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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 at Advanced Energy’s 2023 Annual Meeting of Stockholders at 11 a.m., Mountain Daylight Time, on Thursday, April 27, 2023, at the Jacquard Hotel located at 222 Milwaukee Street, Denver, Colorado, 80206.

2022 was one of the best years in Advanced Energy’s history, highlighted by record financial performance and improvements across many areas of the company. Demand for Advanced Energy’s industry-leading power conversion and control solutions grew meaningfully from the previous year. While electronic component availability remained a significant challenge, our engineering, supply chain and operations teams executed extremely well to deliver strong revenue and earnings growth for the year. We believe we substantially outperformed our markets in 2022 by delivering record revenues in three of our four markets and increasing sales to each market by more than 20% year-over-year. As a result, 2022 revenue surpassed the 3-year financial target we set in December 2019 with a compound annual growth rate of greater than 30%.

We made significant progress across our strategic initiatives during the year. New product and technology development is foundational to our long-term success. Our investments and execution enabled us to double the number of new products launched in 2022, and we expect to further accelerate the number of product launches in 2023. Following the acquisition and rapid integration of SL Power, a leading supplier of medical and industrial power solutions, we created a dedicated medical product team to deliver our broad set of technologies to our customers and increased our share position in the medical power market. Lastly, we invested in operational improvement and capacity projects across our factory network, which directly contributed to our strong financial results.

Looking forward, we are very excited about the future of Advanced Energy. Despite a cyclical downturn for the semiconductor equipment industry in 2023, we believe our diversification and balanced market exposure will enable us to perform substantially better than in prior cycles. With our solid development pipeline, we will continue to introduce more innovative technologies and differentiated products to address our customers’ most challenging power conversion requirements. Our customer engagement continues to increase with our targeted strategies, and we believe we will continue to gain share across our markets for precision power applications. With a focus on long-term shareholder value creation, we believe we are positioned to emerge from this market cycle stronger and to continue to drive earnings growth over time.

On behalf of our employees and the 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 13, 2023

2023 ANNUAL

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PROXY STATEMENT

Notice of the Annual Meeting of Stockholders

To be held on April 27, 2023

To Our Stockholders:

You are cordially invited to attend the 2023 annual meeting of stockholders (the “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 Annual Meeting.

Logistics

 

Items of Business

 

Board Recommendation

 

Page

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When
Thursday, April 27, 2023, at 11:00 a.m. Mountain Daylight Time

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Where
Jacquard Hotel

222 Milwaukee Street

Denver, Colorado 80206

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Who Can Vote
All holders of our common stock at the close of business on March 8, 2023

1

Election of ten (10) directors;

“FOR”

4

2

Ratification of the appointment of Ernst & Young LLP as Advanced Energy’s independent registered public accounting firm for 2023;

“FOR”

25

3

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

“FOR”

27

4

Advisory vote on the frequency of future advisory votes on executive compensation;

“Every Year”

65

5

Approval of Advanced Energy’s 2023 Omnibus Incentive Plan;

“FOR”

67

6

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

82

Each of matters 1 through 5 is described in detail in the accompanying proxy statement, dated March 13, 2023.

Your vote is important. All stockholders are cordially invited to attend the Annual Meeting in person. If you do not plan to attend the Annual Meeting and vote your shares of common stock in person, please authorize a proxy to vote your shares in one of the following ways:

    

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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 postage-paid envelope provided

Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting to be Held on April 27, 2023

This notice for the Annual Meeting, the proxy statement, the proxy card, and the Company’s 2022 Annual Report including the Annual Report on Form 10-K are available online at: www.proxydocs.com/aeis.

Any proxy may be revoked at any time prior to its exercise at the Annual Meeting.

 

By Order of the Board of Directors,

 

 Denver, Colorado

Elizabeth K. Vonne

 March 13, 2023

Corporate Secretary

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2023 ANNUAL

PROXY STATEMENT

Proxy Summary

The Board of Directors of the Company requests your proxy in connection with the Annual Meeting. This proxy statement and the accompanying proxy card and materials are first being sent to stockholders of Advanced Energy Industries, Inc. or made available electronically on or about March 13, 2023.

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 4 

FOR
ALL NOMINEES

No Effect

Plurality of votes present (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 2023

Page 25

FOR

No Effect

Majority of votes cast at the Annual Meeting
(by proxy or in person)

3

Advisory approval on the compensation of our named executive officers

Page 27

FOR

No Effect

Majority of votes cast
at the Annual Meeting (by proxy or in person)

4

Advisory vote on the frequency of future advisory votes on executive compensation

Page 65

Every Year

No Effect

Plurality of votes present (by proxy or in person)

5

Approval of Advanced Energy’s 2023 Omnibus Incentive Plan

Page 67

FOR

No Effect

Majority of votes cast at the Annual Meeting (by proxy or in person)

We do not know of any other matters to be submitted to the stockholders at the Annual Meeting. If any other matters properly come before the 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 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.

PRECISION  |  POWER  |  PERFORMANCE

   1

2023 ANNUAL

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PROXY STATEMENT

Our Governance Best Practices

WHAT WE DO

WE DO NOT DO

   We specify in our Board Governance Guidelines that the Chairman of the Board and CEO positions 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.

x  There are no interlocking relationships among our directors.

x  There are no excise tax gross-up arrangements with any of our executive officers.

x  We do not guarantee incentive awards.

x  Our policies prohibit hedging or pledging of company stock.

