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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

(Amendment No.   )

Filed by the Registrant

þ

Filed by a Party other than the Registrant

Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

þ

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12

ADVANCED ENERGY INDUSTRIES, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

þ

No fee required.

Fee paid previously with preliminary materials.

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

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A Message from our CEO

Dear Stockholders:

Please join us for Advanced Energy’s 2024 Annual Meeting of Stockholders at 11:00 a.m., Mountain Daylight Time, on Thursday, April 25, 2024, at Advanced Energy’s corporate headquarters located at 1595 Wynkoop Street, Suite 800, Denver, Colorado 80202.

We delivered solid financial results in 2023. Record revenue in the industrial and medical markets, combined with healthy overall demand in the networking and telecom markets, partially offset the effects of a cyclical decline in the semiconductor equipment market. For the year, we delivered record cash flow from continuing operations of $213 million.

From a strategic perspective, 2023 was a banner year for Advanced Energy. We launched 20 new platform products, including several groundbreaking platforms with unique enabling technologies. These include the eVerestTM and eVoSTM plasma power platforms and the NeoPower high-density configurable power platform. With exciting new products, a motivated team, and enhanced go-to-market strategies, we achieved a Company record number of design wins in the year. In addition, we began executing a multiyear manufacturing consolidation strategy, a key part of our plan to move gross margin above 40% on a non-GAAP basis as markets recover.

We also launched a new website in 2023, making it easier for customers and investors to understand Advanced Energy and its product portfolio.

Looking forward, I am excited about the future of Advanced Energy. We have strong engagements with key customers, a robust new product pipeline, and a premier factory network. In addition, we have a strong balance sheet, which will allow us to make acquisitions that make strategic and financial sense for the company.

I remain highly confident in our plan to accelerate revenue and earnings growth as markets recover. We target high-value markets, with a great team of innovative scientists and engineers, supported by focused sales, marketing, and operations teams. On behalf of our employees and Board of Directors, we thank you for your continued support.

Best Regards,

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Stephen D. Kelley
President and Chief Executive Officer

March 15, 2024

i

2024 ANNUAL

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PROXY STATEMENT

Notice of the Annual Meeting of Stockholders

To be held on April 25, 2024

11:00 a.m. Mountain Daylight Time

To Our Stockholders:

You are cordially invited to attend the 2024 annual meeting of stockholders (the “2024 Annual Meeting”) of Advanced Energy Industries, Inc. (“Advanced Energy” or the “Company”). Please see below for the meeting logistics and business matters to be addressed at the 2024 Annual Meeting.

Logistics

 

Items of Business

 

Board Recommendation

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When
Thursday,
April 25, 2024,
at 11:00 a.m. MDT

Where
Advanced Energy

1595 Wynkoop Street, Suite 800
Denver, CO 80202

Who Can Vote
All holders of our common stock at the close of business on March 5, 2024

1

Election of ten (10) directors;

FOR ALL NOMINEES

2

Ratification of the appointment of Ernst & Young LLP
as Advanced Energy’s independent registered public accounting firm for 2024;

FOR

3

Advisory approval of Advanced Energy’s compensation of its named executive officers;

FOR

4

Approval of Advanced Energy’s Second Amended and Restated Certificate of Incorporation to provide exculpation from personal liability for certain officers as permitted by Delaware law and make certain other minor, non-substantive updates;

FOR

5

Any other matters of business properly brought before the 2024 Annual Meeting.

Each of matters 1 through 4 is described in detail in the proxy statement accompanying this
Notice of the Annual Meeting of Stockholders, dated March 15, 2024.

Your vote is important.

All stockholders are cordially invited to attend the 2024 Annual Meeting in person. If you do not plan to attend the 2024 Annual Meeting and vote your shares of common stock in person, please authorize a proxy to vote your shares in one of the below ways. Any proxy may be revoked at any time prior to its exercise at the 2024 Annual Meeting.

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Place your vote via internet at www.proxypush.com/AEIS

    

Call toll-free (if US or Canada)
1-866-390-9955

    

Mark, date, sign and mail your proxy card in the pre-paid envelope provided

Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting to be Held on April 25, 2024

This notice for the 2024 Annual Meeting, the proxy statement, the proxy card, and the Company’s 2023 Annual Report, which includes the annual report on Form 10-K for the year ended December 31, 2023,
are available online at www.proxydocs.com/AEIS.

 

By Order of the Board of Directors,

 Denver, Colorado

Elizabeth K. Vonne

 March 15, 2024

Executive Vice President, General Counsel, and Corporate Secretary

ii

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2024 ANNUAL

PROXY STATEMENT

Table of Contents

A Message from our CEO

i

Notice of the Annual Meeting of Stockholders

ii

Table of Contents

1

Proxy Summary

2

Proposal No. 1 - Election of Directors

5

Director Compensation

16

Corporate Governance

18

Proposal No. 2 - Ratification of the Appointment of Ernst & Young LLP as Advanced Energy’s Independent Registered Public Accounting Firm for 2024

25

Proposal No. 3 - Advisory Approval of the Company’s Named Executive Officer Compensation

27

Security Ownership of Certain Beneficial Owners and Management

29

Executive Compensation

31

Compensation Discussion and Analysis

31

Compensation Risk Assessment

44

Compensation Committee Report

45

Equity Compensation Plan Information

46

Management

47

Summary Compensation Table for 2023

49

2023 Grants of Plan-Based Awards

50

2023 Outstanding Equity Awards at Fiscal Year-End

51

2023 Option Exercises and Stock Vested

52

Pension Benefits

52

Non-Qualified Deferred Compensation

52

Potential Payments upon Termination or Change in Control

54

Pay versus Performance

56

CEO Pay Ratio

61

Certain Relationships and Related Transactions

62

Proposal No. 4 - Approval of Advanced Energy’s Second Amended and Restated Certificate of Incorporation to Provide Exculpation from Personal Liability for Certain Officers as Permitted by Delaware Law and Make Certain Other Minor, Non-Substantive Updates

63

Conduct and Communications

66

Proposals of Stockholders

66

Form 10-K

67

Delinquent Section 16(a) Reports

67

General Meeting Matters

67

Appendix A - Reconciliation of Non-GAAP Measures

A-1

Appendix B - Second Amended and Restated Certificate of Incorporation

B-1

PRECISION  |  POWER  |  PERFORMANCE

1

2024 ANNUAL

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PROXY STATEMENT

Proxy Summary

The Board of Directors of Advanced Energy Industries, Inc. (“Advanced Energy” or the “Company”) requests your proxy in connection with the annual meeting of stockholders to be held on April 25, 2024 (the “2024 Annual Meeting”). This proxy statement and the accompanying proxy card and materials are first being sent to stockholders of Advanced Energy or made available electronically on or about March 15, 2024.

This summary highlights key information presented elsewhere in this year’s proxy statement.  This section does not contain all the information that you should consider, and you should read the entire proxy statement before voting.

Our Meeting Agenda

PROPOSAL

REFERENCE

BOARD
RECOMMENDATION

EFFECT OF BROKER
NON-VOTES AND
ABSTENTIONS

VOTES REQUIRED
FOR APPROVAL

1

Election of ten (10) directors

Page 5 

FOR
ALL NOMINEES

No Effect

Plurality of votes of shares present at the 2024 Annual Meeting (by proxy or in person), subject to the resignation policy described on page 15

2

Ratification of the appointment of Ernst & Young LLP as Advanced Energy’s independent registered public accounting firm for 2024

Page 25

FOR

No Effect

Majority of shares present at the 2024 Annual Meeting
(by proxy or in person), excluding broker non-votes and abstentions

3

Advisory approval of the compensation of our named executive officers

Page 27

FOR

No Effect

Majority of shares present
at the 2024 Annual Meeting (by proxy or in person), excluding broker non-votes and abstentions

4

Approval of Advanced Energy’s Second Amended and Restated Certificate of Incorporation to provide exculpation from personal liability for certain officers as permitted by Delaware law and make certain other minor, non-substantive updates

Page 63

FOR

Same Effect as
a Vote Against

Sixty-six and two-thirds percent (66 ⅔%) of the outstanding shares of voting stock of the Company

We do not know of any other matters to be submitted to stockholders at the 2024 Annual Meeting. If any other matters properly come before the 2024 Annual Meeting, the proxy holders intend to vote the shares they represent on such matters as the Board of Directors may recommend.  The proposed corporate actions on which the stockholders are being asked to vote at the 2024 Annual Meeting are not corporate actions for which stockholders of a Delaware corporation have the right to exercise appraisal rights under the Delaware General Corporation Law.

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2024 ANNUAL

PROXY STATEMENT

About Advanced Energy

Advanced Energy is a global leader in the design and manufacture of highly engineered, precision power conversion, measurement, and control solutions for mission-critical applications and processes. Advanced Energy’s power solutions enable customer innovation in complex applications for a wide range of industries including semiconductor equipment, industrial production, medical and life sciences, data center computing, networking, and telecommunications.

Our Mission

Our Vision

Our Strategy

Enable customer innovation by delivering highly engineered, applications-critical, precision power & control solutions.

Drive sustainable growth as the recognized world leader & trusted partner in precision power technology and applications.

Grow by delivering proprietary products with differentiated performance & delivered value that enable our customers’ success in rewarding markets.

Advanced Energy’s Environmental, Social, and Governance Initiatives

We incorporate environmental, social, and governance (“ESG”) responsibility across our business with the same focus and dedication as we approach all our initiatives.

Sustainability is key to our strategy in the products we make, the way we operate, and how we govern as a public company. We believe that our efforts to increase power conversion efficiency and to improve the efficiency of and reduce waste in our operations reflect our commitment to minimizing the environmental impact and carbon emissions that may be linked to the industries we serve. We also aspire to be a premier employer and good corporate citizen and invest in diversity, inclusion, and social responsibility. We recognize that diverse perspectives and collaboration enable us to drive innovation and future growth for our global customers.

Our results and ongoing efforts related to ESG are an integral part of our commitment to deliver long-term value to our global stakeholders. This commitment is driven from the highest levels of the Company, including our Chief Executive Officer, executive management team, and Board of Directors.

In 2020, we added oversight of the Company’s sustainability program to the Nominating, Governance & Sustainability Committee. As indicated in its charter, the Nominating, Governance & Sustainability Committee is directed to review the Company’s progress towards achieving its sustainability goals, as well as to review ESG trends that could impact the Company’s operations, performance, and reputation. In 2022, we enhanced our ESG governance structure by launching our ESG steering committee and ESG working group. The ESG steering committee is responsible for providing management-level guidance on our ESG approach, while the ESG working group reports to the steering committee and is responsible for the implementation of ESG initiatives that advance our ESG program.

We are excited to share certain of our “value driven” ESG initiatives, areas of focus, and accomplishments on the following page. We look forward to making a difference in the markets and communities we serve.

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3

2024 ANNUAL

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PROXY STATEMENT

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Environment

    

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Social & Community

Energy-Efficient Products. Advanced Energy’s dedicated R&D teams strive to improve power conversion efficiency, balanced with exceptional stability and nimble control and response. Every increase in power conversion efficiency reduces our customers’ power consumption, decreasing their environmental impact and carbon emissions. Advanced Energy’s innovations reduce electricity consumption in a wide range of industries, including semiconductor manufacturing, industrial and medical equipment, as well as data center computing, telecom, and networking.

Energy-Efficient Operations. Advanced Energy makes continuous improvements to reduce our energy usage in our global factories. For example, our Philippines factory is a three-time Philippine Economic Zone Authority (PEZA) Hall of Fame Awardee for Outstanding Environmental Performance. By employing novel alternatives, the site reduces the need for thermal testing. We also track our greenhouse gas emissions at several key manufacturing sites.

