VAR DEF 14A Report ended Feb. 13, 2020

Confidential, for Use of the Commission Only

(as permitted by Rule 14a-6(e)(2))

No fee required.

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

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to elect ten directors to serve until the 2021 Annual Meeting;

to approve, on an advisory basis, the compensation of our named executive officers as described in the accompanying Proxy Statement;

to approve the Varian Medical Systems, Inc. 2010 Employee Stock Purchase Plan, as amended (the “Amended ESPP”);

to ratify the appointment of PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for fiscal year 2020; and

to transact any other business that properly comes before the Annual Meeting.

PROXY SUMMARY

GENERAL INFORMATION

PROPOSAL ONE — ELECTION OF DIRECTORS

Our Board; Selection of Nominees

Governance of the Corporation

Board Committees and Committee Meetings

PROPOSAL TWO — ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

Background to the Advisory Vote

Philosophy of our Executive Compensation Program

Varian’s Fiscal Year 2019 Performance

Alignment of Executive Incentives with Our Value Creation Strategy

PROPOSAL THREE — APPROVAL OF THE VARIAN MEDICAL SYSTEMS, INC. 2010 EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED

Reasons to Approve the Amended ESPP

Description of the Amended ESPP

U.S. Federal Tax Aspects

New Amended ESPP Benefits

Historical Plan Benefits

Equity Compensation Plan Information

Recommendation of the Board

PROPOSAL FOUR — RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Selection of the Accounting Firm

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

Principal Accountant Fees and Services

AUDIT COMMITTEE REPORT

STOCK OWNERSHIP

Beneficial Ownership of Certain Stockholders, Directors and Executive Officers

Delinquent Section 16(a) Reports

COMPENSATION OF THE NAMED EXECUTIVE OFFICERS AND DIRECTORS

Executive Compensation Governance Policies

Compensation and Leadership Development Committee Report

Summary Compensation Table

Compensation Committee Interlocks and Insider Participation

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Review, Approval or Ratification of Related Person Transactions

Transactions with Related Persons

APPENDIX A — VARIAN MEDICAL SYSTEMS, INC. 2010 EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED

Who is soliciting my proxy?

The Board of Directors (the “Board”) of Varian Medical Systems, Inc. (“we,” “us,” “Varian” or the “Company”) is sending you this Proxy Statement in connection with the Board’s solicitation of proxies for use at the 2020 Annual Meeting of Stockholders (the “Annual Meeting”) or any adjournment or postponement thereof. Certain of our directors, officers and employees also may solicit proxies on the Board’s behalf by mail, telephone, email or fax or in person. We have hired Georgeson LLC, 1290 Avenue of the Americas, New York, New York 10104, to assist in soliciting proxies from brokers, bank nominees and other stockholders.

Who is paying for this solicitation?

We will pay for the solicitation of proxies. Our directors, officers and employees will not receive additional remuneration. We expect that we will pay Georgeson LLC not more than $9,500, plus reasonable out-of-pocket expenses, and also will reimburse banks, brokers, custodians, nominees and fiduciaries for their reasonable charges and expenses to forward our proxy materials to the beneficial owners of our common stock.

What am I voting on?

You will be voting on four proposals.

Who can vote?

Only our stockholders of record at the close of business on December 16, 2019 may vote. Each share of common stock outstanding on that date is entitled to one vote on all matters to come before the meeting.

Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials this year instead of a full set of proxy materials?

Pursuant to rules adopted by the U.S. Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials (consisting of the Notice of Annual Meeting, this Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended September 27, 2019, as filed with the SEC on November 25, 2019) over the Internet. Therefore, we are sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders. Starting on the date of distribution of the Notice, all stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request printed copies may be found in the Notice. If you request printed versions of the proxy materials by mail, the materials will also include a proxy card or other voting instruction form.

Can I receive proxy materials for future annual meetings by email rather than receiving a paper copy of the Notice?

If you are a holder of record, you may elect to receive the Notice or other future proxy materials by email by logging into www.proxyvote.com and entering your email address before you vote if you are voting by Internet or any time at www.computershare.com/investor or http://enroll.icsdelivery.com/var. If your shares are registered in street name, please check with your broker, bank or other nominee about how to receive future proxy materials by email, or enroll at http://enroll.icsdelivery.com/var. If you choose to receive proxy materials by email, next year you will receive an email with instructions on how to view those materials and vote before the next annual meeting. Your choice to obtain documents by email will remain in effect until you notify us otherwise. Delivering future notices by email will help us further reduce the cost and environmental impact of our stockholder meetings.

What is the difference between a stockholder of record and a “street name” holder?

If your shares are registered directly in your name with Computershare Trust Company, N.A., our stock transfer agent, you are considered the stockholder of record for those shares.

How do I vote and how do I revoke my proxy?

If you hold your shares in your own name as a stockholder of record, you may vote your shares either in person at the meeting or by proxy. To vote in person, please bring a form of identification, such as a valid driver’s license or passport, and proof that you were a stockholder as of December 16, 2019, and we will give you a ballot when you arrive. To vote by proxy, please vote in one of the following ways:

Via the Internet. You may vote through the Internet at www.proxyvote.com by following the instructions provided in the Notice.

Via Mail. If you received your proxy materials or request printed copies by mail, you may vote by mail by marking, dating, signing and mailing the proxy card in the envelope provided.

What is the deadline for submitting a proxy?

Internet voting facilities for stockholders of record will be available 24 hours a day. In order to be counted, proxies submitted by the Internet must be received by 11:59 p.m. Eastern Time on February 12, 2020. Proxies submitted by mail must be received prior to the start of the Annual Meeting.

What constitutes a quorum?

On the record date, we had 90,909,154 shares of common stock, $1.00 par value, outstanding. Voting can take place at the Annual Meeting only if stockholders owning a majority of the issued and outstanding stock entitled to vote at the Annual Meeting are present in person or represented by proxy.

What are abstentions and broker non-votes and how do they affect voting?

Abstentions—If you specify that you wish to “abstain” from voting on an item, your shares will not be voted on that particular item. Abstentions are counted toward establishing a quorum. Abstentions have no effect on the election of directors and are included in the shares entitled to vote on Proposals Two, Three and Four. On Proposals Two, Three and Four, abstentions have the effect of a vote against the proposal.

What vote is needed?

For Proposal One, the election of directors, the ten nominees may be elected only upon the affirmative vote of a majority of the total votes cast. In other words, the number of votes cast “For” a nominee’s election must exceed 50% of the votes cast with respect to that nominee’s election, not including any abstentions. Votes “Against” a nominee’s election will count as a vote cast. However, abstentions or shares as to which a shareholder gives no authority or discretion, including “broker non-votes,” will have no effect and not count as a vote cast with respect to that nominee.

What happens if a director does not receive a majority of votes cast at the Annual Meeting?

Prior to an election, each incumbent director submits a resignation letter whose effectiveness is contingent upon the incumbent director failing to receive more than 50% of the votes cast in an uncontested election. If an incumbent director does not receive a majority of the votes cast, the Nominating and Corporate Governance Committee of the Board will make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken. The Board will act on the Nominating and Corporate Governance Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of the election results.

Can I vote on other matters?

