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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  ☑

Filed by a Party other than the Registrant  ☐

Check the appropriate box:

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PDF SOLUTIONS, INC.

(Name of Registrant as Specified In Its Charter)

N/A

(Name of Person(s) Filing proxy statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

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Notice of 2024 Annual Meeting
of Stockholders and Proxy Statement

PDF Solutions, Inc.

Tuesday, June 18, 2024

10:00 a.m. PDT

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PDF Solutions, Inc.

2024 Notice of Annual Meeting of Stockholders

The 2024 Annual Meeting of Stockholder (the “Annual Meeting”) of PDF Solutions, Inc. (the “Company,” or “PDF Solutions,” or “we,” or “us”) will be held on Tuesday, June 18, 2024, at 10:00 a.m. PDT at the Company’s corporate headquarters, located at 2858 De La Cruz Boulevard, Santa Clara, California 95050.

The items of business at the Annual Meeting are:

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Stockholder may also consider such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

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2024 Notice of Annual Meeting of Stockholders

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Other Important Information

You are entitled to attend the Annual Meeting only if you were a stockholder as of the close of business on the Record Date or hold a valid proxy for the Annual Meeting. You should be prepared to present photo identification for admittance. If you are not a stockholder of record but hold shares through a broker, bank, trustee, or nominee (i.e. in street name), you should provide proof of beneficial ownership as of the Record Date, such as your most recent account statement prior to the Record Date, a copy of the voting instruction card provided by your broker, bank, trustee, or nominee, or similar evidence of ownership.

Your Vote is Very Important

Whether or not you expect to attend the Annual Meeting in person, please vote your shares as soon as possible. You may vote over the Internet, in person at the annual meeting, by using the toll-free telephone number on your proxy card or voting instruction materials (if you are in Canada, Puerto Rico, or the United States), or by mailing a proxy card or voting instruction card.

On or about May 9, 2024, we will mail our stockholders as of the Record Date, a Notice of Internet Availability of Proxy Materials.

Please review the instructions on the Notice of Internet Availability of Proxy Materials or on your proxy card or voting instruction materials regarding your voting options.

Our proxy statement, proxy card and annual report to stockholders for the year ended December 31, 2023, are available at https://www.pdf.com/proxy-materials.

On behalf of our Board of Directors, thank you for your participation in this important annual process.

By Order of the Board of Directors,

PETER COHN

Secretary

Santa Clara, California

April [•], 2024

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Proxy Statement

For the 2024 Annual Meeting of Stockholders

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PDF SOLUTIONS, INC.

2858 De La Cruz Boulevard

Santa Clara, California 95050

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To Be Held on June 18, 2024, at 10:00 a.m. PDT

Proposals to be Voted on at the Annual Meeting

You are being asked to vote on the following:

The Board recommends a vote FOR each of the director nominees listed in Proposal 1 and FOR Proposals 2, 3, 4, 5, and 6.

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Proposal No. 1:Election of Class II Directors

The Board of Directors, upon recommendation from the NCG Committee of the Board, has nominated three candidates for election/re-election to the Board this year as Class II directors: Chi-Foon Chan, Kimon W. Michaels, and Shuo Zhang. Detailed information about each nominee, and each of our continuing directors, is provided below.

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Recommendation of the Board

THE BOARD RECOMMENDS THAT OUR STOCKHOLDERS VOTE FOR THE ELECTION OF EACH OF THE CLASS II DIRECTOR NOMINEES INDICATED ABOVE.

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Proposal 1: Election of Directors

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Director Classes

Our amended and restated bylaws (our “Bylaws”) provide that the number of directors shall be established by the Board or the stockholders of the Company. Our amended and restated certificate of incorporation provides that the directors shall be divided into three classes, with each class serving for staggered, three-year terms and one class being elected at each year’s annual meeting of stockholders. The Board has set the number of Directors at eight, currently consisting of two Class I directors, three Class II directors and three Class III directors.

The Class II directors elected at the 2024 annual meeting of stockholders (the “Annual Meeting”) will hold office until the first annual meeting that is held after the year ending December 31, 2026, or until each such director’s successor has been duly elected and qualified or until such director’s earlier death, resignation, or removal. The terms of the Class III and Class I directors will expire at the annual meeting of stockholders following the years ending December 31, 2024, and December 31, 2025, respectively. If any director nominee is unable to serve or for good cause will not serve, the Board may reduce the size of the Board, designate a substitute, or leave a vacancy unfilled. If a substitute is designated, proxies voting on the original director candidate will be cast for the substitute candidate.

It is not expected that the nominee listed below will be unable or will decline to serve as a director. The Class II nominees listed below are Chi-Foon Chan, Ph.D., Kimon W. Michaels, Ph.D., and Shuo Zhang, each of whom presently serves as a director of the Company. Each of these nominees has consented to serve a three-year term.

The certain individual experience, qualifications, attributes, and skills of the below named directors that led the Board to conclude that Chi-Foon Chan, Kimon Michaels, and Shuo Zhang should be re-nominated as directors are described in each nominee’s biography below. The information below was provided by the nominee and the continuing Class I and Class III directors with unexpired terms. There is no family relationship between the continuing directors, executive officers, and the Class II nominees.

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Proposal 1: Election of Directors

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Board Skills and Experiences

Our directors collectively provide significant skills and experiences in areas relevant to overseeing the Company’s business and strategy. The skills and experience of our Board include, but are not limited to:

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Board Skills Matrix

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Nominee Selection Process

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Proposal 1: Election of Directors

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Proposal 1: Election of Directors

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Nominees for Class II Directors

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Proposal 1: Election of Directors

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Nominees for Class II Directors

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Proposal 1: Election of Directors

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Continuing Class III Directors

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Proposal 1: Election of Directors

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Continuing Class III Directors

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Proposal 1: Election of Directors

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Continuing Class I Directors

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Corporate Governance

Governance and our Board of Directors

We are committed to the highest standards of corporate ethics and diligent compliance with financial accounting and reporting rules. The Board provides independent leadership in the exercise of its responsibilities. Our executive officers oversee a strong system of internal controls and compliance with corporate policies and applicable laws and regulations. Our employees operate in a climate of responsibility, candor, and integrity.

Key highlights of the Board and corporate governance practices are set forth below:

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Corporate Governance

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Board Leadership Structure

The Corporate Governance Board Guidelines provide for a Chairperson of the Board or, if vacant, a Lead Independent Director. The Bylaws and Corporate Governance Board Guidelines require that the Chairperson position be held by a separate individual from the Chief Executive Officer unless otherwise determined by the Board. The Board believes the separation of the Chief Executive Officer and the Chairperson position enhances the Board’s oversight of, and independence from, Company management, the ability of the Board to carry out its roles and responsibilities on behalf of our stockholders, and our overall corporate governance as compared to a combined Chairperson/Chief Executive Officer leadership structure.

Under our Corporate Governance Board Guidelines, the Chairperson of the Board, or in the absence of such a position, the Lead Independent Director, is responsible for presiding at all meetings of our stockholders and of the Board as a whole, as well as over executive sessions of the independent directors, and shall perform such other duties, and exercise such powers, as from time to time shall be prescribed in the Bylaws or by the Board. The position of Chairperson of the Board of Directors has been vacant since May 2018.

In January 2019, the independent directors unanimously elected Mr. Joseph Bronson to the role of Lead Independent Director. Mr. Bronson has been a director of the Company since May 2014. He is currently Chair of the NCG Committee and a member of Audit Committee of the Board.

Under the Bylaws, in the absence of a Chairperson, the Lead Independent Director may exercise all the rights and powers granted to the Chairperson of the Board. By definition, no employee may hold the Lead Independent Director position.

Role and Responsibilities of the Lead Independent Director

The Lead Independent Director’s primary responsibilities are set forth in the Corporate Governance Board Guidelines and the Lead Independent Director Charter and include:

The Lead Independent Director must be elected by a majority of the non-employee, independent directors of the Board for renewable one-year terms or until such earlier time as he or she ceases to be a director, resigns as Lead Independent Director or is replaced as Lead Independent Director by a majority of the nonemployee, independent directors, or the Board elects an independent Chair. The establishment of a Lead Independent Director with robust function, authority and responsibilities reflects the Board’s commitment to strong corporate governance.

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Corporate Governance

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The Board of Directors and its Committees

The Board has standing Audit, CHCM, and NCG Committees. Our board committees operate pursuant to charters that have been approved by the Board, are reviewed at least annually, and are available on our website at https://www.pdf.com/company/governance/.

The following table provides additional information regarding the committees of our Board of Directors:

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Audit Committee

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Nominating and Corporate Governance Committee

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Compensation and Human Capital Management Committee

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Board Diversity and Board Diversity Matrix

The NCG Committee has identified increasing diversity at the Board level as an essential element in supporting the attainment of our strategic objectives. Our Board has adopted a diversity policy, pursuant to which we are committed to actively seeking highly-qualified individuals from minority groups to include in the pool from which new candidates are selected. All candidates will be identified based on merit and suitability and considered against appropriate criteria, having due regard for the benefits of diversity on our Board.

The table below provides certain highlights of the composition of our Board members. Each of the categories listed in the below table has the meaning as it is used in Nasdaq Rule 5605(f)(1).

