elf Beauty Inc

Compensation Program Components

Targeted Compensation Mix

The targeted mix of our three primary compensation elements (base salary, annual cash incentive opportunity and the targeted value of long-term incentives)(1)for FY 2024 for our Chief Executive Officer and the average for our other named executive officers are as follows:

Each compensation element for our named executive officers is discussed further below and set forth in more detail in the “Summary Compensation Table” and under the heading Executive Compensation—Executive Compensation Tables—Grants of Plan-Based Awards.”

Base Salaries

We provide base salaries as a fixed source of compensation for our executive officers, allowing them a degree of certainty with respect to their day-to-day compensation. The Compensation Committee recognizes the importance of base salaries as an element of compensation that helps to attract and retain highly qualified executive talent. The relative levels of base salary for each executive officer are designed to reflect that executive officer’s scope of responsibility and accountability to us, as well as our desire to maintain relative internal parity among our executive officers. The Compensation Committee reviews the base salaries of our executive officers on an annual basis but has never made an adjustment.

FY 2024 Base Salaries

The base salaries for each of our named executive officers remained the same as in FY 2023. The decision to keep base salaries at the same level as provided at the time of hire was made based on our philosophy of delivering the majority of compensation through long-term equity-based compensation designed to deliver value to our executive officers only when our performance creates value for our stockholders.

The annual base salaries for FY 2024 for our named executive officers were as follows:

Annual Cash Incentive Compensation

We provide annual cash incentive compensation to motivate our executive officers to achieve our short-term financial and strategic goals. Annual cash incentive compensation is based on predetermined financial measures that are chosen by the Compensation Committee at the beginning of the fiscal year and that are aligned with our annual growth objectives as well as our long-term business plan. The financial measure performance goals for our annual cash incentive compensation are designed to be challenging.

We believe that annual cash incentive compensation:

•aligns the interests of our executive officers, e.l.f. Beauty and our stockholders;

•enables us to focus on achieving and exceeding financial goals that drive stockholder value creation;

•recognizes and rewards individuals for contributing to our success;

•attracts and retains the top talent in the industry; and

•holds our executive officers accountable.

The annual cash incentive payout for each executive officer is determined based on a formula consisting of the executive officer’s base salary, target annual cash incentive opportunity (which is set as a percentage of base salary by the Compensation Committee early in the applicable fiscal year) and a funding percentage of the annual cash incentive compensation pool based on our performance with respect to predetermined financial measures chosen by the Compensation Committee—a visual depiction of the annual cash incentive payout formula is shown below. Individual performance has not been considered when determining annual cash incentive payouts for executive officers (or any other employee) as we adhere to a “one team” philosophy where all employees participate equally (subject to variations in target annual cash incentive opportunity) in our successes and shortcomings.

The funding percentage of the annual cash incentive compensation pool is determined based on our performance of the predetermined financial measures chosen by the Compensation Committee.

There is a threshold funding percentage of 80% (if the threshold performance goal is achieved) and a maximum funding percentage of 200% (if the maximum performance goal is achieved or exceeded), with funding percentages corresponding on a linear basis to performance between threshold and target levels and performance between target and maximum levels. If the threshold performance is not achieved, the funding percentage is set at 0% and no annual cash incentive compensation is paid.

The Compensation Committee reviews the target annual cash incentive opportunities of our executive officers on an annual basis. The target annual cash incentive opportunity for each of our named executive officers remained the same as in FY 2023. The decision to keep target annual cash incentive opportunities at the same level as in FY 2023 was made based on our philosophy of delivering the majority of compensation through long-term equity-based compensation designed to deliver value to our executive officers only when our performance creates value for our stockholders.

The target annual cash incentive opportunities for FY 2024 for our named executive officers were as follows:

FY 2024 Annual Cash Incentive Compensation

In each year since going public, our annual cash incentive compensation program has been measured by our Adjusted EBITDA performance against pre-established targets. When we have performed well against the targets, our executive officers (and general team) have been rewarded with annual cash incentive compensation up to 200% of target, and when we have under-performed against the targets, no annual cash incentive compensation has been paid.

For FY 2024, the Compensation Committee again chose Adjusted EBITDA as our annual cash incentive compensation program performance metric because it is a key measure we use to understand and evaluate our operational performance and because the Compensation Committee believes Adjusted EBITDA is an important driver of the price of our common stock, which aligns compensation for our executive officers with maximizing stockholder value. Adjusted EBITDA is a non-

GAAP financial measure, and we provide a reconciliation of net income to Adjusted EBITDA in Annex A and a short definition of Adjusted EBITDA in the Note Regarding Non-GAAP Financial Measures.

The Compensation Committee set the Adjusted EBITDA goals for annual cash incentive compensation in connection with the Board-approved full year FY 2024 budget, which was adopted at the beginning of the fiscal year. Specifically, the Compensation Committee set the Adjusted EBITDA bonus goals in April 2023 and, once set, the goals were not altered or changed in any way. The Compensation Committee has never altered or changed Adjusted EBITDA goals for annual cash incentive compensation.