You are entitled to vote on any other matters that are properly brought before the Annual Meeting. Our By-Laws limit the business conducted at any annual meeting to (1) business in the notice of the annual meeting, (2) business directed by the Board and (3) business brought by a stockholder of record entitled to vote at the meeting so long as the stockholder has met the requirements for submitting stockholder proposals provided in our By-Laws. Under our By-Laws, a stockholder must notify our Secretary in writing (at our Palo Alto, California headquarters) of the proposal not less than 90 days nor more than 120 days before the anniversary of the prior year’s annual meeting, which for the 2021 Annual Meeting of Stockholders will be no earlier than October 16, 2020 and no later than November 15, 2020. The notice must give a brief description of the business to be brought before the annual meeting, the reasons for conducting the business and the text of the proposal, as well as the name and address of the stockholder giving the notice and the beneficial owner on whose behalf the proposal is made, the number of shares owned and information about that beneficial ownership, all as detailed in our By-Laws. The notice must also describe any material interest the stockholder or beneficial owner has in the business and arrangements between such stockholder or beneficial owner and any other person in connection with the proposal and must include certain representations, all as detailed in our By-Laws.

How do I suggest potential candidates for director positions?

A stockholder may suggest one or more potential candidates for consideration by the Board as nominees for election as one of our directors at an annual meeting of stockholders. This can be done by notifying our Corporate Secretary in writing at our Palo Alto, California headquarters not less than 90 days nor more than 120 days before the anniversary of the prior year’s annual meeting, which for the 2021 Annual Meeting of Stockholders will be no earlier than October 16, 2020 and no later than November 15, 2020. The notice must include all information about the potential candidate that must be disclosed in proxy solicitations pursuant to Regulation 14A under the Exchange Act (including the potential candidate’s written consent to

How do I nominate candidates for director positions on the Proxy Statement under proxy access?

How does the Board select nominees for election to the Board?

The Nominating and Corporate Governance Committee (the “Nominating Committee”) will consider potential candidates for directors submitted by stockholders, in addition to those suggested by other Board members and members of our management, and does not evaluate potential candidates differently based upon the source of the potential candidate. The Nominating Committee considers and evaluates each properly submitted potential candidate for director in an effort to achieve a balance of skills and characteristics on the Board, as well as to ensure that the composition of the Board at all times adheres to the independence requirements applicable to NYSE-listed companies and other regulatory requirements applicable to us. Please refer to “Proposal One—Election of Directors” and our Corporate Governance Guidelines for additional details on our policy, process and membership criteria. A stockholder may recommend potential candidates for director by notifying our Corporate Secretary in writing (at our Palo Alto, California headquarters) as detailed in the question and answer above.

How may I communicate with the Board of Directors?

Stockholders and other interested parties may communicate directly with the Board, the Board’s Chairman or any other director or with the independent directors as a group or any other group of directors through the Board’s Chairman by sending an email to lead.director@varian.com. Messages received will be forwarded to the appropriate director or directors.

When and where is the Annual Meeting being held?

The Annual Meeting will be held on Thursday, February 13, 2020 at 4:30 p.m. Pacific Time at our headquarters at 3100 Hansen Way, Palo Alto, California 94304. If you need directions to the Annual Meeting so that you may attend or vote in person, please contact our Investor Relations department at investors@varian.com.

How can I find the results of the Annual Meeting?

Preliminary results will be announced at the Annual Meeting. Final results also will be published in a Current Report on Form 8-K to be filed with the SEC within four business days after the Annual Meeting. If the official results are not available at that time, we will provide preliminary voting results in the Form 8-K and will provide the final results in an amendment to the Form 8-K as soon as they become available.

BOARD RECOMMENDATION

VOTE “FOR” EACH OF THE NOMINEES

Knowledge about our industries and technologies;

Experience in industries beyond healthcare;

International business experience;

Cultural, gender, ethnic or age diversity;

Experience in financial oversight and with the financial community, and a strong reputation with the financial community;

Experience in business management and the potential to succeed top management in the event of an unexpected necessary Board intervention;

Broad experience at policy making in business, government, education, technology or public interest; or

Business contacts, knowledge or influence useful to our business and product lines.

Anat Ashkenazi

Age: 47

Director Since: 2018

Independent

Occupation: Public

Company Executive

Principal occupation, business experience and directorships

•  Positions at Eli Lilly and Company, a global pharmaceutical company:

•  Senior Vice President, Controller and Chief Financial Officer, Lilly Research Labs (September 2016—present)

•  Vice President, Finance and Chief Financial Officer, Lilly Diabetes and Lilly Global Manufacturing and Quality (April 2015—September 2016)

•  Chief Financial Officer, Lilly Oncology (October 2013—April 2015)

•  Other Current Public Company Board Memberships: None

•  Prior Public Company Board Memberships in Past Five Years: None

Experience, qualifications, attributes or skills supporting directorship

•  Over 20 years of in-depth financial management and planning experience including corporate finance and financial services

•  Extensive experience in the pharmaceutical industry having worked for Eli Lilly and Company across different therapeutic areas and disciplines

•  Experience in global and regional strategic planning, organizational redesign, and Six Sigma implementation

Jeffrey R. Balser

Age: 57

Director Since: 2018

Independent

Occupation: CEO of an

Academic Medical Center

Principal occupation, business experience and directorships

•  President and Chief Executive Officer of Vanderbilt University Medical Center (May 2016—present)

•  Dean, Vanderbilt University School of Medicine (October 2008—present)

•  Vice Chancellor for Health Affairs, Vanderbilt University Medical Center (June 2009—April 2016)

•  Associate Vice Chancellor for Research, Vanderbilt University Medical Center (January 2004—October 2008)

•  Other Current Public Company Board Memberships: None

•  Prior Public Company Board Memberships in Past Five Years: None

Experience, qualifications, attributes or skills supporting directorship

•  In-depth knowledge of the healthcare industry, hospital operations and managed care industry

•  Experience in management and strategic planning of hospital and physician practice, medical education, clinical and basic research through service as

Chief Executive Officer and Dean, and previously as chief research officer, of a leading academic medical institution

•  Licensed Medical Doctor, Board certified in Anesthesiology and Critical Care Medicine

Judy Bruner

Age: 61

Director Since: 2016

Independent

Occupation: Former

Public Company

Executive

Principal occupation, business experience and directorships

•  Positions at SanDisk Corporation, a global leader in flash memory storage solutions:

•  Executive Vice President, Administration and Chief Financial Officer (June 2004—May 2016)

•  Member of Board of Directors (June 2002—July 2004)

•  Senior Vice President and Chief Financial Officer, Palm, Inc., a manufacturer of personal digital assistants (September 1999—June 2004)

•  Vice President, Finance & Corporate Controller, 3Com Corporation, a digital electronics manufacturer (May 1998—September 1999)

•  Other Current Public Company Board Memberships: Applied Materials, Inc., a provider of engineering solutions; Rapid7, a security data and analytics solutions provider; Seagate Technology PLC, a data storage company

•  Prior Public Company Board Memberships in Past Five Years: Brocade Communications Systems, Inc., a technology company specializing in data and storage networking products

Experience, qualifications, attributes or skills supporting directorship

•  Over 35 years of financial management experience in the high technology industry

•  Deep experience with compliance and enterprise risk management

•  Audit committee chair experience

•  Significant mergers and acquisitions experience

•  Membership on boards of other public companies

Jean-Luc Butel

Age: 63

Director Since: 2017

Independent

Occupation: Former

Public Company

Executive

Principal occupation, business experience and directorships

•  Positions at Baxter International, a health care company providing a portfolio of renal and hospital products:

•  President, International (January 2015—June 2015)

•  Corporate Officer, Operating Committee Member, Corporate Vice President and President, International (February 2012—December 2014)

