PLEXUS CORP

OVERVIEW OF DIRECT COMPENSATION

Total direct compensation for executive officers at Plexus consists of three primary components—salary, annual cash incentive payments under the VICP and long-term equity-based awards. Each of these components is complementary to the others, addressing different aspects of direct compensation and seeking to motivate employees, including executive officers, in varying ways. The Committee reviews the total compensation package of each executive officer to determine whether it is reasonable.

Setting Compensation Levels

The Committee uses a combination of peer company data and published general industry surveys to provide insight into the competitiveness of each component of compensation offered to Plexus’ executive officers. This data is compiled and analyzed by Plexus human resources’ leaders, who then meet with the Committee’s compensation consultant to help the consultants understand Plexus’

business model, organizational structure and compensation philosophy. The compensation consultant, Plexus human resources’ personnel, and our CEO discuss the analysis, rationale and methodology, and make recommendations to the Committee. Our CEO is excluded from CEO compensation discussions.

When assessing the competitiveness of compensation and making compensation determinations, the Committee’s process includes a review and analysis of various factors, including:

In performing these analyses, the Committee uses tally sheets, which incorporate these factors to provide a comprehensive view of Plexus’ total compensation for each executive and payout exposure under various performance scenarios.

When determining the competitive target compensation for each executive, the Committee uses comparable pay information as a point for reference. Through this form of benchmarking, the Committee does not aim for any particular numerical or percentage tests as compared to peer company data or surveys; however, it generally views the 50th percentile of market data as a reasonable comparison and uses its judgment following the review of multiple data points to arrive at individual pay determinations. In that consideration, the Committee discusses total compensation (including outstanding equity awards) for all executive officers, the level of experience and leadership each provides, and financial and personal performance results. The Committee seeks to properly position the total target direct compensation of the Company’s executive officers and to balance different types of compensation (including equity) in order to promote retention and strong Company performance. The Committee believes this approach results in a comprehensive and thoughtful compensation review process because it allows the Committee to use discretion when appropriate in responding to particular circumstances. The Committee intends to continue these practices in the future.

Use of Peer Companies

For compensation planning purposes, the Committee has constructed a peer group in order to compare the compensation of Plexus’ executive officers with that paid by other companies. Companies were chosen for the peer group using filtering criteria such as:

The Committee has established a group of peer companies for comparison purposes using the selection criteria discussed above. The Committee conducts reviews of the peer group and selection criteria on a periodic basis to ensure that both are appropriate. A review of the peer group was completed in fiscal 2023 for fiscal 2024 compensation planning but no changes were made. A similar review was completed in fiscal 2024 for fiscal 2025 compensation planning but no changes were made. The peer group for fiscal 2024 and fiscal 2025 compensation planning consisted of the companies set forth in the table below.

PEER GROUP FOR SETTING 2024 AND 2025 PAY

DISTRIBUTION OF PAY COMPONENTS

The Committee believes that a majority of executive compensation should be at risk and that the CEO’s percentage at risk should be the highest. VICP targets for the named executive officers other than Mr. Kelsey ranged from 80% to 90% of base salary in fiscal 2024, with the opportunity to earn cash incentives beyond those levels if Plexus exceeded its targeted financial goals. In the case of Mr. Kelsey, the VICP target as a percentage of base salary was 135% in fiscal 2024, reflecting his overall greater responsibility for the Company. In fiscal 2024, long-term incentives for executive officers were granted in the form of: (i) RSUs that vest based on continued service, which promotes a long-term ownership mentality; and (ii) PSUs, which represent compensation that is at risk since these awards will be forfeited if performance is below a threshold level.

Except in the case of promotions or other special circumstances, compensation adjustments and equity awards for executive officers are targeted for implementation in the second quarter of each fiscal year to align with the Company’s internal performance management cycle and changes to the compensation of its other non-executive employees. The Committee considers both individual and Company performance in making these determinations, and believes that this timing forges a strong link between performance and pay.

