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    2018 ANNUAL REPORT ANNUAL REPORT, PROXY STATEMENT & NOTICE OF ANNUAL MEETING


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    DEAR SHAREHOLDERS, CUSTOMERS & EMPLOYEES This has been both a record-setting and challenging year for Coherent. In fiscal 2018, the company posted all-time highs for revenue, gross margin and earnings per share, but saw increasing headwinds in two of our markets develop towards the end of the fiscal year. We have built a very solid business in OLED (organic light emitting diodes) display manufacturing by providing critical process technology that enhances clarity, energy efficiency, brightness and refresh (i.e., frame) rates. We delivered a record number of tools during fiscal 2018 to both well-established and aspiring OLED manufacturers. Despite the expansion of manufacturing capacity, OLED technology has proven difficult to master. Samsung Display continues to lead in OLED performance, reliability and unit volume. Their total output is estimated at about one-third of today’s smartphone market. The other two-thirds of the market appears to want access to OLED displays, but at costs well-below what Samsung is rumored to be charging. Other manufacturers need to crack the code on high-yield manufacturing of OLEDs to allow the technology to proliferate. These circumstances have created an interesting dynamic. Samsung appears to be focusing on high value business rather than trading volume for pricing. Their competitors, meanwhile, are investing in R&D and pilot production, but holding off on volume scaling until they have validated all critical metrics. This has led to an investment gap in fiscal 2019, leading us to project that the display market (i.e., systems and service) will be down in fiscal 2019 compared to fiscal 2018. Even with this apparent pause, there are numerous reasons to remain optimistic about OLED technology. When this technology first emerged, we had suggested that fab construction was the best investment indicator. There are more than twenty OLED fabs either under construction or in the planning phase between now and 2023, which could drive meaningful equipment and service revenue for manufacturing systems providers. A number of them are scheduled to come online in 2020 and provide the basis for an expected sales recovery in the same time frame. There have also been a number of announcements around new products beyond the traditional smartphone market including foldable smartphones,


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    tablets and laptops that exploit the flexibility of OLEDs. Collectively, we believe these opportunities, along with a growing service business, should provide attractive longer-term growth in the FPD market. The materials processing market has also exhibited a broad range of opportunities and challenges for the company during fiscal 2018. Much of our attention has been focused on automotive, medical device and consumer electronics manufacturing. We have made good progress with Tier 1 automotive suppliers and have demonstrated enabling capabilities in EV (electric vehicle) battery manufacturing. If our early successes continue, we will participate in one of the most environmentally impactful and financially attractive applications in the photonics universe. Another application that covers the aforementioned focus areas is additive manufacturing (i.e., 3D printing). The technique has been used to transform plastic resin into three-dimensional structures for more than two decades. It has also been applied to making metal parts from metal powder, but the cost and other factors have relegated its use to very high value parts, especially in the aerospace arena. A number of companies are trying to change this paradigm including OR Laser, whose founders believed that being able to design for additive rather than subtractive manufacturing was one of the keys to unlocking the market. They developed a tool that is very well suited for a teaching environment so that design and mechanical engineering students could develop the expertise on how to exploit 3D printed parts in the lightweighting of motor vehicles, the fabrication of custom medical and dental devices and the reduction of production waste. OR also developed a custom operating environment that is very intuitive and simple to use. The combination of OR’s philosophy and a compelling market opportunity led us to acquire OR in April 2018. While it’s a small business today, we are optimistic about its long-term growth potential. It’s not all smooth sailing in materials processing. For almost two decades, China has accounted for much of the growth in laser-based materials processing, first as a global factory and then addressing a growing domestic market. Recently imposed U.S. tariffs on Chinese imports and, to a lesser extent, Chinese tariffs on certain U.S.-manufactured photonics products have disrupted the market. Facing uncertain demand and the prospect of additional tariffs, Chinese manufacturers have reduced spending, which has had a direct impact on the demand for certain products in our portfolio. The drop in demand may also be partially responsible for a price war that has ignited in the fiber laser market as competitors jockey for market share. We will continue to support our customers in China as the trade situation works to some form of resolution, while also pivoting towards opportunities that are not exposed to tariffs. We had a record year in instrumentation and components. Our solution set for bioinstrumentation, microscopy and sequencing remains the industry standard and we are evolving it to deliver higher content and value to OEM customers. In the medical space, demand for lasers used in aesthetics, ophthalmology and dental as well as treatment kits for surgical procedures was brisk. We believe this will continue as new applications receive regulatory approval and more people gain access to sponsored medical care.


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    2018 ANNUAL REPORT Our aerospace and defense business posted very good growth and is poised for continued success. We have won a significant amount of business for very large optics used in ground and space-based telescopes, including the new thirty-meter telescope (TMT) project being sponsored by an international consortium. These optics are polished at our facility in Richmond, California before receiving metallic coatings to protect them from exposure. The leading provider of these coatings is Quantum Coatings. We entered into an agreement in October 2018 to acquire certain assets and intellectual property from Quantum that enables us to be vertically integrated. This same technology is applied to the large optics used in our FPD business. One of the key benefits of record financial results is very strong cash flow. We used part of the cash to fund various capital investments to grow the business and improve its efficiency for the long term. We made voluntary prepayments of approximately €285 million on our outstanding debt during fiscal 2018 and 2017 that further reduced our leverage levels. We also repurchased approximately $100 million in the company’s common stock and announced a new authorization to repurchase up to an additional $250 million of common stock through the end of calendar 2019. We believe the combined benefits of emerging applications across multiple markets, an anticipated display rebound in fiscal 2020, strategic M&A opportunities and a reduced share count will prove to be very attractive to shareholders. Thank you for your continued interest and support, Garry W. Rogerson, John R. Ambroseo, Chairman of the Board President and Chief Executive Officer


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    FORWARD-LOOKING STATEMENTS The foregoing shareholder letter contains forward-looking statements, as defined under the Federal securities laws. These forward-looking statements include the statements that relate to: the company’s projections for the display market in fiscal 2019, 2020 and the longer-term; potential for product and service development and growth in the materials processing market; the uncertainty of demand and additional tariffs and their corresponding effects on the materials processing market; the company’s fiscal 2019 outlook, including its expectations for demand levels in the instrumentation and components market; the continued success of the aerospace and defense business; and the use of excess cash. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. Factors that could cause actual results to differ materially include risks and uncertainties, including, but not limited to, risks associated with growth in demand for our products, customer acceptance and adoption of our products, the worldwide demand for flat panel displays and adoption of OLED for mobile displays, the pricing and availability of OLED displays, the demand for and use of our products in commercial applications, our ability to generate sufficient cash to fund capital spending or debt repayment, our successful implementation of our customer design wins, our ability to successfully rectify execution issues on a going forward basis, our and our customers’ exposure to risks associated with worldwide economic conditions, our customers’ ability to cancel long-term purchase orders, the ability of our customers to forecast their own end markets, our ability to accurately forecast future periods, continued timely availability of products and materials from our suppliers, our ability to timely ship our products and our customers’ ability to accept such shipments, our ability to have our customers qualify our product offerings, worldwide government economic policies, including U.S. tariffs on Chinese manufactured goods, our ability to integrate the business of Rofin-Sinar Technologies Inc. and other acquisitions successfully, manage our expanded operations and achieve anticipated synergies, and other risks identified in the company’s Securities and Exchange Commission filings. Readers are encouraged to refer to the risk disclosures and critical accounting policies and estimates described in the company’s reports on Forms 10-K, 10-Q and 8-K, as applicable and as filed from time-to-time by the company. Actual results, events and performance may differ materially from those presented herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this letter. The company undertakes no obligation to update these forward-looking statements as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except to the extent required by applicable law.


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    9JAN201710413614 Notice of Annual Meeting of Stockholders February 28, 2019 8:00 a.m. Hyatt Regency Santa Clara 5101 Great America Parkway Santa Clara, CA 95054 MATTERS TO BE VOTED ON: 1. To elect the eight directors named in the accompanying proxy statement; 2. To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending September 28, 2019; 3. To approve on a non-binding, advisory basis, our named executive officer compensation; and 4. To transact such other business as may properly be brought before the meeting and any adjournment(s) thereof. The foregoing items of business are more fully described in the proxy statement accompanying this notice. Stockholders of record at the close of business on December 31, 2018 are entitled to notice of and to vote at the meeting and at any adjournments or postponements thereof. All stockholders are cordially invited to attend the meeting. However, to ensure your representation at the meeting, you are urged to vote in advance. You may vote via the Internet or by telephone, or if you requested to receive printed proxy materials, by marking, signing, dating and returning the proxy card as promptly as possible in the postage-prepaid envelope provided for that purpose. This year, we will be using the ‘‘Notice and Access’’ method of providing proxy materials to you via the Internet. Accordingly, our stockholders who have not previously requested paper copies of the materials will receive a Notice Regarding the Availability of Proxy Materials with instructions on how to access the proxy materials via the Internet. The notice includes instructions for requesting a paper copy of the proxy materials if that is your preference. We believe this approach provides stockholders with easy access to the materials and a convenient method of voting, while reducing the printing, distribution and environmental costs of the proxy process. Any stockholder of record attending the meeting may vote in person even if he or she has returned a proxy. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder. Santa Clara, California Sincerely, January 14, 2019 8JAN201712031820 John R. Ambroseo President and Chief Executive Officer Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on February 28, 2019 The proxy statement and annual report to stockholders are available at www.proxyvote.com. YOUR VOTE IS IMPORTANT


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    TABLE OF CONTENTS JAN201816223265GENERAL INFORMATION ABOUT THE MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 SPOTLIGHT ON GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 PROPOSAL ONE—ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 PROPOSAL TWO—RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM . . . . . 21 PROPOSAL THREE—APPROVAL ON A NON-BINDING, ADVISORY BASIS, OF OUR NAMED EXECUTIVE OFFICER COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . 23 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 24 OUR EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 COMPENSATION DISCUSSION AND ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 SUMMARY COMPENSATION AND EQUITY TABLES . . . . . . . . . . . . . . . . . . . . . . . . . . 44 PAY RATIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 EQUITY COMPENSATION PLAN INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS . . . . . . . . . . . 51 REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS . . . . . . . . . 52 OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 2


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    PROXY STATEMENT General Information About the Meeting General The Proxy is solicited on behalf of the Board of Directors (the ‘‘Board’’) of Coherent, Inc. (‘‘Coherent’’ or the ‘‘Company’’) for use at the Annual Meeting of Stockholders (the ‘‘Annual Meeting’’ or ‘‘meeting’’) to be held at 8:00 a.m., local time, on February 28, 2019 at the Hyatt Regency Santa Clara, 5101 Great America Parkway, Santa Clara, California 95054, and at any adjournment(s) thereof, for the purposes set forth herein and in the accompanying Notice of Annual Meeting of Stockholders. Our telephone number is (408) 764-4000. These proxy solicitation materials were first mailed on or about January 14, 2019 to all stockholders entitled to vote at the Annual Meeting. Who May Vote at the Meeting? What Does Each Share of Common You are entitled to vote at the Annual Meeting if our records Stock I Own Represent? show that you held your shares as of the close of business on On all matters, each share has one vote, unless, with respect our record date, December 31, 2018 (the ‘‘Record Date’’). On to Proposal One regarding the election of directors, the Record Date, 24,326,589 shares of our common stock, cumulative voting is in effect. See ‘‘Proposal One—Election of $0.01 par value, were issued and outstanding. Directors—Vote Required’’ for a description of cumulative voting rights with respect to the election of directors. Why did I Receive a One-Page Notice delivery) containing instructions on how to access our proxy materials, including this proxy statement and our annual in the Mail Regarding the Internet report. The Notice Regarding the Availability of Proxy Availability of Proxy Materials Instead Materials sets forth instructions on how to vote over the of a Full Set of Proxy Materials? Internet and also how to request paper copies if that is your preference. In accordance with the Securities and Exchange Commission (‘‘SEC’’) rules, we are furnishing proxy materials to our This process is designed to provide stockholders with easy stockholders primarily via the Internet, instead of mailing access to our proxy materials, while reducing the printing, printed copies of those materials to each stockholder. On distribution and environmental costs of the proxy process. January 14, 2019, we commenced mailing a Notice Regarding However, if you would prefer to receive printed proxy the Availability of Proxy Materials to our stockholders (other materials, please follow the instructions included in the Notice than those who had previously requested electronic or paper Regarding the Availability of Proxy Materials. How Does a Stockholder Vote? Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure your vote is counted. If you are entitled to vote, you may do so as follows: • Through the Internet: Follow the instructions in the Notice Regarding the Availability of Proxy Materials or otherwise go to www.proxyvote.com to complete an electronic proxy card. • Using the Telephone: Dial toll-free 1-800-690-6903 using a touch-tone phone and follow the recorded instructions. You will be asked to provide the control number from your Notice Regarding the Availability of Proxy Materials or your proxy card. 3


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    General Information • Through your broker: If your shares are held through a broker, bank or other nominee (commonly referred to as held in ‘‘street name’’), you will receive instructions from them that you must follow to have your shares voted. If you want to vote in person, you will need to obtain a legal proxy from your broker, bank or other nominee and bring it to the meeting. • In person: Attend the Annual Meeting and, if you request, we will give you a ballot at the time of voting. If you have previously submitted a proxy card, you must notify us at the Annual Meeting that you intend to cancel your prior proxy and vote by ballot at the meeting. • Returning a Proxy Card: If you have requested printed proxy materials, simply complete, sign and date the proxy card and return it promptly in the envelope provided. If your signed proxy card is received before the Annual Meeting, the designated proxies will vote your shares as you direct. For telephone or Internet use, your vote must be received by 11:59 p.m., Eastern time, on February 27, 2019 to be counted. If you return a signed and dated proxy card without marking any voting directions, your shares will be voted ‘‘for’’ the election of all eight nominees for director set forth in this proxy statement and ‘‘for’’ Proposals Two and Three. Matters to be Presented at the Meeting We are not aware of any matters to be presented at the meeting other than those described in this proxy statement. If any other matter is properly presented at the Annual Meeting, your proxy holders (one of the individuals named on your proxy card) will vote your shares in their discretion. The cost of this solicitation will be borne by us. We may reimburse brokerage firms and other persons representing beneficial owners of shares for their expenses in forwarding solicitation material to such beneficial owners. In addition, proxies may be solicited by certain of our directors, officers and regular employees, without additional compensation, personally or by telephone, e-mail or facsimile. Revoking Your Proxy If you hold your shares in street name, you must follow the instructions of your broker, bank or other nominee to revoke your voting instructions. If you are a holder of record and wish to revoke your proxy instructions, you must (i) advise the Corporate Secretary in writing at our principal executive offices at 5100 Patrick Henry Dr., Santa Clara, California 95054 before the proxies vote your shares at the meeting, (ii) timely deliver later-dated proxy instructions or (iii) attend the meeting and vote your shares in person. Attendance at the Annual Meeting All stockholders of record as of the Record Date may attend duly authorized representative of a stockholder of record as of the Annual Meeting. Please note that cameras, recording the Record Date. The meeting will be subject to certain rules of devices and similar electronic devices will not be permitted at conduct, which will be described in a guidelines and the Annual Meeting. No items will be allowed into the Annual procedures document that will be distributed to attendees at Meeting that might pose a concern for the safety of those the meeting. For directions to attend the Annual Meeting or attending. Additionally, to attend the meeting you will need to other questions, please contact Investor Relations by bring identification and proof sufficient to us that you were a telephone at (408) 764-4110 no later than noon (California stockholder of record as of the Record Date or that you are a time) on February 27, 2019. 4