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Overboarding Policy

The NCG Committee considers each director’s ability to dedicate sufficient time, energy, and attention to the fulfillment of his or her duties when it nominates directors each year. Our Corporate Governance Board Guidelines contains our overboarding policy, which provides that prior to accepting service on the board of directors of any other public company, a Director shall notify the Chairperson or Lead Independent Director and the chair of the Committee. Ordinarily, Directors should not serve on more than three other boards of public companies in addition to our Board (except for any employee Director, who shall not serve on more than one other board). Members of the Audit Committee may not serve on more than three public company audit committees (including the Audit Committee), unless such member is a retired certified public accountant, chief financial officer, controller or has similar experience, in which case the limit will be four committees.

The Board also considers directors’ other obligations and commitments, including leadership positions the director may hold on other boards, in assessing directors’ ability to serve on our Board. In renominating directors for election at our 2024 annual meeting, the NCG Committee and Board have determined that each of our directors is currently in compliance with our Corporate Governance Board Guidelines and has sufficient time, energy, and attention to serve on the Board.

Board and Committee Evaluation

The NCG Committee is responsible for periodically overseeing an evaluation of our corporate governance practices and procedures and reviewing and recommending to the Board for approval any changes to our corporate governance framework. In addition, the NCG Committee is tasked with evaluating our programs, policies, practices, and disclosures relating to environmental and social issues and impact to support the sustainable growth of our businesses.

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Stockholder Recommendations of Board Candidates

We consider potential Board candidates recommended by stockholders. Stockholders may send any recommendations for director nominees or other communications to the Board or any individual director at the following address:

Board of Directors (or NCG Committee, or name of individual director)
PDF Solutions, Inc.
Attention: Secretary
2858 De La Cruz Boulevard
Santa Clara, California 95050

See “Proposals for Next Year’s Annual Meeting” on page 85 for information on how to recommend or nominate one or more potential candidates for election to the Board of Directors.

Stockholders’ Communications

Our Board welcomes all communications from our stockholders. Stockholders may send communications to the Board or any director of the Board in particular, at the following address: PDF Solutions, Inc., Attention: Investor Relations, 2858 De La Cruz Boulevard, Santa Clara, California 95050. Any correspondence addressed to the Board or to any one of our directors of the Board sent in care of our corporate offices is reviewed by our Investor Relations department and presented to the Board at its regular meetings.

Stockholder Engagement

The Board values the input of our stockholders, and we are committed to maintaining stockholder engagement that provides a constructive dialogue. Our engagement with its stockholders is intended to provide stockholders with honest, candid information on relevant issues. We also gather stockholder views and feedback.

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The chart below includes detail of the features of our approach to stockholder engagement.

Director Independence

We have adopted standards for director independence in accordance with the Nasdaq listing rules and the SEC rules. An “independent director” means a person, other than an officer or employee of the Company or its subsidiaries, or any other individual having a relationship that, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. To be considered independent, the Board must affirmatively determine that neither the director nor an immediate family member has had any direct or indirect material relationship with the Company within the last three years.

The Board considered the relationships, transactions, or arrangements with each of the directors discussed in “Certain Relationships and Related Transactions,” in this Proxy Statement and concluded that none of the current or former non-employee directors who served in 2023 on the Board have any relationships with the Company that would impair their independence, other than Drs. Kibarian and Michaels, who are employees of the Company.

The Board determined that Joseph R. Bronson, Dr. Chi-Foon Chan, Nancy Erba, Michael B. Gustafson, Ye Jane Li, and Shuo Zhang are independent directors under applicable Nasdaq listing rules and SEC rules.

The Board has determined that:

The independent directors meet regularly in executive sessions without the presence of the non-independent directors or members of our management, and in any event, not less than twice per year during regularly scheduled Board meeting days and from time to time as they deem necessary or appropriate.

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The Board’s Role in Risk Oversight

Our Board of Directors and committees of the board play a significant role in providing oversight of our management of risk. While our senior management has responsibility for the day-to-day management of risks, our Board is responsible for ensuring that the risk management processes designed and implemented by management are functioning as intended.

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Strategy Oversight by Board

Our Board of Directors actively oversees our long-term business strategy and strategic priorities. The Board attends an all-day meeting once a year, including in 2023, focused on strategy, which includes presentations from, and engagement with, the senior leaders of the Company. In 2023, the Board also worked closely with our CEO in reviewing and monitoring the execution of our performance to strategic goals. In addition, throughout the year, the Board routinely met with senior management on critical business matters that tie to our strategic priorities.

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Information Security and Risk Oversight

We are heavily reliant on our technology and infrastructure, as well as the public cloud to an increasing degree, to provide our products and services to our customers. As a result, we have developed an information security program to enhance our network security measures, identify and mitigate information security risk, and protect and preserve the confidentiality, integrity, and continued availability of critical information owned by us and that of our customers and suppliers that is in our care.

As described in the Audit Committee Charter, the Audit Committee is tasked with oversight of certain risk issues, including cybersecurity. The Audit Committee is comprised entirely of independent directors, two of whom have significant work experience related to information security issues or oversight. Management reports high severity security incidents to the Audit Committee after they are discovered. Additionally, management provides a summary four times per year of all security incidents to the Audit Committee. The full Board of Directors is also provided an annual assessment of our information security program, our internal response preparedness, and assessments led by outside assessors and auditors.

Additional information about the Company's cybersecurity program can be found in Item 1C. “Cybersecurity” of our Annual Report on Form 10-K filed on February 3, 2024.

Code of Ethics

We have adopted a Code of Ethics, which applies to all employees, officers, and directors, including our principal executive officer and principal financial officer. The Board of Directors is responsible for setting the standards of conduct contained in the Code of Ethics and for updating these standards as appropriate to reflect legal and regulatory developments. The Audit Committee is charged by the Board with the authority and responsibility to review and assess the Code of Ethics and recommend any amendments thereto or waivers thereof for approval by the Board.

Although we are currently not a member of the Responsible Business Alliance (RBA), upon recommendation by the Audit Committee, our Board of Directors elected to adopt the RBA Code of Conduct to supplement our Code of Ethics, including the specific policies of the RBA Code relating to the five critical areas of corporate social responsibility: labor, health and safety, environment, management systems, and ethics.

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Corporate Governance Policies

We provide information on our website about our corporate governance policies, including our Code of Ethics, charters for the three standing committees of the Board (i.e. the Audit, CHCM, and NCG Committees) and the Lead Independent Director Charter. The Board also adopted the following governance policies: Diversity Policy, Corporate Governance Board Guidelines, Director Confidentiality Policy, Related Parties Transactions Policy, Stock Ownership Guidelines Policy, and Director Disclosure Policy. These materials can be found at https://www.pdf.com/company/governance/. Our website address provided is not intended to function as a hyperlink, and the information on our website is not, and should not be considered, part of this Proxy Statement and is not incorporated by reference herein.

Investors may also request free printed copies of the Code of Ethics and committee charters by sending inquiries to us at PDF Solutions, Inc., Attention: Investor Relations, 2858 De La Cruz Boulevard, Santa Clara, California 95050.

Our policies and practices reflect corporate governance initiatives that are compliant with the Nasdaq continued listing requirements and the corporate governance requirements of the Sarbanes-Oxley Act of 2002, including:

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Environmental, Social, & Governance Matters

ESG Oversight

Given the importance of ESG to the long-term success of our business, our Board and its committees play a critical role in overseeing ESG matters.

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Audit Committee Report

The Audit Committee of our Board is composed of three independent directors and operates under a written charter adopted by the Board of Directors. The members of the Audit Committee are Ms. Erba (Chair since March 1, 2023), Mr. Bronson (Chair until March 1, 2023), and Mr. Gustafson. Each of the members of the Audit Committee is independent as defined by the Nasdaq listing rules. In addition, based on the background, education, qualification, and attributes summarized in this Proxy Statement, our Board has determined that Ms. Erba and Mr. Bronson each qualify as an “audit committee financial expert” as defined by SEC rules.

Our Board has adopted a written charter for the Audit Committee, which governs the Audit Committee’s functions and responsibilities. The Audit Committee periodically reviews and reassesses the adequacy of the Audit Committee charter at least once per year and makes recommendations to the Board regarding changes or amendments to the Audit Committee it deems appropriate.

The Audit Committee, in consideration of stockholder ratification, appoints the accounting firm to be engaged as our independent registered public accounting firm. The independent registered public accounting firm is responsible for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB, and to issue a report thereon. Management is responsible for our internal controls and the financial reporting process. The Audit Committee is responsible for monitoring, overseeing, and assessing the effectiveness of these processes.

The Audit Committee held five meetings during the year ended December 31, 2023. The meetings were designed to facilitate and encourage communication between the Audit Committee, management and our independent registered public accounting firm, BPM LLP. Management represented to the Audit Committee that our consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The Audit Committee reviewed and discussed the audited consolidated financial statements for the year ended December 31, 2023, with management and the independent registered public accounting firms.

The Audit Committee discussed with the independent registered public accounting firms the adequacy of our internal control system, financial reporting procedures and the matters required to be discussed by the applicable requirements of the PCAOB and the SEC.

The Audit Committee has received and reviewed the written disclosures and the letter from the independent registered public accounting firms as required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence. Additionally, the Audit Committee has discussed with BPM LLP, as applicable, the issue of their respective independence from the Company.

Based on its review of the audited consolidated financial statements and the various discussions noted above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2023.

