in multiple accounts (e.g., with our transfer agent and/or banks, brokers or other registered stockholder), we may be unable to use the householding procedures and, therefore, that stockholder may receive multiple copies of the Notice. You should follow the instructions on each Notice that you receive in order to vote the shares you hold in different accounts.

A stockholder that shares an address with another stockholder, who has received only one (1) Notice may write or call us as specified below:

(i)

To request a separate copy of such materials, which will be promptly mailed without charge; and

(ii)

To request that separate copies of these materials be sent to his or her home for future meetings.

Conversely, a stockholder of record who shares the same address with another stockholder of record may write or call us as specified below to request that a single set of the proxy and proxy statement be delivered to that address. Such stockholder requests may be made to our Investor Relations Department either via phone at 978-253-6200 or by mail directed to:

Investor Relations Department

Rudolph Technologies, Inc.

16 Jonspin Road

Wilmington, Massachusetts 01887

If you are a beneficial owner of shares held in street name, please contact your bank, broker or other holder of record regarding such requests.

What Are The Deadlines For Submission Of Stockholder Proposals For 2020 Annual Meeting?

Stockholders of the Company are entitled to present proposals for consideration at forthcoming stockholder meetings provided that they comply with the proxy rules promulgated by the SEC, if applicable, and the Bylaws of the Company. Stockholders wishing to present a proposal at the Company’s 2020 Annual Stockholder Meeting must submit such proposal in writing to the Company no later than December 4, 2019 in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended (“Exchange Act”), if they wish for it to be eligible for inclusion in the proxy statement and form of proxy relating to that meeting. In addition, under the Company’s Bylaws, a stockholder wishing to nominate a director or make a proposal at the 2020 Annual Stockholder Meeting outside of Exchange Act Rule 14a-8 must submit such nomination or proposal in writing to the Company no earlier than January 16, 2020 and no later than February 15, 2020. The Nominating & Governance Committee will also consider qualified director nominees recommended by stockholders. Our process for receiving and evaluating Board member nominations from our stockholders is described below under the caption “Nominating & Governance Committee.”

CORPORATE GOVERNANCE PR INCIPLES AND PRACTICES

Rudolph Technologies is committed to sound and effective corporate governance practices. Having such principles is essential to running our business efficiently and to maintaining our integrity in the marketplace. The major components of our corporate governance practices are described below.

Board Leadership Structure

Our Company management is led by Michael P. Plisinski, who has served as our CEO since November 2015, and David B. Miller, who is an independent director and has served as the Chairman of the Board of Directors since August 2018. Prior to that, Thomas G. Greig served as Chairman of the Board from April 2016 to August 2018. Our Board of Directors is currently comprised of one (1) non-independent director, Mr. Plisinski, and seven (7) directors each of whom has been affirmatively determined by our Board of Directors to meet the criteria for independence established by the SEC and the New York Stock Exchange (“NYSE”). The independent directors meet periodically in executive session chaired by the Chairman without the CEO or other management present. Furthermore, each director is encouraged to suggest items for the Board agenda and to raise at any Board meeting subjects that are not on the agenda for that meeting.

In accordance with our sound and effective corporate governance practice, the roles of CEO and Chairman of the Board, as cited above, are held by separate individuals, with the independent Chairman of the Board being designated by the Board. The Board of Directors believes that at the current time the designation of an independent Chairman of the Board facilitates the functioning of the Board of Directors, while leaving the CEO responsible for setting the strategic direction for the Company and for the day-to-day leadership and performance of the Company. The independent Chairman of the Board:

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Presides at all meetings of the stockholders and the Board of Directors at which he or she is present;

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Establishes the agenda for each Board of Directors meeting;

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Sets the schedule and annual agenda, to the extent foreseeable;

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Calls and prepares the agenda for and presides over separate executive sessions of the independent directors;

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Acts as a liaison between the independent directors and the Company’s management;

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Serves as a point of communications with stockholders; and

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Performs such other powers and duties as may from time to time be assigned by the Board of Directors or as may be prescribed by the Company’s Bylaws.

Board Meetings

The Board of Directors of the Company held a total of five (5) meetings during 2018. None of our incumbent directors attended fewer than 80% of the meetings of the Board of Directors and the standing committees upon which such directors served during 2018. While the Company does not currently have a formal policy regarding the attendance of directors at the Annual Meeting of stockholders, directors are encouraged to attend. All members of the Board of Directors serving at the time attended the 2018 Annual Meeting of Stockholders.

Board Independence

The Board of Directors makes an annual determination as to the independence of each of our Board members under the current standards for “independence” established by the NYSE and the SEC. The Board has determined that all of the nominees for election as directors and current members of our Board, including Jeffrey A. Aukerman, Daniel H. Berry, Leo Berlinghieri, Vita A. Cassese, David B. Miller, Thomas G. Greig and John R. Whitten, are independent under the NYSE Corporate Governance Rules with the exception of Michael P. Plisinski, our Chief Executive Officer. During 2018, none of the independent members of our Board were a party to any transactions, relationships or arrangements that were considered by the Board to impair his or her independence. On four (4) occasions during 2018, our Board met in executive sessions in which the independent Board members were solely present.

Oversight Of Risk

Our Audit Committee is responsible for overseeing risk management and, on at least an annual basis, reviews and discusses with management policies and systems pursuant to which management addresses risk, including risks associated with our audit, financial reporting, internal control, disclosure control, cybersecurity, legal and regulatory compliance, and investment policies. Our Audit Committee regularly reviews with our Board any issues that arise in connection with such topics and, in accordance with our Summary of Corporate Governance Guidelines, our full Board regularly engages in discussions of risk management to assess major risks facing our Company and review options for the mitigation of such risks. Each of our Board committees also considers the risk within its area of responsibilities. For example, our Compensation Committee periodically reviews enterprise risks to ensure that our compensation programs do not encourage excessive risk-taking and our Nominating & Governance Committee oversees risks related to governance issues, such as succession planning, and serves as the contact point for employees to report corporate compliance issues. As a result of the foregoing, we believe that our CEO, together with the Chairman of our Audit Committee and our full Board of Directors provide effective oversight of the Company’s risk management function.

Board Committees

The Board has three standing committees with separate chairs - the Audit, Compensation, and Nominating & Governance Committees. Each of the Board committees is comprised solely of independent directors. The Audit Committee, Compensation Committee and Nominating & Governance Committee have each adopted a written charter that sets forth the specific responsibilities and qualifications for membership to the respective committees. The charters of each of these committees are available on our website at https://investors.rudolphtech.com/board-of-directors-committees.

In 2018, the composition of and number of meetings held by the Company’s Board Committees were as follows:


Rudolph Technologies Board Committee	Committee Chairman	Full Year Committee Members ¹	Partial Year Committee Members ²	# of Meetings held in 2018
Audit Committee	Jeffrey A. Aukerman	John R. Whitten David B. Miller	Vita A. Cassese	9
Nominating & Governance Committee	Leo Berlinghieri	John R. Whitten	Daniel H. Berry Thomas G. Greig	9
Compensation Committee	David B. Miller	Jeffrey A. Aukerman	Daniel H. Berry Vita A. Cassese Thomas G. Greig	5

Each full year member of the respective committees attended all of the committee’s meetings held in 2018.

For partial year members of the committees attendance in 2018 was as follows:

^•

Ms. Cassese was appointed to the Board in July 2018. Thereafter, in 2018 she attended all Committee meetings for which she was a member (Audit – 3 meetings; Compensation – 1 meeting).

^•

Mr. Berry moved from the Compensation Committee to the Nominating & Governance Committee in January 2018. He attended all Committee meetings for which he was a member (Compensation - 1 meeting; Nominating & Governance - 8 meetings)

^•

Mr. Greig moved from the Nominating & Governance Committee to the Compensation Committee in January 2018. He attended all Committee meetings for which he was a member (Nominating & Governance - 1 meeting; Compensation - 4 meetings)

In January 2018, Mr. Berry resigned as Chairman of the Compensation Committee. Thereafter, Mr. Miller was elected as Chairman of the Compensation Committee. In July 2018, Mr. Whitten resigned as Chairman of the Audit Committee. Thereafter, Mr. Aukerman was elected as Chairman of the Audit Committee.

Audit Committee

The Audit Committee assists the Board in fulfilling its responsibilities for general oversight of the integrity of our financial statements, our accounting policies and procedures and our compliance with legal and regulatory requirements. Among its functions, the Audit Committee is responsible, among other things, for:

•

The appointment, compensation, retention and oversight of the Company’s independent registered public accounting firm;

•

The approval of services performed by the Company’s independent registered public accounting firm;

•

Reviewing the responsibilities, functions and performance of the Company’s internal audit function;

•

Reviewing the scope and results of internal audits and ongoing assessments of the Company’s risk management processes; and

•

Evaluating the Company’s system of internal control over financial reporting and disclosure controls and procedures.

The report of our Audit Committee is found below under the caption “Audit Committee Report.”

The Board has determined that each of the Audit Committee members meet the Audit Committee membership requirements set forth by the NYSE and the SEC, including that they be “independent.” Furthermore, the Board has determined that (i) each of Mr. Whitten and Mr. Aukerman qualify as an “Audit Committee Financial Expert” as that term is defined under SEC rules and (ii) that both Mr. Whitten and Mr. Aukerman are “independent,” as that term is defined under NYSE listing standards.

Compensation Committee

The Compensation Committee is responsible for the establishment of the policies upon which compensation of and incentives for the Company’s executive officers will be based, the review and recommendation for approval by the independent members of the Board of the compensation of the Company’s executive officers, and the administration of the Company’s equity compensation plans.

In general, the Compensation Committee is responsible for reviewing and recommending for approval by the independent members of the Board of Directors the Company’s compensation policies and practices, including executive salary levels and variable compensation programs, both cash-based and equity-based. With respect to the compensation of the Company’s CEO, the Compensation Committee reviews and recommends for approval by the independent members of the Board the various elements of the CEO’s compensation. With respect to other executive officers, including each of our NEOs, the Compensation Committee reviews the CEO recommendations for compensation for such individuals presented to the Compensation Committee by the CEO and the reasons thereof and, in its discretion, may modify the compensation packages for any such individuals.

In accordance with its charter, the Compensation Committee may form and delegate its authority to subcommittees when appropriate. Further, the Compensation Committee has the authority to retain, and to terminate, any compensation consultant or other advisors to assist in the evaluation of director, CEO or executive compensation or other matters within the scope of the Compensation Committee’s responsibilities and is directly responsible for the appointment, compensation and oversight of such consultants and other advisors, including their fees and other retention terms. From time to time, the Compensation Committee engages the services of such outside compensation consultants to provide advice on compensation plans and issues related to the Company’s executive and non-executive employees. In 2018, the Compensation Committee engaged Pay Governance LLC to provide other ad hoc assistance to the Compensation Committee. Pay Governance LLC provided no services to management. The Compensation Committee also has authority to obtain advice and assistance from internal or external legal, accounting and other advisors.

The Board has determined that each of the Compensation Committee members meet the Compensation Committee membership requirements set forth by the NYSE and the SEC, including that they be “independent”.

For further discussion of the Compensation Committee and its processes and procedures, please refer to the “Compensation Program Objectives, Design and Practices” section in the Compensation Discussion and Analysis below.

Nominating & Governance Committee

The responsibilities of the Nominating & Governance Committee include identifying prospective director nominees and recommending to the Board director nominees for the next Annual Meeting of stockholders and replacements of a director in the event of a vacancy on the Board. The Nominating & Governance Committee also recommends to the Board the appointment of directors to Board Committees and is charged with developing and recommending to the Board the governance principles applicable to the Company. Further, the Nominating & Governance Committee, together with our CEO, is responsible for overseeing our Company’s management succession planning.

The Nominating & Governance Committee also oversees the annual evaluation of the Board, the Committees of the Board and the individual directors. Typically, this evaluation is performed during the first qua rter by each of the directors and reflects an assessment of the Board, the Committees of the Board and for each individual director in the prior year. Among other topics, the evaluation in general assesses:

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For both the Board and the Committees:

◦

Their structure and composition;

◦

The format and content of meetings; and

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The effectiveness of the Board/Committees.

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For each individual director:

◦

Their performance and approach to their directorship;

◦

Their understanding of their role as a director;

◦

Their understanding of critical aspects of the Company’s business, products and strategy; and

◦

Their skills, experience and ongoing training.

In addition, the Board reviews the issues faced during the past year, assesses its response and makes determinations whether additional resources or approaches might be applied to further optimize the handling of the issues. The goal of the evaluation is to identify and address any performance issues at the Board, committee or individual level, should they exist, identify potential gaps in the boardroom and to assure the maintenance of an appropriate mix of director skills and qualifications. Upon completion of the evaluation, the Nominating & Governance Committee provides feedback to the Board, the committees and the individual directors regarding the results of the evaluation and raises any issues that have been identified which may need to be addressed.

The Board has determined that each of the Nominating & Governance Committee members meets the Nominating & Governance Committee membership requirements, including the independence requirements of the NYSE.

Other Committees

Our Board of Directors may from time to time establish other special or standing committees to facilitate the management of the Company or to discharge specific duties delegated to the committee by the full Board of Directors.

Compensation Committee Interlocks And Insider Participation

In 2018, no member serving on the Compensation Committee at any time during the year (David B. Miller, Jeffrey A. Aukerman, Vita A. Cassese, Thomas G. Greig and Daniel H. Berry) had any form of interlocking relationship as described in Item 407(e)(4) of Regulation S-K. Further, no member of the Compensation Committee as constituted in 2019 (David B. Miller, Jeffrey A. Aukerman, Vita A. Cassese, and Thomas G. Greig) has any form of interlocking relationship as described in Item 407(e)(4) of Regulation S-K as of the date of this proxy statement.

Board Membership Criteria And Nominee Identification

The Nominating & Governance Committee of the Board determines the required selection criteria and qualifications of director nominees based upon the needs of the Company at the time nominees are considered. These criteria include the following specific, minimum qualifications that the Nominating & Governance Committee believes must be met by a nominee to be recommended by the Committee for a position on the Board:

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The candidate must possess the ability to apply good business judgment;

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The candidate must be in a position to properly exercise his or her duties of loyalty and care;

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The candidate must exhibit proven leadership capabilities, high integrity and experience with a high level of responsibilities within his or her chosen field; and

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The candidate must have the ability to grasp complex principles of business, finance, international transactions and semiconductor inspection, metrology, lithography and related software technologies.

The Nominating & Governance Committee has not adopted a formal diversity policy with regard to the s election of director nominees. Diversity is one of the factors that the Nominating & Governance Committee considers in identifying nominees for director. In selecting director nominees, the Nominating & Governance Committee considers, among other factors:

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The competencies and skills that the candidate possesses and the candidate’s areas of qualification and expertise that would enhance the composition of the Board; and

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How the candidate would contribute to the Board’s overall balance of expertise, perspectives, backgrounds and experiences in substantive matters pertaining to the Company’s business.

In its identification of director nominees, the Nominating & Governance Committee will consider how the candidate would contribute to the Board’s overall balance of diversity of expertise, perspectives, backgrounds and experiences in substantive matters pertaining to the Company’s business. When current Board members are considered for nomination for reelection, the Nominating & Governance Committee also takes into consideration their prior contributions to and performance on the Board and their record of attendance.

The Nominating & Governance Committee will consider the above criteria for nominees identified by the Nominating & Governance Committee itself, by stockholders, or through some other source. The Nominating & Governance Committee uses the same process for evaluating all nominees, regardless of the original source of nomination. The Nominating & Governance Committee may use the services of a third party search firm to assist in the identification or evaluation of Board member candidates.

Consideration Of Director Nominees

The Nominating & Governance Committee has a formal policy with regard to consideration of director candidates recommended by the Company’s stockholders, which may be found on our website at:

https://investors.rudolphtech.com/corporate-governance/director-candidates-policy-and-procedure

In accordance with the policy, the Nominating & Governance Committee will consider recommendations for candidates to the Board of Directors from stockholders of the Company holding no less than 1% of the Company’s securities for at least twelve (12) months prior to the date of the submission of the recommendation. Stockholders wishing to recommend persons for consideration by the Nominating & Governance Committee as nominees for election to the Company’s Board of Directors can do so by writing to the Office of the General Counsel of the Company at its principal executive offices giving:

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Candidate’s name, age, business address and residence address;

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Candidate’s detailed biographical data and qualifications including his/her principal occupation and employment history;

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The class and number of shares of the Company which are beneficially owned by the candidate;

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The candidate’s written consent to being named as a nominee and to serving as a director, if elected;

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Information regarding any relationship between the candidate and the Company in the last three (3) years;

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Any other information relating to the candidate that is required by law to be disclosed in solicitations of proxies for election of directors;

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The name and address of the recommending or nominating stockholder;

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The class and number of shares of the Company which are beneficially owned by the recommending or nominating stockholder;

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A description of all arrangements or understandings between such stockholder and each nominee and any other person or persons (naming such person or persons) relating to the nomination; and

•

Any other information specified under Section 2.5 of the Company’s Bylaws regarding advance notice.

Corporate Governance Guidelines

Our Board of Directors adopted Corporate Governance Guidelines, a copy of which is available on our website at https://investors.rudolphtech.com/corporate-governance.

Codes Of Ethics

We have adopted a Code of Business Conduct and Ethics (applicable to all employees, executive officers and directors) and a Financial Code of Ethics (applicable to our financial officers, including our CEO and Chief Financial Officer (“CFO”)) that set forth principles to guide all employees, executive officers and directors and establish procedures for reporting any violations of these principles. Copies of these codes may be found on our website at:

https://investors.rudolphtech.com/corporate-governance/code-of-business-conduct-and-ethics

https://investors.rudolphtech.com/corporate-governance/financial-code-of-ethics

or may be requested by writing to:

Rudolph Technologies, Inc.

Attention: Investor Relations

16 Jonspin Road

Wilmington, Massachusetts 01887

The Company will disclose any amendment to its codes of ethics or waiver of a provision of its codes of ethics applicable to its officers or directors, including the name of the officer or director to whom the waiver was granted, on our website at www.rudolphtech.com, on the Investors page.

Related Persons Transactions Policy

There have been no “related person transactions” since the beginning of 2018 to present, nor are there any currently proposed “related person transactions,” involving any director, director nominee or executive officer of the Company, any known 5% stockholder of the Company or any immediate family member of any of the foregoing persons (which are referred to together as “related persons”). A “related person transaction” generally means a transaction involving more than $120,000 in which the Company (including any of its subsidiaries) is a participant and in which a related person has a direct or indirect material interest.

The Board has adopted policies addressing the Company’s procedures with respect to the review, approval and ratification of “related person transactions” that are required to be disclosed pursuant to Item 404(a) of Regulation S-K. Our related person practices and policies ensure that our directors, officers and employees are proactively screened from any conflicts of interests interfering with their obligations to the Company. Our policies are included in our corporate governance documents, including our Code of Business Conduct and Ethics, Audit Committee Charter and Summary of Corporate Governance Policies, each of which is available at the Investors section of our website located at https://investors.rudolphtech.com/.

•

Pursuant to our Code of Business Conduct and Ethics, our directors, officers and employees are required to avoid any actual or apparent conflicts of interest (other than conflicts of interest that have received appropriate approval as described below), which includes taking actions or having interests that may interfere with the objective or efficient performance of such person’s duties to the Company or that may result in such person receiving improper personal benefits as a result of their position with the Company.

