FORMFACTOR INC

Executive Compensation Philosophy.

The Compensation Committee of our Board oversees the 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, while avoiding incentives that promote excessive risk taking. 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 that provides the opportunity for our named executive officers and other employees to 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 Components”.

Our emphasis on variable, or at-risk, compensation provides that our named executive officers, subject to retention needs, will generally only receive target or above-target compensation to the extent that our performance goals have been achieved or exceeded, respectively.

As in prior years, our compensation philosophy in 2024 was focused on pay-for-performance. We aimed to closely align the compensation paid to our named executive officers with the achievement of both near-term and long-term financial goals. To accomplish this objective, we structured our compensation mix such that 90% and 80% of the total target 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 shows the allocation of the core elements of target compensation for fiscal year 2024. 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 (time-based RSUs and performance-based RSUs) utilizing the targeted economic value for executives as approved by the Compensation Committee.

Compensation Benchmarking.

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. Additionally, Aon provides data reflecting the compensation practices of companies outside of FormFactor’s peer group for consideration. This information is reviewed by the Compensation Committee in connection with its evaluation of the level of pay, mix of pay, and competitiveness of the Company’s executive compensation. The Compensation Committee completed its annual review of our peer group for 2024 and made minimal changes to executive compensation, which were deemed to be closely aligned with peers and best practices recommended by Institutional Shareholder Services (ISS) and Glass Lewis. The Compensation Committee considers the policies of outside investors and several governance advisory groups as well as comparability to FormFactor when establishing the compensation peer group. As a result of this review in 2024, Entegris was removed as a peer due to it exceeding both the revenue and market cap ranges described in the table below, and was replaced with Alpha and Omega Semiconductor. For fiscal year 2024, our peer group for compensation practices consisted of 19 companies for the purpose of evaluating the competitiveness of our named executive officer compensation.