Omkaram Nalamasu
APPLIED MATERIALS INC /DEAbout Omkaram Nalamasu
Omkaram “Om” Nalamasu is Senior Vice President and Chief Technology Officer of Applied Materials and President of Applied Ventures, LLC, roles he has held since 2013; he joined Applied in 2006 after leadership roles at Bell Laboratories and serving as NYSTAR Distinguished Professor and Vice President of Research at Rensselaer Polytechnic Institute (RPI) . He is age 66 per the latest 10-K and chairs strategic innovation initiatives including CHIPS for America Industrial Advisory Committee participation . Company performance context under his technology leadership: FY2024 revenue $27.2B, GAAP EPS $8.61, non-GAAP EPS $8.65, with strong cash generation; five-year TSR materially outperformed the S&P 500, and FY2024 segment highlights included $19.9B Semiconductor Systems revenue .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Bell Laboratories | Leadership roles (R&D) | Pre-2002 | Advanced materials and semiconductor research foundation |
| Rensselaer Polytechnic Institute (RPI) | NYSTAR Distinguished Professor, VP of Research | 2002–2006 | Led university research strategy; industry-academic collaboration |
| Applied Materials | Appointed VP of Research; Deputy CTO; GM, Advanced Technologies Group | 2006–2011 | Built Advanced Technologies Group and innovation platform |
| Applied Materials | Corporate VP CTO; Group VP CTO; SVP CTO | 2011–present | Oversees technology strategy and multi-year LTI metrics alignment |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| CHIPS for America (U.S. Dept. of Commerce) | Industrial Advisory Committee Member | Active in 2023–2024 | Supports national semiconductor strategy; cited in AMAT sustainability disclosures |
Fixed Compensation
| Year | Base Salary ($) | Target Bonus % of Salary | Target Bonus ($) | Actual Annual Bonus Paid ($) |
|---|---|---|---|---|
| 2022 | 592,308 | 120% (Company program; NEO-specific table later) | — | 568,080 |
| 2023 | 625,385 | 120% (Company program; NEO-specific table later) | — | 742,203 |
| 2024 | 659,616 | 120% | 798,000 | 866,608 |
Notes:
- FY2024 annual incentive had an initial non-GAAP EPS hurdle of $5.55, which the company exceeded (actual $8.65), unlocking scorecard-based payouts and a 1.1x individual performance factor for all NEOs .
Performance Compensation
Annual Bonus – FY2024 Corporate Scorecard Details (applied to all NEOs)
| Metric (Category) | Weighting | Target/Objective | Actual | Score/Payout Modifier | Notes |
|---|---|---|---|---|---|
| Non-GAAP EPS hurdle | — | $5.55 minimum to fund pool | $8.65 | Pass | Gate for bonus calculation |
| WFE Market Share (Financial & Market) | 10% | Grow share (VLSI) | Below target | 0.75x | Market-relative outcome |
| Talent productivity milestones (Financial & Market) | 5% | Hiring, engagement, productivity | Progress, below milestone | 0.75x | Execution vs stretch goals |
| Non-GAAP Gross Margin (Financial & Market) | 10% | Margin improvement initiatives | 47.6% in line with target | 1.0x | Externally reported GM |
| Non-GAAP Op Margin & Cash Flow (Financial & Market) | 10% | OM and FCF/OCF goals | OM 29.2% below target; OCF 32%, FCF 28% above target | 0.75x | Mixed result across measures |
| Relative TSR vs peers (Financial & Market) | 7.5% | Above target TSR ranking | Above target | 1.5x | Outperformance vs peers |
| Operational, DIO, Quality, Safety | 7.5% | Improve key ops metrics | Improved | 1.0x | Ops excellence |
| Semi Biz 2028 milestones (Products & Growth) | 20–22.5% (by NEO) | Position for FY2028 targets | Met/exceeded | 1.1x | Strategic progress |
| IMS 2028 milestones (Products & Growth) | 2.5–7.5% (by NEO) | Position IMS for 2028 | Achieved | 1.0x | |
| Display 2028 milestones (Products & Growth) | 1.5–5% (by NEO) | Position Display | Delivered | 1.0x | |
| New/adjacent growth 2028 (Products & Growth) | 1.5–25% (by NEO) | Position adjacencies | Achieved | 1.0x | |
| Services 2028 milestones (Services & Subscription) | 5–25% (by NEO) | Position AGS for 2028 | Met/exceeded | 1.25x | |
| Customer wins (Customers & Markets) | 2.5% | Tool-of-record wins | Significantly exceeded | 2.0x | |
| Product safety, OTD, install (Customers & Markets) | 2.5% | Meet OTD & quality | OTD below target | 0.75x | |
| Culture of Inclusion progress (People & Org) | 2.5% | COI representation | Progress, below aspirational | 0.75x | |
| Sustainability milestones (People & Org) | 2.5% | Net Zero 2040 milestones | Met significant milestones | 1.0x |
Individual Performance Factor (IPF): 1.1x for all NEOs including Nalamasu .