•

Pursuant to our Summary of Corporate Governance Policies, if a director becomes involved in any activity or interest that may result in an actual or potential conflict (or the appearance of a conflict) with the interests of the Company, that director is required to disclose such information promptly to the Board, which will determine an appropriate resolution on a case-by-case basis. This policy further reflects that all directors must recuse themselves from any discussion or decision affecting their personal, business or professional interests. Similarly, our Board will determine the appropriate resolution of any actual or potential conflict of interest involving our CEO and our CEO will determine the appropriate resolution of any conflict of interest issue involving any other officer of the Company. When necessary and appropriate, resolution of such issues may require consideration of the matter by the Audit Committee.

•

Pursuant to both the Board’s Summary of Corporate Governance Policies and the Audit Committee Charter, the Audit Committee, which consists entirely of independent directors, will review any proposed transaction in which the Company or its subsidiaries are to participate if the amount involved in the transaction exceeds $120,000 and we are aware that any related person may have a direct or indirect material interest in the transaction. The Audit Committee will consider the facts and circumstances and will approve or ratify a proposed transaction if the Audit Committee considers it appropriate and believes that such transaction will serve the long-term interests of our stockholders. The Compensation Committee of the Board reviews and approves compensation decisions for Board members and our executive officers (and such other employees of the Company as directed by the Board) pursuant to the Compensation Committee Charter.

Communications With The Board Of Directors

We have a formal policy regarding communications with the Board of Directors, which is found on our website at:

https://investors.rudolphtech.com/corporate-governance/stockholder-communications-policy

Stockholders and other interested parties may communicate with the Chairman of the Nominating & Governance Committee by writing to:

Chairman of the Nominating & Governance Committee

c/o Rudolph Technologies, Inc.

Office of the General Counsel

550 Clark Drive

P.O. Box 860

Budd Lake, New Jersey 07828

and such communications will be forwarded to the Board of Directors to the extent appropriate. Prior to forwarding any communication, the Chairman of the Nominating & Governance Committee will review it and, in his or her discretion, will not forward a communication deemed to be of a commercial nature or otherwise inappropriate for review by the Board of Directors. Stockholders and other interested parties who would like their submission directed to a member or members of the Board of Directors, including the independent members of the Board, may so specify, and the communication will be forwarded to such specific directors, as appropriate.

PROPOSAL 1

ELECTION OF DIRECTORS

Nominees

The authorized number of directors is currently established at eight (8). The Company’s Certificate of Incorporation provides that the directors be divided into three classes, with the classes serving for staggered, three-year terms. Currently, there are two (2) directors in Class I and three (3) directors in both Class II and Class III. The status of the respective terms for the classes are as follows:

Class of Director	Election Status	End of Term
Class I	Elected in 2018	2021*
Class II	Nominated for Election in 2019	2022*
Class III	Elected in 2017	2020*

* or until their successors have been duly elected and qualified

At the Annual Meeting, Class II directors will be elected to hold office for a three (3) year term expiring at the 2022 Annual Meeting of stockholders or until their respective successor is duly elected and qualified or until the director’s earlier death, resignation or removal. Based on the recommendation of the Nominating & Governance Committee, the three (3) Class II director nominees approved by the Board for inclusion in this proxy statement are:

Daniel H. Berry Vita A. Cassese Thomas G. Greig

Each nominee is currently serving as a director of Rudolph Technologies. In making its recommendations, the Nominating & Governance Committee considered a number of factors, including its criteria for Board membership, which include the minimum qualifications that must be possessed by a director candidate in order to be nominated for a position on our Board. Each nominee has indicated that he or she will serve if elected. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the Company’s three (3) nominees. In the event that any nominee of the Company becomes unable or unavailable to serve as a director at the time of the Annual Meeting (which we do not anticipate), the proxy holders will vote the proxies for any substitute nominee who is designated by the current Board of Directors to fill the vacancy. Alternatively, the Board of Directors, in its discretion, may elect to reduce the number of directors serving on the Board.

Board Composition And Refreshment

A priority of the Nominating & Governance Committee and the Board as a whole is making certain that the composition of the Board reflects the desired professional experience, skills and backgrounds in order to present an array of viewpoints and perspectives and effectively represent the long-term interests of stockholders. Further, the Board recognizes the importance of Board refreshment in order to continue to achieve an appropriate balance of tenure, turnover, diversity and skills on the Board. To this end, in 2018, the Board engaged in an extensive search to add an additional new member to the Board and upon the conclusion of these efforts appointed Vita A. Cassese to the Board in July 2018. Ms. Cassese is included as a candidate for election this year. The Board believes that the new insights and ideas contributed by Ms. Cassese will be essential to our Board and its strategy and complement the valuable experience and familiarity that longer-serving directors bring to the Company.

Vote Required

Pursuant to the Company’s Bylaws, our directors are elected by the affirmative vote of the majority of the votes cast (provided, however, that if the number of nominees exceeds the number of directors to be elected, directors will be elected by a plurality voting standard). In order for a director in an uncontested election to be elected, the number of shares cast “for” his/her election must exceed the number of votes cast “against” his/her election (with “abstentions” and “broker non-votes” not counted as a vote cast either “for” or “against” that director’s election). If a nominee who is an incumbent director is not elected, our Bylaws provide that such director must promptly tender a resignation to the Board. Our Nominating & Governance Committee would then make a recommendation to the Board on whether to accept or reject the tendered resignation, or whether other action should be taken. Within ninety (90) days after the date of the certification of the election results, our Board will act on any such

tendered resignation and publicly disclose (in a press release, a filing with the SEC or other broadly disseminated means of communication) its decision regarding the tendered resignation and the rationale behind the decision.

Information About The Nominees And Continuing Directors

Our Board and its Nominating & Governance Committee believe that all of the directors and nominees are highly qualified and have demonstrated leadership skills and have experience and judgment in areas that are relevant to our business. We believe that their ability to challenge and stimulate management and their dedication to the affairs of the Company collectively serve the interests of the Company and its stockholders.

The three (3) Class II nominees for director and the current Class I and Class III directors with unexpired terms are set forth below. All information is as of the record date.

Name	Position	Board Tenure
Nominee Class II Directors:
Daniel H. Berry	Operating Partner, Riverside Partners, LLC		20.42 years
Vita A. Cassese	Chief Executive Officer, Mardon Management Advisors		0.67 years
Thomas G. Greig	Former Senior Managing Director, Liberty Capital Partners, Inc.		16.17 years
Continuing Class I Directors:
Leo Berlinghieri	Former Chief Executive Officer and President, MKS Instruments, Inc.		10.50 years
Michael P. Plisinski	Chief Executive Officer, Rudolph Technologies, Inc.		3.33 years
Continuing Class III Directors:
Jeffrey A. Aukerman	Former Partner, Deloitte & Touche LLP		4.25 years
David B. Miller	Former President, DuPont Electronics & Communications		3.67 years
John R. Whitten	Former Chief Financial Officer, Vice President and Treasurer, Applied Industrial Technologies, Inc.		12.67 years

Except as discussed below, each nominee or incumbent director has been engaged in the principal occupation set forth above during the past five (5) years. There are no family relationships between any directors or executive officers of the Company. The Company is unaware of any arrangements or understandings among Class II nominees for director, current Class I and Class III directors and any other person(s) pursuant to which a Class II nominee was approved by the Board or a current Class I and Class III director was elected.

The following reflects additional information regarding the background and qualifications of our directors, including the experience and skills that support the Board’s determination that each director should serve on our Board.

NOMINEES FOR CLASS II DIRECTORS

Daniel H. Berry

Director Since:	October 1998
Age:	73
Independent Status:	Independent Director
Board Committee(s):	Compensation (Chairman/Member through January 2018); Nominating & Governance (beginning in January 2018)
Other Boards Served:	R&D Altanova (Since 2015) Thinklogical, LLC (2012-2017) New York University - Tandon School of Engineering (1999-2016) NDS Surgical Imaging, LLC (2009-2011) IZI Medical Products, LLC (2009-2011) Applied Precision, Inc. (2004-2007)

Since January 2002, Mr. Berry has been an Operating Partner of Riverside Partners, LLC, a private equity investment firm. From September 2010 to August 2011, Mr. Berry served as Chief Executive Officer of NDS Surgical Imaging, LLC, a supplier to the medical imaging industry. From July 2004 to August 2007, Mr. Berry also served as Executive Vice President of Applied Precision, formerly a Riverside portfolio company. He was employed by Ultratech Stepper, Inc. (presently Ultratech, Inc.), an equipment supplier to the semiconductor industry, from 1990 to 2001 in various positions including President and Chief Operating Officer from May 1999 to November 2001. Prior to this, Mr. Berry held positions at General Signal, Perkin Elmer and Bell Laboratories. Mr. Berry holds a B.S. in Electrical Engineering from the Polytechnic Institute of Brooklyn.

Specific Qualifications, Attributes, Skills and Experience

High Level of Financial Experience

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Substantial financial experience gained both as Operating Partner with Riverside Partners, LLC and in serving in executive management roles with various companies such as NDS Surgical Imaging, LLC, Ultratech, Inc. and Applied Precision, among others.

Relevant Senior Leadership / CEO Experience

•

Served as Chief Executive Officer for NDS Surgical Imaging and, within the semiconductor industry, as President and Chief Operating Officer of Ultratech, Inc. and as Executive Vice President of Applied Precision. Further, he has served as an Operating Partner of Riverside Partners, LLC for over seventeen (17) years.

Broad International Exposure

•

Roles with global companies including Bell Laboratories, Perkin Elmer, General Signal, Applied Precision, NDS Surgical Imaging and Ultratech including executive management of Asian and European organizations provide broad and deep experience in international business and customer relations.

Extensive Knowledge of Company Business/Industry

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Over forty-five (45) years of employment experience within an array of fields in the semiconductor industry including both lithography and probe card test and analysis.

Innovation/Technology Experience

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Expansive scope of technological and innovative experience from over forty-five (45) years of semiconductor industry employment.

Vita A. Cassese

Director Since:	July 2018
Age:	69
Independent Status:	Independent Director
Board Committee(s):	Audit, Compensation
Other Boards Served:	Loftware, Inc. (since 2014) Medical Knowledge Group (since 2015) Interactive Health, Inc. (since 2017) Zitter Health Insights (2015-2019) Context Matters, Inc. (2016-2017) Decision Resources Group, Inc. (2010-2012) College of Mount Saint Vincent Board (Trustee) (since 2007)

Ms. Cassese currently serves as the CEO of Mardon Management Advisors, a technology and analytics advisory firm. Ms. Cassese has over 30 years of experience in operating and strategic management roles at Pfizer, Inc., Ms. Cassese’s last held position at Pfizer, Inc. was chief information officer of its Worldwide Pharmaceuticals Group. Ms. Cassese serves as a mentor for the Masters in Technology program at Columbia University and has been a guest lecturer at New York University's Stern School of Business, MIT Sloan School of Business, and Boston University. Ms. Cassese earned a B.A. in Mathematics from the College of Mount Saint Vincent and an MBA from New York University’s Stern School of Business.

Specific Qualifications, Attributes, Skills and Experience

High Level of Financial Experience

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Substantial financial experience gained in serving in executive management roles with Pfizer, Inc. and as chief information officer of Pfizer’s Worldwide Pharmaceuticals Group.

Relevant Senior Leadership / CEO Experience

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Serves as Chief Executive Officer of Mardon Management Advisors. Additional experience as Vice President, Business Development, Strategy and Innovation for Pfizer, Inc. and CIO for Pfizer Worldwide Pharmaceuticals.

Broad International Exposure

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Roles with Pfizer included management of nearly 2,000 employees in 44 countries as well as serving on the company’s Worldwide Pharmaceuticals Executive Leadership Team responsible for long-term international business strategy.

Innovation/Technology Experience

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Extensive innovation and technology experience derived from over 30 years of operations experience, service on multiple technical advisory boards and leadership of a technology and analytics advisory firm.

Thomas G. Greig, III

Director Since:	January 2003
Age:	71
Independent Status:	Independent Director
Board Committee(s):	Nominating & Governance (through January 2018); Compensation (beginning in January 2018)
Other Boards Served:	Black Box Corporation (1999-2019)

Mr. Greig served as the Company’s independent Chairman from April 2016 to August 2018. He served as the Company’s independent Lead Director from January 2013 through March 2016.

Mr. Greig was employed by Liberty Capital Partners, Inc., a private equity investment firm, from July 1998 to June 2016 and last held the position of Senior Managing Director. From December 1985 to July 1998, Mr. Greig was a Managing Director of Donaldson, Lufkin, & Jenrette, Inc., an investment-banking firm. Mr. Greig holds a B.S. in Engineering from Princeton University, an M.S.E. in Electrical Engineering from New York University and an M.B.A. from Harvard University Graduate School of Business Administration.

Specific Qualifications, Attributes, Skills and Experience

High Level of Financial Experience

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Wide-ranging acquisition and financial background as a result of his affiliation with Liberty Capital Partners, Inc., a private equity investment firm, for over nineteen (19) years and Donaldson, Lufkin, & Jenrette, Inc., an investment banking firm, for over twelve (12) years.

Relevant Senior Leadership / CEO Experience

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Served as in senior management roles for over 30 years, both as Senior Managing Director of Liberty Capital Partners, Inc. and as Managing Director of Donaldson, Lufkin, & Jenrette, Inc.

The Company’s Board of Directors unanimously recommends voting

“FOR” each of the nominees set forth above.

CONTINUING CLASS I DIRECTORS

Leo Berlinghieri

Director Since:	September 2008
Age:	65
Independent Status:	Independent Director
Board Committee(s):	Nominating & Governance (Chairman)
Other Boards Served:	Unipower, LLC (Since 2017) MKS Instruments, Inc. (2005-2013) Massachusetts High Technology Council, Inc. (2006-2013)

From July 2005 to December 2013, Mr. Berlinghieri served as Chief Executive Officer and President of MKS Instruments, Inc., a critical subsystem and instrument provider to the semiconductor industry. From April 2004 to July 2005, Mr. Berlinghieri served as President and Chief Operating Officer and prior to that served as Vice President and Chief Operating Officer from July 2003 to April 2004 for MKS Instruments, Inc.

Specific Qualifications, Attributes, Skills and Experience

High Level of Financial Experience

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Substantial financial experience gained in roles as Chief Executive Officer, President and Vice President and Chief Operating Office with MKS Instruments, Inc.

Relevant Senior Leadership / CEO Experience

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Served for over eight (8) years as Chief Executive Officer and President of MKS Instruments, Inc. Additional prior experience as Vice President and Chief Operating Officer of the company, among other senior management roles.

Broad International Exposure

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Gained extensive international experience in various roles with MKS Instruments, including Chief Executive Officer, Chief Operating Officer and Vice President of Global Sales and Service.

Extensive Knowledge of Company Business/Industry

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Over thirty-three (33) years of experience in the semiconductor industry, including eight (8) years at the helm of MKS Instruments, Inc. a public corporation. Also served on the SEMI North America Advisory Board (NAAB) including as its chairman in 2009.

Innovation/Technology Experience

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Broad array of technological experience with MKS Instruments, Inc., including roles in manufacturing, customer support, and sales all in addition to his roles as Chief Executive Officer and Chief Operating Officer.

Michael P. Plisinski

Director Since:	November 2015
Age:	49
Independent Status:	Non-Independent Director
Board Committee(s):	None
Other Boards Served:	None

Mr. Plisinski has served as the Company’s Chief Executive Officer since November 2015. Prior to his appointment as our CEO, Mr. Plisinski served as our Executive Vice President and Chief Operating Officer from October 2014 to November 2015 and as Vice President and General Manager, Data Analysis and Review Business Unit from February 2006 when the Company merged with August Technology Corporation until October 2014. From February 2004 to February 2006, Mr. Plisinski served as August Technology’s Vice President of Engineering and, from July 2003 to February 2004, as its Director of Strategic

Marketing for review and analysis products. Mr. Plisinski joined August Technology as part of the acquisition of Counterpoint Solutions, a supplier of optical review and automated met rology equipment to the semiconductor industry, where he was both sole founder and President from June 1999 to July 2003. Mr. Plisinski has a B.S. in Computer Science from the University of Massachusetts and has completed the Advanced Management Program fr om Harvard Business School.

Specific Qualifications, Attributes, Skills and Experience

High Level of Financial Experience

•

Substantial financial experience gained in roles as Chief Executive Officer, Chief Operating Officer and Vice President, General Manager with the Company.

Relevant Senior Leadership / CEO Experience

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Serving as Chief Executive Officer of Rudolph Technologies with prior experience as Chief Operating Officer and Vice President, General Manager of the Company’s Data Analysis and Review Business Unit, among other senior management positions.

Broad International Exposure

•

Extensive experience working with Rudolph Technologies Asian and European customers through the various roles held within the Company.

Extensive Knowledge of Company Business/Industry

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Over fifteen (15) years of dedicated experience with Rudolph Technologies and additional four (4) years as founder of an optical review and automated metrology start-up company, each serving the semiconductor industry.

Innovation/Technology Experience

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Technological and innovative experience includes leadership roles in both engineering and software development while with Rudolph Technologies. Prior entrepreneurial experience in the founding of optical review and automated metrology equipment company, Counterpoint Solutions.

CONTINUING CLASS III DIRECTORS

Jeffrey A. Aukerman

Director Since:	December 2014
Age:	53
Independent Status:	Independent Director
Board Committee(s):	Audit (Chairman beginning in July 2018), Compensation
Other Boards Served:	Advisory Council to the Lariccia School of Accounting & Finance at Youngstown State University (since 2012)

Mr. Aukerman is a certified public accountant and has extensive public accounting and consulting experience, serving many public and private equity sponsored public reporting companies in the manufacturing, distribution and services industries. From July 1987 to May 2014, Mr. Aukerman was employed by Deloitte & Touche LLP, which, together with its affiliates, is an audit, consulting, tax and advisory services firm, and served as an audit partner for the most recent fifteen (15) years. He also served in various capacities for the firm, including as an audit function professional practice director for the Cleveland, Ohio office and a regional leader of internal control subject matter specialists. Mr. Aukerman graduated magna cum laude with a B.S.B.A. in Accounting from Youngstown State University.

Specific Qualifications, Attributes, Skills and Experience

High Level of Financial Experience

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Twenty-seven (27) years of extensive experience with a wide range of financial reporting, accounting, risk management, and compliance matters at Deloitte & Touche LLP.

Relevant Senior Leadership / CEO Experience

•

Served as Partner at Deloitte & Touche LLP.

David B. Miller

Director Since:	July 2015
Age:	62
Independent Status:	Independent Director
Board Committee(s):	Audit, Compensation (Chairman beginning in January 2018)
Other Boards Served:	President, University of Virginia School of Engineering & Applied Science Foundation (since 2011); Merrimac Industries, Inc. (2002-2008) SEMI International (2011-2015) North Carolina Chamber of Commerce (2010-2015)

Mr. Miller has served as the Company’s non-executive Chairman since August 2018. From June 1981 to November 2015, Mr. Miller served in various positions, most recently as President, with DuPont Electronics & Communications, an electronic materials company. Mr. Miller holds a B.S. in Electrical Engineering from the University of Virginia.

