As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 4/18/08  Veeco Instruments Inc             DEFR14A     4/18/08    1:886K                                   Merrill Corp-MD/FA

Document/Exhibit                   Description                      Pages   Size 

 1: DEFR14A     Revised Definitive Proxy Solicitation Material      HTML    568K 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

 

Filed by the Registrant  x

Filed by a Party other than the Registrant  o

Check the appropriate box:

 

o	Preliminary Proxy Statement
o	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x	Definitive Proxy Statement
o	Definitive Additional Materials
o	Soliciting Material Pursuant to Rule 14a-12

 

Veeco Instruments Inc.

(Name of Registrant as Specified In Its Charter)

 

 

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

 

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VEECO INSTRUMENTS INC.

Terminal Drive

Plainview, NY  11803

 

 

NOTICE OF ANNUAL MEETING

 

Dear Veeco Stockholder:

 

On Friday, May 2, 2008, Veeco Instruments Inc. will hold its 2008 Annual Meeting of Stockholders at the Corporate Center, 395 North Service Road, Lower Auditorium, Melville, New York.  The meeting will begin at 9:30 a.m.  At the meeting, we will consider:

 

1.             Election of three directors;

 

2.             Ratification of the appointment of our independent registered public accounting firm for fiscal year 2008; and

 

3.             Any other business properly presented at the meeting.

 

Only stockholders who own stock at the close of business on March 7, 2008 can vote at this meeting or any adjournments that may take place.  For ten days prior to the annual meeting, a list of these stockholders will be available for inspection at our principal executive offices, Terminal Drive, Plainview, NY 11803.  A stockholder may examine the list for any legally valid purpose related to the meeting.

 

Your Board of Directors recommends that you vote “FOR” each of the listed nominees for Director and “FOR” proposal 2 above, which proposals are further described in this proxy statement.  This proxy statement also outlines the corporate governance practices at Veeco, discusses our compensation practices and philosophy, and describes the Audit Committee’s recommendations to the Board regarding our 2007 financial statements.  We encourage you to read these materials carefully.

 

Whether or not you expect to attend the meeting, we urge you to vote promptly.

 

The approximate date of mailing for this proxy statement and card as well as a copy of Veeco’s 2007 Annual Report is March 27, 2008.  For more information about Veeco, please visit our website at www.veeco.com.

 

By order of the Board of Directors,

 

John F. Rein, Jr.

Executive Vice President, Chief Financial Officer

and Secretary

 

March 27, 2008

 

 

PROXY STATEMENT

 

QUESTIONS AND ANSWERS

 

Q1.         Who is entitled to vote?

You may vote if our records show that you owned shares of Veeco Instruments Inc. common stock on March 7, 2008, the record date for the meeting.  At such time, 31,876,601 shares of Veeco common stock were issued and outstanding.  You are entitled to one vote for each share that you own.

 

Q2.         How can I vote if I own shares directly?

If your shares are registered directly in your name with our transfer agent, then you are considered the stockholder of record with respect to those shares and these proxy materials are being sent directly to you.  Stockholders of record may vote by (1) marking, signing, dating and mailing each proxy card in the envelope provided or (2) attending the meeting and voting in person.

 

Q3.         How can I vote if my shares are held through a brokerage, bank or similar organization?

If your shares are held in “street name” (that is, they are held in the name of a broker, bank or similar organization), you are considered the beneficial holder of such shares and these proxy materials are being forwarded to you by such organization.  The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting.  As a beneficial owner, you have the right to direct the stockholder of record on how to vote the shares in your account.  If you do not give instructions to the record holder on how to vote, the record holder will be entitled to vote your shares in its discretion.  Please follow the voting instructions provided by the organization holding your shares to ensure your vote is counted.  If you are not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid proxy from the stockholder of record.

 

Q4.         Can my broker vote my shares if I do not instruct him or her how to vote?

Yes.  If you are a beneficial owner of shares and you do not give instructions to your record holder, the record holder will be entitled to vote your shares in its discretion on discretionary items.  Proposals 1 and 2 are considered to be discretionary items.  Discretionary items are items considered routine.

 

Q5.         What if I return a proxy card but do not make specific choices?

If you return a signed and dated proxy card without marking any voting selections, your Veeco shares will be voted “FOR” the election of all three nominees for director and “FOR” the ratification of the selection of Ernst & Young LLP as Veeco’s independent registered public accounting firm for the fiscal year ending December 31, 2008.  If any other matter is properly presented at the meeting, your proxy (one of the individuals named on your proxy card ) will vote your shares using his best judgment.

 

Q6.         How do I revoke or change my vote?

If you are a stockholder of record, you may revoke or change your vote by:

(1) notifying Veeco’s transfer agent, American Stock Transfer and Trust Company, Operations Center, 6201 15th Avenue, Brooklyn, NY  11219, in writing at any time before the meeting;

(2) submitting a later-dated proxy; or

(3) voting in person at the meeting.

 

 

The latest-dated, timely, properly completed proxy that you submit will count as your vote. If a vote has been recorded for your shares and you submit a proxy card that is not properly signed or dated, the previously recorded vote will stand.

 

If your shares are held in street name, consult the voting instructions provided by the organization holding your shares or contact such organization for instructions on how to revoke or change your vote.

 

Q7.         What is a “quorum”?

A “quorum” is a majority of the outstanding shares present at the meeting or represented by proxy.  There must be a quorum for the meeting to be held.  If you submit a timely, properly executed proxy or vote instruction card, then you will be considered part of the quorum, even if you abstain from voting.  In addition, shares represented by proxies designated as broker non-votes will be counted for purposes of determining a quorum.

 

Abstentions:  Abstentions are not counted in the tally of votes FOR or AGAINST a proposal.  A WITHHELD vote is the same as an abstention.  Abstentions and withheld votes are counted as shares present and entitled to be voted.

 

Broker Non-Votes:  Broker non-votes occur when shares held by a broker or other nominee are not voted with respect to a proposal because (1) the broker has not received voting instructions from the stockholder, and (2) the broker lacks the authority to vote the shares at his/her discretion.  Broker non-votes are not counted in the tally of votes FOR or AGAINST a proposal but are counted as shares present and entitled to be voted.

 

Q8.         How many votes are needed to approve each proposal?

Directors are elected by a plurality of the votes cast at the meeting.  The three nominees receiving the most “FOR” votes among votes properly cast at the meeting will be elected.  Veeco’s Bylaws provide that corporate action to be taken by stockholder vote, other than the election of directors, shall be authorized by a majority of the votes cast at a meeting of the stockholders at which a quorum is present.  Therefore, to be approved, Proposal 2 must receive a “FOR” vote from a majority of the Veeco shares represented at the meeting.

 

Q9.         How will voting on any other business be conducted?

Although we do not know of any business to be considered at the 2008 Annual Meeting other than the proposals described in this proxy statement, if any other business is presented at the Annual Meeting, your signed proxy or vote instruction card gives authority to John R. Peeler, Veeco’s Chief Executive Officer, and John F. Rein, Jr., Veeco’s Executive Vice President, Chief Financial Officer and Secretary, to vote on such matters at their discretion.