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

x  We do not have a poison pill.

do

Advanced Energy’s Environmental, Social and Governance Initiatives

Advanced Energy designs and manufactures highly engineered power conversion, measurement and control solutions. Our long history of innovation and technology leadership, broad portfolio of proprietary products and technical talent across our global locations help solve our customers’ most challenging power delivery problems. Sustainability is key to our strategy in the products we make, the way we operate, and how we govern as a public company. We incorporate environmental, social, and governance (“ESG”) responsibility across our business with the same focus and dedication we approach all our initiatives.

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

In 2020, our Board officially added oversight of the Company’s sustainability program to the Nominating, Governance & Sustainability Committee (“NG&S”). As indicated in its charter, this committee is directed to review the Company’s progress towards achieving its sustainability goals as well as to review environmental, governance, and social trends that could impact the Company’s operations, performance, and reputation. We believe that our goals to increase the energy efficiency of many of our products, and to improve the efficiency of our operations, reflect our efforts to reduce the environmental impact and carbon emissions that may be linked to the industries we serve.

2   

PRECISION  |  POWER  |  PERFORMANCE

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2023 ANNUAL

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.

Recycling. Advanced Energy is committed to reducing waste through efficiency improvements and recycling. In addition, we are implementing a recycled packaging initiative for some products.

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 12,000 employees located across the globe. Each person’s background and unique skill set are fundamental to our success. In 2020, the Company launched the AE STEM Diversity Scholarship Program, aimed at developing emerging talent and promoting greater ethnic, racial and gender diversity in STEM fields. In 2022, the Company continued to accept applications from undergraduate and post-graduate students attending six leading institutions in the field of power technologies. The Corporate DE&I Steering Committee provides guidance and direction on DE&I while enabling local teams to develop specific, targeted initiatives as appropriate.

Volunteerism. We offer each employee eight hours of paid time off to volunteer with a self-selected 501(c)(3) organization.

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.

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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 its 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: https://www.advancedenergy.com/about-us/leadership-team/board-governance-guidelines/.

Human Rights. Respecting the human rights of our employees and all those involved in our business operations is a core principle for Advanced Energy. Our Code of Conduct, which also applies to our suppliers, specifically prohibits activities involving slave or forced labor, human trafficking, and child labor.

Supply Chain. We are committed to sustainable and 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.

PRECISION  |  POWER  |  PERFORMANCE

   3

2023 ANNUAL

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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 Annual Meeting. Each of the directors elected at the Annual Meeting will commence their term at the end of the Annual Meeting until the next annual meeting of the Company’s stockholders, or 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.

We routinely evaluate the composition of the Board to ensure we have a balanced mix of expertise. Accordingly, this year brought a new addition and a departure to our Board.

Brian M. Shirley, the former Senior Vice President DRAM and Emerging Memory Engineering at Micron Technology, Inc. joined the Board of Directors in June 2022. Mr. Shirley is the fifth independent director to join our Board of Directors since 2018 and brings more than 30 years of executive management and operations experience in semiconductor product technologies and advancing innovation and growth. Edward Grady is not a nominee for reelection at the Annual Meeting and will be departing as a Board member. The Board thanks Mr. Grady for his many years of dedicated and committed service since 2008 to the Board of Directors and to the stockholders of the Company.

A board of ten (10) directors is to be elected at the Annual Meeting. The Board of Directors has nominated for reelection the persons listed in the Overview of Board Nominees on the following page. Each nominee was recommended for reelection by our Nominating, Governance & Sustainability Committee. Each of the nominees is currently a director of Advanced Energy. In the event that any nominee is unable to or declines to serve as a director at the time of the 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 Annual Meeting will continue from the end of the Annual Meeting until the next annual meeting of the Company’s stockholders, or until a successor has been elected and qualified or until such director’s earlier resignation or removal.

4   

PRECISION  |  POWER  |  PERFORMANCE

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2023 ANNUAL

PROXY STATEMENT

Overview of Board Nominees

The nominees presented below represent a broad group of experienced business leaders. The table provides a summary of our nominees’ background and responsibilities as of February 1, 2023.

Committee Memberships

Name and Principal Occupation

Age

Director
Since

   

Audit &
Finance

Nominating,
Governance & Sustainability

Compensation

Pricing

GRANT H. BEARD (Chairman)

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

62

2014

C

FREDERICK A. BALL

Former EVP & Chief Administrative Officer of Marketo Inc.

60

2008

C

M

ANNE T. DELSANTO

Currently serves as a limited partner at Operator Collective and Stage 2 Capital

59

2020

M

M

TINA M. DONIKOWSKI

Former Vice President, Global Locomotive Business at General Electric Company

63

2018

M

C

RONALD C. FOSTER

Former Chief Financial Officer of Micron Technology, Inc.

72

2014

C

M

STEPHEN D. KELLEY

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

60

2021

LANESHA T. MINNIX

Currently serves as Executive Vice President & General Counsel of Ecolab

47

2020

M

M

DAVID W. REED

Currently serves as CEO of Vendanta Resources Ltd.’s Semiconductor Group

64

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.

53

2022

M

Board Nominee Highlights

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PRECISION  |  POWER  |  PERFORMANCE

   5

2023 ANNUAL

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PROXY STATEMENT

Nominees

Grant H. Beard (Chairman)

Director Since: 2014

Committees: Pricing

Age: 62

Independent Director

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. 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

Frederick A. Ball

Director Since: 2008

Committees: Compensation, Pricing

Age: 60

Independent Director

Business Experience:

Frederick A. Ball previously served as Executive Vice President and Chief Administrative Officer of Marketo Inc., 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 a number of private and public technology companies including Webroot Software, BigBand Networks, Inc., and Borland Software Corporation. Mr. Ball also served as Vice President, Mergers and Acquisitions for KLA-Tencor Corporation, 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. (ESIO), Sendgrid, Inc. (SEND), and FirstMark Horizon Acquisition Corporation (FMAC). Mr. Ball has served, and currently serves on other private company boards, including Intercom and Contentful.