Specific Qualifications, Attributes, Skills and Experience

High Level of Financial Experience

•

Substantial financial experience gained in role with DuPont Electronics & Communications including as President of the company. Oversight of complex financial transactions, profit and loss responsibility and investor relations during prior operations and leadership roles with this company.

Relevant Senior Leadership / CEO Experience

•

Served as President of DuPont Electronics & Communications.

Broad International Exposure

•

Served as President of DuPont Electronics & Communications, a global electronic materials company. Served several joint venture boards in the U.S. and Asia while with DuPont Electronics & Communications as well as the board of SEMI International. Resided in Tokyo, Japan for three (3) years.

Extensive Knowledge of Company Business/Industry

•

Forty (40) years of experience within the electronics industry including six (6) years at the helm of DuPont Electronics & Communications, which in addition to other markets, served the semiconductor industry.

Innovation/Technology Experience

•

Significant experience and leadership roles with DuPont Electronics & Communications, overseeing the company’s technology advancement, breadth of process expertise and ongoing innovation.

John R. Whitten

Director Since:	July 2006
Age:	72
Independent Status:	Independent Director
Board Committee(s):	Audit (Chairman through July 2018), Nominating & Governance
Other Boards Served:	American Century Investments (since 2008)

From November 1995 to December 2003, Mr. Whitten served as Chief Financial Officer, Vice President and Treasurer of Applied Industrial Technologies, Inc., a global supply distributor of customized industrial, fluid power, and flow control products and provider of engineering design and systems integration services. Prior to this, Mr. Whitten served this company as its Chief Accounting Officer for over 10 years. Mr. Whitten is a C.P.A. and holds a B.B.A. in Accounting from Cleveland State University.

Specific Qualifications, Attributes, Skills and Experience

High Level of Financial Experience

•

Has public accounting firm experience and served for eight (8) years as Chief Financial Officer, Vice President and Treasurer of Applied Industrial Technologies, Inc. Currently serving as Audit Committee Chairman for the Board of American Century Investments, a registered investment company that oversees sixty-eight (68) mutual fund portfolios with over $100 billion of assets under management.

Relevant Senior Leadership / CEO Experience

•

Served as Chief Financial Officer, Vice President and Treasurer of Applied Industrial Technologies, Inc.

Compensation Of Directors

Directors who are employees of the Company receive no compensation for their services as members of the Board of Directors. Director compensation is a mix of cash and equity-based compensation, which is largely comprised of the equity component to align with the Company’s long-term performance and stockholder interests. To enhance this alignment further, the Board increased the stock holding requirements for all outside directors and the CEO as discussed below.

The components of the compensation for directors who are not employees of the Company are as follows:

Board Compensation Element	Amount/Value
Annual Retainer	$70,000	¹
Annual Equity Grant (Restricted Stock Units (RSUs))	$100,000	²
Committee Chairmanship	$15,000	¹
Board Chairmanship	$40,000	¹
Initial Equity Grant (Restricted Stock Units (RSUs))	$100,000	³

Paid in quarterly installments at the middle of each quarter

Awarded at second quarter Board meeting in an amount of shares calculated by dividing amount by the Company Common Stock closing stock price on the date of grant, rounded to the nearest 100 shares.

Awarded as of the first Board meeting following election or appointment and calculated in the same manner as the annual equity grant above but prorated by the number of quarters between such first meeting and the date on which the next annual equity grant is scheduled to be awarded.

Any initial equity grants and/or annual equity grants typically vest on the first anniversary of the grant date. All 2018 equity awards were granted under and subject to the terms of the Rudolph Technologies, Inc. 2018 Stock Plan.

In 2018, directors were not paid to serve on the committees of the Board of Directors with the exception of those directors serving as committee chairs during 2018. Mr. Berlinghieri (Nominating & Governance Committee Chairman), Mr. Whitten (Audit Committee Chairman through July 2018), Mr. Aukerman (Audit Committee Chairman beginning in July 2018), Mr. Berry (Compensation Committee Chairman through January 2018) and Mr. Miller (Compensation Committee Chairman beginning in January 2018), each received cash compensation in 2018 for their services as Committee Chairmen consistent with that cited in the table above. From time to time, directors may be compensated for work performed as members of special subcommittees of the Board of Directors. Notwithstanding the foregoing, no fees were paid to directors for special subcommittee work in 2018.

In 2018, Mr. Greig received the above referenced annual retainer for the independent Chairman of the Board as compensation for his service in this role through August 2018. Thereafter, Mr. Miller received the above referenced annual retainer for the independent Chairman of the Board as compensation for his service in this role for the remainder of 2018.

For the year ended December 31, 201 8 , the directors, excluding the directors who are named executive officers, received total compensation indicated in the table below. There were no option awards , non-equity incentive plan compensation, or pension and nonqualified deferred compensation earnings granted to such directors . T hey did not earn any type of compensation during the year other than what is disclosed in the following table:

Name	Fees Earned or Paid in Cash	Stock Awards (1)	All Other Compensation	Total
Jeffery A. Aukerman	$77,500	$100,595	$0	$178,095
Leo Berlinghieri	$85,000	$100,595	$0	$185,595
Daniel H. Berry	$71,250	$100,595	$0	$171,845
Vita A. Cassese	$17,500	$74,412	$0	$91,912
Thomas G. Greig	$100,000	$100,595	$0	$200,595
David B. Miller	$93,750	$100,595	$0	$194,345
John R. Whitten	$77,500	$100,595	$0	$178,095

(1)

Represents the grant date fair value for each share-based compensation award granted during the year, calculated in accordance with FASB ASC Topic 718. The assumptions used in determining the grant date fair value of these awards are set forth in Note 9 to our consolidated financial statements, which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 filed with the SEC. As of December 31, 2018, our directors had the following stock awards outstanding: Mr. Aukerman – 3,100 RSUs; Mr. Berlinghieri – 3,100 RSUs; Mr. Berry – 3,100 RSUs; Ms. Cassese – 3,900 RSUs; Mr. Greig – 3,100 RSUs; Mr. Miller – 3,100 RSUs; and Mr. Whitten – 3,100 RSUs.

Stock Ownership/Retention Guidelines For Directors

The Company has established guidelines related to stock ownership and retention for its outside directors. Currently, the guidelines require that each non-employee director of the Company own shares of Company Common Stock valued at a minimum of three (3) times the amount of the director’s total cash compensation which includes the annual cash retainer as well as any additional fee paid to those individuals who are Committee Chairs, Lead Director or Chairman of the Board. For a new director the stock holding requirement is to be attained within three (3) years of his or her initial election or appointment to the Board.

PROPOSAL 2

ADVISORY VOTE ON EXECUTIVE COMPENSATION

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, enables our stockholders to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with SEC rules. Consistent with the recommendation of the Board of Directors and the preference of our stockholders as reflected in the non-binding advisory vote on the frequency of future advisory votes on named executive officer compensation held at the 2017 Annual Meeting of Stockholders, the Company currently holds an annual “say on pay” vote.

Our executive compensation arrangements are designed to enhance stockholder value on an annual and long-term basis. Through the use of base pay as well as annual and long-term incentives, we seek to compensate our named executive officers for their contributions to our profitability and success. Please read the Compensation Discussion and Analysis beginning on page 30 of this proxy statement and the tabular and additional narrative disclosures on executive compensation beginning on page 52 of this proxy statement for additional details about our executive compensation arrangements, including information about the fiscal year 2018 compensation of our named executive officers.

This advisory vote addresses the overall compensation of our named executive officers as well as our philosophy and policies regarding executive compensation practices as described in this proxy statement. We are asking our stockholders to indicate their support for our compensation arrangements as described in this proxy statement.

For the reasons discussed above, the Board recommends that stockholders vote in favor of the following resolution:

“ RESOLVED, that the Company’s stockholders APPROVE, on an advisory basis, the compensation paid to the Company’s named executive officers, as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion and other related tables and disclosures.”

Because your vote is advisory, it will not be binding upon or overrule any decisions of the Board, nor will it create any additional fiduciary duty on the part of the Board. This advisory vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and our compensation philosophy, policies and practices described in this proxy statement, and does not seek to have the Board or Compensation Committee take any specific action. However, the Board and the Compensation Committee value the view expressed by our stockholders in their vote on this proposal and will take into account the outcome of the vote when considering executive compensation matters in the future.

Vote Required

The affirmative vote, in person or by proxy, of a majority of the shares present or represented at the meeting and entitled to vote will be required to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement.

The Board recommends a vote “FOR” the approval of the compensation of

the named executive officers as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K as required by Section 14A(a)(1) of the Exchange Act.

PROPOSAL 3

RATIFICATION OF APPOINTMENT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

Although ratification by stockholders is not required by law, the Board of Directors is submitting the Audit Committee’s selection of Ernst & Young LLP (“E&Y”) as the Company’s independent registered public accounting firm for fiscal year 2019 for ratification as a matter of good corporate governance and recommends that the stockholders vote for ratification of such appointment. In the event of a negative vote on such ratification, the Board of Directors will reconsider its selection. Even if the selection is ratified, the Audit Committee may appoint a new independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change would be in the best interests of the Company and its stockholders. Representatives of E&Y, the independent registered public accounting firm presented herein, will be in attendance at the Annual Meeting and will have the opportunity to make a statement, if they desire to do so, and to respond to appropriate questions.

Independent Registered Public Accounting Firm Selection Process

Ernst & Young LLP has served as the Company’s independent registered public accounting firm since March 2008. During this time, the firm has demonstrated:

•

A high degree of independence and professionalism in their audit engagement with the Company;

•

A solid record of partner and professional staff continuity;

•

A knowledge of current and emerging accounting and auditing issues affecting the Company;

•

A deep and ongoing understanding of the Company’s business model and industry; and

•

A readiness to assist the Company and the audit committee in keeping up-to-date with the latest accounting and auditing pronouncements and their application to the Company’s business.

In making its selection of an independent registered public accounting firm, the Audit Committee assesses, among other factors:

•

The performance of the independent registered public accounting firm in the prior year;

•

The anticipated needs of the Company and ability of the accounting firm to address them in the coming year;

•

The proposed fees for the coming year; and

•

The potential impact of changing auditors for the coming year.

Ultimately, the decision of the independent registered public accounting firm is made with the best interest of the Company and its stockholders in mind.

Factors Used To Assess Independent Registered Public Accounting Firm Quality

Members of the Audit Committee have experience in dealing with audits of other public companies as well as experience with other accounting firms. After receiving proposals and presentations from a number of firms in 2008, the Audit Committee’s basis for the selection of E&Y as the Company’s independent registered public accounting firm included, among other considerations, E&Y’s breadth of services and international footprint as well as expense considerations. On an ongoing basis, E&Y has been responsive, reliable and professional in their dealings with the Audit Committee and have appropriately assisted the Committee in its oversight of the Company’s financial processes and financial statements. In addition, E&Y makes available to the Company specialists within their firm to assist in the audit when consultation on specific and unique issues arise. These processes appear to be effective in assisting E&Y with their audit engagement.

As a part of the Audit Committee’s review of E&Y’s qualifications, E&Y provides the Company with the firm-wide comments from the Public Company Accounting Oversight Board (PCAOB) regarding this Board’s examinations of E&Y for the prior year. E&Y also updates the Company with the quality improvements that the firm has made as a result of the PCAOB comments as well as other changes to their quality and risk assessment processes.

Audit Committee’s Involvement In The Lead Partner Selection

In keeping with their independence policy, E&Y employs a regular schedule of rotation of the both the lead engagement partner (“Lead Partner”) and the support staff. This rotation provides for sufficient overlap of the new Lead Partner with the outgoing Lead Partner. This process allows for the members of the Audit Committee and the Company management to become familiar with the new Lead Partner and new staff and to introduce them to the Company’s business. Prior to the new Lead Partner’s full engagement, the Audit Committee and Company management meet with E&Y to review and offer feedback on the industry experience, financial acumen and anticipated fit of the new Lead Partner with the Company.

Policy On Audit Committee Pre-Approval Of Audit And Permissible Non-Audit Services Of Independent Registered Public Accounting Firm

The Audit Committee pre-approves all audit and permissible non-audit services provided by the Company’s independent registered public accounting firm. These services may include audit services, audit-related services, tax and other services. Pre-approval is generally provided for up to one (1) year, and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis. During 2018, all services provided by Ernst & Young LLP were pre-approved by the Audit Committee in accordance with this policy.

Fees Billed To The Company By Ernst & Young LLP For 2018 And 2017

For the years ended December 31, 2018 and 2017, aggregate fees for professional services rendered by our independent registered public accounting firm, Ernst & Young LLP, in the following categories were as follows:

Fees	2018	2017
Audit	$1,066,402	$1,160,779
Audit Related	31,500	31,500
Tax	47,620	111,250
All Other	2,000	1,995
Total	$1,147,522	$1,305,524

Audit Fees

Audit fees for the years ended December 31, 2018 and 2017 were for the audit of the Company’s annual financial statements and a review of those financial statements included in the Company’s quarterly reports on Form 10-Q and may include services that are normally provided by the independent registered public accounting firm in connection with regulatory filings or engagements including any comfort letters and consents for financings and filings made with the SEC.

Audit Related Fees

Audit related fees for the years ended December 31, 2018 and 2017 were for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s annual financial statements and are not reported under “Audit Fees,” specifically fees for employee benefit plan audits.

Tax Fees

Tax fees may include fees for tax compliance, tax planning and tax advice. Tax fees for the years ended December 31, 2018 and 2017 were for tax advice.

All Other Fees

All other fees would consist of fees for products and services other than the services described above. For the years ended December 31, 2018 and 2017, all other fees included payments for an accounting and auditing information tool.

Negotiation of the annual independent registered public accounting firm fees is the responsibility of the Audit Committee with the support of the Company’s CFO. All of the fees listed in the chart above were pre-approved by the Audit Committee, which concluded that the provisions of such services by Ernst & Young LLP were compatible with the maintenance of that firm’s independence in the conduct of its audit functions.

Vote Required

The affirmative vote, in person or by proxy, of a majority of the shares present or represented at the meeting and entitled to vote will be required to ratify Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2019.

The Company’s Board of Directors unanimously recommends voting “FOR” the

ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2019.

AUDIT COMMITTEE REPORT

The following is the Audit Committee’s report submitted to the Board of Directors for the year ended December 31, 2018.

The Audit Committee of the Board of Directors has:

•

reviewed and discussed with management and with Ernst & Young LLP, the Company’s independent registered public accounting firm, together and separately, the Company’s audited consolidated financial statements contained in its Annual Report on Form 10-K for the year ended December 31, 2018;

•

discussed with Ernst & Young LLP, the matters required to be discussed by Statement on Auditing Standards No. 1301, Communications with Audit Committees;

•

received the written disclosures and the letter from Ernst & Young LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with Ernst & Young LLP its independence; and

•

discussed and reviewed with the Company’s manager - internal audit (“Mgr-IA”) and Ernst & Young LLP, with and without management present, the Company’s work in complying with the requirements of Section 404 under the Sarbanes-Oxley Act of 2002 regarding internal controls over financial reporting. In connection therewith, the Audit Committee also discussed with the Mgr-IA, with and without other members of management present, management’s assessment of the effectiveness of internal controls over financial reporting as of December 31, 2018. The Audit Committee also discussed Ernst & Young LLP’s audit report on internal controls over financial reporting as of December 31, 2018 with management and Ernst & Young LLP.

Based on the foregoing review and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.


	THE AUDIT COMMITTEE


	Jeffrey A. Aukerman (Chairman)
	Vita A. Cassese David B. Miller John R. Whitten

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis contains a discussion of the material elements of compensation awarded to, earned by, or paid to the Company’s “Named Executive Officers” listed in the table below (“NEOs”), including our principal executive officer, the principal financial officer, and the next three most highly compensated executives of the Company in 2018.


Rudolph Technologies’ Named Executive Officers (NEOs)
Name	Title
Michael Plisinski	Chief Executive Officer
Steven Roth	Senior Vice President, Finance and Administration and Chief Financial Officer
Robert Koch	Vice President and General Counsel
Richard Rogoff	Vice President and General Manager, Lithography Systems Group
Elvino da Silveira	Vice President, Business Development

EXECUTIVE SUMMARY

Our Business

We are a global leader in the design, development, manufacture and support of defect inspection, lithography, process control metrology, and process control software used by semiconductor and advanced packaging device manufacturers worldwide. We also provide services relating to the maintenance and repair of our products, installation services and training. Semiconductor capital equipment is our primary served market.

201 8 Financial Highlights

In 2018, for the first time in the Company’s public company history, the Company realized its fourth consecutive year of record sales. In addition, the Company maintained its operating income performance consistent with the two prior years. Both of these achievements helped to drive strong financial performance in 2018. The following reflects some of our financial accomplishments in 2018 as compared to 2017 and 2016:

*Record Year

Results Of Our 2018 Stockholder Vote On Executive Compensation

Our Board recognizes the fundamental interest our stockholders have in the compensation of our executive officers. At our 2018 Annual Meeting, 96% of stockholders present at the meeting voted in favor of our advisory vote on executive compensation. Our stockholders also responded favorably to our 2018 Stock Plan, which was approved by stockholder vote on May 16, 2018.

COMPENSATION PROGRAM OBJECTIVES, DESIGN AND PRACTICES

Our Compensation Philosophy And Principles

Rewarding continuous improvement in financial and operating results and the creation of stockholder value are key attributes of our compensation philosophy, which serves as the framework for the Company’s executive compensation program. The Compensation Committee of the Board of Directors of the Company (referred to as the “Committee” or the “Compensation Committee”) has developed a set of core objectives and principles that it has used to develop the executive compensation program. The specific objectives of our executive compensation program are to:

•

Attract, retain, and motivate executive talent;

•

Align compensation with Company and individual performance; and

•

Foster an ownership mentality that aligns our executives’ interests with stockholder interests.

Consistent with the foregoing, the Compensation Committee believes that the most effective executive compensation program is one that is designed to reward the achievement of specific strategic and operating goals of the Company on both an annual and a long-term basis, and which aligns our executives’ interests with those of our stockholders. The Compensation Committee evaluates both performance and compensation to ensure that the Company maintains its ability to attract and retain superior employees in key positions. Based on that evaluation, the Compensation Committee designs the compensation provided to key employees to remain competitive relative to the compensation paid to similarly situated executives at competitor companies. The Compensation Committee believes executive compensation packages provided by the Company to its executives, including the NEOs, should include base salary, annual cash incentive opportunities, select perquisites and stock-based compensation, including equity incentive opportunities which rewards performance as measured against pre-established goals.

The following principles support the objectives and design of the compensation program:

•

The compensation program is designed to be fair and competitive, from an internal and external perspective, taking into account the role, unique qualifications and distinct responsibilities of each executive;

•

A substantial portion of an executive’s compensation is designed to be at risk and linked to the achievement of both corporate and individual goals and changes in stockholder value;

•

A retirement provision which is designed to provide financial stability following employment but will not be the focal point of why executives choose to work for the Company;

•

The use of select, limited perquisites and other executive benefits are designed to serve a business purpose; and

•

All compensation program elements taken as a whole are designed to help focus executives to achieve the Company’s financial and strategic goals.