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The information contained in the Audit Committee Report shall not be deemed to be “soliciting material,” to be “filed” with the SEC, or to be subject to Regulation 14A or Regulation 14C (other than as provided in Item 407 of Regulation S-K) or to the liabilities of Section 18 of the Exchange Act and, notwithstanding anything to the contrary set forth in any of the Company’s filings under the Securities Act of 1933, as amended, (the “Securities Act”) or the Exchange Act that might incorporate future filings, including this Proxy Statement, in whole or in part, the Audit Committee Report shall not be deemed to be incorporated by reference into any such filings with the SEC except to the extent that the Company specifically incorporates it by reference into a document filed under the Securities Act or the Exchange Act.

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The Audit Committee has appointed BPM LLP (“BPM”) as our independent registered public accounting firm for the year ending December 31, 2024. As a matter of good corporate governance, our Audit Committee has decided to submit its selection of principal independent registered public accounting firm to stockholders for ratification. In the event that ratification of this selection of auditors is not approved by a majority of the shares of common stock voting at the Annual Meeting in person or by proxy, the Audit Committee will consider interviewing other independent registered public accounting firms. There can be no assurances, however, that it will appoint another firm if this proposal is not approved.

Even if the selection is ratified, the Audit Committee in its discretion may select a different registered public accounting firm at any time to be the independent registered public accounting firm for the year ending December 31, 2024, if it determines that such a change would be in the best interests of the Company and our stockholders.

BPM was originally retained by us on September 13, 2018. A representative of BPM is expected to be present at the Annual Meeting. This representative will have an opportunity to make a statement and will be available to respond to appropriate questions.

Principal Accountant Fees and Services

We regularly review the services provided by and fees of the independent registered public accounting firm. These services and fees are also reviewed with our Audit Committee annually. In accordance with standard policy, BPM periodically rotates the individuals who are responsible for PDF Solution’s audit.

BPM was our independent registered public accounting firm for the years ended December 31, 2023 and 2022. Our Audit Committee determined that BPM’s provision of these services, which are described below, does not impair BPM’s independence from the Company. The aggregate fees incurred for BPM’s audits of our 2023 and 2022 financial statements are summarized in the following service categories:

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Proposal No. 2:
Ratification of Appointment of Independent Registered Public Accounting Firm

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

The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by BPM. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to an initial estimated budget. BPM and Company management are required to periodically report to the Audit Committee regarding the extent of services provided by BPM in accordance with this pre-approval, and the fees performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis.

All services provided by BPM during the years ended December 31, 2023 and 2022, were approved by the Audit Committee in accordance with our pre-approval policy and applicable SEC regulations.

Recommendation of the Board

THE BOARD RECOMMENDS THAT OUR STOCKHOLDERS VOTE FOR THE RATIFICATION OF BPM LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2024.

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Introduction

Our Board has unanimously adopted a resolution to amend our amended and restated certificate of incorporation, subject to stockholder approval, to provide for the elimination or limitation of monetary liability of certain officers of the Company for breaches of the fiduciary duty of care.

If our stockholders approve this proposal at the Annual Meeting, the Company will amend Article XIII of our amended and restated certificate of incorporation as set forth in Appendix A to this Proxy Statement (the “Amendment”). The description in this Proposal 3 should be read in conjunction with the full text of the Amendment, which is marked in Appendix A to show the proposed modifications. In accordance with the General Corporation Laws of Delaware (the “DGCL”), our Board may elect to abandon the Amendment without further action by stockholders at any time prior to the effectiveness of the filing of the Amendment with the Secretary of State of the State of Delaware, notwithstanding stockholder approval of the Amendment.

Purpose and Possible Effects of the Proposed Amendment

Article XIII of our amended and restated certificate of incorporation currently provides for the Company to limit the monetary liability of directors for breaches of fiduciary duties as a director, pursuant to and consistent with Section 102(b)(7) of the DGCL. Effective August 1, 2022, Section 102(b)(7) of the DGCL was amended to permit a Delaware corporation’s certificate of incorporation to include a provision eliminating or limiting monetary liability for certain officers for breaches of the fiduciary duty of care (the “Section 102(b)(7) Amendment”). Our Board desires to amend our amended and restated certificate of incorporation to maintain provisions consistent with the governing statutes contained in the DGCL. Prior to the Section 102(b)(7) Amendment, Delaware law permitted Delaware corporations to exculpate directors from personal liability for monetary damages associated with breaches of the fiduciary duty of care, but such protection did not extend to a Delaware corporation’s officers. Consequently, stockholder plaintiffs have employed a tactic of bringing certain claims that would otherwise be exculpated if brought against directors, against individual officers to avoid dismissal of such claims. The Section 102(b)(7) Amendment was adopted to address inconsistent treatment between officers and directors as well as rising litigation and insurance costs for public companies.

This provision would not exculpate any officers from liability for breaches of the duty of loyalty, acts, or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, or any transaction in which the officer derived an improper personal benefit. Nor would this provision exculpate such officers from liability for claims brought by or in the right of the Company, such as derivative claims.

Our Board believes it is necessary to provide protection to officers to the fullest extent permitted by law in order to attract and retain top talent. This protection has long been afforded to directors, and accordingly, our Board believes that this proposal is fair and in the best interests of the Company and its stockholders.

Recommendation of the Board

THE BOARD RECOMMENDS THAT OUR STOCKHOLDERS VOTE FOR THE APPROVAL OF AN AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCLUDE AN OFFICER EXCULPATION PROVISION, AS DESCRIBED IN THIS PROXY STATEMENT.

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At the Annual Meeting, we are asking our stockholders to approve our Ninth Amended and Restated 2011 Stock Incentive Plan (the “Ninth Amended 2011 Plan”), which is the Ninth amendment and restatement of the 2011 Stock Incentive Plan, (defined on page 42 below), to, among other things, increase the number of shares reserved for issuance under the Ninth Amended 2011 Plan by an additional 800,000 shares and eliminate the term of the plan.

Background

Our Board of Directors adopted the Ninth Amended 2011 Plan on [•], 2024, subject to the approval of stockholders.

As of April 19, 2024, there were [•] shares subject to outstanding grants and [•] shares remaining available for future grants under the Eighth Amended and Restated 2011 Stock Incentive Plan (the “Eighth Amended 2011 Plan”). The Ninth Amended 2011 Plan would result in [•] shares being available for future Awards based on the shares available for future Awards under the Ninth Amended 2011 Plan as of April 19, 2024.

If approved by our stockholders, the Ninth Amended 2011 Plan will take effect on June 18, 2024, and will continue in effect until terminated by the Board, pursuant to the terms of the Ninth Amended 2011 Plan. The Ninth Amended 2011 Plan will govern all Awards granted on or after June 18, 2024, and earlier restatements of the Plan shall continue to govern all Awards granted prior to such date. If our stockholders do not approve this proposal, then the Ninth Amended 2011, including an increase in the number of shares available for issuance and the other amendments described in this proposal, will not become effective and the Eighth Amended 2011 Plan will continue in effect.

Reasons to Approve the Ninth Amended 2011 Plan

Our Board of Directors recommends a vote in favor of the Ninth Amended 2011 Plan because the Board believes the Amended Plan is in the best interests of the Company and our stockholders for the following reasons:

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Proposal No. 4:
Approval of our Ninth Amended and Restated 2011 Stock Incentive Plan

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Summary of Changes to the Ninth Amended 2011 Plan

The Ninth Amended 2011 Plan is being amended to provide, among other things, for the following:

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Proposal No. 4:
Approval of our Ninth Amended and Restated 2011 Stock Incentive Plan

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The Ninth Amended 2011 Plan Reflects Governance Best Practices

The Ninth Amended 2011 Plan was designed to include a number of best practice provisions that we believe reinforce the alignment between our stockholders’ interests and equity compensation arrangements for employees, non-employee directors and contractors. These provisions include, but are not limited to the following:

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Proposal No. 4:
Approval of our Ninth Amended and Restated 2011 Stock Incentive Plan

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While the use of long-term incentives in the form of equity awards is an important part of our compensation program, we recognize that stock awards dilute existing stockholders and are mindful of our responsibility to our stockholders to exercise judgment in the granting of equity awards.

The following table sets forth information regarding outstanding grants as of April 19, 2024, under the Ninth Amended 2011 Plan. As of April 19, 2024, we had [•] shares of common stock issued and outstanding. The market value of one share of our common stock on April 19, 2024, as determined based on the closing price per share of our common stock as reported on the Nasdaq was $[•].

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Proposal No. 4:
Approval of our Ninth Amended and Restated 2011 Stock Incentive Plan

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The following table provides detailed information regarding our historical equity award granting practices, including our share usage rate (commonly referred to as “burn rate”) and equity overhang activity (based on total potential award shares) under the 2011 Stock Incentive Plan for the last three years. The effects of our stock repurchase program are included in these calculations. During the last three years, no awards were issued under any equity plan other than the 2011 Stock Incentive Plan and our 2021 Employee Stock Purchase Plan, and no awards were made outside of a stockholder-approved equity plan.

The table below shows the number of time-based full value awards granted under the 2011 Stock Incentive Plan in each of the last three years. The Company did not grant any options or performance-based awards in the last three years.

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Description of the Ninth Amended 2011 Plan

The material features of the Ninth Amended 2011 Plan are outlined below. This summary does not purport to be a complete description of all the provisions of the Ninth Amended 2011 Plan and is qualified in its entirety by reference to the complete text of the Ninth Amended 2011 Plan. Stockholders are urged to read the actual text of the Ninth Amended 2011 Plan in its entirety, a copy of which has been filed with the SEC as Appendix B to this Proxy Statement. Any stockholder who desires to obtain a copy of the Ninth Amended 2011 Plan may do so by written request to our Secretary at PDF Solutions, Inc., Attention: Secretary, 2858 De La Cruz Boulevard, Santa Clara, CA 95050.