Key Skills and Qualifications:

   Senior Leadership Experience

   Financial Expertise

   Global Expertise

   Public Board Experience

   Industry Experience

6   

PRECISION  |  POWER  |  PERFORMANCE

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2023 ANNUAL

PROXY STATEMENT

Anne T. DelSanto

Director Since: 2020

Committees: Compensation, Nominating, Governance & Sustainability

Age: 59

Independent Director

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.com (“Salesforce”), 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. She began her career as an account systems engineer with IBM, where she spent several years building solutions for the health care market. Ms. DelSanto serves on the board of Juniper Networks, Inc. (JNPR), and New Relic, Inc. (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

Tina M. Donikowski

Director Since: 2018

Committees: Audit and Finance, Nominating, Governance & Sustainability

Age: 63

Independent Director

Business Experience:

Tina M. Donikowski retired from General Electric Company, 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 CIRCO International (NYSE: CIR), a leading provider of flow control solutions and other highly engineered products and subsystems used in energy, aerospace and industrial markets based in Burlington, Massachusetts, TopBuild (NYSE: BLD) a leading installer and distributor of insulation and building material products to the U.S. construction industry based in Daytona Beach, Florida, and Eriez Magnetics, a privately held manufacturer and designer of magnetic, vibratory, and metal detection applications based in Erie, Pennsylvania. Ms. Donikowski also serves as a member of the Board of Trustees, Gannon University, and the Board of Trustees, Boys & Girls Club of Erie, Pennsylvania. 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

PRECISION  |  POWER  |  PERFORMANCE

   7

2023 ANNUAL

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PROXY STATEMENT

Ronald C. Foster

Director Since: 2014

Committees: Audit and Finance, Pricing

Age: 72

Independent Director

Business Experience:

Ronald C. Foster previously served as Chief Financial Officer and Vice President of Finance of Micron Technology, Inc. (“Micron”), 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., a semiconductor wafer test equipment company. Prior to joining FormFactor, Inc., 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., and Hewlett Packard Company. He previously served as a board member of Everspin Technologies, Inc. (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

Stephen D. Kelley

Director Since: 2021

Age: 60

Business Experience:

Stephen D. Kelley currently serves as President & Chief Executive Officer of Advanced Energy Industries, Inc., 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. (AMKR), a publicly traded 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 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. Mr. Kelley currently serves on the board of directors of Onto Innovations Inc. (NYSE: ONTO), a leader in the process control for the semiconductor and related industries, since January 2023. 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

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2023 ANNUAL

PROXY STATEMENT

Lanesha T. Minnix

Director Since: 2020

Committees: Nominating, Governance & Sustainability, Audit and Finance

Age: 47

Independent Director

Business Experience:

Lanesha T. Minnix is executive vice president, general counsel and corporate secretary for Ecolab Inc. (ECL), a global leader in water, hygiene and infection prevention solutions that protect people, planet and business health. Prior to joining Ecolab in June 2022, Ms. Minnix served as senior vice president, chief legal officer and corporate secretary of Flowserve Corporation (FLS), a publicly traded 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. 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 Expertise

David W. Reed

Director Since: 2022

Committees: Compensation

Age: 64

Independent Director

Business Experience:

David W. Reed is the CEO 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. (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 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 his 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

PRECISION  |  POWER  |  PERFORMANCE

   9

2023 ANNUAL

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PROXY STATEMENT

John A. Roush

Director Since: 2016

Committees: Nominating, Governance & Sustainability, Compensation

Age: 58

Independent Director

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: (1) Pine Environmental LLC, a provider of test equipment and services for environmental consultants; and (2) Novipax LLC, a producer of absorbent pads for the poultry industry. Mr. Roush also serves as a director of Lemaitre Vascular, Inc. (LMAT), a publicly traded global provider of medical devices and implants for the treatment of peripheral vascular disease, and he is a member of its Audit and Compensation Committees. Mr. Roush also serves 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 executive officer and a director of Novanta Inc., (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.

Key Skills and Qualifications:

   Senior Leadership Experience

   Public Board Experience

   Technical Expertise

   Global Expertise

   Financial Expertise

Brian M. Shirley

Director Since: 2022

Committees: Audit and Finance

Age: 53

Independent Director

Business Experience:

Mr. Shirley retired from Micron Technology, Inc., 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 consulted 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

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2023 ANNUAL

PROXY STATEMENT

Summary of Director Nominee Qualifications and Attributes

This table provides a summary view of the qualifications and attributes of each director nominee.