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    General Information Quorum; Abstentions; Broker Non-Votes Our bylaws provide that stockholders holding a majority of the proposal from the beneficial owner. Broker non-votes shares of common stock issued and outstanding and entitled represented by submitted proxies will not be taken into to vote on the Record Date constitute a quorum at meetings of account in determining the outcome of any proposal. stockholders. Votes will be counted by the inspector of Abstentions will not be taken into account in determining the election appointed for the Annual Meeting, who will separately outcome of the election of directors. However, abstentions are count ‘‘For’’ and ‘‘Against’’ votes, abstentions and broker deemed to be votes cast with respect to Proposals Two and non-votes. Three and will have the same effect as a vote ‘‘Against’’ these proposals. We intend to separately report abstentions, and our A ‘‘broker non-vote’’ occurs when a nominee holding shares Compensation and H.R. Committee will generally view for a beneficial owner does not vote because the nominee abstentions as neutral when considering the results of does not have discretionary voting power with respect to the Proposal Three. proposal and has not received instructions with respect to the Deadline for Receipt of Stockholder Proposals or Nominations; Proxy Access In order to submit stockholder proposals for inclusion in our business on the 120th day prior to the annual meeting and not proxy statement pursuant to Rule 14a-8 of the Securities later than the close of business on the later of (i) the 90th day Exchange Act of 1934, as amended (‘‘SEC Rule 14a-8’’) for prior to the annual meeting and (ii) the tenth day following the the annual meeting to be held in fiscal 2020, written materials day on which public announcement of the date of such must be received by the Corporate Secretary at our principal meeting is first made, and must otherwise be in compliance office in Santa Clara, California no later than September 16, with applicable laws and regulations in order to be considered 2019. Stockholder proposals must otherwise comply with the for inclusion in the proxy statement and form of proxy relating requirements of SEC Rule 14a-8. to that meeting. We have not received any notice regarding any such matters to be brought at the Annual Meeting. Proposals must be addressed to: Bret DiMarco, Corporate Secretary, Coherent, Inc., 5100 Patrick Henry Dr., Santa If a stockholder who has notified us of his or her intention to Clara, California 95054. Simply submitting a proposal does present a proposal at an annual meeting does not appear to not guarantee its inclusion. present his or her proposal at such meeting, we need not present the proposal for vote at such meeting. The Section 2.16 of the Company’s bylaws also establishes an chairperson of the annual meeting has the final discretion advance notice procedure with respect to director nominations whether or not to allow any matter to be considered at the and stockholder proposals that are not submitted for inclusion meeting which did not timely comply with all applicable notice in the proxy statement, but that a stockholder instead wishes requirements. to present directly from the floor at any annual meeting. To be properly brought before the annual meeting to be held in fiscal If a stockholder wishes only to recommend a candidate for 2020, a notice of the nomination or the matter the stockholder consideration by the Governance and Nominating Committee wishes to present at the meeting must be delivered to the as a potential nominee for the Company’s Board, see the Corporate Secretary (see above), no later than the close of procedures discussed in ‘‘Proposal One—Election of business on the 45th day (November 30, 2019), nor earlier Directors—Process for Stockholders to Recommend than the 75th day (October 31, 2019), prior to the one year Candidates for Election to the Board of Directors.’’ anniversary of the date these proxy materials were first mailed by us, unless the annual meeting of stockholders is held prior The attached proxy card grants to the proxyholders to January 29, 2020 or after April 28, 2020, in which case, the discretionary authority to vote on any matter raised at the proposal must be received by us not earlier than the close of Annual Meeting, including proposals which are timely raised at 5


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    General Information the meeting, but did not meet the deadline for inclusion in this include the information required under our bylaws and must be proxy statement. received by our Corporate Secretary at our principal executive offices between the close of business on August 17, 2019 and In addition, our bylaws provide that, under certain the close of business on September 16, 2019, unless the date circumstances, a stockholder or group of stockholders may of the annual meeting to be held in fiscal 2020 is more than include director candidates that they have nominated in our 30 days before or more than 60 days after the anniversary of proxy statement. These proxy access provisions permit a this Annual Meeting. In that case, such notice must be stockholder, or a group of up to 20 stockholders, who have delivered not earlier than the 90th day prior to the date of the owned 3% or more of our outstanding common stock annual meeting to be held in fiscal 2020 and not later than the continuously for at least three years to submit director close of business on the later of (i) the 60th day prior to the nominees (for up to 20% of the number of directors then in date of the annual meeting to be held in fiscal 2020 or (ii) the office) for inclusion in our proxy materials, as long as the 10th day following the day on which public announcement of stockholder(s) provide timely written notice of such the date of such meeting is first made. For additional nomination and the stockholder(s) and nominee(s) satisfy the information regarding the Company’s proxy access requirements specified in our bylaws. Notice of director provisions, please refer to the Company’s bylaws. nominees for our 2020 annual meeting of stockholders must Eliminating Duplicative Proxy Materials To reduce the expense of delivering duplicate voting materials Similarly, if you share an address with another stockholder to our stockholders who may hold shares of Coherent and have received multiple copies of our proxy materials, you common stock in more than one stock account, we are may contact us at the address or telephone number specified delivering only one Notice Regarding the Availability of Proxy above to request that only a single copy of these materials be Materials and/or set of the other proxy solicitation materials, delivered to your address in the future. Stockholders sharing a as applicable, to certain stockholders who share an address, single address may revoke their consent to receive a single unless otherwise requested. A separate proxy card is included copy of our proxy materials in the future at any time by in the voting materials (either electronically or by mail, as contacting our distribution agent, Broadridge, either by calling applicable) for each of these stockholders. toll-free at 1-800-542-1061, or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, We will promptly deliver, upon written or oral request, a NY 11717. It is our understanding that Broadridge will remove separate copy of the annual report or this proxy statement to a such stockholder from the householding program within stockholder at a shared address to which a single copy of the 30 days of receipt of such written notice, after which each such documents was delivered. To obtain an additional copy, you stockholder will receive an individual copy of our proxy may write us at 5100 Patrick Henry Drive, Santa Clara, materials. California 95054, Attn: Investor Relations, or contact our Investor Relations department by telephone at (408) 764-4110. Incorporation by Reference To the extent that this proxy statement has been or will be ‘‘Compensation Discussion and Analysis’’ shall not be specifically incorporated by reference into any other filing of deemed to be so incorporated (other than in our annual report Coherent with the SEC, the sections of this proxy statement on Form 10-K), unless specifically provided otherwise in such entitled ‘‘Report of the Audit Committee of the Board of filing. Directors’’ (to the extent permitted by the rules of the SEC) and 6


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    General Information FURTHER INFORMATION We will provide without charge to each stockholder solicited by these proxy solicitation materials a copy of our annual report on Form 10-K for the fiscal year ended September 29, 2018 without exhibits and any amendments thereto upon request of such stockholder made in writing to Coherent, Inc., 5100 Patrick Henry Drive, Santa Clara, California 95054, Attn: Investor Relations. We will also furnish any exhibit to the annual report on Form 10-K if specifically requested in writing. You can also access our SEC filings, including our annual reports on Form 10-K, and all amendments thereto on the SEC website at www.sec.gov. Stockholder List A list of stockholders entitled to vote at the Annual Meeting will be available for examination by stockholders of record at the Annual Meeting. 7


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    Spotlight on Governance Our historical business results have been complemented by Importantly, the Board has implemented our governance an approach to corporate governance that has consistently approach with the full support and recommendation of senior been recognized for best practices, including: management. These governance practices do not result from * Annual Board elections with no classified Board; any shareholder proposals related to them. Rather, they reflect the commitment of the Board and management to maintain * Stockholders may act by written consent; common sense and industry-leading governance practices and * Independent Board Chair; policies to go along with our historical strong financial * Majority voting for members of the Board in uncontested performance. Our Board’s independent director composition elections; consists of 29% female directors and over 40% diverse directors. Our Board is 88% independent, with only our CEO serving as an * ‘‘Proxy access’’ bylaw provision; inside director. * No ‘‘blank check’’ preferred stock; In addition to a diverse background of experiences, the Board * Super majority of independent directors on the Board; believes it is extremely important to have a balance of * Executive compensation heavily weighted towards independent service on the Board, with a mix of new (0-5 years), performance; mid-term (5-10 years) and long-term (more than 10 years) tenures participating. Our financial performance over the past * No super majority stockholder approval for mergers or decade is proof that our shareholders have benefited from having other business combinations in our bylaws or charter; a Board with a strong history of refreshment and including * Age-based Board tenure/refreshment guidelines; and various tenured members. In general the Board seeks to have * Board, CEO and executive officer stock ownership the greatest weight towards the new and mid-term categories requirements. (which may vary from time to time), which is reflected in the current composition of our independent directors following the annual meeting: New Members (five years or less): 29% Mid-Term Members (five to ten years): 29% Long-Term Members (more than ten years): 43% Coherent has also undertaken several less publicized ‘‘green’’ Contributing to the community, our Santa Clara based initiatives, such as the installation of over 1200 solar panels on employees raised from individual employee funds over our corporate headquarters building. This array develops over $93,625 for the Second Harvest Food Bank during 2018, 400kW of energy per hour and approximately 625,000 kW which is the equivalent of 187,250 meals for those in need in hours annually, which reduces greenhouse gas emissions by Silicon Valley. We are proud to have been the largest approximately 460 tons per year. This installation also allowed corporate donor during their annual spring donation drive. us to place eight electric vehicle charging stations that our While much has been debated about requiring public employees can use for free. Our most important companies to disclose their ‘‘political spending,’’ we voluntarily environmental-related initiative, however, has been our disclose that we had no such corporate spending in 2018. energy-efficient product designs over the years, which have Our Board, management and employees take great pride in significantly reduced the amount of power and consumable our financial performance, governance, stockholder relations materials needed to operate our products. and global corporate citizenship. 8


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    PROPOSAL ONE ELECTION OF DIRECTORS Nominees Eight (8) members of the Board are to be elected at the Annual We are not aware of any reason that any nominee will be Meeting, seven (7) of whom are standing for re-election. unable or will decline to serve as a director. The term of office Mr. McMullen, who was recommended to the Governance and of each person elected as a director will continue until our next Nominating Committee by the search firm retained by the annual meeting of stockholders or until a successor has been committee, joined the Board effective as of September 28, elected and qualified or until his or her earlier resignation or 2018 (prior to the end of fiscal 2018) and is standing for removal. There are no arrangements or understandings election for the first time at the Annual Meeting. Unless between any director or executive officer and any other person otherwise instructed, the proxy holders will vote the proxies pursuant to which he or she is or was to be selected as a received by them for the nominees named below. Each director or officer. nominee has consented to be named a nominee in the proxy statement and to continue to serve as a director, if elected. If The names of the nominees, all of whom are currently any nominee becomes unable or declines to serve as a directors standing for re-election, and certain information director, if additional persons are nominated at the meeting or about them are set forth below. All of the nominees have been if stockholders are entitled to cumulate votes, the proxy unanimously recommended for nomination by the Board holders intend to vote all proxies received by them in such a acting on the unanimous recommendation of the Governance manner (in accordance with cumulative voting) as will ensure and Nominating Committee of the Board. The committee the election of as many of the nominees listed below as consists solely of independent members of the Board. There possible, and the specific nominees to be voted for will be are no family relationships among directors or executive determined by the proxy holders. officers of Coherent. Name Age Director Since Principal Occupation John R. Ambroseo 57 2002 President and Chief Executive Officer Jay T. Flatley(1)(2) 66 2011 Executive Chairman of Illumina, Inc. Pamela Fletcher(3) 52 2017 Vice President—Global Innovation at General Motors Company Susan M. James(1)(3) 72 2008 Retired Audit Partner, Ernst & Young Michael R. McMullen(2) 57 2018 President and Chief Executive Officer of Agilent Technologies, Inc. Garry W. Rogerson(1)(3) 66 2004 Former Chief Executive Officer of Advanced Energy Industries, Inc. Steve Skaggs(1)(3) 56 2013 Former Senior Vice President and Chief Financial Officer of Atmel Corporation Sandeep Vij(2) 53 2004 Former President and Chief Executive Officer of MIPS Technologies, Inc. (1) Member of the Governance and Nominating Committee; Messrs. Flatley and Skaggs joined the committee in March 2018. (2) Member of the Compensation and H.R. Committee; Mr. McMullen joined the committee in December 2018. (3) Member of the Audit Committee. Except as set forth below, each of our directors has been engaged in his or her principal occupation set forth above during the past five years. 9


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    Proposal One Election of Directors John R. Ambroseo. Mr. Ambroseo has served as our Mr. Flatley’s years of executive and management experience President and Chief Executive Officer as well as a member of in the high technology industry, including serving as the chief the Board of Directors since October 2002. Mr. Ambroseo executive officer of several public companies, his service on served as our Chief Operating Officer from June 2001 through the boards of other publicly held companies, and his years of September 2002. Mr. Ambroseo served as our Executive Vice service as a director of Coherent make him an invaluable President and as President and General Manager of the member of the Board. Coherent Photonics Group from September 2000 to June Pamela Fletcher. Ms. Fletcher has served as Vice 2001. From September 1997 to September 2000, President—Global Innovation at General Motors Company Mr. Ambroseo served as our Executive Vice President and as (‘‘GM’’), a global automotive company, since October 2018 and President and General Manager of the Coherent Laser Group. was previously Vice President—Global Electric Vehicle From March 1997 to September 1997, Mr. Ambroseo served Programs at GM from October 2017 to October 2018. Over a as our Scientific Business Unit Manager. From August 1988, fifteen-plus year career with GM, Ms. Fletcher has served in when Mr. Ambroseo joined us, until March 1997, he served as various roles, including Global Executive Chief Engineer, a Sales Engineer, Product Marketing Manager, National Sales Autonomous and Electrified Vehicles and New Technology, Manager and Director of European Operations. Mr. Ambroseo from July 2016 to October 2017; Executive Chief Engineer, received a Bachelor degree from SUNY-College at Purchase Electrified Vehicles from August 2012 to July 2016; Chief and a PhD in Chemistry from the University of Pennsylvania. Engineer, Chevrolet Volt Propulsion System from 2009 to Mr. Ambroseo’s status as our Chief Executive Officer, his August 2012; and Assistant Chief Engineer, Hybrid & Electric approximately 30-year tenure with Coherent, his extensive Propulsion Systems from 2007 to 2008. She holds a B.S. knowledge of our products, technologies and end markets and Engineering from Kettering University and an M.S. Engineering his over a decade of service as a director of Coherent make from Wayne State University. him an invaluable member of the Board. Ms. Fletcher’s years of executive and management experience in the automotive industry and her knowledge of Jay T. Flatley. Since 1999 Mr. Flatley has served as a advanced and emerging automotive technologies make her member of the Board of Directors of Illumina, Inc., a leading an invaluable member of the Board. developer, manufacturer and marketer of life science tools and integrated systems for the analysis of genetic variation Susan M. James. Ms. James originally joined Ernst & and function and since July 2016, as Illumina’s Executive Young, a global accounting services firm, in 1975, serving as a Chairman of the Board of Directors. From January 2016 to partner from 1987 until her retirement in June 2006, and as a July 2016, he also served as Illumina’s Chairman of the Board consultant from June 2006 to December 2009. During her of Directors. From 1999 until July 2016, Mr. Flatley was tenure with Ernst & Young, she was the lead partner or Illumina’s Chief Executive Officer. From 1999 to December partner-in-charge for the audit work for a significant number of 2013, Mr. Flatley also served as Illumina’s President. Prior to technology companies, including Intel Corporation, Sun joining Illumina, Mr. Flatley was President, Chief Executive Microsystems, Inc., Amazon.com, Inc., Autodesk, Inc. and the Officer, and a member of the Board of Directors of Molecular Hewlett-Packard Company, as well as for the Ernst & Young Dynamics, Inc., a Nasdaq listed life sciences company North America Global Account Network. She also served on the focused on genetic discovery and analysis, from 1994 until its Ernst & Young Americas Executive Board of Directors from sale to Amersham Pharmacia Biotech Inc. in 1998. January 2002 through June 2006. She is a certified public Additionally, he was a co-founder of Molecular Dynamics and accountant (inactive) and a member of the American Institute of served in various other positions there from 1987 to 1994. Certified Public Accountants. Ms. James also serves on the From 1985 to 1987, he was Vice President of Engineering and board of directors of Tri-Valley Animal Rescue, a non-profit Vice President of Strategic Planning at Plexus Computers, a corporation dedicated to providing homes for homeless pets. UNIX computer company. Mr. Flatley is also a member of the Ms. James previously served as a director of Applied board of directors of the following public company: Denali Materials, Inc. and Yahoo! Inc. Ms. James holds Bachelor’s Therapeutics Inc., a biopharmaceutical company. Mr. Flatley degrees in Mathematics from Hunter College and Accounting previously served on the board of directors of Juno from San Jose State University. Therapeutics, Inc., a biopharmaceutical company. Mr. Flatley holds a B.A. in Economics from Claremont McKenna College Ms. James’ years in the public accounting industry, her service on the boards and committees of a number of other publicly and a B.S. and a M.S. in Industrial Engineering from Stanford held companies and her years of service as a director of University. Coherent make her an invaluable member of the Board. 10


