Richard Wallace
KLAAbout Richard Wallace
Richard Wallace is President and Chief Executive Officer of KLA, serving as CEO since January 2006 and President since November 2008; he joined KLA Instruments in 1988 and has been on KLA’s Board since 2006. He is age 65 and holds a B.S. in Electrical Engineering from the University of Michigan and an M.S. in Engineering Management from Santa Clara University, where he also taught strategic marketing and global competitiveness courses; prior roles included positions at Ultratech Stepper and Cypress Semiconductor . Under Wallace’s tenure, KLA reported FY2025 revenue of $12.156 billion (+23.9% YoY) and net income of $4.062 billion (+47.1% YoY), with free cash flow margin of 30.8% and cumulative TSR rising to $489.42 versus peer index $277.82 based on a $100 initial investment (measurement window from June 30, 2020 to FY-end) . Wallace serves as a director at Marvell Technology, Inc. (since 2024) and previously at Splunk, Inc. (2022–2024) and Proofpoint, Inc. (2017–2021) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| KLA | President & CEO | Jan 2006–present | Overall leadership; deep knowledge of business, operations, risks, and strategy execution |
| KLA | President & COO | Jul 2005–Dec 2005 | Transition leadership before CEO appointment |
| KLA | EVP, Customer Group | May 2004–Jul 2005 | Led customer-focused operations and strategy |
| KLA | EVP, Wafer Inspection Group | Jul 2000–May 2004 | Led key product group; technology and operations leadership |
| KLA Instruments | Applications Engineer & various GM roles | 1988 onward | Built broad operational and product leadership foundation |
| Ultratech Stepper; Cypress Semiconductor | Various roles (pre-KLA) | Not disclosed | Early semiconductor equipment and chip industry experience |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Marvell Technology, Inc. | Director | Since 2024 | Current U.S. public company board service |
| Splunk, Inc. | Director | 2022–2024 | Prior U.S. public company board service |
| Proofpoint, Inc. | Director | 2017–2021 | Prior U.S. public company board service |
Fixed Compensation
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Base Salary ($) | $1,000,000 | $1,129,905 | $1,190,481 |
| All Other Compensation ($) | $28,058 | $28,434 | $50,085 |
| CEO Base Salary Rate (approved) | — | — | $1,200,000; +6.7% YoY |
Performance Compensation
Annual Bonus Plan (Cash)
| Metric | Weighting | Target | Actual | Payout | Vesting |
|---|---|---|---|---|---|
| Operating Margin Dollars (2024 plan) + Balanced Scorecard | Grid-based (no fixed weight) | $3.93B OMD target; balanced scorecard calibrated 1–5 | $4.404B OMD (~12% above target); balanced scorecard “4+” | Funding 144% of target; CEO bonus achievement multiplier 120%; actual bonus $3,704,317 | Cash; pays per plan year; operates on calendar-year basis |
CEO target bonus percentages: 175% (Jan–Jul 2024) and 200% (Aug–Dec 2024), increased to 200% for calendar 2025 .
Equity Awards (RSUs and PRSUs)
| Award Type | Grant Date | Shares (#) | Grant-Date Fair Value ($) | Performance Metric | Vesting |
|---|---|---|---|---|---|
| RSU (FY2025 annual) | Aug 1, 2024 | 10,658.011 | $8,058,948 | None (service only) | 25% per year over 4 years from grant date |
| PRSU (FY2025 annual) – Target | Aug 1, 2024 | 15,987.016 | $12,088,422 | Three-year Relative Free Cash Flow Margin vs industry peer group (FY2025–FY2027) | 100% of earned shares vest at three-year anniversary (on or after performance determination) |
| PRSU – Threshold/Maximum | Aug 1, 2024 | Threshold: 3,996.754 (25%); Maximum: 31,974.032 (200%) | N/A | Same as above | Same as above |
No stock options or SARs were granted in FY2025, and no option exercises occurred in FY2025; KLA currently does not grant new option-like awards . Dividend equivalents on RSUs/PRSUs are paid only upon vesting/settlement .
Equity Ownership & Alignment
| Metric | As of |
|---|---|
| Beneficial Ownership: 34,502.841 shares; <1% of 131,684,530 outstanding | Sept 10, 2025 |
| Stock Ownership Guideline: CEO must hold ≥4x base salary | Policy |
| Guideline Compliance (Total Shares for compliance measure): 73,888.343 shares; $66,184,744 value; 55.2x salary (price $895.74) | Jun 30, 2025 |
| Hedging/Pledging Policy: Prohibited for officers/directors | Policy |
| Shares Vested in FY2025: 65,199 shares; value realized $47,714,122; net shares issued after tax withholding 32,873 | FY2025 |
Notes:
- Beneficial ownership table excludes RSUs/PRSUs not issuable within 60 days; ownership percentage shown as “<1%” per proxy methodology .
- Guideline compliance counts outstanding RSUs and PRSUs for which performance conditions have been met but service-based vesting remains; unearned PRSUs are excluded .
