ASTEC INDUSTRIES INC

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35 Astec Industries, Inc. | Notice of Annual Meeting and Proxy Statement 2024

Elements of Our Compensation Program

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In calendar year 2023, the principal elements of our executive compensation program, and the purposes for each element, were as follows:

In addition to the above described key components, the Company’s executive officer compensation program also includes certain limited perquisites and executive benefits, including contributions to the Company’s Supplemental Executive Retirement Plan (“SERP”) (the SERP is closed to new participants), a non-qualified deferred compensation plan (“Deferred Compensation Plan”) that allows participants to defer a portion of their base salary and/or annual bonus, as well as other benefits that are generally available to all employees of the Company, including medical and 401(k) plans.

Base Salary

Base salary is the fixed component of our named executive officers’ target total direct compensation. The Compensation Committee reviews base salaries on an annual basis and base salary increases for named executive officers, when given, historically have been intended to reflect changes in market-based compensation for

similarly situated executives in our industry, with further increases approved by the Compensation Committee based on a subjective assessment of a number of factors as discussed above. Base salary changes for the CEO are approved by the Company’s full Board.

In determining base salaries for the named executive officers each year, the Compensation Committee considers evaluations and recommendations provided by the Company’s CEO regarding whether adjustments to base compensation of the other named executive officers are warranted (each of whom report directly to the CEO), its own observations, and information provided by the Committee’s independent consultant. In recommending changes to the CEO’s base salary to the full Board for approval, the Compensation Committee considers its own observations and assessments with respect to individual performance, the CEO’s leadership of the Company and information provided by its consultant.

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After considering these factors, and discussing proposed salaries for the other named executive officers with the CEO, the Compensation Committee approved annual salaries for the named executive officers (with the indicated percentage increases), effective April 1, 2023 (or as of a later date in 2023, as indicated):

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(1)

The base salary increases for the named executive officers were generally made to bring their compensation in line with similarly situated executives in our industry and with comparable levels of revenue responsibility, based in part on FW Cook’s compensation study and market analysis completed in Fall 2022.

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(2)

Mr. van der Merwe’s base salary increase reflects his promotion to Chief Executive Officer, effective January 6, 2023.

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(3)

Mr. Norris’ base salary was increased from $350,000 to $364,000 effective April 1, 2023, and was increased to $415,000 in connection with his promotion to Group President, effective December 1, 2023.

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(4)

Mr. Snyman joined the Company on July 3, 2023, and his base salary was originally set at $425,000 to be competitive with similarly situated executives in our industry, and was increased to $436,000 effective December 1, 2023, in connection with an increase to his duties and responsibilities.

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(5)

Mr. Ruffalo’s employment with the Company terminated on January 6, 2023, prior to the Compensation Committee’s approval of 2023 base salaries for executive officers.

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36 Astec Industries, Inc. | Notice of Annual Meeting and Proxy Statement 2024

Changes to the compensation for other named executive officers were in line with market conditions and also reflected changes based on individual performance.

Annual Cash Incentive Compensation

We provide annual cash incentive opportunities to motivate and reward the named executive officers for achievement of financial results and key business objectives. For calendar year 2023, the Compensation Committee continued with our annual incentive plan (AIP) in a manner largely consistent with the AIP that was in place for calendar year 2022. The primary components of the program are discussed below.

A target bonus opportunity is set for each named executive officer as a percentage of base salary, with the percentage varying depending on their position, based on a review of competitive market practices and internal equity considerations. For 2023, the AIP target amounts for the named executive officers were as follows:

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(1)

Mr. Norris’ 2023 target AIP (as a percentage of his base salary) was initially set at 50%, and was increased to 60% in connection with his promotion to Group President effective December 1, 2023. Mr. Norris’ AIP payout for 2023 was prorated on a monthly basis between these amounts.

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(2)

Mr. Snyman joined the Company on July 3, 2023, and his AIP target was prorated to reflect the portion of the year he was employed by the Company.

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(3)

Mr. Ruffalo’s employment with the Company terminated on January 6, 2023, prior to the Compensation Committee’s approval of 2023 target bonus opportunities for executive officers.

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In order to earn any annual incentive pay for the Adjusted EBITDA and Working Capital Turnover metrics, a plan trigger goal must be achieved. For calendar year 2023, the plan trigger goal was achieving at least 65% of a target Adjusted EBITDA goal, or $58.5 million. Assuming the plan trigger goal was achieved, actual incentive amounts that could be earned by the named executive officers for 2023 ranged from 50% (for performance at threshold levels) to a maximum of 200% (for performance above target levels) of their respective target bonus amounts, based on the level of achievement of performance goals relating to three key metrics: Adjusted EBITDA (weighted 50%), Working Capital Turnover (weighted 25%), and a non-financial metric related to the successful achievement of our enterprise resource planning implementation project milestones (weighted 25%). Performance goals for the CEO, CFO, Group Presidents and other corporate officers relate 100% to total Company performance. We retained the Adjusted EBITDA (defined below) as an AIP performance metric for calendar year 2023 because we continue to believe that it is an efficient short-term measure of operating performance, profitability and cash flow. We also retained Working Capital Turnover (defined below) as an AIP performance metric for calendar year 2023 because it is an important indicator of how efficiently we use our working capital to support our sales, which we believe is critical to our success. We included the non-financial metric — Strategy Execution — related to the successful on-time achievement of project milestones associated with our enterprise resource planning implementation project because this is a strategic initiative that is critical to the Company’s transformation.