Based on our expected business momentum in FY 2024, the Adjusted EBITDA target and maximum goals for our annual cash incentive program (as presented in the chart below) were all higher than our actual Adjusted EBITDA result of $116.8 million in FY 2023 (after funding of the FY 2023 annual cash incentive compensation pool). Given the requirement to deliver absolute year-over-year growth to achieve any payout, as well as the requirement to deliver Adjusted EBITDA growth of approximately 20% over our actual Adjusted EBITDA for FY 2023 to achieve a 100% payout, the Compensation Committee believed that the Adjusted EBITDA goals were aggressive and challenging, only attainable with strong performance and were aligned with our objectives for FY 2024.

The Adjusted EBITDA goals and the corresponding funding percentages for the FY 2024 annual cash incentive compensation pool were as follows:

Consistent with past practice, the FY 2024 annual cash incentive compensation pool was self-funded, meaning that our Adjusted EBITDA performance in FY 2024 needed to be sufficient to generate profit to pay the annual cash incentive payouts for FY 2024 and to generate profit for e.l.f. Beauty and its stockholders.

We achieved approximately $235 million in Adjusted EBITDA in FY 2024, after funding of the annual cash incentive compensation pool. This Adjusted EBITDA performance was greater than the maximum performance goal for FY 2024 and, as such, resulted in an overall funding percentage of 200%.

The annual cash incentive payouts for FY 2024 for our named executive officers were as follows:

The annual cash incentive payouts for FY 2024 are reported under the heading “non-equity incentive plan comp.” in the Summary Compensation Table.

Long-Term Incentive Compensation

A core principle of our executive compensation program is to deliver a significant percentage of total compensation awarded to our executive officers in the form of long-term incentive compensation. The value realized from this compensation is dependent on our financial success and the sustained performance of our common stock over the long term. This means that our executive officers are rewarded when they produce value for our stockholders. We have designed our long-term incentive compensation to motivate our executive officers to work toward objectives that we believe provide a meaningful return to our stockholders while also serving as an effective recruitment and retention tool.

In determining the size of equity awards granted to any executive officer, the Compensation Committee considers a number of reference points, including:

•our performance, the executive officer’s contributions to that performance, as well as expectations for that executive officer’s future contributions to our performance;

•the competitive market compensation levels for the executive officer’s position;

•the relative mix of cash and equity, and in particular the fact that cash compensation paid to our executive officers is generally low compared to the competitive market; and

•internal parity among our executive officers.

We grant annual equity awards (RSUs and PSUs) in a consistent manner to our executive officers. For the last four years, we have granted our annual equity awards to our executive officers on June 1, the first day of the month that immediately follows the release of our year-end financial results. The Compensation Committee has determined that this methodology is prudent in that it allows for the market to process all reported public information (including initial financial guidance for the upcoming fiscal year) prior to establishing the value of annual equity awards for our executive officers. Going forward, we expect to continue this general timing of annual equity awards to executive officers.

FY 2022 Performance Equity Award Payout

As described in our Proxy Statement for FY 2022, the Compensation Committee granted PSUs to our named executive officers in FY 2022 (the “FY 2022 PSUs”).

The FY 2022 PSUs were tied to our achievement of net sales compound annual growth rate (CAGR) (weighted 60%) and Adjusted EBITDA CAGR (weighted 40%) targets measured over the three-year performance period ended March 31, 2024 (the “FY 2022 PSU Performance Period”), with a potential uplift in the event both goals were achieved at maximum and we achieved an additional target for Adjusted EBITDA margin expansion (defined as the percentage increase for the performance period of the Company’s Adjusted EBITDA divided by net sales) measured over the FY 2022 PSU Performance Period. Each FY 2022 PSU represented the right to receive up to 2 shares of our common stock upon vesting.

A visual depiction of the calculation of the payout for the FY 2022 PSUs is shown below:

The net sales CAGR and Adjusted EBITDA CAGR goals for the FY 2022 PSUs were as follows:

The Adjusted EBITDA margin expansion goal for the FY 2022 PSUs was ≥10 basis points.

Given the prospect of continued disruptions from COVID-19 in consumer behavior and global supply chain challenges in June 2021 when the goals were set, the Compensation Committee believed that the performance goals for the FY 2022 PSUs were challenging and rigorous and were aligned with our then-publicly announced three-year long-range plan.

Our performance against the FY 2022 performance targets over the FY 2022 PSU Performance Period were as follows:

The net sales CAGR performance, the Adjusted EBITDA CAGR performance, and the Adjusted EBITDA margin expansion performance was greater than the maximum respective performance goals for the FY 2022 PSUs and, as such, resulted in an achievement factor for the net sales CAGR metric of 1.75 (175%), an achievement factor for the Adjusted EBITDA metric of 1.75 (175%), and a 25% payout for the Adjusted EBITDA margin expansion, resulting in an overall payout of the FY 2022 PSUs at 200%.