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    Proposal One Election of Directors Michael R. McMullen. Mr. McMullen has served as Chief service on the boards of other publicly held companies, and his Executive Officer of Agilent Technologies, Inc. (‘‘Agilent’’), a years of service as a director of Coherent make him an global leader in Life Sciences and Diagnostics, since March invaluable member of the Board. 2015 and as President of Agilent since September 2014. From September 2014 to March 2015, he also served as Agilent’s Steve Skaggs. Mr. Skaggs has been a private investor since Chief Operating Officer. From September 2009 to September April 2016. From May 2013 to April 2016, Mr. Skaggs served as 2014, he served as Senior Vice President, Agilent and Senior Vice President and Chief Financial Officer of Atmel President, Chemical Analysis Group at Agilent. From January Corporation, a leading supplier of microcontrollers, prior to its 2002 to September 2009, he served as Agilent’s Vice President acquisition by Microchip Technology Incorporated. Mr. Skaggs and General Manager of the Chemical Analysis Solutions Unit joined Atmel in September 2010 and served as Senior Vice of the Life Sciences and Chemical Analysis Group. Prior to President, Corporate Strategy and Development until his assuming this position, from March 1999 to December 2001, appointment as Chief Financial Officer. Mr. Skaggs has more Mr. McMullen served as Country Manager for Agilent’s China, than 25 years of experience in the semiconductor industry, Japan and Korea Life Sciences and Chemical Analysis Group. including serving as President, Chief Executive Officer and Prior to this position, Mr. McMullen served as the Controller for Chief Financial Officer of Lattice Semiconductor, a supplier of the Hewlett-Packard Company and Yokogawa Electric Joint programmable logic devices and related software. He was also Venture from July 1996 to March 1999. Mr. McMullen has been previously a member of the board of directors of Lattice. Prior to a member of the board of directors of Agilent since March 2015. Lattice, Mr. Skaggs was employed by Bain & Company, a Mr. McMullen holds a bachelor’s degree in economics and global management consulting firm, where he specialized in business administration from the University of Delaware and an high technology product strategy, mergers and acquisitions and MBA from the Wharton School of Business. corporate restructurings. Mr. Skaggs holds an MBA degree from the Harvard Business School and a B.S. degree in Mr. McMullen’s years of executive and management Chemical Engineering from the University of California, experience in the high technology industry, including serving as Berkeley. the chief executive officer and on the board of another publicly held company make him an invaluable member of the Board. Mr. Skaggs’ years of executive and management experience in the high technology industry, including serving as the chief Garry W. Rogerson. Mr. Rogerson has served as Coherent’s executive officer and chief financial officer of other public Chairman of the Board since June 2007. Since September companies, his prior service on the board of another publicly 2015, Mr. Rogerson has been a private investor. From August held company and his years of service as a director of Coherent 2011 to September 2015, Mr. Rogerson was Chief Executive make him an invaluable member of the Board. Officer and a member of the Board of Directors of Advanced Energy Industries, Inc., a provider of power and control Sandeep Vij. Since February 2013, Mr. Vij has been a private technologies for thin film manufacturing and solar-power investor. Previously, he held the position of President and Chief generation, after which he agreed to serve as a special advisor Executive Officer and was a member of the board of directors of for a period of time. He was Chairman and Chief Executive MIPS Technologies, Inc., a leading provider of processor Officer of Varian, Inc., a major supplier of scientific instruments architectures and cores, from January 2010 until its sale in and consumable laboratory supplies, vacuum products and February 2013. In addition, Mr. Vij had been the Vice President services, from February 2009 and 2004, respectively, until the and General Manager of the Broadband and Consumer purchase of Varian by Agilent Technologies, Inc. in May 2010. Division of Cavium Networks, Inc., a provider of highly Mr. Rogerson served as Varian’s Chief Operating Officer from integrated semiconductor products from May 2008 to January 2002 to 2004, as Senior Vice President, Scientific Instruments 2010. Prior to that, he held the position of Vice President of from 2001 to 2002, and as Vice President, Analytical Worldwide Marketing, Services and Support for Xilinx Inc., a Instruments from 1999 to 2001. Mr. Rogerson received an digital programmable logic device provider, from 2007 to April honours degree and Ph.D. in biochemistry as well as an 2008. From 2001 to 2006, he held the position of Vice President honorary doctoral science degree from the University of Kent at of Worldwide Marketing at Xilinx. From 1997 to 2001, he served Canterbury. as Vice President and General Manager of the General Products Division at Xilinx. Mr. Vij joined Xilinx in 1996 as Mr. Rogerson’s years of executive and management Director of FPGA Marketing. He is a graduate of General experience in the high technology industry, including serving as Electric’s Edison Engineering Program and Advanced Courses the chief executive officer of several public companies, his 11


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    Proposal One Election of Directors in Engineering. He holds an MSEE from Stanford University executive officer of another public company, his service on the and a BSEE from San Jose State University. board of another publicly held company, and his years of service as a director of Coherent make him an invaluable Mr. Vij’s years of executive and management experience in the member of the Board. high technology industry, including serving as the chief Retiring Director On September 25, 2018, L. William Krause informed the Board that, in accordance with the mandatory retirement age guideline in our Governance Guidelines, he intended to retire from our Board at the end of his current term and not stand for reelection at our annual meeting. We are grateful for Mr. Krause’s distinguished service and instrumental guiding voice as a member of the Board since 2009. The Company’s bylaws provide that the number of directors on the Board will be between five (5) and nine (9), and that the Board has the authority to set the number from time to time. In light of Mr. Krause’s retirement, the Board has resolved that the number of directors on the Board will be decreased from nine (9) to eight (8) effective at our annual meeting. Director Independence The Board has determined that, with the exception of Mr. Ambroseo, all of its current members and all of the nominees for director are ‘‘independent directors’’ as that term is defined in the listing rules of the Nasdaq Stock Market. Board Meetings and Committees The Board held a total of five (5) formal meetings and acted two responsible for approving the services performed by our (2) times by unanimous written consent during fiscal 2018. independent registered public accounting firm and for reviewing Additionally, from time to time between formal meetings, and evaluating our accounting principles and our system of members of the Board participate in update or status telephone internal accounting controls. calls and briefings, which are not included in these totals. During fiscal 2018, the Board had three standing committees: Compensation and H.R. Committee the Audit Committee; the Compensation and H.R. Committee; The Compensation and H.R. Committee consists of directors and the Governance and Nominating Committee. From time to Vij (Chair), Flatley, Krause and McMullen. The Compensation time, the Board may create, and has in the past created, limited and H.R. Committee held eight (8) meetings during fiscal 2018. ad hoc committees, service on which does not provide Mr. McMullen was appointed to the committee on December 6, additional compensation. Each of our directors attended at least 2018, and Mr. Krause will no longer serve on the committee 75% of the meetings of the Board and the committees on which upon his retirement from the Board. As noted above, all of the he or she served during fiscal 2018. members of the Compensation and H.R. Committee are ‘‘independent’’ as defined under the listing rules of the Nasdaq Audit Committee Stock Market. The Compensation and H.R. Committee, among The Audit Committee consists of directors James (Chair), other things, reviews and approves our executive Fletcher, Rogerson and Skaggs. The Audit Committee held compensation policies and programs, and makes equity grants twelve (12) meetings during fiscal 2018. The Board has to our employees, including officers, pursuant to our equity determined that directors James, Rogerson and Skaggs are plan. In fiscal 2018, this committee had the sole authority ‘‘audit committee financial experts’’ as that term is defined in the delegated to it by the Board to make employee equity grants, rules of the SEC. Among other things, the Audit Committee has which are done at a meeting rather than by written consent. On the sole authority for appointing and supervising our September 27, 2018, however, the Board, at the independent registered public accounting firm and is primarily recommendation of the Compensation and H.R. Committee, 12


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    Proposal One Election of Directors designated an Equity Committee with authority to make grants fiscal 2018, Mr. Krause served as a member of the Governance of restricted stock units, within guidelines recommended by the and Nominating Committee through March 1, 2018, at which Compensation and H.R. Committee, to individuals who are point Mr. Flatley and Mr. Skaggs were appointed to the employees serving at a level below that of vice president. The committee. The Governance and Nominating Committee held Equity Committee is composed of our CEO, in his capacity as a eight (8) meetings during fiscal 2018. The Governance and member of the Board. The Equity Committee will report to the Nominating Committee, among other things, assists the Board Compensation and H.R. Committee periodically and upon by making recommendations to the Board on matters request of the Compensation and H.R. Committee. The Equity concerning director nominations and elections, board Committee’s designated authority is first effective for fiscal 2019 committees and corporate governance, allocation of risk and is concurrent with and does not supersede the authority of oversight amongst the Board and its committees and the Compensation and H.R. Committee. For additional compensation for directors. For fiscal 2018, the committee information about the Compensation and H.R. Committee’s retained an independent compensation consultant to advise it processes and procedures for the consideration and on compensation for service on the Board. determination of executive compensation, see ‘‘Compensation Discussion and Analysis.’’ Copies of the charters for each committee of the Board may be found on our website at www.coherent.com under ‘‘Investor Governance and Nominating Committee Relations.’’ The Governance and Nominating Committee consists of directors Rogerson (Chair), Flatley, James and Skaggs. During Attendance at Annual Meeting of Stockholders by the Members of the Board of Directors All directors are encouraged, but not required, to attend our annual meeting of stockholders. At our annual meeting held on March 1, 2018, all then-current members of the Board attended in person. Process for Stockholders to Recommend Candidates for Election to the Board of Directors The Governance and Nominating Committee will consider such nominee’s election or re-election, an irrevocable nominees properly recommended by stockholders. A resignation effective upon such nominee’s failure to receive the stockholder that desires to recommend a candidate for election required vote for re-election at the next meeting at which such to the Board must direct the recommendation in writing to us at nominee would face re-election and upon acceptance of such our principal executive offices (Attention: Corporate Secretary) resignation by the Board in accordance with Coherent’s and must include the candidate’s name, age, home and guidelines or policies, and any other information required to be business contact information, principal occupation or disclosed about the nominee if proxies were to be solicited to employment, the number of shares beneficially owned by the elect the nominee as a director. nominee and the stockholder making the recommendation, For a stockholder recommendation to be considered by the whether any hedging transactions have been entered into by Governance and Nominating Committee as a potential the nominee or on his or her behalf, information regarding any candidate at a meeting of stockholders, nominations must be arrangements or understandings between the nominee and the received on or before the deadline for receipt of stockholder stockholder nominating the nominee or any other persons proposals for such meeting. In the event a stockholder decides relating to the nomination, a written statement by the nominee to nominate a candidate for director and solicits proxies for such acknowledging that the nominee will owe a fiduciary duty to candidate, the stockholder will need to follow the rules set forth Coherent if elected, a written statement of the nominee that by the SEC and in our bylaws. See ‘‘General Information About such nominee, if elected, intends to tender, promptly following the Meeting—Deadline for Receipt of Stockholder Proposals.’’ 13


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    Proposal One Election of Directors The Governance and Nominating Committee’s criteria and weighting or priority to any of these factors. The process for evaluating and identifying the candidates that it Governance and Nominating Committee considers each approves as director nominees are as follows: individual candidate in the context of the current perceived needs of the Board as a whole. While the Governance and • the Governance and Nominating Committee regularly Nominating Committee has not established specific reviews the current composition and size of the Board; minimum qualifications for director candidates, the • the Governance and Nominating Committee reviews the committee believes that candidates and nominees must qualifications of any candidates who have been properly reflect a Board that is comprised of directors who (i) are recommended by a stockholder, as well as those predominantly independent, (ii) are of high integrity, candidates who have been identified by management, (iii) have qualifications that will increase the overall individual members of the Board or, if the Governance and effectiveness of the Board, and (iv) meet other requirements Nominating Committee determines, a search firm. Such as may be required by applicable rules, such as financial review may, in the Governance and Nominating literacy or financial expertise with respect to audit Committee’s discretion, include a review solely of committee members; information provided to the Governance and Nominating • in evaluating and identifying candidates, the Governance Committee or may also include discussions with persons and Nominating Committee has the authority to retain and familiar with the candidate, an interview with the candidate terminate any third party search firm that is used to identify or other actions that the committee deems proper; director candidates and has the authority to approve the • the Governance and Nominating Committee evaluates the fees and retention terms of any search firm; and performance of the Board as a whole and evaluates the • after such review and consideration, the Governance and qualifications of individual members of the Board eligible for Nominating Committee recommends the slate of director re-election at the annual meeting of stockholders; nominees to the full Board for its approval. • the Governance and Nominating Committee considers the suitability of each candidate, including the current members The Governance and Nominating Committee will endeavor to of the Board, in light of the current size and composition of notify, or cause to be notified, all director candidates, including the Board. Except as may be required by rules promulgated those recommended by a stockholder, of its decision as to by the Nasdaq Stock Market or the SEC, it is the current whether to nominate such individual for election to the Board. belief of the Governance and Nominating Committee that Our corporate governance guidelines require that upon a there are no specific, minimum qualifications that must be member of the Board turning 72 years old, he or she shall met by any candidate for the Board, nor are there specific submit a conditional resignation to the Governance and qualities or skills that are necessary for one or more of the Nominating Committee effective upon the next annual members of the Board to possess. In evaluating the meeting of stockholders. The committee then determines qualifications of the candidates, the Governance and whether to recommend that the Board accept such Nominating Committee considers many factors, including, resignation. Ms. James has so notified the committee, which issues of character, judgment, independence, age, determined that it was not in the best interest of the expertise, diversity of experience, length of service, other Company’s stockholders to accept her resignation and has commitments and the like. While Coherent does not have a included Ms. James in the slate for this year’s election of formal policy with regard to the consideration of diversity in directors. As described in ‘‘—Retiring Directors’’ above, on identifying director nominees, as noted above, diversity of September 25, 2018, Mr. Krause informed the Board that, in experience is one of many factors that the committee accordance with the mandatory retirement age guideline, he considers; intends to retire from the Board at the end of his current term • the Governance and Nominating Committee evaluates such and will not stand for reelection at the Annual Meeting. factors, among others, and does not assign any particular 14