The resulting total targeted direct compensation mix used for fiscal 2024 for Mr. Kelsey and the average for the other named executive officers is illustrated in the charts below:

BASE SALARY

Factors Considered In Determining Base Salary

Prior to establishing the base salary level for the CEO and approving salary levels for other executive officers, the Committee takes into consideration various factors. These factors include:

The Committee uses this information and meets in executive session to discuss appropriate pay positioning and pay mix based on the data gathered. The data gathered in the determination process helps the Committee test for fairness, reasonableness and competitiveness. While the Committee takes into account the Company’s compensation philosophy and goals and follows a holistic approach to executive compensation packages, its final determination may incorporate the subjective judgment of its members, as well.

Executive officer base salary changes may include the following two components:

2024 Base Salary Adjustments

Base salary adjustments for 2024 were approved by the Committee in December 2023 for all executive officers. When considering compensation adjustments, the Company has placed a greater emphasis on annual and long-term incentive opportunities, as opposed to base salary, since they are performance-based, represent compensation that is at risk, promote the creation of shareholder value and are intended to further align the interests of executive officers with those of our shareholders. Our CEO’s base salary is higher than those of our other executive officers because of the more extensive and challenging duties and responsibilities associated with that position. In addition, the CEO’s total compensation is more heavily weighted toward performance-based compensation when compared to the total compensation of our other executive officers.

For 2024, Mr. Kelsey’s base salary was set at $1,100,000 which was not changed from his previous salary. The base salary for Mr. Kelsey is positioned near the median of peer group and market comparisons.

Increases for our other named executive officers varied from 2.8% to 5.7%. Base salary increases for 2024 for these named executive officers represented merit increases only. Variations between these named executive officers reflected competitive conditions and the Committee’s view of the named executive officers’ duties, responsibilities and performance. The Committee believed that base salaries for those named executive officers were appropriately aligned with peer group and market comparisons, and were awarded based on individual performance.

Presented below are the 2024 base salaries and percentage increases as compared to the prior year for our named executive officers:

On January 25, 2024, Plexus announced anticipated restructuring charges to enable improved scalability, create greater efficiency and align its cost structure to position Plexus for future investments and long-term growth. At that time, Mr. Kelsey also announced he would voluntarily take a 10% base salary reduction, which went into effect on January 7, 2024 and remained in effect until June 23, 2024. For the same reasons as Mr. Kelsey, all named executive officers voluntarily took a 5% pay reduction from January 7, 2024 to June 23, 2024. The impact of such voluntary reductions are not shown in the table above, but are reflected in the “Base Salary” column of the Summary Compensation Table below.

ANNUAL INCENTIVE COMPENSATION (AT RISK)

The VICP provides annual cash incentives to approximately 4,300 participants, including all of our executive officers. The award opportunity levels for each participant are expressed as a percentage of base salary.

For executive officers, the VICP is a sub-plan of the Incentive Plan with the opportunity to earn above their targeted award opportunities based on the achievement of corporate financial goals. Higher levels of duties and responsibilities within Plexus lead to higher cash incentive opportunities under the VICP because the Committee believes that heightened responsibility leads to more influence on corporate performance. For each executive officer, 80% of the targeted award is keyed to the corporate financial goals; the remaining 20% of the targeted award is keyed to the achievement of individual objectives. Offering a greater percentage of compensation tied to performance measures is intended to more strongly link executive compensation with Company performance and shareholder returns.

The table below lists the fiscal 2024 VICP award opportunities for the named executive officers, expressed as a percentage of base salary. There were no changes to targeted awards for 2024 compared to 2023 for any named executive officer.

The VICP provides for payments relating to corporate financial goals both below and above the targeted awards by establishing specific threshold levels of corporate performance at which payments begin to be earned and maximum payout levels beyond which no further payment is earned. The payout for our executive officers at the maximum payout level is 200% of the targeted award. The Committee believes that the opportunity to receive a payout above target should be based solely on achieving corporate financial goals. Therefore, to achieve the maximum payout of 200% of the targeted award, executive officers must achieve 90% payouts for each of the revenue and ROIC components of the VICP, with the individual objectives component comprising the balance at a maximum of 20%. Payments to participants are not permitted under the VICP unless the Company achieves positive net income for the plan year.