The payouts for the FY 2022 PSUs for our named executive officers were as follows:

FY 2024 Equity Awards

Overview

Consistent with its practice in FY 2023, the Compensation Committee decided to grant equity awards to all our named executive officers in FY 2024 as follows:

•50% of the shares underlying equity awards of the target equity compensation level (based on target achievement of performance goals) in the form of time-based RSUs, which, in order to enhance retention, vest over a four-year period in four substantially equal annual installments, subject to continued service through each vesting date; and

•50% of the shares underlying equity awards of the target equity compensation level (based on target achievement of performance goals) in the form of PSUs to continue to closely align their compensation with our strong pay-for-performance culture and focus on the delivery of substantial value to our stockholders.

For FY 2024, the Compensation Committee approved increases in the target equity compensation level for all our named executive officers. In approving these adjustments, the Compensation Committee took into consideration our net sales and Adjusted EBITDA growth, our sustained strong company performance (including, at the time the Compensation Committee set our FY 2024 executive compensation, the achievement of 17 consecutive quarters of net sales growth and the increase in rank of our e.l.f. Cosmetics brand from the number five U.S. Mass Cosmetics brand to the number three brand), the significant percentage of equity in the form of PSUs and market benchmarks and perspectives on market pay levels as provided by its independent compensation consultant. Additionally, the Compensation Committee took into consideration that we have a relatively small executive team, and each member is tasked with overseeing multiple departments and company initiatives.

Below is a summary of the equity awards granted to our named executive officers in FY 2024:

FY 2024 PSUs

The FY 2024 PSUs are tied to our achievement of net sales CAGR (weighted 60%) and Adjusted EBITDA CAGR (weighted 40%) targets measured over a three-year performance period ending on March 31, 2026 (the “FY 2024 PSU Performance Period”), with a potential uplift in the event of achievement of a market share gain performance metric for our e.l.f. Cosmetics brand over the FY 2024 PSU Performance Period (based on applicable Nielsen xAOC data). The FY 2024 PSUs were structured the same as PSUs granted in the fiscal year ended March 31, 2023 (the “FY 2023 PSUs”) (with upward adjustments to all performance targets).

Each FY 2024 PSU represents the right to receive up to 2.25 shares of our common stock upon vesting (calculated as (i) up to two shares based on achievement of net sales CAGR and Adjusted EBITDA CAGR measured over the FY 2024 PSU Performance Period and (ii) an additional 0.25 shares based on achievement of a market share gain performance metric for our e.l.f. Cosmetics brand over the FY 2024 PSU Performance Period). The number of shares issuable upon vesting of each FY 2024 PSU is determined by the Compensation Committee as follows:

•determine the achievement of each of our net sales CAGR and Adjusted EBITDA CAGR goals;

•determine achievement of the market share goal;

•assign an achievement factor in accordance with the table below;

•multiply the achievement factor by the applicable weight (60% for net sales CAGR and 40% for Adjusted EBITDA CAGR); and

•add the results together to determine the number of shares issued per vested PSU.

The correlation between achievement of each of our net sales CAGR and Adjusted EBITDA CAGR goals and the corresponding achievement factor is as follows:

A visual depiction of the calculation of the payout for the FY 2024 PSUs is shown below:

The FY 2024 PSUs will vest in a single installment, subject to continued service and to the extent earned, upon the Compensation Committee’s certification of our achievement following the FY 2024 PSU Performance Period. Factoring in the relevant opportunities and risks, the performance metrics for the FY 2024 PSUs were rigorous, aggressive and challenging, and only attainable with sustained strong performance. We believe this three-year cliff vesting helps to retain our executive officers through the completion of the FY 2024 PSU Performance Period and incentivize long-term performance.

An example calculation of the payout for the FY 2024 PSUs is shown below. This example assumes net sales CAGR performance is at target, the Adjusted EBITDA CAGR performance is at the maximum, and the market share gain performance metric performance is at target. The FY 2024 PSU payout would be 165% of target (or 1.65 shares issued per vested FY 2024 PSU) calculated as follows:

FY 2025 Equity Awards

For FY 2025, we continued to grant annual equity awards to our executive officers with a mix of 50% time-based vesting RSUs and 50% PSUs (based on target achievement of performance goals). The PSUs granted in FY 2025 are structured the same as the FY 2024 PSUs (with upward adjustments to all performance targets) and may be earned based on our achievement of net sales CAGR and Adjusted EBITDA CAGR targets over a three-year performance period, with a potential uplift in the event of achievement of a market share gain performance metric for our e.l.f. Cosmetics brand over the same three-year performance period.