•  Positions at Medtronic, Inc., a global leader in medical technology:

•  Corporate Officer, Executive Committee Member, Executive Vice President; Group President International (January 2011—January 2012)

•  Corporate Officer, Executive Committee Member, Senior Vice President and President, Medtronic International (May 2008—December 2010)

•  Corporate Officer, Executive Committee Member, Senior Vice President, Medtronic and President, Medtronic Asia Pacific (August 2003—April 2008)

•  Other Senior Management Experience: President, Johnson & Johnson Independence Technology; President, Worldwide Consumer Healthcare, Becton Dickinson

•  Other Current Public Company Board Memberships: Takeda Pharmaceutical Company Limited, a global pharmaceuticals company focused on metabolic disorders, gastroenterology, neurology, inflammation and oncology

•  Prior Public Company Board Memberships in Past Five Years: Biosensors International Group, Ltd., a medical device company specializing in interventional cardiology procedures and critical care technologies

Experience, qualifications, attributes or skills supporting directorship

•  Extensive experience in sales, operations and general management of healthcare companies through his service as an executive of several large U.S. healthcare companies

•  Extensive experience leading international business operations of large U.S. healthcare companies, including in Europe, Asia and North and South America

Regina E. Dugan

Age: 56

Director Since: 2013

Independent

Occupation: Startup CEO

Principal occupation, business experience and directorships

•  Chief Executive Officer of a stealth startup in the technology sector (February 2019—present)

•  Vice President of Engineering, Facebook, Inc., leading Building 8, a team charged with developing and delivering next generation consumer hardware to market (May 2016—January 2018)

•  Vice President of Engineering, Google, Inc., leading the Advanced Technology and Products group, a group charged with breakthrough innovations in mobile computing and accelerating the development of promising technologies to market (February 2014—April 2016)

•  Senior Vice President, Google owned Motorola Mobility LLC, a mobile technology company Google acquired in May 2012 (March 2012— February 2014)

•  Director, Defense Advanced Research Projects Agency (DARPA), a breakthrough product development organization of the U.S. Department of Defense (July 2009—March 2012)

•  Co-Founder, President and Chief Executive Officer, RedXDefense LLC, a security solutions company (2005—July 2009)

•  Co-Founder, President and Chief Executive Officer, Dugan Ventures, an investment firm (currently a non-voting partner) (2001—July 2009)

•  Other Current Public Company Board Memberships: Zynga Inc., a social game developer

•  Prior Public Company Board Memberships in Past Five Years: None

Experience, qualifications, attributes or skills supporting directorship

•  Experience leading DARPA, the principal agency within the U.S. Department of Defense responsible for product development, research, demonstration and fielding of high-risk, high-payoff capabilities

•  Familiarity with defense, security and commercial industries

•  Expertise with a wide range of advanced technologies and demonstrated track record in moving to use new technologies, from sensor systems to big data products

•  Years of experience serving in senior executive positions with responsibilities including fostering innovation and developing strategic business relationships across diverse industries and commercial entities large and small

•  Experience serving on the board of another public company

R. Andrew Eckert

Age: 58

Director Since: 2004

Chairman Since: 2014

Independent

Occupation: Former CEO

of Private and Public

Companies

Principal occupation, business experience and directorships

•  Chief Executive Officer, Acelity L.P., Inc., a global advanced wound care company (April 2017—October 2019)

•  Chief Executive Officer, Valence Health, a healthcare solutions company (August 2015—October 2016)

•  Chief Executive Officer, TriZetto Corporation, a healthcare IT solutions firm (March 2014—November 2014)

•  Chief Executive Officer, CRC Health Corporation, a provider of substance abuse treatment and adolescent youth services (January 2011—March 2014)

•  Managing Director, Symphony Technology Group, a private equity firm (October 2009—January 2011)

•  President and Chief Executive Officer, Eclipsys Corporation, a former publicly traded healthcare information management software provider (October 2005—May 2009)

•  Chief Executive Officer, SumTotal Systems, Inc., an enterprise software provider (2004—2005)

•  Chief Executive Officer, Docent Inc., an enterprise software provider that was acquired by SumTotal Systems (2002—2004)

•  Chairman and Chief Executive Officer, ADAC Laboratories, a former publicly traded medical imaging company (1997—2001)

•  Other Current Public Company Board Memberships: Becton, Dickinson and Company, a global medical technology company

•  Prior Public Company Board Memberships in Past Five Years: None

Experience, qualifications, attributes or skills supporting directorship

•  Extensive experience obtained over 15 years serving as an executive officer of several public companies, including a medical imaging company and healthcare information management company

•  Deep knowledge of operational, financial, strategic planning, product development and marketing matters

•  Experience serving on the board of directors of several public companies in the healthcare industry

Phillip G. Febbo

Age: 53

Director Since: 2019

Independent

Occupation: Public

Company Executive

Principal occupation, business experience and directorships

•  Chief Medical Officer, Illumina, Inc. (March 2018—present)

•  Chief Medical Officer, Genomic Health, Inc. (2013—March 2018)

•  Professor of Medicine and Urology at the University of California, San Francisco (UCSF) (2010—2013)

•  Service on the board of directors of the American College of Medical Genetics and Genomics Foundation (2018—present)

•  Other Current Public Company Board Memberships: None

•  Prior Public Company Board Memberships in Past Five Years: None

Experience, qualifications, attributes or skills supporting directorship

•  Broad experience in medical strategy and managing resources strategically on a global scale across areas like product development, evidence generation, product marketing, and sales, gained from service as the Chief Medical Officer of two genomic health companies

•  Deep knowledge in cancer research, clinical and academic research programs, including through service as the principal investigator of clinical trials funded by National Institute of Health, Department of Defense, and various industry and non-profit foundation grants

•  Critical insights in evaluating data of various cancer treatments and leveraging multidisciplinary care to optimize patient outcomes

David J. Illingworth

Age: 66

Director Since: 2011

Independent

Occupation: Former

Public Company CEO

Principal occupation, business experience and directorships

•  Chief Executive Officer, Smith & Nephew plc, a medical devices company (July 2007—April 2011)

•  Chief Operating Officer and Division President, Smith & Nephew plc (2002—July 2007)

•  Other Senior Management Experience: President, XL Vision, Inc.; Chairman and Chief Executive Officer, VidaMed, Inc.; President, Nellcor Puritan Bennett LLC; and Managing Director, Asia/Pacific, GE Medical Systems

•  Other Current Public Company Board Memberships: Domtar, Inc., a manufacturer of fiber-based products

•  Prior Public Company Board Memberships in Past Five Years: None.