Eligibility and Types of Awards

Only employees and independent contractors of the Company or any parent, subsidiary or affiliate of the Company, and non-employee directors of the Board, are eligible to participate in the Ninth Amended 2011 Plan. Upon the adoption of the Ninth Amended 2011 Plan approximately [•] employees (including 4 executive officers), 6 non-employee directors, and [•] contractors will be eligible to participate in the Ninth Amended 2011 Plan.

The terms of the Ninth Amended 2011 Plan provide for discretionary incentive awards in the form of options (which may be incentive stock options or nonstatutory stock options), stock appreciation rights, stock grants and stock units (collectively, the “Awards”).

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Proposal No. 4:
Approval of our Ninth Amended and Restated 2011 Stock Incentive Plan

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Administration of the Ninth Amended 2011 Plan

The Board (or its duly authorized delegee) shall administer the Ninth Amended 2011 Plan. The Board shall generally have membership composition which enables Awards to those participants who are subject to the requirements of Section 16 of the Exchange Act. However, the Board may from time-to-time delegate to a committee of one or more members of the Board, and the Board or such committee may from time-to-time delegate to one or more of our officers, the authority to grant or amend Awards or to take other administrative actions with respect to participants who are subject to the requirements of Section 16 of the Exchange Act. Notwithstanding the foregoing, the Board shall administer the Ninth Amended 2011 Plan with respect to all Awards granted to non-employee directors.

Subject to the provisions of the Ninth Amended 2011 Plan, the Ninth Amended 2011 Plan administrator shall have the full authority, in its sole discretion, to take any actions it deems necessary or advisable for the administration of the Ninth Amended 2011 Plan, including, but not limited to:

The Ninth Amended 2011 Plan administrator’s determinations under the Ninth Amended 2011 Plan shall be final and binding on all persons.

To the maximum extent permitted by applicable law, each member of the Ninth Amended 2011 Plan administrator shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Ninth Amended 2011 Plan or any Award agreement, and (ii) from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Articles of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold them harmless.

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Proposal No. 4:
Approval of our Ninth Amended and Restated 2011 Stock Incentive Plan

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Share Reserve

The stock issuable under the Ninth Amended 2011 Plan shall be authorized but unissued shares or treasury shares. The aggregate number of shares reserved for Awards under the Ninth Amended 2011 Plan is 14,600,000 shares. Stockholders originally approved our 2011 Stock Incentive Plan at our 2011 Annual Meeting, with 3,200,000 shares initially reserved for future awards under it. Stockholders have approved eight prior amendment and restatements to the 2011 Stock Incentive Plan to, among other things, increase the number of shares reserved for Awards under it as follows:

In addition, any shares subject to stock options or similar awards granted under our 2001 Plan that are forfeited or repurchased by the Company or that expire or otherwise terminate without having been exercised in full and shares issued pursuant to awards granted under the 2001 Plan on or after November 16, 2011, when our 2011 Stock Incentive Plan was first approved by stockholders, shall be added to the Ninth Amended 2011 Plan share reserve and shall become available for issuance pursuant to the Ninth Amended 2011 Plan, with the maximum number of such shares to be added to the Ninth Amended 2011 Plan pursuant to such terminations, forfeitures and repurchases not to exceed 3,500,000 shares. As of April 19, 2024, there were 509,793 such shares added to the 2011 Stock Incentive Plan. In the case of Awards other than stock options or stock appreciation rights, the aggregate number of shares reserved under the Ninth Amended 2011 Plan will be decreased at a rate of 1.33 per share issued pursuant to each such Award.

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Proposal No. 4:
Approval of our Ninth Amended and Restated 2011 Stock Incentive Plan

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If Awards are forfeited or are terminated for any reason before vesting or being exercised, then the shares underlying such Awards will again become available for Awards under the Ninth Amended 2011 Plan (for purposes of clarity, if the share reserve is reduced by 1.33 shares per share subject to Awards granted under the Ninth Amended 2011 Plan other than options or stock appreciation rights, then the share reserve shall be increased by 1.33 times the number of shares subject to such Awards that are so forfeited or terminated). Further, if shares acquired pursuant to any such Award, are forfeited to or repurchased by the Company such shares shall return to the Ninth Amended 2011 Plan and again be available for issuance pursuant to the Ninth Amended 2011 Plan, provided that in the case of Awards, other than options or stock appreciation rights 1.33 times the number of shares so forfeited or repurchased will return to the Ninth Amended 2011 Plan and will again become available for issuance. Stock appreciation rights to be settled in shares shall be counted in full against the number of shares available for issuance under the Ninth Amended 2011 Plan, regardless of the number of shares issued upon settlement of the stock appreciation rights. Notwithstanding the foregoing, shares subject to an Award under the Ninth Amended 2011 Plan may not again be made available for issuance under the Ninth Amended 2011 Plan if such shares are: (i) shares that were subject to a stock-settled stock appreciation right and were not issued upon the net settlement or net exercise of such stock appreciation right, (ii) shares used to pay the exercise or purchase price of an Award, (iii) shares delivered to or withheld by the Company to pay the withholding taxes related to an Award, or (iv) shares repurchased on the open market with the proceeds of an option exercise.

Any dividend equivalents settled in cash distributed under the Ninth Amended 2011 Plan shall not reduce the number of shares available for Awards.

In the event of a subdivision of the outstanding shares, a declaration of a dividend payable in shares, a declaration of a dividend payable in a form other than shares in an amount that has a material effect on the price of shares, a combination or consolidation of the outstanding shares (by reclassification or otherwise) into a lesser number of shares, a recapitalization, a spin-off or a similar occurrence, the Ninth Amended 2011 Plan administrator will make such adjustments as it, in its sole discretion, deems appropriate to the number of shares and kind of shares or securities issuable under the Ninth Amended 2011 Plan (on both an aggregate and per-participant basis) and under each outstanding Award, to the per-participant Award limits, and to the exercise price of outstanding stock options and stock appreciation rights.

As of April 19, 2024, the fair market value of a share of Company common stock (based on the closing price of the Company’s common stock) was $[•], and there were approximately [•]shares of our common stock subject to outstanding stock options granted under the 2011 Stock Incentive Plan with a weighted average exercise price of $[•] and a weighted average remaining term of [•] years. In addition, there were approximately [•] shares of our common stock subject to outstanding stock unit awards granted under the 2011 Stock Incentive Plan.

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Proposal No. 4:
Approval of our Ninth Amended and Restated 2011 Stock Incentive Plan

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Award Limitations

Subject to capitalization adjustments, no participant in the Ninth Amended 2011 Plan shall receive stock options and stock appreciation rights during any fiscal year of the Company covering in excess of 1,000,000 shares per Award type, and no participant in the Ninth Amended 2011 Plan shall receive stock grants or stock units during any fiscal year of the Company covering in excess of 1,000,000 shares. Subject to capitalization adjustments, the aggregate maximum number of shares that may be issued in connection with incentive stock options under the Ninth Amended 2011 Plan shall be 1,000,000 shares. Further, no incentive stock options may be granted after April 15, 2034, without further stockholder approval.

Dividends and dividend equivalents will not be paid or settled with respect to any award granted under the Ninth Amended 2011 Plan until the underlying shares or units vest, and no dividend equivalents or otherwise may be credited with respect to options and stock appreciation rights.

Terms and Condition of Awards

Stock Options

In the case of stock options, each stock option granted under the Ninth Amended 2011 Plan shall be evidenced and governed by a stock option agreement between the participant and the Company, which will generally be delivered online by the Company or its designated third-party broker and accepted online by the participant. The stock option agreement or the online grant summary to which such agreement refers shall specify whether the option is an incentive stock option or a non-qualified stock option, the number of shares granted, the exercise price, the vesting schedule, exercisability, and the term (not to exceed ten years from the date of grant). The exercise price of a stock option must not be less than 100% of the fair market value of a share (or 110% for an incentive stock option granted to an individual who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, its parent or any of its subsidiaries) on the date of grant.

Under the Ninth Amended 2011 Plan, the stock option exercise price must be paid at the time the shares are purchased and may generally be made in cash (including by check, wire transfer or similar means) or, if provided for in the applicable Award agreement, by cashless exercise, by surrendering previously acquired shares of Company common stock, or by any other form that is consistent with applicable laws, regulations and rules and approved by the Committee. Except as otherwise provided in the applicable Award agreement, a stock option may be exercised during the lifetime of the participant only or by the guardian or legal representative of the participant. No stock option can be exercised after the expiration date of the stock option.

Within the limitations of the Ninth Amended 2011 Plan, the Ninth Amended 2011 Plan administrator may modify, extend, or assume outstanding stock options or may accept the cancellation of outstanding stock options (whether granted by the Company or by another issuer) in return for the grant of new stock options for the same or a different number of shares and at the same or a different exercise price. Notwithstanding the foregoing, no modification of a stock option shall, without the consent of the participant, impair his or her rights or obligations under such stock option and, unless there is approval by the Company stockholders, the Ninth Amended 2011 Plan administrator may not reprice outstanding stock options.