To underscore the importance of “pay-for-performance” in our compensation philosophy and our Company’s culture, the Compensation Committee has developed incentive arrangements based on performance standards established at levels which the Committee believes, at target achievement, will incentivize our executives to meet or exceed industry performance. The incentive component of the Company’s executive compensation program, also referred to as the Key Executive Incentive Compensation Plan, rewards executives for achieving specific corporate, business unit and individual goals as well as strategic and operational measures depending on the executive involved.

Our long-term incentive program includes grants of performance-based stock units (“PSUs”) which are earned based on the achievement of Total Shareholder Return (“TSR”) performance relative to peers over a three (3) year period. Our long-term incentive program also includes service-based RSUs, which vest in equal annual increments over time. All grants are currently made under the stockholder approved Rudolph Technologies, Inc. 2018 Stock Plan and shares earned and vested are subject to the Company’s stock ownership and retention guidelines.

The Company strives to promote an ownership mentality among its key leadership and the Board of Directors, in part through the guidelines described below under the heading “Stock Ownership/Retention Guidelines.” We believe this “skin in the game” approach further mitigates the incentive to take on unnecessary risks. To that end, a stock ownership requirement for independent directors has been established such that the minimum number of shares to be held by each director is equivalent in value of three (3) times their respective total annual cash compensation. For the CEO, the stock ownership requirement reflects a minimum share ownership equivalent in value to three (3) times the CEO’s year-end base salary. As for the NEO’s, the stock ownership requirement reflects a minimum share ownership equal to the NEO’s current year-end base salary. In further support of this approach, our Board of Directors previously established an anti-pledging and anti-hedging policy to

ensure that personal interests relating to the stock holdings of officers and directors do not conflict with their dut ies to the Company.

NEO Compensation Elements

Our executive compensation program is generally comprised of four parts, each intended to address different objectives: base salary, annual cash performance incentives, long-term equity incentives, which generally are in the form of both performance-based vesting and service-based vesting RSU grants, and limited perquisites.

The table below highlights the foregoing key elements of our executive compensation structure.

NEO Compensation Elements
Element	Form	Description
Base Salary	Fixed Cash Compensation	Competitive cash compensation that takes into consideration the scope and complexity of the role, individual qualifications, experience, and internal value to the Company.
Annual Cash Incentive Plan	Annual Performance-Based Cash Compensation	Annual cash incentive contingent on meeting performance criteria related to corporate, business unit/department, and individual performance objectives.
Long-Term Equity Incentive Program	Performance- and Time-Based Restricted Stock Units	A set percentage of PSUs that are earned based on TSR performance relative to peers, with remaining percentage of the RSUs vesting incrementally over a fixed period.
Executive Perquisites	Monthly car allowance Income tax preparation Airline club membership	Limited perquisites, consistent with market practice, that promote efficient use of executives’ time and attract and retain executive talent.

The Compensation Committee aligns the Key Executive Incentive Compensation Plan, which encompasses our annual cash incentive plan and long-term incentive equity program, with the Company’s performance relative to pre-established performance goals based on the Company’s stated financial objectives, historical performance, and anticipated market and economic conditions for the performance period.

In adopting this design, the Compensation Committee considered a number of parameters, including the advice of its independent compensation consultant, comparable practices within the industry and the desire to achieve the goals underlying the compensation program. The Compensation Committee believes that as a result of this program the Company has been able to attract, retain and motivate executives and reward the achievement of strategic, operational and financial goals, thereby enhancing stockholder value.

Our Compensation Practices

The Compensation Committee has adopted the following practices and policies with respect to the Company’s executive compensation program:


What We Do
Committee Independence	The Compensation Committee consists of independent directors and reserves time at each meeting to meet in executive session without management present.
Independent Compensation Consultant	The Compensation Committee has engaged its own independent compensation consultant and annually assesses the consultant’s performance, independence, and whether any potential conflicts of interest exist.
Independent Legal Advisor	The Compensation Committee has engaged its own independent legal advisor specializing in corporate compensation issues, as necessary.
CEO Goal Setting and Performance Evaluation	The Compensation Committee, with the input of the full Board, engages in formal goal setting and performance evaluation processes with the CEO.
Peer Group	The Compensation Committee has established formal criteria for the selection of peer group companies used as a competitive reference point with respect to executive and director compensation, program design and practices, and financial and stock performance.
Share Ownership Guidelines	The Company maintains rigorous share ownership guidelines, which apply to executives and directors, and serve as a risk-mitigating feature within our compensation structure.
Double Trigger Change-in-Control	The Company has entered into employment agreements with senior executives, including the CEO, that contain change-in-control severance protection. Executives are entitled to severance in the event of both a change-in-control of the Company and a qualifying termination of employment (“double trigger”).
Clawback Policy	The Company has adopted a policy that provides for the recovery or adjustment of amounts previously awarded or paid to a NEO in the event that financial results or other performance measures on which the award or payment were determined are restated or adjusted.
What We Don’t Do
Anti-Hedging and Pledging Policies	The Company’s insider trading policy prohibits hedging transactions related to our Common Stock. Additionally, under the Company’s anti-pledging policy, non-employee directors and executive officers are prohibited from making any new pledges of Company securities as collateral for a loan, or otherwise making a new transfer of Company securities to a margin account.
Tax Gross-Ups on Perquisites or Severance	The Company does not provide any tax gross-up payments to cover personal income taxes on perquisites or severance benefits related to a change-in-control.

Compensation Consultant

From time to time, the Compensation Committee has engaged the services of outside compensation consultants to provide advice on compensation plans and issues related to the Company’s executive and non-executive employees. In 2018, the Committee again engaged Pay Governance LLC, an independent executive compensation consulting firm, to provide advice on the Company’s executive compensation arrangements. Pay Governance LLC does not provide any services other than those related to compensation consulting and does not provide any services to Company management. The Committee has determined that Pay Governance LLC is independent within the meaning of the Compensation Committee Charter and NYSE listing standards, and the work of Pay Governance LLC for the Committee does not raise any conflicts of interest.

Independent Legal Counsel

The Compensation Committee has engaged, as necessary, the services of independent outside legal counsel for compensation issues. No independent counsel was engaged for compensation issues in 2018.

Role Of Executives In Establishing Compensation

The Compensation Committee makes all determinations regarding executive compensation subject to approval by the independent members of the Board. On an annual basis, the Committee evaluates our CEO’s performance in light of the goals and objectives established for measuring his or her performance at the beginning of the previous fiscal year. The results of this evaluation guide the Committee in setting our CEO’s salary, cash incentive award opportunity and equity compensation. The CEO does not participate in the Compensation Committee’s or Board’s deliberations regarding his or her compensation.

With regard to compensation for executives other than the CEO, the Committee seeks input from the CEO. Each year, the CEO is responsible for establishing proposed personal and corporate objectives for each of the Company’s other executives, including our other NEOs. These objectives, subject to the approval of the Compensation Committee, are reviewed and agreed upon by the CEO with the executive. In addition, as part of the annual performance review of the Company’s executives, the CEO assesses the performance of his or her direct reports and recommends any merit increase to be proposed for each individual. These recommendations are compiled by the CEO into executive compensation plans which include any proposed merit increases, each executive’s personal and corporate objectives, proposed annual incentive award opportunities (expressed as a percentage of their base salary) and equity grant proposals, and are submitted to the Compensation Committee for review and consideration for approval. At the Compensation Committee meeting during which the executive compensation plans are reviewed, the CEO attends the initial session to present the proposed plans and to answer questions. Thereafter, the Compensation Committee meets without the CEO present to review, discuss and recommend for approval all executive compensation plans, subject to any modifications made by the Committee. The Committee then recommends such compensation packages to the independent members of the Board of Directors for approval.

Compensation Committee Activity

During 2018, the Compensation Committee met five (5) times. As discussed above, in early 2018 the Company’s CEO met with the Compensation Committee to present the proposed compensation plans for each of the Company’s executives as well as the proposed incentive award opportunities under the 2018 Employee Cash Bonus Program for certain non-executive employees. At each of its meetings held during 2018, the Compensation Committee met in executive session, without the presence of the CEO or any other Company executives, to review the relevant compensation matters.

In 2018, the Compensation Committee took a number of actions. These included reviewing and recommending for approval by the independent members of the Board:

•

the annual compensation of the Company’s CEO for 2018;

•

annual compensation for each of our other executive officers for 2018;

•

the Key Executive Incentive Compensation Plan and Employee Cash Bonus Programs for 2018; and

•

the service-based and performance-based equity incentive awards and related performance targets for the Company’s executives for 2018.

In reviewing and setting the annual compensation for each executive of the Company, the Compensation Committee considered the amounts payable under each of the elements of their respective compensation plans, including base salary, annual cash

incentive aw ards, equity grants and perquisites. The Committee took into consideration both the Company’s internal pay equity as well as the competitive environment within which the Company operates. In each instance, the Committee determined that the base salary and annual and long-term incentive award opportunities for the individual executives were at an acceptable level for 201 8 and that the perquisites were appropriate for the related positions.

In late 2018, the Compensation Committee, reviewed our annual- and long-term incentive programs for 2019. At this time, measures were again selected that were determined to be consistent with advancing the interests of the Company’s stockholders and aligning and supporting the Company’s business strategy.

Based on the foregoing, in early 2019, the Compensation Committee met and took a number of actions. These included the review and recommendation for approval by the independent members of the Board of:

•

the annual compensation of the Company’s CEO for 2019;

•

the annual compensation for each of our other executive officers for 2019;

•

the Key Executive Incentive Compensation Plan and Employee Cash Bonus Programs for 2019; and

•

the service-based and performance-based equity incentive awards and related performance targets for the Company’s executives for 2019.

Peer Companies

In order to meet its objective of maintaining competitive executive compensation packages, the Committee obtains third-party compensation information from time to time and reviews executive compensation programs of comparable, publicly held, high technology companies.

The Committee has engaged independent compensation consultants at various times in the development and evaluation of its compensation programs. To the extent that independent compensation consultants are not engaged to consult with the Committee with respect to compensation for a position or time period, the Committee obtains market compensation information using internal resources at the Company. The Committee reviews data related to compensation levels and programs of other similar companies prior to making its decisions, but only considers such information in a general manner in order to obtain a better understanding of the current compensation practices within our industry. In the fall of 2012 and through 2019, the Committee engaged Pay Governance LLC to provide peer group data and perform an assessment of compensation levels provided to executives.

Data representing company proxy disclosures and industry compensation surveys was used in conducting this assessment. The peer group of industry related companies that was developed was based generally on the following criteria:

•

Semiconductor equipment industry (publicly traded companies);

•

Revenues of approximately $500 million or less;

•

Market capitalization of less than $1 billion; and

•

Competitors for business and employee talent.

Since the initially establishing a compensation peer group with advice of our compensation consultant, our list of peer companies has evolved. Companies have been removed over time due to being acquired or a re-evaluation of the fit with the Company’s peer group criteria, while other companies have been added. The peer group for the 2019 and 2018 review (which was used to make decisions regarding the respective year’s compensation), as approved by the Committee, consisted of the following companies.



Companies Included In Compensation Peer Group For 2019
Advanced Energy Industries, Inc.	Cohu, Inc.	Maxwell Technologies, Inc.
Amtech Systems, Inc. (1)	DSP Group, Inc.	Nanometrics Incorporated
Axcelis Technologies Inc.	EMCORE Corporation	Sigma Designs, Inc.
Brooks Automation Inc.	FormFactor Inc.	Veeco Instruments, Inc.

Companies Included In Compensation Peer Group For 2018 But Excluded For 2019
Electro Scientific Industries, Inc. (1)	Xcerra Corporation (1)

(1)

Removed in 2019 due to being acquired by another company.

The pay practices of the foregoing peer group were analyzed for base salary and short-term and long-term incentives. Periodically, peer groups are used to evaluate other programs such as executive retirement, perquisites and severance policies. Our peer group data is supplemented by broader technology industry data from compensation surveys to further facilitate the evaluation of compensation levels and design. Compensation levels are generally developed at the low (25 ^th percentile), middle (50 ^th percentile) and high (75 ^th percentile) end of the market for each pay element (base salary and short-term and long-term incentives) and for total compensation.

While the Committee considers market data for each pay element and in total, the Committee does not specifically target any particular market compensation level. Instead, the Committee uses its discretion in setting the compensation levels as appropriate.

2018 AND 2019 ELEMENTS OF OUR COMPENSATION PLANS

Compensation Program Design

The compensation program provided to the Company’s executive officers is generally comprised of four parts, each intended to address different objectives: base salary, annual cash performance incentive awards, long-term incentives that generally are in the form of both performance-based stock units and service-vesting RSU grants, and limited perquisites. Executives are also entitled to participate in benefit programs available to all Company employees, such as our ESPP and 401(k) Plan. This design was adopted for executives by the Committee taking into consideration a number of parameters including the independent compensation consultant’s advice, comparable practices within the industry and the desire to achieve the goals underlying the compensation program. The Committee believes that as a result of this program the Company can attract, retain and motivate employees and reward the achievement of strategic operational and financial goals, thereby enhancing stockholder value.

Annually, the Committee reviews the elements of the compensation package as well as the overall package afforded to the executives. At this time, the Committee, in its discretion, can recommend adjustments to the elements of the program to the independent members of the Board of Directors for review and approval. This review would typically be performed coincident with the evaluation of the individual executive’s performance in relation to their Key Executive Incentive Compensation Plan goals, salary adjustment and equity grants, if any, as discussed below.

The Committee and Board believe that each of the elements as well as the entire compensation package for Company executives is appropriate for the Company given its performance, industry, current challenges and environment.

Based on the objectives discussed in the foregoing section, the Committee seeks to structure our equity and cash incentive compensation program to motivate executives to achieve the business goals set by the Company and reward the executives for achieving such goals, which we believe aligns the financial incentives of our executives with the interests of our stockholders. The Committee primarily uses salary, perquisites and other executive benefits as a means for providing base compensation to employees for their knowledge and experience and for fulfilling their basic job responsibilities.

In establishing these components of the executive compensation package, it is the Committee’s intention to set total executive compensation at a sufficient level to attract and retain a strong motivated leadership team, while remaining reasonable and in line with stockholder perception of overall fairness of executive compensation.

Base salary levels for executive officers of the Company have been generally established at or near the start of each year. The Company’s annual executive cash incentive bonuses are administered through its Key Executive Incentive Compensation Plan. The plan provides guidelines for the calculation of annual non-equity incentive-based compensation, subject to the Committee’s

oversight and the Company’s and executive’s achievement of corporate and individual goals. Generally, at its first meeting each year, the Committee determines final bonuses for executive officers earned in the preceding year based on each individual’s performance and the performance of the Company through its audited financial statements, and also reviews the incentive program to be established for the current year a nd approves the group of executives eligible to participate in the plan for that year.

Each of the Company’s executives, including our NEOs, is eligible to receive equity compensation, which has recently been in the form of PSU and RSU grants under the Company’s stockholder approved 2018 Stock Plan. All full-time and part-time employees are eligible for equity grants. The Committee believes that through the Company’s broad-based equity compensation plan, the economic interests of all employees, including the executives, are more closely aligned with those of our stockholders. It is also believed that this approach will allow the Company to use equity as an incentive in a balanced manner that supports the recruitment and retention of top talent.

The Committee generally recommends for approval by the independent members of the Board the grant of equity awards at the first regularly scheduled meeting of the Board or upon completion of the Committee’s review and approval process. The Committee and the Board do not generally grant equity awards at other times during the year, other than in the case of a new hire, promotion or other exceptional circumstances.

Impact Of Performance On Compensation

The performance of the Company and of the executive has a direct impact on the compensation received by such executive from the Company. On an annual basis, the CEO reviews the performance and compensation for the Company’s executives to determine any potential salary adjustment for each individual. This assessment takes into consideration a number of factors, including the Company’s profitability; the performance of applicable business units; the executive’s individual performance and measurable contribution to the Company’s success; and pay levels of similar positions with comparable companies in the industry and within similar technology industries.

In addition, both Company and individual performance are assessed by the CEO when proposing to the Committee any annual cash incentive payout to the NEOs (other than the CEO) under the annual cash incentive component of their Key Executive Incentive Compensation Plan. The plan includes various incentive level opportunities based on the executive’s accountability and impact on Company operations, with target award opportunities that are established as a percentage of base salary. Typically, these targets range from 30% to 100% of base salary for the executives in the plan. For our NEOs, 2018 and 2019 target annual cash bonus opportunities were set as follows:

	Target Annual Cash Incentive Percentage
Name	2019	2018
Michael P. Plisinski	100.0%	100.0%
Steven R. Roth	60.0%	60.0%
Robert A. Koch	40.0%	35.0%
Richard Rogoff	45.0%	45.0%
Elvino da Silveira	40.0%	40.0%

Under the annual cash incentive component of our Key Executive Incentive Compensation Plan, payout is based upon achievement of corporate and personal objectives with no payout unless the Company meets the threshold level of at least one of the Board approved corporate financial targets established as part of the plan. Personal objectives are awarded only upon clear achievement of the associated goal. Failure to meet the personal objectives thereby has a negative impact on the ultimate bonus payout.

In addition to a review of the prior year’s objectives, the CEO and each executive also confer to propose new individual performance targets for the executives (including the NEOs, other than the CEO) for the current year, which are combined with the corporate targets into an annual cash incentive opportunity proposal. The personal targets that are established are designed to result in additional incremental value to the Company if they are achieved. These personal performance targets in 2018 included goals related to additional corporate and/or business unit financial measures, operational measures and activities, transactional activities, and marketing initiatives, depending on the executive involved. The target level of the corporate component to the bonus goals was set based on the Company’s financial budget established by the Board at the beginning of the year. The determination of these goals is made annually to meet the changing nature of the Company’s business.

Upon completion of the prior year’s results and prior to implementation of the current year’s proposed Key Executive Incentive Compensation Plan, the results for each participating executive employee are submitted to, and reviewed by, the Compensation Committee, which considers the CEO’s recommendations for executives other than the CEO and determines the final bonus

earned by each executive based on Company and individual performance. The Compensation Committee then establishes the Company and individual metrics applicable to the current year’s Key Executive Incentive Compensation Plan. T hereafter, the Committee’s recommendations are presented to the independent members of the Board for approval of the achieved incentive payment, if any, and of the new plan for the current year. If, during the year, there are changes to the Key Executive I ncentive Compensation Plan that are proposed, such changes are presented to the Compensation Committee for its consideration. The Compensation Committee may exercise discretion in relation to its recommendation to the independent members of the Board regar ding an individual’s award under the Key Executive Incentive Compensation Plan based upon its review.

An executive’s role, responsibilities, individual performance and contribution to the Company are factors considered in determining the size of any discretionary equity grant that may be recommended by the Compensation Committee to the independent members of the Board of Directors for approval as long-term incentive to the individual.

Based upon the foregoing, the compensation that an executive may realize in the course of a year can be impacted by the positive or negative performance of such individual as well as Company performance. We intend for an individual’s compensation under the Key Executive Incentive Compensation Plan to be proportionate to the Company’s and his or her performance against established goals. Similarly, equity awards that are performance-based are intended to be proportionate to the Company’s performance under goals established for the Company. This review and evaluation are more subjective when applied to salary adjustments. In this case, an executive’s performance is evaluated by taking into consideration the executive’s contribution to the Company, the significance of the individual’s achievements in relation to the overall corporate goals and mission, and the executive’s effectiveness in his or her role within the Company and then weighed against the performance of other executives. Industry norms and reference to comparative company data are considered to the extent appropriate. Thus, there is no precise, objective formula that is applied in determining salary adjustments.