Employment Terms
| Scenario (Original Severance Plan) | Salary/Bonus Continuation ($) | Pro-rated Bonus ($) | Accelerated Vesting of Stock Awards ($) | Dividend Equivalents ($) | Total ($) |
|---|---|---|---|---|---|
| Termination without Cause or Good Reason (no CoC) | $2,400,000 | $3,704,317 | $81,444,785 | $1,482,627 | $89,031,729 |
| Termination without Cause or Good Reason within 2 years after Change of Control (double trigger) | $11,407,086 | $3,704,317 | $157,853,675 | $2,494,268 | $175,459,346 |
Key plan terms:
- No single-trigger; double-trigger required for CoC benefits; 3x base salary and 3x average annual bonus for the preceding three years; 100% acceleration of all equity awards; additional $2,000 per month for three years; extended option exercise periods (where applicable) .
- Outside CoC: 2x base salary lump sum; pro-rated annual bonus; pro-rated vesting of outstanding equity awards through termination date .
- Clawback Policy: SEC/NASDAQ-compliant incentive compensation recovery effective Oct 2, 2023 for Section 16 officers .
- Tax gross-ups: None provided on CoC or severance payments .
- Deferred compensation: Wallace maintained an Executive Deferred Savings Plan balance; plan offers deferral with no company match .
- Executive Retiree Medical: Eligible to participate until age 65, paying full premium; legacy eligibility group as of Feb 2011 .
Board Governance
- Board Service: Director since 2006; age 65; not independent; serves as KLA’s President & CEO; not assigned to Board committees .
- Board Structure: Independent Chair; 9 of 10 directors independent; majority voting; anti-hedging/pledging; clawback policy in place .
- Dual-Role Implications: CEO compensation decisions are made by KLA’s Outside Directors (not by the Compensation and Talent Committee) to mitigate independence concerns; other executive compensation decisions are made by an independent Compensation and Talent Committee .
Multi-Year Compensation Summary (CEO)
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Salary ($) | $1,000,000 | $1,129,905 | $1,190,481 |
| Stock Awards ($) | $23,492,301 | $19,695,857 | $20,147,371 |
| Non-Equity Incentive ($) | $2,124,000 | $1,978,769 | $3,704,317 |
| All Other ($) | $28,058 | $28,434 | $50,085 |
| Total ($) | $26,644,359 | $22,832,965 | $25,092,254 |
Performance & Track Record Indicators
| Measure | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| KLA TSR ($100 initial) | $174.17 | $173.68 | $264.61 | $447.99 | $489.42 |
| Peer Group TSR ($100 initial) | $167.56 | $128.04 | $183.98 | $274.10 | $277.82 |
| Net Income ($ thousands) | $2,077,353 | $3,322,060 | $3,387,351 | $2,761,896 | $4,061,643 |
| Free Cash Flow Margin (%) | 28.2% | 32.6% | 31.7% | 30.9% | 30.8% |
| Total Revenues ($ millions) | $6,918.7 | $9,211.9 | $10,496.1 | $9,812.2 | $12,156.2 |
Additional FY2025 highlights: Revenues +23.9% YoY; net income +47.1% YoY; dividends and stock repurchases $3,054,540 thousand (+21.8% YoY) .
Compensation Governance & Peer Benchmarking
- Program design: Majority “at-risk” pay; 95% of CEO compensation at risk in FY2025, with 63% tied to performance objectives .
- Metrics: Short-term bonuses use Operating Margin Dollars and balanced scorecard; long-term PRSUs use three-year Relative Free Cash Flow Margin and non-GAAP EPS (EPS Awards referenced in program overview) .
- Peer group references: Pay-versus-performance peer group TSR measured against the Philadelphia Semiconductor Index; PRSU performance measured versus an industry peer group for free cash flow margin (composition not enumerated) .
- Consultant: Independent compensation consultant engaged by the Compensation and Talent Committee .
- Say-on-Pay: Annual advisory vote; Board recommends “FOR”; next say-on-pay expected at 2026 annual meeting .
Investment Implications
- Alignment is strong: Wallace’s ownership far exceeds guidelines (55.2x salary), hedging/pledging prohibited, and incentives emphasize profitability and free cash flow, supporting shareholder value creation; TSR has materially outperformed the peer index over multi-year horizons .
- Retention and payout risk: Very large equity acceleration and cash severance in change-of-control scenarios (estimated $175.5 million total) create strong retention but may reduce takeover attractiveness; dividend equivalents add cash-like components upon vesting .
- Near-term selling pressure: Significant FY2025 vesting activity (65,199 shares vested; $47.7 million value realized; 32,873 net shares issued) and annual RSU tranches could create periodic liquidity events; absence of options reduces forced exercise-driven selling .
- Governance mitigants: Independent Chair, Outside Directors determine CEO pay, robust clawback, and anti-hedging/pledging policies offset dual-role independence concerns; committee independence and risk controls are explicit .