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Proposal No. 4:
Approval of our Ninth Amended and Restated 2011 Stock Incentive Plan

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Stock Appreciation Rights

In the case of stock appreciation right, each stock appreciation right granted under the Ninth Amended 2011 Plan shall be evidenced by an agreement between the participant and the Company, which will generally be delivered online by the Company or its designated third-party broker and accepted online by the participant. A stock appreciation right agreement may provide for a maximum limit on the amount of any payout notwithstanding the fair market value on the date of exercise of the stock appreciation right. Each stock appreciation right agreement or the online grant summary to which such agreement refers shall specify the number of shares to which the stock appreciation right pertains, the exercise price, exercisability, and the term (not to exceed ten years from the date of grant). The exercise price of a stock appreciation right must not be less than 100% of the fair market value of a share on the date of grant.

Stock appreciation rights may be awarded in combination with stock options or stock grants, and such an Award shall provide that the stock appreciation rights will not be exercisable unless the related Award is forfeited. No stock appreciation right can be exercised after the expiration date provided in the applicable Award agreement.

If, on the date when a stock appreciation right expires, the exercise price under such stock appreciation right is less than the fair market value of a share on such date but any vested portion of such stock appreciation right has not been exercised or surrendered, then such stock appreciation right shall automatically be deemed to be exercised as of such date with respect to such vested portion. Upon exercise of a stock appreciation right, the participant (or any person having the right to exercise the stock appreciation right after the participant’s death) shall receive from the Company (i) shares, (ii) cash or (iii) any combination of shares and cash, as the Ninth Amended 2011 Plan administrator shall determine at the time of grant of the stock appreciation right, in its sole discretion.

The amount of cash and/or the fair market value of shares received upon exercise of stock appreciation rights shall, in the aggregate, be equal to the amount by which the fair market value (on the date of surrender) of the shares subject to the stock appreciation rights exceeds the exercise price of the shares.

Stock Grants

In the case of stock grants, a stock grant may be issued with or without cash consideration. Each stock grant awarded under the Ninth Amended 2011 Plan shall be evidenced and governed by a stock grant agreement between the participant and the Company, which will generally be delivered online by the Company or its designated third-party broker and accepted online by the participant. The stock grant agreement or the online grant summary to which such agreement refers shall specify the number of shares granted and the vesting conditions and schedule in the event any shares subject to the Award are restricted and subject to vesting.

The holder of a stock grant awarded under the Ninth Amended 2011 Plan will be credited with all dividends and other distributions that are paid by the Company on an equivalent number of shares that are not subject to such restrictions. Any such dividends and other distributions shall be distributed only if, when and to the extent the related shares vest. Dividends and other distributions credited with respect to any shares that do not vest shall be forfeited.

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Proposal No. 4:
Approval of our Ninth Amended and Restated 2011 Stock Incentive Plan

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Stock Units

In case of stock units, each stock unit granted under the Ninth Amended 2011 Plan shall be evidenced by a stock unit agreement between the participant and the Company, which will generally be delivered online by the Company or its designated third-party broker and accepted online by the participant. Each stock unit agreement shall specify the number of shares to which the stock unit pertains, and the vesting conditions for the stock units (if any). Settlement of vested stock units may be made in the form of cash, shares, or any combination of both, as determined by the Ninth Amended 2011 Plan administrator at the time of the grant of the stock units, in its sole discretion. Methods of converting stock units into cash may include (without limitation) a method based on the average fair market value of shares over a series of trading days. Vested stock units may be settled in a lump sum or in installments. The distribution may occur or commence when the vesting conditions applicable to the stock units have been satisfied or have lapsed, or it may be deferred, in accordance with applicable law, to any later date. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents.

The Ninth Amended 2011 Plan administrator may, in its sole discretion, provide that dividend equivalents will be credited in connection with the grant of stock units that may be settled in cash, in shares of equivalent value, or in some combination thereof. Any dividend equivalents credited with respect to stock units shall be equal in value to the dividends and other distributions that are paid by the Company on an equivalent number of shares and shall be settled in cash or shares to the participant (with or without interest or other earnings, as provided at the discretion of the Ninth Amended 2011 Plan administrator) only if, when and to the extent the related stock units vest. Dividend equivalents credited with respect to any stock unit that does not vest shall be forfeited.

Assignment or Transfer of Awards

Except as otherwise provided in the applicable Award agreement and then only to the extent such transfer is otherwise permitted by applicable law and is not a transfer for value (unless such transfer for value is approved in advance by the Company’s stockholders), no Award shall be transferable by the participant other than by will or by the laws of descent and distribution. No stock option, stock appreciation right or interest therein may be assigned, pledged, or hypothecated by the participant during his or her lifetime, whether by operation of law or otherwise, or be made subject to execution, attachment, or similar process. Except as otherwise provided in the applicable Award agreement, no stock unit, unvested stock grant or interest therein may be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor’s process, whether voluntarily, involuntarily or by operation of law.

Termination of Service

Unless otherwise provided in the applicable Award agreement, or with respect to a participant who resides in the U.S., the applicable employment agreement provides otherwise, in the event of a participant’s termination of service (and, in all cases, subject to the term of the stock option and/or stock appreciation right, all unvested (or, in the case of a termination for cause, all vested, unvested and unvested) portions of any outstanding Awards shall terminate and/or be immediately forfeited without consideration, and stock options and stock appreciation rights will generally expire 90 days (inclusive) following the termination of service for any reason other than cause, death or disability and 6 months (inclusive) following a termination of service for death or disability.

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Proposal No. 4:
Approval of our Ninth Amended and Restated 2011 Stock Incentive Plan

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Amendment of Awards

Within the limitations of the Ninth Amended 2011 Plan, the Ninth Amended 2011 Plan administrator may modify, extend, or assume outstanding Awards or may accept the cancellation of outstanding Awards (whether granted by the Company or by another issuer) in return for the grant of new Awards for the same or a different number of shares and, as applicable, at the same or a different exercise price. Notwithstanding the foregoing, no modification of an Award shall, without the consent of the participant, impair his or her rights or obligations under such stock appreciation right and, unless there is approval by the Company stockholders, the Ninth Amended 2011 Plan administrator may not reprice outstanding stock options or stock appreciation rights.

Performance Goals

Awards under the Ninth Amended 2011 Plan may be made subject to performance conditions as well as time-vesting conditions. Such performance conditions may be based on an objective formula or standard utilizing one or more of the following factors, including but not limited to: (i) operating income; (ii) earnings before interest, taxes, depreciation and amortization; (iii) earnings; (iv) cash flow; (v) market share; (vi) sales or revenue; (vii) expenses; (viii) cost of goods sold; (ix) profit/loss or profit margin; (x) working capital; (xi) return on equity or assets; (xii) earnings per share; (xiii) economic value added; (xiv) price/earnings ratio; (xv) debt or debt-to-equity; (xvi) accounts receivable; (xvii) write-offs; (xviii) cash; (xix) assets; (xx) liquidity; (xxi) operations; (xxii) intellectual property (e.g., patents); (xxiii) product development; (xxiv) regulatory activity; (xxv) manufacturing, production or inventory; (xxvi) mergers and acquisitions or divestitures; and/or (xxvii) financings, each with respect to the Company and/or one or more of its parent, subsidiaries, affiliates or operating units.

Effect of a Change in Control or Dissolution

The Ninth Amended 2011 Plan provides that in the event of a change in control, except as set forth in an Award agreement, if the successor corporation does not continue, assume, or substitute for outstanding Awards, the participants will fully vest in all their outstanding and unvested Awards and have the right to exercise all of their outstanding options and stock appreciation rights, including shares as to which such Awards would not otherwise be vested or exercisable, and, with respect to Awards with performance-based vesting, all performance goals will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met. In addition, if an option or stock appreciation right is not continued, assumed, or substituted in the event of a change in control, the Company will notify the participant in writing or electronically that such Award shall be fully exercisable for a period of fifteen (15) days from the date of such notice, contingent upon the occurrence of the change in control, and such Award shall terminate upon the expiration of such period. Furthermore, in the event an Award continues in effect or is assumed or an equivalent Award substituted, and a participant’s service is terminated by the Company or one of its subsidiaries without cause upon or within twenty-four (24) months following the change in control, then such participant shall be fully vested in such continued, assumed, or substituted Award. To the extent not previously exercised or settled, options, stock appreciation rights and stock units shall terminate immediately prior to the dissolution or liquidation of the Company.

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Proposal No. 4:
Approval of our Ninth Amended and Restated 2011 Stock Incentive Plan

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For purposes of the Ninth Amended 2011 Plan, a “change in control” means the consummation of any of the following transactions: (i) the sale of all or substantially all of our assets; (ii) the merger of the Company with or into another corporation in which securities possessing more than 50% of the total combined voting power of the Company are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction; (iii)the acquisition, directly or indirectly, by any person or related group of persons of beneficial ownership of securities of the Company representing more than 50% of the total combined voting power of our then outstanding securities (provided, however, that the acquisition of additional stock by any person or related group of persons, who is considered to own more than 50% of the total voting power of the stock of the Company will not be considered a change in control); or (iv) a change in the effective control of the Company, which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election.