Compensation Plan Design And Decisions For 2018 And 2019

For 2018, the Compensation Committee conducted a review of our compensation programs and determined that the 2018 NEO compensation plan would retain the same four basic elements as the prior year’s plan as these align our programs with our current business strategy and include the pay for performance aspect of our executive compensation program. Taking into account the Company’s 2017 performance and outlook for 2018, each NEO’s performance and responsibilities, and current market compensation rates for each NEO position, among other criteria, the Compensation Committee recommended, and the Board approved the updated program and compensation plan structure for our NEOs as detailed below.

Further, for 2019, the Committee determined that the 2019 NEO compensation plan would retain the same four basic elements as the 2018 plan. Taking into account the Company’s 2018 performance and outlook for 2019, each NEO’s performance and responsibilities, and current market compensation rates for each NEO position, among other criteria, the Compensation Committee recommended, and the Board approved the program and compensation plan structure for our NEOs also as detailed below.

Base Salary

The Company provides executives and other employees with base salary to compensate them for services rendered during the fiscal year. Base salaries for executive officers are established considering a number of factors, including the executive’s:

•

Individual performance;

•

Unique qualifications;

•

Role and responsibilities;

•

Measurable contribution to the Company’s profitability and success; and

•

The base salary levels of similar positions with comparable companies in the industry.

The Compensation Committee supports the compensation philosophy of moderation for elements such as base salary and perquisites and other executive benefits. As noted above, under “Impact of Performance on Compensation,” base salary decisions are made as part of the Company’s formal annual review process and are influenced by the performance of the Company and the individual.

The CEO’s recommendations for salary adjustments (other than his or her own) are reviewed and modified as deemed appropriate by the Compensation Committee and presented to the independent members of the Board for approval.

Base Salary For 2018

The Compensation Committee approved a 9.4% increase to the CEO’s base salary and increases ranging from 2.0% to 3.0% for the base salaries of each of our other NEOs for 2018. The CEO’s increase was approved in order to bring the CEO’s base salary within the median of the Company’s 2018 Compensation Peer Group, as defined above in the “Peer Companies” section. There were no increases due to promotions for any NEO in 2018.

Base Salary For 2019

For 2019, the Compensation Committee approved a 3.0% increase to the CEO’s base salary and increases ranging from 2.0% to 3.0% for the base salaries of each of our other NEOs.

Annual Cash Incentive Compensation

An executive’s annual cash incentive award under the Key Executive Incentive Compensation Plan generally depends on the financial performance of the Company relative to profit, revenue and other financial targets and the executive’s individual performance. The incentive opportunity is generally set at a higher percentage for more senior officers, with the result that such officers have a higher percentage of their potential total cash compensation at risk. All executive employees, including all of our NEOs, participate in the Company’s Key Executive Incentive Compensation Plan, if and when established, which is designed to generate additional incentive for maximizing the employee’s performance in realizing the corporate strategic and financial goals and mission.

The Compensation Committee may, but is not required to, establish a Key Executive Incentive Compensation Plan for any given year.

When implemented, an executive may earn an annual incentive award due to success as it relates to the executive’s individual goals, as long as the Company’s financial performance meets at least the threshold level of at least one of the corporate financial performance goals.

Upon completion of the year, the individual’s and the Company’s results with respect to the performance targets are then assessed and presented to the Committee. The Committee reviews the proposed payouts and suggests changes to the extent it deems such action necessary. Key Executive Incentive Compensation Plan awards are paid out following completion of the annual audit by the Company’s independent registered public accounting firm. This generally occurs in the first quarter of each year.

Annual Cash Incentive Plan For 2018

Consistent with prior years, the annual cash incentive component of the 2018 Key Executive Incentive Compensation Plan (“2018 Plan”) included corporate goals, business unit or department goals (if applicable) and personal goals. The 2018 Plan was established such that each NEO’s potential cash award was subject to the achievement of 2018 corporate financial objectives relating to corporate revenue and non-GAAP operating income (“Corporate Goals”). Earning of the potential cash award under the 2018 Plan would begin upon achieving 80% of the corporate revenue target and/or 70% of the corporate non-GAAP operating income target. As in prior years, had the Company not reached either of the corporate revenue or non-GAAP operating income threshold levels, then no payout whatsoever under the 2018 Plan would have been earned by the executives.

For those NEOs who were associated with a particular Company business unit or department, a portion of their cash bonus potential was allocated to business unit/department financial performance goals. In 2018, these goals were the achievement of 2018 business unit revenue and non-GAAP operating income objectives (“Business Unit Goals”). Earning of the potential cash award apportioned to the Business Unit Goals would begin upon achieving 85% of the business unit revenue target and/or 85% of the business unit non-GAAP operating income target.

The final component of the 2018 Plan was the inclusion of personal performance goals that were specific to the individual NEO. The NEO personal performance goals in 2018 included targets related to senior management planning, additional corporate financial measures, operational measures and activities, product development measures or marketing initiatives, depending on the executive involved. Cash bonuses arising from the personal performance goals were drafted to be awarded on an “each or nothing” basis.

Provided that either of the Corporate Goal performance thresholds was met, then the cash incentive component of the 2018 Plan was designed and administered as follows:

•

Cash bonuses arising from the Corporate Goals and the Business Unit Goals were awarded starting at a 50% level at the respective goal threshold and increasing linearly up to the 2018 Plan target amounts.

•

If the 2018 Plan target was exceeded in either or both Corporate Goal categories, then the cash payout would increase as follows:

◦

Corporate Revenue: From 100% to 120% of target, additional cash compensation would be earned linearly up to 200% of this target.

◦

Non-GAAP Operating Income: From 100% to 130% of target, additional cash compensation would be earned linearly up to 200% of this target.

•

Upon achieving either of the Corporate Goals, the Business Unit Goals, if applicable, and personal performance goals could be earned in full.

•

No further cash payout would be realized if either of the Business Unit Goals was exceeded.

The targets established in 2018 for the Corporate Goals, Business Unit Goals and Personal Goals were of comparable difficulty compared to prior years.

For 2018, the target cash incentive percentages remained unchanged for each of the NEOs as compared to the prior year. Additionally, of the NEOs, only Mr. Rogoff had a portion of his potential cash bonus allocated to Business Unit Goals in 2018.

In each year the Company has offered the Key Executive Incentive Compensation Plan, the corporate targets have been established at levels in excess of the overall industry projections in order that the Company drive to outperform the industry. In 2017, the Company achieved 102.2% of the corporate revenue and 113.0% of the non-GAAP operating income goals. The Company achieved the following performance results (dollars in millions) in 2018:

Performance Measure	Threshold	Target	Maximum	Actual Performance Achieved	Actual Performance Achieved as Percentage of Target
Corporate Revenue	$236.6	$295.8	$355.0	$273.8	81.4%
Non-GAAP Operating Income (1)	$49.1	$70.2	$91.3	$58.7	72.7%

(1)

This non-GAAP financial measure excludes the impact of amortization of intangibles and share-based compensation expenses.

The following tables reflect the 2018 Plan performance component percentages at target and based on actual achievement for each NEO for 2018:

	Corporate Target Variable Components		Business Unit / Department Target Fixed Components
Name	Revenue	Non-GAAP Operating Income	Revenue / Gross Margin	Operating Income / Market Share	Personal Goals
Michael P. Plisinski	35%	35%	n/a	n/a	30%
Steven R. Roth	35%	35%	n/a	n/a	30%
Robert A. Koch	35%	35%	n/a	n/a	30%
Richard Rogoff (1)	15%	15%	20%	20%	30%
Elvino da Silveira	35%	35%	n/a	n/a	30%

(1)

Mr. Rogoff’s Business Unit Target Variable Components were Business Unit Revenue and Business Unit Operating Income.

	Corporate Achieved Variable Components		Business Unit / Department Achieved Fixed Components
Name	Revenue	Non-GAAP Operating Income	Revenue / Gross Margin	Operating Income / Market Share	Personal Goals	Total Achieved
Michael P. Plisinski	28.5%	25.4%	n/a	n/a	22.0%	75.9%
Steven R. Roth	28.5%	25.4%	n/a	n/a	27.5%	81.4%
Robert A. Koch	28.5%	25.4%	n/a	n/a	22.0%	75.9%
Richard Rogoff	12.2%	10.9%	0%	0%	18.0%	41.1%
Elvino da Silveira	28.5%	25.4%	n/a	n/a	10.0%	63.9%

In 2018, while the Company exceeded the threshold levels of the corporate revenue and non-GAAP operating income financial performance goals established under our annual and long-term incentive program, our NEOs did not meet all of their individual metrics established under our annual incentive program. As a result, our NEOs earned cash bonus awards for 2018 under our annual cash incentive program below target levels. Actual amounts paid to our NEOs under our 2018 annual cash incentive

component of the 2018 Plan are reported below in the Non-Equity Incentive Plan Compensation column of our Summary Compensation Table.

Annual Cash Incentive Plan For 2019

For 2019, the Compensation Committee adopted an annual cash incentive plan as part of the NEO compensation program that was consistent with the 2018 plan. As in 2018, the 2019 cash incentive component is structured such that each NEO’s potential cash award is subject to the achievement of 2019 corporate financial objectives relating to corporate revenue and corporate non-GAAP operating income. The financial goal targets established for 2019 are of comparable difficulty as compared to prior years. Further, the performance ranges for each metric are consistent with those utilized in 2018 including a payout level for threshold performance at 50% of target and the same target level to achieve the maximum payout by exceeding the corporate performance objectives for each of the corporate financial metrics. As in the past, the cash bonus payout is contingent on meeting at least one of the 2019 corporate revenue or corporate non-GAAP operating income goals. Should the Company not reach the threshold level for either the 2019 corporate revenue or corporate non-GAAP operating income goal, then no payout under the plan will be made to executives.

Each 2019 Key Executive Incentive Compensation Plan (“2019 Plan”) is again divided into up to three (3) components: Corporate Goals, Business Unit Goals (if applicable) and personal performance goals. Provided that either of the Corporate Goal thresholds is met, the cash bonus potential of the 2019 Plan may again be realized. The annual cash incentive component of the 2019 Plan was designed and shall be administered in the same manner as described above under “Annual Cash Incentive Plan for 2018”.

As in 2018, only executives associated with a particular Company business unit or department had a portion of their cash bonus potential allocated to Business Unit Goals in 2019.

The personal performance goals for the NEOs in 2019 include individual targets that, depending upon the executive, may relate to any of the following: corporate leadership development, additional corporate financial measures, operational measures and activities, product development measures, intellectual property initiatives and strategic business projects.

The following table reflects a comparison of the structure of the annual cash incentive components of the 2018 and 2019 Plans.

Key Executive Incentive Compensation Plan - Annual Cash Incentive Provisions	2018	2019
Payout if both financial metric thresholds are not reached	0%	0%
Corporate revenue threshold	80%	80%
Corporate non-GAAP operating income threshold	70%	70%
Payout upon attaining corporate financial metrics' threshold levels	50%	50%
Payout upon attaining corporate financial metrics' target goals	100%	100%
Payout upon attaining corporate financial metrics' maximum goals	200%	200%
Corporate revenue metric upside performance range	100%-120%	100%-120%
Corporate non-GAAP operating income metric upside performance range	100%-130%	100%-130%
Business unit/department goal payout	Variable	Variable
Personal goal payout	Fixed	Fixed

Long-Term Equity Incentive Plan

The Compensation Committee currently administers the Company’s 2018 Stock Plan, which was approved by stockholder vote on May 16, 2018.

Employees and members of management, including the Company’s NEOs, generally receive annual equity grants (collectively, “Grants”) at or about the time of their performance reviews each year from a pool of shares established under the 2018 Stock Plan. The Company’s long-term incentive compensation program seeks to align the executives’ interests with the Company’s stockholders by rewarding successes in stockholder returns. Additionally, the Committee desires to foster an ownership mentality among executives by providing stock-based incentives as a portion of compensation.

Over the past several years, the Committee has annually awarded executives with grants of performance-based and service-based RSUs.

The purpose of the Grant program is to provide incentive to executives and other key employees of the Company to work to maximize long -term return to the Company’s stockholders. The number of Grants awarded to each executive officer is initially determined on a discretionary rather than formula basis by the Compensation Committee.

In awarding Grants to the executive officers, the CEO (except in connection with his or her own Grants) and the Committee consider a number of subjective factors, including the executive’s position and responsibilities at the Company, the executive’s individual performance, the number of Grants held (if any) and other factors that they may deem relevant.

Long-Term Equity Incentive Program For 2018

The long-term equity incentive component of the 2018 Plan was divided between PSU grants and service-based RSU grants. For 2018, the Compensation Committee established the portion of our NEOs’ long-term incentive awards granted in the form of PSUs at 50% and the portion of our long-term incentive awards granted in the form of service-vesting RSUs at 50%, reflecting our commitment to pay-for-performance.

Performance-Based Stock Units: Under the 2018 Plan, TSR was employed with the long-term equity incentive program associated with the PSUs. TSR combines price appreciation and dividends paid to show the total return to a stockholder as an annualized percentage, thus directly linking executive pay to stock price changes. The period of measurement for this long-term equity incentive element was established at three (3) years. This design of performance incentive was implemented to align our NEOs’ incentive compensation with an appropriate measure of the Company’s long-term performance while also employing a metric that is believed to be important to stockholders.

In order to implement the TSR measure a performance peer group was established (“TSR Peers”). The formation of the TSR Peers took into consideration each of the companies in the Company’s compensation peer group currently projected to be standalone operations in three (3) years and supplements them with additional industry-specific companies in order to produce a broader, yet relevant, base of comparative TSR performance companies. The TSR Peers for the 2018 Plan was initially set-up to as a comparison to a performance peer group consisting of eighteen (18) companies of which ten (10) companies are from the Company’s 2018 compensation peer group and an additional eight (8) companies are from within the Company’s industry. During 2018, two (2) companies in both the 2018 compensation peer group and the TSR Peers were acquired and no longer qualify as comparative companies under the TSR (Electro Scientific Industries, Inc. and Xcerra Corporation). The sixteen (16) TSR peer group companies for the long-term equity incentive component of the 2018 Plan currently are as follows:


2018 Long-Term Equity Incentive Program - Peer Group Companies
Advanced Energy Industries, Inc.	Cohu, Inc.	Nanometrics Incorporated
Applied Materials, Inc.	FormFactor, Inc.	PDF Solutions, Inc.
ASML Holding N.V.	KLA Corporation	Teradyne, Inc.
Axcelis Technologies, Inc.	Kulicke & Soffa Industries, Inc.	Veeco Instruments, Inc.
Brooks Automation, Inc.	Lam Research Corporation
Camtek Ltd.	MKS Instruments, Inc.

•

The performance and standards to earn the PSU equity awards are as follows:


TSR Performance Relative to Peers	RSUs Earned as % of Target
Below 30 ^th Percentile	0%
30 ^th Percentile	50%
55 ^th Percentile	100%
80 ^th Percentile and above	200%

•

The PSU award payout will be calculated on a straight-line basis between the 30th & 55th and the 55th & 80th percentile levels referenced above.

•

A negati ve TSR cap was instituted which limits any PSUs earned to target level if the Company’s TSR i s negative over the performance period and our TSR ranks above the target performance level.

•

Earned PSUs are not subject to additional service-based vesting conditions.

Service Vesting Restricted Stock Units: For 2018, fifty percent (50%) of each NEO’s equity grant was comprised of time-based RSUs. Each service-based RSU award is subject solely to service-based vesting in equal annual increments over a three (3) year vesting period.

For 2018, the Compensation Committee recommended and the independent members of the Board approved adjustments to the long-term incentive grant values provided to our CEO and other NEOs that ranged from +0.0% to +41.8% when compared to values granted the prior year. As discussed above, PSUs granted in early 2018 are subject to a measure of the Company’s relative TSR measured over the three-year performance period; thus, determination of the final TSR results shall take place in February of 2021. At such time, any PSUs earned based on our TSR performance relative to the specified peer companies will fully vest.

Long-Term Equity Incentive Program For 2019

The long-term equity incentive component of the 2019 Plan continues to be divided between PSU grants and service-based RSU grants. Consistent with that which was implemented in 2018, the Compensation Committee determined to maintain the portion of our NEOs’ long-term incentive awards granted in the form of PSUs and service-vesting RSUs each at 50%.

In 2019, the Committee granted equity awards to our NEOs with the dollar value allocated to each NEO and the structure of the long-term equity incentive component determined in a similar manner as that implemented in 2018 and discussed above. As implemented in 2018, the 2019 performance-based long-term equity incentive of our NEO compensation program is based on the metric of TSR. The following parameters are included in the design of the long-term equity incentive program in 2019:

Performance-Based Stock Units: For 2019, fifty percent (50%) of each NEO’s equity grant is comprised of PSUs. The relative TSR plan design includes the following features:

•

The performance period will cover a three-year period (2019 through 2022, for awards granted in early 2019).

•

Performance will be assessed using TSR, which measures growth in stock price, plus any dividends paid, during the performance period.

•

TSR performance will be compared to the same TSR Peers as utilized in 2018, based on the same rationale established for these benchmark companies, with the addition of three (3) companies, CyberOptics Corporation, Photronics, Inc. and Ultra Clean Holdings Inc. to replace the two that were acquired in 2018. Thus, the 2019 TSR Peers shall be:


2019 Long-Term Equity Incentive Program - Peer Group Companies
Advanced Energy Industries, Inc.	CyberOptics Corporation	PDF Solutions, Inc.
Applied Materials, Inc.	FormFactor, Inc.	Photronics, Inc.
ASML Holding N.V.	KLA Corporation	Teradyne, Inc.
Axcelis Technologies, Inc.	Kulicke & Soffa Industries, Inc.	Ultra Clean Holdings Inc.
Brooks Automation, Inc.	Lam Research Corporation	Veeco Instruments, Inc.
Camtek Ltd.	MKS Instruments, Inc.
Cohu, Inc.	Nanometrics Incorporated

•

The performance and standards to earn the PSU equity awards are unchanged from 2018.

•

The PSU award payout will be calculated on a straight-line basis between the 30th & 55th and the 55th & 80th percentile levels referenced above.

•

A negative TSR cap has been instituted which limits any PSUs earned to target level if the Company’s TSR is negative over the performance period and our TSR ranks above the target performance level.

•

Earned PSUs are not subject to additional service-based vesting conditions.

Service Vesting Restricted Stock Units: For 2019, fifty percent (50%) of each NEO’s equity grant is comprised of time-based RSUs. The time required for the RSUs to fully vest is three (3) years from the date of grant. As a result, each service-based RSU award is subject solely to service-based vesting in equal annual increments over the three (3) year vesting perio d.

The following table reflects a comparison of the structure of the long-term equity incentive components of the 2018 and 2019 Plans.

