FOX FACTORY HOLDING CORP

Our executive compensation program is designed to achieve our goals and objectives through attracting, retaining, and rewarding our officers appropriately for executing our strategy to drive long-term stockholder value.

Overview of Salary and Regular Target Incentives(1)

(1) This table does not describe the other benefits and officer perquisites provided by the Company, which are summarized in Benefits and Officer Perquisites.

Target Pay Mix

Our executive compensation program is predominantly provided through at-risk, performance-based pay opportunities. As an officer’s ability to impact operational performance increases, so does the proportion of his or her at-risk pay. The officers’ target annual and long-term incentive compensation grows proportionately as job responsibilities increase, which encourages officers to focus on the Company’s long-term success and aligns with long-term interests of our stockholders.

The graphics below illustrate the mix of fixed and regular annual incentive compensation opportunities at target we provided to our CEO and other NEOs for fiscal year 2025. The majority of the CEO’s regular annual target compensation opportunity is at-risk, subject to Company financial results and, for the long-term incentive, the value of equity earned will ultimately reflect the stock price at the end of the multi-year performance period (PSUs) or at each vesting date (RSUs).

Base Salaries

The NEOs’ base salaries are set on average to be within a competitive range of market median based on the market benchmarks, individual responsibilities, performance and various other factors, as discussed above in the Market Benchmarking section. The January 2025 salary increases approved by the Committee are presented in the table below. The officer salary and target incentive review process started in the latter part of the prior year (October 2024) and increases became effective at the start of the year (January 2025).

The table below summarizes base salaries for our NEOs approved by the Committee for fiscal year 2025, as well as the base salary percentage increase over fiscal year 2024 base salaries. The base salary increases varied based on consideration of the factors listed above.

Annual Performance-Based Cash Bonuses

Annual incentives are designed to motivate and reward achievement of short-term financial objectives. All NEOs have most of the award opportunity tied to company financial performance, as measured by adjusted EBITDA. The CEO’s award is based 100% on adjusted EBITDA; the other NEOs have a 75% weighting adjusted EBITDA and 25% Individual Performance goals and their overall rating, which can only be earned if at least a threshold level of adjusted EBITDA is met. To encourage and reward retention, the NEOs are not entitled to any Cash Bonus unless the Company employs the NEO 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, which is the maximum. Target incentive award opportunities are set on average to be within a competitive range of market median based on the market benchmarks, position level, individual responsibilities, performance, and various other factors, as discussed above in the Market Benchmarking section.

Goals were set in the first quarter of 2025, the target adjusted EBITDA goal of $201 million was set above 2024 actual of $167 million. The Company’s 2025 adjusted EBITDA for the annual performance-based cash bonuses was $171 million, which was between threshold and target, with financial component being earned at 70% of target. Individual Performance results for the NEOs, excluding the CEO who has the full award based on adjusted EBITDA, reflected their leadership in executing other financial and operational objectives, including the Phase 1 profit optimization plan.

In 2025, to shift the earning and payout of a portion of the annual cash opportunity to align to stock price performance over a two-year period, the Company provided an elective opportunity for the NEOs and other executives to select a two-year PSU in lieu of 50% of their target cash award opportunity. This portion of the award opportunity, which is earned for adjusted EBITDA results (not individual performance), was matched one-for-one with the number of PSUs determined at date of grant in March 2025. The higher performance-based award opportunity for the two-year PSU reflects the doubling of the vesting period duration (change from a one-year vesting period to two years) and shift from cash to stock. The cash awards earned were paid in early 2026 and the earned PSU shares will vest in early 2027. All the NEOs irrevocably elected to participate in this opportunity.

The table below presents the number of PSUs earned at 70% of target, based on $26.14 stock price on the award opportunity determination date of March 4, 2025. By the time cash bonus payments were made on March 13, 2026, the company’s common stock price had declined by 41% to $15.50, which commensurately reduced the value of the earned PSUs, further aligning compensation outcomes with the stockholder experience.

Equity-Based Awards

The Committee believes equity awards are another important component of executive compensation and serve to directly align the interests of our officers with those of our stockholders. The Company awards officers PSUs to reward achievement of multi-year goals and RSUs to promote long-term retention. For the 2025 awards, the Committee decided to grant an equal mix, at target, of RSUs and PSUs. RSUs vest over three years (one-third each year) and PSUs cliff vest after the three-year performance period, and other than for a qualifying retirement, only vest if the employee remains with the Company at the time of vesting. The Committee approves equity awards under our 2022 Omnibus Plan. The number of RSUs and PSUs to grant is determined by dividing the target dollar value by the stock price at date of grant and considers the level of share usage. As such, to deliver the same targeted grant dollar value in periods when the stock price appreciates (such as in 2021 to 2023) the number of shares to grant declines. Conversely, in periods when the stock price declines (such as in 2024 and 2025) the number of shares to grant rises.

Each year, the Committee reviews the design of the PSUs and considers if changes are warranted including whether our key business initiatives, operating environment and other factors support reverting to the Company’s prior design, and common market approach, of setting all three years of goals at the start of the first year of the three-year PSU cycle. For the 2024 and 2025 PSU cycles, the Committee decided that setting annual goals at the start of each of the three years (with any earned shares paid upon completion of the full three-year performance period) best fit the current market instability, OEM customer challenges, our ongoing business transformation, and talent needs to ensure performance goals have the appropriate stretch while maintaining strong alignment to driving long-term stockholder value.

2026 Design Change: Effective for 2026, we reverted to using ROIC and FCF, equally weighted, with full three-year goals set at date of grant for the 2026-2028 period. Target goals were set based on the budget/forecast in early 2026 with the resulting target goals requiring significant improvement over the Company’s 2025 results.

In determining the target incentive award opportunities, which are set on average to be within a competitive range of market median, the Committee considered market benchmarks, position level, individual responsibilities, performance, and various other factors, as discussed above in the Market Benchmarking section. The equity grant mix was set considering many of the foregoing factors as well as 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.