 

Q10.       Who will count the vote?

A representative of American Stock Transfer and Trust Company, Veeco’s transfer agent, will count the vote and act as the inspector of election.

 

Q11.       How can I find out the results of the voting at the Annual Meeting?

Preliminary voting results will be announced at the Annual Meeting.  Final voting results will be published in Veeco’s quarterly report on Form 10-Q for the second quarter of 2008.

 

Q12.       Who can attend the Annual Meeting?

All stockholders who owned shares on March 7, 2008 may attend.

 

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Q13.       What does it mean if I get more than one proxy or vote instruction card?

If your shares are registered in more than one name or in more than one account, you will receive more than one card.  Please complete and return all of the proxy or vote instruction cards you receive to ensure that all of your shares are voted.

 

Q14.       If I received multiple copies of the proxy statement and annual report at my residence, what do I need to do to receive only one copy?

With your consent and the consent of other shareholders in your household, we may send one set of the proxy statement and annual report to a household where two or more Veeco stockholders reside if we believe they are members of the same family.  Each consenting stockholder would continue to receive a separate notice of annual meeting and proxy card.  This procedure, referred to as “householding,” would reduce the volume of duplicate information you receive, and would also reduce the Company’s printing and mailing costs.  If you are an eligible stockholder and would like to receive only one copy of the proxy statement and annual report, please contact the Company by sending a written request to the Secretary, Veeco Instruments Inc., Terminal Drive, Plainview, NY 11803 or by calling 516-677-0200.  Your consent will remain in effect until Veeco receives contrary instructions from you or other shareholders in your household.  Should you revoke your consent, Veeco will begin sending individual copies of the annual report and proxy statement to you within thirty (30) days of your revocation.  Also, if you would like to obtain a separate copy of the annual report or proxy statement, you may direct your request to the address above, or you may call 516-677-0200.  If you hold your shares in street name, please contact your broker.

 

Q15.       I have Veeco shares that are held in street name, as do others in my household.  We received only one copy of the proxy statement and annual report.  What should I do if I would like additional copies of these materials?

Some brokerage firms have instituted “householding” in connection with the delivery of annual reports and proxy statements (see the answer to Question 14).  If your family holds Veeco shares in multiple brokerage accounts, you may have previously received “householding” notification from your broker or bank.  If you wish to revoke your decision to household and thereby receive multiple proxy statements and annual reports, please contact your broker directly.  If any shareholder residing at the same address would like additional copies of the proxy statement and annual report, please contact your broker or bank, or you may contact the Company by sending a written request to the Secretary, Veeco Instruments Inc., Terminal Drive, Plainview, NY 11803 or by calling 516-677-0200.

 

Q16.       When are stockholder proposals for the 2009 Annual Meeting due?

To be considered for inclusion in next year’s proxy statement, all stockholder proposals must be submitted in writing to the Secretary, Veeco Instruments Inc., Terminal Drive, Plainview, NY 11803 by November 27, 2008.

 

Additionally, Veeco’s advance notice bylaw provisions require that any stockholder proposal to be presented from the floor of the 2009 Annual Meeting must be submitted in writing to Secretary, at the above address, by February 2, 2009, and must be accompanied by:

 

·		the name, residence and business address of the proposing stockholder;
·		a representation that the stockholder is a record holder of Veeco stock or holds Veeco stock through a broker and the number of shares held;
·		a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting;
·		any material interest of the stockholder in such business; and
·		a representation that the stockholder intends to appear in person or by proxy at the 2009 Annual Meeting to present the proposal.

 

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A proposal may be presented from the floor only after the chairman of the meeting has determined that it is a proper matter for consideration under our bylaws.

 

Q17.       What is Veeco’s process for nominating director candidates?

Veeco’s Board of Directors is currently comprised of ten directors divided into three classes of Directors serving staggered three-year terms.  Dr. Low, having reached 75 years of age before the date of the Annual Meeting, will not stand for re-election in accordance with the Company’s Corporate Governance Guidelines.  These guidelines provide that, in general, the Board believes that 75 is an appropriate retirement age for outside directors and will not nominate directors for re-election who are beyond 75 years of age.  The Board has determined to reduce the size of the Board from ten to nine directors following Dr. Low’s retirement.  As a result, the number of directors following the Annual Meeting will be nine.  One-third of Veeco’s directors are elected each year by its stockholders at the annual meeting of stockholders.  The Board of Directors is responsible for filling vacancies that may occur on the Board at any time during the year and for nominating director nominees to stand for election at the annual meeting of stockholders.  The Nominating and Governance Committee of the Board of Directors reviews all potential director candidates, and recommends potential director candidates to the full Board.  Director candidates may be identified by current directors of the Company, as well as by stockholders.  The Nominating and Governance Committee is comprised entirely of independent directors, as defined by Nasdaq.  In evaluating candidates, the Nominating and Governance Committee will consider the criteria and qualifications set forth in the committee’s charter, which qualifications include personal integrity and honesty, sound business judgment, independence, background and business experience, willingness and capability to actively participate in Board and committee activities and potential conflicts of interest, as well as the factors described under “Director Qualification Standards” in Veeco’s Corporate Governance Guidelines.  In any particular situation, the committee may focus on persons possessing a particular background, experience or qualifications which the committee believes would be important to enhance the effectiveness of the Board.  The full Board reviews and has final approval authority on all potential director candidates being recommended to the stockholders for election.  The evaluation process for candidates recommended by stockholders is the same as for candidates from any other source.  See the answer to Question 18 below regarding the process for stockholder nominations of director candidates.

 

Q18.       Can a stockholder nominate someone to be a director of Veeco?

As a stockholder, you may recommend any person as a nominee for director of Veeco for consideration by the Nominating and Governance Committee by submitting the name and supporting information in writing to the Nominating and Governance Committee of the Board of Directors, c/o Secretary, Veeco Instruments Inc., Terminal Drive, Plainview, NY 11803.  The recommending stockholder must meet the eligibility requirements for submitting a stockholder proposal for inclusion in that proxy statement, a written recommendation must be received by Veeco by November 27, 2008 and the written recommendation must contain the following:

 

·      The candidate’s name, age, address, principal occupation or employment, the number of shares of Common Stock such candidate beneficially owns, a brief description of any direct or indirect relationships with the Company, and the information that would be required in a proxy statement soliciting proxies for the election of the candidate as a director;

·      A signed consent of the nominee to cooperate with reasonable background checks, requests for information and personal interviews and to serve as a director, if elected; and

·      A description of all relationships or arrangements between the recommending stockholder and the candidate and any other person or persons (including their names) pursuant to which the recommendation is being made, as well as a list of all other companies that the stockholder has recommended the candidate to for election

 

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as a director in that year.

 

Q19.       How can stockholders communicate with Veeco’s Directors?

Stockholders may address communications to one or more members of the Board (other than sales or employment-related communications) by letter addressed to the Secretary, Veeco Instruments Inc., Terminal Drive, Plainview, NY 11803.  The Secretary will forward copies of all letters (other than sales or employment-related communications) to each Board member to whom they are addressed.