Reducing Waste. Advanced Energy strives to reduce waste and conserve natural resources through efficiency improvements and recycling. Our manufacturing facilities in Asia actively manage and maximize our waste diversion rate, and we have implemented water treatment and wastewater recycling programs. In addition, we are implementing a recycled packaging initiative to reuse packaging material for supplies from our local suppliers.

Charitable Contributions. Our charitable contributions committee, founded in 2010, is supported and led by our employees. The committee provides financial support for 501(c)(3) corporations, nonprofit institutions, and organizations that improve education, the environment and health and social services across the communities in which we operate and where our employees live.

Diversity and Inclusion. We have approximately 10,000 employees located across the globe. Each person’s background and unique skill set are fundamental to our success. The Corporate Diversity & Inclusion Steering Committee provides guidance and direction on diversity, equity, and inclusion while enabling local teams to develop specific, targeted initiatives as appropriate. We also have an active Women’s Leadership Forum focused on career development and internal networking.

Volunteerism. We offer each employee eight hours of paid time off to volunteer with self-selected 501(c)(3) organizations or other nonprofit organizations.

Community Involvement. We work closely with community organizations, including supporting STEM education in local schools, working with universities around the world to facilitate their innovative research projects, participating in local chambers of commerce and partnering with local nonprofit organizations. Advanced Energy’s STEM Scholarship Program, launched in 2020, aims to develop emerging talent in STEM fields. We accept applications from undergraduate and post-graduate students attending leading institutions in the field of power technologies.

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Governance

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Ethical Business Practices

Commitment. Advanced Energy is firmly committed to strong and effective corporate governance practices and accountability to our stockholders.

Continuous Improvement. We routinely review our governance practices against evolving best practices and consider feedback and input from our stockholders. We encourage you to review our Board Governance Guidelines on our website at www.advancedenergy.com/
en-us/about/leadership.

Core Values. At all levels of our organization, Advanced Energy delivers results by building a culture grounded in our Core Values: innovation, integrity, empowerment, partnership, accountability, and execution.

Transparency. We are committed to transparency in all parts of our business to promote accountability, cultivate trust, and foster open communication. We believe that transparency leads to improvements to our processes and policies, and ultimately contributes to our success.

Human Rights. Respecting the human rights of our employees and all those involved in our business operations is a core principle for Advanced Energy. Integrity at our Core, Advanced Energy’s Code of Ethical Conduct, specifically prohibits activities involving slave, forced, bonded, or indentured labor, and child labor, and we require our suppliers use no forced labor themselves or in their supply chains. Integrity at our Core can be viewed on our website at www.advancedenergy.com/en-us/about/environment-social-and-governance.

Supply Chain. We are committed to responsible sourcing of the materials that make up our products. We annually request our suppliers to confirm that minerals originating within DRC +9 are conflict-free.

Employee Training and Helplines. We actively communicate to our employees on ethical business practices and provide a 24-hour anonymous hotline to address ethics issues.

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PRECISION  |  POWER  |  PERFORMANCE

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2024 ANNUAL

PROXY STATEMENT

Proposal No. 1 - Election of Directors

What am I voting on and how should I vote?

You are being asked to elect ten (10) directors at the 2024 Annual Meeting. Each of the directors elected at the 2024 Annual Meeting will commence their term at the end of the 2024 Annual Meeting until the next annual meeting of the Company’s stockholders, until a successor has been elected and qualified, or until such director’s earlier resignation or removal.

We believe that each of the nominees is sufficiently qualified to lead the Company in the best interest of stockholders.

The Board of Directors therefore recommends you vote “FOR” each of the nominees set forth below.

A board of ten (10) directors is to be submitted for election at the Annual Meeting. The Board of Directors has nominated for reelection the persons listed in the Overview of Nominees for Election to the Board on the following page. Each of the nominees is currently a director of Advanced Energy and was recommended for reelection by our Nominating, Governance & Sustainability Committee. In the event that any nominee is unable or declines to serve as a director at the time of the 2024 Annual Meeting, the proxy holders will vote in favor of a nominee designated by the Board of Directors, on recommendation by the Nominating, Governance & Sustainability Committee, to fill the vacancy. We are not aware of any nominee who will be unable or who will decline to serve as a director. The term of office of each person elected as a director at the 2024 Annual Meeting will continue from the end of the 2024 Annual Meeting until the next annual meeting of the Company’s stockholders, until a successor has been elected and qualified, or until such director’s earlier resignation or removal.

PRECISION  |  POWER  |  PERFORMANCE

5

2024 ANNUAL

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PROXY STATEMENT

Overview of Nominees for Election to the Board

The director nominees presented below represent a broad group of experienced business leaders. The table provides a summary of our nominees’ background and responsibilities as of March 15, 2024.

Committee Memberships

Name and Principal Occupation

Age

Director
Since

   

Audit and
Finance

Nominating,
Governance & Sustainability

Compensation

GRANT H. BEARD (Chairman)

Currently serves as Sr. Executive Operating Partner for Blue Point Capital, a private equity firm

63

2014

FREDERICK A. BALL

Former EVP & Chief Administrative Officer of Marketo Inc.

61

2008

C

ANNE T. DELSANTO

Currently serves as a Limited Partner at Operator Collective and Stage 2 Capital

60

2020

M

M

TINA M. DONIKOWSKI

Former Vice President, Global Locomotive Business at General Electric Company

64

2018

M*

C

RONALD C. FOSTER

Former Chief Financial Officer of Micron Technology, Inc.

73

2014

C*

STEPHEN D. KELLEY

Currently serves as President, CEO, and director of Advanced Energy

61

2021

LANESHA T. MINNIX

Currently serves as Executive Vice President, General Counsel & Corporate Secretary of Ecolab, Inc.

48

2020

M

M

DAVID W. REED

Currently serves as CEO of Vendanta Resources Ltd.’s semiconductor group

65

2022

M

JOHN A. ROUSH

Currently serves as Operating Executive Advisor to ACON Investments, LLC, a private equity firm

58

2016

M

M

BRIAN M. SHIRLEY

Former Senior Vice President DRAM and Emerging Memory Engineering of Micron Technology, Inc.

54

2022

M*

* Indicates audit committee financial expert

Board Nominee Highlights

Independence

Tenure

Gender

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2024 ANNUAL

PROXY STATEMENT

Nominees

Grant H. Beard (Chairman)

Independent Director

Age: 63

Director Since: 2014

Business Experience:

Grant H. Beard currently serves as a Senior Executive Operating Partner for Blue Point Capital, a private equity firm, and as a Senior Advisor to Center Rock Capital, a global alternative investment firm. Mr. Beard served as Chairman and Chief Executive Officer of Wynnchurch Industries, LLC, a diversified holding company investing in engineered product businesses, from January 2016 to June 2017. Mr. Beard also served as a Senior Advisor to Wynnchurch Capital Ltd. Prior to joining Wynnchurch, Mr. Beard served as the Chairman and Chief Executive Officer of Wolverine Advanced Materials LLC, a Wynnchurch company, from July 2012 until October 2015. Mr. Beard served as President and Chief Executive Officer of Constar International, Inc. (formerly Nasdaq: CNST) from 2010 to 2012, where he led the financial and operational restructuring of Constar’s global packaging business that was later sold to Plastipak Corporation. Prior to that, Mr. Beard served as President & CEO of TriMas Corporation, Chairman & CEO of Health Media, and Global Group President of Fluid Management Products at Dana/Echlin Corporation. In addition, Mr. Beard served as a Senior Executive Operating Partner with Blue Point Capital from 2009 to 2014. Mr. Beard also has experience at two private equity/merchant banking groups, Anderson Group and Oxford Investment Group, where he was actively involved in corporate development, strategy and operations management.

Key Skills and Qualifications:

   Senior Leadership Experience

   Financial Expertise

   Public Board Experience

   Global Expertise

   Industry Experience

Mr. Beard brings to the Board significant senior management and public board experience, together with global expertise in industrial and related markets and in the private equity/merchant banking industry, as well as experience in strategy, operations, and M&A transactions.

Frederick A. Ball

Independent Director

Age: 61

Director Since: 2008

Committees: Compensation (Chair)

Business Experience:

Frederick A. Ball previously served as Executive Vice President and Chief Administrative Officer of Marketo Inc. (formerly Nasdaq: MKTO), a leading provider of a cloud-based marketing platform, from February 2016 through August 2016. Prior to that, Mr. Ball was Marketo’s Senior Vice President and Chief Financial Officer from May 2011 to February 2016. Prior to joining Marketo, Mr. Ball was the Chief Financial Officer for several private and public technology companies, including Webroot Software, BigBand Networks, Inc., and Borland Software Corporation (formerly Nasdaq: BORL). Mr. Ball also served as Vice President, Mergers and Acquisitions for KLA-Tencor Corporation (now KLA Corp., Nasdaq: KLAC), a manufacturer of semiconductor equipment, and prior to that as its Vice President of Finance. Mr. Ball was with PricewaterhouseCoopers LLC for over 10 years. Mr. Ball previously served as a director of Electro Scientific Industries, Inc. (formerly Nasdaq: ESIO), Sendgrid, Inc. (formerly NYSE: SEND), and FirstMark Horizon Acquisition Corporation (formerly NYSE: FMAC). Mr. Ball has served, and currently serves on other private company boards, including Alchemer, Contentful, and Webgility.

Key Skills and Qualifications:

   Senior Leadership Experience

   Financial Expertise

   Public Board Experience

   Global Expertise

   Industry Experience

Mr. Ball brings to the Board significant experience in senior management, operations, finance, and auditing, having served as the Chief Financial Officer of a leading provider of cloud-based marketing software, as well as experience in strategy and executive compensation.

PRECISION  |  POWER  |  PERFORMANCE

7

2024 ANNUAL

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PROXY STATEMENT

Anne T. DelSanto

Independent Director

Age: 60

Director Since: 2020

Committees: Compensation and Nominating, Governance & Sustainability

Business Experience:

Anne T. DelSanto currently serves as a Limited Partner at Operator Collective and Stage 2 Capital, both venture capital funds that invest in early-stage companies supporting entrepreneurial efforts aimed at next generation technology and software. From February 2018 to April 2019, Ms. DelSanto served as the Executive Vice President and General Manager of Platform at Salesforce, Inc. (NYSE: CRM), a customer relationship management company, following six years of other senior leadership roles at the company. Prior to Salesforce, Ms. DelSanto served as Group Vice President of Sales Engineering at Oracle Corp. (NYSE: ORCL), an information technology and services company. She began her career as an Account Systems Engineer with International Business Machines Corporation (NYSE: IBM), where she spent several years building solutions for the health care market. Ms. DelSanto serves on the board of Juniper Networks, Inc. (NYSE: JNPR), and New Relic, Inc. (NYSE: NEWR). Ms. DelSanto graduated with a degree in mathematics from St. John’s University and earned a Master of Science in administrative studies from Boston College.

Key Skills and Qualifications:

   Senior Leadership Experience

   Public Board Experience

   Global Expertise

   Technical Expertise

   Financial Expertise

Ms. DelSanto brings to the Board significant experience as a veteran technology executive with more than three decades driving organizations towards exponential growth and provides valuable insight relative to the Company’s growth strategies in data center computing and telecom networking markets.