Clawback

Each participant must comply with applicable law, the Company’s Code of Ethics, and the Company’s corporate policies, as applicable, including without limitation the Company’s Compensation Recovery Policy. Notwithstanding anything to the contrary, (i) compliance with applicable law, the Company’s Code of Ethics, and the Company’s corporate policies, as applicable, will be a pre-condition to earning, or vesting in, any Award under the Ninth Amended 2011 Plan and (ii) any Awards under the Ninth Amended 2011 Plan that are subject to the Company’s Compensation Recovery Policy will not be earned or vested, even if already granted, paid, or settled, until the Company’s Compensation Recovery Policy ceases to apply to such Awards and any other vesting conditions applicable to such Awards are satisfied.

Amendment and Termination of Plan

The Board may amend or terminate the Ninth Amended 2011 Plan at any time and for any reason. Any such termination of the Ninth Amended 2011 Plan, or any amendment thereof, shall not impair any Award previously granted under the Ninth Amended 2011 Plan. No Awards shall be granted under the Ninth Amended 2011 Plan after the plan’s termination. An amendment of the Ninth Amended 2011 Plan shall be subject to the approval of the Company’s stockholders only to the extent such approval is required by applicable laws, regulations, or rules.

U.S. Federal Income Tax Consequences

The following summary is intended only as a general guide as to federal income tax consequences under current U.S. tax law of participation in the Ninth Amended 2011 Plan and does not attempt to describe all potential tax consequences. This discussion is intended for the information of our stockholders considering how to vote at the Annual Meeting and not as tax guidance to individuals who participate in the Ninth Amended 2011 Plan. The following is not intended or written to be used, and cannot be used, for the purposes of avoiding taxpayer penalties. Tax consequences are subject to change and a taxpayer’s particular situation may be such that some variation in application of the described rules is applicable. Accordingly, participants have been advised to consult their own tax advisors with respect to the tax consequences of participating in the Ninth Amended 2011 Plan.

A recipient of an incentive stock option, nonstatutory stock option, or stock appreciation right will not have taxable income upon the grant of the stock option or stock appreciation right. For nonstatutory stock options and stock appreciation rights, the participant will recognize ordinary income upon exercise in an amount equal to the difference between the fair market value of the shares on the date of exercise and the exercise price. Any gain or loss recognized upon any later disposition of the shares generally will be a capital gain or loss.

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Proposal No. 4:
Approval of our Ninth Amended and Restated 2011 Stock Incentive Plan

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The acquisition of shares upon exercise of an incentive stock option will not result in any taxable income to the participant, except, possibly, for purposes of the alternative minimum tax. The gain or loss recognized by the participant on a later sale or other disposition of such shares will either be capital gain or loss or ordinary income, depending upon whether the participant holds the shares for the legally required period (two-years from the date of grant and one-year from the date of exercise). If the shares are not held for the legally-required period, the participant will generally recognize ordinary income equal to the lesser of (i) the difference between the fair market value of the shares on the date of exercise and the exercise price, or (ii) the difference between the sales price and the exercise price.

For stock Awards subject to vesting (restricted stock), unless the participant elects to be taxed at the time of receipt of the restricted stock, the participant will not have taxable income upon the receipt of the Award, but upon vesting will recognize ordinary income equal to the fair market value of the shares at the time of vesting less the amount paid for such shares (if any).

For Awards of stock units, a participant does not receive any taxable income at the time the Award of stock units is granted. Instead, when the stock units vest and the shares of stock are transferred, the participant will recognize ordinary income equal to the amount of cash and/or the fair market value of shares received.

At the discretion of the Ninth Amended 2011 Plan administrator, the Ninth Amended 2011 Plan allows a participant to satisfy his or her tax withholding requirements under federal and state tax laws in connection with the exercise or receipt of an Award by electing to have shares withheld, and/or by delivering to the Company already-owned shares.

If the participant is an employee or former employee, the amount a participant recognizes as ordinary income in connection with any Award is subject to withholding taxes (generally not applicable to incentive stock options) and the Company is allowed an income tax deduction equal to the amount of ordinary income recognized by the participant. However, Code Section 162(m) contains special rules regarding the federal income tax deductibility of compensation paid to certain executive officers. Under Section 162(m), annual compensation paid to any of these specified executives will be deductible only to the extent that it does not exceed $1,000,000.

New Plan Benefits

The Ninth Amended 2011 Plan does not provide for set benefits or amounts of Awards, and we have not approved any Awards that are conditioned on stockholder approval of the Ninth Amended 2011 Plan. However, we plan to grant Awards to certain named executive officers, employees that are not executive officers, and current non-employee directors that remain directors following the Annual Meeting in connection with our annual award cycle following our Annual Meeting, which Awards will be made under the Ninth 2011 Amended Plan if it is approved by stockholders or under the Eighth Amended 2011 Plan if the Ninth 2011 Amended Plan is not approved by stockholders. The planned Awards to non-employee directors are discussed in further detail in the section entitled “Director Compensation” below.

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Proposal No. 4:
Approval of our Ninth Amended and Restated 2011 Stock Incentive Plan

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The following table summarizes the RSU grants that each of these individuals or groups will receive following the Annual Meeting. All other future Awards to directors, executive officers, employees, and consultants of the Company under the Ninth Amended 2011 Plan are discretionary and cannot be determined at this time.

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Proposal No. 4:
Approval of our Ninth Amended and Restated 2011 Stock Incentive Plan

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Historical Plan Benefits

The following table sets forth, for each of the individuals and groups indicated, the total number of shares of our common stock subject to stock awards that have been granted (even if not currently outstanding) under our 2011 Stock Incentive Plan, since the plan became effective, as amended and restated through April 19, 2024 (the “2011 Stock Incentive Plan”).

Equity Compensation Plan Information

Please also refer to the Equity Compensation Plan Information table on page 55 for further information about the shares, which may be issued upon the exercise of options, warrants and rights under all of our equity compensation plans as of December 31, 2023.

Recommendation of the Board

THE BOARD RECOMMENDS THAT OUR STOCKHOLDERS VOTE FOR THE APPROVAL OF THE NINTH AMENDED AND RESTATED 2011 STOCK INCENTIVE PLAN.

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At the Annual Meeting, we are asking our stockholders to approve our First Amended and Restated 2021 Employee Stock Purchase Plan (the “Amended ESPP”), which is the first amendment and restatement of the Company’s 2021 Employee Stock Purchase Plan to, among other things, increase the number of shares reserved for options by an additional 200,000 shares for a total of 1,200,000 shares and eliminate the term of the plan.

Background

Our Board of Directors adopted the Amended ESPP on April 15, 2024, subject to the approval of stockholders.

As of April 19, 2024, there were [•] shares remaining available for future options under the 2021 Employee Stock Purchase Plan. The Amended ESPP would result in [•] shares being available for future options based on the shares available for future options under the Amended ESPP as of April 19, 2024.

If approved by our stockholders, the Amended ESPP will take effect on June 18, 2024, and will continue in effect until terminated by the Board pursuant to the terms of the Amended ESPP. The Amended ESPP will govern all options granted on or after June 18, 2024, and the 2021 Employee Stock Purchase Plan will continue to govern all options granted prior to June 18, 2024. If our stockholders do not approve this proposal, then the Amended ESPP, including an increase in the number of shares available for issuance and the other amendments described in this proposal, will not become effective and the 2021 Employee Stock Purchase Plan will continue in effect.

Reasons to Approve the Amended ESPP

The Amended ESPP, which is an important component of the overall compensation package we offer to our employees, provides eligible employees with an opportunity to purchase shares of our common stock at a discount through payroll deductions and to benefit from stock price appreciation, thus enhancing the alignment of employee and stockholder interests.

The Board believes that it is in the best interests of the Company and our stockholders to approve the Amended ESPP, which would increase the number of shares reserved for purchaser rights by an additional 200,000 shares for a total of 1,200,000 shares and eliminate the term of the plan so that we can continue to provide an opportunity for eligible employees to purchase shares of common stock of the Company, and thereby have an additional incentive to contribute to the prosperity of the Company.

Summary of Changes to 2021 Employee Stock Purchase Plan

The 2021 Employee Stock Purchase Plan is being amended to provide, among other things, for the following:

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Proposal No. 5:
Approval of our First Amended and Restated 2021 Employee Stock Purchase Plan

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Amended ESPP Reflects Governance Best Practices

The Amended ESPP includes provisions that protect our stockholders’ interests and reflect corporate governance best practices.

Description of the Amended ESPP

The material features of the Amended ESPP are outlined below. This summary does not purport to be a complete description of all the provisions of the Amended ESPP. It is qualified in its entirety by reference to the full text of the Amended ESPP. A copy of the Amended ESPP has been filed with the SEC as Appendix C to this proxy statement, and any stockholder who desires to obtain a copy of the plan may do so by written request to the Company’s Secretary at PDF Solutions, Inc., Attention: Corporate Secretary, 2858 De La Cruz Boulevard, Santa Clara, CA 95050.

Eligibility and Purchase Rights

Employees of the Company and those subsidiaries of the Company that the Board has designated to participate may participate in the Amended ESPP, except an employee is not eligible to participate in the Amended ESPP if he or she owns or has the right to acquire 5% or more of the total combined voting power or value of all classes of stock of the Company or of any subsidiary of the Company (including stock attributed to such employee pursuant to section 424(d) of the Code). The Amended ESPP administrator, in its discretion, from time-to-time may, prior to an enrollment date for all options to be granted on such enrollment date, determine (on a uniform and nondiscriminatory basis) that an employee will not be eligible to participate in the Amended ESPP if he or she: (1) has not completed at least two years of service since his or her last hire date (or such lesser period of time as may be determined by the Amended ESPP administrator in its discretion), (2) customarily works not more than 20 hours per week (or such lesser period of time as may be determined by the Amended ESPP administrator in its discretion), or (3) customarily works not more than 5 months per calendar year (or such lesser period of time as may be determined by the Amended ESPP administrator in its discretion).