Experience, qualifications, attributes or skills supporting directorship

•  In-depth knowledge of the medical technology industry

•  Extensive experience in sales, operations and general management in the United States, United Kingdom and Asia through his service as an executive of various medical technology companies

•  Service on the board of directors and as a member of the audit committee and the environmental, health, safety and sustainability committee, of another public medical device company

Michelle M. Le Beau

Age: 65

Director Since: 2019

Independent

Occupation: Professor and

Director of an Academic

Cancer Center

Principal occupation, business experience and directorships

•  Positions at the University of Chicago:

•  Arthur and Marian Edelstein Professor of Medicine, Section of Hematology/Oncology (1986—present)

•  Director, University of Chicago Medicine Comprehensive Cancer Center (2004—present)

•  Board Member of the University of Chicago Medicine Cancer Council (2012—present)

•  Director, Cancer Cytogenetics Laboratory (1986—present)

•  Other Current Public Company Board Memberships: None

•  Prior Public Company Board Memberships in Past Five Years: None

Experience, qualifications, attributes or skills supporting directorship

•  Extensive experience with cancer research, clinical and research program development, and structure and operation of academic cancer centers

•  Deep knowledge of academic and government cancer research priorities, and opportunities across the cancer research and care continuum

•  Service on (i) numerous scientific advisory boards for academic cancer centers, including advisory boards and working groups for the National Cancer Institute of the U.S. National Institutes of Health, (ii) the board of directors of professional organizations in oncology and cancer research (e.g. the American Association for Cancer Research and the American Society of Hematology), and (iii) multiple non-profit organizations in cancer research, advocacy, outreach and education (e.g. the American Cancer Society)

•  Doctoral degree in Genetics, and board-certified in clinical cytogenetics by the American Board of Medical Genetics and Genomics

•  In-depth knowledge of the biology and development of human cancers

Dow R. Wilson

Age: 60

Director Since: 2012

Occupation: President and

CEO of Varian

Principal occupation, business experience and directorships

•  Positions at the Company:

•  President and Chief Executive Officer (September 2012—present)

•  Corporate Executive Vice President and Chief Operating Officer (October 2011—September 2012)

•  Corporate Executive Vice President and President, Oncology Systems (August 2005—September 2011)

•  Corporate Vice President and President, Oncology Systems (January 2005—August 2005)

•  Prior to joining the Company in January 2005, held various senior management positions in and outside of the United States with General Electric Company, a diversified industrial company

•  Other Current Public Company Board Memberships: Agilent Technologies, a research, development and manufacturing company for life science

•  Public Company Board Memberships in Past Five Years: Saba Software, an e-learning software provider; Varex Imaging Corporation, a leading independent supplier of medical X-ray tubes and image processing solutions

•  U.S. Government Appointments:

•  Presidential appointment to U.S. President’s Advisory Council on Doing Business in Africa (November 2014—January 2019)

•  Appointed to U.S. Department of Commerce’s US-Brazil CEO Forum in April 2019

•  Board member of the US-India Strategic Partnership Forum, a non-profit focused on driving economic growth, job creation, innovation, inclusion, and entrepreneurship in the U.S. and India

Experience, qualifications, attributes or skills supporting directorship

•  Deep knowledge of our business, strategy and technology gained through serving as President of our Oncology Systems business and Chief Operating Officer before becoming our President and Chief Executive Officer

•  Significant knowledge of domestic and international medical and healthcare industries gained from serving in management positions at General Electric

•  Critical insight into operational requirements of a company with worldwide reach, knowledge of corporate and business unit strategies, and operational expertise, each gained from executive management experience at two large, global organizations

•  Experience serving on the board of directors and as lead director of another public company

INDUSTRY KNOWLEDGE

Contributes to a deeper understanding of healthcare trends and technologies and our business strategy, operations, key performance indicators and competitive environment.

GLOBAL BUSINESS EXPERIENCE

Critical to cultivating and sustaining business and governmental relationships internationally and providing oversight of our multinational operations.

PUBLIC COMPANY EXECUTIVE EXPERIENCE

Contributes to the Board’s understanding of our business strategy; demonstrates leadership ability.

RISK MANAGEMENT

Contributes to the identification, assessment and prioritization of risks facing the Company.

TECHNOLOGY/CYBER SECURITY

A significant background working in technology, resulting in knowledge of how to anticipate technological trends, generate disruptive innovation and extend or create new business models; contributes to the Board’s understanding of cyber security risks.

MERGERS & ACQUISITIONS

A history of leading growth through acquisitions and other business combinations, with the ability to assess “build or buy” decisions, analyze the fit of a target with the Company’s strategy and culture, accurately value transactions, and evaluate operational integration plans.

GENDER/ETHNIC DIVERSITY

Representation of gender and/or ethnic diversity that expands the Board’s understanding of the needs and viewpoints of our customers, partners, employees, governments and stockholders worldwide.

INDEPENDENCE

Varian requires that at least two- thirds of its Board members are independent. The Board has determined that all director nominees, other than Mr. Wilson, meet the independence standards set by the NYSE.

TENURE

The average tenure of the director nominees is approximately five years, which reflects a balance of company experience and new perspectives.

DIVERSITY

The Board is committed to achieving a diverse and broadly inclusive membership. Four of our ten director nominees are diverse, based on gender.

The Board’s Ethics and Compliance Committee (the “Ethics Committee”) oversees our ethical compliance programs and compliance with requirements involving legal and ethical business conduct.

The Board’s Corporate Governance Guidelines articulate clear corporate governance policies, which include basic director duties and responsibilities.

The Board has adopted a Code of Conduct applicable to all of our employees, including the executive officers, and to our directors.

We have hotlines for employees to report concerns regarding ethics and financial matters, including accounting, internal controls and audit concerns, and the Audit Committee has established procedures for anonymous submission of these matters.

The Board has adopted a policy regarding conflicts of interest and “related-person transactions” under which potential conflicts of interest and related-person transactions must be reviewed and pre-approved by the Nominating Committee. The Nominating Committee has determined that certain categories of transactions are pre-approved under this policy. Please refer to the discussion under “Certain Relationships and Related Transactions” for more information on this policy and the related procedures.

Directors are expected to attend all stockholder meetings, and all current directors that were members of the Board at the time of the 2019 Annual Meeting of Stockholders attended the Annual Meeting.

The Board conducts an annual assessment on its effectiveness and the effectiveness of each of its committees.

The Board encourages director continuing education through a mix of in-house and third-party presentations and programs. The Nominating Committee is charged with tracking director continuing education. We pay or reimburse directors for expenses associated with attending these continuing education events.

We do not maintain a stockholders’ rights plan or “poison pill.”

In fiscal year 2014, the Board appointed an “independent” non-employee director as Chairman, and since 2006 we have separated the roles of Chairman and Chief Executive Officer. Mr. Eckert served in the capacity of lead independent director from February 2012 to February 2014 and has served as Chairman since February 2014.

90% of the Board members are independent of the Company and our management. The definition of “independent” is included in our Corporate Governance Guidelines, which can be found through the “Corporate Governance” link on the Investors page on our website at www.varian.com.

All members of our key Board committees—the Audit Committee, the Compensation Committee, the Ethics Committee and the Nominating Committee—are independent.

The Company’s Bylaws and Corporate Governance Guidelines include a majority voting standard for uncontested director elections. If the number of nominees timely nominated for an annual meeting does not exceed the number of directors to be elected, each nominee shall be elected if the nominee receives the affirmative vote of a majority of the total votes cast, not including any abstentions. Prior to an election, each incumbent director submits a resignation letter whose effectiveness is contingent upon the incumbent director failing to receive more than 50% of the votes cast in an uncontested election. If an incumbent director does not receive a majority of the votes cast, the Nominating and Corporate Governance Committee of the Board will make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken. The Board will act on the Nominating and Corporate Governance Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of the election results.

Our By-Laws permit eligible stockholders to be able to nominate candidates for election to the Board in accordance with procedures providing for proxy access. This proxy access provision may be used by an eligible stockholder, or a group of up to 20 eligible stockholders, who has continuously owned at least three percent or more of the outstanding shares of our common stock for three years before, and including the day of, submitting a nomination notice, and who continues to hold the qualifying minimum number of shares through the date of the applicable annual meeting of stockholders. The proxy access provision provides that an eligible stockholder, or a group of eligible stockholders, may nominate up to the greater of (i) 20% of the total number of directors who are members of the Board as of the last day on which a nomination notice may be submitted, or (ii) two directors.