 

Q20.       How much will this proxy solicitation cost?

Laurel Hill Advisory Group, LLC was hired by Veeco to assist in the distribution of proxy materials and the solicitation of votes for a fee of $5,500, plus reimbursement of out-of-pocket expenses.  The expense of soliciting proxies will be borne by Veeco. In addition, Veeco may reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to stockholders.  Laurel Hill may contact stockholders by mail, telephone, fax and personal interviews.  Veeco has agreed to indemnify Laurel Hill against certain liabilities and expenses in connection with such solicitation, including liabilities under the federal securities laws.  Some personal solicitations also may be made by directors, officers and employees of Veeco without special compensation, other than reimbursement for expenses.

 

Q21.       Who is soliciting my vote?

Your vote is being solicited by the Board of Directors of Veeco Instruments Inc. for the 2008 Annual Meeting of Stockholders to be held on Friday, May 2, 2008 at 9:30 a.m.

 

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CORPORATE GOVERNANCE

 

Veeco’s Board of Directors and management are committed to responsible corporate governance to ensure that Veeco is managed for the long-term benefit of its stockholders.  To that end, the Board of Directors and management periodically review and update, as appropriate, Veeco’s corporate governance policies and practices.  In doing so, the Board and management review published guidelines and recommendations of institutional stockholder organizations and current best practices of similarly situated public companies.  The Board and management also regularly evaluate and, when appropriate, revise Veeco’s corporate governance policies and practices in accordance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and listing standards issued by the Securities and Exchange Commission (“SEC”) and The Nasdaq Stock Market, Inc. (“Nasdaq”).

 

Corporate Governance Policies and Practices

 

Veeco has instituted a variety of policies and practices to foster and maintain corporate governance, including the following:

 

Corporate Governance Guidelines - Veeco adheres to written Corporate Governance Guidelines, adopted by the Board and reviewed by the Nominating and Governance Committee from time to time.  The Corporate Governance Guidelines relate to director qualifications, conflicts of interest, succession planning, periodic board and committee self-assessment and other governance matters.

 

Code of Business Conduct - Veeco maintains written standards of business conduct applicable to all of its employees worldwide.

 

Code of Ethics for Senior Officers - Veeco maintains a Code of Ethics that applies to its Chief Executive Officer, President, Chief Financial Officer and Chief Accounting Officer.

 

Director Education Policy - Veeco has adopted a written policy under which it encourages directors to attend, and provides reimbursement for the cost of attending, director education programs.  During the past three years, a majority of the Board has attended one or more director education programs accredited by Institutional Shareholder Services.

 

Disclosure Policy - Veeco maintains a written policy that applies to all of its employees with regard to the dissemination of information.

 

Board Committee Charters - Each of Veeco’s Audit, Compensation, and Nominating and Governance Committee has a written charter adopted by Veeco’s Board that establishes practices and procedures for each committee in accordance with applicable corporate governance rules and regulations.

 

Copies of each of these documents can be found on the Company’s website (www.veeco.com) via the Investors page.  Veeco has agreed to adopt certain changes to its Corporate Governance Guidelines to be effective upon final settlement of the shareholder derivative action described in our Annual Report on Form 10-K for the year ended December 31, 2007 under Item 3 - Legal Proceedings.  It is expected that the final settlement will occur during the first half of 2008.  Veeco’s website will be updated to reflect the new Corporate Governance Guidelines once they are effective.

 

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Independence of the Board of Directors

 

Veeco’s Corporate Governance Guidelines provide that at least a majority of the Board of Directors must be independent in accordance with the Nasdaq listing standards.  In addition, service on other boards must be consistent with Veeco’s conflict of interest policy and the nature and time involved in such service is reviewed when evaluating suitability of individual directors for election.

 

Independence of Current Directors.  Veeco’s Board of Directors has determined that all of the directors are independent directors within the meaning of the applicable Nasdaq listing standards, except Mr. Peeler, the Company’s Chief Executive Officer, and Mr. Braun, the Company’s Chairman.

 

Independence of Committee Members.  All members of each of Veeco’s  committees are required to be and are independent in accordance with the Nasdaq listing standards.

 

Compensation Committee Interlocks and Insider Participation.  During 2007, none of Veeco’s executive officers served on the board of directors of any entity whose executive officers served on Veeco’s Compensation Committee.  No current or past executive officers of Veeco serve on our Compensation Committee.  During 2007, the members of our Compensation Committee were Messrs. D’Amore, Low (Chairman) and McDaniel.

 

Board Access to Independent Advisors.  The Board members have full and free access to officers and employees of Veeco and are free to retain independent legal, financial or other advisors as the Board or a Committee deems necessary.

 

Director Resignation Upon Change in Employment.  The Corporate Governance Guidelines provide that a director shall submit his resignation if he changes his principal employment from what it was when he was elected as a director or undergoes a change affecting his qualification as a director.  Upon such submission, the Board of Directors determines whether to accept or reject the resignation.

 

Board Meetings and Committees

 

During 2007, Veeco’s Board of Directors held eight meetings.  Each current Director attended at least 75% of the meetings of the Board of Directors and Board committees on which such Director served during 2007.  It is the policy of the Board to hold executive sessions of the independent directors meeting without management at every regular quarterly board meeting and as requested by a director.  Mr. Pfister, who has been designated as Lead Director, presides over these executive sessions.  All members of the Board are welcome to attend the Annual Meeting of Stockholders.  In 2007, Mr. Braun was the only director who attended the Annual Meeting of Stockholders.  The Board has established the following standing committees:  an Audit Committee, a Compensation Committee and a Nominating and Governance Committee.

 

Audit Committee.  The Audit Committee reviews the scope and results of the audit and other services provided by Veeco’s independent registered public accounting firm.  The Audit Committee currently consists of Messrs. Elftmann, Fridrich, Pfister (Chairman) and Simone.  The Board has determined that all members of the Audit Committee are financially literate as that term is currently defined by Nasdaq and by applicable SEC rules.  The Board of Directors has determined that each of Messrs. Elftmann, Pfister and Simone may be considered an “audit committee financial expert” as defined by applicable SEC rules.  During 2007, the Audit Committee met fourteen times.

 

Compensation Committee.  The Compensation Committee sets the compensation levels of senior management and administers Veeco’s stock incentive plans and employee stock purchase plan.  All members of the Compensation Committee are (x) “non-employee directors” (within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), and (y) “outside

 

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directors” (within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”)).  None of the members of the Compensation Committee have interlocking relationships as defined by the SEC.  The Compensation Committee currently consists of Messrs. D’Amore, Low (Chairman) and McDaniel.  During 2007, the Compensation Committee met fourteen times.

 

Nominating and Governance Committee.  The Company’s Nominating and Governance Committee addresses Board organizational issues and develops and reviews corporate governance principles applicable to Veeco.  In addition, the committee searches for persons qualified to serve on the Board of Directors and makes recommendations to the Board of Directors with respect thereto.  The Nominating and Governance Committee currently consists of Messrs. Kingsley (Chairman), Low and McDaniel.  During 2007, the Nominating and Governance Committee met three times.