The VICP provides that extraordinary items or charges should be excluded from fiscal year results. In addition, the Committee has the authority to exclude non-recurring charges, when determining the achievement of the corporate financial goals.

2024 Plan Design – Company Financial Goals

Our financial and compensation models align with our business strategy. The specific corporate financial goals for fiscal 2024, each of which stood independently of the other with regard to award opportunities, were revenue and ROIC. The goals were chosen because they aligned performance-based compensation to the key financial metrics that the Company used internally to measure its ongoing performance and that it used in its financial plans. The fiscal 2024 targets for these goals were set as part of our annual financial planning process and continue to align with our enduring financial goals. For each of the corporate financial goals, we also established specific “threshold” and “maximum” payout levels of achievement as part of that process.

For the purposes of the VICP, ROIC is defined as tax-effected annual operating income divided by the average invested capital over a five quarter period for the fiscal year and the prior fiscal year fourth quarter. Invested capital is defined as equity plus debt and operating lease liabilities, less cash and cash equivalents. Revenue is defined as the fiscal 2024 net recognized sales of the Company for financial statement purposes. The Committee has discretion to adjust ROIC to account for the effects of extraordinary items. No award is payable to any participant under the VICP unless we have positive net income for the fiscal year. In the event of results that are below the revenue and the ROIC threshold levels, the VICP may pay out only in respect to the portion based on individual objectives.

When determining ROIC for VICP awards, extraordinary items or charges, and non-recurring charges, are disregarded, except as otherwise determined by the Committee in its discretion. In fiscal 2024, non-recurring charges of $25.3 million were excluded from the ROIC calculation for VICP awards.

For fiscal 2024, in accordance with Plexus’ strategic plan and the Committee’s philosophy of aligning compensation with the Company’s enduring goals, the Committee established the performance goals described below:

The Committee believes that setting the maximum payout levels for revenue and ROIC consistent with our financial goals fully aligns employees with financial results that maximize value to our shareholders, without encouraging excessive risk-taking. Threshold levels for both metrics were set at the minimum levels of performance at which Plexus believes it begins generating value for our shareholders. Target levels for revenue and ROIC, which were set between the threshold and maximum payout levels, were intended to be challenging, but achievable, based on industry conditions and Plexus’ financial plan. Awards for performance between the threshold and target level, and between the target and maximum levels, are calculated by straight-line interpolation.

The following table sets forth the fiscal 2024 financial targets and potential VICP payout amounts (as a percent of targeted VICP cash incentive) for the named executive officers, at the threshold, target and maximum payout performance levels:

In fiscal 2024, revenue was $3,961 million and ROIC was 11.8%. Therefore, the Company’s performance was below the threshold for revenue but between the target and maximum payout for ROIC.

2024 Plan Design – Individual Objectives

The Committee determines and approves the individual objectives established for the CEO and the other executive officers. For fiscal 2024, common individual objectives were shared by all executive officers, including Mr. Kelsey and the other named executive officers. Attainment of the individual objectives represents 20% of the potential targeted VICP award; however, no such award may be earned based on individual objectives unless the Company achieves positive net income for the plan year. The Committee’s assessment of individual objectives is based on their likely impact on the achievement of the Company’s annual financial plan and other longer-term strategic priorities, their effect on shareholder value and their alignment with one another.