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    Proposal One Election of Directors Majority Voting and Conditional Resignations from the Board of Directors Since 2013, we have had a majority vote standard for the The Board has also adopted a policy on majority voting to election of directors in elections that are not Contested (i) establish procedures under which any incumbent director Elections (as defined below). This means that a nominee for who fails to receive a majority of the votes cast in an election director in an uncontested election such as this one shall be that is not a Contested Election shall tender his or her elected to the Board if the votes cast ‘‘for’’ such nominee resignation to the Governance and Nominating Committee for exceed the votes cast ‘‘against’’ such nominee (with consideration; and (ii) provide that the Governance and abstentions and broker non-votes not counted as a vote cast Nominating Committee will make recommendations to the either ‘‘for’’ or ‘‘against’’ that director’s election). However, if Board regarding the actions to be taken with respect to all the number of nominees exceeds the number of directors to such offers to resign. The Board shall act on the resignation be elected (a ‘‘Contested Election’’), our bylaws provide that within 90 days following certification of the election results. In directors shall be elected by a plurality of the votes cast. the event that the Board does not accept such resignation, then such director shall continue to serve until such time as his or her successor is elected. Stockholder Communication with the Board of Directors While the Board believes that management speaks for Any stockholder communications that the Board receives will Coherent, the Board encourages direct communication from first go to our Corporate Secretary, who will log the date of stockholders. Accordingly, any stockholder may contact any receipt of the communication as well as the identity and member of the Board individually or as a group by writing by contact information of the correspondent in our stockholder mail to our principal executive offices (c/o Corporate communications log. Secretary) at 5100 Patrick Henry Dr., Santa Clara, CA 95054. Our Corporate Secretary will review, summarize and, if Any stockholder may report to us any complaints or comments appropriate, investigate the complaint under the direction of regarding accounting, internal accounting controls, or auditing the Board or appropriate committee of the Board in a timely matters. Any stockholder who wishes to so contact us should manner. In the case of accounting or auditing related matters, send such complaints or comments to the Audit Committee, a member of the Audit Committee, or the Audit Committee as c/o Corporate Secretary, at our principal executive offices. a whole, will then review the summary of the communication, Additionally, as noted below, our Compensation and H.R. the results of the investigation, if any, and, if appropriate, the Committee encourages stockholder communication on draft response. The summary and response will be in the form matters related to executive compensation. of a memo, which will become part of the stockholder communications log that the Corporate Secretary maintains with respect to all stockholder communications. Independent Chair and Board Leadership The Board’s leadership structure consists of an independent Board Chair, who is elected by the independent directors, and independent committee chairs. We separate the positions of Chief Executive Officer and Board Chair in recognition of the differences between the two roles. The Board believes this structure provides independent Board leadership and engagement. Given that our Chair is an independent director, the Board does not feel the need for a separate ‘‘lead independent director,’’ as our independent Chair performs that function. The Board takes its independence seriously and reinforces this standard with, following the Annual Meeting, seven of its eight members, or 88%, being independent. 15


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    Proposal One Election of Directors The Role of the Board and Its Committees in Risk Oversight The Board oversees Coherent’s risk profile and management. In general the Board and its committees management’s processes for assessing and managing risk, oversee the following risk categories: both as a Board and through its committees, with the • the Board generally oversees the Company’s overall Governance and Nominating Committee delegated the enterprise risk management process and specifically with responsibility for assigning oversight responsibilities to each regard to the areas of strategy, mergers and acquisitions, committee and the Board as a whole. Our senior executive communications and operations; team provides regular updates to the Board and each committee regarding our strategies and objectives and the • the Audit Committee generally oversees risks primarily risks inherent with them. related to financial controls, IT, accounting, tax, treasury, capital, legal, regulatory and compliance; Each regular meeting of the Board includes a discussion of • the Compensation and H.R. Committee generally oversees risks related to the Company’s financial results and operations our compensation programs so that they do not incentivize and each committee schedules risk-related presentations excessive risk taking as well as overseeing human regularly throughout the year. In addition, our directors have resources related risks; and access to our management to discuss any matters of interest, including those related to risk. Those members of • the Governance and Nominating Committee oversees the management most knowledgeable of the issues attend Board assignment of risk oversight categories by each particular and committee meetings to provide additional insight on the committee and/or the Board as a whole, as well as those matters being discussed, including risk exposures. Our Chief risks related to compensation of members of the Board and Financial Officer and General Counsel both report directly to succession planning for the Board and our Chief Executive our Chief Executive Officer, providing him with further visibility Officer. to our risk profile. A Vice President, Finance is the designated Management presents an annual assessment of the risks officer overseeing our enterprise risk management program associated with the Company’s compensation plans. The and works closely with both our Chief Financial Officer and Compensation and H.R. Committee agreed with the General Counsel on these matters. conclusion from the first quarter of fiscal 2019 presentation These regular meetings also provide our Board members the that the risks were within our ability to effectively monitor and manage and that these risks are not reasonably likely to have opportunity to discuss issues of concern directly with a material adverse effect on the Company. Additional Board Governance Matters The Board (acting on the recommendation of the Governance • Independent Directors—No more than four (4) other and Nominating Committee) has approved the Company’s public company boards of directors in addition to the Corporate Governance Guidelines, which include, among Company; other items (in addition to those items described elsewhere in • Audit Committee members—No more than three this proxy statement), the following provisions: (3) other public company audit committees in addition • At each regular meeting of the Board, the independent to the Company, unless the other independent directors also meet in executive session without the directors consent; presence of management; • Each independent member of the Board must, within five • To avoid ‘‘over-boarding’’ we maintain the following limits on years of initial appointment, acquire and thereafter maintain service on other boards: a minimum value of Company stock equal to three times such director’s annual Board cash retainer (exclusive of any • CEO—No more than one (1) other public company cash retainer for service as chair or committee service); board of directors in addition to the Company (note, however, that Mr. Ambroseo does not serve on any public company boards other than ours); 16


  • Page 22

    Proposal One Election of Directors • The Board is responsible for reviewing the Company’s maintains the flexibility to not apply such limit on a facts and succession planning and senior management development circumstances basis). on an annual basis; and • The Board maintains an age-based term limit of 72 (provided, that the Governance and Nominating Committee Fiscal 2018 Director Compensation During fiscal 2018, we paid our non-employee directors an annual retainer (depending upon position) and for service on the Board as follows: Position Annual Retainer Board Member $ 60,000 Board Chair $ 50,000(1) Audit Committee Chair $ 34,000 Compensation and H.R. Committee Chair $ 20,000 Governance and Nominating Committee Chair $ 13,500 Audit Committee member (non-Chair) $ 12,500 Compensation and H.R. Committee member (non-Chair) $ 10,000 Governance and Nominating Committee member (non-Chair) $ 6,500 (1) On December 6, 2018, after reviewing materials provided by its compensation consultant, the Governance and Nominating Committee approved an increase to the annual retainer of the Board Chair from $50,000 to $60,000 effective as of the beginning of the second quarter of fiscal 2019. The Governance and Nominating Committee annually pay practices for service on boards of directors. Compensia reviews Board and committee compensation with the advised the committee that the design and pay levels of the assistance of an independent compensation consultant, which director compensation program were aligned with peer market for fiscal 2018 was Compensia. Compensia is separately practices, with the annual retainer for the Board Chair below. compensated for this work from the work it does as the As noted, the Board is compensated with a combination of Compensation and H.R. Committee’s independent consultant cash retainers and a fixed value of time-based RSUs. As for executive compensation. The annual review includes a noted elsewhere in this proxy statement, Compensia has not comparison to peer companies (which are the same as used provided any other service for the Company other than as for executive compensation as noted on page 36) and market directed by a committee of the Board. 17


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    Proposal One Election of Directors The chart below presents information concerning the total compensation of our non-employee directors for service (including Board and, where applicable, committee service) during fiscal 2018: Fees Paid in Stock Awards Option Awards Name Cash ($)(1) ($)(2)(3) ($)(4) Total ($) Jay T. Flatley 73,250 191,792 — 265,042 Pamela Fletcher 72,500 191,792 — 264,292 Susan M. James 100,500 191,792 — 292,292 L. William Krause 74,875 191,792 — 266,667 Michael R. McMullen* — 212,482 — 212,482 Garry W. Rogerson 136,000 191,792 — 327,792 Steve Skaggs 75,750 191,792 — 267,542 Sandeep Vij 80,000 191,792 — 271,792 * Mr. McMullen joined the Board effective September 28, 2018, the day prior to the last day of our 2018 fiscal year. Therefore, Mr. McMullen did not receive any cash retainer for his Board service during fiscal 2018. However, Mr. McMullen did receive an award of RSUs under the 2011 Plan at the time of his initial appointment to the Board in accordance with the Company’s standard practice, as described below. (1) The chart below summarizes the gross cash amounts earned by non-employee directors for service during fiscal 2018 on the Board and its committees: Compensation Governance Annual Board Audit and H.R. and Nominating Service Committee Committee Committee Total Name ($) ($) ($) ($) ($) Jay T. Flatley 60,000 — 10,000 3,250 73,250 Pamela Fletcher 60,000 12,500 — — 72,500 Susan M. James 60,000 34,000 — 6,500 100,500 L. William Krause 60,000 — 10,000 4,875 74,875 Michael R. McMullen* — — — — — Garry W. Rogerson 110,000 12,500 — 13,500 136,000 Steve Skaggs 60,000 12,500 — 3,250 75,750 Sandeep Vij 60,000 — 20,000 — 80,000 * Mr. McMullen joined the Board effective September 28, 2018, the day prior to the last day of our 2018 fiscal year. Therefore, Mr. McMullen did not receive any cash retainer for his Board service during fiscal 2018. (2) These amounts do not reflect compensation actually received. Rather, these amounts represent the aggregate grant date fair value computed in accordance with ASC 718, for restricted stock units (‘‘RSUs’’) which were granted in fiscal 2018. The assumptions used to calculate the value of these RSUs are set forth in Note 12 ‘‘Employee Stock Award and Benefit Plans’’ of the Notes to the Consolidated Financial Statements in our annual report on Form 10-K for fiscal 2018. Note that Mr. McMullen’s stock awards are at a different value due to the difference in stock price on the date of his grant date as compared to the other directors, who received their grants on a different date. 18


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    Proposal One Election of Directors (3) The aggregate number of shares underlying unvested RSUs held by each of our non-employee directors as of the end of fiscal 2018 and reflecting the grants made to our non-employee directors during fiscal 2018 was as follows: Name Shares(a) Jay T. Flatley 916(b) Pamela Fletcher 1,375(c) Susan M. James 916(b) L. William Krause 916(b) Michael R. McMullen 1,234(d) Garry W. Rogerson 916(b) Steve Skaggs 916(b) Sandeep Vij 916(b) (a) The shares underlying the RSUs will vest to the extent an individual is a member of the Board on the applicable vesting date. (b) These shares will vest on February 15, 2019. (c) 916 shares will vest on February 15, 2019 and 459 shares are scheduled to vest on June 30, 2019. (d) 50% of the shares are scheduled to vest on each of September 28, 2019 and September 28, 2020. (4) No stock options were granted to our non-employee directors during fiscal 2018. As of the end of fiscal 2018, Mr. Flatley held outstanding stock options with respect to 24,000 shares and none of the other non-employee directors held any stock options. Our stockholders approved the adoption of our 2011 Equity upon the director’s election to the Board at the Company’s Incentive Plan (the ‘‘2011 Plan’’) at our annual meeting held in annual meeting. In addition, the Board determined that upon March 2011 and re-approved the 2011 Plan at our annual the initial appointment of a non-employee director, such meeting held in March 2017. director will receive an award of RSUs under the 2011 Plan valued at $225,000 (based on the trailing thirty day closing Following the recommendation of the Governance and price of the Company’s common stock on the Nasdaq Stock Nominating Committee (based upon review by Compensia) in Market measured from the last trading day prior to the date of February 2017, the Board adopted resolutions automatically grant), which RSUs shall vest over two years (fifty percent on granting each year without any discretion to each each anniversary of the date of grant). This was a change from non-employee director an award of RSUs under the 2011 Plan the historical practice of granting a fixed number of 3,500 (rounded down to the nearest whole share) valued at RSUs per year. The Board determined to migrate to a value- $225,000 (based on the trailing thirty day closing price of the based annual grant rather than fixed shares. Company’s common stock on the Nasdaq Stock Market measured from the last trading day prior to the date of grant) 19


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    Proposal One Election of Directors Option Exercises and Stock Vested during Fiscal 2018 The table below sets forth certain information for each non-employee director regarding the exercise of options and the vesting of stock awards during fiscal 2018, including the aggregate value realized upon such exercise or vesting. Option Awards Stock Awards Number of Shares Number of Shares Acquired on Value Realized Acquired on Value Realized Exercise on Exercise Vesting on Vesting Name (#) ($) (#) ($)(1) Jay T. Flatley — — 1,293 283,594 Pamela Fletcher — — 458 71,640 Susan M. James — — 1,293 283,594 L. William Krause — — 1,293 283,594 Michael R. McMullen — — — — Garry W. Rogerson — — 1,293 283,594 Steve Skaggs — — 1,293 283,594 Sandeep Vij — — 1,293 283,594 (1) Reflects the market price of our common stock on the vesting date or the last day on which our common stock traded prior to the vesting date if trading did not occur on the vesting date. Vote Required The affirmative vote of a majority of the votes cast is required cannot be cast for more than eight (8) candidates. However, for the election of directors. You may vote ‘‘FOR,’’ ‘‘AGAINST’’ no stockholder will be entitled to cumulate votes for a or ‘‘ABSTAIN’’ with respect to each of the director nominees candidate unless (i) such candidate’s name has been properly named in this proxy statement. Pursuant to our bylaws, placed in nomination for election at the Annual Meeting prior to abstentions and broker non-votes are not considered to be the voting and (ii) the stockholder, or any other stockholder, votes cast and, therefore, will not have an effect in determining has given notice at the meeting prior to the voting of the the outcome of the election of directors, and votes withheld will intention to cumulate the stockholder’s votes. If cumulative count as a vote against a nominee’s election. If a quorum is voting occurs at the meeting and you do not specify how to present, each of the eight (8) nominees who receives more distribute your votes, your proxy holders (the individuals ‘‘FOR’’ votes than ‘‘AGAINST’’ votes will be elected. named on your proxy card) will cumulate votes in such a manner as will ensure the election of as many of the nominees Every stockholder voting for the election of directors may listed above as possible, and the specific nominees to be cumulate such stockholder’s votes and give one candidate a voted for will be determined by the proxy holders. number of votes equal to the number of directors to be elected multiplied by the number of votes to which the stockholder’s Recommendation shares are entitled. Alternatively, a stockholder may distribute The Board recommends that stockholders vote ‘‘FOR’’ his or her votes on the same principle among as many each of the eight nominees presented herein. candidates as the stockholder thinks fit, provided that votes 20


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    PROPOSAL TWO RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Audit Committee of the Board has selected Deloitte & Committee believes that such a change would be in the best Touche LLP, an independent registered public accounting interest of Coherent and its stockholders. If stockholders do firm, to audit our financial statements for the fiscal year ending not ratify the appointment of Deloitte & Touche LLP, the Audit September 28, 2019, and recommends that stockholders vote Committee may reconsider its selection. The Audit Committee for ratification of such appointment. Deloitte & Touche LLP selected Deloitte & Touche LLP to audit our financial has audited our financial statements since the fiscal year statements for the fiscal year ended September 29, 2018, ended September 25, 1976. Although ratification by which was ratified by our stockholders. stockholders is not required by law, the Audit Committee has determined that it is desirable to request ratification of this Representatives of Deloitte & Touche LLP are expected to be selection by the stockholders as a matter of good corporate present at the meeting and will be afforded the opportunity to practice. Notwithstanding its selection, the Audit Committee, make a statement if they desire to do so. The representatives in its discretion, may appoint a new independent registered of Deloitte & Touche LLP are also expected to be available to public accounting firm at any time during the year if the Audit respond to appropriate questions. Principal Accounting Fees and Services The following table sets forth fees for services provided by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, ‘‘Deloitte’’) during fiscal 2018 and 2017: 2018 2017 (1) Audit fees $ 3,589,147 $ 4,102,586 Tax fees(2) 931,017 347,865 All other fees(3) 1,895 1,895 Total $ 4,522,059 $ 4,452,346 (1) Represents fees for professional services provided in connection with the integrated audit of our annual financial statements and internal control over financial reporting and review of our quarterly financial statements, advice on accounting matters that arose during the audit and audit services provided in connection with other statutory or regulatory filings. (2) Represents tax compliance and related services. (3) Represents the annual subscription for access to the Deloitte Accounting Research Tool, which is a searchable on-line accounting database. 21


