BENCHMARK ELECTRONICS INC

The Human Capital and Compensation Committee believes that our long-term equity-based incentive program focuses executives on key performance metrics that align with long-term shareholder value creation and the Company’s long–term strategic plan, establishes a direct link between compensation and the achievement of long-term financial objectives, and facilitates an increased equity ownership by our executives. In the first quarter of 2023, the committee awarded executive officers a combination of PSUs and RSUs under the Company's 2019 Omnibus Incentive Compensation Plan (the "2019 Omnibus Plan") as further described below.

2023 Awards

The long-term equity-based incentive compensation awards made in the first quarter of 2023 consisted of 50% of the total value awarded in PSUs and 50% in RSUs.

PSUs—The committee believes the PSUs, which are subject to the achievement of measurable, absolute financial goals, enable management to build a meaningful ownership stake in the Company to encourage long-term strategic thinking and the avoidance of unnecessary or excessive risk taking. The financial goals for the 2023 grants were set by the committee and relate to the achievement of Revenue, Operating Income Margin and ROIC performance goals as outlined in the Company’s three-year strategic plan. Achievement of these goals will be assessed at the end of the three-year performance period. Each metric will be weighted and assessed equally and independently. The number of PSUs that will ultimately be earned will not be determined until the end of the corresponding performance periods and may vary from as low as zero to as high as 2.5 times the target number depending on the level of achievement of the performance goals.

RSUs—Long-term equity-based incentive compensation awards include time-based awards, which typically vest over four years, to improve retention of executive officers and to enable a steadily growing ownership stake in the Company that encourages long-term strategic performance.

To determine the awards for each executive officer, the committee evaluated each executive officer’s performance and responsibilities, and also considered market data, relative pay among the Company’s executive officers and other factors (without assigning a specific weight to each factor). The evaluation was made with input from our CEO (as to executive officers other than the CEO), and also factored in the future potential contribution from each executive officer. Although management recommended the number of shares to be covered by equity awards granted to employees, the committee approved the grant of all equity awards and did not delegate the timing of such grants. Equity award grants to our CEO and other executive officers are not automatically made each year. The amount and terms of equity awards already held by executives generally are not significant factors in the committee’s determination of whether and how many equity awards should be granted to the executive officers each year.

The actual number of PSUs and RSUs granted is calculated by dividing the dollar value of the award by the closing price of the Company’s stock on the equity award grant date. The closing price of the Company’s stock on February 23, 2023 (the date of the grant) was $24.41 and for Mr. Moezidis it was $25.19 on August 15, 2023 (the date of his grant). The table below shows the target PSUs and RSUs awarded for fiscal 2023 for each of the named executive officers:

A Closer Look at PSUs. Any vesting of PSUs depends on the Company’s achievement of financial goals set by the Human Capital and Compensation Committee and derived from the Company’s overall financial objectives, which for PSUs awarded in 2023 with a three-year performance period ending in December 2025, included goals relating to:

28 Benchmark. Benchmark Electronics, Inc. • 2024 Proxy Statement

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Revenue: Revenue shall be the total revenue as reported in the Company’s consolidated financial statements for the measurement year.

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Operating Income Margin: Operating Income Margin shall be the operating income as reported in the Company’s consolidated financial statements for the measurement year, excluding one-time, non-recurring, non-operational gains or charges and amortization of intangible assets (“Adjusted Operating Income”), divided by the revenue; and

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ROIC: ROIC shall be the operating income as reported in the Company’s consolidated financial statements for the measurement year, excluding one-time, non-recurring, non-operational gains or charges and amortization of intangible assets and stock compensation expense, adjusted for taxes (i.e., multiplied by one minus the tax rate), divided by the quarterly average of invested capital by the Company during the performance period, as described below. The tax rate used shall equal the book tax rate for the Company for the measurement year, excluding all discrete items. The quarterly average of invested capital shall equal the average of invested capital on each of last five quarterly consolidated balance sheets for the Company during the performance period (opening balance sheet (fourth quarter of year prior to measurement year) and first quarter, second quarter, third quarter and fourth quarter balance sheets of the measurement year). Invested capital for each balance sheet shall equal the sum of total interest-bearing debt and finance leases (both current and long-term), minority interest, and shareholders’ equity as of the date of each balance sheet less cash and cash equivalents and restricted cash at each balance sheet date.

The Human Capital and Compensation Committee believes that revenue growth, operating margin and the efficient use of invested capital are key long-term determinants of shareholder value. The PSU targets are designed to enhance focus on performance across these areas ensuring alignment between management’s compensation and the creation of shareholder value.

2021 PSU Award Results

The below table sets forth the threshold, target and maximum performance goals for the 2021 PSU three-year awards comprised of (i) revenue, (ii) Operating Income Margin, and (iii) ROIC, weighted in equal thirds. Each plan component is assessed independently with respect to 2023 financial results of the Company.

(1)

Represents actual revenue adjusted for revenue related to supply chain premiums as of December 31, 2023.

At its regular first quarter 2023 meeting, the Human Capital and Compensation Committee determined that the performance goals for the 2021 PSU awards were achieved in the aggregate at 111.6% of target and, therefore, shares were approved and issued under such awards.