Tina M. Donikowski

Independent Director

Age: 64

Director Since: 2018

Committees: Audit and Finance and Nominating, Governance & Sustainability (Chair)

Business Experience:

Tina M. Donikowski retired from General Electric Company (NYSE: GE), a diversified industrial company, in October 2015 after 38 years with the company. Ms. Donikowski served in a number of senior positions during her career at General Electric Company, including most recently as Vice President, Global Locomotive Business, GE Transportation, from January 2013 until her retirement. Ms. Donikowski currently serves on the board of directors of TopBuild Corp. (NYSE: BLD), a leading installer and distributor of insulation and building material products to the U.S. construction industry based in Florida, and Eriez Magnetics, a privately held manufacturer and designer of magnetic, vibratory, and metal detection applications based in Pennsylvania. Ms. Donikowski also serves as a member of the Board of Trustees of Gannon University. She previously served as a board member of CIRCOR International (formerly NYSE: CIR), a leading provider of flow control solutions and other highly engineered products and subsystems used in energy, aerospace and industrial markets and Atlas Copco AB (Stockholm: ATCO), a world-leading provider of sustainable productivity solutions based in Sweden. Ms. Donikowski holds a Bachelor of Science degree in Industrial Engineering, as well as an Honorary Doctorate, from Gannon University.

Key Skills and Qualifications:

   Senior Leadership Experience

   Public Board Experience

   Global Expertise

   Technical Expertise

   Financial Expertise

Ms. Donikowski brings to the Board broad senior management, operations, and global experience having served for 38 years in various leadership positions at General Electric Company. Her experience provides the Board with valuable input on strategic, operational, market, and product strategies.

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PRECISION  |  POWER  |  PERFORMANCE

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2024 ANNUAL

PROXY STATEMENT

Ronald C. Foster

Independent Director

Age: 73

Director Since: 2014

Committees: Audit and Finance (Chair)

Business Experience:

Ronald C. Foster previously served as Chief Financial Officer and Vice President of Finance of Micron Technology, Inc. (Nasdaq: MU), a global corporation that produces various forms of semiconductor devices, from April 2008 to March 2015. Mr. Foster was appointed to that position in 2008 after serving as a member of Micron’s Board of Directors from June 2004 to April 2005. Before joining Micron, Mr. Foster was the Chief Financial Officer and Senior Vice President of FormFactor, Inc. (Nasdaq: FORM), a semiconductor wafer test equipment company. Prior to joining FormFactor, Mr. Foster served as the Chief Financial Officer for JDS Uniphase, Inc. and Novell, Inc., and served in various financial and operational roles at Applied Materials, Inc. (Nasdaq: AMAT), and Hewlett Packard Company (NYSE: HPE). He previously served as a board member of Everspin Technologies, Inc. (Nasdaq: MRAM), Inotera Memories Inc., a public company on the Taiwan stock exchange, LUXIM Corporation and Aptina Company.

Key Skills and Qualifications:

   Senior Leadership Experience

   Financial Expertise

   Industry Experience

   Public Board Experience

   Global Expertise

Mr. Foster brings to the Board significant senior management experience in the semiconductor and high-tech industries as well as significant experience in financial management, accounting, and finance issues, having served as Chief Financial Officer for various companies.

Stephen D. Kelley

Age: 61

Director Since: 2021

Business Experience:

Stephen D. Kelley currently serves as President & Chief Executive Officer of Advanced Energy, and as a member of our Board of Directors since March 2021. Mr. Kelley served as President & CEO and a board member of Amkor Technology, Inc. (Nasdaq: AMKR), a leading semiconductor package and test company, from May 2013 to June 2020. Prior to joining Amkor, Mr. Kelley served as Senior Advisor to Advanced Technology Investment Company, the Abu Dhabi-sponsored investment company that owns GlobalFoundries, until December 2012. Mr. Kelley served as Executive Vice President and Chief Operating Officer of Cree, Inc. (now Wolfspeed, Inc., NYSE: WOLF) from 2008 to 2011. Previously, Mr. Kelley held executive leadership roles of various businesses at companies including Texas Instruments, Philips Semiconductors, National Semiconductor, and Motorola. Since January 2023, Mr. Kelley has served on the board of directors of ONTO Innovation Inc. (NYSE: ONTO), a leader in the process control for the semiconductor and related industries. Mr. Kelley holds an SB ChE from the Massachusetts Institute of Technology and a JD from Santa Clara University.

Key Skills and Qualifications:

   Senior Leadership Experience

   Public Board Experience

   Industry and Technical Expertise

   Global Operations Expertise

   Financial Expertise

Mr. Kelley brings more than 30 years of significant senior management experience in the global semiconductor and electronics industry, as well as broad management experience in strategic planning, business development, technology, manufacturing, and operations.

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2024 ANNUAL

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PROXY STATEMENT

Lanesha T. Minnix

Independent Director

Age: 48

Director Since: 2020

Committees: Audit and Finance and Nominating, Governance & Sustainability

Business Experience:

Lanesha T. Minnix is Executive Vice President, General Counsel, and Corporate Secretary for Ecolab Inc. (NYSE: ECL), a global leader in water, hygiene, and infection prevention solutions that protect people, planet, and business health. Ms. Minnix tendered her resignation from Ecolab in February 2024 and expects to join Walgreens Boots Alliance, Inc. (Nasdaq: WBA) as Executive Vice President and Global Chief Legal Officer in April 2024. Prior to joining Ecolab in June 2022, Ms. Minnix served as Senior Vice President, Chief Legal Officer and Corporate Secretary of Flowserve Corporation (NYSE: FLS), a manufacturer of products for a range of industries, including oil and gas, power, chemical, water, pharmaceuticals, and food processing, and was responsible for the company’s legal, compliance, and regulatory matters from June 2018 to June 2022. Previously, Ms. Minnix served as Senior Vice President and General Counsel for BMC Stock Holdings, Inc., a leading provider of diversified building products and services, from June 2017 until June 2018. Earlier in her career, Ms. Minnix held roles with increasing responsibility at ABM Industries, Shell Oil Company, and Sprint Corporation. Ms. Minnix began her career as a Corporate Associate at the law firm of K&L Gates LLP. Ms. Minnix holds a juris doctor and an MBA from the University of Tulsa, and a bachelor’s degree in Marketing from St. Louis University.

Key Skills and Qualifications:

   Senior Leadership Experience

   Industry Expertise

   Global Operations Expertise

Ms. Minnix brings to the Board leadership and public company experience and has broad exposure to advanced industrial markets for a range of applications. Her legal and business skills add significant value to the Board.

David W. Reed

Independent Director

Age: 65

Director Since: 2022

Committees: Compensation

Business Experience:

David W. Reed is the Chief Executive Officer of Vendanta Resources Ltd.’s semiconductor group, which position he commenced in February 2023. Prior to that, Mr. Reed retired from NXP Semiconductors N.V. (Nasdaq: NXPI), where he principally served as Executive Vice President – Operations. NXP is a world leader in secure connectivity solutions, and Mr. Reed was responsible for NXP’s internal and external manufacturing operations, supply chain, information technology, total quality, and procurement. Mr. Reed joined NXP in 2015, having served as General Manager at Freescale Semiconductor, Ltd. until its merger with NXP. Mr. Reed has 37 years of extensive international experience with global execution of water fab, assembly/test, packaging, R&D, foundries, and joint ventures for analog, automotive, logic, and wireless customers.  Mr. Reed joined Freescale Semiconductor in 2012 as Senior Vice President, Manufacturing Operations. Previously, Mr. Reed was Vice President and General Manager at GLOBALFOUNDRIES and began his career at Texas Instruments in 1984, where he held multiple overseas and leadership assignments. Mr. Reed has served on several private boards, including SSMC Foundry, a joint venture between NXP and TSMC, as its chairman, the Dwight Look College of Engineering at Texas A&M University, and Circle 10 Council of the Boy Scouts of America.  Mr. Reed received an undergraduate degree from Austin College, an undergraduate degree in Chemical Engineering from Texas A&M University, and an MBA from the University of Dallas.

Key Skills and Qualifications:

   Senior Leadership Experience

   International Experience

   Global Operations Expertise

   Industry and Technical Expertise

Mr. Reed brings to the Board significant senior management and operations experience in the semiconductor capital equipment and manufacturing industry, particularly in the areas of global operations and supply chain management.  

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2024 ANNUAL

PROXY STATEMENT

John A. Roush

Independent Director

Age: 58

Director Since: 2016

Committees: Compensation and Nominating, Governance & Sustainability

Business Experience:

John A. Roush currently serves as an Operating Executive Advisor to ACON Investments, LLC, a private equity firm. Mr. Roush serves on the board of two privately held ACON portfolio companies: Pine Environmental LLC, a provider of test equipment and services for environmental consultants; and Novipax LLC, a producer of absorbent pads for the poultry industry. Mr. Roush also serves as a director and member of the audit and compensation committees of Lemaitre Vascular, Inc. (Nasdaq: LMAT), a global provider of medical devices and implants for the treatment of peripheral vascular disease, and as a director of Targan, Inc. (formerly Applied Life Sciences & Systems), a privately held company that is developing automated vaccine delivery technology for the poultry industry. Mr. Roush previously served as Chief Financial Officer and Chairman of ACON S2 Acquisition Corp., a special purpose acquisition company (now ESS Tech, Inc., NYSE: GWH) from September 2020 to October 2021. He also previously served as Chief Executive Officer and a director of Novanta Inc. (Nasdaq: NOVT, formerly GSI Group Inc.), a leading global supplier of precision photonic components and subsystems to original equipment manufacturers in the medical and industrial technology markets, from December 2010 to September 2016. Mr. Roush joined Novanta after a twelve-year career with PerkinElmer, Inc., a provider of technology and services to the diagnostics, research, environmental, safety and security, industrial, and laboratory services markets, where he was a corporate officer and served in several leadership positions. Prior to joining PerkinElmer, Mr. Roush held management positions with Outboard Marine Corporation, AlliedSignal, Inc., (now Honeywell International), McKinsey & Company Inc., and General Electric Company (NYSE: GE).

Key Skills and Qualifications:

   Senior Leadership Experience

   Public Board Experience

   Technical Expertise

   Global Operations Expertise

   Financial Expertise

Mr. Roush brings to the Board significant senior management level experience and leadership in the medical and advanced industrial markets and applications, as well as significant public board experience and experience in private equity.


Brian M. Shirley

Independent Director

Age: 54

Director Since: 2022

Committees: Audit and Finance

Business Experience:

Mr. Shirley retired from Micron Technology, Inc. (Nasdaq: MU), a global corporation that produces various forms of semiconductor devices, as Senior Vice President DRAM and Emerging Memory Engineering in December 2019. He joined Micron as a Product Engineer in 1988, and held positions of increasing responsibility across product design, engineering, and business unit management. Mr. Shirley is listed as an inventor on 82 U.S. patents and helped drive Micron’s expansion into specialized memory for servers, mobile and networking solutions, in addition to maintaining a focus on cost leadership and power reduction. After retirement from Micron, Mr. Shirley consults for various U.S. government departments, advising on the semiconductor geopolitical landscape, supply chain resilience, and national security. Mr. Shirley holds a Bachelor of Science degree in electrical engineering from Stanford University.

Key Skills and Qualifications:

   Senior Leadership Experience

   Industry and Technical Expertise

   Global Operations Expertise

Mr. Shirley brings to the Board significant experience as a veteran technology executive with more than three decades of experience in semiconductor product technologies, including as an inventor on 82 U.S. patents, and an extensive track record of advancing innovation and growth.