Key Executive Incentive Compensation Plan - Long-Term Equity Incentive Provisions	2018	2019
Performance-based / Service-based grant breakout	50%-50%	50%-50%
Service-based grant vesting period	33.3% annually over 3 years	33.3% annually over 3 years
Performance-based grant evaluation period	3 years	3 years
Performance-based grant metric(s)	TSR	TSR
Performance-based grant vesting period	100% upon earning	100% upon earning
Performance threshold for earning grant	30 ^th TSR percentile	30 ^th TSR percentile
Percent of grant earned at threshold	50%	50%
Measure at which 100% of grant is earned	55 ^th TSR percentile	55 ^th TSR percentile
Maximum grant upside	200%	200%
Measure at which maximum upside of grant is earned	80 ^th TSR percentile	80 ^th TSR percentile

Personal Benefits And Perquisites

Benefits

All employees of the Company, including its executives, are eligible to participate in the following benefit plans and programs (“Benefit Package”):

•

Health and dental insurance;

•

Elective vision care program;

•

Life insurance and accidental death and dismemberment coverage;

•

401(k) savings plan;

•

Short- and long-term disability insurance with supplemental income continuation;

•

Health care and dependent care flexible spending account programs;

•

Employee assistance program (EAP);

•

Tuition reimbursement plan;

•

Employee stock purchase plan;

•

Employee referral bonus program; and

•

Length of service awards.

The Company, in its discretion, may offer to reimburse the expenses that an employee incurs as a result of the Company requiring the individual to relocate their primary residence for employment purposes.

The Committee believes that these benefits are consistent with industry practice and are important in recruiting and retaining qualified employees.

Perquisites

In addition to the above Benefit Package, executive employees, including NEOs, receive the following:

•

A monthly car allowance;

•

Company-paid tax preparation services; and

•

Company-paid membership in one (1) airline executive club.

The foregoing perquisites were determined based on a review of comparable company offerings performed by the Company and the Comm ittee’s compensation consultant and are evaluated annually as part of the compensation review. The Committee believes that these benefits are reasonable and consistent with the Company’s overall compensation program and better enable the Company to attract and retain superior employees for key positions.

Executive Perquisites For 2018

In 2018, executive base perquisites provided to the NEOs included a monthly car allowance, income tax preparation fee payment and airline club membership. These perquisites remained unchanged from those provided to the NEOs in the prior year.

Executive Perquisites For 2019

In 2019, executive base perquisites, including a monthly car allowance, income tax preparation fee payment and airline club membership remained unchanged from that provided to the NEOs in 2018.

Retirement Provision For Equity Awards

As part of their review of the overall compensation program for all Company employees, including the NEOs, the Compensation Committee determined that the implementation of a retirement provision related to equity awards would continue to incentivize individuals as they near the end of their employment with the Company. Previously, upon retirement of an employee any equity grants that had not vested were forfeited. Thus, any incentive realized through the service-vesting schedule for Company equity grants was diminished. As a result, the Compensation Committee assessed various retirement provision alternatives and recommended to the Board, and the Board approved, the following retirement provision:

•

An employee is “retirement eligible” if they achieve a combination of age plus years of service with the Company totaling 70, with a base minimum age of 58 years old and a minimum service requirement of five years.

•

Retirement under the provision then would occur when an employee has become retirement eligible and has formally notified the Company of his/her intention to retire from the employ of the Company on a date certain and does so retire or as otherwise approved by the Compensation Committee.

•

Upon such retirement by the employee, any equity awards granted in 2017 and onward shall vest based on:

◦

The vesting schedule established for time-based equity awards; or

◦

The actual performance results for performance-based equity awards.

•

For clarity, in the event of an employee’s retirement under the provision, there will be no acceleration of an award’s vesting schedule or forfeiture of unvested awards granted in or after 2017.

Employee Stock Purchase Plan

The Company has maintained an Employee Stock Purchase Plan since 1999. The Company’s 2018 Employee Stock Purchase Plan was approved by stockholders in 2018 and is currently administered by the Compensation Committee.

Under the terms of our current and prior Employee Stock Purchase Plans, eligible employees may elect to have up to fifteen percent (15%) of eligible compensation deducted from their base salary and applied to the purchase of shares of Company Common Stock. The price the employee pays for each share of stock is ninety-five percent (95%) of the fair market value of the Company Common Stock at the end of the applicable six-month purchase period. The Employee Stock Purchase Plan qualifies as a non-compensatory plan under Code Section 423.

The Company does not offer a non-qualified deferred compensation plan.

CORPORATE AND GOVERNANCE POLICIES

Employment And Change-In-Control Agreements

While the Company utilizes employment agreements on a limited basis, we currently maintain employment agreements or arrangements with each of our NEOs.

In 2000, the Company entered into a management agreement with Mr. Roth, effective as of July 24, 2000. Mr. Roth previously had employment agreements with the Company when it was a private entity, and, at the time of the Company’s initial public offering, his agreement was redrafted to reflect terms believed to be appropriate for such officer’s service in his capacity with a publicly held corporation.

Upon the appointment of Mr. Plisinski to the position of CEO, he entered into a new employment agreement with the Company. This agreement superseded the executive employment agreement that Mr. Plisinski had entered into with August Technology Corporation which was assumed by the Company upon its merger with August Technology in 2006.

Mr. Plisinski’s employment agreement provides for a term of two (2) years with automatic renewals for additional two-year terms and Mr. Roth’s agreement provides for a term of one (1) year with automatic renewals for additional one-year terms, unless the Company or the applicable executive delivers a notice of non-renewal to the other party. Mr. Plisinski’s agreement prohibits him from competing with the Company in any way or soliciting its employees during his term of employment and for two (2) years after termination of his employment. Mr. Roth’s agreement prohibits him from competing with the Company in any way or soliciting its employees during his term of employment and for one (1) year after termination of his employment.

Certain of our executive officers are also entitled to payments upon a qualifying termination of employment following a Change-in-Control event. The Committee believes that providing severance in a Change-in-Control situation is beneficial to stockholders so that executives may remain objectively neutral when evaluating a transaction that may be beneficial to stockholders yet could negatively impact the continued employment of the executive. As a result, in August 2009, the Compensation Committee further authorized the Company to enter into a Change-in-Control Agreement with Mr. Koch and other Company executives and authorized amendment to the management agreement of Mr. Roth to include comparable Change-in-Control terms. In February 2014, the Company entered into a Change-in-Control Agreement with Mr. Rogoff and Mr. da Silveira with comparable Change-in-Control terms. Further, Mr. Plisinski’s employment agreement also contains Change-in-Control terms.

See “Potential Payments Upon Termination of Employment or Change-in-Control” below for a description of these arrangements and potential payments that the NEOs would have been entitled to receive upon applicable hypothetical termination scenarios as of December 31, 2018.

Other Elements Of Post-Termination Compensation

The Company does not have a practice of providing retirement benefits, including any supplemental executive retirement plans (SERP), to its executives, other than through its 401(k) plan and the retirement provision for equity grants effective in 2017. The Company retains the discretion to utilize the offer of severance and/or change-in-control protection as an incentive in its hiring and retention of executives.

Non-Solicitation And Non-Competition Policy

The Company maintains a policy of entering into an agreement with each of its new executives, which contains both non-solicitation and non-competition provisions. The non-solicitation provisions apply for one (1) year after termination of the individual’s employment while the non-competition provisions are in effect during the individual’s employment and generally for one (1) year thereafter. Each of the Company’s executives has entered into these covenants with the Company, except Mr. Plisinski, whose non-solicitation and non-competition provisions are in place during, and extend for two (2) years after the end of, his employment with the Company. In each case, these covenants have been implemented to protect the confidential information, goodwill and other assets of the Company. For those individuals with employment agreements, should a breach of the non-solicitation or non-competition terms of their agreements occur, this could give rise to the Company declaring a breach under the agreement and terminating all severance payments thereunder.

General Termination Benefits

Upon termination of an executive’s employment with the Company, the individual is entitled to receive his or her base salary earned through the termination date, along with a payout for all accrued but unused vacation time earned though such date. Thereafter, further cash compensation to the executives is discontinued, except to the extent that severance or change-in-control payments are required to be made in accordance with individual or Company severance protection arrangements. Certain executives with the Company who have entered into employment agreements are entitled to elect to continue group health or other group benefits as allowed by COBRA with continued Company co-payments for agreed post-termination periods. The Company retains the right to offer severance and/or payment of COBRA benefits to any individual who is terminated from the Company at its discretion.

Stock Ownership/Retention Guidelines

The Company has established guidelines related to stock ownership and retention for its executives and its outside directors to further align the interest of the executives and non-employee directors with the interests of stockholders, to have a stake in the long-term financial future of the Company and to further promote the Company’s commitment to sound corporate governance while allowing them to prudently manage their personal financial affairs.

In 2005, the Board established the Company’s initial stock ownership policy. Since that time, the policy has been periodically amended such that the stock ownership and retention levels currently in effect are the following:


Company Role	Company Common Stock Holding Requirement	Effective Date
Non-Employee Directors	3x value of total cash compensation (1)	Within 3 years of initial election to Board
CEO	3x value of CEO’s base annual salary	Within 3 years of hire/promotion
CFO, COO, Business Unit GM, VP Worldwide Sales, General Counsel	1x value of executive’s base annual salary	Within 3 years of hire/promotion
VP reporting directly to CEO (excluding above)	5,000 shares	Within 1 year of date of hire/promotion
VP not reporting directly to CEO	2,500 shares	Within 1 year of date of hire/promotion

(1)

Includes annual cash retainer and any fee paid for service as a Committee Chair, Lead Director or Chairman.

In assessing compliance with the foregoing guidelines, the Company takes into consideration only the ownership of Common Stock in the Company. To that end, unearned PSUs, unvested service based RSUs and vested or unvested stock options do not qualify as shares for purposes of compliance with the Company’s stock ownership and retention guidelines.

Compliance with the Company’s stock ownership and retention guidelines is reviewed annually by the Nominating & Governance Committee. At their last review on January 22, 2019, the Nominating & Governance Committee determined that all executives and directors who were with the Company and acting in their executive/director capacities for periods in excess of one (1) year were in compliance with the ownership requirements or would be upon the first quarter 2019 vesting of RSU grants. Should any individual in the future not own the minimum number of required shares after notice by the Nominating & Governance Committee, additional action, including possible removal from the executive role or a determination to not nominate the director for election, would be considered by the Board.

The Nominating & Governance Committee has scheduled its review of the Company’s stock ownership and retention guidelines for its January 2020 meeting and at this annual review will evaluate the appropriateness of the foregoing stock ownership levels for 2020 based in part on the trailing three-year weighted average of the Company’s stock price at the time of the evaluation, as well as other considerations such as market conditions and comparable practices within the industry.

Prohibition On Hedging And Pledging Of Company Stock

In order to ensure that our executives, including our NEOs, bear the full risk of the Company’s stock ownership, our insider trading policy prohibits hedging transactions related to our Common Stock. Additionally, under the Company’s anti-pledging policy, non-employee directors and executive officers are prohibited from making any new pledges of Company securities as collateral for a loan, or otherwise making a new transfer of Company securities to a margin account, provided that non-employee directors may pledge their securities when obligated to do so to realize the consummation of potential mergers, acquisitions and similar transactions with which the Company may be involved from time to time.

Adjustments Or Recovery Of Prior Compensation

The Company adopted a policy which provides for the recovery or adjustment of amounts previously awarded or paid to a NEO in the event that financial results or other performance measures on which an award or payment were determined are to be restated or adjusted. In addition, if the Company is required to restate its financial results due to material noncompliance with any financial reporting requirements as a result of misconduct, the Sarbanes-Oxley Act of 2002 requires the CEO and CFO to disgorge:

•

Any bonus or other incentive-based or equity-based compensation received from the Company during the 12-month period following the first public issuance of the non-compliant financial reporting document; and

•

Any profits realized from the sale of Company stock during that 12-month period.

In addition, Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires the SEC to direct the national securities exchanges to prohibit the listing of any security of an issuer that does not develop and implement a clawback policy. The SEC has not finalized its rules related to these clawback policies. Once the final rules are in place, the Company will adjust its policy, as necessary, to comply with SEC regulations.

Compensation Program Risk Assessment

In 2017, the Compensation Committee engaged the compensation consultant to conduct a comprehensive review of our executive compensation program and practices including an assessment of whether possible compensation design features may have the potential to incentivize the NEOs to take risks that are reasonably likely to have a material adverse effect on the Company. The compensation risk assessment covered potential risks and risk mitigating features in each of the following areas: compensation philosophy and pay mix; performance measures used in incentive plans; goal setting and payout leverage and caps; calculation and verification of performance outcomes for incentive payments; and other features. Based on this compensation risk assessment framework, the Committee evaluated our current executive compensation policies, practices and programs and believes they do not create risks that are reasonably likely to have a material adverse effect on the Company.

IRS Limits On Deductibility Of Compensation

Prior to the 2018 tax year, Section 162(m) of the IRC limited the tax deductibility of annual compensation paid to any publicly held corporation’s CEO and three other highest compensated officers excluding the CFO, to the extent that the officer’s compensation (other than qualified performance-based compensation) exceeded $1 million. Although the Compensation Committee considers deductibility issues when approving executive compensation elements, the Committee believes that the other compensation objectives, such as attracting, retaining and providing appropriate incentives to executives, are important and can supersede the goal of maintaining deductibility. Consequently, the Compensation Committee generally makes compensation decisions without regard to deductibility, as the Committee believes it has appropriately structured its compensation programs to provide incentives to our executives to increase Company return and stockholder value. Recent changes in the tax laws eliminated the “performance-based” exception, and the limitation on deductibility has been expanded to include all named executive officers. As a result, beginning in 2018, the Company may no longer deduct compensation paid to our named executive officers in excess of $1 million.

CONCLUSION

In reviewing its compensation programs, the Company has concluded that each element of compensation as well as the total compensation opportunities for its NEOs and its other executive officers are reasonable, appropriate and in the interests of the Company and its stockholders. The Company believes that this compensation program appropriately satisfies the Company’s goals of establishing a compensation package that attracts and retains a strong motivated leadership team, aligns the financial incentives of the executives with the interests of the stockholders, and rewards the achievement of specific annual, long-term and strategic goals of the Company. The Company believes that the compensation program which has been established and is reflected herein has enabled it to recruit and secure a talented and motivated leadership team by which the Company drives toward the ultimate objective of improving stockholder value.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

We, the Compensation Committee of the Board of Directors, have reviewed and discussed the Compensation Discussion and Analysis (“CD&A”) within the Executive Compensation section of this proxy statement with the management of the Company. Based on such review and discussions, we have recommended to the Board of Directors that the CD&A be included as part of this proxy statement.

THE COMPENSATION COMMITTEE

David B. Miller (Chairman)

Jeffrey A. Aukerman

Vita A. Cassese

Thomas G. Greig

Summary Compensation Table

The table below sets forth information for the years ended December 31, 2018, 2017 and 2016 concerning the compensation of the CEO, the CFO and the three other most highly compensated NEOs:

Name and Principal Position	Year	Salary ($)	Stock Awards ($)(1)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)(2)	All Other Compensation ($)(3)	Total ($)
Michael P. Plisinski	2018	$516,346	$1,256,384	—	$398,639	$19,864	$2,191,233
Chief Executive Officer	2017	$476,539	$910,659	—	$505,413	$8,964	$1,901,575
	2016	$450,000	$650,005	—	$426,555	$8,814	$1,535,374
Steven R. Roth	2018	$351,121	$445,449	—	$172,520	$9,114	$978,204
Senior Vice President, Finance and	2017	$341,658	$289,537	—	$204,852	$8,964	$845,011
Administration and Chief Financial Officer	2016	$331,707	$199,992	—	$197,279	$8,814	$737,792
Robert A. Koch	2018	$288,180	$209,023	—	$77,017	$9,043	$583,263
Vice President and General Counsel	2017	$280,432	$136,875	—	$103,696	$8,900	$529,903
	2016	$272,264	$102,489	—	$80,963	$8,814	$464,530
Richard Rogoff	2018	$294,279	$140,495	—	$54,652	$9,114	$498,540
Vice President and General Manager	2017	$288,600	$129,485	—	$68,111	$31,314	$517,510
Lithography Systems Group	2016	$280,194	$122,996	—	$65,130	$8,814	$477,134
Elvino da Silveira	2018	$271,652	$135,930	—	$69,864	$9,114	$486,560
Vice President, Business Development	2017	$264,259	$107,907	—	$101,069	$8,964	$482,199
	2016	$255,879	$102,489	—	$40,654	$8,814	$407,836

(1)

Amounts reflect the grant date fair value for each share-based compensation award granted to the executive officer during the covered year, calculated in accordance with FASB ASC Topic 718. The assumptions used in determining the grant date fair values of awards are set forth in Note 9 to our consolidated financial statements, which are included in our Annual Report on Form 10-K filed with the SEC on February 15, 2019. For 2018, the amount reported for each NEO includes the grant date fair value attributable to the 2018 awards of (i) time-based RSUs and (ii) PSUs, assuming that the performance conditions were satisfied at target at the time of grant. The grant date fair value attributable to the 2018 PSUs assuming maximum performance achievement is as follows: Mr. Plisinski, $1,412,745; Mr. Roth, $500,896; Mr. Koch, $235,068; Mr. Rogoff, $157,983; and Mr. da Silveira, $152,877. The actual amounts earned will be determined following the end of the three (3) year performance period (February 8, 2018 – February 8, 2021.

(2)

Represents annual cash performance bonus awards under the Key Executive Incentive Compensation Plan earned for 2018, 2017 and 2016, respectively.

(3)

The table below details the components of this column for 2018.

Name	Year	Matching Contribution to 401(k)	Insurance (1)	Perquisites		Severance Compensation	Total “All Other Compensation”
Michael P. Plisinski	2018	$8,250	$864	$10,750		—	$19,864
Steven R. Roth	2018	$8,250	$864	—	⁽²⁾	—	$9,114
Robert A. Koch	2018	$8,179	$864	—	⁽²⁾	—	$9,043
Richard Rogoff	2018	$8,250	$864	—	⁽²⁾	—	$9,114
Elvino da Silveira	2018	$8,250	$864	—	⁽²⁾	—	$9,114

(1)

Insurance is the premium associated with coverage under the group term life insurance and accidental death and dismemberment insurance plans provided by the Company to its employees. Coverage is equal to the lesser of two (2) times salary or $450,000.

(2)

Value of aggregate perquisites and benefits for each NEO except Mr. Plisinski is less than $10,000, and therefore, perquisites for these individuals are not required to be disclosed in accordance with SEC rules.

Grants of Plan-Based Awards in 20 18

The following table sets forth information with respect to non-equity and equity incentive plan awards granted during 2018 to the Named Executive Officers.

		Estimated Future Payouts Under Non-Equity Incentive Plan Awards ($) (1)			Estimated Future Payouts Under Equity Incentive Plan Awards (#) (2)			All Other Stock Awards: Number of	Grant Date Fair Value
Name	Grant Date	Threshold	Target	Maximum	Threshold	Target	Maximum	Shares of Stocks or Units (#) (3)	of Stock and Option Awards ($)
	2/8/2018	$91,875	$525,000	$1,050,000
Michael P. Plisinski	2/8/2018				11,482	22,964	45,928		$706,373
	2/8/2018							22,965	$550,012
	2/8/2018	$37,076	$211,860	$423,720
Steven R. Roth	2/8/2018				4,071	8,142	16,284		$250,448
	2/8/2018							8,142	$195,001
	2/8/2018	$17,750	$101,430	$202,860
Robert A. Koch	2/8/2018				1,911	3,821	7,642		$117,534
	2/8/2018							3,820	$91,489
	2/8/2018	$9,970	$132,930	$265,860
Richard Rogoff	2/8/2018				1,284	2,568	5,136		$78,992
	2/8/2018							2,568	$61,504
	2/8/2018	$19,124	$109,280	$218,560
Elvino da Silveira	2/8/2018				1,243	2,485	4,970		$76,439
	2/8/2018							2,484	$59,492

(1)

The amounts reported in these columns represent the annual cash incentive opportunities under the Company’s Key Executive Incentive Compensation Plan for each of our Named Executive Officers for the 2018 performance period. The metrics against which performance was measured under this plan, as well as other details regarding the plan, are discussed above in the Compensation Discussion and Analysis under “Annual Cash Incentive Compensation.” The amounts actually earned by our Named Executive Officers under the plan are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above.