GRANT H. BEARD

FREDERICK A. BALL

ANNE T. DELSANTO

TINA M. DONIKOWSKI

RONALD C. FOSTER

STEPHEN D. KELLEY

LANESHA T. MINNIX

DAVID W. REED

JOHN A. ROUSH

BRIAN M. SHIRLEY

Qualifications and Experience

Finance

Finance/Accounting

·

·

·

·

·

·

·

External Reporting

·

·

·

·

·

·

·

Capital Markets & Capital Allocation

·

·

·

·

·

·

·

·

Markets

Semiconductor

·

·

·

·

·

·

Industrial

·

·

·

·

·

·

Medical

·

·

·

Asia

·

·

·

·

·

·

·

Functional Expertise

Sales/Channel/Marketing

·

·

·

·

·

·

R&D/Product Development

·

·

·

·

·

·

·

HR – Talent Management

·

·

·

·

·

·

·

Tech – IT/Cyber/Digitization

·

·

·

·

·

Procurement & Supply Chain

·

·

·

·

·

·

·

M&A Transactions and Integrations

·

·

·

·

·

·

·

·

·

·

Software & Controls

·

·

·

·

Leadership

CEO – Public Company

·

·

·

CEO – Private/Division President

·

·

·

·

·

·

·

Strategy

·

·

·

·

·

·

·

·

·

·

Demographic Background

Tenure (Years)

8

13

2

4

8

2

2

1

6

0

Age (Years)

62

60

59

63

72

60

47

64

58

53

PRECISION  |  POWER  |  PERFORMANCE

   11

2023 ANNUAL

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PROXY STATEMENT

The table below provides certain highlights of the composition of our Board members as of February 1, 2023. Each of the categories listed in the table below has the meaning as it is used in Nasdaq Rule 5605(f). Following the 2023 Annual Meeting the below responses will change when Edward Grady no longer serves an Advanced Energy Industries director.

Board Diversity Matrix (as of February 1, 2023)

Total Number of Directors

11

Female

Male

Non-Binary

Did Not Disclose Gender

Part I: Gender Identity

Directors

3

8

0

0

Part II: Demographic Background

African American or Black

1

0

0

0

White

2

8

0

0

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2023 ANNUAL

PROXY STATEMENT

Nominees

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 semiconductor capital equipment, industrial and medical, data center, and telecom markets. It is equally important that, collectively, the directors have successful 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 which are important to the Company’s business and its future:

Graphic

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

Graphic

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 Company Board Experience

Graphic

Because the Company is a global leader in innovative power solutions for 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

Graphic

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

Graphic

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

PRECISION  |  POWER  |  PERFORMANCE

   13

2023 ANNUAL

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PROXY STATEMENT

Grant H. Beard brings to the Board significant senior management and public company 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 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.

Anne T. 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 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.

Ronald C. 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 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.

Lanesha T. Minnix brings to the Board leadership and public company experience and has had 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 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.

John A. 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 company board experience and experience in private equity.

Brian M. 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.

The Board believes that the qualities and skills listed above for each of the nominees, qualifies each such nominee for service as a director of Advanced Energy.

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. Furthermore, Edward C. Grady was “independent” during the time he served on the Board of Directors. 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

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2023 ANNUAL

PROXY STATEMENT

all of them are elected at the 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 common 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.

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 http://www.advancedenergy.com 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 receiving the recommendation. 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 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 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.

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2023 ANNUAL

Graphic

PROXY STATEMENT

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.

Director Compensation

The compensation policy for non-employee directors for the fiscal year ended December 31, 2022, was as follows:

Compensation Elements for Non-Employee Directors

Compensation Element

    

2022 Compensation Program

Annual Board Cash Retainer

$60,000 annual cash retainer paid in equal quarterly installments to each Board member. 1

$65,000 additional annual cash retainer for the Chairman of the Board, paid in equal quarterly installments. ¹

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 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 Annual Meeting; each annual grant will vest one year from the date of grant. 2
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 Chair. 3
$25,000 annual cash retainer fee for Compensation Chair. 4
$15,000 annual cash retainer fee for Nominating, Governance & Sustainability Chair. 5

Annual Committee Member Retainer

$13,000 annual cash retainer fee for Audit and Finance.
$10,000 annual cash retainer fee for Compensation. 6
$5,000 annual cash retainer fee for Nominating, Governance & Sustainability.

¹The Board approved an increase of $15,000 in April 2022 for the annual cash retainer for all non-employee directors.

²The Board approved an increase of $50,000 in April 2022 for the Chairman of the Board annual equity retainer.

³The Board approved an increase of $4,000 in April 2022 for the Audit and Finance Committee Chair cash retainer.

4The Board approved an increase of $7,000 in April 2022 for the Compensation Committee Chair cash retainer.

5The Board approved an increase of $2,000 in April 2022 for the Nominating, Governance and Sustainability Committee Chair cash retainer.

6The Board approved an increase of $2,500 in April 2022 for the members of the Compensation Committee cash retainer.

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2023 ANNUAL

PROXY STATEMENT

At this time, directors are not separately compensated for their service on the Pricing Committee.

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.

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 2022.

2022 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

$

117,500

$

249,954

$

367,454

Frederick A. Ball

$

74,000

$

199,948

$

273,948

Anne T. DelSanto

$

66,250

$

199,948

$

266,198

Tina M. Donikowski

$

79,500

$

199,948

$

279,448

Ronald C. Foster

$

80,500

$

199,948

$

280,448

Edward C. Grady

$

65,500

$

199,948

$

265,448

Lanesha T. Minnix

$

70,500

$

199,948

$

270,448

David W. Reed

$

61,250

$

249,887

$

311,137

Thomas M. Rohrs*

$

28,750

$

$

28,750

John A. Roush

$

66,250

$

199,948

$

266,198

Brian M. Shirley

$

33,250

$

183,298

$

216,548

Stephen D. Kelley

$

$

 

$

(1)On February 1, 2022, Mr. Reed was granted 578 restricted stock units (RSUs) for his service on the Board, which fully vested on April 28, 2022, and the Company’s closing stock price on February 1, 2022, was $86.40. On May 9, 2022, Messrs. Beard, Ball, Foster, Grady, Reed and Roush and Mses. Donikowski, DelSanto and Minnix were each granted 2,655 restricted stock units (RSUs) for their service on the Board. On May 9, 2022, Mr. Beard was granted an additional 664 restricted stock units (RSUs) for his service as Chairman of the Board. All RSUs granted on May 9, 2022, vest on May 9, 2023, and were the only outstanding unvested equity awards held by these directors as of December 31, 2022. The Company’s closing stock price on May 9, 2022, was $75.31. Separately, on June 15, 2022, Mr. Shirley was granted 2,468 RSUs for his service on the Board, which will vest on May 9, 2023, and the Company’s closing stock price on June 15, 2022, was $74.27.