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2024 ANNUAL

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Director Qualifications

The Board respects its responsibility to provide oversight, counseling, and direction to the management of the Company in the interest and for the benefit of the stockholders. Accordingly, it seeks to be composed of directors with diverse skills, experience, qualifications, and characteristics. It is critical that directors understand the markets in which the Company operates, specifically the semiconductor capital equipment, industrial and medical, data center, and telecom markets. It is equally important that, collectively, the directors have experience in each of the primary aspects of our business, including engineering, research and development, finance and audit, product strategy and development, customer relations, supply chain management, and sales and marketing. The following are certain qualifications, experience, and skills for Board members that are important to the Company’s business and its future:

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Directors who have served in senior leadership positions are important to the Company, as they bring experience and perspective in analyzing, shaping, and overseeing the execution of important operational and policy issues at a senior level. These directors’ insights and guidance and their ability to assess and respond to situations encountered in serving on our Board may be enhanced if their leadership experience has been developed at businesses or organizations that operated on a global scale, faced significant competition, and/or involved technology or other rapidly evolving business models.

Senior Leadership Experience

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Directors who have served on other public company boards can offer advice and insights with regard to the dynamics and operation of a board of directors, the relations of a board to the chief executive officer and other management personnel, the importance of particular agenda and oversight matters, and oversight of a changing mix of strategic, operational, and compliance-related matters.

Public
Board Experience

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Because the Company is a global leader in innovative power solutions for the semiconductor, data center, telecom, and industrial and medical markets, experience in relevant technology is useful in understanding the Company’s research and development efforts, competing technologies, the various products and processes the Company develops, the manufacturing and assembly-and-test operations, and the market segments in which the Company competes.

Industry & Technical Expertise

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Because the Company is a global organization with research and development, manufacturing, assembly and test facilities, and sales and other offices in many countries, directors with global expertise can provide a useful business and cultural perspective regarding many significant aspects of our business.

Global Expertise

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Knowledge of financial markets, financing and funding operations, and accounting and financial reporting processes is important because it assists the directors in understanding, advising, and overseeing the Company’s capital structure, financing and investing activities, financial reporting, and internal control of such activities.

Financial Expertise

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2024 ANNUAL

PROXY STATEMENT

The following matrix summarizes certain qualifications and skills discussed above that were considered by the Nominating, Governance & Sustainability Committee and the Board in nominating the director candidates for election to the Board. The fact that a particular qualification, skill, or expertise is not listed below does not mean that the nominee does not possess it or that the Nominating, Governance & Sustainability Committee and the Board did not evaluate it.

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2024 ANNUAL

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The table below provides certain highlights of the composition of our Board members as of February 1, 2024, based on voluntary, self-reported information pursuant to Nasdaq Rule 5606.

Board Diversity Matrix

As of February 1, 2024

Total Number of Directors

10

Female

Male

Part I: Gender Identity

Directors

3

7

Part II: Demographic Background

African American or Black

1

0

White

2

7

Independence

The Board of Directors has determined that each of the nominees, other than Stephen D. Kelley (i.e., Grant H. Beard, Frederick A. Ball, Anne T. DelSanto, Tina M. Donikowski, Ronald C. Foster, Lanesha T. Minnix, David W. Reed, John A. Roush and Brian M. Shirley), is an “independent director” within the meaning of the Nasdaq Stock Market Rules. Under these rules, to be considered independent, the Board must affirmatively determine, among other things, that neither the director nor any immediate family member of the director has had any direct or indirect material relationship with the Company within the last three years. The Board of Directors has made an affirmative determination that none of the independent directors has had any relationship with Advanced Energy or with another director that would interfere with the exercise of his or her independent judgement in carrying out his or her responsibilities as a director. The independent directors, if all of them are elected at the 2024 Annual Meeting, will constitute a majority of the Board of Directors. There is no family relationship amongst any of the directors and executive officers of the Company. The Company’s executive officers serve at the discretion of the Board.

Involvement in Certain Legal Proceedings

During the past ten years none of the persons currently serving as executive officers and/or directors of the Company has been the subject matter of any of the following legal proceedings that are required to be disclosed pursuant to Item 401(f) of Regulation S-K, including: (a) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (b) any criminal convictions; (c) any order, judgment, or decree permanently or temporarily enjoining, barring, suspending or otherwise limiting their involvement in any type of business, securities or banking activities; (d) any finding by a court, the Securities and Exchange Commission (the “SEC”) or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud; or (e) any sanction or order of any self-regulatory organization or registered entity or equivalent exchange, association or entity. Nor are any such legal proceedings believed to be contemplated by governmental authorities against any director or executive officer. Further, no executive officers, directors, beneficial owners of more than five percent of the Company’s stock, or any other actor mentioned in Item 103(c)(2) of Regulation S-K is a party adverse to the Company in a material proceeding or has a material interest adverse to the Company.

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PROXY STATEMENT

Required Vote

Our Board has adopted a director resignation policy (the “Policy”), which is included in the Company’s Board Governance Guidelines. The Policy applies to uncontested elections of directors, in other words, an election of directors where the number of nominees for election does not exceed the number of directors to be elected. A copy of the Policy is available on the Company’s website at www.advancedenergy.com/en-us/about/leadership within the Company’s Board Governance Guidelines. Under the Policy, any nominee for director in an uncontested election who does not receive a majority vote “FOR” that director’s election to the Board relative to the number of votes cast with respect to that director’s election (excluding broker non-votes, abstentions, and failures to vote with respect to that director’s election) will promptly tender a written offer of resignation to the Board. The Policy provides that the Nominating, Governance & Sustainability Committee of the Board will promptly consider the director’s offer of resignation and make a recommendation to the Board. Pursuant to the Policy, the Board would then act on that recommendation within 90 days of receipt. When deciding what action to recommend or take regarding the director’s resignation, the Policy permits each of the Nominating, Governance & Sustainability Committee and the Board to consider any factors they deem relevant, including the best interests of the Company and its stockholders.

Under Delaware law, a nominee who receives a plurality of the votes cast at the 2024 Annual Meeting will be elected as a director (subject to the Policy described above). The “plurality” standard means the nominees who receive the largest number of “FOR” votes cast are elected as directors of the Company. Thus, the number of shares not voted for the election of a nominee (and the number of “withhold” votes cast with respect to that nominee) will not affect the determination of whether that nominee has received the necessary votes for election under Delaware law. However, the number of “withhold” votes with respect to a nominee will affect whether or not our Policy will apply to that individual. If any nominee is unable or declines to serve, proxies will be voted for the balance of those named and for such person as shall be designated by the Board, on recommendation by the Nominating, Governance & Sustainability Committee, to replace any such nominee. However, the Board does not anticipate that this will occur.

Stockholders do not have the right to cumulate their votes for the election of directors. Unless otherwise instructed, the proxy holders will vote the proxies received by them “FOR” each of the ten (10) nominees. Votes withheld from a nominee will be counted for purposes of determining whether a quorum is present, but will not be counted as an affirmative vote for such nominee.

The Board of Directors recommends a vote “FOR” the election of each of the nominees named above.

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2024 ANNUAL

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Director Compensation

The compensation policy for non-employee directors for the fiscal year ended December 31, 2023, was as follows:

Compensation Elements for Non-Employee Directors

Compensation Element

    

2023 Compensation Program

Annual Board Cash Retainer

$60,000 annual cash retainer paid in equal quarterly installments to each Board member.

$65,000 additional annual cash retainer for the Chairman of the Board, paid in equal quarterly installments.

Annual Board Equity Retainer

Restricted stock units with an approximate value of $200,000 granted annually to each non-employee director on the date of his or her re-election at the 2024 Annual Meeting; each annual grant will vest one year from the date of grant.
Additional restricted stock units with an approximate value of $50,000 granted annually to the Chairman of the Board on the date of his or her reelection at the 2024 Annual Meeting; each annual grant will vest one year from the date of grant.
The Board may (but is not required to) grant restricted stock units to a new non-employee director upon initial election or appointment to the Board.

Annual Chair Cash Fees

$30,000 annual cash retainer fee for Audit and Finance Committee Chair.
$25,000 annual cash retainer fee for Compensation Committee Chair.
$15,000 annual cash retainer fee for Nominating, Governance & Sustainability Committee Chair.

Annual Committee Member Retainer

$13,000 annual cash retainer fee for Audit and Finance Committee members.
$10,000 annual cash retainer fee for Compensation Committee members.
$5,000 annual cash retainer fee for Nominating, Governance & Sustainability Committee members.

In February 2014, our Board of Directors adopted a Stock Ownership Policy that requires non-employee directors to own an amount of stock of the Company with a value equal to at least five times the annual retainer for Board service (exclusive of any compensation for committee service, meeting fees, leadership roles, etc.), based in each case, on the volume weighted average closing price of the Company’s stock for the two fiscal years as of December 31 of the applicable year and subject to the terms in the Stock Ownership Policy. The Stock Ownership Policy provides for a phase-in period over five years for each member to achieve the requisite ownership requirements. All non-employee members of the Board either currently conform to the policy or are on track to meet the policy within the required time frame.

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PROXY STATEMENT

The Compensation Committee continually reviews and monitors non-employee director compensation, uses market data for comparisons to peer programs, and works with the Company’s independent compensation consultant, Compensia, Inc., to ensure the program remains appropriate.

The following table details director compensation for 2023.

2023 Director Compensation

Change in

Pension Value

and

 

Nonqualified

 

Non-Equity

Deferred

 

Fee Earned or

Option

Incentive Plan

Compensation

All Other

Paid in Cash

Stock Awards

Awards

Compensation

Earnings

Compensation

Total

Name

    

($)

    

($) (1)

    

($)

    

($)

    

($)

    

($)

    

($)

Grant H. Beard

125,000

245,201

370,201

Frederick A. Ball

85,000

196,178

281,178

Anne T. DelSanto

75,000

196,178

271,178

Tina M. Donikowski

88,000

196,178

284,178

Ronald C. Foster

90,000

196,178

286,178

Edward C. Grady*

36,500

36,500

Lanesha T. Minnix

78,000

196,178

274,178

David W. Reed

70,000

196,178

266,178

John A. Roush

75,000

196,178

271,178

Brian M. Shirley

73,000

196,178

269,178

Stephen D. Kelley

 

(1)On May 5, 2023, Messrs. Beard, Ball, Foster, Reed, Roush, and Shirley and Mses. Donikowski, DelSanto and Minnix were each granted 2,257 restricted stock units (“RSUs”) for their service on the Board. On May 5, 2023, Mr. Beard was granted an additional 564 RSUs for his service as Chairman of the Board.  All RSUs granted on May 5, 2023 vest on May 5, 2024, and were the only outstanding unvested equity awards held by these directors as of December 31, 2023. The Company’s closing stock price on May 5, 2023 was $86.92.

*Mr. Grady did not stand for reelection at the 2023 Annual Meeting and ceased to be a board member on April 25, 2023.

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2024 ANNUAL

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Corporate Governance

Our Governance Best Practices

WHAT WE DO

WHAT WE DO NOT DO

 We specify in our Board Governance Guidelines that the Chairman of the Board and CEO positions must be held by separate persons in order to ensure effective management oversight.

 We aim to have a substantial portion of executive compensation be performance-based.

 We maintain a highly independent and diverse Board of Directors.

 We maintain robust stock ownership requirements for directors and executives.

 We have annual elections of directors.

 We conduct annual Board, committee, and director evaluations.

 We have regular executive sessions of independent directors.

Ñ We do not have any interlocking relationships among our directors.

Ñ We do not have excise tax gross-up arrangements with any of our executive officers.

Ñ We do not guarantee incentive awards.

Ñ We do not permit hedging or pledging of company stock.

Ñ We do not provide significant perquisites or separate pension programs to our executive officers.

Ñ We do not have a poison pill.

do

Board Governance Structure

The Board Governance Guidelines set forth the Board’s policy that the positions of Chairman of the Board and Chief Executive Officer should be held by separate persons to aid in the Board’s oversight of management. The Board Governance Guidelines are available on our website at www.advancedenergy.com/en-us/about/leadership.