(2)

The amounts reported in these columns represent the award opportunities under the Company’s 2018 PSU program. The metrics against which performance was measured under this program, as well as other details regarding the plan, are discussed above in the Compensation Discussion and Analysis under the heading “Long-Term Equity Incentive Plan.” This award was granted under the Company’s 2018 Stock Plan. These performance period for these awards is three years and the final determination of the award ultimately earned will be made in 2021.

(3)

The amounts reported in this column represent the awards of RSUs which are subject to service-based vesting conditions, as discussed above in the Compensation Discussion and Analysis under the heading “Long-Term Equity Incentive Plan.” This award was granted under the Company’s 2018 Stock Plan. These RSUs vest in 33.3% increments on each of the first three (3) anniversaries of the grant date.

Outstanding Equity Awards At 201 8 Year-End

The following table sets forth information with respect to outstanding equity awards held by the Named Executive Officers at December 31, 2018.

		Stock Awards
Name	Grant Date (1)	Number of Shares or Units of Stock That Have Not Vested (#)(2)	Market Value of Units of Stock That Have Not Vested ($)(3)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (4)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (5)
	1/31/2014	2,812	$57,562
	10/1/2014	1,406	$28,781
Michael P. Plisinski	1/28/2015	17,600	$360,272
	1/27/2016	31,734	$649,595
	2/6/2017	15,480	$316,876	15,481	$316,896
	2/8/2018	22,965	$470,094	22,964	$470,073
	1/31/2014	2,250	$46,058
	1/28/2015	6,600	$135,102
Steven R. Roth	1/27/2016	9,763	$199,849
	2/6/2017	4,922	$100,753	4,922	$100,753
	2/8/2018	8,142	$166,667	8,142	$166,667
	1/31/2014	1,875	$38,381
	1/28/2015	4,400	$90,068
Robert A. Koch	1/27/2016	5,002	$102,391
	2/6/2017	2,326	$47,613	2,327	$47,634
	2/8/2018	3,820	$78,195	3,821	$78,216
	1/31/2014	2,250	$46,058
	1/28/2015	5,280	$108,082
Richard Rogoff	1/27/2016	6,004	$122,902
	2/6/2017	2,201	$45,054	2,201	$45,054
	2/8/2018	2,568	$52,567	2,568	$52,567
	1/31/2014	1,875	$38,381
	1/28/2015	4,400	$90,068
Elvino da Silveira	1/27/2016	5,002	$102,391
	2/6/2017	1,834	$37,542	1,834	$37,542
	2/8/2018	2,484	$50,847	2,485	$50,868

(1)

For better understanding of this table, we have included an additional column showing the grant date of stock options and restricted stock units.

(2)

Amount includes (i) service-based RSU awards and (ii) PSU awards that have been earned and remain subject to service-based vesting requirements. PSUs and RSUs vest in accordance with the schedule below:


Grant Date	Grant Type	Vesting
1/31/2014	Service-based RSU	1/5 ^th per year on the anniversary of the grant date
1/31/2014	Earned PSU	1/5th on February 20, 2015 and 1/5th per year on the anniversary of the grant date
10/1/2014	Service-based RSU & earned performance-based PSU	1/5 ^th per year on the anniversary of the grant date
1/28/2015	Service-based RSU	1/5th per year on the anniversary of the grant date
1/28/2015	Earned PSU	1/5 ^th on February 19, 2016 and 1/5 ^th per year on the anniversary of the grant date
1/27/2016	Service-based RSU	1/5 ^th per year on the anniversary of the grant date
1/27/2016	Earned PSU	1/5 ^th on February 16, 2017 and 1/5 ^th per year on the anniversary of the grant date
2/6/2017	Service-based RSU	1/3rd per year on the anniversary of the grant date
2/6/2017	PSU	100% of final performance determination on third anniversary of the grant date following end of three (3) year performance period (February 6, 2017 – February 6, 2020) based on TSR performance relative to peer companies
2/8/2018	Service-based RSU	1/3rd per year on the anniversary of the grant date
2/8/2018	PSU	100% of final performance determination on third anniversary of the grant date following end of three (3) year performance period (February 8, 2018 – February 8, 2021) based on TSR performance relative to peer companies

(3)	Based on the Company’s common stock closing price of $20.47 per share on December 31, 2018.

(4)	PSUs granted in 2017 and 2018 are reported in this table at target. The actual number of PSUs earned will be determined based on performance achievement measured over the three (3) year performance period, and any earned PSUs will vest on February 6, 2020 and February 8, 2021, respectively.

Option Exercises And Stock Vested In 2018

The following table sets forth information with respect to the exercise of stock options and vesting of RSUs by the NEOs during the year ended December 31, 2018:

	Option Awards		Stock Awards
	Number of	Value	Number of	Value
	Shares Acquired	Realized on	Shares Acquired	Realized on
Name	on Exercise (#)	Exercise ($)	on Vesting (#)	Vesting ($)(1)
Michael P. Plisinski	—	$ —	133,554	$2,950,435
Steven R. Roth	—	$ —	12,774	$338,759
Robert A. Koch	—	$ —	7,795	$206,854
Richard Rogoff	—	$ —	8,993	$232,981
Elvino da Silveira	10,000	$324,500	6,662	$177,531

(1)

The aggregate dollar amount realized is based on the fair market value of the shares upon vesting.

Pension And Nonqualified Deferred Compensation

The Company does not have a defined benefit pension program, nor does it offer non-qualified deferred compensation.

Potential Payments Upon Termination Of Employment Or Change-In-Control

This section (including the following tables) summarizes each NEO’s estimated payments and other benefits that would be received by the NEO or the NEO’s estate if his or her employment had terminated on December 31, 2018, under the hypothetical circumstances set forth below.

Each of our NEOs would be entitled to certain termination payments upon his or her death or Disability, his or her involuntary termination without Cause, or his or her voluntary termination with Good Reason as described below. Although the definitions of each of these terms is specific to the NEO’s employment agreement or change-in-control agreement with the Company, the terms generally have the following meanings:

•

“Disability” generally means that the executive, due to physical or mental impairment, is unable to perform his or her duties to the Company for a specified period of time.

•

“Cause” generally means that the executive engaged in a crime or other serious act involving moral turpitude; materially breached an agreement between him or her and the Company; or otherwise materially breached his or her obligations to the Company.

•

A voluntary termination for “Good Reason” generally means, depending on the particular executive’s agreement, that the executive’s duties, responsibilities or status with the Company or its successor are materially reduced; his or her primary place of work is moved to a location outside a predetermined radius; in particular cases, certain reduction in compensation; or the Company materially breaches the terms of his or her agreement with the Company or any successor fails to assume the executive’s change-in-control agreement.

NEO Employment Agreements

Mr. Plisinski

Mr. Plisinski’s employment agreement provides for the following:

•

In the event of any termination of Mr. Plisinski’s employment, he is entitled to payment of all base salary due and owing through the termination date and an amount equal to all earned but unused vacation through the termination date.

•

In the event Mr. Plisinski’s employment is terminated due to his death, his estate would be entitled to:

◦

Payment of his then-current base salary as if his employment had continued for three (3) months following his death;

◦

Continued co-payment for a period of six (6) months following his death of amounts due under COBRA for continuation of Company’s group health and other group benefits for his covered dependents, if the covered dependents so elect;

◦

Payment of his annual incentive case bonus based on actual performance achievement, prorated for the time employed preceding his death, to be paid out with the Company’s annual incentive plan payouts; and

◦

Immediate vesting of stock options and SARs, and immediate vesting of RSU awards granted after his appointment as CEO which by their terms would vest within twelve (12) months after death and, if a performance award, based on actual performance achievement for such performance period completed within twelve (12) months after death.

•

In the event Mr. Plisinski’s employment is terminated due to his Disability, he would be entitled to:

◦

Payment of his then-current base salary through the end of the month of such termination;

◦

Continued co-payment for a maximum period of six (6) months following his Disability of amounts due under COBRA for continuation of Company’s group health and other group benefits, if he or his covered dependents, as appropriate, so elects;

◦

Payment of his annual incentive case bonus based on actual performance achievement, prorated for the time employed preceding his termination, to be paid out with the Company’s annual incentive plan payouts; and

◦

Immediate vesting of stock options and SARs, and immediate vesting of RSU awards granted after his appointment as CEO which by their terms would vest within twelve (12) months after termination for disability and, if a performance award, based on actual performance achievement for such performance period completed within twelve (12) months after termination.

•

In the event Mr. Plisinski’s employment is terminated by the Company without Cause or Mr. Plisinski terminates his employment for Good Reason, he would be entitled to:

◦

Payment of two (2) times his then-current base salary for a period of twenty-four (24) months;

◦

Continued co-payment for a period of up to eighteen (18) months of amounts due under COBRA for continuation of Company’s group health and other group benefits, if he so elects; and

◦

Vesting of any equity incentive awards outstanding as of the termination date that, by their terms:

(1)

represent either unvested shares which were earned based on a completed performance period under a performance-based award granted on or after the employment agreement effective date and which as of the termination date are then subject to time-based vesting only, or shares under such an equity incentive award granted on or after the employment agreement effective date which will be earned under a performance-based award based on actual achievement under a performance period which has been completed on or prior to the termination date but as to which performance period the actual number of shares earned against the award performance goals has not yet been determined by the Company; and

(2)

would have become vested based solely on the passage of time within the twelve (12) month period immediately following the termination date had Mr. Plisinski continued in employment with the Company.

•

If, within eighteen (18) months following the occurrence of a Change-in-Control ¹ , Mr. Plisinski’s employment is terminated for any reason other than for Cause or Mr. Plisinski terminates his employment for Good Reason, he would be entitled to:

◦

Payment of two (2) times the sum of his then-current base salary and target annual cash bonus for a period of twenty-four (24) months;

◦

Continued co-payment by Company for a period of up to eighteen (18) months of amounts due under COBRA for continuation of Company’s group health and other group benefits, if he so elects; and

◦

Immediate vesting of all unvested stock options, SARs and all unvested and outstanding performance-based (at target) and service-based RSUs and other equity awards.

¹	For Mr. Plisinski, a “Change-in-Control” would generally be considered to have occurred if:

•

a merger or consolidation of the Company or an acquisition by the Company involving the issuance of its securities as consideration for the acquired business results in the stockholders of the Company following such transactions having less than fifty percent (50%) of combined voting power of the surviving entity;

•	any person or persons becomes the beneficial owner of thirty percent (30%) or more of our outstanding shares;

•	all or substantially all assets of the Company are disposed of pursuant to a plan of liquidation of the Company;

•	all or substantially all of our assets are sold; or

•

during any twelve (12) month consecutive period the individuals who presently make up our Board or who become members of our Board with the approval of at least a majority of our existing Board cease to constitute at least a majority of the Board; provided any transaction or event described above will not constitute a change-in-control under the agreement unless it qualifies as a “change-in-control” under Section 409A of the Internal Revenue Code.

◦

To the extent that change -in- control termination payments made to Mr. Plisinski under his agr eement are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, Mr. Plisinski would either have to pay the excise tax or have his benefits reduced so that no portion of his termination payments were subject to the excise tax.

◦

In order to receive these termination or change-in-control termination payments, Mr. Plisinski would be required to sign a general release of all known and unknown claims that he may have against the Company.

◦

As part of his employment agreement, Mr. Plisinski is subject to non-solicitation and non-competition restrictions that limit his ability to compete with the Company during the term of the agreement and for a period of two (2) years following his resignation or termination for any reason.

The following table reflects the potential payments to Mr. Plisinski in the event of his termination or his termination following a change-in-control:

Potential Payments To Mr. Plisinski Upon Termination Or Change-In-Control
	Cash Severance		Value of
Termination Circumstance as of 12/31/2018	Base Salary	Management Incentive Bonus	Accelerated Unvested Equity	Benefits Continuation
By the Company without cause	$1,050,000 (2x salary)	$ -	$1,112,770	$36,265
Executive resignation for good reason	$1,050,000 (2x salary)	$ -	$1,112,770	$36,265
Death	$131,250 (3 months salary)	$398,639 (1x bonus)	$798,146	$12,088
Disability	$ -	$398,639 (1x bonus)	$798,146	$12,088
Within 18 months following sale or change-in-control:
By the Company without cause	$1,050,000 (2x salary)	$797,278 (2x bonus)	$2,670,148	$36,265
By the executive with good reason	$1,050,000 (2x salary)	$797,278 (2x bonus)	$2,670,148	$36,265

Mr. Roth

Mr. Roth’s employment agreement provides for the following:

•

In the event Mr. Roth’s employment is terminated as a result of his death or Disability, he or his estate would be entitled to:

◦

Payment of all base salary due and owing through the termination date and amount equal to all earned but unused vacation through the termination date;

◦

Payment of an amount equal to Mr. Roth’s bonus as was paid or payable for the most recent completed bonus period; and

◦

Accelerated vesting of all outstanding and unvested stock options, performance-based and service-based RSUs or other equity awards.

•

In the event Mr. Roth’s employment is terminated without Cause or Mr. Roth terminates his employment for Good Reason, he would be entitled to:

◦

Payment of all base salary due and owing through the termination date and an amount equal to all earned but unused vacation through the termination date;

◦

Payment for over a period of one (1) year of one (1) times Mr. Roth’s:

Then-current base salary; and

Bonus as was paid or payable for the most recent completed bonus period;

◦

Accelerated vesting of all unvested stock options and all unvested and outstanding performance based and service-based RSUs and other equity awards.

•

If, within one (1) year following the occurrence of a change-in-control ² , Mr. Roth’s employment is terminated for any reason other than for Cause or Mr. Roth terminates his employment for Good Reason, he would be entitled to:

◦

Payment of all base salary due and owing through the termination date and including an amount equal to all earned but unused vacation through the termination date;

◦

Payment over a period of one (1) year of one (1) times Mr. Roth’s:

Then-current base salary; and

Bonus as was paid for the most recent completed bonus period;

◦

Accelerated vesting of all unvested stock options and all unvested and outstanding performance-based and service-based RSUs and other equity awards; and

◦

Maintenance of Mr. Roth’s and his dependents’ health care benefit coverage to the same extent provided for by and with the same Company/Executive payment contribution percentages under Company’s group plans at the time of termination. Such coverage shall extend for a term of one (1) year from the Termination Date unless he becomes covered as an insured under another employer’s or spousal health care plan.

•

To the extent that termination or change-in-control payments made to Mr. Roth under his agreement are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, Mr. Roth would either have to pay the excise tax or have his benefits reduced so that no portion of his termination payments were subject to the excise tax.

•

In order to receive these termination or change-in-control payments, Mr. Roth would be required to sign a general release of all known and unknown claim the he may have against the Company.

•

As part of his employment agreement, Mr. Roth is subject to non-competition and non-solicitation restrictions that limit his ability to compete with the Company during the term of the Agreement and for a period of one (1) year following his resignation or termination for any reason.

²	For Mr. Roth, a “Change-in-Control” would generally be considered to have occurred if:

•	any person or persons becomes the beneficial owner of twenty-five percent (25) or more of our outstanding voting shares;

•

during any two (2) consecutive year period individuals who presently make up our Board or who become members of our Board with the approval of at least two-thirds of our existing Board (other than a new director who assumes office in connection with an actual or threatened election contest) cease to be at least a majority of the Board;

•

a merger or consolidation of the Company is consummated with another entity (unless outstanding voting securities of the Company immediately prior to the termination would continue to represent more than fifty-one percent (51%) of the combined voting power of the surviving entity and had the power to elect as least a majority of the board of the surviving entity);

•	our stockholders approve a plan of liquidation of the company or an agreement for the sale of all or substantially all of our assets; or

•

any other event occurs of a nature that would be required to be reported as a “change-in-control” under Schedule 14A of the Exchange Act, provided any transaction or event described above will not constitute a change-in-control under the agreement unless it qualifies as a “change-in-control” under Section 409A of the Internal Revenue Code.

The following table reflects the potential payments to Mr. Roth in the event of his termination or his termination following a change-in-control:

Potential Payments To Mr. Roth Upon Termination Or Change-In-Control
	Cash Severance		Value of
Termination Circumstance as of 12/31/2018	Base Salary	Management Incentive Bonus	Accelerated Unvested Equity	Benefits Continuation
By the Company without cause	$353,100 (1x salary)	$172,520 (1x bonus)	$915,848	$ -
Executive resignation for good reason	$353,100 (1x salary)	$172,520 (1x bonus)	$915,848	$ -
Death	$ -	$172,520 (1x bonus)	$915,848	$ -
Disability	$ -	$172,520 (1x bonus)	$915,848	$ -
Within 12 months following sale or change-in-control:
By the Company without cause	$353,100 (1x salary)	$172,520 (1x bonus)	$915,848	$24,177
By the executive with good reason	$353,100 (1x salary)	$172,520 (1x bonus)	$915,848	$24,177

Messrs. Koch, Rogoff and da Silveira

The executive change-in-control agreements for Messrs. Koch, Rogoff and da Silveira provide for the following:

•

In the event Mr. Koch’s, Mr. Rogoff’s or Mr. da Silveira’s employment is terminated as a result of his death or “Disability”, the executive or his estate would be entitled to:

◦

Payment of all base salary due and owing through the termination date and an amount equal to all earned but unused vacation through the termination date; and

◦

Accelerated vesting of all unvested stock options and all unvested and outstanding performance-based and service-based RSUs and other equity awards.

•

If, within one (1) year following the occurrence of a change-in-control ³ , Mr. Koch’s, Mr. Rogoff’s or Mr. da Silveira’s employment is terminated for any reason other than for Good Cause or Mr. Rogoff, Mr. Koch or Mr. da Silveira terminates his employment for Good Reason, the executive would be entitled to:

◦

Payment of all base salary due and owing through the termination date and an amount equal to all earned but unused vacation through the termination date;

◦

Payment of his then-current base salary for a period of twelve (12) months (paid over a period of twelve (12) months);

◦

Accelerated vesting of all unvested stock options and all unvested and outstanding performance-based and service-based RSUs and other equity awards; and

◦

Maintenance of his and his dependent’s health care benefit coverage to the same extent provided for by and with the same Company/Executive payment contribution percentages under Company’s group plans at the time of

³	For Messrs. Koch, Rogoff and da Silveira, a “Change-in-Control” would generally be considered to have occurred if:

•	any person or persons becomes the beneficial owner of fifty percent (50%) or more of our outstanding voting shares;

•	during any twelve (12) month period a majority of the Board is replaced by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; or

•

there is a change in the ownership of Company assets that occurs with a person or group over a twelve (12) month period if the subject assets have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of Company immediately prior to such acquisition or acquisitions (subject to certain exceptions), provided any transaction or event described above will not constitute a change-in-control under the agreement unless it qualifies as a “change-in-control” under Section 409A of the Internal Revenue Code.

termination. Such coverage shall extend for a term of one (1) year from the termination date unless he becomes covered as an insured under another employer’s or spousal health care plan.