 

Succession Planning Committee.  On November 22, 2006, Veeco announced that Mr. Braun, then Veeco’s Chairman and Chief Executive Officer, planned to transition from his then current role to the position of Chairman in 2007 and that Veeco’s Board had formed a Succession Planning Committee to search for and select a new Chief Executive Officer.  The Succession Planning Committee was comprised of Messrs. D’Amore, Fridrich, Low and McDaniel (Chairman).  On July 1, 2007, Mr. Peeler joined the Company as Chief Executive Officer.  In January 2008, the Board determined that the Succession Planning Committee had fulfilled its responsibilities and that the Compensation Committee would assume the responsibilities of that committee.  During 2007, the Succession Planning Committee met seven times.

 

Strategic Planning Committee.  In January 2008, the Board approved the formation of a committee to oversee the Company’s strategic planning process.  The Board designated Messrs. D’Amore, McDaniel (Chairman) and Pfister as members of the committee.

 

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Compensation of Directors

 

Members of the Board of Directors who are not employees of Veeco receive a retainer of $5,000 per quarter, plus additional retainers of $1,250 per quarter for the chairman of the Compensation Committee and the chairman of the Nominating and Governance Committee, $3,000 per quarter for the chairman of the Audit Committee, and $2,500 per quarter for the Lead Director.  In addition, during the first two quarters of 2007, the chairman of the Succession Planning Committee received a retainer of $5,000 per quarter and each member of the Succession Planning Committee (other than the chairman) received a retainer of $3,000 per quarter.  In addition, non-employee Directors receive a fee of $2,000 for attending each board, committee or stockholder meeting held in person and $1,000 for participating in each board or committee meeting held by conference call.  Pursuant to the Company’s 2000 Stock Incentive Plan, during 2007 each non-employee Director received an automatic annual grant of 5,000 shares of restricted stock.  The restrictions on these shares lapse on the first anniversary of the date of grant.  Directors who are employees, such as Mr. Braun and Mr. Peeler, do not receive compensation for serving as Directors or for attending board, committee or stockholder meetings.

 

The following table provides information on compensation awarded or paid to the non-employee directors of Veeco for the fiscal year ended December 31, 2007.

 

Name		Fees Earned or Paid in Cash ($)(1)		Stock  Awards ($)(2)(3)		Total ($)
Richard A. D’Amore		62,000		107,661		169,661
Joel A. Elftmann		52,000		107,661		159,661
Heinz K. Fridrich		64,000		107,661		171,661
Douglas A. Kingsley		37,250		107,661		144,911
Paul R. Low		70,250		107,661		177,911
Roger D. McDaniel		73,000		107,661		180,661
Irwin H. Pfister		74,000		107,661		181,661
Peter J. Simone		50,000		107,661		157,661

(1)   Represents quarterly retainers and meeting fees paid during 2007.  Includes payments made in 2007 for attendance at certain meetings held at the end of 2006.  Does not include payments for attendance at certain meetings held at the end of 2007 for which payments were made in 2008.

 

(2)   Reflects awards of 5,000 shares of restricted stock to each director on each of May 8, 2006 and May 7, 2007, which awards will vest over a one-year service period.  In accordance with SEC rules and Statement of Financial Accounting Standards No. 123(R), “Share Based Payment” (“FAS 123(R)”), the amounts shown reflect the value of each award amortized over the portion of the service period which lapsed during the year.  The grant date fair value of the award to each director in 2006 was $27.12 per share or $135,600, and in 2007 was $18.50 per share or $92,500.

 

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(3)   As of December 31, 2007, there were outstanding the following aggregate number of stock awards and option awards held by each non-employee director of the Company:

 

Outstanding Equity Awards at Fiscal Year End
Name		Stock  Awards (#)		Option  Awards (#)
Richard A. D’Amore		10,000		65,000
Joel A. Elftmann		10,000		65,000
Heinz K. Fridrich		10,000		65,000
Douglas A. Kingsley		10,000		48,667
Paul R. Low		10,000		65,000
Roger D. McDaniel		10,000		51,000
Irwin H. Pfister		10,000		65,000
Peter J. Simone		10,000		20,000

 

Certain Contractual Arrangements With Directors and Executive Officers

 

Veeco has entered into indemnification agreements with each of its directors, executive officers and certain senior officers and anticipates that it will enter into similar agreements with any future directors and executive officers.  Generally, the indemnification agreements are designed to provide the maximum protection permitted by Delaware law with respect to indemnification of a director or executive officer.  The indemnification agreements provide that Veeco will indemnify such persons against certain liabilities that may arise by reason of their status or service as a director or executive officer of the Company and that the Company will advance expenses incurred as a result of proceedings against them as to which they may be indemnified.  Under the indemnification agreements, a director or executive officer will receive indemnification if he or she is found to have acted in good faith and in a manner he or she reasonably believed to be or not opposed to the best interests of Veeco and with respect to any criminal action, if he or she had no reasonable cause to believe his or her conduct was unlawful.

 

Certain Relationships and Related Transactions

 

Pursuant to its charter, the Company’s Audit Committee, or one or more of its members with delegated authority, shall review and, if appropriate, approve all proposed related party transactions.  For this purpose, “related party transactions” are defined as those transactions required to be disclosed as such pursuant to applicable SEC and Nasdaq rules.  During 2007, there were no such transactions.

 

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PROPOSAL 1

ELECTION OF DIRECTORS

 

Veeco’s Certificate of Incorporation provides for a Board of Directors elected by Stockholders which is divided into three classes of Directors serving staggered terms.  Currently, the Board of Directors is comprised of ten members, consisting of three Class I Directors, four Class II Directors and three Class III Directors.  Dr. Low, currently a Class II director, having reached 75 years of age before the date of the Annual Meeting, will not stand for re-election in accordance with the Company’s Corporate Governance Guidelines.  These guidelines provide that, in general, the Board believes that 75 is an appropriate retirement age for outside directors and will not nominate directors for re-election who are beyond 75 years of age.  The Board has determined to reduce the size of the Board from ten to nine directors following Dr. Low’s retirement.  As a result, the number of directors following the Annual Meeting will be nine.  Each of the Class II Directors, other than Dr. Low, is up for re-election this year.

 

Based on the recommendation of the Nominating and Governance Committee, the Board of Directors has nominated the following Directors for re-election, each of whom is currently a Class II Director:

 

Name		Nominated for  Re-Election to:		For a Term Expiring  at the Annual Meeting of Stockholders in:
Joel A. Elftmann		Class II		2011
John R. Peeler		Class II		2011
Peter J. Simone		Class II		2011

 

The following Directors will continue in their current positions for the term specified:

 

Name		Continuing in:		Term Expires at the Annual Meeting of Stockholders in:
Edward H. Braun		Class III		2009
Richard A. D’Amore		Class III		2009
Douglas A. Kingsley		Class III		2009
Heinz K. Fridrich		Class I		2010
Roger D. McDaniel		Class I		2010
Irwin H. Pfister		Class I		2010

 

Management does not contemplate that any of the nominees for Director will be unable to serve, but, if such a situation should arise, it is the intention of the persons named in the accompanying proxy to vote for the election of such other person or persons as the remaining members of the Board of Directors may recommend.