Our entire Board is elected annually.

The Board has added six new independent directors to the Board since August 2016, including most recently Dr. Febbo and Dr. Le Beau, and has a commitment to inclusiveness and diversity.

The Board has adopted a guideline for director retirement that provides that a director should not serve on the Board for more than 15 years or after a director reaches the age of 75. This guideline may be waived if the Board deems appropriate, as in the case of Mr. Eckert.

Our Corporate Governance Guidelines contain committee rotation guidelines that recommend adding a new member to each committee every three years.

The annual cycle of agenda items for Board and committee meetings reflects Board and committee requests and changing business and legal issues. The Board receives regularly scheduled presentations from our finance, legal and compliance departments and major business units and operations, and reviews

enterprise risk at least annually. The Board’s and committees’ annual agenda includes, among other items, our long-term strategic plans, periodic reports on progress against long-term strategic plans, emerging and disruptive technologies, potential acquisition or investment targets, capital projects and evaluation of the Chief Executive Officer and management and Board succession.

Dr. Balser is the Chief Executive Officer of Vanderbilt University Medical Center, which is a customer of ours.

Mr. Eckert serves as an outside director of a company from whom we are licensing and with whom we are developing certain technology.

Dr. Febbo joined after the end of fiscal year 2019.

Oversees our accounting and financial reporting process and audits of financial statements.

Assists the Board in oversight and monitoring of (i) the integrity of our financial statements, (ii) our compliance with legal and regulatory requirements, (iii) the independent registered public accounting firm’s qualifications and independence, (iv) the performance of our internal audit function and of the independent registered public accounting firm, and (v) the principal risk exposures facing the corporation that are related to financial statements, legal, regulatory and other similar matters, as well as the corporation’s related mitigation efforts.

Prepares the Audit Committee Report included in our proxy statement.

Reviews and approves our foreign exchange exposure management policy, including but not limited to entering swaps thereunder and the exemption of swaps from any execution and clearing requirements.

Reviewing cybersecurity risks and incidents and any other risks and incidents relevant to our computerized information system controls and security, and discussing if any such risks and incidents should be disclosed in our periodic filings with the SEC.

Reports to the Board the results of its monitoring and recommendations.

Provides to the Board any additional information and materials as the committee may determine is necessary to make the Board aware of significant financial matters requiring the Board’s attention.

Ms. Ashkenazi joined after the end of fiscal year 2019.

Discharges the Board’s responsibilities relating to compensation of our executive officers.

Evaluates our compensation plans, policies and programs for executive officers and recommends the establishment of policies dealing with various compensation and employee benefit plans.

Administers our executive stock and cash incentive plans.

Provides advice on management development matters that have major implications for the growth, development and depth of our management team, including reviewing succession plans.

Reviews and discusses with management and recommends to the Board whether the disclosures under “Compensation Discussion and Analysis” should be included in our proxy statement.

Reviews the compensation paid to directors for service on the Board and its committees.

Assesses, at least annually, the risks associated with our compensation policies, and reports to the Board and the Audit Committee whether our compensation policies and practices create risks that are reasonably likely to have a material adverse effect on us.

Dr. Febbo joined after the end of fiscal year 2019.

Mr. Guertin will retire from the Board immediately following the Annual Meeting.

Dr. Le Beau joined after the end of fiscal year 2019.

Oversees compliance with legal, regulatory and global trade requirements.

Oversees compliance programs designed to foster legal and ethical business conduct, interactions with government officials and interactions with healthcare providers.

Develops and recommends to the Board our Code of Conduct.

Dr. Le Beau joined after the end of fiscal year 2019.

Develops and recommends to the Board for adoption or amendment, our Corporate Governance Guidelines, and policy regarding conflicts of interest and related person transactions.

Identifies, evaluates and recommends to the Board potential nominees to the Board, including stockholder suggestions.

Reviews with the Board annually the independence, skills and characteristics of all individual members and the skills and characteristics of the Board as a whole in determining whether to recommend incumbent directors for re-election.

Evaluates and makes recommendations to the Board concerning the size of the Board, the appointment of directors to Board committees, the qualifications of committee members and the selection of Board committee chairs.

Oversees the annual review of director independence and evaluation of the Board’s performance.

Acts on matters when a meeting of the full Board is impracticable.

Has all the powers of the Board except those powers reserved by law to the full Board.

Attraction and Retention of Key Talent. The pay program should enable the company to attract and retain individuals with the background, experience, and talent required to lead the development and successful implementation of the Company’s business strategy.

Performance-Driven Compensation. A high proportion of total compensation should be at risk and subject to achievement of annual and long-term operating and strategic goals that deliver long-term value creation for both customers and stockholders.

Stockholder Alignment. Long-term incentives should be awarded in Company stock to increase the alignment of executive interests with those of stockholders.

Appropriately Balance Short- and Long-term Performance Orientation. The mix of incentives should place emphasis on achievement of long-term sustainable growth and profitability.

Total Compensation Context. Pay decisions should be made in the context of total compensation relative to pay practices of competitors for key talent and in consideration of individual performance, experience, knowledge, and internal parity among peers.

  Growth Priorities

  Innovate in Radiation Therapy         

•  9% growth in oncology gross orders

•  50%+ share of global radiation therapy market

•  200+ gross orders for Halcyon^™

•  Record TrueBeam^® orders and revenue

•  5% growth in linear accelerator installed base (an increase of 439 units), bringing total to 8,496 units

•  8% of revenue invested in R&D to drive innovation and extend technology leadership

•  17 orders for Ethos, the world’s first AI driven adaptive radiation therapy platform, since 2019 ASTRO launch

•  Acquired Cancer Treatment Solutions International (“CTSI”); CTSI facilitates the use of clinical processes and technology solutions that ensure the delivery of precise, consistent and safe care to cancer patients worldwide

  Leverage Artificial Intelligence,

  Machine Learning, and Cloud

  Solutions

•  16% growth in software revenue

•  5,500+ unique software installations globally

•  25,000+ patients on our Noona^® platform, providing patient reported outcomes and extending into life sciences market

•  First cloud deployment of our flagship enterprise suite of ARIA^® and Eclipse^™

  Grow Emerging Business and

  Technologies

•  Entered into the interventional oncology market via the acquisitions of Endocare, Inc (“Endocare”), Hangzhou Alicon Pharm Sci & Tec Co., Ltd. (“Alicon”) and Boston Scientific’s embolic microspheres business

•  Acquired CyberHeart with an IP portfolio that covers the use of radiation in the heart (cardiac radioablation) and other forms of radiosurgery for cardiovascular disease

  GUIDING PRINCIPLE

2019 INCENTIVE PLAN DESIGN

Growth

Annual Cash Incentives

Invest in R&D to drive new product development / innovation and in appropriate levels of capital expenditure (“CAPEX”) to build capacity for growth

Achieve operating efficiencies to drive growth

Promote efficient capital allocation for acquisitions that expand our business base

Includes an economic profit measure to encourage balance between short and long-term decision making that:

•  combines growth and return,

•  includes a cost charged on the capital employed to generate growth and earnings, and

•  treats R&D and CAPEX like investments while holding management accountable for earning a return on cumulative investments over time