*Mr. Rohrs did not stand for reelection at the 2022 Annual Meeting and ceased to be a board member on May 9, 2022.

Board of Directors Meetings

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).

The Board of Directors held ten meetings in 2022. During 2022, four executive sessions of the Board of Directors were held. The Board’s committees consist of the Audit and Finance Committee, Nominating, Governance & Sustainability Committee, Compensation Committee and Pricing Committee.

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   17

2023 ANNUAL

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PROXY STATEMENT

Members of the Board of Directors are welcomed and encouraged, but not required, to attend the Annual Meeting. The Company’s annual meeting of stockholders held on May 9, 2022 (the “2022 Annual Meeting”) was attended in person or by telephone by all of the nominees and all but one of the then-members of the Board of Directors.

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2023 ANNUAL

PROXY STATEMENT

AUDIT AND FINANCE COMMITTEE

Meetings: 12

Chair: Ronald C. Foster

Other Members:

  Edward C. Grady*

  Lanesha T. Minnix

  Tina M. Donikowski

  Brian M. Shirley (Joined October 2022)

*Edward C. Grady is not a nominee for reelection at the Annual Meeting and will be departing as a Board member.

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.

Financial Expertise: 100% compliance with SEC rules. The Board of Directors has evaluated the credentials of Messrs. Foster, Shirley, and Grady, 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/about-us/leadership-team/audit--finance-committee-charter/.

Key Responsibilities:

  selecting Advanced Energy’s independent registered public accounting firm;

  approving the scope, fees and results of the audit engagement;

  determining the independence and evaluating the performance of Advanced Energy’s independent registered public accounting firm and internal auditors;

  approving in advance any audit and non-audit services and fees charged by the independent registered public accounting firm;

  evaluating comments made by the independent registered public accounting firm with respect to accounting procedures and internal controls and determining whether to bring such comments to the attention of Advanced Energy’s management;

  reviewing the internal accounting procedures and controls with Advanced Energy’s financial and accounting staff and approving significant changes;

  engaging advisors and consultants as necessary in connection with the conduct of the Company’s business or as pertains to the assessment of risk or dispute resolution;

  reviewing and approving related party transactions;

  overseeing financial-related risks, enterprise risk management program, and cybersecurity risks; and

  establishing procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, including confidential, anonymous submissions by the Company’s employees and consultants, received through established procedures.

PRECISION  |  POWER  |  PERFORMANCE

   19

2023 ANNUAL

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PROXY STATEMENT

The Audit and Finance Committee approves all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Approval is provided on a service-by-service basis. In 2022, the Audit and Finance Committee approved all of the services provided by Advanced Energy’s independent registered public accounting firm.

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, 2022, and met together and separately with both management and Ernst & Young LLP, the Company’s independent registered public accounting firm for 2022, to discuss Advanced Energy’s audited financial statements as of and for the year ended December 31, 2022. 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 2022 Annual Report on Form 10-K. The Audit and Finance Committee has recommended the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2023, subject to stockholder ratification.

The Audit and Finance Committee

Ronald C. Foster, Chairman

Tina M. Donikowski

Edward C. Grady

Lanesha T. Minnix

Brian Shirley (Joined October 2022)

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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2023 ANNUAL

PROXY STATEMENT

NOMINATING, GOVERNANCE & SUSTAINABILITY COMMITTEE

Meetings: 4

Chair: Tina M. Donikowski

Other Members:

  Anne T. DelSanto

  John A. Roush

  Lanesha T. Minnix

 

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

Charter: In 2020, the Board and the Committee added sustainability to the Committee’s name and charter with certain of the key responsibilities noted below. Available at https://www.advancedenergy.com/about-us/leadership-team/nominatinggovernance-comm.-charter/

Key Responsibilities:

  ensuring that a majority of the directors are independent;

  establishing qualifications and standards to serve as a director;

  identifying and recommending individuals qualified to become directors;

  considering any candidates recommended by stockholders;

  determining the appropriate size and composition of the Board;

  ensuring that the independent directors meet in executive session at least quarterly;

  reviewing other directorships, positions, and business and personal relationships of directors and candidates for conflicts of interest, effect on independence, ability to commit sufficient time and attention to the Board or other suitability criteria;

  sponsoring and overseeing performance evaluations for the Board as a whole, conducting director peer evaluations, coordinating evaluations of the other committees with the other committee chairpersons;

  developing and reviewing periodically, at least annually, the insider trading policy and other key corporate governance policies of Advanced Energy, and recommending any changes to the Board;

  reviewing succession plans for the CEO and other key management positions as appropriate;

  considering any other corporate governance issues that arise from time to time and referring them to the Board;

  if the Board requests, developing appropriate recommendations to the Board;

  reviewing the Company’s sustainability program and goals and the Company’s progress towards achieving those goals; and

  reviewing environmental, social, governance trends that could impact the Company’s business operations, performance and reputation.