The fiscal 2024 shared individual objectives for our named executive officers that the Committee set at the beginning of the year concentrated on (a) a reduction in inventory levels; (b) continued pursuit of the Company’s “zero defects” cultural journey, focused on quality improvement initiatives and goals; (c) enterprise projects supporting innovation; and (d) ESG initiatives relating to energy reduction, talent sourcing, and waste to landfill controls. The Committee revisited the shared individual objectives during fiscal 2024 and revised the objectives to focus solely on customer controllable free cash flow performance for the second half of the fiscal year. Customer controllable free cash is calculated by adding operating profit with the changes in accounts receivable, inventory, accounts payable, and customer deposits. The revised goals, detailed in the table below, were set to drive immediate improvement in free cash flow performance.

Mr. Kelsey provided the Committee with an assessment of the executive team’s performance on each shared individual objective and the Committee determined the ultimate award percentage level for each objective. Actual achievement of individual objectives for fiscal 2024 was based upon the Committee’s determination of the degree to which the objectives were completed by the executive team. Based on initiative progress as of Q2, the Committee determined a payout of 85.0% was achieved for the first half of the fiscal year. Customer controllable free cash flow results exceeded the maximum payout for Q3 at $193.5 million and Q4 at $239.4 million resulting in a 100% payout for the second half of the fiscal year. As a result, all named executive officers were awarded a 92.5% payout of the personal objectives portion of the VICP, or a 18.5% payout versus the target of 20% for individual objectives.

2024 Annual Incentive Compensation (At Risk) – Actual Payout

The following table sets forth the fiscal 2024 VICP total payout as a percentage of each named executive officer’s target award, capturing the fiscal 2024 results for the Company’s revenue and ROIC goals combined with the individual objectives payout.

LONG-TERM INCENTIVES

Plan Structure

Total compensation, consistent with practices in our industry, places a particular emphasis on equity-based compensation for executive officers. The shareholder-approved Incentive Plan allows, and its predecessor allowed, for various award types, including options, SARs, restricted stock awards (including RSUs), performance stock awards (including PSUs), other stock awards and cash incentive awards. Equity-based awards are intended to provide incentives to enhance corporate performance as well as to further align the interests of our executive officers with those of our shareholders. The reported values of the long-term incentive opportunities under equity plans can vary significantly from year to year as a percentage of total direct compensation because they are determined by valuing the equity-based awards on the same basis that we use for financial statement purposes; that value depends significantly on our stock price and its volatility at the time of the awards.

For fiscal 2024 grants, and in furtherance of its emphasis on at-risk performance-based compensation, the Committee’s annual equity grant allocation formula for named executive officers consisted of 50% PSUs and 50% RSUs. The Committee believes that this equity grant allocation formula promotes a strong pay-for-performance link and further enhances the alignment of the interests of our executives with those of our shareholders. The equity grant allocation formula also is intended to promote share ownership (along with our equity ownership guidelines) and motivate our executives to succeed in the long-term. The Committee intends to continue to emphasize the use of performance-based awards for executive officers in future years.

The Committee’s long-term incentive strategy allows for use of a portfolio approach when granting awards. Each element of the portfolio for fiscal 2024 was intended to address a different aspect of long-term incentive compensation, as set forth below:

Annual Award Determination and Allocation Process

Each year the Committee reviews market data, individual performance and the estimated value of the entire pool of equity awards prior to making grants to executive officers, including when making grants in connection with promotions or other increases in responsibilities. Pursuant to its portfolio approach, in fiscal 2024, the Committee distributed awards in the form of PSUs and RSUs to eligible participants, as discussed above. When making these determinations, PSUs that vest based on the relative TSR of Plexus common stock are valued using a Monte Carlo simulation model, while the values of PSUs that vest based on economic return performance and RSUs are determined based on the fair market value of Plexus common stock.

The Committee determines the grant for the CEO and approves grants for all other executive officers. The CEO provides the Committee with initial grant recommendations for each executive officer other than himself by balancing the need to provide competitive compensation with the desire to keep related compensation value and expense relatively stable from period to period. The Committee considers each executive officer’s duties, responsibilities and performance, as well as internal and external comparisons (for example, peer group comparisons and other third-party market surveys, as described above), when approving the grant value for each executive officer. Those in positions with more responsibility tend to receive larger grants to reflect their role in the Company and the market comparisons for their compensation. Also, as discussed above, for the CEO, the Committee uses the vested and unvested equity information, as well as the accumulated value analysis, to balance the level of existing awards with the desire to reward performance and to provide retention incentives.