Long-Term Incentives – Structure and FY2024 Grants
| Component | Mix | Performance Metrics | Vesting | FY2024 Nalamasu Target |
|---|---|---|---|---|
| PSUs | 50% of NEO LTI value | 50% 3-year average non-GAAP operating margin; 50% 3-year relative TSR vs S&P 500 | At end of 3-year period; Threshold/Target/Max: 0%/100%/200% per metric | 13,478 PSUs (from $4,000,000 target) |
| RSUs | 50% of NEO LTI value | Time-based | Ratable over 3 years | 13,478 RSUs (from $4,000,000 target) |
FY2022 PSU Outcomes (performance period FY2022–FY2024):
| Metric | Threshold | Target | Max | Actual Result | Payout Factor |
|---|---|---|---|---|---|
| 3-year avg non-GAAP Operating Margin | 26.4% | 28.4% | 32.4% | 29.6% | 130% |
| Relative TSR vs S&P 500 | 25th %ile | 50th %ile | 75th %ile | 73rd %ile | 193% |
| Total PSU payout | — | — | — | — | 161.5% |
| Nalamasu’s PSUs earned | — | 11,605 target | — | — | 18,742 earned |
Equity Ownership & Alignment
| Date | Beneficial Ownership (Shares) | % of Outstanding | Notes |
|---|---|---|---|
| Dec 31, 2023 | 120,730 | <1% | Includes shares with sole voting/disposition power |
| Dec 31, 2024 | 101,664 | <1% | Beneficial ownership per proxy |
Stock ownership guidelines: CEO 6x salary; other Section 16 officers (including Nalamasu) 3x salary; no selling below guideline; all directors and executive officers were in compliance as of Dec 31, 2024 . Hedging and pledging: prohibited for directors and Section 16 officers under insider trading policy .
Vested vs unvested; vesting calendar:
- Outstanding RSUs at FY2024 year-end: 13,478 (12/7/2023 grant), 11,125 (12/12/2022 grant), 3,869 (12/2/2021 grant) .
- Outstanding PSUs at FY2024 year-end (target/unearned): 13,478 (FY2024 grant), 16,687 (FY2023 grant), 11,605 (FY2022 grant) .
- RSU vesting dates/schedule: 2023 grants vest one-third on Dec 19, 2024/2025/2026; 2022 grants vest half on Dec 19, 2024 and Dec 19, 2025; 2021 grants vested in full on Dec 19, 2024 .
- 2023 vesting activity: Nalamasu had 58,091 shares acquired on vesting; 27,652 shares withheld for taxes; value realized $6,040,883 .
Deferred compensation:
| Year | Executive Contributions ($) | Aggregate Earnings ($) | Withdrawals ($) | Aggregate Balance ($) |
|---|---|---|---|---|
| 2022 | 1,055,244 | (972,900) | 173,365 | 5,827,348 |
| 2023 | 798,074 | 225,686 | 226,241 | 6,354,866 |
Employment Terms
- Employment agreements: Applied does not have change-of-control agreements or employment contracts for NEOs other than the CEO; Nalamasu has no separate employment agreement .
- Equity change-in-control: Double-trigger acceleration applies if awards are not assumed or if terminated without cause/for good reason within 12 months post-change-of-control; applies to PSUs/RSUs .
- Retirement provisions: Qualified retirement (age ≥60 and ≥5 years of service) enables partial RSU acceleration and partial PSU payout based on actual performance at the end of the cycle; Nalamasu qualified as of FY2023 and FY2024. Illustrative value if he had retired on Oct 27, 2023: $7,011,945; on Oct 25, 2024: $9,666,772 (based on closing prices and target PSU remaining eligible) .