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PROXY STATEMENT

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. This committee may retain recruiting professionals to assist in identifying and evaluating candidates for director nominees but does not retain any recruiters currently. The committee has no stated specific or minimum qualifications that must be met by a Board candidate. 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. To that end, on June 15, 2022, the Board added Brian M. Shirley as a new Board member. In selecting nominees, the Nominating, Governance & Sustainability Committee assesses the independence, character, and acumen of candidates. The committee also endeavors to establish a number of areas of collective core competency of the Board and assess whether a candidate possesses skills including business judgment, leadership, strategic vision and knowledge of management, accounting, finance, industry, technology, manufacturing, international markets and marketing that would be complementary to the Board. 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 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 Amended and Restated By-laws of Advanced Energy, including but not limited to, your name and address, the number of shares of Advanced Energy common stock that you own, 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 80 of this proxy statement.

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PROXY STATEMENT

COMPENSATION COMMITTEE

Meetings: 8

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 Securities Exchange Act of 1934. Each of the members of the Compensation Committee is an “non-employee director” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended.

Charter: Available at https://www.advancedenergy.com/about-us/leadership-team/compensation-committee-charter/

Key Responsibilities:

  approving, or recommending to the Board of Directors for approval, salaries, incentives and other compensation for directors and officers of Advanced Energy;

  reviewing executive management succession planning;

  reviewing CEO succession planning in the context of executive compensation; and

  approving, or recommending to the Board of Directors for approval, policies relating to such compensation and benefit plans.

The Compensation Committee has retained an independent compensation consultant to assist and advise the Compensation Committee in fulfilling these responsibilities. For the 2022 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 its long-term incentive compensation programs for its executive officers and its compensation program for its non-employee directors.

PRICING COMMITTEE

Meetings: 0

Chair: Grant H. Beard

Other Members:

  Frederick A. Ball

  Ronald C. Foster

Independence: 100% compliance with NASDAQ rules.

Key Responsibility:

  may exercise all of the powers and authority of the Board of Directors in connection with all matters relating to the Company’s previously authorized stock repurchase program and the issuance of any future indebtedness by the Company, including the terms and conditions, timing and other provisions of such stock repurchases or debt issuances.

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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 https://www.advancedenergy.com/about-us/leadership-team/board-governance-guidelines/.

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. 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.

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. Consistent with this oversight role, the Board received regular updates from management as to potential impacts to operations, including the Company’s labor force and supply chain vulnerabilities from the COVID-19 pandemic. 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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PROXY STATEMENT

PROPOSAL NO. 2 - RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS ADVANCED ENERGY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2023

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 year 2023. 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 auditor.

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 2023.

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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2023 ANNUAL

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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 registered public accounting firm for 2022 and 2021. All of the fees in the following table were approved by the Audit 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 particular service or 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

    

2022

    

2021

(In thousands)

Audit Fees

(1)

$

3,676

$

4,128

Audit Related Fees

(2)

 

Tax Fees

(3)

389

 

1,237

All Other Fees

(4)

 

Total Fees

$

4,065

$

5,365

(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 2022 and 2021.
(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 2023 requires the affirmative “FOR” vote of a majority of the shares of common stock cast on this proposal. For purposes of determining the number of votes cast on this proposal, only those votes cast as either “FOR” or “AGAINST” are included. Abstentions and broker non-votes are not considered votes cast on this proposal.

Representatives of Ernst & Young LLP are expected to be present at the 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 2023.

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2023 ANNUAL

PROXY STATEMENT

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 Securities Exchange Act of 1934, as amended.

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.

Accordingly, stockholders are being asked to 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 2023 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 the 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.

98%

At the 2022 Annual Meeting, over 98% 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 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 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 compensation at risk

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2023 ANNUAL

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PROXY STATEMENT

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 the 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 the 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 of common stock cast on this proposal. For purposes of determining the number of votes cast on this proposal, only those votes cast as either “FOR” or “AGAINST” are included. Abstentions and broker non-votes are not considered votes cast on this proposal. The vote on this proposal is advisory in nature and, therefore, is not binding on the Company; provided, however, the Board and Compensation Committee will review the results of 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 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. We are asking our stockholders to vote on the frequency of such advisory votes at the Annual Meeting as described in Proposal 4.

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

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2023 ANNUAL

PROXY STATEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of February 1, 2023, there were 37,457,514 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, 2023 (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 2022; 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.

 

5,828,369

(1)

15.6%

The Vanguard Group

 

4,135,626

(2)

11.0%

Ameriprise Financial, Inc.

2,878,671

(3)

7.7%

FMR LLC

2,080,795

(4)

5.6%

Stephen D. Kelley, President and Chief Executive Officer

 

35,741

(5)(6) 

*

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

 

30,622

(5)(6) 

*

Elizabeth K. Vonne, Executive Vice President and General Counsel

 

(5)(6) 

*

Eduardo Bernal Acebedo, Executive Vice President and Chief Operations Officer

10,890

(5)(6) 

*

John Donaghey, Executive Vice President and Global Head of Sales

6,435

(5)(6) 

*

Grant H. Beard, Chairman of the Board of Directors

 

56,838

(7)

*

Frederick A. Ball, Director

 

37,917

(7)

*

Anne T. DelSanto, Director

 

3,585

(7)

*

Tina M. Donikowski, Director

 

5,300

(7)

*

Ronald C. Foster, Director

46,813

(7)

*

Edward C. Grady, Director

 

53,613

(7)(8)

*

Lanesha T. Minnix, Director

 

2,241

(7)

*

David W. Reed, Director

578

(7)

*

John A. Roush, Director

 

30,813

(7)

*

Brian M. Shirley, Director

 

(7)

*

All executive officers and directors, as a group (15 persons)

 

321,386

(8)

*

*

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 26, 2023, by BlackRock, Inc. BlackRock, Inc. reports sole voting power over 5,828,369 shares and sole dispositive power over 5,872,795 shares. The address for BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055.

