Quanex Building Products CORP

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Peer Group and Competitive Positioning

Fiscal 2025

Following the Tyman acquisition in August 2024, the Compensation Committee’s independent consultant, Frederic W. Cook & Co., Inc. (“FW Cook”), reviewed the continued appropriateness of the peer group. FW Cook proposed, and the Compensation Committee approved, the group of nineteen similarly-situated industry companies for fiscal 2025, referred to in this CD&A as the “Peer Group.” Quanex was positioned near the median of the group on the primary scope metric of revenue. The Peer Group serves as a point of reference in designing and setting its compensation levels. The following companies were included in the Company’s fiscal 2025 peer group:

The companies that were removed from the prior year’s peer group include: CIRCOR Int’l; PGT, Inc.; and Tredegar Corporation.

FW Cook used the Peer Group pay information, along with general industry survey data, to develop the appropriate range of compensation for each executive position. The Compensation Committee exercises discretion in making compensation decisions based on the following inputs: its understanding of market conditions, its understanding of competitive pay analysis, recommendations from the CEO regarding his direct reports, the Committee’s overall evaluation of the executive’s performance, and our overall compensation strategy.

Fiscal 2026

For fiscal 2026, the Company removed one company (Masonite Int’l after acquisition by Owens Corning in 2024) from the comparator group. The eighteen companies below comprise the fiscal 2026 peer group:

Program Description

Our executive compensation program is a traditional design structure that has been customized to suit the business and organizational objectives of the Company. It includes base salary, annual cash incentive compensation, long-term incentives, and executive benefits. Our fiscal 2025 long-term incentive program consisted of restricted stock grants, PRSUs, and performance share awards. The amount of pay that is performance-based for an executive is directly related to the level of responsibility held by the position; accordingly, our highest ranked executive has the most performance-based pay as a percentage of total compensation. We set realistic but challenging goals in our annual incentive and long-term performance plans. In each case, if we fail to meet the pre-determined standards, no plan-based compensation is earned by executives.

We evaluate the various components of compensation annually relative to the competitive market for prevalence and value. By setting each of the elements against the competitive market within the parameters of our compensation strategy, the relative weighting of each element of our total pay mix varies by individual.

We do not set fixed percentages for each element of compensation. The mix may also change over time as the competitive market moves or other market conditions which affect us change. We do not have and do not anticipate establishing any policies for allocating between long-term and currently paid compensation, or between cash and non-cash compensation. We have a process of assessing the appropriate allocation among these elements of compensation on a periodic basis and adjusting our position based on market conditions and our business strategy.

Base Salary

Purpose: This pay element is intended to compensate executives for their qualifications and the value of their job in the competitive market.

Competitive Positioning: The Company’s goal is to target the market median as our strategic target for base salary. We review each executive’s salary and performance every year to determine whether base salary should be adjusted. Along with individual performance, we also consider movement of salary in the market, as well as our financial results from the prior year to determine appropriate salary adjustments.

While the Compensation Committee applies general compensation concepts when determining the competitiveness of our executives’ salaries, the Compensation Committee generally considers base salaries as being competitive when they are within a reasonable range of the stated market target (in this case, the market 50th percentile).

Fiscal 2025 Review: The table below provides base salaries for fiscal years 2024 and 2025, except for Ms. Navascues who was hired in January 2025. The increases to base salaries reflect market adjustments to position the incumbents closer to the pay strategy of market median and recognition of their individual development and contribution to the Company.

Annual Incentive Awards (AIA)

Purpose: This element of compensation is intended to reward executives for the achievement of annual goals related to key business drivers. It is also intended to emphasize to executives the key business goals of the Company from year to year.

Competitive Positioning: The Company’s strategy is to target the market median for annual incentives for performance that meets expected levels. We have established the range of possible payouts under the plan so that our competitive position could be above or below our stated strategy based on performance outcomes.

Plan Mechanics: The Company’s 2020 Omnibus Incentive Plan (the “Omnibus Plan”) serves as the governing plan document for our AIA. The AIA plan design is geared toward goal attainment, which pays target award levels for expected performance results.

Fiscal 2025: The AIA emphasizes earnings and informed decision making with regard to the Company’s operational and strategic goals. To integrate the goals of the AIA throughout the Company, the annual incentive program participation includes the top leaders of our business divisions. We believe this is necessary in order to align managers throughout the organization with this incentive structure.

Rigorous Goals: The Compensation Committee took careful consideration of the Company’s performance in order to develop the plan design and goals for fiscal 2025. In line with the Company’s commitment to align incentives with strategic imperatives, the fiscal 2025 scorecard was based on 25% Revenue, 25% Adjusted EBITDA, 25% Adjusted EBITDA Margin and 25% Achievement of Run-Rate Synergy Targets. The Compensation Committee believes that these metrics balance the management team’s focus and position the Company strategically for healthy growth and profitability. The Company set rigorous performance expectations based on the forecasted results of the operating divisions and the projected markets for building products.

Target Award Levels: Based on market practices for annual incentives and our compensation strategy, we set a target award opportunity for each of our executives. This is the amount of incentive compensation the executive can earn when performance meets expected results, or “target.” The table below reflects the payout percentage of each named executive officer’s base salary at the threshold, target, and maximum levels of performance for fiscal 2025.

Potential AIA Payout

Expressed as a % of Salary

Fiscal 2025 Results: The Company’s targets on the primary metrics under the fiscal 2025 AIA scorecard considered by the Compensation Committee was a Revenue goal of $1,895.5 million, an Adjusted EBITDA goal of $281.82 million, an Adjusted EBITDA Margin goal of 14.9%, and an achievement of Run-Rate Synergy goal equal to $15M. In calculating performance of both Adjusted EBITDA and Adjusted EBITDA Margin, the Committee excluded purchase price accounting inventory step-ups, transaction and advisory fees, gain/loss on the sale of certain fixed assets, asset impairment charges, and restructuring charges. In addition, the Revenue and EBITDA goal metrics were adjusted as necessary to exclude the impact of foreign currency exchange rates.

A summary of the final threshold, target, and maximum goals after adjusting for foreign currency exchange rates is as follows:

Solely for purposes of measuring performance under the AIA, the Company achieved Fiscal 2025 Revenue of $1.838 billion, Adjusted EBITDA of $237 million, Adjusted EBITDA Margin of 12.9%, and Run Rate Synergies of $42 million. Together, these results produced an AIA achievement equal to 71% of target for executive officers.