Long-Term Focus

Performance Share Unit (“PSU”) and Performance Stock
Option (“PSO”) Awards

Use multi-year performance metrics focused on rewarding value creation and aligning interests with stockholders

Set 3-year goals tied to a combination of revenue growth and change in EBIT margin, two primary measures of value creation

For fiscal year 2019 awards, we adjusted the threshold performance goal to require positive revenue growth in order to receive any payout

Relative Performance

Relative Total Stockholder Return (“TSR”) Modifier for PSUs
and PSOs

Adjust rewards for significant over or under performance versus peers

Index relative TSR to 48 Business Model Peers in the healthcare industry (as described below in the Relative TSR Modifier section for the fiscal year 2019 PSU and PSO awards)

•  Cap maximum PSU and PSO payout at 100% of target if TSR ranks in the bottom quartile of Business Model Peers

•  Set minimum PSU and PSO payout at 100% of target if TSR ranks in the top quartile of Business Model Peers

For fiscal year 2020 PSU and PSO awards, the TSR modifier has been further refined (as described in more detail in the Stockholder Engagement section below)

CEO Pay for Performance

CEO Long-Term Incentive Award Mix

Further align CEO pay with performance for stockholders

Grant 100% of CEO long-term incentive equity awards in performance-vested awards consisting of PSOs and PSUs

89% of our CEO’s total target compensation opportunity was performance-based, with 100% of his long- term incentive (equity) awards subject to performance-based vesting.

78% of our other Named Executive Officers’ total target compensation opportunity was performance- based, with 60% of their long-term incentive (equity) awards subject to performance-based vesting.

CEO realizable pay versus stockholders’ returns. The following graph shows Varian’s stock price relative to CEO target compensation and realizable pay over the last several years.

The assumptions that were used to calculate the amounts set forth in this chart appear in the “CEO realizable pay versus stockholders’ returns” section in the “Compensation Discussion and Analysis” set forth below.

Name and position ⁽¹⁾

Dow R. Wilson ⁽²⁾

President and Chief Executive Officer

Gary E. Bischoping, Jr.

President, Interventional Oncology Solutions (Former Chief Financial Officer)

Kolleen T. Kennedy

President, Proton Solutions and Chief Growth Officer

Christopher A. Toth

Senior Vice President and President, Oncology Systems

John W. Kuo

Senior Vice President, General Counsel and Corporate Secretary

All current executive officers as a group (5 persons) ⁽³⁾

All current directors who are not executive officers as a group (10 persons) ⁽⁴⁾⁽⁵⁾

All current and former employees, including all current officers who are not executive officers, as a group ⁽⁶⁾

No awards have been granted under the 2010 ESPP to any associate of any of our directors (including nominees) or executive officers, and no person received 5% or more of the total awards granted under the 2010 ESPP since its inception.

Mr. Wilson is also a nominee for election as a director.

This group includes Mr. Wilson, Ms. Kennedy, Mr. Toth, Mr. Kuo and J. Michael Bruff who succeeded Mr. Bischoping as Senior Vice President, Finance and Chief Finance Officer on December 1, 2019. We do not consider Mr. Bischoping, who currently serves as President, Interventional Oncology Solutions, to be an executive officer at this time.

This group includes all the nominees for election as a director other than Mr. Wilson.

Includes 358 shares that were purchased by Mr. Guertin when he was the Chief Executive Officer of the Company.

Excludes any shares that were purchased by the current executive officers of the Company under the 2010 ESPP.

(In millions, except price per share)

Plan Category                                    

Equity compensation plans approved by security holders

Equity compensation plans not approved by security holders

Total

The weighted average exercise price does not take into account the shares issuable upon vesting of outstanding restricted stock units, deferred stock units and performance units, which have no exercise price.

Consists of stock options (including performance-based options), restricted stock units, deferred stock units and performance units granted under the Fifth Amended and Restated 2005 Omnibus Stock Plan (the “Fifth Amended 2005 Plan”). The number of shares subject to outstanding performance awards assumes the target payout with respect to such awards.

Includes 5.7 million shares available for future issuance under the Fifth Amended 2005 Plan. Also includes 5.0 million shares available for future issuance under the 2010 ESPP, including shares subject to purchase during the current offering period, which commenced on October 29, 2019 (the exact number of which will not be known until the purchase date on May 1, 2020). Subject to the number of shares remaining in the share reserve, the maximum number of shares purchasable by any participant under the 2010 ESPP on any one purchase date in any offering period, including the current offering period, will not exceed 1,000 shares.

Fee Category

Audit Fees

Audit-Related Fees

Tax Fees

All Other Fees

Total Fees

Stockholders

The Vanguard Group, Inc. ⁽¹⁾

100 Vanguard Blvd.

Malvern, PA 19355

BlackRock, Inc. ⁽²⁾

55 East 52nd Street

New York, NY 10055

Loomis, Sayles & Co., L.P. ⁽³⁾

One Financial Center

Boston, MA 02111

Directors, Nominees for Director and Named Executive Officers

Anat Ashkenazi

Jeffrey R. Balser

Judy Bruner ⁽⁴⁾

Jean-Luc Butel ⁽⁵⁾

Regina E. Dugan ⁽⁶⁾

R. Andrew Eckert ⁽⁷⁾

Phillip G. Febbo .

Timothy E. Guertin ⁽⁸⁾

David J. Illingworth ⁽⁹⁾

Michelle M. Le Beau

Dow R. Wilson ⁽¹⁰⁾

Gary Bischoping, Jr. ⁽¹¹⁾

Kolleen T. Kennedy ⁽¹²⁾

John W. Kuo ⁽¹³⁾

Christopher A. Toth ⁽¹⁴⁾

All directors, nominees for director and executive officers as a group
(15 persons) ⁽¹⁵⁾

The percentage of shares of common stock beneficially owned does not exceed one percent of the shares of common stock outstanding at December 2, 2019.

Based on a Schedule 13G/A filed February 11, 2019, The Vanguard Group, Inc. has sole power to vote 112,809 of these shares, shared power to vote 32,410 of these shares, sole power to dispose of 9,792,826 of these shares and shared power to dispose of 144,115 of these shares.

Based on a Schedule 13G/A filed February 6, 2019, BlackRock, Inc. has sole power to vote 6,389,647 of these shares and sole power to dispose of 7,237,070 of these shares.

Based on a Schedule 13G/A filed February 14, 2019, Loomis, Sayles & Co., L.P. has sole power to vote 4,044,959 of these shares and sole power to dispose of 5,613,273 of these shares.

Amount shown includes 2,870 deferred stock units that have vested but that are subject to deferred distribution.

Amount shown includes 1,871 deferred stock units that have vested but that are subject to deferred distribution.

Amount shown includes 1,990 deferred stock units that have vested but that are subject to deferred distribution.

Amount shown includes 5,651 shares that may be acquired under exercisable stock options. Also includes 1,990 deferred stock units that have vested but that are subject to deferred distribution.

Amount shown includes 1,990 deferred stock units that have vested but that are subject to deferred distribution and 32,125 shares held in a trust of which Mr. Guertin is the trustee.

Amount shown includes 5,651 shares that may be acquired under exercisable stock options. Also includes 1,990 deferred stock units that have vested but that are subject to deferred distribution.

Amount shown includes 301,484 shares that may be acquired under exercisable stock options.

Amount shown includes 19,947 shares that may be acquired under exercisable stock options.

Amount shown includes 2,485 shares that may be acquired under exercisable stock options.