The Committee continues its focus on increasing incentive award opportunities for our executive officers as a portion of total potential compensation in order to more strongly link executive compensation with Company performance and shareholder returns.

Timing of Grants

Grants of PSUs are made in the fiscal second quarter; however, the performance goals for the PSUs are set in the fiscal first quarter. Grants of RSUs are generally made once a year during the fiscal second quarter, but may also be made in connection with new hires, promotions, other increases in responsibilities or in special situations. The Committee anticipates continuing to follow this grant schedule and practice for future grants. The Committee does not take material nonpublic information into account when determining the timing and terms of equity awards, andwe have not timed the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.

Fiscal 2024 Awards

Based on the Committee’s long-term incentive strategy, as well as individual responsibility and performance considerations, and reflecting all of the grants discussed above, the Committee granted the following equity awards to Mr. Kelsey and the other named executive officers in fiscal 2024.

Vesting of 50% of the PSUs granted in fiscal 2024 is based on a three-point annual average of the Company’s absolute economic return performance during the performance period; vesting of the other 50% is based on the relative TSR of Plexus stock as compared to the companies in the S&P 400 Index. Performance on these metrics will be determined following the conclusion of the relevant three year performance period.

In order to further align the Company’s financial model and business strategy to the payout of long-term incentives, the maximum payout on 50% of the PSUs is achieved when the three-point annual average economic return is at or above 5.0% over the three year performance period. If the maximum payout level is achieved, 200% of this portion of the PSUs will be earned. A target payout on this portion of the award will be achieved if the three-point annual average economic return is 2.5%; the Committee believes that this target is meaningfully difficult, but is achievable and appropriate for our industry. The Committee believes it is appropriate for a portion of these awards to vest when the three-point annual average economic return exceeds 0.0% because any positive level of economic return generates shareholder value. If the Company does not achieve a positive three-point annual average economic return, this portion of the PSUs will not pay out. Below is the payout matrix for the portion of the PSUs that may be earned based on economic return performance (if performance is between the specified levels, the payout will be interpolated):

The TSR calculations will be based on the percentage change from the initial price to the final price during the performance period, which is three years from the date of grant, and will reflect the reinvestment of dividends, if any. The initial price is calculated using the average closing price of common stock over the 30 calendar day period ending on the trading day immediately preceding the first day of the three year performance period. The final price is the average closing price of common stock over the 30 calendar day period ending on the last day of the three year performance period. The TSR calculations will be adjusted to reflect stock splits, recapitalizations and other similar events.

The portion of the PSUs that may be earned based on relative TSR performance will vest at target if the TSR of Plexus stock is at the 50th percentile of companies in the S&P 400 Index. A payout at maximum, which is 150% of the target award for this portion, may be achieved if the relative TSR of Plexus stock is at or above the 75th percentile of companies in the S&P 400 Index. The Committee believes that a relative TSR at or above this level would be reflective of significant achievement during the performance period. In order to receive a payout at threshold, which is 50% of the target award for this portion, the relative TSR of Plexus stock must be at or above the 25th percentile of companies in the S&P 400 Index. If the relative TSR of Plexus stock is below the 25th percentile, none of the PSUs will be earned and the awards will be forfeited.

The payout matrix for the portion of the PSUs granted in fiscal 2024 that may be earned based on relative TSR performance is presented in the table below (if performance is between the specified levels, the payout will be interpolated):

For information regarding the performance of PSUs granted in fiscal 2024 and prior fiscal years as of September 28, 2024, see the “Outstanding Equity Awards at Fiscal Year-End” table below.

Annual awards of RSUs generally vest on the third anniversary of the grant, subject to early vesting on a change in control.