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    Proposal Two Ratification of the Appointment of Deloitte & Touche LLP as Independent Registered Public Accounting Firm Pre-Approval of Audit and Non-Audit Services The Audit Committee has determined that the provision of to pre-approve certain additional services, and such non-audit services by Deloitte is compatible with maintaining pre-approvals are communicated to the full Audit Committee Deloitte’s independence. In accordance with its charter, the at its next meeting. During fiscal years 2018 and 2017, 100% Audit Committee approves in advance all audit and non-audit of the services were pre-approved by the Audit Committee in services to be provided by Deloitte. In other cases, the accordance with this policy. Chairman of the Audit Committee has the delegated authority Vote Required Recommendation The affirmative vote of a majority of votes present in person or The Audit Committee and the Board recommends that represented by proxy and entitled to vote at the Annual stockholders vote ‘‘FOR’’ the ratification of the Meeting is required to ratify the selection of Deloitte & appointment of Deloitte & Touche LLP as our Touche LLP as our independent registered public accounting independent registered public accounting firm for the firm for the fiscal year ending September 28, 2019. fiscal year ending September 28, 2019. 22


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    PROPOSAL THREE APPROVAL ON A NON-BINDING, ADVISORY BASIS, OF OUR NAMED EXECUTIVE OFFICER COMPENSATION At our annual meeting in March 2017, our stockholders As described in our Compensation Discussion and Analysis, indicated they would like to have an annual advisory vote on we have adopted an executive compensation philosophy executive compensation. Accordingly, the Board proposes designed to provide alignment between executive pay and that stockholders provide advisory (non-binding) approval of performance and to focus executives on making decisions that the compensation of our named executive officers, as enhance our stockholder value in both the short and long term. disclosed pursuant to the compensation disclosure rules of the Executives are compensated in a manner consistent with SEC, including the Compensation Discussion and Analysis, Coherent’s strategy, competitive practices, stockholder the Fiscal 2018 Summary Compensation Table and related interest alignment, and evolving compensation governance tables and disclosure. standards. Vote Required Recommendation The affirmative vote of a majority of votes present in person or The Board recommends that stockholders vote ‘‘FOR’’ represented by proxy and entitled to vote at the Annual the approval, on a non-binding, advisory basis of our Meeting is required to approve the compensation of our named executive officer compensation disclosed in this named executive officers disclosed in this proxy statement. proxy statement. The vote is an advisory vote and, therefore, not binding. The Board values the opinions of our stockholders and to the extent there is any significant vote against our named executive officer compensation as disclosed in this proxy statement, the Board will consider our stockholders’ concerns and the Compensation and H.R. Committee will evaluate whether any actions are necessary to address those concerns. 23


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    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth, as of December 31, 2018, Compensation Table appearing herein, and (iv) all current certain information with respect to the beneficial ownership of executive officers and directors as a group. We do not know of Coherent common stock by (i) any person (including any any arrangements, including any pledge by any person of our ‘‘group’’ as that term is used in Section 13(d)(3) of the securities, the operation of which may at a subsequent date Securities Exchange Act of 1934 (the ‘‘Exchange Act’’)) known result in a change of control. Unless otherwise indicated, the by us to be the beneficial owner of more than 5% of our voting address of each stockholder in the table below is securities, (ii) each director and each nominee for director, c/o Coherent, Inc., 5100 Patrick Henry Drive, Santa Clara, (iii) each of the executive officers named in the Summary California 95054. Number Percent of Name and Address of Shares Total(1) T. Rowe Price Associates, Inc.(2) 2,803,249 11.52% 100 East Pratt Street Baltimore, MD 21202 BlackRock, Inc.(2) 2,251,879 9.26% 55 East 52nd Street New York, NY 10055 Vanguard Group Inc.(2) 2,185,105 8.98% P.O. Box 2600 Valley Forge, PA 19482 John R. Ambroseo(3) 160,296 * Kevin Palatnik(4) 23,071 * Mark Sobey 10,854 * Paul Sechrist(5) 7,474 * Bret DiMarco(6) 14,200 * Jay T. Flatley(7) 38,209 * Pamela Fletcher(8) 916 * Susan M. James(8) 6,209 * L. William Krause(8) 11,709 * Michael R. McMullen — * Garry W. Rogerson(9) 12,709 * Steve Skaggs(8) 12,709 * Sandeep Vij(10) 5,709 * All directors and executive officers as a group (14 persons)(11) 305,495 1.25% * Represents less than 1%. (1) Based upon 24,326,589 shares of Coherent common stock outstanding as of December 31, 2018. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to the securities. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, each share of Coherent common stock subject to options held by that person that are currently exercisable or will be exercisable within 60 days of December 31, 2018 and all RSUs held by that person that will vest within 60 days of December 31, 2018, are deemed outstanding. Such shares are not deemed outstanding for the purpose of computing the percentage ownership of any other person. (2) Based on the institutional holding report provided by NASDAQ. (3) Includes 160,296 shares owned by the Ambroseo-Lacorte Family Trust, of which Mr. Ambroseo is a trustee. 24


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    Security Ownership of Certain Beneficial Owners and Management (4) Includes 5,250 shares issuable upon vesting of RSUs within 60 days of December 31, 2018. (5) Includes 7,474 shares owned by the Sechrist Family Trust, of which Mr. Sechrist is a trustee. (6) Includes 14,200 shares owned by the DiMarco Family Trust, of which Mr. DiMarco is a trustee. (7) Includes 24,000 shares issuable upon exercise of vested options held by Mr. Flatley, 916 shares issuable upon vesting of RSUs within 60 days of December 31, 2018, and 13,293 shares held by the Flatley Family Trust. (8) Includes 916 shares issuable upon vesting of RSUs within 60 days of December 31, 2018. (9) Includes 916 shares issuable upon vesting of RSUs within 60 days of December 31, 2018, and 11,793 shares held by the 2000 Rogerson Family Revocable Living Trust. (10) Includes 916 shares issuable upon vesting of RSUs within 60 days of December 31, 2018, and 4,793 shares held by the Vij Family 2001 Trust. (11) Includes an aggregate of 24,000 shares issuable upon exercise of vested options and 11,662 shares issuable upon vesting of RSUs within 60 days of December 31, 2018. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our officers and of the copies of such forms received by us, and on written directors, and persons who own more than ten percent of a representations from certain reporting persons that no other registered class of our equity securities to file reports of reports were required for such persons, we believe that, ownership and changes in ownership with the SEC. Such during fiscal 2018, all of our officers, directors and, to our officers, directors and ten-percent stockholders are also knowledge, greater than ten percent stockholders complied required by SEC rules to furnish us with copies of all forms that with all applicable Section 16(a) filing requirements. they file pursuant to Section 16(a). Based solely on our review 25


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    OUR EXECUTIVE OFFICERS The name, age, position and a brief account of the business experience of our Chief Executive Officer and each of our other executive officers as of December 31, 2018 are set forth below: Name Age Office Held (1) John R. Ambroseo 57 President and Chief Executive Officer Kevin Palatnik(1) 61 Executive Vice President and Chief Financial Officer Mark Sobey(1) 58 Executive Vice President and General Manager, OEM Laser Sources Paul Sechrist(1) 59 Executive Vice President, Worldwide Sales and Service Bret DiMarco(1) 50 Executive Vice President, General Counsel and Corporate Secretary Thomas Merk 56 Executive Vice President and General Manager, Industrial Lasers & Systems (1) ‘‘Named Executive Officer’’ for purposes of our Compensation Discussion and Analysis. Please see ‘‘Proposal One—Election of Directors— Paul Sechrist. Mr. Paul Sechrist was appointed Executive Nominees’’ above for Mr. Ambroseo’s biographical Vice President, Worldwide Sales and Service in March 2011. information. He has over 37 years of experience with Coherent, including roles as Senior Vice President and General Manager of Kevin Palatnik. Mr. Palatnik has served as our Executive Commercial Lasers and Components from October 2008 to Vice President and Chief Financial Officer since February March 2011, Vice President and General Manager of 2016. Prior to that from August 2011 until its acquisition by Specialty Laser Systems, Santa Clara from March 2008 to Knowles Corporation in July 2015, Mr. Palatnik served as the October 2008 and Vice President for Components from April Chief Financial Officer of Audience, Inc., a provider of 2005 to October 2008. Mr. Sechrist received an AA degree intelligent voice and audio solutions for mobile devices. Prior from San Jose City College, with Physics studies at California to that from June 2001 to November 2010, Mr. Palatnik held State University, Hayward. various roles at Cadence Design Systems, Inc., an electronic design automation software company, including as its senior Bret DiMarco. Mr. DiMarco has served as our Executive vice president and chief financial officer. Mr. Palatnik also Vice President and General Counsel since June 2006 and our serves as a member of the board of directors and chair of the Corporate Secretary since February 2007. From February audit committee of Adesto Technologies, Inc., a memory 2003 until May 2006, Mr. DiMarco was a member and from solutions semiconductor company. Mr. Palatnik received a October 1995 until January 2003 was an associate at Wilson B.S. in Industrial Engineering and Operations Research and a Sonsini Goodrich & Rosati, P.C., a law firm. Mr. DiMarco M.B.A. from Syracuse University. received a Bachelor’s degree from the University of California at Irvine and a Juris Doctorate degree from the Law Center at Mark Sobey. Dr. Sobey has served as our Executive Vice the University of Southern California. Additionally, President and General Manager of OEM Laser Sources (OLS) Mr. DiMarco is a member and chair of the Nasdaq Listing and since November 2016. He previously served as our Executive Hearing Review Council and an adjunct professor at the Vice President and General Manager of Specialty Laser University of California, Hastings College of the Law. Systems (SLS) from April 2010 to November 2016, and Senior Vice President and General Manager of SLS from joining Thomas Merk. Mr. Merk was appointed Executive Vice Coherent in July 2007 until April 2010. Prior to Coherent, President and General Manager, Industrial Lasers & Systems Dr. Sobey spent over 20 years in the Laser and Fiber Optics in December 2016. Prior to that, Mr. Merk was Chief Executive Telecommunications industries, including Senior Vice Officer and President of Rofin-Sinar Technologies Inc. and a President roles in Product Management at Cymer and Global member of its board of directors from July 2015 to November Sales at JDS Uniphase. He received his PhD in Engineering 2016, when the acquisition of Rofin by Coherent was and BSc in Physics from the University of Strathclyde in completed. From December 2005 to July 2015 Mr. Merk was Scotland. 26


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    Our Executive Officers the Chief Operating Officer of the Rofin Micro and Marking company, and remained there until 2000, most recently Business and a Managing Director of Carl Baasel serving as managing director. Mr. Merk holds a Master’s Lasertechnik GmbH & Co. KG. from May 2000 to November Degree in mechanical engineering from the Technical 2016. He started his career in 1989 at Boehringer University of Stuttgart, Germany. Werkzeugmaschinen Vertriebs GmbH, a machine tool 27


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    COMPENSATION DISCUSSION AND ANALYSIS Introduction In this section, we describe the material components of our executive compensation program for our ‘‘Named Executive Officers’’ or ‘‘NEOs’’: Messrs. Ambroseo, Palatnik, Sobey, Sechrist and DiMarco. We also provide an overview of our executive compensation philosophy, principal compensation policies and practices by which the Compensation and H.R. Committee, or the committee, arrives at its decisions regarding NEO compensation. While this section is focused on compensation for our 2018 fiscal year, we also discuss in this section the design changes made by the committee for executive compensation beginning in our 2019 fiscal year. NEO Compensation Overview The following chart sets forth our compensation philosophy and design principles: Compensation Philosophy Compensation Design Principles Retain and hire talented Our executives should have market competitive compensation and the committee executives orients our target total compensation generally near the 50th percentile of the committee’s selected peer group, with actual compensation falling above or below depending upon our financial performance and the performance of our stock price against an index over a three-year vesting period. Compensation components may be above or below such percentile target and varies by individual executive. Pay for performance, with both A significant portion of the annual compensation of our executives is designed to short and long-term vary with annual business performance and a significant portion of long-term measurements equity compensation is based on the long-term relative performance of our stock price in comparison to the Russell Index (by way of a single three year vesting period). Tie compensation to performance Our fiscal 2018 annual cash incentive plan was dependent upon corporate of the core business achievement of two performance targets based on: revenue and Adjusted EBITDA dollars. The committee determined that these were the most effective metrics for tying management’s compensation directly to our core operating results for fiscal 2018. Align compensation with Our stockholders benefit from continued strong operating performance by the stockholder interests Company, and we believe that having a significant portion of compensation tied to equity with both time and performance-based vesting requirements directly aligns management to stockholder returns. Performance-based RSUs make up the largest potential portion of the equity grants for our CEO, and make up a significant potential portion of the equity grants of our other NEOs. Grants of performance-based RSUs in fiscal 2018 have the same measurement period consistent with historical practice: a single vesting date three years from grant solely dependent upon the performance of our common stock price measured against the Russell Index, with target at meeting the index’s performance. Prior to fiscal 2018 we used the Russell 2000 Index to compare our stock price performance, but due to the recent increase in our market cap, we have been moved to the Russell 1000 Index and, accordingly, for grants made in the first quarter of fiscal 2018 and fiscal 2019 the committee compares our stock price performance against the performance of the Russell 1000 Index. We refer to the applicable Russell Index as the ‘‘Russell Index.’’ 28


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    Compensation Discussion and Analysis The following chart sets forth our principal elements of NEO compensation: Executive Compensation Program Overview—Elements of Compensation Element Variability Objective How Established Fiscal Year 2018 for NEOs Base Salary Fixed Provide a Reviewed against Base salary increased for 2018 competitive fixed executive officer’s for NEOs other than the CEO to component of skill, experience and more closely align with peers. compensation that, responsibilities, and as part of a total for competitiveness cash compensation against our package, enables us compensation peer to attract and retain group. top talent. Annual Cash Performance Offer a variable cash Target payouts set Semi-annual bonus funding tied Incentive Based compensation by measuring total to revenue and Adjusted EBITDA opportunity twice per cash compensation achievement. Revenue fiscal year based opportunity against achievement weighted at 25% upon the level of the peer group. and Adjusted EBITDA achievement of Corporate achievement weighted at 75%. corporate goals. performance targets Total payout can range from 0% based on meeting to 200% of target. For the first operational goals half of fiscal 2018, revenue tied to the achievement was 200% of target Company’s operating and adjusted EBITDA budget for the achievement was 178.7% of applicable fiscal target, with a corresponding cash year. bonus payout of 184.05% of target. For the second half of fiscal 2018, revenue achievement was 6.3% of target and adjusted EBITDA achievement was below threshold, with a corresponding cash bonus payout of 1.58%. Combined bonus payout for the year equaled 93% of target. RSUs—Service Value Tied to Align long-term Target total value of Fiscal year 2018 service-based Based Stock Price management and annual awards using awards vest 1/3 per year over stockholder interests market data three years, with the first vesting and strengthen (reviewed against date occurring on the one year retention with our compensation anniversary of the grant date. three-year vesting. peer group for Service-based competitiveness) and awards create the executive long-term retention. officer’s responsibilities, contributions and criticality to ongoing success. 29