Participation in the Amended ESPP is available to all employees of the Company and its wholly owned subsidiaries that are designated by the Board to participate in the plan. The Board has designated all subsidiaries to participate in the Amended ESPP. As of April 19, 2024, approximately [•] employees, including [•] executive officers, were eligible to participate in the Amended ESPP.

Administration of the Amended ESPP

The Amended ESPP will be administered by the CHCM Committee. The Amended ESPP administrator shall have the authority to control and manage the operation and administration of the Amended ESPP. The Amended ESPP administrator shall have all powers and discretion necessary or appropriate to supervise the administration of the Amended ESPP and to control its operation in accordance with its terms, including, but not by way of limitation:

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Proposal No. 5:
Approval of our First Amended and Restated 2021 Employee Stock Purchase Plan

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All actions, interpretations, and decisions of the Amended ESPP administrator shall be conclusive and binding on all persons, and shall be given the maximum possible deference allowed by law.

The Company and each participating subsidiary shall indemnify and hold harmless the members of the CHCM Committee and the Board, from and against any and all losses, claims, damages or liabilities (including attorneys’ fees and amounts paid, with the approval of the Board, in settlement of any claim) arising out of or resulting from the implementation of a duty, act, or decision with respect to the Amended ESPP, so long as such duty, act or decision does not involve gross negligence or willful misconduct on the part of any such individual.

Share Reserve

If stockholders approve the Amended ESPP, a total of 1,200,000 shares will be reserved for issuance under the Amended ESPP. In the event of any reorganization, recapitalization, stock split, subdivision of the outstanding shares, reverse stock split, stock dividend, declaration of a dividend payable in a form other than shares in an amount that will have a material effective on the shares, combination or consolidation of shares, merger, consolidation, offering of rights, spin-off or other similar change in the capital structure of the Company, the Board shall make appropriate adjustments in the number, kind and purchase price of the shares or securities available for purchase under the Plan and in the maximum number of shares or kind of securities subject to and purchase price for any purchase right under the Amended ESPP.

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Proposal No. 5:
Approval of our First Amended and Restated 2021 Employee Stock Purchase Plan

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Participation and Enrollment

Each eligible Employee may elect to become a participant by enrolling or re-enrolling in the Amended ESPP effective as of any enrollment date established by the Amended ESPP administrator. To enroll, an eligible employee must complete, sign and submit to the Company an enrollment form in such form, manner and by such deadline as may be specified by the Amended ESPP administrator from time to time (in its discretion and on a nondiscriminatory basis). Any participant whose option expires and who has not withdrawn from the Amended ESPP automatically will be re-enrolled in the Amended ESPP on the enrollment date immediately following the purchase date on which his or her option expires. Any participant whose option has not expired and who has not withdrawn from the Amended ESPP automatically will be deemed to be un-enrolled from the participant’s current option and be enrolled as of a subsequent enrollment date if the price per share on such subsequent enrollment date is lower than the price per share on the enrollment date relating to the participant’s current option.

On his or her enrollment form, each participant must elect to make plan contributions via payroll withholding from his or her eligible compensation. Eligible compensation includes a participant’s regular wages, provided the Amended ESPP administrator, in its discretion, may (on a uniform and nondiscriminatory basis) establish a different definition of eligible compensation prior to an enrollment date for all options to be granted on such enrollment date. Pursuant to such procedures as the Amended ESPP administrator may specify from time to time, a participant may elect to have withholding equal to a whole percentage from 1% to 10% (or such lesser, or greater, percentage that the Amended ESPP administrator may establish from time to time for all options to be granted on any enrollment date). A participant may elect to increase or decrease his or her rate of payroll withholding by submitting a new enrollment form in accordance with such procedures as may be established by the Amended ESPP administrator from time to time. A participant may stop his or her payroll withholding by submitting a new enrollment form in accordance with such procedures as may be established by the Amended ESPP administrator from time to time. To be effective as of a specific date, an enrollment form must be received by the Company no later than the deadline specified by the Amended ESPP administrator, in its discretion and on a nondiscriminatory basis, from time to time. Any participant who is automatically re-enrolled in the Amended ESPP will be deemed to have elected to continue his or her contributions at the percentage last elected by the participant.

Offerings

On each enrollment date on which a participant enrolls or re- enrolls in the Amended ESPP, he or she shall be granted an option to purchase shares of our common stock. Each option granted under the Amended ESPP shall expire upon the conclusion of the option’s offering period which will end on the earliest to occur of (a) the completion of the purchase of shares on the last purchase date occurring within 27 months of the grant date of such option, (b) such shorter option period as may be established by the Amended ESPP administrator from time to time prior to an enrollment date for all options to be granted on such enrollment date, or (c) the date on which the participant ceases to be a participant for any reason. Until otherwise determined by the Amended ESPP administrator for all options to be granted on an enrollment date, the period referred to in clause (b) in the preceding sentence shall mean the period from the applicable enrollment date through the last business day prior to the immediately following enrollment date. The number of shares available for purchase by each participant under an option will be established by the Amended ESPP administrator from time to time prior to an enrollment date for all options to be granted on such enrollment date.

Amended ESPP will be implemented by a series of overlapping offering periods of 24 months’ duration, with new offering periods commencing on February 1 and August 1 of each year. Each offering period will consist of four consecutive purchase periods of six months’ duration, and at the end of each six-month period, an automatic purchase will be made for participants.

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Approval of our First Amended and Restated 2021 Employee Stock Purchase Plan

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Purchase of Shares

On each purchase date, the funds then credited to each participant’s account shall be used to purchase whole shares of our common stock. Any cash remaining after whole shares of common stock have been purchased shall be carried forward in the participant’s account for the purchase of shares on the next purchase date. The price per share of the shares purchased under any option granted under the Amended ESPP shall be 85% of the lower of the closing price per share on the Nasdaq National Market System on (i) the grant date for such option (or, if the grant date is a non-trading day on the Nasdaq National Market, then the closing price on the prior Nasdaq trading day) or (ii) the purchase date. Subject to the limitations below, the number of shares of our common stock a participant purchases during each purchase period is determined by dividing the total amount of payroll deductions withheld from the participant’s paychecks during the purchase period by the purchase price.

Shares purchased on any purchase date shall be delivered directly to a participant or to a custodian or broker (if any) designated by the Amended ESPP administrator to hold shares for the benefit of the participants. As determined by the Amended ESPP administrator from time to time, such shares shall be delivered as physical certificates or by means of a book entry system.

If at any time the shares available under the Amended ESPP are over- enrolled, enrollments shall be reduced proportionately to eliminate the over-enrollment. Such reduction method shall be “bottom up,” with the result that all option exercises for one share shall be satisfied first, followed by all exercises for two shares, and so on, until all available shares have been exhausted. Any funds that, due to over-enrollment, cannot be applied to the purchase of whole shares shall be refunded to the participants (without interest thereon).

Limitations on Shares

Under the Amended ESPP, no employee shall be granted an option if immediately after the grant the employee would own stock and/or hold outstanding options to purchase stock equaling 5% or more of the total voting power or value of all classes of our stock or its subsidiaries. In addition, no employee shall be granted an option under the Amended ESPP if the option would permit the employee to purchase stock under all our employee stock purchase plans and our subsidiaries in an amount that exceeds $25,000 of fair market value of such shares for each calendar year in which the option is outstanding at any time. In addition, the Amended ESPP limits the number of shares that any participant can purchase on a purchase date to 12,500 shares.

Designation of Beneficiaries

For so long as the Amended ESPP administrator determines (on a uniform and nondiscriminatory basis) to permit the designation of beneficiaries, each participant may, pursuant to such uniform and nondiscriminatory procedures as the Amended ESPP administrator may specify from time to time, designate one or more beneficiaries to receive any amounts credited to the participant’s account at the time of his or her death. A participant may designate different beneficiaries (or may revoke a prior beneficiary designation) at any time by delivering a new designation (or revocation of a prior designation) in like manner. Any designation or revocation shall be effective only if it is received by the Amended ESPP administrator and, when so received, the designation or revocation shall be effective as of the date the designation or revocation is executed (whether or not the participant still is living), but without prejudice to the Amended ESPP administrator on account of any payment made before the change is recorded. The last effective designation received by the Amended ESPP administrator shall supersede all prior designations. If a participant dies without having effectively designated a beneficiary, or if no beneficiary survives the participant, the participant’s account shall be payable to his or her estate.

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Proposal No. 5:
Approval of our First Amended and Restated 2021 Employee Stock Purchase Plan

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Withdrawal

A participant may withdraw at any time without affecting his or her eligibility to participate in future offerings by submitting a completed enrollment form to the Company. A withdrawal will be effective only if it is received by the Company by the deadline specified by the Committee (in its discretion and on a uniform and nondiscriminatory basis) from time to time. When a withdrawal becomes effective, the Participant’s payroll contributions shall cease, and all amounts then credited to the Participant’s account shall be distributed to him or her (without interest thereon).

Cessation of Participation

Participation ceases immediately upon the cessation of a participant’s status as an eligible employee (for example, because of his or her termination of employment from the Company and all participating subsidiaries for any reason). As soon as practicable after such cessation, the participant’s payroll contributions shall cease and all amounts then credited to the participant’s account shall be distributed to him or her (without interest thereon).