Amount shown includes 4,072 shares that may be acquired under exercisable stock options.

Amount shown includes 10,048 shares that may be acquired under exercisable stock options.

Amount shown includes 332,156 shares that may be acquired under exercisable stock options and 32,125 shares held in trusts, including those described in footnote 8, held by all persons who are directors, nominees for director and/or executive officers of the Company as of December 2, 2019, which includes Mr. Bruff who succeeded Mr. Bischoping as Senior Vice President, Finance and Chief Finance Officer on December 1, 2019. We do not consider Mr. Bischoping, who currently serves as President, Interventional Oncology Solutions, to be an executive officer at this time.

     Growth Priorities

FY 2019 Results

     Innovate in Radiation Therapy

•  9% growth in oncology gross orders

•  50%+ share of global radiation therapy market

•  200+ gross orders for Halcyon^™

•  Record TrueBeam^® orders and revenue

•  5% growth in linear accelerator installed base (an increase of 439 units), bringing total to 8,496 units

•  8% of revenue invested in R&D to drive innovation and extend technology leadership

•  17 orders for Ethos, the world’s first AI driven adaptive radiation therapy platform, since 2019 ASTRO launch

•  Acquired Cancer Treatment Solutions International (“CTSI”); CTSI facilitates the use of clinical processes and technology solutions that ensure the delivery of precise, consistent and safe care to cancer patients worldwide

•  16% growth in software revenue

•  5,500+ unique software installations globally

•  25,000+ patients on our Noona^® platform, providing patient reported outcomes and extending into life sciences market

•  First cloud deployment of our flagship enterprise suite of ARIA^® and Eclipse^™

•  Entered into the interventional oncology market via the acquisitions of Endocare, Inc (“Endocare”), Hangzhou Alicon Pharm Sci & Tec Co., Ltd. (“Alicon”) and Boston Scientific’s embolic microspheres business

•  Acquired CyberHeart with an IP portfolio that covers the use of radiation in the heart (cardiac radioablation) and other forms of radiosurgery for cardiovascular disease

GUIDING PRINCIPLE

2019 INCENTIVE PLAN DESIGN

Growth

Annual Cash Incentives

Invest in R&D to drive new product development / innovation and in appropriate levels of capital expenditure (“CAPEX”) to build capacity for growth

Achieve operating efficiencies to drive growth

Promote efficient capital allocation for acquisitions that expand our business base

Includes an economic profit measure to encourage balance between short and long-term decision making that:

•  combines growth and return,

•  includes a cost charged on the capital employed to generate growth and earnings, and

•  treats R&D and CAPEX like investments while holding management accountable for earning a return on cumulative investments over time

Performance Share Unit (“PSU”) and Performance Stock
Option (“PSO”) Awards

Use multi-year performance metrics focused on rewarding value creation and aligning interests with stockholders

Set 3-year goals tied to a combination of revenue growth and change in EBIT margin, two primary measures of value creation

For fiscal year 2019 awards, we adjusted the threshold performance goal to require positive revenue growth in order to receive any payout

Relative Total Stockholder Return (“TSR”) Modifier for PSUs
and PSOs

Adjust rewards for significant over or under performance versus peers

Index relative TSR to 48 Business Model Peers in the healthcare industry (as described below in the Relative TSR Modifier section for the fiscal year 2019 PSU and PSO awards)

•  Cap maximum PSU and PSO payout at 100% of target if TSR ranks in the bottom quartile of Business Model Peers

•  Set minimum PSU and PSO payout at 100% of target if TSR ranks in the top quartile of Business Model Peers

For fiscal year 2020 PSU and PSO awards, the TSR modifier has been further refined (as described in more detail in the Stockholder Engagement section below)

CEO Pay for Performance

CEO Long-Term Incentive Award Mix

Further align CEO pay with performance for stockholders

Grant 100% of CEO long-term incentive equity awards in performance-vested awards consisting of PSOs and PSUs

89% of our CEO’s total target compensation opportunity was performance-based, with 100% of his long- term incentive (equity) awards subject to performance-based vesting.

78% of our other Named Executive Officers’ total target compensation opportunity was performance- based, with 60% of their long-term incentive (equity) awards subject to performance-based vesting.

CEO realizable pay versus stockholders’ returns. The following graph shows Varian’s stock price relative to CEO target compensation and realizable pay over the last several years.

“Target TDC” is the sum of (i) the salary paid, (ii) the target annual incentive, and (iii) the grant date fair value of long-term incentives from each fiscal year’s Summary Compensation Table. “Realizable TDC” for each fiscal year is the sum of (i) the salary paid, (ii) the annual incentive earned and paid for the fiscal year, (iii) the time-vested RSUs granted in that fiscal year valued at the stock price on applicable vesting date(s) if vested or September 27, 2019 if unvested, (iv) the intrinsic value of time-vested stock options valued as of September 27, 2019, (v) the number of earned PSUs valued at the stock price when earned, (vi) the number

  What We Do:

  What We DON’T Do:

✓  Independent Compensation Committee

û   Target pay to any specified percentile of market

✓  Independent compensation advisor

û   “Golden Parachute” tax gross ups

✓  NEOs employed “at will”

û   NEO employment contracts

✓  Robust CEO & NEO stock ownership guidelines

û   Permit directors and executive officers to engage in common stock margining, pledging or hedging

✓  Clawback policy that applies to our annual cash incentive plan and equity incentive plan

û   Permit executive officers to sell Company stock without a 10b5-1 trading plan

✓  Annual compensation review and risk assessment

û   Excessive NEO perquisites

✓  Annual stockholder “say on pay” vote

û   Reprice and repurchase options without stockholder approval

✓  Award 100% of CEO and 60% of other NEO long-term incentive value in performance-vested equity awards

û   Excessive pension/supplemental NEO retirement plan payouts

✓  Place caps on maximum payouts from our annual cash incentive plan and our PSU/PSO plans

û   Single trigger acceleration of equity vesting or change in control payments

✓  Beginning in fiscal year 2018, require revenue growth to earn a payout for PSU and PSO awards

û   Change in control severance payments without involuntary job loss or substantial diminution of duties

✓  Solicit detailed feedback regarding our compensation practices from stockholders throughout the year

û   Excessive severance/change in control provisions that provide cash payments exceeding three times average annual cash compensation for the preceding five years

✓  Annual review of succession plan

Attraction and Retention of Key Talent. The pay program should enable the company to attract and retain individuals with the background, experience, and talent required to lead the development and successful implementation of the Company’s business strategy.

Performance-Driven Compensation. A high proportion of total compensation should be at risk and subject to achievement of annual and long-term operating and strategic goals that deliver long-term value creation for both customers and stockholders.

Stockholder Alignment. Long-term incentives should be awarded in Company stock to increase the alignment of executive interests with those of stockholders.

Appropriately Balance Short- and Long-term Performance Orientation. The mix of incentives should place emphasis on achievement of long-term sustainable growth and profitability.

Total Compensation Context. Pay decisions should be made in the context of total compensation relative to pay practices of competitors for key talent and in consideration of individual performance, experience, knowledge, and internal parity among peers.

Name

Title

Dow R. Wilson

President and Chief Executive Officer

Kolleen T. Kennedy

President, Proton Solutions and Chief Growth Officer

Gary E. Bischoping, Jr.