Fiscal 2021 PSUs

The TSR of Plexus stock during the three year performance period for the fiscal 2021 PSUs that ended in fiscal 2024 was at the 57.9 percentile of companies in the S&P 400 Index. As a result, and according to the payout matrix applicable to this grant, this portion of the PSUs vested and paid out at 115.8% of target after certification by the Committee.

Fiscal 2022 PSUs

The performance period with respect to the portion of the fiscal 2022 PSUs that vested based on a three-point annual average of the Company’s absolute economic return concluded at the end of fiscal 2024. Average economic return for the three year performance period was 3.0%. The average economic return results exclude the impact of accelerated stock-based compensation expense for executive retirements of $5.1 million. As a result, and according to the matrix established for the fiscal 2022 PSUs, this portion of the PSUs vested and paid out at 118.5% of target after certification by the Committee. The Committee plans to evaluate the performance of the portion of the fiscal 2022 PSUs that vests based on relative TSR at its February 2025 meeting.

EQUITY OWNERSHIP GUIDELINES

The Company’s executive stock ownership guidelines are intended to increase the alignment between the interests of management and our shareholders. To accomplish these objectives, we require our CEO to own Plexus stock with a minimum market value equal to five times their annual base salary, our CSO, COO and CFO to own three times their annual base salary and other executive officers, including those named in the “Summary Compensation Table,” to own Plexus stock with a minimum market value equal to two times their annual base salary. Other Plexus leadership team members are required to own a value of Plexus common stock as determined by the CEO. Stock options and unvested PSUs do not count toward the satisfaction of the guidelines. Unvested RSUs will count toward the satisfaction of these guidelines.

There is no specific time requirement to meet these guidelines. However, an executive officer is generally not permitted to sell Plexus shares that were acquired or awarded while an executive officer unless the applicable ownership requirement has been met; there are exceptions, including financing the exercise of stock options and any applicable taxes when the shares will be held, in connection with any applicable tax consequence related to the vesting of an equity award or with prior approval under special circumstances. All of our named executive officers, including Mr. Kelsey, have met the ownership amounts required by the guidelines and are in compliance with the procedural requirements of the guidelines.

CLAWBACK POLICY

In early fiscal year 2024, we adopted a new clawback policy, called the Plexus Corp. Compensation Recovery Policy, to comply with new SEC regulations and Nasdaq listing standards. This new clawback policy serves to discourage executives from engaging in behavior that could potentially harm the Company or its shareholders. Prior to our adoption of this policy, we maintained a clawback policy that only applied to VICP compensation.

Under the new clawback policy, in the event of a qualifying accounting restatement, we are required to recover reasonably promptly from the covered officers, including our NEOs, any erroneously awarded compensation, defined generally as the excess of the amount of incentive-based compensation received by the covered officer during the applicable recovery period over the amount of incentive-based compensation that would have been received had it been determined based on the restated amounts in the accounting restatement.

The preceding description of our clawback policy is qualified by the terms of the policy itself, which was filed as Exhibit 97 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

INSIDER TRADING POLICY

We maintain an insider trading policy (our “Insider Trading Policy”) that governs the purchase, sale, and other disposition of our securities by our directors, officers, employees, and related persons. We believe our Insider Trading Policy is reasonably designed to promote compliance with insider trading laws, rules, and regulations as well as the exchange listing standards applicable to us. The foregoing summary of our Insider Trading Policy does not purport to be complete and is qualified by reference to our Insider Trading Policy, a copy of which was filed Exhibit 19 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 28, 2024.

ANTI-HEDGING AND ANTI-PLEDGING POLICY

The Company’s Insider Trading Policy explicitly prohibits directors, officers and employees from engaging in transactions designed to hedge or offset a decrease in the price of the Company’s common stock, including, but not limited to, prepaid variable forward contracts, equity swaps, collars and exchange funds. Pledges and short sales of the Company’s securities are also prohibited under the Insider Trading Policy.