FOX FACTORY HOLDING CORP

Our executive compensation program is designed to achieve our goals and objectives through rewarding our executives appropriately for their contributions to corporate growth, seeking to retain our executives and encouraging our executives’ active engagement in their roles. Our executive compensation program consists of the following elements:

Base salary

Performance-based bonus (based, in whole or in part, on financial performance of the Company)

Awards of RSUs and PSUs(subject to the discretion of the Compensation Committee)

Minimal benefits and perquisites

In addition to a 401(k) plan that is offered to our employees broadly, we also offer a non-qualified deferred compensation plan to executives and non-employee directors.

Base Salaries. We provide our Named Executive Officers with a base salary to compensate them for services rendered during the fiscal year and sustained performance. The purpose of the base salary is to reflect job responsibilities, value to us and competitiveness of the market. Salaries for our Named Executive Officers are determined by the Committee based on the following factors: nature and responsibility of the position and, to the extent available, salary norms for comparable positions, the expertise of the individual executive, the competitiveness of the market for the executive’s services, and, for all Named Executive Officers other than the Chief Executive Officer, the recommendations of our Chief Executive Officer. The Committee believes that the base salary of each of the Named Executive Officers is, particularly in light of each of their total compensation packages, competitive with the market.

The following table summarizes base salaries for our Named Executive Officers approved by the Committee for fiscal year 2023, as well as the base salary percentage increase over fiscal year 2022 base salaries:

As a result of the market pay benchmarking and broad market pay movement, combined with, among other things, the historic growth and performance of the Company as well as the demonstrated, ongoing performance by each of the executives, the Committee determined that base salary adjustments, which were effective at the start of fiscal year 2023 were warranted and necessary to be competitive in a today’s labor market.

Annual Performance-Based Cash Bonuses. Our practice is to award annual performance-based cash bonuses (each a “Cash Bonus”) to the Named Executive Officers, in accordance with the underlying formulas set forth in the Employment Agreements of each Named Executive Officer. Annual Cash Bonuses are designed to motivate and reward achievement of short-term financial objectives and to attract talent. The underlying factors for determining the amount of the Cash Bonuses vary among the Named Executive Officers. For fiscal year 2023, Messrs. Dennison and Humphrey would have been eligible to receive a Cash Bonus based only on the Company’s achievement of Company Target Adjusted EBITDA. Ms. Torres and Messrs. Schemm, Merchant, Tutton, and Fletcher would have been eligible to receive a Cash Bonus comprised of two parts: (1) Cash Bonus based on the Company’s achievement of Company Target Adjusted EBITDA, and (2) the executive’s achievement of certain individual performance objectives and overall ratings. However, no Named Executive Officer would be eligible to receive a Cash Bonus if the Company’s actual Adjusted EBITDA for fiscal year 2023 was under 90% of Company Target Adjusted EBITDA. Additionally, in order to encourage and reward longevity, the Named Executive Officers are not entitled to any Cash Bonus unless the Company employs the Named Executive Officer on the last day of the applicable performance period. In cases where the Company significantly outperforms targets, payouts can be earned up to the 200% of target Maximum Level.

For fiscal year 2023, no payouts were earned since Adjusted EBITDA was below the threshold goal.

Equity-Based Awards. The Committee believes equity awards are another important component of executive compensation and serve to better align the interests of our executives with those of our stockholders. The Company awards restricted stock units, with long vesting periods, which are forfeited upon termination from employment, in order to promote long-termism. In determining whether to grant RSUs to certain NEOs, the Committee reviews its historical practice with respect to granting equity awards to such individuals. The Committee primarily utilizes RSUs, including those with performance conditions, as compared to other types of equity awards because of their simplicity for the recipient, their ability to serve as a retention tool and their ability to keep value. The Committee approves equity awards under our 2022 Omnibus Plan, as detailed below. For fiscal year 2023, the Committee determined to grant an equal mix, at target, of RSUs and PSUs as discussed below.