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(1)

Adjusted EBITDA is a non-GAAP financial measure that is defined as net income before interest, income taxes, depreciation and amortization each excluding the effect of acquisitions completed during the year, further adjusted for gains or losses outside the normal scope of our ordinary activities including but not limited to transformation program costs, restructuring and other related charges, asset impairments, gains or losses on the sale of assets, transaction costs representing acquisition and integration related costs and other items of income expense, gain or loss, that, in the case of each of the foregoing are identified in the publicly filed reports.

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(2)

Working capital turnover ratio is a formula that calculates how efficiently the company utilizes working capital to support sales and growth. Working capital is current assets minus current liabilities. The working capital turnover ratio is calculated as follows: annual net sales divided by the average amount of working capital during the same year.

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37 Astec Industries, Inc. | Notice of Annual Meeting and Proxy Statement 2024

(3)

Strategy Execution is a non-financial metric related to the successful on-time achievement of project milestones associated with our enterprise resource planning implementation project because this is a strategic initiative that is critical to the Company’s transformation.

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Based on achievement on the performance goals in calendar year 2023, the Compensation Committee approved the following 2023 AIP bonus payments for the named executive officers: Mr. van der Merwe, $1,120,170; Ms. Weyenberg, $532,985; Mr. Norris, $289,993; and Mr. Snyman, $196,995. As noted above, the employment of Messrs. Ruffalo, Averkamp and Pasricha terminated prior to the end of calendar year 2023, and as a result, no AIP incentive was earned by these former executive officers. For a discussion of the severance payments and benefits paid to these individuals in connection with the termination of their employment, see the Potential Payments upon Termination, Resignation or Change-in-Control section below.

Long-Term Incentive Compensation

Grants of equity-based compensation are designed to create a strong and direct link between executive officer pay and shareholder return and to enable executive officers to develop and maintain a long-term position in the Company’s common stock. For calendar year 2023, the Committee approved equity awards to key employees, including the named executive officers, consisting of time-based restricted stock units (RSUs) and performance-based restricted stock units (PSUs). RSUs comprise 50% of the 2023 annual Long-Term Incentive (“LTI”) grant value, and will vest in equal installments on the first three anniversaries of the grant date, subject to the participant's continued employment with the Company. PSUs comprise the remaining 50% of the annual LTI grant value awarded in 2023 and can be earned in amounts between 0% and 200% of the target number of shares granted. The PSUs granted in 2023 have a single, three-year

performance period and will vest and be earned on the third anniversary of the grant date. The amount of PSUs earned will be based on the level of achievement of performance goals relating to two metrics:

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Adjusted ROIC accounts for 50% of the total PSU award value. Adjusted ROIC has historically been strongly correlated to shareholder value creation and supports a disciplined approach to capital management. Adjusted ROIC is a non-GAAP financial measure that is defined as income or loss from operations less income taxes and further adjusted for gains or losses outside the normal scope of our ordinary activities including but not limited to transformation program costs, restructuring and other related charges, asset impairments, gains or losses on the sale of assets, transaction costs representing acquisition and integration related costs and other items of income expense, gain or loss, after tax and divided by average invested capital.

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Total shareholder return (TSR) relative to a peer group accounts for the remaining 50% PSU award value. This metric has been used as a performance measure for PSU awards since 2016 and measures our stock price performance relative to a custom TSR peer group. PSUs may be earned between 0% and 200% of the target number of shares granted based on our TSR relative to our TSR peer group, as follows: 200% of the target award is earned if our TSR is at the 75th percentile and above; 100% of the target award is earned if our TSR is at the 50th percentile; 50% of the target award is earned if our TSR is at the 25th percentile; and 0% of the target award is earned if our TSR is below the 25th percentile. Linear interpolation applies between these performance levels.

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The Committee approved awards of RSUs and PSUs for each named executive officer with the intended target grant values and the number of RSUs and PSUs granted to each named executive officer being as follows:

Deferred Compensation Plan

The Deferred Compensation Plan is a nonqualified deferred compensation plan that the Company adopted effective January 1, 2021, to provide select employees, including its executive officers, with an opportunity to voluntarily defer the receipt of a portion of their base salary and/or annual cash incentive awards. The Compensation Committee believes that providing opportunities to defer taxable income is an important part of an attractive rewards program necessary to recruit and retain qualified executive officers.

Perquisites and other Executive Benefits

Executive officers are eligible for certain perquisites and additional benefits that are not available to all employees (but are available to many management level employees), such as our SERP (the SERP is closed to new participants). The SERP provides additional benefits to individuals whose retirement benefits are affected by the limit on the maximum amount of compensation under the Company’s 401(k) plan and provides additional benefits on annual profit-sharing distributions not recognized under the 401(k) plan. Additional details regarding perquisites and other benefits provided to our named executive

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