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    Compensation Discussion and Analysis Element Variability Objective How Established Fiscal Year 2018 for NEOs RSUs— Performance Performance-based Target total value of Performance award measured by Performance Based—Value awards provide an annual awards using comparing our stock price Based Tied to Stock incentive opportunity market data performance against that of the Price and based upon the (reviewed against Russell Index. Awards can range Based on performance of our our compensation from 0% to 200% of target. For Relative stock price against peer group for every 1% our stock price is Performance to the performance of competitiveness) and below the Russell Index, the Russell Index the Russell Index. the executive target award is reduced by 4%; This component officer’s for every 1% our stock price is directly aligns NEO responsibilities, above the Russell Index, the pay to our contributions and target award is increased by stockholders. criticality to ongoing 2%. success. Other Benefits Primarily Fixed Provide competitive Reviewed for No significant changes for fiscal employee benefits. competitiveness. year 2018 program. We do not view this as a significant component of our executive compensation program. Stockholder Feedback The committee considers feedback from our stockholders the heading ‘‘Stockholder Communication with the Board of regarding our executive compensation program, including as Directors.’’ The committee welcomes direct stockholder expressed by the results of our annual advisory vote on feedback and considers such feedback as well as our executive compensation, which our stockholders have historical ‘‘say on pay’’ results in its deliberations on executive historically strongly supported. Although we had strong pay for compensation. From a timing perspective, however, the performance alignment and the say on pay for fiscal 2017 committee generally meets in our first fiscal quarter (which are compensation was approved by an overwhelming majority, the last months of the calendar year) to make decisions on the say on pay vote approval was lower than in prior years. We executive compensation for the then current fiscal year. In attributed such lower level of support to comments from one of contrast, our annual meeting is held in the spring and the principal proxy advisory firms. Members of our senior stockholders are asked to vote on compensation for a fiscal management team met with the advisory firm and discussed year which was already completed. Accordingly, the our approach to compensation. Following our annual meeting compensation structure for fiscal 2018 was already in March, 2018, we received correspondence from one determined by the time the committee received feedback from stockholder with whom we were able to exchange views on stockholders and reviewed advisory firm reports. Therefore, compensation design directly. In response to such as noted above, in the first fiscal quarter of 2019, the discussions and taking into account the ‘‘say on pay’’ vote committee made changes to our fiscal 2019 compensation results in March, 2018, we modified the design of our design in response to such feedback and review as described performance-based RSU grants. Such grants made in the first below. quarter of fiscal 2019 now require performance above the Russell Index in order to obtain a target award. We strongly urge our stockholders to read this Compensation Discussion and Analysis in conjunction with Proposal Three. We encourage our stockholders to directly express their views to the committee as described in this proxy statement under 30


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    Compensation Discussion and Analysis Our Chief Executive Officer and Chief Financial Officer regularly meet with our stockholders throughout the year, primarily to discuss financial and business matters related to the Company. The feedback from those meetings are considered by the Board and the committee in deliberations on such topics throughout the year. Design Changes to Executive Compensation in Fiscal 2019 In fiscal 2019, the committee made the following changes to • Considered internal pay equity between the CEO and other the design of executive compensation: NEOs as a factor in determining compensation. • Redesigned the measurement of the Company’s In addition, the committee has scheduled for fiscal 2019 a performance-based RSUs to require performance above review of the Company’s current executive compensation the Russell Index in order to achieve target grant levels; recoupment (or ‘‘clawback’’) policy. • Moved the annual cash Variable Compensation Plan to a single one year measurement period; and Executive Summary Our Business our performance-based RSU design hit the maximum cap Founded in 1966, Coherent, Inc. is one of the leading established by the committee for the three year PRSU providers of lasers and laser-based technology for scientific, program. commercial and industrial customers. Our common stock is listed on the Nasdaq Global Select Market and is part of Set forth below are tables reflecting several performance several indexes, including the Russell 1000 and Standard & metrics from the last three fiscal years that impact the Poor’s MidCap 400 Index. For more information about our compensation for our NEOs. business, please read the sections captioned ‘‘Business’’ and Our revenue increased 101% from fiscal 2016 to fiscal 2017 ‘‘Management’s Discussion and Analysis of Financial and increased 10% from fiscal 2017 to fiscal 2018 (dollars in Condition and Results of Operations’’ in our Annual Report on millions): Form 10-K filed with SEC on November 27, 2018. ANNUAL REVENUE Selected Business Highlights We experienced 10% growth in year-over-year revenue in $2,000 fiscal 2018, which met our internal growth targets. In addition, $1,800 $1,903 we experienced growth in our Adjusted EBITDA and $1,600 $1,723 non-GAAP earnings per share. While the Company exceeded $1,400 the performance-related goals for our executive $1,200 compensation programs in the first half of the year for our $1,000 annual cash program, the Company underperformed as $800 $857 compared to target metrics in the second half of fiscal 2018. $600 As a result, you will see in the coming pages that in fiscal 2018 $400 our performance-related executive compensation in our $200 annual cash program yielded annual results below the $0 targeted 100%. Long-term performance measurement under FY2016 FY2017 17DEC201818423557 FY2018 31


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    Compensation Discussion and Analysis Our Adjusted EBITDA increased 168% from fiscal 2016 to making decisions that enhance our stockholder value in both fiscal 2017 and increased 6% from fiscal 2017 to fiscal 2018: the short and long-term. We design our executive compensation program to achieve the following goals: ADJUSTED EBITDA • Pay for performance, with both short and long-term $600 measurements—A significant portion of the annual $550 compensation of our executives is designed to vary with $550 M $500 $519 M annual business performance and the long-term relative $450 performance of Coherent’s stock price in comparison to the $400 Russell Index (by way of a single three year vesting period). $350 The committee and management set demanding performance targets. For example, there was a de minimus $300 bonus paid out for the second half of fiscal 2018 as $250 explained below. For the first half of fiscal 2018, the bonus $200 $194 M payout was 184.05% of target for a combined bonus payout $150 for fiscal 2018 of 92.81% of target. The performance of the FY2016 FY2017 FY2018 Company’s stock as measured against the Russell Index *Adjusted EBITDA is defined as operating income adjusted for depreciation, amortization, stock-based compensation, major resulted in maximum shares issued under the performance- restructuring costs and certain other non-operating income and based RSUs, which vested in November, 2018 at the 17DEC201820490179 expense items such as costs related to acquisitions. maximum 200% payout. Our non-GAAP earnings per share from continuing operations The following chart shows the payout percentages as increased 165% from fiscal 2016 to fiscal 2017 and increased compared to the committee’s selected target for each of the 9% from fiscal 2017 to fiscal 2018: last three fiscal years under our annual cash bonus plan: NON-GAAP EARNINGS PER SHARE ANNUAL PAYOUT PERCENTAGE UNDER $16 CASH INCENTIVE PLAN $14 200% $13.64 180% 200% $12 $12.57 160% $10 140% 151% Payout (%) $8 120% 100% $6 80% 93% $4 $4.75 60% $2 40% 20% $0 0% FY2016 FY2017 FY2018 FY2016 FY2017 17DEC201822493029 FY2018 *Non-GAAP earnings per share is defined as earnings per share excluding certain recurring and non-recurring items. 17DEC201818423959 Payouts under our annual cash bonus plan over the last six years have ranged from 33.38% to 200% as shown in the For a reconciliation table of earnings per share on a GAAP following chart: basis to non-GAAP basis and net income from continuing operations on a GAAP basis to Adjusted EBITDA, please refer VCP Payout Percentage to the ‘‘Reconciliation Table’’ at the end of this section. 250.00% Compensation Overview 200.00% Payout Percent 150.00% Compensation Philosophy. We tie executive total 100.00% compensation to stockholder value with two measures: our 50.00% operational results and the comparative performance of our 0.00% stock price. This approach provides strong alignment between FY13 FY14 FY15 FY16 FY17 FY18 executive pay and performance, and focuses executives on Payout % 34.35% 33.38% 84.78% 150.91% 17DEC201820490449 200.00% 92.81% 32


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    Compensation Discussion and Analysis • Tie compensation to performance of the core the maximum possible payout, Coherent’s stock has to business—Our fiscal 2018 annual cash incentive plan was outperform the index by at least 50%. Accordingly, for our dependent upon Coherent’s achievement against two executives to achieve the committee’s targeted criteria: Adjusted EBITDA dollars and revenue. The compensation, Coherent’s common stock must at least committee determined that these were the most effective meet the Russell Index. The chart below illustrates this metrics for tying management’s compensation directly to structure: Coherent’s core operating results for fiscal 2018. PERFORMANCE RSU VESTING • Retain and hire talented executives—Our executives should have market competitive compensation, and the 225 committee orients our target total compensation generally 200 near the 50th percentile of the committee’s selected peer 175 Payout (% of Target) group (as noted below), with actual compensation falling 150 above or below depending upon Coherent’s financial 125 performance. Additionally, certain compensation 100 components may be above or below such percentile target Target 75 and varies by individual executive. 50 • Align compensation with stockholder interests—Our 25 stockholders benefit from continued strong operating 0 performance by the Company and we believe that having a -75% -50% -25% 0% 25% 50% 75% 100% significant portion of compensation tied to equity, with both Performance (Percentage Points17DEC201818424223 vs. Index) time and performance-based vesting requirements, directly aligns management to stockholder returns. The As mentioned above, the committee has modified the design performance-based RSUs make up the largest potential of the performance-based RSUs made in the first quarter of portion of the equity grants for our CEO. Grants of fiscal 2019 to require performance above the Russell Index to performance-based RSUs historically have the same achieve the targeted payout. measurement period: a single vesting date three years from grant solely dependent upon the performance of Coherent’s Elements of Executive Compensation. During fiscal 2018, common stock price measured against the Russell Index, the compensation of our NEOs primarily consisted of (A) base with target equal to meeting the index’s performance. For salary, (B) participation in our annual variable compensation each 1% that Coherent’s common stock exceeds the plan (referred to herein as our ‘‘annual cash incentive plan’’ or performance of the Russell Index for the trailing 90 trading ‘‘VCP’’), and (C) long-term equity incentive awards divided days from the vesting measurement date against the between time-based RSUs and performance-based RSUs. comparable period from the date of grant, the grant recipient For fiscal 2018, on average, approximately 80% of our NEO’s will get a 2% increase in the number of shares above target target compensation and approximately 92% of our CEO’s (up to a maximum cap of 200% of target), and for each 1% target compensation was delivered through our cash incentive below the Russell Index’s performance, a 4% decrease in plan and long-term equity incentives (both time and the number of shares below target (down to zero). As a performance vesting). result, compensation decreases faster for failing to achieve As a demonstration of how executive cash compensation is the target than it increases for exceeding it. If Coherent’s tied to company performance, the cash compensation for our stock underperforms the Russell Index performance by more than 25%, then there is no payout, but in order to hit 33


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    Compensation Discussion and Analysis CEO during fiscal 2018 at target, maximum and actual can as Executive Vice Presidents and Senior Vice Presidents be illustrated as follows (dollars in thousands): who report to the CEO; CEO FY 2018 CASH PAY MIX • Our performance-based RSU program is measured by the Company’s stock price achievement against the Russell $3,000 Index over a three year period, which the committee believes is a direct connection to long-term total stockholder $2,500 return. Fiscal 2019 grants require achievement in excess of the Russell Index to achieve target payout; $2,000 • The committee is composed entirely of directors who satisfy Cash $1,500 Cash Cash the standards of independence in Coherent’s Corporate Bonus Bonus 70% Bonus Governance Guidelines and Nasdaq listing standards; $1,000 53% 52% • The committee makes decisions regarding Mr. Ambroseo’s $500 Base Base Base compensation without him present; Salary Salary Salary 47% 30% 48% • Executive incentive compensation programs include limits $0 Target Maximum Actual on maximum payouts to contain the risk of excessive payouts; Fixed Variable17DEC201818423695 • The committee utilizes an independent compensation consultant; Compensation Governance. ‘‘Pay for performance’’ has • We have eliminated material historical perquisites as an been and remains at the core of Coherent’s executive element of compensation for our NEOs; compensation coupled with appropriately managing risk and aligning our compensation programs with long-term • We have a recoupment or ‘‘claw-back’’ policy for our Chief stockholder interests. We accomplish this primarily by having Executive Officer and Chief Financial Officer, as described a majority of our NEOs’ potential compensation being ‘‘at risk’’ below; through a combination of (i) a fiscal year variable cash • We prohibit employees and directors from hedging or incentive program tied to achievement of financial metrics and pledging Company stock; (ii) equity grant vesting tied to achievement of a performance metric. The committee monitors and considers evolving • Our change-of-control plan provides for payment solely in governance approaches and standards in executive ‘‘double-trigger’’ circumstances, that is a change of control compensation, as well as communications it receives directly coupled with a termination of employment within a defined from stockholders. time period; • None of our NEOs are entitled to any ‘‘gross-up’’ to offset As more fully discussed below, recent examples of how this the impact of IRS Code Sections 280G or 4999 in philosophy is applied and changes made pursuant to connection with a change of control; and compensation practices as well as governance practices in effect during fiscal 2018, include: • None of our NEOs have employment agreements. • We have minimum share ownership requirements for our Chief Executive Officer and members of the Board as well 34


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    Compensation Discussion and Analysis Our stockholders have historically strongly supported our and providing insights regarding our employees (executive and executive compensation philosophy and design as seen in the otherwise) and the business context for the committee’s significant majorities approving our ‘‘say on pay’’ proposal decisions. NEOs attend portions of committee meetings when (does not include broker non-votes; rounded). We saw some invited by the committee, but leave the meetings when matters drop in support for the ‘‘say on pay’’ proposal at the fiscal 2018 potentially affecting them are discussed. meeting which we attributed to the impact of comments made Role of the Committee’s Compensation Consultant by one of the principal proxy advisory firms. As indicated above, The committee utilizes the services of an independent we met with the advisory firm and have implemented certain compensation consultant and in fiscal 2018, engaged changes to our compensation program in response to their Compensia as its independent compensation consultant. comments and the feedback we received from a stockholder. Compensia assisted the committee by: SAY ON PAY STOCKHOLDER VOTES • Reviewing and analyzing our executive compensation Votes For Votes Against Abstentions program, including providing NEO tally sheets to the 98% 97% committee; • Providing market data and ranges for fiscal 2018 83% compensation; and • Providing further insight on compensation governance trends. Additionally, in fiscal 2018, Compensia was retained by the Governance and Nominating Committee to review, analyze and make recommendations regarding compensation for service on the Board and its committees. 16% The independent compensation consultant serves at the discretion of the committee and is not permitted to do other work 1% 1% 1% 2% 1% for Coherent unless expressly authorized by the committee. Since retention, Compensia has not performed any work for FY 2016 FY 2017 FY 2018 20DEC201814472290 Coherent other than its work with the committee, the Board or other committees of the Board. The committee is focused on Role of Management maintaining the independence of its compensation consultant The committee regularly meets with Mr. Ambroseo, our Chief and, accordingly, does not anticipate having its consultant Executive Officer, to obtain recommendations with respect to perform any other work for the Company in addition to its direct the compensation programs, practices and packages for our work for the committee, the Board, or another committee of the NEOs other than Mr. Ambroseo. Additionally, Mr. Palatnik, our Board. The committee has assessed the independence of Executive Vice President and Chief Financial Officer, Compensia and concluded that no conflict of interest exists. Mr. DiMarco, our Executive Vice President, General Counsel and Corporate Secretary, and members of our human The Company also participates in and maintains a resources department are regularly invited to meetings of the subscription to the Radford Global Technology Survey. This committee or otherwise asked to assist the committee. survey provides benchmark data and compensation practices reports of a broad cross-section of technology companies The assistance of these individuals includes providing financial similar in size to Coherent to assist us with employee information and analysis for the committee and its compensation compensation generally. consultant, taking minutes of the meeting or providing legal advice, developing compensation proposals for consideration, Pay Positioning Strategy and Benchmarking of Compensation Philosophically the committee initially orients target total of our peers (as measured by our designated peer group and compensation for our NEOs generally near the 50th percentile compiled by the committee’s independent compensation 35