 

The Board of Directors recommends a vote FOR approval of the Director nominees named above.

 

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MEMBERS OF THE BOARD OF DIRECTORS

 

The Directors of Veeco, and their ages, year they joined the Board and committee memberships as of March 27, 2008, are:

 

Committee Membership

Name

Age

Director Since

Audit

Compen- sation

Nominating and Governance

Strategic Planning

Edward H. Braun

68

1990

Richard A. D’Amore

54

1990

X

X

Joel A. Elftmann

68

1994

X

Heinz K. Fridrich

75

1998

X

Douglas A. Kingsley

45

2000

Chair

Paul R. Low

75

1994

Chair

X

Roger D. McDaniel

69

1998

X

X

Chair

John R. Peeler

53

2007

Irwin H. Pfister (A)

63

1998

Chair

X

Peter J. Simone

60

2004

X

 

(A)          Mr. Pfister also serves as Lead Director.

 

Edward H. Braun has been Chairman of Veeco since July 2007.  Prior thereto, he was Chairman and Chief Executive Officer of Veeco since January 1990, and was also President of Veeco from January 1990 to May 2000 and from October 2000 to March 2003.  Prior to 1990, Mr. Braun served as Executive Vice President and Chief Operating Officer of Veeco’s predecessor.  Mr. Braun joined the predecessor in 1966 and held numerous positions with the predecessor, including Director of Marketing, General Manager and Chief Operating Officer.  Mr. Braun is a Director Emeritus of SEMI, Semiconductor Equipment and Materials International, a trade association, of which he was Chairman of the Board in 1993, a member of the Executive Advisory Council of IDEMA, the International Disk Drive and Materials Equipment Association, and a director of Cymer, Inc., a supplier of excimer laser light sources used in deep ultra-violet photolithography systems.

 

Richard A. D’Amore has been a General Partner of North Bridge Venture Partners since 1994.  In addition to Veeco, Mr. D’Amore is a director of Phase Forward Incorporated.

 

Joel A. Elftmann is Chairman of the Board of Custom Fab Solutions LLC, a supplier to semiconductor capital equipment manufacturers.  Mr. Elftmann was a co-founder of FSI International Inc. and served as its Chairman and Chief Executive Officer from May 1991 through December 1999, and thereafter served as its Chairman until January 2002.  Mr. Elftmann was a co-founder of Metron Technology, N.V. (“Metron”), a distributor of semiconductor capital equipment, and served as Chairman and a Supervisory Director of Metron through December 2004 and as a director of Nortem, a company liquidated following the asset sale of Metron.  He currently serves as a director of Community Bank of Chaska and is also a Director Emeritus and former Chairman of the Board of Directors of SEMI.

 

Heinz K. Fridrich is an Industry Professor Emeritus of the University of Florida.  He joined the University of Florida in 1993 after 43 years with IBM, including serving as Vice President and General Manager of IBM’s largest development and manufacturing site for semiconductors and electronic packaging, and as IBM’s Vice President responsible for worldwide manufacturing and quality.

 

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Douglas A. Kingsley  has been a Managing Director of North Bridge Growth Equity since February 2007.  Previously, Mr. Kingsley was a Managing Director of Advent International Corporation, a private equity firm, where he was employed from 1990 until January 2006.  From 1985 through 1988, Mr. Kingsley was a sales engineer for Teradyne, Inc., a manufacturer of automatic test equipment for the electronics industry.  He is also a member of the Board of Overseers of the Boston Symphony Orchestra.

 

Paul R. Low has been President and Chief Executive Officer of PRL Associates, a technology consulting firm, since founding the firm in 1992.  Previously, Dr. Low was Vice President-General Manager, Technology Products for IBM from 1989 through 1992 and a member of IBM’s Management Board from 1990 to 1992.

 

Roger D. McDaniel, currently retired, was President and Chief Executive Officer of IPEC, Inc., which manufactured chemical-mechanical planarization (“CMP”) equipment for the semiconductor industry, from 1997 to April 1999.  Through August 1996, Mr. McDaniel was Chief Executive Officer of MEMC Electronic Materials, Inc., a producer of silicon wafers.  Mr. McDaniel is a past Chairman of SEMI and a director of Entegris, Inc.

 

John R. Peeler has been Chief Executive Officer and a Director of Veeco since July 2007.  Prior thereto, he was Executive Vice President of JDS Uniphase Corp. (“JDSU”) and President of the Communications Test & Measurement Group of JDSU, which he joined upon the close of JDSU’s merger with Acterna, Inc. (“Acterna”) in August 2005.  Before joining JDSU, Mr. Peeler served as President and Chief Executive Officer of Acterna.  Mr. Peeler joined a predecessor of Acterna in 1980 and served in a series of increasingly senior leadership roles including Vice President of Product Development, Executive Vice President and Chief Operating Officer, and President and CEO of TTC, the Communications Test subsidiary.  Mr. Peeler was appointed as President and CEO of Acterna in 2003.

 

Irwin H. Pfister is a private investor and currently serves as an Operating Partner with Baird Capital Partners.  Prior to his retirement from Schlumberger in 2005, Mr. Pfister was Executive Vice President of Schlumberger Ltd. and Chief Executive Officer of SchlumbergerSema, a leading information technology services provider.  He joined Schlumberger in May 1986 and held several management positions, including Executive Vice President of Schlumberger Test and Transactions.  From January 1990 to June 1997, Mr. Pfister was President of the Semiconductor Solutions Group of Schlumberger.  Mr. Pfister is a past Chairman of SEMI and is also a director of Credence Systems Corporation.

 

Peter J. Simone is an independent consultant to several private companies and the investment community.  From June 2001 to December 2002, Mr. Simone was Executive Chairman of SpeedFam-IPEC, Inc., a semiconductor equipment company which was acquired by Novellus Systems, Inc.  From August 2000 to February 2001, Mr. Simone was President and a director of, and from January 2000 to August 2000 was a consultant to, Active Control eXperts, Inc., a supplier of precision motion control and smart structures technology.  From April 1997 to January 2000, Mr. Simone served as President and Chief Executive Officer and a director of Xionics Document Technologies, Inc.  Mr. Simone is also a director of Cymer, Inc., Monotype Imaging, Inc. and Newport Corporation.

 

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Independence Assessment by Audit Committee

 

The Company’s Audit Committee considered and determined that the provision of the services provided by Ernst & Young LLP as set forth herein is compatible with maintaining Ernst & Young LLP’s independence.

 

Representatives of Ernst & Young LLP will be present at the Annual Meeting and may make a statement if they so desire.  They will also be available to respond to appropriate questions.