Time-Based RSU Awards

The Committee believes time-based RSU awards serve as a retention incentive for the Named Executive Officers. In March 2023, the Committee approved grants of time-based RSU awards under our 2022 Omnibus Plan to Mr. Dennison (21,005 RSUs), Mr. Humphrey (4,412 RSUs), Mr. Merchant (2,941 RSUs), Mr. Tutton (3,571 RSUs), and Mr. Fletcher (2,521 RSUs). Due to his departure from the Company in April 2023, only 1,500 RSUs of the 4,412 RSUs granted to Mr. Humphrey remained eligible for vesting. In June 2023, in connection with his hire as Chief Financial Officer and Treasurer, the Committee approved 7,481 grants of time-based RSUs to Mr. Schemm. The Committee did not approve any grants of time-based RSUs to Ms. Torres. All RSUs vest over three years (one-third each year), and only vest if the employee remains with the Company at the time of vesting. In determining the amount of these awards, the Committee considered primarily the executive’s position and level of responsibility within our Company, the retention and long-term incentive value of the award, the amounts of past awards that had not yet vested, and the prior granting practices outlined above.

Timing of RSU Awards

Annual grants of equity awards are typically determined at the Committee meeting with an effective grant date shortly after we report earnings for the fiscal year. This timing allows for the grants to be effective after the release of earnings information for the prior fiscal year when the public is aware of the information and the information is reflected in the stock price used to value the awards. The Committee does not time equity grant dates to affect the value of compensation either positively or negatively.

From time to time, special circumstances may cause the Committee to grant annual equity awards outside of the regular annual timeline. In such circumstances, the Committee continues to adhere to its practices of not timing equity grants to take advantage of material non-public information or affect the value of compensation either positively or negatively.

Performance-Based RSU Awards

In fiscal year 2023, the Committee approved PSUs to certain executives that represent shares potentially issuable in the future. Issuance is based upon the Company's performance, over a three-year performance period, based on achievement of ROIC and FCF goals. The PSUs vest only upon the achievement of the applicable performance goals for the performance period, and depending on the actual achievement on the performance goals, the grantee may earn between 0% and 200% of the target PSUs. The number of PSUs to be granted is calculated based on the stock price on the date of grant. In March 2023, the Committee approved grants of PSUs awards under our 2022 Omnibus Plan, at target, to Mr. Dennison (21,005 PSUs), Mr. Merchant (2,941 PSUs), Mr. Tutton (3,571 PSUs), and Mr. Fletcher (2,521 PSUs). In June 2023, in connection with his hire as CFO, the Committee approved a grant of 5,328 PSUs to Mr. Schemm. In fiscal year 2023, the Committee did not approve any grants of PSUs to Mr. Humphrey or Ms. Torres.

2021-2023 Performance-Based RSU Awards

In early 2021, the performance goals, as established by the Committee, for three-year PSU cycle, 2021 to 2023, for ROIC and FCF, were equally weighted. Actual performance, as adjusted for the UAW strike impact, exceeded the target goals of 12.8% ROIC and $263 million FCF. The Committee exercised discretion pursuant to the 2022 Omnibus Plan in determining the PSU award amount and, for the completed three-year performance period (2021-2023), approved 200% of the target award based on actual performance, as adjusted.

Retirement Plans and Policies. The Committee believes that retirement programs are important to the Company as they contribute to the Company’s ability to be competitive with its peers and reward our executive officers based on long-term performance of the Company and, therefore, are an important piece of the overall compensation package for the Named Executive Officers. For all eligible employees, including our Named Executive Officers, the Company provides a 401(k) plan. The 401(k) plan is a U.S. tax qualified retirement savings plan pursuant to which all eligible U.S. employees, including the Named Executive Officers, are able to make pre-tax contributions and after-tax contributions from their cash compensation. The Company makes matching contributions for all participants each year equal to 50% of their pre-tax contributions up to 6% of their total eligible Internal Revenue Code Section 415 compensation. The Company’s matching contributions to the 401(k) plan for fiscal year 2023 to the accounts of the Named Executive Officers are included in the “All Other Compensation” column in the Summary Compensation Table.

In fiscal year 2023, the Committee approved the 2023 Policy Regarding Terms Applicable to Restricted Stock Unit and Performance Share Unit Award Agreements in the Event of Qualified Retirement (the “Retirement Policy”). The purpose of the Retirement Policy is to identify certain terms and conditions for continued vesting of certain equity awards, including unvested RSUs and PSUs, granted under the 2022 Omnibus Plan after a qualified retirement. The Retirement Policy defines the criteria that must be met to be deemed a “qualified retirement.” The Retirement Policy applies to our executives, including NEOs, on the same terms as all employees.