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    Compensation Discussion and Analysis consultant and, when applicable, including, for example, when performance or market data for executive compensation using there are few comparable positions reported in the proxy data a completely different peer group will, therefore, naturally of our peer group companies, data from the Radford Global result in a different analysis. We encourage our stockholders Technology Survey), resulting in targeted total compensation to consider the peer group used in any comparisons and direct that is competitive for performance that meets the objectives any questions to the committee regarding such comparisons established by the committee. An NEO’s actual salary, cash or any other matters when considering how to vote on incentive compensation opportunity and equity compensation Proposal Three. grant value may fall below or above the target position based on the individual’s performance, contributions, scope of role, For pay decisions made for fiscal 2018, after consulting with experience, skills and knowledge, as well as the historical pay our independent compensation consultant, the committee structure for each executive, Company performance and the determined that the following companies comprise the peer proportion of compensation at risk. These factors are weighed group for fiscal 2018: by the committee in its judgment, and no single factor takes Dolby Laboratories (DLB) Microsemi Corporation precedence over others nor is any formula used in making (MSCC) these decisions nor was the impact of any factor on the Entegris (ENTG) MKS Instruments (MKSI) determination of compensation quantifiable. In general the F5 Networks (FFIV) National Instruments committee will balance between cash and equity (NATI) compensation elements to have more compensation in equity Finisar (FNSR) Nuance Communications for each NEO in order to more closely align NEO (NUAN) compensation directly with that of the performance of the FLIR Systems (FLIR) OSI Systems (OSIS) Company and with stockholders. In fiscal 2019, the committee Infinera (INFN) Plantronics (PLT) also asked its independent compensation consultant to review Keysight Technologies Synaptics (SNYA) and report on internal pay equity between the CEO and the (KEYS) other NEOs as a factor when approving compensation. Lumentum Holdings, Inc. Teradyne (TER) The Chief Executive Officer’s review of the performance of the (LITE) other NEOs is considered by the committee in making Maxim Integrated Products ViaSat (VSAT) individual pay decisions. With respect to the Chief Executive (MXIM) Officer, the committee additionally considered the performance of Coherent as a whole and the views of other members of the Board regarding the Chief Executive Officer’s Several factors are considered in selecting the peer group, the performance. Actual realized pay is higher or lower than the most important of which are: targeted amounts for each individual based primarily on the Company’s performance. Primary Criteria • Industry (primarily companies in the Electronic Equipment In analyzing our executive compensation program relative to and Semiconductor sub-industry classifications defined by target market positioning, the committee reviews information the Global Industry Classification Standard (GICS) system); provided by its independent compensation consultant, which and includes an analysis of data from peer companies’ proxy • Revenue level (primarily companies with annual revenues filings with respect to similarly situated individuals at the peer between 0.5x-2.0x that of Coherent). companies (when available) and the Radford Global Technology Survey (as a supplement when peer group Secondary Criteria company data is unavailable). It is important to note that these • Market capitalization between 0.25x and 3.0x of Coherent; are the peers selected by the committee. The committee uses • Market capitalization as a multiple of revenues of greater criteria as described below in determining the appropriate than 1.5x; and peer group. There are proxy advisory services that use their own criteria to select peers for the Company and, accordingly, • A disclosed peer of a peer company. stockholders should be aware that these advisory services do not, in fact, follow the same methodology of the committee and The committee reviews the composition of the peer group there may be wide variances between the different peer annually to ensure it is the most relevant set of companies to groups used by these services. Any comparison of company use for comparison purposes. Dolby Laboratories, F5 Networks and Maxim Integrated Products were added to the 36


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    Compensation Discussion and Analysis companies comprising the Company’s peer group for fiscal and competitively compensate our executives for the jobs we 2018 replacing four companies from the fiscal 2017 peer ask them to perform. This is the most stable component of our group which were acquired. executive compensation program, as this amount is not at risk. The committee reviewed market data information provided by Components of Our Executive Compensia with respect to similarly situated individuals to Compensation Program assist it in determining the base salary for each NEO, The principal components of our executive officer depending upon the particular executive’s experience, skills, compensation and employment arrangements during fiscal knowledge, performance and contribution. The committee 2018 included: increased the base salaries of our NEOs other than the CEO in fiscal 2018, as supported by compensation analysis • Base salary; provided by Compensia, from 2% to 8% to more closely align • Annual cash incentive plan; their base salary with the base salary of peers. According to information provided by our compensation consultant, none of • Equity awards; and the increases brought base salary above the 50th percentile of • Other benefits. our peer group companies. For several of our NEOs, base salary remained below the 50th percentile of our peer group. These components were selected because the committee Our CEO did not receive a base salary increase in fiscal 2018 believes that a combination of salary, incentive pay and and has not received a base salary increase in eight of the last benefits is necessary to help us attract and retain the ten years. executive talent on which Coherent’s success depends. The following table shows the components of total direct Variable Cash Incentive Compensation compensation at target for our NEOs as a group for fiscal A substantial portion of each individual’s potential short-term 2018. In maintaining the design for fiscal 2018, the committee compensation is in the form of variable incentive cash recognized the significant support received from the compensation tied to committee-established goals. In fiscal Company’s stockholders for the compensation program 2018, Coherent maintained one incentive cash program under design, as reflected in the continued strong vote totals in favor which executive officers were eligible to receive annual cash of our executive compensation through our annual incentives, the 2018 Variable Compensation Plan (‘‘2018 ‘‘say-on-pay’’ proposal. VCP’’). CEO AND NEO (OTHER THAN CEO) FY2018 DIRECT COMPENSATION MIX 2018 VCP 100% The 2018 VCP was designed as an ‘‘at risk’’ bonus 12% compensation program to promote a focus on Coherent’s 90% 20% 22% 33% growth and profitability. It provided an incentive compensation 80% opportunity in line with targeted market rates to our NEOs. 70% Under the 2018 VCP, participants were eligible to receive 60% bi-annual bonuses (with measurement periods for the first half 45% 50% 72% 33% and the second half of the 2018 fiscal year). In setting the 62% 40% performance goals at the beginning of the fiscal year, the 30% committee assessed the anticipated difficulty and importance 14% 19% to the success of Coherent of achieving the performance 20% 10% goals. 10% 11% 20% 14% 8% 5% 0% The actual awards (if any) payable for each semi-annual CEO Target CEO Maximum NEO Target NEO Maximum period depend on the extent to which actual performance met, exceeded or fell short of the goals approved by the committee. Base Salary Annual Incentive Performance-Based Time-Based The 2018 VCP goals were tied to Coherent achieving varying RSUs RSUs 18DEC201813362244 levels of revenue and Adjusted EBITDA dollars (‘‘Adjusted EBITDA’’), with revenue weighted at 25% and Adjusted Base Salary EBITDA weighted at 75%. Each performance metric is Base salary is the foundation to providing an appropriate total measured and paid out independently, but the revenue payout direct compensation package. We use base salary to fairly is capped at 100% achievement until Adjusted EBITDA 37


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    Compensation Discussion and Analysis reaches a minimum dollar target. Adjusted EBITDA is defined Second Half Fiscal 2018 VCP Scale as operating income adjusted for VCP payouts, depreciation, Revenue $ (in millions) Payout amortization, stock compensation expenses, major $942.0 (threshold) 0% restructuring charges and certain non-operating income or $943.9 (actual) 6.3% (actual) expense items, such as costs related to our acquisition of $972.0 (target) 100% Rofin. The committee also reviews the financial impact of $1,002.0 200% mergers and acquisitions to determine if any adjustments in VCP are required. Each measurement period had the same range of between Adjusted EBITDA $ (in millions) Payout zero and 200%, with target at 100% of the executive’s $263.7 (actual) 0% (actual) participation rate. $300.8 (threshold) 0% $323.3 (target) 100% Fiscal 2018 Variable Compensation $345.7 200% Plan Scale for NEOs Revenue achievement for the first half of fiscal 2018 was $958.7 million, with a corresponding cash bonus payout of The tables below describe for each NEO under the 2018 VCP 200% of target. Adjusted EBITDA achievement for the first half (i) the target percentage of base salary and (ii) the actual of fiscal 2018 was $302.4 million, with a corresponding cash award earned for the measurement period in fiscal 2018. The bonus payout of 178.7% of target. The weighted, combined potential award range for each NEO is 0% to 200% of the cash bonus payout was 184.05% of target. target award percentage of base salary. First Half Fiscal 2018 VCP Scale First Half of Fiscal 2018 Revenue $ (in millions) Payout Actual Award as a $908.0 (threshold) 0% Named Target Actual Percentage $928.0 (target) 100% Executive Percentage Award of Target Officer of Salary ($)(1) Award(2) $948.0 200% John Ambroseo 115% 846,640 184.05% $958.7 (actual) 200% (actual) Kevin Palatnik 75% 303,685 184.05% Mark Sobey 70% 273,778 184.05% Paul Sechrist 70% 260,902 184.05% Adjusted EBITDA $ (in millions) Payout Bret DiMarco 65% 233,283 184.05% $271.2 (threshold) 0% $288.6 (target) 100% $302.4 (actual) 178.7% (actual) $306.1 200% Second Half of Fiscal of 2018 Actual Award as a Named Target Actual Percentage Revenue achievement for the second half of fiscal 2018 was Executive Percentage Award of Target $943.9 million, with a corresponding cash incentive payout of Officer of Salary ($)(1) Award(2) 6.3%. Adjusted EBITDA achievement for the second half of John Ambroseo 115% 7,245 1.58% fiscal 2018 was $263.7 million, with no cash incentive payout. Kevin Palatnik 75% 2,599 1.58% The weighted, combined cash incentive payout for the second Mark Sobey 70% 2,343 1.58% half was 1.575% of target. Paul Sechrist 70% 2,233 1.58% Bret DiMarco 65% 1,996 1.58% (1) Reflects gross amounts earned during the applicable half of fiscal 2018. 38


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    Compensation Discussion and Analysis (2) This reflects the aggregate bonuses earned by the Fiscal 2018 Equity Grants NEOs for the applicable half of fiscal 2018 under the For fiscal 2018, the committee based the equity program on a 2018 VCP. combination of time-based and performance-based RSUs over a three-year period. In particular, the committee Equity Awards determined to measure achievement for the performance We believe that equity awards provide a strong alignment grants by the relative performance of Coherent’s stock price in between the interests of our executives and our stockholders. comparison to the Russell Index. The committee believed that We seek to provide equity award opportunities that are using the Russell Index (in which Coherent was a member at consistent with our compensation philosophy, with the the time of grant) as a proxy of total stockholder return directly potential for increase for exceptional financial performance, aligns executive compensation with stockholder interest. The consistent with the reasonable management of overall equity committee determined that both the performance-based and compensation expense and stockholder dilution. Finally, we time-based RSU grants provide a further retention tool in that believe that long-term equity awards are an essential tool in the time-based grants vest over three years with pro rata promoting executive retention. For fiscal 2018, our long-term annual vesting and, for the performance-based grants, a incentive program included the grant of time-based RSUs and single measurement period three years from the date of grant performance-based RSUs. These components provide a with three-year cliff vesting thereafter if such grants vest at all reward for past corporate and individual performance and an because such grants vest purely based on performance. incentive for future performance. Performance-based RSU grants in fiscal 2018 vest solely Our performance-based RSU grants are tied to the dependent upon the performance of Coherent’s common Company’s performance and, as a result, may fluctuate from stock price measured against the Russell Index. For each 1% no vesting to vesting above target. When making its that Coherent’s common stock exceeds the performance of compensation decisions, the committee reviews a the Russell Index for the trailing 90 trading days from the compensation overview prepared by its independent vesting measurement date against the comparable period compensation consultant which reflects potential realizable from the date of grant, the grant recipient will get a 2% value under current short and long-term compensation increase in the number of shares above target (up to a arrangements for the CEO. In addition, the committee reviews maximum cap of 200% of target), and for each 1% below the a compensation overview prepared by its compensation Russell Index’s performance, a 4% decrease in the number of consultant reflecting the intrinsic value of unvested equity shares (down to zero). As a result, compensation decreases awards and performance-based RSUs at target and projected faster for failing to achieve the target than it increases for values for all of the NEOs. exceeding it. The performance-based RSUs make up the largest potential portion of the equity grants for our Chief Executive Officer. The following table summarizes some of the key features of our general fiscal 2018 equity grants: Fiscal 2018 Equity Grants Type RSUs and performance-based RSUs (PRSUs) Vesting for RSUs One-third each grant anniversary Vesting for PRSUs Single vesting date three years from grant 100% tied to Russell Index Minimum vest: zero PRSU Metrics Target vest: Even with Russell Index Maximum vest: 200% of target For our Chief Executive Officer, greater than half of his total As an example, our performance-based design was seen in equity awards are performance-based. Approximately 71% the vesting of the PRSU grants made in November 2014, of his equity awards are performance-based and at maximum which vested in the first quarter of fiscal 2018. Our common achievement that percentage increases to approximately stock at the time of grant was $64.84 and gained 393% as 83%. compared to the Russell Index, which gained 126% over the 39


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    Compensation Discussion and Analysis same three-year measurement period. This out-performance The following tables reflect the number of shares subject to resulted in 200% PRSU vesting. equity grants made to the NEOs during fiscal 2018: Performance-Based In the event of a change of control of the Company, the Named Performance-Based RSU Grants Range Executive Time-Based RSU Grants (issuance dependent performance-based grants will be measured, with respect to Officer RSU Grants at Target upon achievement) performance periods not yet completed, by the relative stock John Ambroseo 7,492 18,791 0 - 37,582 performance of Coherent in comparison to the Russell Index Kevin Palatnik 2,997 2,505 0 - 5,010 through the date of the change of control and such Mark Sobey 2,797 2,338 0 - 4,676 performance-based shares would, subject to the terms of the Paul Sechrist 2,497 2,088 0 - 4,176 Change of Control Severance Plan, then convert to Bret DiMarco 2,198 1,837 0 - 3,674 time-based vesting with a single vesting date at the three year anniversary of the grant. Equity Award Practices The following charts show the aggregate composition of Equity grants to our employees are driven by our annual equity grants for fiscal 2018 to our Chief Executive Officer, at review process. Grant guidelines are based on competitive target and at maximum achievement under the terms of the market practices. Typically, an eligible employee is granted performance-based grants: equity at the first committee meeting after beginning employment and may be eligible for periodic grants thereafter. FY 2018 CEO EQUITY GRANT COMPONENTS Eligibility for and the size of grants are influenced by the then-current guidelines for non-executive officer grants and the individual’s performance or particular requirements at the 17% time of hire. No option grants have been made to an employee since 2010. AT In fiscal 2018 the committee granted an aggregate of 152,776 MAXIMUM shares subject to time-based and performance-based restricted stock units (at maximum), representing ACHIEVEMENT approximately 0.63% of Coherent’s outstanding common stock as of September 29, 2018 (excluding automatic and initial grants to directors). With the assistance of Compensia, 83% the committee has reviewed this burn rate relative to peer practices and proxy advisory firm guidance and found that the total dilution was consistent with the median of peer practices and such guidance. During fiscal 2018 all equity grants were made at meetings of the committee. 29% Chief Executive Officer and Executive Minimum Stock AT Ownership Guidelines The committee adopted mandatory stock ownership TARGET guidelines for our Chief Executive Officer during fiscal 2012. ACHIEVEMENT During the first quarter of fiscal 2018, the committee adopted enhanced stock ownership guidelines increasing the value of 71% shares our Chief Executive Officer must hold to at least five times base salary and making our Executive Vice Presidents and Senior Vice Presidents reporting to the Chief Executive Officers subject to stock ownership guidelines of one times such individual’s base salary. In the event that our Chief Executive Officer or other officer does not satisfy the minimum Time-Based RSUs Performance-Based RSUs 18DEC201813362373 requirements, then 50% of the net after-tax shares (e.g. exercised options/shares received on the vesting of 40