 

Stockholders are asked to ratify the action of the Board of Directors in making this appointment.  If this appointment is not ratified by the Stockholders, the Audit Committee will reconsider the appointment.

 

The Board of Directors recommends a vote FOR ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2008.

 

AUDIT COMMITTEE REPORT

 

The Audit Committee is responsible for providing independent objective oversight of the Company’s auditing, accounting, financial reporting process, its system of internal controls, and legal and ethical compliance on behalf of the Board of Directors.  The Committee operates under a charter adopted by the Board, a copy of which is available on Veeco’s website (www.veeco.com).  Management has the primary responsibility for the financial statements and the reporting process including the system of internal control over financial reporting.  In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed the audited financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2007 (the “Annual Report on Form 10-K”) and the quarterly financial statements during 2007 with management, including the specific disclosures in the section entitled “Management Discussion and Analysis of Financial Condition and Results of Operations.”  The review with management included a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements.

 

The Committee reviewed with the independent registered public accounting firm, who is responsible for expressing an opinion on the conformity of those audited financial statements with U.S. generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee by SAS 61, as amended by SAS 90, Communication with Audit Committees and PCAOB Auditing Standard No. 5, An Audit of Internal Control Over Financial Reporting That is Integrated With an Audit of Financial Statements and related Independence Rule and Conforming Amendments.  In addition, the Audit Committee has discussed with the independent registered public accounting firm the auditors’ independence from management and the Company including the matters in the written disclosures and the letter from the independent auditors required by the Independence Standards Board No. 1, Independence Discussions with Audit Committees, and the matters required to be discussed by SAS 90 and considered the compatibility of non-audit services with the auditors’ independence and satisfied itself as to the independence of the independent registered public accounting firm.

 

During 2007, management evaluated the Company’s system of internal control over financial reporting in accordance with the requirements set forth in Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations.  The Audit Committee was kept apprised of the progress of the evaluation and provided oversight and advice to management during the process.  In connection with this oversight, the Committee received periodic updates provided by management and the independent registered public

 

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EXECUTIVE COMPENSATION

 

Executive Officers

 

The executive officers of Veeco, and their ages, as of March 27, 2008, are as follows:

 

Name		Age		Position
John R. Peeler		53		Chief Executive Officer
Mark R. Munch		46		Executive Vice President, Metrology and Instrumentation
Robert P. Oates		54		Executive Vice President, Process Equipment
John F. Rein, Jr.		61		Executive Vice President, Chief Financial Officer and Secretary
William A. Tomeo		57		Executive Vice President, Worldwide Sales and Service
John P. Kiernan		46		Senior Vice President, Finance, Chief Accounting Officer and Corporate Controller

 

John R. Peeler has been Chief Executive Officer and a Director of Veeco since July 2007.  Prior thereto, he was Executive Vice President of JDSU and President of the Communications Test & Measurement Group of JDSU, which he joined upon the close of JDSU’s merger with Acterna, Inc. (“Acterna”) in August 2005.  Before joining JDSU, Mr. Peeler served as President and Chief Executive Officer of Acterna.  Mr. Peeler joined a predecessor of Acterna in 1980 and served in a series of increasingly senior leadership roles including Vice President of Product Development, Executive Vice President and Chief Operating Officer, and President and CEO of TTC, the Communications Test subsidiary.  Mr. Peeler was appointed as President and CEO of Acterna in 2003.

 

Mark R. Munch, Ph.D. has been Executive Vice President, Metrology and Instrumentation since February 2008.  Prior thereto, he was Senior Vice President and General Manager of the Commercial Lasers and Components Group of Coherent Inc.  From 2004 to 2006, Dr. Munch was Chief Executive Officer and President of Cooligy Inc. and, from 2002 to 2004, he served as Vice President of Engineering and Manufacturing and Chief Technology Officer of Cooligy.  Before that, he served as Division Vice President and General Manager for two optical components product divisions of Corning, Inc. as well as Vice President and Chief Technology Officer of Corning Photonic Technologies.  Prior to Corning, Dr. Munch served in various executive positions at Tyco Corporation including General Manager, Vice President, and Chief Technology Officer.  Earlier in his career, Dr. Munch spent ten years at Raychem Corporation in various management positions.

 

Robert P. Oates has been Executive Vice President, Process Equipment since January 2007 and was Senior Vice President and General Manager, Process Equipment since January 2006.  Prior thereto, he was Senior Vice President of Veeco’s Data Storage Operations from October 2005 through January 2006, Vice President and General Manager of Veeco’s Ion Beam Process Equipment Group from September 2004 through September 2005, Vice President/Treasurer of Veeco from May 2002 to September 2004 and Vice President and General Manager of Veeco’s NeXray division from 1995 to May 2002.  Mr. Oates held various financial positions with Veeco and Veeco’s predecessor company from 1977 to 1995.

 

John F. Rein, Jr. has been Executive Vice President, Chief Financial Officer and Secretary of Veeco since April 2000 and was Treasurer of Veeco from April 2000 to May 2002.  Prior thereto, he was Vice President-Finance and Chief Financial Officer of Veeco since December 1993, and became Treasurer and Secretary of Veeco in October 1994.  Prior to joining Veeco, Mr. Rein served for eight years as Vice President-Finance for Axsys Technologies, Inc. From 1979 to 1986, Mr. Rein was Treasurer of Industrial General Corporation.  Prior to that, he was on the audit staff of Ernst & Young LLP.

 

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William A. Tomeo has been Executive Vice President, Worldwide Sales and Service of Veeco since October 2007.  From 2006 to 2007, Mr. Tomeo was employed by the Communications Test business of JDSU, most recently as Vice President/General Manager of the Service Assurance Solutions Division.  From 2004 to 2005, Mr. Tomeo was Marketing Manager for Agilent Technologies and was President and Chief Executive Officer of Digi-Data Corporation, a privately held data storage equipment manufacturer, from 2003 to 2004.  Mr. Tomeo also served as Chief Executive Officer of TellSoft Technologies, Inc., a venture-funded internet communications start-up, and was employed by Hewlett-Packard Company for approximately 20 years, holding a number of senior positions including Vice President and Worldwide Sales & Marketing for the Communications Test Solutions Group and General Manager of the Network Test Division.

 

John P. Kiernan has been Senior Vice President, Finance, Chief Accounting Officer and Corporate Controller since July 2005.  Prior thereto, he was Vice President, Finance and Corporate Controller of Veeco from April 2001 through June 2005, Vice President and Corporate Controller from November 1998 to March 2001 and Corporate Controller from February 1995 to November 1998.  Prior to joining Veeco, Mr. Kiernan was an Audit Senior Manager at Ernst & Young LLP from October 1991 through January 1995 and held various audit staff positions with Ernst & Young LLP from June 1984 through September 1991.