The Company believes this Board leadership structure is most appropriate for the Company because it provides the Board with increased independence. Additionally, we separate the roles of Chairman of the Board and Chief Executive Officer in recognition of the differences between the two roles as they are presently defined. The principal responsibility of the Chief Executive Officer is to manage the business of the Company, whereas the principal responsibilities of the Chairman of the Board are to manage the operations of the Board of Directors and its committees and provide oversight and counsel to the Chief Executive Officer on behalf of the Board.

Risk Oversight

Senior management manages material risks and reviews such risks with the Chief Executive Officer, and if warranted, the Board. As part of its general oversight role, the Board reviews business reports from management that routinely outline operational risks that may exist from time to time. In addition, for risks related more specifically to the financial operations of the Company, such as credit risk, liquidity risk, and cybersecurity, the Audit and Finance Committee examines reports from management and reviews such risks in light of the Company’s business operations.

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2024 ANNUAL

PROXY STATEMENT

Attendance and Meetings

In 2023, the Board of Directors held nine meetings, and the independent directors of the Board held four executive sessions. Each of the directors attended above 75% of the aggregate number of meetings of the Board of Directors (held during the period for which he or she was a director) and the committees that he or she served on (during the period for which he or she was a committee member).

Members of the Board of Directors are welcomed and encouraged, but not required, to attend the 2024 Annual Meeting. The Company’s annual meeting of stockholders held on April 27, 2023 (the “2023 Annual Meeting”) was attended in person or by telephone by all of the nominees and then-members of the Board of Directors.

Board Committees

To support effective corporate governance, our Board of Directors delegates certain responsibilities to its committees, who report on their activities to the Board. These committees act pursuant to written charters adopted by the Board and have the authority to engage legal counsel or other advisors or consultants as they deem appropriate to carry out their responsibilities.

The Board’s standing committees consist of the Audit and Finance Committee, Nominating, Governance & Sustainability Committee, and Compensation Committee. The Board of Directors dissolved the standing Pricing Committee, which consisted of Mr. Grant H. Beard, Mr. Frederick A. Ball, and Mr. Ronald C. Foster, on April 27, 2023, but may form an ad hoc pricing committee as needed.

AUDIT AND FINANCE COMMITTEE

Meetings: 9

Chair: Ronald C. Foster

Other Members:

Brian M. Shirley
Tina M. Donikowski
Lanesha T. Minnix

Independence: 100% compliance with Nasdaq and SEC rules. The Board of Directors determined that each of the members of the Audit and Finance Committee is “independent” in accordance with the Nasdaq Stock Market Rules and Rule 10A-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Financial Expertise: 100% compliance with SEC rules. The Board of Directors has evaluated the credentials of Messrs. Foster and Shirley, and Ms. Donikowski and determined that they are “audit committee financial experts” as defined under the rules promulgated by the SEC.

Charter: Available at www.advancedenergy.com/en-us/about/leadership

Key Responsibilities:

appoint and oversee Advanced Energy’s independent registered public accounting firm;
pre-approve audit, audit-related, and non-audit services, terms, and fees charged by the independent registered public accounting firm;
supervise and monitor the performance of the Company’s internal audit department;
monitor the integrity of the Company’s financial reporting process and review the adequacy and effectiveness of Company’s internal control over financial reporting;

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2024 ANNUAL

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review and discuss the financial statements and disclosure thereof, quarterly earnings press releases, any financial information, and earnings guidance;
establish and maintain procedures for confidential and anonymous submission of concerns regarding internal control over financial reporting or auditing matters and reporting of potential misconduct or undue risk;
review and discuss the Company’s capital structure, potential capital market transactions, and capital allocation strategies;
review and approve related party transactions;
at least annually receive reports from the General Counsel and discuss the adequacy of the Company’s policies and practices related compliance with applicable laws and regulations;
oversee financial-related risks, enterprise risk management program, and data privacy and cybersecurity risks.

Audit Fees: The Audit and Finance Committee pre-approves all audit and permissible non-audit services provided by Advanced Energy’s independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval is provided by category of service, with approvals for specific fees within each pre-approved category made by management. In 2023, the Audit and Finance Committee pre-approved all of the services provided by Ernst & Young LLP, Advanced Energy’s independent registered public accounting firm.

Financial Statements: The Audit and Finance Committee also conducts financial reviews with Advanced Energy’s independent registered public accounting firm prior to the release of financial information in the Company’s Forms 10-K and 10-Q. Management has primary responsibility for Advanced Energy’s financial statements and the overall reporting process, including systems of internal controls. The independent registered public accounting firm audits the annual financial statements prepared by management, expresses an opinion as to whether those financial statements fairly present the financial position, results of operations and cash flows of Advanced Energy in conformity with accounting principles generally accepted in the United States and discusses with the Audit and Finance Committee any issues they believe should be raised.

Report of the Audit and Finance Committee

In accordance with the Audit and Finance Committee’s written charter duly adopted by the Board of Directors, we have reviewed Advanced Energy’s audited financial statements, as of and for the year ended December 31, 2023, and met together and separately with both management and Ernst & Young LLP, the Company’s independent registered public accounting firm for 2023, to discuss Advanced Energy’s audited financial statements as of and for the year ended December 31, 2023. In addition, the Audit and Finance Committee has discussed with the independent registered public accounting firm the matters outlined in Statement on Auditing Standards No. 1301, as amended (Communication with Audit Committees), to the extent applicable and received the written disclosures and the letter from the independent registered public accounting firm required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees). Further, the Audit and Finance Committee received the written disclosures and the letter from the independent accountants required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit and Finance Committee concerning independence, and discussed with the independent registered public accounting firm the independent accountant’s independence.

Based on its review and discussion of the foregoing matters and information, the Audit and Finance Committee recommended to the Board of Directors that the audited financial statements referenced above be included in Advanced Energy’s Annual Report on Form 10-K for the year ended December 31, 2023. The Audit and

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Finance Committee has recommended the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2024, subject to stockholder ratification.

The Audit and Finance Committee

Ronald C. Foster, Chairman

Tina M. Donikowski

Lanesha T. Minnix

Brian M. Shirley

This report of the Audit and Finance Committee is not deemed “soliciting material” and is not deemed filed with the SEC or subject to Regulation 14A or the liabilities under Section 18 of the Exchange Act.

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2024 ANNUAL

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PROXY STATEMENT

NOMINATING, GOVERNANCE & SUSTAINABILITY COMMITTEE

Meetings: 4

Chair: Tina M. Donikowski

Other Members:

Anne T. DelSanto
Lanesha T. Minnix
John A. Roush

Independence: 100% compliance with Nasdaq rules. Each of the members of the Nominating, Governance & Sustainability Committee is an “independent director” within the meaning of the Nasdaq Stock Market Rules.

Charter: Available at www.advancedenergy.com/en-us/about/leadership

Key Responsibilities:

review and determine the appropriate composition and size of the Board;
establish skills, experience, qualifications, and other criteria to serve as a director;
identify and screen individuals qualified to become directors, consider candidates recommended by stockholders, and recommend to the Board the slate of director nominees for election by stockholders and any candidates to appointed by the Board to fill vacancies between stockholder meetings;
assist with assessment of director independence and ensure the majority of directors are independent;
recommend to the Board directors to be appointed to serve on Board committees and as chairs of each committee;
sponsor and oversee performance evaluations for each of the Board committees and the Board as a whole and conduct director peer evaluations
oversee director succession planning and review succession plans for the Chief Executive Officer;
develop and review periodically, at least annually, key corporate governance policies of Advanced Energy and recommend any changes to the Board;
periodically review and reassess the adequacy of Advanced Energy’s charter and by-laws;
review the Company’s sustainability program and goals and the Company’s progress towards achieving those goals; and
review ESG trends that could impact the Company’s business operations, performance, and reputation.

Director Nominations

The Nominating, Governance & Sustainability Committee evaluates and interviews potential director candidates. All members of the Board may interview the final candidates. The Nominating, Governance & Sustainability Committee of the Board considers candidates for director nominees proposed by directors and stockholders, as described in more detail below. The Nominating, Governance & Sustainability Committee may retain recruiting professionals to assist in identifying and evaluating candidates for director nominees, but does not retain any recruiters currently. The Nominating, Governance & Sustainability Committee has no stated specific or minimum qualifications that must be met by a candidate for director. However, as set forth in the Company’s Board Governance Guidelines, the Nominating, Governance & Sustainability Committee strives for a mix of skills and diverse perspectives (functional, cultural, and geographic) that is effective for the Board. In selecting nominees, the Nominating, Governance & Sustainability Committee assesses the independence, character, and acumen of candidates. The Nominating, Governance & Sustainability Committee also endeavors to establish a number of areas of collective core competency of the Board and assess whether a candidate possesses skills that would be complementary to the Board, including business judgment, leadership, strategic

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vision and knowledge of management, accounting, finance, industry, technology, manufacturing, international markets and marketing. Additional criteria include a candidate’s personal and professional ethics, integrity and values, as well as his or her willingness to devote sufficient time to prepare for and attend meetings and participate effectively on the Board.

The Board Governance Guidelines provide that the Nominating, Governance & Sustainability Committee is responsible for reviewing with the Board, from time to time, the appropriate skills and characteristics required of Board members in the context of the current make-up of the Board. In assessing the diversity of the Board, the Nominating, Governance & Sustainability Committee considers such factors as leadership, character, reputation, integrity, judgment, age, understanding of and experience in manufacturing, technology expertise, finance and marketing acumen, and exposure and experience in international markets. The Board values a diverse set of viewpoints and experiences, and also considers gender and ethnic diversity. These factors, which are among the factors the Board and the Nominating, Governance & Sustainability Committee considers useful to a well-functioning board, are reviewed in the context of assessing the perceived needs of the Board at any particular point in time and in its search for potential nominees.

The Nominating, Governance & Sustainability Committee will consider any and all director candidate recommendations by our stockholders that are submitted in accordance with the procedures set forth in the Company’s Second Amended and Restated By-Laws. The Nominating, Governance & Sustainability Committee will apply the same processes and criteria in evaluating director candidates recommended by stockholders as it applies in evaluating director candidates recommended by directors, members of management, or any other person. If you are a stockholder and wish to recommend a candidate for nomination to the Board of Directors, you should submit your recommendation in writing to the Nominating, Governance & Sustainability Committee, in care of the Corporate Secretary of Advanced Energy at 1595 Wynkoop St., Suite 800, Denver, Colorado 80202. Your recommendation must include all of the information set forth in Article III, Section 6(a) of the Second Amended and Restated By-Laws of Advanced Energy, including but not limited to, your name and address, the class and number of shares of Advanced Energy which are, directly or indirectly, owned beneficially and of record, the name of the person you recommend for nomination, the reasons for your recommendation, a summary of the person’s business history and other qualifications as a director of Advanced Energy, and whether such person has agreed to serve, if elected, as a director of Advanced Energy. Please also see the information under the section entitled “Proposals of Stockholders” on page 66 of this proxy statement.

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COMPENSATION COMMITTEE

Meetings: 5

Chair: Frederick A. Ball

Other Members:

Anne T. DelSanto
David W. Reed
John A. Roush

Independence: 100% compliance with Nasdaq rules. Each of the members of the Compensation Committee is an “independent director” within the meaning of the Nasdaq Stock Market Rules.

Non-Employee: 100% compliance with SEC rules. Each of the members of the Compensation Committee is an “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act.