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    Compensation Discussion and Analysis RSUs) are required to be held until the guidelines are met. As subject to various participation limitations. As employees, our of December 31, 2018, Mr. Ambroseo held outstanding stock NEOs are eligible to participate in this plan. worth more than 20 times his base salary and, accordingly, significantly exceeded the minimum stock ownership Severance and Change of Control Arrangements guidelines. Our other NEOs also exceeded the minimum stock Our Change of Control Severance Plan (the ‘‘Change of ownership guidelines. Control Plan’’) provides certain benefits in the event of a change of control of Coherent for certain executives, including Other Benefits each of our NEOs. Benefits are provided if there is a change in Retirement Plans ownership of Coherent, a change in effective control of U.S. based executive officers are eligible to participate in our Coherent, or a change in ownership of a substantial portion of 401(k) Retirement Plan on the same terms as all other U.S. Coherent’s assets (in each case as construed under employees, including a 4% Company matching contribution. Section 409A of the Internal Revenue Code and the Our 401(k) Retirement Plan is intended to be a tax-qualified regulations thereunder) (a ‘‘change of control’’) and within two plan and therefore is subject to certain Internal Revenue Code years thereafter (or within two months prior thereto) the limitations on the dollar amounts of deferrals and Company participant’s employment is terminated without cause or contributions that can be made to plan accounts. These voluntarily terminates following a constructive termination limitations apply to our more highly-compensated employees event. The plan’s provisions are, therefore, of the variety (including the NEOs). commonly referred to as ‘‘double-trigger.’’ Importantly, the plan does not include any ‘‘gross up’’ provisions for the We maintain a Deferred Compensation Plan for certain participants for the tax effects caused by any such benefits. employees and members of the Board. The Deferred The committee believes the Change of Control Plan serves as Compensation Plan permits eligible participants to defer an important retention tool in the event of a pending change of receipt of compensation pursuant to the terms of the plan. The control transaction. Deferred Compensation Plan permits participants to contribute, on a pre-tax basis, up to 75% of their base salary The committee completed its review of the provisions of the earnings, up to 100% of their bonus pay and commissions and Change of Control Plan during fiscal 2015 and determined to up to 100% of directors’ annual retainer earned in the review the plan again in four years. In the first quarter of fiscal upcoming plan year. We provide no matching or other 2019, the committee reviewed and adopted substantially the additional contributions to such Deferred Compensation Plan. same Change of Control Plan and determined to review the Plan participants may designate investments for deferral in a plan again in four years. Compensia assisted the committee in variety of different deemed investment options. To preserve its review and analysis of the Change of Control Plan. The the tax-deferred status of deferred compensation plans, the committee believes that reviewing the Change of Control Plan IRS requires that the available investment alternatives be every four years allows for the right balance in providing ‘‘deemed investments.’’ Participants do not have an certainty for the participants while providing the committee ownership interest in the funds they select; the funds are only with the opportunity to revise the plan consistent with used to measure the gains or losses that are attributed to the corporate governance best practices, evolving peer group participant’s deferral account over time. practices and regulatory changes. The committee considers the Deferred Compensation Plan to The committee does not consider the potential payments and be a reasonable and appropriate program because it benefits under these arrangements when making promotes executive officer retention by offering a deferred compensation decisions for our NEOs. These arrangements compensation plan that is comparable to and competitive with serve specific purposes unrelated to the determination of the what is offered by our peer group of companies. NEOs’ total direct compensation for a specific year. Employee Stock Purchase Plan Our stockholders have approved an employee stock purchase plan whereby employees can purchase shares for a discount, 41


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    Compensation Discussion and Analysis Tax and Accounting Considerations Accounting for Stock-Based Compensation—We account for are appropriate and in the best interests of the stockholders stock-based compensation in accordance with the after taking various factors into consideration, including requirements of ASC 718. We also take into consideration business conditions and the performance of the Company and ASC 718 and other generally accepted accounting principles the executive officer. In addition, due to the ambiguities and in determining changes to policies and practices for our stock- uncertainties as to the application and interpretation of based compensation programs. Section 162(m), including with respect to grandfathered payments, as well as operational issues, no assurances can Section 162(m) of the Internal Revenue Code— be given that compensation, even if intended to satisfy the Section 162(m) limits our income tax deduction of requirements for deductibility under Section 162(m), would in compensation for certain executive officers unless the fact do so. The tax legislation signed into law in late 2017 may compensation is less than $1 million during any fiscal year or have additional impacts regarding the application of this and certain performance-based compensation deductible in fiscal other Internal Revenue Code provisions. years before fiscal year 2019 or certain grandfathered payments pursuant to written binding contracts in effect on Section 409A of the Internal Revenue Code—Section 409A November 2, 2017. Although the committee may consider the imposes additional significant taxes in the event that an impact of Section 162(m) as well as other tax and accounting executive officer, director or service provider received consequences when developing and implementing executive ‘‘deferred compensation’’ that does not satisfy the compensation programs, the committee retains the flexibility requirements of Section 409A. We consider Section 409A in to design and administer compensation programs it believes the design and operation of any plans. Other Compensation Policies To further align our executive compensation program with the Financial Officer and it caused material noncompliance with interests of our stockholders, at the end of fiscal 2009, a any financial reporting requirement, then Coherent shall seek committee of the Board approved a clawback policy for our disgorgement of any portion of the bonus or other incentive or Chief Executive Officer and Chief Financial Officer. The equity based compensation related to such accounting clawback policy provides that, in the event that there is an restatement received by such individual during the 12-month accounting restatement and there is a finding by the Board period following the originally filed financial document. Under that such restatement was due to the gross recklessness or our Insider Trading Policy, no employees or directors are intentional misconduct of the Chief Executive Officer or Chief allowed to hedge or pledge Coherent securities. Compensation Committee Interlocks and Insider Participation During fiscal 2018, the Compensation and H.R. Committee of the Board consisted of Messrs. Vij (Chair), Flatley and Krause. None of the members of the committee has been or is an officer or employee of Coherent. None of our executive officers serve on the board of directors or compensation committee of a company that has an executive officer that serves on our Board or Compensation and H.R. Committee. No member of our Board is an executive officer of a company in which one of our executive officers serves as a member of the board of directors or compensation committee of that company. Committee Independence Each of the members of the committee qualifies as (i) an ‘‘independent director’’ under the requirements of The Nasdaq Stock Market, (ii) a ‘‘non-employee director’’ under Rule 16b-3 of the Securities Exchange Act of 1934 (the ‘‘1934 Act’’), (iii) an ‘‘outside director’’ under Section 162(m) of the Code and (iv) an ‘‘independent outside director’’ as that term is defined by ISS. 42


  • Page 48

    Compensation Discussion and Analysis Compensation and H.R. Committee Report The Compensation and H.R. Committee of the Board has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation and H.R. Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement. Respectfully submitted by the Compensation and H.R. Committee* Sandeep Vij, Chair Jay Flatley L. William Krause * Note that Mike McMullen was appointed to the Compensation and H.R. Committee in December, 2018 and thus was not on the Committee during fiscal year 2018. RECONCILIATION TABLE—NON-GAAP EARNINGS PER SHARE FROM CONTINUING OPERATIONS Fiscal Year 2018 2017 2016 GAAP NET INCOME PER DILUTED SHARE FROM CONTINUING OPERATIONS $ 9.95 $ 8.42 $ 3.58 Stock-based compensation 1.11 0.94 0.63 Amortization of intangible assets 1.72 1.72 0.24 Restructuring charges 0.12 0.34 — Non-recurring tax expense (benefit) 0.66 (0.05) (0.05) Costs related to acquisitions 0.03 0.70 0.26 Interest expense on Barclays debt commitment — 0.07 0.03 (Gain) loss on hedge of Barclays debt commitment — (0.29) 0.06 Gain on business combination — (0.14) — Other impairment charges 0.03 0.08 — Purchase accounting step up 0.02 0.77 — NON-GAAP NET INCOME FROM CONTINUING OPERATIONS PER DILUTED SHARE $ 13.64 $ 12.57 $ 4.75 RECONCILIATION TABLE—ADJUSTED EBITDA Fiscal Year (in millions) 2018 2017 2016 GAAP NET INCOME FROM CONTINUING OPERATIONS $ 247.4 $ 208.6 $ 87.5 Income tax expense 114.2 93.4 35.4 Interest and other income (expense), net 36.5 27.4 6.7 Depreciation and amortization 113.4 104.5 34.4 Costs related to acquisitions 0.7 17.6 9.8 Gain on business combination — (5.4) — Restructuring charges and other 3.9 12.3 — Other impairment charges 0.8 2.9 — Stock-based compensation 32.7 30.4 20.2 Purchase accounting step up 0.8 26.8 — ADJUSTED EBITDA $ 550.4 $ 518.5 $ 194.0 43


  • Page 49

    SUMMARY COMPENSATION AND EQUITY TABLES Fiscal 2018 Summary Compensation Table The table below presents information concerning the total compensation of our NEOs for the fiscal years ended September 29, 2018, September 30, 2017 and October 1, 2016. Non-Equity Incentive Plan All Other Fiscal Stock Awards Compensation Compensation (2) (3) Name and Principal Position Year Salary ($) ($) ($) ($) Total ($) (1) (4) John Ambroseo, 2018 800,010 7,867,051 853,885 10,946 9,531,892 President and 2017 766,358 7,488,106 1,760,021 10,754 10,025,239 Chief Executive Officer 2016 625,019 3,558,430 943,185 12,631 5,139,265 Kevin Palatnik(5), 2018 438,083(1) 1,568,031 306,283 10,946(4) 2,323,343 Executive Vice President 2017 426,747 1,613,899 645,029 10,754 2,696,429 and Chief Financial Officer 2016 238,272 1,909,158 323,065 11,940 2,482,435 Mark Sobey, 2018 420,390(1) 1,463,443 276,121 10,946(4) 2,170,900 Executive Vice President and 2017 396,467 1,413,369 521,304 10,754 2,341,894 General Manager of OEM Laser Sources 2016 377,416 845,773 370,201 12,922 1,606,312 Paul Sechrist, 2018 399,246(1) 1,306,720 263,135 10,946(4) 1,980,047 Executive Vice President 2017 371,543 1,464,189 450,004 10,754 2,296,490 Worldwide Sales and Services 2016 357,011 720,993 323,249 12,922 1,414,175 Bret DiMarco, 2018 387,116(1) 1,149,941 235,280 10,946(4) 1,783,283 Executive Vice President, 2017 368,947 1,351,551 450,004 10,754 2,181,256 General Counsel and Corporate Secretary 2016 343,512 737,250 259,188 11,410 1,351,360 (1) Reflects the dollar amount of salary earned in fiscal 2018. (2) Amounts shown reflect the grant date fair value of awards granted in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718. Reflects unvested time-based and performance-based restricted stock units; there is no guaranty that the recipients will ultimately receive this amount, or any amount. See footnote 3 to the Grants of Plan-Based Awards table for additional information. No stock options were granted to the NEOs in fiscal years 2018, 2017 and 2016. (3) Reflects the dollar amounts earned under the Variable Compensation Plan (VCP) during the applicable fiscal years. (4) Reflects a 401(k) company match earned during fiscal year 2018. (5) Mr. Palatnik joined the Company during fiscal year 2016. Accordingly, for fiscal 2016, compensation information is provided for only the portion of such fiscal year during which he was employed. 44


  • Page 50

    Summary Compensation and Equity Tables Grants of Plan-Based Awards in Fiscal 2018 Except as set forth in the footnotes, the following table shows all plan-based equity and non-equity incentive awards granted to our NEOs during fiscal 2018. Our NEOs did not receive any option awards during fiscal 2018. All Other Actual Stock Estimated Future Payouts Payouts Estimated Future Payouts Awards: Under Non-Equity Incentive Under Under Equity Incentive # of Plan Awards Non-Equity Plan Awards Securities Grant Incentive Underlying Date Fair Thresh- Maxi Plan Awards Thresh Maxi Options Value Name Type Grant Date hold($)(1) Target($) mum($) ($)(2) hold(#) Target(#) mum(#) (#) ($)(3) John Ambroseo PRSU 11/03/2017 0 18,791 37,582 5,920,105 RSU 11/03/2017 7,492 1,946,946 1st semi-annual bonus 0 460,006 920,011 846,640 2nd semi-annual bonus 0 460,006 920,011 7,245 Total 0 920,012 1,840,022 853,885 Kevin Palatnik PRSU 11/03/2017 0 2,505 5,010 789,200 RSU 11/03/2017 2,997 778,830 1st semi-annual bonus 0 165,001 330,002 303,685 2nd semi-annual bonus 0 165,001 330,002 2,599 Total 0 330,002 660,004 306,284 Mark Sobey PRSU 11/03/2017 0 2,338 4,676 736,587 RSU 11/03/2017 2,797 726,856 1st semi-annual bonus 0 148,752 297,504 273,778 2nd semi-annual bonus 0 148,752 297,504 2,343 Total 0 297,504 595,008 276,121 Paul Sechrist PRSU 11/03/2017 0 2,088 4,176 657,824 RSU 11/03/2017 2,497 648,895 1st semi-annual bonus 0 141,756 283,512 260,902 2nd semi-annual bonus 0 141,756 283,512 2,233 Total 0 283,512 567,024 263,135 Bret DiMarco PRSU 11/03/2017 0 1,837 3,674 578,747 RSU 11/03/2017 2,198 571,194 1st semi-annual bonus 0 126,750 253,500 233,283 2nd semi-annual bonus 0 126,750 253,500 1,996 Total 0 253,500 507,000 235,279 (1) Failure to meet a minimum level of performance would have resulted in no bonus paid out under the 2018 Variable Compensation Plan. (2) Reflects the amount earned under the 2018 Variable Compensation Plan during fiscal 2018. (3) Reflects the dollar amount recognized for financial statement reporting purposes (disregarding an estimate of forfeitures related to service-based vesting conditions) for fiscal 2018 in accordance with ASC 718, and includes grants made in fiscal 2018. The assumptions used in the valuation of these awards are set forth in Note 12 ‘‘Employee Stock Award and Benefit Plans’’ of the Notes to the Consolidated Financial Statements in our annual report on Form 10-K for fiscal 2018. For informational purposes, if the maximum level of performance for the PRSU awards was achieved, the value, calculated by multiplying the closing price of the Company’s common stock on the date of grant by the number of shares issuable upon achievement of the maximum level of performance under the applicable PRSU is $9,766,434, $1,301,949, $1,215,152, $1,085,217 and $954,762, for Messrs. Ambroseo, Palatnik, Sobey, Sechrist and DiMarco, respectively. These amounts do not correspond to the actual value, if any, that will be recognized by the NEOs. See ‘‘Compensation Discussion and Analysis— Equity Awards’’ for a description of the PRSUs. 45

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