 

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Summary Compensation Table

 

The following table sets forth a summary of annual and long-term compensation awarded to, earned by, or paid for the fiscal year ended December 31, 2007 to (a) the two individuals who served as principal executive officer of Veeco during the year, (b) the principal financial officer of Veeco, (c) each of the next three most highly compensated executive officers (as defined in Rule 3b-7 under the Exchange Act) of Veeco serving at the end of the year and (d) one additional officer of Veeco who was an executive officer during 2007 but who was not serving as an executive officer at the end of such year (the “NEOs”):

 

Name and Principal Position		Year		Salary ($)		Bonus ($) (1)		Stock Awards ($) (2)		Option Awards ($) (3)		Non- Equity Incentive Plan Compen- sation ($) (4)		All Other Compen- sation ($) (5)		Total ($)
John R. Peeler C.E.O (6)		2007		276,923		0		521,809		256,178		0		1,036,223		2,091,133
Edward H. Braun Chairman and Former C.E.O. (7)		2007 2006		650,000 650,000		0 0		949,917 110,840		414,129 57,167		0 387,649		23,548 23,431		2,037,594 1,229,087
John F. Rein, Jr. E.V.P., C.F.O. and Secretary		2007 2006		391,574 371,829		0 0		169,094 66,504		53,119 21,438		0 157,978		12,484 12,423		626,271 630,172
Robert P. Oates E.V.P., Process Equipment		2007 2006		372,406 330,154		0 0		233,773 148,336		81,109 74,747		99,194 190,102		11,452 11,452		797,934 754,791
William A. Tomeo E.V.P. Worldwide Sales and Service (8)		2007		60,577		0		35,011		14,982		29,231		201,929		341,730
John P. Kiernan S.V.P, Finance and Corporate Controller		2007 2006		270,800 255,385		0 0		33,819 13,301		17,706 7,146		0 77,161		11,260 11,138		333,585 364,131
Jeannine P. Sargent Former E.V.P., Metrology and Instrumentation (9)		2007 2006		160,228 321,542		0 0		182,923 174,336		0 80,764		0 71,629		205,754 11,140		548,905 659,411

(1)   In accordance with SEC rules, performance bonuses paid during 2007 pursuant to the Company’s Management Bonus Plan are reflected under the column entitled “Non-Equity Incentive Plan Compensation.”  The Company did not pay discretionary bonuses during 2007.  All bonuses were either performance-based or signing bonuses, which are reflected in “All Other Compensation.”

 

(2)   Reflects awards of restricted stock.  Under the terms of these restricted stock awards, one third of the shares vest on each of the first, second and third anniversaries of the date of grant.  Holders of restricted stock are entitled to dividends to the same extent as holders of unrestricted stock.  In accordance with SEC rules and FAS 123(R), the amounts shown above reflect the value of the stock award (based on the grant date fair value) amortized over the portion of the service period which lapsed during the year.  For Ms. Sargent, the expense in 2007 does not reflect the reversal of the expense accrual taken in the prior year for unvested stock awards which were forfeited upon termination.  The amounts shown relate to the following stock awards:

 

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(3)   The values shown reflect the dollar amounts relating to option awards recognized for financial statement reporting purposes for the fiscal year ended December 31, 2007, in accordance with FAS 123(R).  These values include amounts from options granted in and prior to 2007.  For Ms. Sargent, the expense in 2007 does not reflect the reversal of the expense accrual taken in the prior year for unvested options which were forfeited upon termination.  Assumptions used in the calculation of these amounts for fiscal years ended December 31, 2004, 2005, 2006, and 2007 are included in Note 5 to the Company’s audited financial statements for the fiscal year ended December 31, 2007, included in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2008 (the “Consolidated Financial Statements”).  The amounts shown relate to the following option awards:

 

 

(4)   Reflects cash bonuses paid under the Company’s Management Bonus Plan or, in the case of Mr. Tomeo, commissions.  Bonuses and commissions listed for a particular year represent bonuses or commissions earned and paid with respect to such year even though all or part of such bonuses or commissions may have been paid during the first quarter of the subsequent year.

 

(5)   All Other Compensation consists of car allowance, 401(k) matching contribution, premiums for group term life insurance, housing allowance, sign-on bonuses and separation payments as follows:

 

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Other Compensation
Name		Year		Car Allowance ($)		401(k) Matching Contri- bution ($)		Premium for Group Term Life Insurance ($)		Housing Allowance ($)		Sign-on Bonus ($) (A)		Separation Payments ($)		Total Other Compen- sation ($)
J. Peeler		2007		9,000		2,500		255		24,468		1,000,000				1,036,223
E. Braun		2007 2006		18,000 18,000		2,500 2,500		3,048 2,931								23,548 23,431
J. Rein		2007 2006		8,400 8,400		2,500 2,500		1,584 1,523								12,484 12,423
R. Oates		2007 2006		8,400 8,400		2,500 2,500		552 552								11,452 11,452
W. Tomeo		2007		1,750				179				200,000				201,929
J. Kiernan		2007 2006		8,400 8,400		2,500 2,500		360 238								11,260 11,138
J. Sargent		2007 2006		3,500 8,400		2,500 2,500		92 240						199,662		205,754 11,140

 

(A)  If the executive’s employment is terminated by the Company for “cause” or by him without “good reason” (as each of those terms is defined in his employment agreement), prior to completing his first anniversary, then the executive shall reimburse the Company the full amount of the sign-on bonus.  If his employment is terminated after the first anniversary but prior to his second anniversary, the executive shall reimburse the Company one half of the sign-on bonus.

 

(6)  Mr. Peeler joined Veeco as Chief Executive Officer on July 1, 2007.

 

(7)  Mr. Braun relinquished the position of Chief Executive Officer of Veeco on June 30, 2007.  He served as Chairman for the entire year.

 

(8)  Mr. Tomeo joined Veeco as Executive Vice President, Worldwide Sales and Service on October 15, 2007.

 

(9)  Ms. Sargent was an executive officer of Veeco during 2007 but left the Company in May 2007 and, therefore, was not serving as an executive officer at the end of such year.

 

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Grants of Plan-Based Awards

 

The following table sets forth certain information concerning grants to each NEO during 2007 of stock options, shares of restricted stock and long-term cash incentive awards made under the Company’s 2000 Stock Incentive Plan, as amended, and the Company’s Long-Term Cash Incentive Plan.  Ms. Sargent, who left the Company in May 2007, did not receive any such awards during 2007.  The option and restricted stock awards are also included in the Stock Awards and Option Awards columns of the Summary Compensation Table.  The options have a seven-year life.  The options and the shares of restricted stock vest one third per year on each of the first, second and third anniversaries of the date of grant.  Holders of restricted stock are entitled to dividends to the same extent as holders of unrestricted stock.  For 2007, long-term cash incentive awards were granted to the NEOs and certain other executives.  These awards will be earned when, and if, the goals specified are achieved over the three-year performance period designated for the award.  The goals include cumulative earnings before interest, taxes and amortization (“EBITA”) and revenue targets for the Company as a whole for the three-year period ending December 31, 2009.  Compensation awarded under the 2007 Long-Term Cash Incentive Plan will be disclosed in 2010 in the Summary Compensation Table if the performance criteria are satisfied.

