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FY17 6-MONTH EXECUTIVE INCENTIVE PLAN
(Annual Executive Bonus)

Plan Summary
This KLA-Tencor Executive Incentive Plan (this “Plan”) is intended to motivate
senior executives to achieve corporate objectives by providing a competitive
bonus for target performance and potential upside for outstanding performance.

Plan Period
This Plan is effective for the 6-month period from July 1, 2016 through December
31, 2016 (the “Plan Period”). Newly eligible employees (e.g., employees promoted
to an incentive-eligible position for the first time or a new hire) must be in
an eligible position on or before October 1, 2016 and recorded in the HR system
in order to qualify for participation in this Plan Period.

Eligible Positions
The Company’s Chief Executive Officer (“CEO”) and employees holding a position
at the X02 level and above (collectively, with the CEO, “Executives”) are
eligible to participate in the Plan.

Program Payments
Bonus payments, based on performance during the Plan Period, will be paid within
45 days following December 31, 2016. Bonus calculations are based on paid base
salary for the applicable Plan Period. Paid base salary includes base salary and
seasonal bonuses paid in some countries if the seasonal bonus is considered a
component of the employee’s annual salary. Paid base salary does not include
relocation allowances and reimbursements, tuition reimbursements,
car/transportation allowances, expatriate allowances, commissions, long-term
disability payments, or bonuses paid during the fiscal year. A participant must
be a regular, active employee of the Company on the date of the payout in order
to receive payment. Employees who are promoted or hired into an eligible
position during the Plan Period (on or before October 1, 2016) will have their
payouts calculated on paid salary from the effective date of the promotion or
hire. If an employee’s target bonus changes during the year, the payout will be
prorated.

Target Bonus
A target bonus is established as a percent of base salary for each Plan
participant.

Funding Threshold
Total available funding for the Plan will be determined by performance against a
threshold level as measured by Balanced Scorecard and Operating Margin (“OM”)*
performance for the Plan Period. The Plan will be fully funded (equivalent to
the sum, for all Plan participants in the aggregate, of 2 times the product of
each Plan participant’s target bonus percentage and base salary during the Plan
Period) upon achievement of Operating Margin performance of $**. This
performance threshold constitutes the performance threshold for purposes of
Section 162(m) of the Internal Revenue Code (“Section 162(m)”). This fully
funded amount represents the maximum bonus opportunity for all Plan participants
in the aggregate and the maximum total cost of the Plan.

NOTE: Portions of this Exhibit are the subject of a Confidential Treatment
Request by KLA-Tencor Corporation to the Securities and Exchange Commission (the
“SEC”). Such portions have been redacted and are marked with a “**” in place of
the redacted language. The redacted information has been filed separately with
the SEC.

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Performance Matrix and Determination of Funding Available for Bonus Payments
The level of funding available for payment to participating Executives will be
based on performance as measured against the Corporate Balanced Scorecard and OM
performance, as provided in the table (“FY17 6-month Executive Bonus Payout
Table”) below. Amounts in the table represent the multiple of each participating
Executive’s target bonus available for allocation of bonus payments, subject to
any positive or negative adjustment based on such Executive’s IPM (as defined
below).

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Individual Performance and Determination of Executive Bonus Payments
The actual bonus payment amount for each individual Executive (other than the
CEO) will be based on the CEO’s assessment of the Executive’s performance for
the Plan Period and determination of an Individual Performance Multiplier
(“IPM”) ranging from 80-120%. The IPM is multiplied by the Executive’s target
bonus and the multiple achieved from the Performance Matrix above to determine
the actual bonus payment amount (see bonus calculation below). Each Executive’s
performance will be evaluated based on how effectively they led their
organization as demonstrated against the key Balanced Scorecard measures and
objectives for the Executive’s respective organization. The IPM and final bonus
payments for each Plan participant who is an executive officer of the Company
for purposes of Section 16 of the Securities Exchange Act of 1934, as amended,
with the exception of the CEO, will be recommended by the CEO and reviewed and
approved by the Compensation Committee. The IPM and final bonus payment for the
CEO will be determined and approved by the Company’s Board of Directors.

NOTE: Portions of this Exhibit are the subject of a Confidential Treatment
Request by KLA-Tencor Corporation to the Securities and Exchange Commission (the
“SEC”). Such portions have been redacted and are marked with a “**” in place of
the redacted language. The redacted information has been filed separately with
the SEC.

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Individual Performance and Determination of Executive Bonus Payments
The actual bonus payment amount for each individual Executive (other than the
CEO) will be based on the CEO’s assessment of the Executive’s performance for
the Plan Period and determination of an Individual Performance Multiplier
(“IPM”) ranging from 80-120%. The IPM is multiplied by the Executive’s target
bonus and the multiple achieved from the Performance Matrix above to determine
the actual bonus payment amount (see bonus calculation below). Each Executive’s
performance will be evaluated based on how effectively they led their
organization as demonstrated against the key Balanced Scorecard measures and
objectives for the Executive’s respective organization. The IPM and final bonus
payments for each Plan participant who is an executive officer of the Company
for purposes of Section 16 of the Securities Exchange Act of 1934, as amended,
with the exception of the CEO, will be recommended by the CEO and reviewed and
approved by the Compensation Committee. The IPM and final bonus payment for the
CEO will be determined and approved by the Company’s Board of Directors.

General Provisions
The Compensation Committee (or the independent members of the Company’s Board of
Directors, within the meaning set forth in Section 162(m) (the “Independent
Directors”)) shall be the Plan Administrator. The Compensation Committee (or the
Independent Directors) shall make such rules, regulations, interpretations and
computations and shall take such other action to administer the Plan as it may
deem appropriate. The establishment of the Plan shall not confer any legal
rights upon any employee or other person for a continuation of employment, nor
shall it interfere with the rights of the Company to discharge any employee and
to treat him or her without regard to the effect which that treatment might have
upon him or her as a participant in the Plan.

This Plan shall be construed, administered and enforced by the Compensation
Committee (or the Independent Directors), in its sole discretion. The laws of
the State of California will govern any legal dispute involving the Plan. The
Compensation Committee (or the Independent Directors) may at any time alter,
amend or terminate the Plan, subject to the requirements of Section 162(m).

This Plan is adopted pursuant to the KLA-Tencor Performance Bonus Plan and sets
forth the terms and conditions for the annual incentive program for Executives
for the first 6 months of fiscal year 2017.

* References in this Plan to Operating Margin refers to the Company’s
calculation of non-GAAP Operating Margin

NOTE: Portions of this Exhibit are the subject of a Confidential Treatment
Request by KLA-Tencor Corporation to the Securities and Exchange Commission (the
“SEC”). Such portions have been redacted and are marked with a “**” in place of
the redacted language. The redacted information has been filed separately with
the SEC.