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PROXY STATEMENT

(2)Information as to the amount and nature of beneficial ownership was obtained from the Schedule 13G/A filed with the SEC on February 9, 2023, by The Vanguard Group. The Vanguard Group reports shared voting power over 65,238 shares, sole dispositive power over 4,135,626 shares and shared dispositive power over 102,331 shares. The address for The Vanguard Group is 100 Vanguard Blvd., Malvern, Pennsylvania 19355.
(3)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, 2023, by Ameriprise Financial, Inc. Ameriprise Financial, Inc. reports shared voting power over 2,730,210 shares and shared dispositive power over 2,761,511 shares. The address for Ameriprise Financial, Inc. is 145 Ameriprise Financial Center, Minneapolis, MN 55474.
(4)Information as to the amount and nature of beneficial ownership was obtained from the Schedule 13G/A filed with the SEC on February 9, 2023, by FMR LLC. FMR LLC reports no shared voting power and sole dispositive power over 2,080,795. The address for FMR LLC is 245 Summer Street, Boston, MA 02210.
(5)Includes beneficial ownership of the following numbers of shares that may be acquired within 60 days of February 1, 2023, pursuant to stock options granted or assumed by Advanced Energy:

Stephen Kelley

 

3,718

Paul Oldham

    

6,042

Eduardo Bernal Acebedo

 

6,042

Elizabeth Vonne

 

John Donaghey

3,254

 

(6)Includes beneficial ownership of the following numbers of shares that will be acquired within 60 days of February 1, 2023, pursuant to stock awards (also called “restricted stock units”) granted or assumed by Advanced Energy:

Stephen Kelley

 

16,206

Paul Oldham

    

6,806

Eduardo Bernal Acebedo

 

2,361

Elizabeth Vonne

 

John Donaghey

1,378

(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 Annual Meeting.
(8)Includes 53,613 shares held by Mr. Grady who will not be standing for reelection at the Annual Meeting.

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2023 ANNUAL

PROXY STATEMENT

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 2022 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’ 2022 pay contingent on the achievement of financial and stock price performance through our Short-Term Incentive Plan (referred to as the 2022 STI Plan) and our Long-Term Incentive Plan (referred to as the 2022 LTI Plan), which we discuss in more detail below. In 2022, 86% of our Chief Executive Officer’s target compensation and, on average, over 74% of our other named executive officers’ target compensation was performance based. For the purposes of these calculations, performance-based compensation includes the 2022 STI Plan at target and the 2022 LTI Plan grant date fair value of annual equity grants. We have excluded from these calculations the stock option grants described below under “2022 Long-Term Equity Incentive (LTI) Compensation – Fiscal Year 2022 Equity Awards” because we consider the grants to be a one-time occurrence and not part of our core target compensation.

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2023 ANNUAL

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PROXY STATEMENT

Executive Summary and Overview of 2022 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.

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 2022 Business Performance

In 2022, we delivered record revenue and non-GAAP earnings per share as a result of solid execution in a challenging, supply constrained environment. Demand for Advanced Energy’s industry-leading power conversion and control solutions was strong across all our markets. We believe that we substantially outperformed our expected end market growth with each of our markets growing at 20% or more year over year.

At the same time, the supply chain environment remained difficult, impacting our gross margins and limiting our ability to completely fulfill demand. Despite these challenges, our aggressive approach to procuring critical parts, successful qualification of redesigns and scarce components, and strong manufacturing execution enabled us to deliver record revenue, gross profit, operating profit, and earnings. During 2022 GAAP earnings grew by 52% to $5.35 per share and non-GAAP earnings grew by 36% to $6.49 per share.

During 2022, we continued to execute our strategy to accelerate profitable growth and scale the company. We accelerated our effort to deliver industry-leading, proprietary technologies to address our customers’ most challenging power conversion requirements and doubled the number of new products launched to the market. We invested in our operational footprint to further drive efficiency, flexibility, and quality enabling us to fully ramp our new Malaysia manufacturing facility and close our Shenzhen site at the end of the year as planned. Finally, we successfully acquired and integrated SL Power into Advanced Energy. This highly complementary acquisition allows us to deliver a broader range of power delivery solutions to our medical customers and expands our position to become one of the top players in the medical power market.

Entering 2023, the semiconductor equipment industry is experiencing a cyclical downturn and ongoing supply constraints continue to limit our ability to meet demand in our other markets. However, we believe our diversification into multiple markets, our larger and more stable service business, and our healthier backlog and customer inventory positions will enable us to perform better than during previous market down cycles, demonstrating the benefits of our long-term strategy. We expect to continue to accelerate the development of new products and scale the Company while optimizing our footprint and controlling costs. As a result, we believe Advanced Energy is well positioned to emerge stronger and continue to grow revenue and earnings over time.

We delivered record revenues and earnings in 2022 in the face of the industry-wide supply constraints.

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2023 ANNUAL

PROXY STATEMENT

Highlights of our consolidated fiscal year 2020, 2021 and 2022 financial performance and key business metrics* are provided below.