•

To the extent that change-in-control termination payments made to Mr. Koch, Mr. Rogoff or Mr. da Silveira are subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, Mr. Koch, Mr. Rogoff or Mr. da Silveira would either have to pay the excise tax or have his benefits reduced so that no portion of his termination payments were subject to the excise tax.

•

In order to receive these change-in-control termination payments, Mr. Koch, Mr. Rogoff or Mr. da Silveira would be required to sign a general release of all known and unknown claims that he may have against the Company.

Each of Mr. Koch, Mr. Rogoff or Mr. da Silveira, have entered into a separate agreement upon employment with the Company that subjects the executive to non-competition and non-solicitation restrictions, which limit his ability to compete with the Company during his employment and for a period of one (1) year following his resignation or termination for any reason.

The following table reflects the potential payments to Mr. Koch in the event of his termination or his termination following a change-in-control:

Potential Payments To Mr. Koch Upon Termination Or Change-In-Control
Termination Circumstance as of 12/31/2018	Cash Severance (Base Salary)	Value of Accelerated Unvested Equity	Benefits Continuation
Death	$ -	$482,498	$ -
Disability	$ -	$482,498	$ -
Within 12 months following sale or change-in-control:
By the Company without cause	$289,800 (1x salary)	$482,498	$20,099
By the executive with good reason	$289,800 (1x salary)	$482,498	$20,099

The following table reflects the potential payments to Mr. Rogoff in the event of his termination or his termination following a change-in-control:

Potential Payments To Mr. Rogoff Upon Termination Or Change-In-Control
Termination Circumstance as of 12/31/2018	Cash Severance (Base Salary)	Value of Accelerated Unvested Equity	Benefits Continuation
Death	$ -	$472,284	$ -
Disability	$ -	$472,284	$ -
Within 12 months following sale or change-in-control:
By the Company without cause	$295,400 (1x salary)	$472,284	$20,099
By the executive with good reason	$295,400 (1x salary)	$472,284	$20,099

The following table reflects the potential payments to Mr. da Silveira in the event of his termination or his termination following a change-in-control:

Potential Payments To Mr. da Silveira Upon Termination Or Change-In-Control
Termination Circumstance as of 12/31/2018	Cash Severance (Base Salary)	Value of Accelerated Unvested Equity	Benefits Continuation
Death	$ -	$407,640	$ -
Disability	$ -	$407,640	$ -
Within 12 months following sale or change-in-control:
By the Company without cause	$273,200 (1x salary)	$407,640	$ -
By the executive with good reason	$273,200 (1x salary)	$407,640	$ -

Executive Officers

Set forth below is certain information regarding the executive officers of the Company and their ages as of March 31, 2019. Information relating to Michael P. Plisinski is set forth above under the caption “PROPOSAL 1 — ELECTION OF DIRECTORS — Continuing Class I Directors.” The Company is unaware of any arrangements or understandings between the executive officers of the Company and other person(s) pursuant to which an executive officer was or is to be selected.

Named Executive Officers (NEOs)

Steven R. Roth Senior Vice President, Finance and Administration and Chief Financial Officer Age: 58

•

Mr. Roth has served the Company in his current role since February 2002.

•

Prior Experience:

◦

September 1996 to February 2002: Vice President, Finance and Administration and Chief Financial Officer of the Company.

◦

August 1991 to August 1996: Director of Corporate Finance for Bell Communications Research, a former research and development company which served the telecommunications industry.

•

Mr. Roth is a C.P.A. and holds a B.S. in Accounting from Villanova University.

Robert A. Koch Vice President & General Counsel Age: 57

•

Mr. Koch has served the Company in his current role since May 2003.

•

Prior Experience:

◦

April 1986 to May 2003: In-house counsel, last serving as Director of Legal Affairs for Howmedica Osteonics Corp., the orthopaedic implant subsidiary of Stryker Corporation.

•

Mr. Koch holds a B.S. in Chemical Engineering and a M.S. in Biomedical Engineering, both from Rutgers University. Mr. Koch earned his J.D. from Rutgers School of Law - Newark in 1991 and is admitted to practice in New Jersey and New York.

Richard B. Rogoff Vice President and General Manager, Lithography Systems Group Age: 52

•

Mr. Rogoff has served the Company in his current role since October 2013.

•

Prior Experience:

◦

July 2007 to October 2013: Vice President, Optics Business Unit of ASML Holding NV, a supplier of lithography systems to the semiconductor industry.

◦

March 2004 to July 2007: Vice President of European Sales and Worldwide Account Support of ASML Holding NV.

◦

Other prior roles included various executive, operational and engineering positions with ASML Holding NV since 1990.

•

Mr. Rogoff has a Bachelor of Science in Microelectronic Engineering from Rochester Institute of Technology and an M.B.A. from INSEAD Business School.

Elvino da Silveira Vice President, Business Development Age: 59

•

Mr. da Silveira has served the Company in his current role since August 2017.

•

Prior Experience:

◦

November 2015 to July 2017: Vice President, Marketing and Product Management of the Company.

◦

December 2012 to October 2015: Vice President and General Manager of the Display Products Lithography Business Unit and Chief Technical Officer of the Lithography Systems Group of the Company.

◦

March 1999 to December 2012: President and Chief Executive Officer of Azores Corporation (from Azores inception to its acquisition by the Company).

◦

Other prior roles included various senior management roles with the latest being Vice President of Operations and Worldwide Customer Support for MRS Technology, Inc., a former manufacturer of capital equipment for the flat panel display industry.

•

Mr. da Silveira holds a B.S. in Mechanical Engineering from Northeastern University.

Other Executive Officers

Reza Asgari General Manager, Americas and Emerging Solutions Age: 60

•

Mr. Asgari has served the Company in his current role since September 2018.

•

Prior Experience:

◦

June 2016 to September 2018: Regional Sales General Manager for the Americas

◦

November 2014 to June 2016: Director, US Sales

◦

January 2008 to November 2014: Product Manager

◦

February 2005 to January 2008: Vice President of Sales and Marketing, RVSI Inspection, LLC.

◦

Other prior roles included Director of Business Development, Asia with Robotic Vision Systems Inc.

•

Mr. Asgari holds a B.S. and M.S. in Mechanical Engineering from Louisiana State University, Agricultural and Mechanical College.

Cleon Chan Vice President, Global Field Operations Age: 51

•

Mr. Chan has served the Company in his current role since August 2017.

•

Prior Experience:

◦

February 2015 to July 2017: Vice President, Asia Operations of the Company.

◦

November 2011 to January 2015: General Manager for Strategic Sales and Marketing for Asia for Applied Materials, Inc.

◦

January 2002 to November 2011: General Manger for Asia Strategic Marketing and South East Asia Operations for Varian Semiconductor Equipment Associates, Inc., a supplier of Ion Implanter systems.

◦

Other prior roles included General Manager for the semiconductor equipment division of STEAG Electronic Systems AG, for Asia-Pacific Operations. This division of STEAG Electronic Systems merged with Mattson Technology Inc. in January 2001.

•

Mr. Chan received a B.Eng. in Electronics and Electrical Engineering from National University of Singapore and M.B.A. from University of Dubuque.

Alex Chow Vice President, Advance Packaging Strategic Marketing Age: 42

•

Mr. Chow has served the Company in his current role since January 2018.

•

Prior Experience:

◦

May 2015 to January 2018: Vice President of Product Marketing for Ultratech, Inc., a semiconductor lithography, laser annealing and inspection equipment manufacturer.

◦

January 2010 through May 2015: Director of Product Marketing for Ultratech, Inc., a semiconductor lithography, laser annealing and inspection equipment manufacturer.

Other prior roles included Manager for Product Marketing, Field Applications Operations for Ultratech, Inc., and Senior Applications Engineer of Suss Microtec.

◦ Other prior roles included Manager for Product Marketing, Field Applications Operations for Ultratech, Inc., and Senior Applications Engineer of Suss Microtec.

•

Mr. Chow received a M.S. in Materials Science and Engineering from the University of Maryland College Park. Mr. Chow completed an Executive Education Program of Strategy in Competitive Market at University of California Berkeley.

Michael J. Colgan Vice President, Research and Development, Process Control Group Age: 56

•

Dr. Colgan has served the Company in his current role since January 2016.

•

Prior Experience:

◦

January 2013 to December 2015: Vice President and General Manager of the Metrology Business Unit of the Company.

◦

January 2011 to December 2012: Director of Operations, Metrology Business Unit of the Company.

◦

Other prior roles included Director of Engineering, Metrology Business Unit as well as various engineering management and staff positions at the Company since 1999.

•

Dr. Colgan holds a B.S. in Physics from Catholic University, a Ph.D. in Physics from Rutgers University and an M.B.A. from University of Scranton.

Leo nard LaBua Vice President and General Manager, Integrated Solutions Group Age: 57

•

Mr. LaBua has served the Company in his current role since August 2018.

•

Prior Experience:

◦

October 2017 to August 2018: Acting General Manager for the Integrated Solutions Group

◦

March 2013 to September 2017: Director of Customer Solutions

◦

Other prior roles included Sr. Manager Analysis Applications and Applications Manager at the Company since 2006

◦

Mr. LaBua also previously held positions with several other corporations including IBM, KLA-Tencor, and ADE Corporation.

•

Mr. LaBua holds a B.S. in Chemical Engineering from Worcester Polytechnic Institute and a M.S. in Computer Science from Marist College.

Anthony Nazzaro Vice President, Worldwide Customer Support Age: 58

•

Mr. Nazzaro has served the Company in his current role since April 2018.

•

Prior Experience:

August 2017 to March 2018: Director, Worldwide Customer Support of the Company.

◦ August 2017 to March 2018: Director, Worldwide Customer Support of the Company.

◦

December 2016 to July 2017: Director Technical Support of the Company.

◦

January 2015 to December 2016: President, FosterWorth, Inc., a company specializing in business expense reduction services.

◦

September 2011 to October 2014: Senior Director Customer Support, ASML Holding N.V., a semiconductor equipment manufacturer.

•

Mr. Nazzaro has over 30 years of customer service leadership experience in large and small organizations ranging in complexity from component manufacturers to leading edge front-end capital equipment suppliers for the semiconductor industry.

George Murray Vice President, Operations Age: 51

•

Mr. Murray has served the Company in his current role since December 2018.

•

Prior Experience:

◦

September 2017 to June 2018: Served as the Chief Operating Officer at Wurth Adams.

◦

Over 15 years’ consulting and executive experience in global operations management of multiple site operations in four industries: RFID/Embedded Technology, Industrial Automation, Electronic Assembly, and Automotive.

•

Mr. Murray holds a B.S. in Business Management and an M.B.A. from University of Phoenix, a Mini-Masters in Project Management from St. Thomas, as well as a Black Belt in Lean Six Sigma from Lean Enterprise.

•

Mr. Murray is a U.S. Army Veteran having served in Ft. Campbell, KY, Germany, Iraq, Kuwait and Saudi Arabia.

Nicholas Ward Vice President, Software Field Services Age: 59

•

Mr. Ward has served the Company in his current role since July 2018.

•

Prior Experience:

◦

2016 to 2018: Mr. Ward served as Senior Director of Marketing and Operations in the Software product business unit at PDF Solutions.

◦

1999 to 2016: Mr. Ward held various technical and leadership positions within the software product groups at Applied Materials.

•

Mr. Ward holds a Postgraduate Diploma in Computing for Commerce and Industry from the Open University in the UK.

CEO Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Michael P. Plisinski, our CEO, during 2018.

For fiscal 2018, our last completed fiscal year:

•

The median of the annual total compensation of all employees of our Company (other than our CEO), was $91,106; and

•

The annual total compensation of our CEO, as reported in the Summary Compensation Table included in this Proxy Statement, was $2,191,233 .

Based on this information, the ratio of the annual total compensation of our CEO to the median employee’s annual total compensation is 24 to 1.

Because there was no change in our employee population or compensation arrangements in the past year that we believe would significantly impact the pay ratio disclosure, we used the same median employee identified in 2017 for our 2018 pay ratio.

This pay ratio is a reasonable estimate calculated in good faith, in a manner consistent with Item 402(u) of Regulation S-K, based on our payroll and employment records and the methodology described below. The Securities and Exchange Commission (“SEC”) rules for identifying the “median employee” and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratios reported by other companies may not be comparable to the pay ratio set forth above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

To identify the employee with the median of the annual total compensation of all our employees that is used for the years ended 2017, 2018 and 2019, we used the following methodology and made the following material assumptions, adjustments and estimates:

•

We determined that as of December 31, 2017, our employee population consisted of approximately 592 individuals located in the U.S. and in countries in Europe and Asia. This population consisted of our full-time, part-time and temporary employees. We excluded a limited number of temporary agency employees and independent contractors, who are employees of, and whose compensation is determined by third parties unaffiliated with the Company and as such are not considered our employees for the purposes of the pay ratio calculation.

•

To identify the “median employee” from our employee population, we used a consistently applied compensation measure which included annual salary as reflected in our payroll records, as well as stock awards and non-equity incentive plan compensation earned in 2017, which was our measurement period. We applied a foreign currency to U.S. dollar exchange rate to the compensation paid in foreign currency and we did not make any cost-of-living adjustments. We selected this compensation measure because it is readily available in our existing payroll records and because it is a reasonable proxy for total compensation for purposes of determining the “median employee.”

For the “median employee” identified in 2017, we calculated the elements of such employee’s compensation for 2018 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K. The median employee’s annual total compensation of $91,106 includes salary, stock awards and non-equity incentive plan compensation, as well as Company matching contributions to the 401(k) employee savings plan, and the cost of Company paid premiums associated with coverage under the group term life insurance and accidental death and dismemberment insurance plan. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of the Summary Compensation Table included in this proxy statement. Any estimates and assumptions used to calculate total annual compensation are described in footnotes to the Summary Compensation Table.

SECURITY OWNERSHIP OF CERTAIN BENEFIC I AL OWNERS

The following table sets forth certain information with respect to beneficial ownership of the Company’s Common Stock as of March 18, 2019 (except as otherwise indicated), by:

(i)

each individual or group known by the Company to own beneficially more than five percent (5%) of the Common Stock;

(ii)

each of the Named Executive Officers;

(iii)

each of the Company’s directors and director nominees; and

(iv)

all directors, director nominees and executive officers as a group.

Except as indicated in the footnotes to this table, the persons named in the table have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them, subject to community property laws where applicable.

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership ⁽¹⁾	Percent of Class ⁽²⁾
BlackRock, Inc. (3) 55 East 52nd Street, New York, NY 10055	4,686,359	15.1%
Dimensional Fund Advisors, LP (4) Building One, 6300 Bee Cave Road, Austin, TX 78746	2,687,523	8.7%
The Vanguard Group (5) 100 Vanguard Boulevard, Malvern, PA 19355	1,998,910	6.5%
Michael P. Plisinski	258,247	*
Steven R. Roth	41,805	*
Richard Rogoff	20,122	*
Robert A. Koch	41,958	*
Elvino da Silveira	23,955	*
Jeffrey A. Aukerman (6)	25,446	*
Leo Berlinghieri	19,000	*
Daniel H. Berry	20,600	*
Vita A. Cassese	—	*
Thomas G. Greig	137,100	*
David B. Miller	17,300	*
John R. Whitten	29,000	*
All directors and executive officers as a group (twenty (20) persons)	689,406	2.2%

Less than 1%

(1)

Includes 23,970 shares subject to restricted stock units vesting within 60 days of March 18, 2019 for all directors and executive officers as a group.

(2)

Applicable percentage ownership is based on 30,933,820 shares of Common Stock outstanding as of March 18, 2019. Beneficial ownership of shares is determined in accordance with the rules of the SEC and generally includes shares as to which a person holds sole or shared voting or investment power. Shares of Common Stock subject to RSUs which will vest, within sixty (60) days of March 18, 2019 are deemed to be beneficially owned by the person holding such RSUs for the purpose of computing the percentage ownership of such person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise noted, the address for the stockholders named in this table is c/o Rudolph Technologies, Inc., 16 Jonspin Road, Wilmington, Massachusetts 01887.

(3)

Information provided herein is based on the Schedule 13G/A that was filed by BlackRock, Inc. on January 31, 2019.

(4)

Information provided herein is based on the Schedule 13G/A that was filed by Dimensional Fund Advisors LP on February 8, 2019.

(5)

Information provided herein is based on the Schedule 13G/A that was filed by The Vanguard Group on February 12, 2019.

(6)

Includes shares held by Aukerman Investments LLC.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth, as of December 31, 2018, certain information related to our equity compensation plans.

	(a)	(b)	(c)
Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1)	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights	Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (2)
Equity compensation plans approved by security holders	840,518	$0.68	4,831,621
Equity compensation plans not approved by security holders	n/a	n/a	n/a
Total	840,518	$0.68	4,831,621

(1)

Includes 794,018 shares issuable upon vesting of outstanding restricted stock units.

(2)

As of December 31, 2018, there were 3,331,621 of these shares were available under the 2018 Stock Plan. As of December 31, 2018, there were 1,500,000 shares available under the 2018 Employee Stock Purchase Plan.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s executive officers, directors and persons who own more than ten percent (10%) of a registered class of the Company’s equity securities to file an initial report of ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the SEC. Such persons are also required by SEC rules to furnish the Company with copies of all Section 16(a) forms they file. Based solely on its review of Section 16 filings made with the SEC, the copies of such forms received by it, or written representations from certain reporting persons, the Company believes that, during the year ended December 31, 2018 and through the record date of March 18, 2019, all officers, directors and greater than ten percent (10%) beneficial owners complied with all Section 16(a) filing requirements, except the following:

•

Alex Chow filed one Form 4 on January 26, 2018 with respect to one equity grant on January 22, 2018.

•

Michael Colgan, Elvino da Silveira, Steven Gardner, Michael Goodrich, Robert Koch, Michael Plisinski, Richard Rogoff and Steven Roth each filed on Form 4 on February 5, 2018 with respect to withholding of shares upon the vesting of equity grants on January 31, 2018.

OTHER MATTERS

The Company knows of no other matters to be submitted to the Annual Meeting. If any other matters properly come before the Annual Meeting, it is the intention of the persons named in the enclosed Proxy to vote the shares they represent as the Board of Directors may recommend.

A DDITIONAL INFORMATION

Stockholders may obtain a copy of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, including financial statements and schedules included in the Annual Report on Form 10-K, without charge, by visiting the Company’s website at https://investors.rudolphtech.com or by writing to:

Michael Sheaffer, Sr. Director, Investor Relations & Market Research

16 Jonspin Road

Wilmington, Massachusetts 01887

Upon written request to the Company, at the above address for Investor Relations, the exhibits set forth on the exhibit index of the Company’s Annual Report on Form 10-K will be made available at reasonable charge (which will be limited to our reasonable expenses in furnishing such exhibits).

BY ORDER OF THE BOARD OF DIRECTORS

Steven R. Roth

Secretary

Dated: April 2, 2019