Charter: Available at www.advancedenergy.com/en-us/about/leadership

Key Responsibilities:

annually review and approve, or review and recommend to the Board for approval, the salaries, incentives, and other forms of compensation for the Chief Executive Officer and other senior executives of Advanced Energy;
review and approve, or recommend to the Board for approval, senior executive employment agreements, severance agreements and change in control agreements/provisions;
adopt, administer, approve, and ratify incentive compensation and stock plans and awards thereunder;
review and make recommendations to the Board regarding incentive-based compensation recovery, or “clawback,” policies, and administer as appropriate;
review and propose to the Board from time to time changes in director compensation;
review human resources management strategy, executive management succession planning, CEO succession planning in the context of executive compensation;
periodically review benefit, incentive compensation, and stock plans, compensation agreements, plans, policies, and arrangements, and establish procedures and mechanisms designed to cause the same to comply with applicable laws and regulation; and
approve, or recommend to the Board for approval, policies relating to compensation and benefit plans.

Compensation Consultant: The Compensation Committee retains an independent compensation consultant to assist and advise the Compensation Committee in fulfilling the above responsibilities. For the 2023 fiscal year, the Compensation Committee engaged Compensia, Inc. to conduct a competitive review of executive compensation and advise the Compensation Committee on other compensation related matters, such as the Company’s long-term incentive compensation programs for its executive officers and its compensation program for its non-employee directors.

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Proposal No. 2 - Ratification of the Appointment of Ernst & Young LLP as Advanced Energy’s Independent Registered Public Accounting Firm for 2024

What am I voting on and how should I vote?

You are being asked to ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the 2024 fiscal year. Although our governing documents and applicable law do not require us to submit this matter to stockholders, the Board believes that asking stockholders to ratify the appointment of Ernst & Young LLP is consistent with best practices in corporate governance.

We believe that Ernst &Young LLP is sufficiently qualified to conduct their duties as independent registered public accounting firm.

The Board of Directors therefore recommends you vote “FOR” the ratification of the appointment of Ernst & Young LLP as Advanced Energy’s independent registered public accounting firm for 2024.

Ratification of Independent Registered Accounting Firm

The Audit and Finance Committee is directly responsible for the appointment, retention, and oversight of the work of any independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company and its subsidiaries.

If stockholders do not ratify the appointment of Ernst & Young LLP, the Audit and Finance Committee will regard such vote as a direction to consider the appointment of a different independent registered public accounting firm. Even if the appointment of Ernst & Young LLP is ratified by the stockholders, the Audit and Finance Committee has the discretion to select a different independent registered public accounting firm at any time if it determines that a change would be in our and our stockholders’ best interests.

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Independent Registered Public Accounting Firm Fees and Services

The following table presents fees billed to Advanced Energy for professional services rendered by Ernst & Young LLP, our independent registered public accounting firm for 2023 and 2022. All of the fees in the following table were approved by the Audit and Finance Committee in conformity with its pre-approval process. Pre-approval generally is provided for up to one year, and any pre-approval is detailed as to the category of services and generally is subject to a specific budget. The independent registered public accounting firm and Advanced Energy’s management are required to periodically report to the Audit and Finance Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, including the fees for the services performed to date. In addition, the Audit and Finance Committee also may pre-approve particular services on a case-by-case basis, as required.

Fee Category

    

2023

    

2022

(In thousands)

Audit Fees

(1)

$

4,451

$

3,676

Audit Related Fees

(2)

 

Tax Fees

(3)

796

 

389

All Other Fees

(4)

 

Total Fees

$

5,247

$

4,065

(1)Audit Fees consisted of fees for (a) professional services rendered for the annual audit of Advanced Energy’s consolidated financial statements and internal controls over financial reporting, (b) review of the interim consolidated financial statements included in quarterly reports, and (c) services that are typically provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements.
(2)Audit Related Fees consisted of fees for assurance and related services that were reasonably related to the performance of the audit or review of Advanced Energy’s consolidated financial statements and are not reported under “Audit Fees.”
(3)Tax Fees consisted of fees for tax advice and/or tax planning during 2023 and 2022.
(4)All Other Fees are not applicable.

Required Vote

Ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for Advanced Energy for 2024 requires the affirmative “FOR” vote of a majority of the shares present at the 2024 Annual Meeting (by proxy or in person), excluding abstentions and broker non-votes.

Representatives of Ernst & Young LLP are expected to be present at the 2024 Annual Meeting to respond to appropriate questions and to make a statement should they so desire.

The Board of Directors recommends a vote “FOR” the ratification of the appointment of Ernst & Young LLP as Advanced Energy’s independent registered public accounting firm for 2024.

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Proposal No. 3 - Advisory Approval of the Company’s Named Executive Officer Compensation

What am I voting on and how should I vote?

We are providing our stockholders an opportunity to indicate whether they approve of our named executive officer compensation as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables and narrative discussion in this proxy statement. This proposal is required pursuant to Section 14A of the Exchange Act.

Although this vote is advisory and is not binding on the Company, the Compensation Committee of the Board will take into account the outcome of the vote when considering future executive compensation decisions.

We believe that our compensation philosophy and practices are consistent with market practices, designed to retain key executives and reward company performance, and aligned with long-term stockholder interests.

The Board of Directors therefore recommends you vote “FOR” the below resolution.

“RESOLVED, on a non-binding, advisory basis, the compensation paid to the Company’s named executive officers, as disclosed in the Company’s Proxy Statement for the 2024 Annual Meeting of Stockholders pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

This advisory vote, commonly referred to as “say on pay,” is not intended to address any specific item of compensation, but instead relates to our overall compensation philosophy as described in “Compensation Discussion and Analysis,” the tabular disclosures regarding named executive officer compensation, and the narrative disclosure accompanying the tabular presentation. These disclosures allow you to view the trends in our executive compensation program and the application of our compensation philosophies for the years presented.

97%

At the 2023 Annual Meeting, over 97% of the votes cast approved our “say on pay” proposal.

Advanced Energy’s compensation program is designed and administered by the Compensation Committee, which is composed entirely of “independent directors” within the meaning of the Nasdaq Stock Market Rules. We carefully consider many different factors, as described in the section “Compensation Discussion and Analysis,” in order to provide appropriate compensation for our executives. Our executive compensation program is intended to attract, motivate, and reward the executive talent required to achieve our corporate objectives and increase stockholder value. The Compensation Committee has designed our compensation program to be competitive with the compensation offered by those peers with whom we may compete for executive talent. Targets for base salaries, annual cash incentive, and long-term equity incentive awards for executives factor in competitive data. A large proportion of our executive officers’ total potential compensation is performance-based in order to align their interests with those of our stockholders, place more of their

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compensation at risk, and emphasize a long-term strategic view. The Compensation Committee deliberately designs compensation objectives in order to allocate a significant percentage of each of our named executive officers’ compensation to performance-based measures.

As discussed in “Compensation Discussion and Analysis” beginning on page 31 of this proxy statement, we believe that our executive compensation program properly links executive compensation to Company performance and aligns the interests of our executive officers with those of our stockholders.

Executive Compensation Objectives

The Compensation Committee believes that executive compensation is a meaningful tool to communicate, align, and reinforce business priorities that support our stockholders’ interests. We also believe it is an important element in the attraction, retention, and recognition of leadership and key talent for the Company. In designing an effective structure, the Compensation Committee follows these key principles:

Pay for performance – aligning pay with a balanced view of performance across leadership priorities to support stockholders’ interest in sustainable results;
Appropriate pay levels – ensuring targets are reasonable based on position, performance, and market context; and
Strong governance – structuring our program with a balanced incentive design to promote the successful execution of our strategic objectives and dutifully manage risk.

Required Vote

Advisory approval of the Company’s named executive officer compensation requires the affirmative “FOR” vote of a majority of the shares present at the 2024 Annual Meeting (by proxy or in person), excluding abstentions and broker non-votes. The vote on this proposal is advisory in nature and, therefore, is not binding on the Company; however, the Board and Compensation Committee will review the results and take into consideration such results when making future executive compensation decisions.

The Company will ask its stockholders to consider an advisory vote on the compensation of our named executive officers every year until the next vote of our stockholders on the frequency of such advisory votes at our 2029 annual meeting of stockholders pursuant to applicable SEC rules, at which time we will consider the outcome of the vote and decide how frequently to hold such future advisory votes.

The Board of Directors recommends a vote “FOR” the approval of the Company’s named executive officer compensation.

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Security Ownership of Certain Beneficial Owners and Management

As of February 1, 2024, there were 37,323,406 shares of the Company’s common stock outstanding. The following table sets forth the beneficial ownership of Advanced Energy common stock as of February 1, 2024 (unless otherwise noted) by:

each person known to us to beneficially own more than five percent (5%) of the outstanding common stock;
each director and nominee for director;
each named executive officer and former named executive officer that held executive leadership roles during 2023; and
the directors and executive officers as a group.

Unless otherwise indicated, the address of each individual named below is c/o Advanced Energy Industries, Inc., 1595 Wynkoop St., Suite 800, Denver, Colorado 80202.

Shares of Common

Stock Beneficially

 

Name of Stockholder

    

Owned **

Percent Owned

BlackRock, Inc.

 

5,986,069

(1)

16.0%

The Vanguard Group

 

4,470,367

(2)

12.0%

FMR LLC

4,146,831

(3)

11.1%

Ameriprise Financial, Inc.

2,492,027

(4)

6.7%

Stephen D. Kelley, President, Chief Executive Officer, and Director

 

59,501

(5)(6) 

*

Paul R. Oldham, Executive Vice President and Chief Financial Officer

 

35,654

(5)(6) 

*

Elizabeth K. Vonne, Executive Vice President and General Counsel

 

2,716

(5)(6) 

*

Eduardo Bernal Acebedo, Executive Vice President and Chief Operations Officer

19,735

(5)(6) 

*

John Donaghey, Executive Vice President and Global Head of Sales

13,029

(5)(6) 

*

Grant H. Beard, Chairman of the Board of Directors

 

60,157

(7)

*

Frederick A. Ball, Director

 

40,572

(7)

*

Anne T. DelSanto, Director

 

5,500

(7)

*

Tina M. Donikowski, Director

 

7,955

(7)

*

Ronald C. Foster, Director

36,850

(7)

*

Lanesha T. Minnix, Director

 

3,835

(7)

*

David W. Reed, Director

3,233

(7)

*

John A. Roush, Director

 

33,468

(7)

*

Brian M. Shirley, Director

 

2,468

(7)

*

All executive officers and directors, as a group (14 persons)

 

324,673

*

*

Less than 1% and unless otherwise noted, all shares are held either directly or indirectly by individuals possessing sole voting and investment power with respect to such shares.

(1)Information as to the amount and nature of beneficial ownership was obtained from the Schedule 13G/A filed with the SEC on January 22, 2024, by BlackRock, Inc. BlackRock, Inc. reports sole voting power over 5,925,633 shares and sole dispositive power over 5,986,069 shares. The address for BlackRock, Inc. is 50 Hudson Yards, New York, New York 10001. None of Blackrock, Inc.’s subsidiaries claim beneficial ownership of 5% or greater of the outstanding shares of the Company’s stock except for BlackRock Fund Advisors.