 

				Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1)						All Other Stock Awards: Number of Shares of		All Other Option Awards: Number of Securities		Exercise or Base Price of		Grant Date Fair Value of Stock and
Name		Grant Date		Thresh- old ($)		Target ($)		Maxi- mum ($)		Stock or Units (#) (2)		Underlying Options (#) (2)		Option Awards ($/Sh)		Option Awards ($)
J. Peeler		7/1/07 7/1/07 7/1/07		93,750		375,000		562,500		150,000		250,000		20.74		3,111,000 1,527,500
E. Braun		6/8/07 6/8/07 6/8/07		121,875		487,500		731,250		175,000		250,000		18.97		3,319,750 1,377,500
J. Rein		6/8/07 6/8/07 6/8/07		56,763		227,052		340,578		15,000		15,000		18.11		271,650 80,250
R. Oates		6/8/07 6/8/07 6/8/07		33,350		133,400		200,100		15,000		15,000		18.11		271,650 80,250
W. Tomeo		10/15/07 10/15/07 10/15/07		25,809		103,236		154,854		30,000		40,000		20.20		606,000 259,200
J. Kiernan		6/8/07 6/8/07 6/8/07		19,500		78,000		117,000		3,000		5,000		18.11		54,330 26,750

(1)   Reflects potential payouts under the Company’s Long-Term Cash Incentive Plan.  Such payouts will be made only if the performance goals are met for the three-year performance period ending December 31, 2009.  During 2007, the Company also made awards under its annual Management Bonus Plan.  These annual bonuses, which were earned during 2007 and paid during the first quarter of 2008, are reflected in the Summary Compensation Table under the Column entitled Non-Equity Incentive Plan Compensation.

 

(2)   Reflects shares of restricted stock or options granted pursuant to the 2000 Stock Incentive Plan.

 

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(1)          The options and shares of restricted stock which are not yet vested will vest one third per year on each of the first, second and third anniversaries of the date of grant.  The grant dates for the awards shown above which have not yet vested are as follows:

 

		Option Awards						Stock Awards
Name		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Grant Date		Number of Shares That Have Not Vested (#)		Restricted Stock Grant Date
J. Peeler		250,000		20.74		7/01/2007		150,000		7/01/2007
E. Braun		26,667 250,000		23.61 18.97		6/09/2006 4/27/2007		16,667 175,000		6/09/2006 4/27/2007
J. Rein		10,000 15,000		23.61 18.11		6/09/2006 6/08/2007		10,000 15,000		6/09/2006 6/08/2007
R. Oates		6,667 15,000		23.61 18.11		6/09/2006 6/08/2007		6,667 6,667 15,000		10/31/2005 6/09/2006 6/08/2007
W. Tomeo		40,000		20.20		10/15/2007		30,000		10/15/2007
J. Kiernan		3,334 5,000		23.61 18.11		6/09/2006 6/08/2007		2,000 3,000		6/09/2006 6/08/2007

 

Options Exercises and Stock Vested During 2007

 

The following table sets forth certain information concerning the exercise of stock options and the vesting of shares of restricted stock during the last fiscal year for each of the NEOs.

 

		Option Awards				Stock Awards
		Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)		Number of Shares Acquired on Vesting (#) (1)		Value Realized on Vesting ($)
J. Peeler		—		—		—		—
E. Braun		—		—		8,333		152,827
J. Rein		—		—		5,000		91,700
R. Oates		—		—		10,000		181,667
W. Tomeo		—		—		—		—
J. Kiernan		—		—		1,000		18,340
J. Sargent		43,333		141,624		10,000		175,700

(1)          Includes the following shares of stock surrendered to the Company to satisfy tax withholding obligations due upon the vesting of restricted stock:

 

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Plans Not Approved by Securityholders

 

The Veeco Instruments Inc. 2000 Stock Option Plan for Non-Officer Employees (as amended, the “Non-Officer Plan”) was approved by the Board of Directors in October 2000.  Stock options granted pursuant to the Non-Officer Plan become exercisable over a three-year period following the grant date and expire after seven years.  The Non-Officer Plan has been frozen and, as such, there are no stock options available for future grant under this plan.

 

In September 2001, the Company assumed certain stock option plans and agreements in connection with the acquisition of Applied Epi, Inc. (“Applied Epi”).  Stock options granted under these plans generally expire after ten years from the date of grant.  Options granted under two of the plans vest over three years and options granted under one of the plans vest immediately upon grant.  As of December 31, 2007, there were 170,668 options outstanding under the various Applied Epi plans.  These plans have been frozen and, as such, there are no stock options available for future grant under these plans.

 

Potential Payments Upon Termination or Change-in-Control

 

The Company has entered into an employment agreement or letter agreement with each of the NEOs and other executive officers of the Company.  These agreements provide for the payment of severance and certain other benefits to the executive in the event (i) the executive’s employment is terminated by Veeco without “cause” (defined as specified serious misconduct), (ii) the executive resigns for “good reason” or (iii) in the case of Messrs. Peeler, Braun and Rein, in the event of death or disability.  “Good reason” is defined in the employment and letter agreements as (a) a salary reduction, other than pursuant to a management-wide salary reduction program, (b) in the case of Messrs. Peeler, Braun, Rein and Oates, an involuntary relocation of the executive’s primary place of work by more than 50 miles from its then current location, (c) in the case of Messrs. Peeler, Rein and Oates, an involuntary diminution in title, authority or responsibilities or a significant reduction in total benefits available (other than a reduction affecting employees generally); and (d) in the case of Messrs. Peeler and Braun, involuntarily ceasing to be a member of the Board.  The nature and extent of the benefits payable vary from executive to executive and, for Messrs. Munch, Oates, Tomeo and Kiernan, vary depending on whether the termination occurs in connection with or following a “change of control.”  The specific benefits payable to each individual under these agreements are described below.  Payment of these severance and other benefits is conditioned on the executive’s release of claims against the Company and on non-competition and non-solicitation provisions applicable during the period in which executive is entitled to severance payments, as described below.  If the termination is for “cause” or by the executive without “good reason,” the severance obligations do not apply.  The description of the employment agreements and letter agreements contained herein is a summary only.  Reference is made to the full text of these agreements which have been filed previously with the SEC.

 

During 2007, as a means of ensuring retention during the transition to a new Chief Executive Officer, the Company made retention incentive awards to Messrs. Rein, Oates and Kiernan.  Under these awards, each of these executives will receive 50% of their base salary, as in effect on May 24, 2007, following the completion of eighteen months of continued service (the “Retention Incentive”).  In the event that the executive’s employment is terminated prior to payment of the retention incentive in a situation where the executive would be entitled to severance under their employment or letter agreement, then the retention incentive will be payable in addition to any other severance provided under such agreement.

 

Peeler Agreement.  In the event of a specified termination, Mr. Peeler will be entitled to severance in an amount equal to 36 months of base salary and he will be entitled to a payment equal to his target bonus for the year of termination, pro-rated for the period of his service during such year.  In addition, upon any such termination, (i) Mr. Peeler will have 36 months (or until the end of the original term of the options, if earlier) to exercise options to purchase common stock of Veeco which are or

 

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