- Clawback: Compensation recovery policy allows reimbursement of incentive compensation under certain circumstances (e.g., material restatement due to officer misconduct) .
- Tax gross-ups: Company does not provide tax gross-ups except for business-related relocation or expatriate assignments .
Fixed Compensation (Detail)
| Year | Salary ($) | All Other Compensation ($) | Total Cash ($) |
|---|---|---|---|
| 2022 | 592,308 | 4,543 | 1,160,931 (salary + bonus) |
| 2023 | 625,385 | 3,718 | 1,367,588 (salary + bonus) |
| 2024 | 659,616 | 14,440 | 1,526,224 (salary + bonus) |
Performance Compensation (Detail)
| Year | Stock Awards Grant Date Fair Value ($) | Annual Bonus ($) | Total Compensation ($) |
|---|---|---|---|
| 2022 | 3,727,899 | 568,080 | 4,892,830 |
| 2023 | 4,037,503 | 742,203 | 5,408,809 |
| 2024 | 4,255,476 | 866,608 | 5,796,140 |
Notes:
- Nalamasu’s FY2024 LTI mix is 50% PSUs and 50% RSUs; PSU metrics are 3-year operating margin and relative TSR with 0–200% payout range per metric .
- FY2022 PSU tranche paid at 161.5%, reflecting OM and TSR overachievement; Nalamasu earned 18,742 PSUs vs 11,605 target .
Compensation Structure Analysis
- Cash vs equity mix: Nalamasu’s total pay is predominantly equity; FY2024 stock awards $4.26M vs cash bonus $0.87M, consistent with Applied’s emphasis on at-risk, multi-year equity .
- Shift from options to RSUs/PSUs: Recent disclosures show PSUs/RSUs, with no option awards reported for Nalamasu in FY2022–FY2024, aligning with lower risk and stronger performance alignment .
- Incentive rigor: FY2024 bonus required exceeding a $5.55 EPS hurdle, multi-factor corporate scorecard, and a 1.1x IPF; PSUs require sustained OM and TSR performance over three years .
- Peer benchmarking: HRCC maintains a large-cap/high-tech peer group; it uses peer data as reference without targeting a percentile .
Say-on-Pay & Shareholder Feedback
- Say-on-pay support: 91% of votes cast supported FY2024 NEO compensation; 92% supported FY2023 .
- Shareholder engagement: Applied conducted extensive outreach covering compensation, governance, and sustainability; feedback informed bylaw amendments lowering special meeting threshold to 10% .
Risk Indicators & Red Flags
- Hedging/pledging: Prohibited for directors and Section 16 officers; reduces misalignment risk .
- Clawback: Policy in place, aligned with best practice .
- Tax gross-ups: None except relocation/expatriate, shareholder-friendly .
- Option repricing: Not disclosed; recent awards are PSUs/RSUs .
Equity Ownership & Vesting Pressure
| Item | Detail |
|---|---|
| Upcoming RSU vest dates | One-third of 12/7/2023 grants on Dec 19, 2025 and Dec 19, 2026; remaining half of 12/12/2022 grants on Dec 19, 2025 |
| FY2023 vesting flow | 58,091 shares vested; 27,652 withheld for taxes (indicative of net share delivery and potential selling flows around vest dates) |
Investment Implications
- Strong pay-for-performance alignment: Nalamasu’s incentives are tied to rigorous multi-year OM and relative TSR, with FY2022–FY2024 PSU payout of 161.5% evidencing overachievement; annual bonuses depend on broad operational and financial scorecards, moderating payout volatility .
- December vesting cadence: RSUs routinely vest mid-December, creating predictable supply around year-end and potential 10b5-1 execution windows; 2023 vesting data shows meaningful share deliveries with tax withholding .
- Retention dynamics: Qualified retirement provisions enable partial RSU acceleration and PSU payout at performance close, which can reduce cliff risk but may modestly lower retention friction; Nalamasu qualifies, with a disclosed retirement-value sensitivity of $9.67M as of FY2024 year-end .
- Governance quality supportive: No hedging/pledging, clawbacks, and strong say-on-pay support (91–92%) minimize compensation-related governance overhang; peer group benchmarking is broad and not percentile-targeted, reducing pay ratcheting risks .