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(2)Information as to the amount and nature of beneficial ownership was obtained from the Schedule 13G/A filed with the SEC on February 13, 2024, by The Vanguard Group. The Vanguard Group reports shared voting power over 70,207 shares, sole dispositive power over 4,360,020 shares and shared dispositive power over 110,347 shares. The address for The Vanguard Group is 100 Vanguard Blvd., Malvern, Pennsylvania 19355.
(3)Information as to the amount and nature of beneficial ownership was obtained from the Schedule 13G/A filed with the SEC on February 9, 2024, by FMR LLC.  FMR LLC reports sole voting power over 4,145,196 shares and sole dispositive power over 4,146,831 shares. The address for FMR LLC is 245 Summer Street, Boston, MA 02210. None of FMR LLC’s subsidiaries claim beneficial ownership of 5% or greater of the outstanding shares of the Company’s stock except for Fidelity Management & Research Company LLC.
(4)Information as to the amount and nature of the beneficial ownership was obtained from the Schedule 13G/A filed with the SEC on February 14, 2024, by Ameriprise Financial, Inc. and Columbia Management Investment Advisers, LLC. Ameriprise Financial, Inc. reports shared voting power over 2,346,247 shares and shared dispositive power over 2,492,027 shares. Columbia Management Investment Advisers, LLC reports shared voting power over 2,343,914 shares and shared dispositive power over 2,370,640 shares. The address for Ameriprise Financial, Inc. is 145 Ameriprise Financial Center, Minneapolis, MN 55474. The address for Columbia Management Investment Advisers, LLC is 290 Congress Street, Boston, MA 02210. Ameriprise Financial, Inc. is the parent holding company of Columbia Management Investment Advisers, LLC, an investment adviser, and may be deemed to beneficially own the shares reported herein by Columbia Management Investment Advisers, LLC. Each of Ameriprise Financial, Inc. and Columbia Management Investment Advisers, LLC disclaims beneficial ownership of the shares of the Company’s stock reported herein.
(5)Includes beneficial ownership of the following numbers of shares that may be acquired within 60 days of February 1, 2024, pursuant to stock options granted or assumed by Advanced Energy:

Stephen D. Kelley

 

7,436

Paul R. Oldham

    

12,084

Eduardo Bernal Acebedo

 

12,084

Elizabeth K. Vonne

 

John Donaghey

6,507

(6)Includes beneficial ownership of the following numbers of shares that will be acquired within 60 days of February 1, 2024, pursuant to stock awards (also called “restricted stock units”) granted or assumed by Advanced Energy:

Stephen D. Kelley

 

27,155

Paul R. Oldham

    

7,549

Eduardo Bernal Acebedo

 

5,164

Elizabeth K. Vonne

 

1,752

John Donaghey

3,129

(7)The shares reported in the table do not include awards that will be granted to each non-employee director if such person is reelected to the Board of Directors at the 2024 Annual Meeting.

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Executive Compensation

Compensation Discussion and Analysis

This Compensation Discussion and Analysis describes our overall executive compensation philosophy and objectives for our named executive officers.

Our named executive officers for 2023 were the following five individuals:

Name

Position

Stephen Kelley

President and Chief Executive Officer

Paul Oldham

Executive Vice President and Chief Financial Officer

Eduardo Bernal Acebedo

Executive Vice President and Chief Operations Officer

Elizabeth Vonne

Executive Vice President, General Counsel & Corporate Secretary

John Donaghey

Executive Vice President, Global Sales

Our Compensation Committee reinforced our philosophy of “pay for performance culture” by making the majority of our named executive officers’ 2023 pay contingent on the achievement of financial and stock price performance through our 2023 Short-Term Incentive Plan (referred to as the “2023 STI Plan”) and our 2023 Long-Term Incentive Plan (referred to as the “2023 LTI Plan”), which we discuss in more detail below. In 2023, 89% of our Chief Executive Officer’s target compensation and, on average, 78% of our other named executive officers’ target compensation was performance based. For the purposes of these calculations, performance-based compensation includes the 2023 STI Plan at target and the 2023 LTI Plan grant date fair value of annual equity grants.

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Executive Summary and Overview of 2023 Compensation

Our Company’s long-term success depends on our ability to fulfill the expectations of our customers in a competitive environment and deliver value to stockholders. To achieve these goals, it is critical that we can attract, motivate, and retain highly talented individuals at all levels of the organization who are committed to the Company’s values and objectives.

Pay Principles

The Company strives to provide compensation to its executive officers that is:

linked to stockholder value creation,
reflective of the overall performance of the Company, and
considerate of the competitive market levels of compensation needed to recruit, retain and motivate top executive talent, while remaining consistent with the other objectives.

Fiscal Year 2023 Business Performance

In 2023, we delivered solid revenue and non-GAAP earnings per share in a challenging market environment. Although our semiconductor revenue decreased by about 20% due to the semiconductor market downcycle, we outperformed most of our sub-system peers. Aggregate revenue in our non-semiconductor markets was flat, with record revenues in the industrial and medical, and growth in telecom and networking markets offsetting headwinds in the data center computing market. As a result, our 2023 revenue of $1.66 billion declined roughly 10% from 2022, a significant improvement in our performance compared to previous semiconductor downturns.

During the year, we saw an improvement in material costs, and we took advantage of lower factory loading to accelerate our plan to optimize our manufacturing footprint and improve efficiency. In 2023, we completed the closure of three factories as part of our multiyear plan to consolidate our manufacturing into large factories to drive efficiencies and scalability. Overall, 2023 earnings and non-GAAP earnings were $3.46 and $4.88 per share, respectively.  Cash flow from continuing operations in 2023 was a record $213 million. During 2023, we achieved a record stock price level and for the five years ending on December 31, 2023, our stock has outperformed the Nasdaq composite, Dow Jones U.S. Electrical Components and Equipment, and S&P 1000 indices.

In 2023, we launched 20 new platform products across the Company, including several groundbreaking platforms. In the semiconductor market, we launched eVerestTM and eVosTM for plasma etch and deposition applications, and in the industrial and medical space, we launched NeoPower, our new flagship configurable power platform with industry-leading power density. We are working closely with our customers to adapt and customize our platform products to meet the specific requirements of high-value applications. We achieved a Company record number of design wins in 2023.

Although we experienced a challenging demand environment in 2023,
we achieved record cash flow from operating activities as we managed our
working capital and core spending levels.

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Highlights of our consolidated fiscal year 2021, 2022, and 2023 financial performance and key business metrics are provided below. All amounts are in millions, except for earnings per share.

Graphic

Graphic

Graphic

Graphic

* Indicates financial performance metric in the 2023 Short-Term Incentive Plan

Note: A reconciliation of the non-GAAP measures above is provided in Appendix A to this proxy statement.

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Compensation Philosophy and Objectives

The Company’s executive compensation program is based on the same objectives that guide the Company in establishing all of its compensation programs:

   Compensation should reflect the level of job responsibility as well as Company and individual performance. As employees progress to higher levels in the organization, an increasing proportion of their pay is linked to Company performance because those employees are more able to affect the Company’s results.

   Compensation should reflect the value of the job in the marketplace. To attract and retain a highly skilled work force, we must remain competitive with the pay of other premier employers with whom we compete for talent.

Pay for
Performance Philosophy

Graphic

Compensation should promote both near-term and long-term focus required for the Company’s success by aligning executive officers’ interests with those of stockholders.
Compensation should reflect the level of job responsibility as well as Company and individual performance. As employees progress to higher levels in the organization, an increasing proportion of their pay is linked to Company performance because those employees are more able to affect the Company’s results.
Compensation should reflect the value of the job in the marketplace. To attract and retain a highly skilled work force, we must remain competitive with the pay of other premier employers with whom we compete for talent.

Overview of Executive Compensation Program

The Compensation Committee

The Compensation Committee is responsible for establishing, implementing, and monitoring adherence with the Company’s compensation philosophy. Accordingly, the Compensation Committee strives to develop and maintain competitive, progressive programs that reward executives for continuous improvement in key financial metrics that drive Company performance and stockholder value. The Compensation Committee also recognizes the need for compensation programs to attract, retain, and motivate high caliber employees, foster teamwork, and maximize the long-term success of Advanced Energy by appropriately rewarding our executives for their achievements. The Compensation Committee evaluates risk and rewards associated with the Company’s overall compensation philosophy and structure.

The Compensation Committee has the authority to engage independent advisors to assist it in making determinations with respect to the compensation of our executives and other employees. For the 2023 fiscal year, the Compensation Committee engaged Compensia, Inc. to conduct a competitive review of executive compensation and advise the Compensation Committee on other compensation related matters. Compensia has not provided any other services to the Company or the Compensation Committee and has not received compensation other than with respect to the services provided to the Compensation Committee. In connection with its engagement of Compensia, the Compensation Committee (a) evaluated Compensia’s independence from management including the independence of the individual representatives of Compensia who served as the Compensation Committee’s consultants, and (b) determined that Compensia is free of conflicts of interest and independent based on the Nasdaq Stock Market’s independence factors.

Role of Executive Officers in Compensation Decisions

The Compensation Committee meets with the Company’s Chief Executive Officer and other senior executives to obtain recommendations with respect to the Company’s compensation programs and practices for executives and other employees. The Compensation Committee takes management’s recommendations into consideration, but is not bound by management’s recommendations with respect to executive compensation. Compensation for the Chief Executive Officer is recommended by the Compensation Committee to the Board for its review and ratification. While management attends certain meetings of the Compensation Committee,

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the Compensation Committee also holds executive sessions not attended by any members of management or by non-independent directors.

Use of Market Data for Comparison Against Peer Companies

One factor that the Compensation Committee considers when making compensation decisions is the compensation paid to executives of a peer group of companies. The Compensation Committee also considers other factors discussed below under the heading “Components of Executive Compensation.”

Our compensation peer group consists of publicly traded companies of roughly similar size to Advanced Energy, all of which are from related industries, including the semiconductor and electronic equipment industries, and may compete with Advanced Energy for executive talent. Our criteria for selecting our peer group companies includes companies with revenue between 50% and 200% and market capitalization between 33% and 300% of Advanced Energy.

The Compensation Committee reviews our peer companies annually to take into account the volatility and breadth of the industries in which Advanced Energy participates. While the Compensation Committee attempts to maintain consistency year to year, adjustments are made as needed. In consultation with Compensia, the Compensation Committee reviewed its list of peer companies in July 2022, to be used for a comparative review for 2023 compensation. As a result of this review, the Compensation Committee removed Azenta, Inc. (formerly Brooks Automation, Inc.), Curtiss-Wright Corp., MACOM Technology Solutions Holdings, Inc., Moog, Inc., Novanta, Inc., Rogers Corporation, Semtech Corp., SPX Technologies, and Wolfspeed Inc. due to revenues outside the selection criteria, acquisition activity, and less relevant business fits. To replace these companies and better align with the semiconductor industry, the Compensation Committee added Cirrus Logic, Inc., MaxLinear, Inc., Silicon Laboratories Inc., Synaptics Incorporated, and Ultra Clean Holdings, Inc.

For 2023, the list of peer companies consists of the following 15 publicly traded companies.

Peer Companies

Coherent Corp. (formerly II-IV)

    

Littelfuse Inc.

   

Power Integrations, Inc.

Cirrus Logic, Inc.

MaxLinear, Inc.

Silicon Laboratories Inc.

Entegris, Inc.

MKS Instruments, Inc.

Smart Global Holdings Inc.

FormFactor, Inc.

Monolithic Power Systems, Inc.

Synaptics Incorporated

Kulicke & Soffa Industries, Inc.

OSI Systems, Inc.

Ultra Clean Holdings, Inc.

Components of Executive Compensation

For 2023, the principal components of compensation for named executive officers were: (1) base salary, (2) annual performance-based cash compensation under the 2023 STI Plan, (3) long-term performance-based equity incentive compensation under the 2023 LTI Plan, and (4) other benefits, each of which is described in more detail below. As we mentioned above, a majority of our named executive officers’ target compensation in 2023 was performance-based compensation under our 2023 STI Plan and 2023 LTI Plan, consistent with our “pay for performance culture.”

