FORMFACTOR INC

Executive Compensation Philosophy.

The Compensation Committee of our Board oversees our company’s executive compensation program and is responsible for ensuring that our named executive officers are compensated in a manner consistent with our business strategy, competitive market practice, sound corporate governance principles and stockholder interests. The core of our executive compensation philosophy is to pay for performance.

Compensation Objectives.

We are committed to a compensation philosophy that is market-competitive and provides that our named executive officers and other employees share in our company’s success. Our executive compensation plans, policies and programs are designed to achieve these three primary objectives:

Target Pay Position/Mix of Pay.

Our executive compensation program is comprised of a combination of base salary, variable pay-for-performance cash incentive payments, and long-term equity grants. Each of these components is discussed in greater detail below under “Compensation Decisions.” We focus on total direct compensation, and factor in all aspects of pay, including base salary, cash incentives and time-based and performance-based long-term incentives, to maintain a program that, in the aggregate, is market competitive. The Compensation Committee does not have a specific formula that is used to determine the various elements of pay but applies the necessary business judgment required to balance the needs of management in leading the business with those of our stockholders to drive near-term and long-term company performance. We also examine peer group benchmarks and other compensation practices, and taking into account those practices, create an appropriately leveraged, variable compensation program for our named executive officers that reinforces our pay-for-performance culture.

In determining the amounts and forms of compensation, the Compensation Committee also considers such factors as our executives’ experience, performance, internal pay comparisons, retention objectives, and, for the CEO, the relative relationship between the CEO compensation and other leaders in the business, in addition to the impact to the company of cash expenditures and equity dilution. The Compensation Committee believes that this approach best supports a pay-for-performance culture and, in turn, the creation of stockholder value over time. Our emphasis on variable, or at-risk, compensation provides that our named executive officers, subject to retention needs, will only receive target or above-target compensation to the extent that our performance goals have been achieved or exceeded.

As in prior years, our compensation philosophy in 2023 focused on pay-for-performance. We closely aligned the compensation paid to our named executive officers with achievement of both near-term and long-term financial goals. In fiscal year 2023, we structured our compensation mix such that 92% and 86% of the total direct compensation awarded to our CEO and our CFO, respectively, was in the form of variable cash incentives and equity awards. This structure supports our pay for performance culture and places the emphasis on long-term performance and retention incentives for alignment with investors. The graphic below reflects the general allocation of the core elements of named executive officer compensation for fiscal year 2023. At-Risk Pay in the graphic below includes awards granted to our CEO and CFO pursuant to our short-term incentive plan, assuming such awards were earned at target, and our long-term equity incentive awards (RSUs

and PSUs) utilizing the grant date fair value. We have excluded a time-based RSU award of 14,184 shares granted to our CFO on August 7, 2023 because we consider this grant to have been a one-time occurrence and it was not part of his core target compensation. This one-time grant is further described in the “Fiscal 2023 Equity Awards” section in this Proxy Statement.

Compensation Benchmarking.

As an input into compensation program development, the Compensation Committee assisted by its independent compensation consultant, Aon’s Human Capital Solutions practice, a division of Aon plc (Aon), conducts an annual review of the compensation practices of a defined peer group that forms the basis for this research. In addition, Aon provides data reflecting the compensation practices of companies outside of FormFactor’s peer group by applying the same peer group parameters. This information is considered by the Committee in connection with its examination of the level of pay, mix of pay, and types and competitiveness of the Company’s executive compensation programs. The Compensation Committee, with the assistance of Aon, completed its annual review of our peer group for 2023. Based on the Compensation Committee’s review and the advice of Aon, we added two companies to our peer group: Lattice Semiconductor and Power Integrations. Additionally, CMC Materials and Coherent, were removed from our peer group due to both being acquired. For fiscal year 2023, our peer group consisted of 19 companies for the purposes of evaluating the competitiveness of our named executive officer compensation. The Compensation Committee maintained the general framework for selecting peer companies as in 2022 after considering the policies of outside investors and several governance advisory groups.