AAON INC

Our policy is that the NEOs’ long-term compensation should be directly linked to enhancing profitability and value provided to our

stockholders. Accordingly, the Compensation Committee grants equity awards under our 2016 Long-Term Incentive Plan, creating a

strong linkage between realized pay to stockholder value creation. Such grants are largely based upon the recommendation of the

principal executive officer (except as to himself) based on the NEOs performance in the prior year and his or her expected future

contribution to our performance.

Positive overall Company performance (financial as well as stock price performance) is a primary element associated with the grant

of equity-based compensation to the executive officers as a group. When determining the total value of compensation provided to our

executive officers, our Compensation Committee, with the advice of our CEO, evaluates various aspects of Company performance in

light of general economic conditions, and compares the Company's performance against similar competitors in the industry.

Performance elements considered may include improvement in sales performance, cost containment initiatives, product and

marketing development, risk management, or successful completion of major capital projects, including enhancements to

manufacturing operations. These elements have not been specifically weighted in determining the amount of the equity incentive

awards because the relative importance of each element may change from time to time and the responsibilities of each executive

officer, as they contribute to the achievement of any particular objective, may vary.

Factors considered when determining any specific equity-based award include:

•the responsibilities of the executive officer;

•the scope, level of expertise and experience required for the executive officer’s position and the period during which the

officer has performed these responsibilities;

•the strategic impact of the officer’s position; and

•the potential future contribution of the officer.

In 2023, we maintained the same targeted equity mix used the previous year, which emphasizes performance-based elements of

PSUs (50%) and stock options (25%). The PSUs will measure AAON’s three-year total shareholder return ("TSR") relative to the

constituents of the S&P 600 SmallCap Capital Goods Industry Group (as constituted at the beginning of the performance period).

This allows us to reward executives for performance relative to companies facing similar market forces and aligns the interests of

management with stockholders by incentivizing performance that drives returns that exceed our peers. In addition, the vesting

horizon for the time-vested restricted shares and stock options was changed to three years to align with the three-year performance

period/vesting horizon of the PSUs. Please see the exhibit below for the relative TSR performance and payout scale:

Results between points are interpolated on a straight-line basis. In the event that AAON's absolute TSR is negative over the 3-year

performance period, the payout will be capped at 100% of target, regardless of relative performance.

The first PSUs were awarded in 2021, and as a result vest in 2024. For the three year performance period of January 1, 2021

through December 31, 2023, the Company's TSR was 61.21% which ranked in the 57.60th percentile of our peer group and resulted

in a final payout of 110.4%. The resulting shares can be found in the Performance Unit Vesting Schedule shown as part of the Grants

of Plan-Based Awards tables.

Awards may be granted to new key employees on their hire date. Other grant date determinations are made by the Compensation

Committee, which are based upon the date the Committee met and proper communication was made to the NEO or key employee as

defined in the definition of grant date by FASB ASC Topic 718. Stock option exercise prices are equal to the value of AAON stock on

the close of business on the determined grant date. We have no program or practice to coordinate timing of grants with release of

material, nonpublic information.