President, Interventional Oncology Solutions (Former Chief Financial Officer) ⁽¹⁾

John W. Kuo

Senior Vice President, General Counsel and Corporate Secretary

Christopher A. Toth

President, Varian Oncology Systems

Mr. Bischoping served as the Company’s Senior Vice President, Finance and Chief Financial Officer in fiscal year 2019, and was succeeded by Mr. Bruff on December 1, 2019. Mr. Bischoping now serves as the Company’s President, Interventional Oncology Solutions.

Component

Purpose and Role

Base salary

•  Provide a market competitive, fixed level of cash compensation to attract and retain talented and skilled executives

•  Recognize sustained performance, capabilities, job scope, experience, and internal pay equity

Annual cash incentives
(Management Incentive Plan, “MIP”)

•  Motivate and reward achievement of annual financial results that drive stockholder value

•  Reward achievement of strategic goals that provide the foundation for future growth and profitability

Performance Share Units (“PSUs”)

•  Reward achievement of 3-year financial goals and TSR relative to peers

•  Encourage long-term stock price growth and executive retention through 3-year cliff vesting and TSR metric

•  Align executives’ interests with stockholders’ interests through use of performance-based equity awards

Performance Stock Options (“PSOs”)

•  Reward achievement of 3-year financial goals and TSR relative to peers

•  Encourage long-term stock price growth and executive retention through 3-year cliff vesting, a TSR metric and a seven-year term to exercise the options

•  Provide leveraged gains aligned with stockholders through use of performance-based stock option awards

Restricted Stock Units (“RSUs”)

•  Encourage stock price growth and executive retention through time-based vesting over three years

•  Align executives’ interests with stockholders’ interests through use of equity awards

Time-Based Stock Options (“Options”)

•  Encourage stock price growth and executive retention through time-based vesting over three years and a seven-year period to exercise the options

•  Provide leveraged gains aligned with stockholders’ interests through use of stock options

Executive benefits and perquisites

•  Provide the same health, welfare and 401(k) benefits as other employees

•  Provide a competitive benefit by allowing executives to defer compensation through a non-qualified deferred compensation plan

•  Facilitate executive health and focus on our business by providing reimbursement for annual physical exams and financial counseling

•  Encourage support of the communities in which we operate by matching charitable donations (available to all employees)

Risk. Annually review the risks and rewards associated with the Company’s compensation programs. Ensure that the program includes plan design features that mitigate risk without diminishing the incentive nature of the compensation and encourages and rewards prudent business judgment and appropriate risk- taking over the short term and the long term.

Annual Program Assessment. Assess the program to ensure that it is well aligned with the Company’s evolving business strategy and is effective in supporting its talent needs. Solicit recommendations for changes from management and our compensation consultant as appropriate. Determine the specific plan designs to be used for the year.

CEO Compensation and Performance Goals. Annually review and approve corporate goals and objectives relevant to the CEO’s compensation; develop the process for evaluating the CEO’s performance; and establish a proposal for CEO compensation based on an evaluation of the CEO’s performance in light of the foregoing corporate goals and objectives and after discussions with the independent directors of the Board and the Committee’s independent advisors.

Compensation of Other Executives. Review, discuss, modify and approve, as appropriate, compensation recommendations made by the CEO for other NEOs.

Considerations in Making Compensation Decisions. Consider, among other factors: the Company’s overall performance, stockholder return, the performance of the Company’s business segments, the achievement of specific corporate goals and objectives that the Committee established, the achievement of any specific individual goals that have been assigned, individual performance on job duties, compensation previously provided, compensation of other executives of the Company, and competitive compensation levels. Confer with the independent directors of the Board and consider, as appropriate, views expressed by stockholders on executive compensation matters, including results of stockholder advisory votes on executive compensation.

Peer Groups. Review and establish annually the Company’s comparator/peer group for use in assessing the competitive range of compensation provided to individuals in similar positions at comparable companies. Review and establish annually the Company’s comparator/peer group for use in assessing total stockholder return relative to business model peers. See additional information on the fiscal year 2019 compensation peer group in “Peer Group and Market Analysis” below and on the 2019 business model peer group in “Relative TSR Modifier” below.

General Advice to the Board. Review management and compensation matters having major implications to the long-range development of the Company including plans for succession of the CEO and other executive officers and corporate officers.

Compensation Consultant. Engage an advisor and meet with its advisor, as needed, in the Committee’s sole discretion.

role including the scope and complexity of responsibilities;

experience and capabilities;

contributions or responsibilities beyond the typical scope of the role;

individual performance;

internal comparisons; and

competitive compensation opportunities as reflected in compensation provided by our peers and other competitors for similar executive talent.

U.S. publicly traded companies from the Healthcare Equipment & Supplies, Life Sciences Tools & Services, and, newly added for fiscal year 2019, Biotechnology, Healthcare Technology, and Pharmaceutical industries

Companies in a relevant range around Varian’s revenues and market-capitalization

Companies with similar business characteristics and comparable talent requirements, such as complex medical or related electronic devices, alternative healthcare therapies or healthcare-related software, significant non-U.S. revenues, and employee headcount generally in a reasonable range around Varian’s headcount

Varian Medical Systems FY 2019 Compensation Peer Group

Healthcare Equipment

Life Sciences Tools and Services

Healthcare Supplies

Boston Scientific

Bruker Corporation

Edwards Lifesciences

Hill-Rom Holdings

Biotechnology

Hologic

IDEXX Labs

Intuitive Surgical

Healthcare Technology

ResMed

Zimmer Biomet Holdings

Peer Group

   Company Scope

Varian

Low

Median

High

  Revenue ($M)

$

2,668

$

1,599

$

2,901

$

9,048

  Market Capitalization ($M)

$

9,765

$

4,728

$

14,755

$

39,292

 Name

FY2018 Annual Salary

(effective December 16, 2017)

FY2019 Annual Salary

(effective December 15,  2018) ¹

    % Increase  

 Dow R. Wilson

$

1,000,000

$

1,000,000

0.0

%

 Kolleen T. Kennedy

$

687,752

$

722,140

5.0

%

 Gary Bischoping, Jr.

$

550,000

$

566,500

3.0

%

 John W. Kuo

$

484,026

$

498,547

3.0

%

 Christopher A. Toth

$

430,000

$

525,000

22.1

%

Ms. Kennedy’s and Mr. Toth’s fiscal year 2019 salaries were effective October 3, 2018, which is the date they were appointed to their new roles.

Payment of any cash annual incentives to our NEOs and certain other senior executives is conditioned upon achievement of at least $250 million in annual net income, on a non-GAAP basis, calculated using the Company’s currency rates as of the end of May 2018 and subject to applicable adjustments adopted by the Compensation Committee at the time the MIP goals were set.

Total awards paid under the MIP for fiscal year 2019 cannot exceed 8% of fiscal year 2019 EBIT (as defined in the MIP) before incentive compensation. In addition, individual awards payable to each of our NEOs and certain other senior executives are capped at the lesser of 200% of target payout or $3,000,000 per individual.

MIP

  Award $  

  Target  

  Award $  

Economic Profit  

Payout %

80%

  Weight  

  Individual Goals  

Payout %

20%

  Weight  

0% - 200%

0% - 200%

Payout Range as Percentage of Target

Target Awards

MIP Target

MIP Maximum

 Name

Annual Salary

% of Salary

Amount

% of Salary

Amount

 Dow R. Wilson

$

1,000,000

125

% 

$

1,250,000

250

% 

$

2,500,000

 Kolleen T. Kennedy

$

722,140

90

% 

$

649,926

180

% 

$

1,299,852

 Gary Bischoping, Jr.

$

566,500