Any participant who is (i) on a leave of absence approved by the participant’s employer, or (ii) otherwise temporarily not an eligible employee even though the participant is still an employee of the Company or a subsidiary (the first date of either such event is referred to herein as the “Transition Date”), shall continue to be a participant for a period the longer of (i) 3 months after such Transition Date or so long as the participant’s right to reemployment with his or her employer is guaranteed either by the applicable employer’s written, legally enforceable agreement with the Participant, or statute, or applicable laws. If the participant does not return from his or her leave of absence or otherwise become an eligible employee again by the date that is 3 months from the Transition Date, his or her employment relationship will be deemed to have terminated, and his or her election to participate in the Amended ESPP shall be deemed to have been cancelled on the first day following such 3 month period after the Transition Date, unless the participant’s right to reemployment with his or her employer is guaranteed either by statute or applicable laws, in which case his or her election to participate in the Amended ESPP shall be deemed to have been cancelled on the first (1st) day after the date that the participant’s right to reemployment with his or her employer is no longer guaranteed either by statute or applicable laws.

Transferability

Except as otherwise described in “Designation of Beneficiaries” above, in no event may either a Participant, a former Participant or his or her beneficiary, spouse or estate sell, transfer, anticipate, assign, hypothecate, or otherwise dispose of any right or interest under the Amended ESPP, and such rights and interests shall not at any time be subject to the claims of creditors nor be liable to attachment, execution or other legal process.

Change in Control

The Amended ESPP provides that in the event of change in control, each right to purchase stock under the Amended ESPP will automatically be exercised immediately prior to the effective date of such change in control, subject to the limitations of the Amended ESPP. The purchase price will generally be equal to 85% of the lesser of the fair market value of our common stock on (i) the grant date of the option or (ii) the day immediately prior to consummation of the transaction. The Company shall use its best efforts to provide at least 10 days’ prior written notice of the occurrence of such change in control and participants shall, following the receipt of such notice, have the right to terminate their outstanding purchase rights prior to the effective date of such change in control.

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Approval of our First Amended and Restated 2021 Employee Stock Purchase Plan

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For purposes of the Amended ESPP, “change in control” generally means an event in which the Company or its stockholders enter into an agreement to dispose of all or substantially all of the assets or outstanding capital stock of the Company by means of a sale, merger or reorganization in which the Company will not be the surviving corporation (other than a reorganization effected primarily to change the jurisdiction in which the Company is incorporated, a merger or consolidation with a wholly-owned subsidiary, or any other transaction in which there is no substantial change in the stockholders of the Company or their relative stock holdings, regardless of whether the Company is the surviving corporation) or in the event the Company is liquidated.

Amendment or Termination

The Board, in its sole discretion, may amend or terminate the Amended ESPP, or any part thereof, at any time and for any reason. If the Amended ESPP is terminated, the Board, in its discretion, may elect to terminate all outstanding options either immediately or upon completion of the purchase of shares on the next purchase date, or may elect to permit options to expire in accordance with their terms (and participation to continue through such expiration dates). If the options are terminated prior to expiration, all amounts then credited to participants’ accounts which have not been used to purchase shares shall be returned to the participants (without interest thereon) as soon as administratively practicable.

U.S. Federal Income Tax Consequences

The following summary is intended only as a general guide as to federal income tax consequences under current U.S. tax law of participation in the Amended ESPP and does not attempt to describe all potential tax consequences. This discussion is intended for the information of our stockholders considering how to vote at the Annual Meeting and not as tax guidance to individuals who participate in the Amended ESPP. The following is not intended or written to be used, and cannot be used, for the purposes of avoiding taxpayer penalties. Tax consequences are subject to change and a taxpayer’s particular situation may be such that some variation in application of the described rules is applicable. Accordingly, participants have been advised to consult their own tax advisors with respect to the tax consequences of participating in the Amended ESPP.

The Amended ESPP is intended to be an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code. Under this type of plan, no taxable income will be reportable by a participant, and no deductions will be allowable to the Company, due to the grant of the option at the beginning of an offering or the purchase of shares at the end of an offering. A participant will, however, recognize taxable income in the year in which the shares purchased under the Amended ESPP are sold or otherwise made the subject of disposition. A sale or other disposition of shares purchased under the Amended ESPP will be a disqualifying disposition if it is made within 2 years after the first day of the offering period pursuant to which the shares were purchased or 1 year after the purchase date. If the participant makes a disqualifying disposition of shares purchased under the Amended ESPP, the excess of the fair market value of the shares on the date of purchase over the purchase price will be treated as ordinary income to the participant at the time of such disposition and the Company will be entitled to an income tax deduction for the same amount for the taxable year of the Company in which the disposition occurs, although the income tax deduction may be limited by the non-deductibility of compensation paid to certain of our officers under Section 162(m) of the Internal Revenue Code. In no other instance will the Company be allowed a deduction with respect to the participant’s disposition of the purchased shares. Any additional gain (or loss) on the disposition will be a capital gain (or loss) to the participant.

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Proposal No. 5:
Approval of our First Amended and Restated 2021 Employee Stock Purchase Plan

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If the participant disposes of shares purchased under the Amended ESPP after satisfying the holding period outlined above (a qualifying disposition), then the participant will realize ordinary income in the year of disposition equal to the lesser of (i) the amount by which the fair market value of the shares on the date of disposition exceeds the purchase price or (ii) 15% of the fair market value of the shares on the first day of the offering period pursuant to which the shares were purchased. This amount of ordinary income will be added to the basis in the shares and any gain (or loss) recognized upon the disposition will be a long-term capital gain (or loss).

New Plan Benefits

The Amended ESPP does not provide for set benefits or amounts of options and we have not approved any options that are conditioned on stockholder approval of the Amended ESPP. Because benefits under the Amended ESPP will depend on employees’ elections to participate and the fair market value of our common stock at various future dates, it is not possible to determine the benefits that will be received by executive officers and other employees if the Amended ESPP is approved by our stockholders.

Historical Plan Benefits

The following table sets forth, for each of the individuals and groups indicated, the total number of shares of our common stock purchased under our 2021 Employee Stock Purchase Plan, since the plan became effective, as amended and restated through April 19, 2024 (the “2021 ESPP”).

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Proposal No. 5:
Approval of our First Amended and Restated 2021 Employee Stock Purchase Plan

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Equity Compensation Plan Information

Please also refer to the Equity Compensation Plan Information table on page 55 for further information about the shares, which may be issued upon the exercise of options, warrants and rights under all of our equity compensation plans as of December 31, 2023, which disclosure is incorporated by reference into this Proposal No. 5.

Recommendation of the Board

THE BOARD RECOMMENDS THAT OUR STOCKHOLDERS VOTE FOR THE APPROVAL OF THE FIRST AMENDED AND RESTATED 2021 EMPLOYEE STOCK PURCHASE PLAN.

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In accordance with the requirements of Section 14A of the Exchange Act, we are asking you to indicate your support for the compensation of our named executive officers as described in this Proxy Statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we are asking our stockholders to vote FOR the following resolution at the Annual Meeting:

“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the 2023 compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the 2024 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure.”

The results of your approval are advisory, which means the outcome of this proposal is not binding on the Company, our Board of Directors or the CHCM Committee of the Board of Directors. However, the CHCM Committee, which is responsible for designing and administering our executive compensation programs, values the opinions expressed by our stockholders and will take the outcome of the vote under advisement in evaluating our executive compensation principles, design, and practices. Assuming no change to our current policy regarding the frequency of such advisory vote, it is expected that the next say-on-pay vote will occur at the 2025 annual meeting of stockholders.

Recommendation of the Board:

THE BOARD RECOMMENDS THAT OUR STOCKHOLDERS VOTE FOR THE ADVISORY APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.

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Security Ownership of Certain Beneficial Owners and Management

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The following table sets forth the beneficial ownership as of April 19, 2024, of (i) each person known to us to be the beneficial holder of more than 5% of our outstanding common stock, (ii) each director and each director nominee, (iii) each Named Executive Officer identified in the Summary Compensation Table on page 66 of this Proxy Statement, and (iv) all executive officers and directors as a group.

Beneficial ownership is determined in accordance with SEC rules. In computing the number of shares beneficially owned by a person, we have included shares for which the named person has sole or shared power over voting or investment decisions. The number of shares beneficially owned also includes ownership of which the named person has the right to acquire, through conversion, option, and warrant exercise or otherwise, within 60 days after April 19, 2024.

Percentage of beneficial ownership is based on [•] shares outstanding as of April 19, 2024. For each named person, the percentage ownership includes beneficial ownership which the person has the right to acquire within 60 days after April 19, 2024. However, such beneficial ownership shall not be deemed outstanding with respect to the calculation of ownership percentage for any other person. Except as otherwise indicated, the address for each person listed as a director or executive officer is c/o PDF Solutions, Inc., 2858 De La Cruz Boulevard, Santa Clara, California 95050.

The Company has relied upon information provided to the Company by its directors and Named Executive Officers and copies of documents sent to the Company that have been filed with the SEC by others for purposes of determining the number of shares each person beneficially owns. Beneficial ownership is determined in accordance with the rules and regulations of the SEC and generally includes those persons who have voting or investment power with respect to the securities. Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of our common stock beneficially owned by them.

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Security Ownership of Certain Beneficial Owners and Management

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