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PRINCIPAL COMPENSATION COMPONENTS
FOR NAMED EXECUTIVE OFFICERS:

Base Salary

Short-Term
Incentive Plan

Long-Term
Incentive Plan

Other Benefits

The amount and relative allocation of each of the above components at target
depends on the following factors:

Historical rates of executive compensation

Data obtained from management’s recruitment activities

Comparative review and analysis provided by Compensia, our independent compensation consultant

Alignment with the Company’s overall compensation philosophy, the executives’ responsibilities, and their performance

Base Salary

Base salaries are set at levels that the Compensation Committee deems to be sufficient to attract and retain highly talented executive officers capable of fulfilling the Company’s key objectives. Base salaries of our named executive officers are also set with the goal of rewarding executive officers on a day-to-day basis for their time and services and based on their job responsibilities. For 2023, the Compensation Committee decided to increase each of the named executive officers’ base salary based on a combination of merit increases and updates to ensure continued alignment with peer company compensation and general market trends.

The base salaries of each of our named executive officers in 2023 were as follows:

Base Salary

% Increase

Name

    

Position

    

(per annum)

    

from 2022

Stephen Kelley

 

President and Chief Executive Officer

$

950,000

5.6

%

Paul Oldham

 

Executive Vice President and Chief Financial Officer

$

535,500

5.0

%

Eduardo Bernal Acebedo (1)

Executive Vice President and Chief Operations Officer

$

491,468

6.5

%

Elizabeth Vonne

 

Executive Vice President, General Counsel and Corporate Secretary

$

410,000

7.9

%

John Donaghey

 

Executive Vice President, Global Sales

$

460,000

5.7

%

(1)Mr. Bernal Acebedo is paid in Singapore Dollars (“SGD”) and his salary was converted to USD using an exchange rate of 0.76 as of December 31, 2023.

Short-Term Incentive Plan Compensation

2023 Short-Term Incentive Plan Metrics

The 2023 STI Plan provides the Company’s named executive officers with an opportunity to earn an annual cash bonus based on the Company’s achievement of certain financial performance goals. We intended for the 2023 STI Plan to motivate our executive officers to achieve these financial performance goals and reward them for accomplishing these goals. For 2023, the Compensation Committee selected the following financial

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measures: revenue, weighted at 40%, non-GAAP operating income from continuing operations weighted at 40%, and adjusted cash flow, weighted at 20%. The Compensation Committee believes that these metrics help to drive balanced performance across the business and that non-GAAP metrics are better indicators of the operating performance of the Company. For further discussion and a reconciliation of these non-GAAP measures, see Appendix A to this proxy statement.

To address ongoing volatility in the markets the Company serves, the 2023 STI Plan provided two six-month performance periods (January 1 - June 30 and July 1 - December 31) for each of the financial measures. Any bonus earned during either six-month performance period is not paid until after the end of the fiscal year.

The Compensation Committee set each of our named executive officers’ annual full-year target bonus opportunity as a percentage of his or her base salary. Actual bonuses awarded to each of our named executive officers may range from 0% to 200% of target depending on actual company performance over the performance periods, as described below. For 2023 these annual full-year bonus targets were as follows:

Name

Target as a % of Base Salary

Target

Stephen Kelley

 

125

%

$ 1,187,500

Paul Oldham

 

85

%

$ 455,175

Eduardo Bernal Acebedo (1)

 

85

%

$ 417,748

Elizabeth Vonne

 

75

%

$ 307,500

John Donaghey

85

%

$ 391,000

(1) Mr. Bernal Acebedo is paid in Singapore Dollars (“SGD”) and his annual target was converted to USD using an exchange rate of 0.76 as of December 31, 2023.

Our named executive officers’ bonuses are paid out of a bonus pool, the size of which is determined based upon the achievement of established financial performance goals during the relevant six-month performance period. The Compensation Committee established the performance goals for each metric in alignment with the Company’s annual operating plan, which contemplated the Company’s business objectives and anticipated market conditions.

Values in $M, except as noted

Performance Goals

Actual Performance

Threshold

Target

Stretch

%

2023 STI Plan

(50%

(100%

(200%

Dollar

Incentive

Financial Performance Metric

Weight

Payout)

    

Payout)

    

Payout)

    

Value

    

Earned

1H 2023

Revenue*

 

40%

$

710

$

835

$

960

$

841

104.0%

Non-GAAP Operating Income from Continuing Operations**

 

40%

$

44

$

102

$

156

$

106

108.0%

Adjusted Cash Flow***

 

20%

$

78

$

116

$

160

$

110

92.0%

 

 

1H Achievement

51.6%

2H 2023

Revenue*

 

40%

$

716

$

842

$

968

$

815

89.4%

Non-GAAP Operating Income from Continuing Operations**

 

40%

$

48

$

107

$

157

$

101

94.4%

Adjusted Cash Flow***

 

20%

$

56

$

117

$

162

$

126

119.0%

 

 

2H Achievement

48.7%

 

 

Overall Achievement

100.3%

*

Revenue targets based on total company operations for the first and second halves of 2023, as applicable.

**

Non-GAAP Operating Income from Continuing Operations must be met at threshold to trigger pool funding for the Revenue and Non-GAAP Operating Income components. Under the 2023 STI Plan, Non-GAAP Operating Income from Continuing Operations excludes non- cash related charges and non-recurring items.

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***

Adjusted Cash Flow is measured as Non-GAAP Operating Income from Continuing Operations plus or minus the change in working capital, as defined as Accounts Receivable, Inventory, and Accounts Payable.  

Note:  Achievement percentages between the threshold and target and between the target and stretch levels are linearly interpolated for each of the first and second half year results, and then those results are averaged together for the full-year payout levels. A reconciliation of the non-GAAP measures above is provided in Appendix A to this proxy statement.

Results of the 2023 Short-Term Incentive Plan

Based on the performance over both halves of the incentive period, our overall corporate achievement was 100.3% for 2023. As a result, the Company’s payouts under the 2023 Short-Term Incentive Plan were as follows:

    

Financial

(Actual at 100.3 % of Target)

Name

Target

Actual

Stephen Kelley

$ 1,187,500

$ 1,191,063

Paul Oldham

 

$ 455,175

 

$ 456,541

Eduardo Bernal Acebedo

 

$ 417,748

 

$ 419,001

Elizabeth Vonne

 

$ 307,500

 

$ 308,423

John Donaghey

$ 391,000

$ 392,173

The 2023 STI Plan included a discretionary individual performance-based modifier ranging from 0% to 150% of the amounts otherwise earned based on corporate performance by the named executive officers. The modifier had a cap in which no executive could achieve greater than 200% of the target incentive. For fiscal year 2023, the Compensation Committee chose not to modify the 2023 bonus of any executive officer based on individual performance.

2024 Short-Term Incentive Plan

The Compensation Committee, in consultation with Compensia, maintained the 2024 Short-Term Incentive Plan largely as designed in 2023, including the right to use a discretionary individual performance-based modifier ranging from 0% to 150% for the named executive officers, and continuation of the cap in which no executive can achieve greater than 200% of the target incentive. The Compensation Committee also approved weighting the potential 2024 STI earned over the two six-month performance periods proportional to the 2024 annual operating plan where 40% of the incentive potential is calculated in the first half and 60% of the incentive potential is calculated in the second half, consistent with the timing of projected earnings.  Each half will be a stand-alone performance period.  

Long-Term Incentive Plan Compensation

We use stock awards to motivate and reward our executive officers, including our named executive officers, for long-term corporate performance and to align their interests with those of our stockholders.

Consistent with market practice in companies of our size and in our industry, our long-term incentive program is comprised primarily of full-value equity vehicles, namely time-based and performance-based restricted stock units (“RSUs”). We award RSUs to provide a long-term, retentive element to the executive pay package. We also use performance-based RSUs (“performance stock units”) in the program to further enhance the alignment between pay and the long-term performance of our Company.

2023 Long-Term Incentive Plan

In fiscal year 2023, we granted our executives, including our named executive officers, a mix of performance-based and time-based RSU awards, on an equally weighted basis, under the 2023 LTI Plan.  The annual equity awards granted to our named executive officers under the 2023 LTI Plan were determined by our Compensation Committee after reviewing data from a competitive market analysis prepared by Compensia. In addition, our

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Compensation Committee considered the input of our CEO regarding the criticality of, individual performance of, and pay levels for his direct reports. 

During 2023 each of our named executive officers participated in the 2023 LTI Plan, pursuant to which we granted equity awards under the Company’s 2017 Omnibus Incentive Plan, as amended. For 2023, the Compensation Committee determined the following 2023 target dollar value for equity awards granted to each of our named executive officers:

2023 LTI Plan Target 

Name

Grant Date Fair Value

Stephen Kelley

$

6,250,000

Paul Oldham

$

1,800,000

Eduardo Bernal Acebedo

$

1,600,000

Elizabeth Vonne

$

1,000,000

John Donaghey

$

1,000,000

2023 LTI Plan targets are set at levels that the Compensation Committee deems to be sufficient to attract and retain highly talented executive officers capable of fulfilling the Company’s key objectives. In consultation with Compensia, the Compensation Committee reviewed the LTI Plan targets of the Company’s executive officers compared to the peer group and general market data, as well as named executive officer performance and execution, to determine a 2023 LTI Plan target award value. The Compensation Committee determined that each of the named executive officers listed above would receive (a) 50% of the 2023 LTI Plan award value in the form of time-based restricted stock units and (b) 50% of the LTI Plan award value in the form of performance stock units. We determined the number of time-based restricted stock units and performance stock units to be granted to each named executive officer by dividing each named executive officer’s target grant date value indicated above by the 30-day trailing average of the closing price of the Company’s common stock leading up to the grant date, which was March 1, 2023 for the named executive officers.  Accordingly, these values differ from the grant date fair value amounts reported in the “Summary Compensation Table for 2023” below, which are reported in accordance with both SEC and accounting rules. Further details regarding the number of time-based restricted stock units and performance stock units that we granted to each of the named executive officers under the 2023 LTI Plan can be found in the “2023 Grants of Plan-Based Awards” table below.

The grants of time-based restricted stock units in 2023 vest ratably over a three-year period with 1/3 vesting on each anniversary of the grant date.

The Compensation Committee, in consultation with Compensia, kept the metrics for the achievement of the performance stock units granted as part of the 2023 LTI Plan largely unchanged from 2022. In 2023, the performance stock units were again based 70% on our relative total shareholder return (“rTSR”) performance compared to a benchmark performance of the S&P 1000, and 30% based on achievement of strategic goals. For 2023, the strategic goal relates to achievement of established levels of non-GAAP gross margin percentage measured over any four consecutive quarters in the three-year performance period. Amounts may be earned as performance occurs, but do not vest and are not issued until the end of the performance period. The Compensation Committee believes that these metrics again closely align management’s interests with stockholders and maintains a focus on achieving strategic objectives.

With respect to the rTSR component, eligible participants have the opportunity to earn up to one-third of the performance stock units during each of the 12-month, 24-month, and 36-month measurement periods, respectively, based on our rTSR performance compared to the S&P 1000. Eligible participants also have the ability to earn any additional performance stock units not earned in the first two measurement periods based on financial performance of our rTSR ranking relative to the S&P 1000 during the 36-month performance period. As noted above, any earned performance stock units are not eligible to vest or be issued until the end of the 36-month performance period. The multi-year structure reflects the cyclical nature of the markets that the Company operates in and encourages performance each year, while the 36-month performance period reflects the long- term incentive structure of the plan. As of December 31, 2023, participants have banked and earned

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