Graphic

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

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PROXY STATEMENT

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

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   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. In accordance with the Compensation Committee Charter, the Compensation Committee may delegate any of its authority to subcommittees when legally permitted and appropriate.

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 2022 fiscal year the Compensation Committee engaged Compensia, Inc. to conduct a competitive review of executive compensation and advise the 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 independent based on the Nasdaq Stock Market’s independence factors, as well as free of conflicts of interest.

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2023 ANNUAL

PROXY STATEMENT

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. The 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, 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.”

The Compensation Committee reviews the 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 2021, which was used for a comparative review for 2022 compensation. The list of peer companies consists of the following 19 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 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 cap between 33% and 300% of Advanced Energy.

Peer Companies

Brooks Automation, Inc.

    

MACOM Technology Solutions Holdings, Inc.

   

Power Integrations, Inc.

Coherent Corp. (formerly II-IV)

MKS Instruments, Inc.

Rogers Corporation

Curtiss-Wright Corp.

Monolithic Power Systems, Inc.

Semtech Corp

Entegris, Inc.

Moog, Inc.

Smart Global Holdings Inc.

FormFactor, Inc.

Novanta, Inc.

SPX Technologies

Kulicke & Soffa Industries, Inc.

OSI Systems, Inc.

Wolfspeed, Inc.

Littelfuse Inc.

Components of Executive Compensation

For 2022, the principal components of compensation for named executive officers were: (1) base salary, (2) annual performance-based cash compensation under the 2022 STI Plan, (3) long term performance-based equity incentive compensation under the 2022 LTI Plan, and (4) other benefits, each of which is described in more detail below. In determining the amount and relative allocation among each component of compensation for each named executive officer, the Compensation Committee considered, among other factors, the Company’s and each executive officer’s performance during the year, historical rates of executive compensation, data obtained from management’s recruitment activities, the comparative review and analysis provided by Compensia and alignment with the Company’s overall compensation philosophy. As we mentioned above, a majority of our named executive officers’ target compensation in 2022 was performance-based compensation under our 2022 STI Plan and 2022 LTI Plan, consistent with our “pay for performance culture”.

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2023 ANNUAL

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PROXY STATEMENT

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 the 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 2022, the Compensation Committee decided to increase each of the named executive officers’ base salary based on a combination of merit increase, peer company compensation and general market trends. The base salaries of each of our named executive officers in 2022 were as follows:

Base Salary

% Increase

Name

    

Position

    

(per annum)

    

from 2021

Stephen Kelley

 

President and Chief Executive Officer

$

900,000

5.9

%

Paul Oldham

 

Executive Vice President and Chief Financial Officer

$

510,000

5.2

%

Eduardo Bernal Acebedo (1)

Executive Vice President and Chief Operations Officer

$

453,124

2.9

%

Elizabeth Vonne

 

Executive Vice President, General Counsel and Corporate Secretary

$

380,000

%

John Donaghey (2)

 

Executive Vice President, Global Sales

$

435,000

8.8

%

(1) Mr. Bernal Acebedo is paid in Singapore Dollars (“SGD”) and his salary was converted to USD using an exchange rate of 0.74625 as of December 31, 2022.

(2) Mr. Donaghey received a promotional increase in July 2022, to EVP, Global Sales, and his increase reflects the full year increase to his base salary.

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2023 ANNUAL

PROXY STATEMENT

2022 Short Term Incentive Plan Compensation

The 2022 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 intend for the 2022 STI Plan to motivate our executive officers to achieve these financial performance goals and reward them for accomplishing these goals. For 2022, the financial measures were 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.

To address ongoing volatility in the markets the Company serves, the 2022 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 2022 these annual full-year bonus targets were as follows:

Name

Target as a % of Base Salary

Target

Stephen Kelley

 

100

%

$ 900,000

Paul Oldham

 

75

%

$ 382,500

Eduardo Bernal Acebedo (1)

 

75

%

$ 339,843

Elizabeth Vonne (2)

 

65

%

$ 176,621

John Donaghey (3)

75

%

$ 283,479

(1) Mr. Bernal Acebedo is paid in Singapore Dollars (“SGD”) and his annual target was converted to USD using an exchange rate of 0.74625 as of December 31, 2022.

(2) Ms. Vonne’s target reflects pro-ration based on her hire date of April 15, 2022.

(3) Mr. Donaghey’s target reflects the first half of the year in his former role as SVP and the second half of the year in his current role as EVP.

Our named executive officers’ bonuses are paid out of a bonus pool, the size of which is contingent on the achievement of certain financial performance goals during the relevant six-month performance period. Achievement of the various performance goals listed in the table below determines the size of the bonus pool for Messrs. Kelley, Oldham, Bernal Acebedo, Donaghey and Ms. Vonne.

The Compensation Committee selected the specific financial performance metrics for 2022 as shown below. These metrics are aligned with the Company’s overall strategic and operating plan. The Compensation Committee adjusted the financial goals for the second performance period to be higher than the original metrics established at the beginning of the year due to favorable second half projections going into the third fiscal quarter. Given the projected levels of revenue and earnings during the year, first half achievement was weighted at 40% of the total and second half achievement was weighted at 60% of the total. Financial performance metrics and results exclude the results of the Company’s acquisition of SL Power in April 2022.

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2023 ANNUAL

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PROXY STATEMENT

2022 Short Term Incentive Metrics (Values in $M, except as noted)

2022 STI Plan*

Performance Goals

Actual Performance

Threshold

Target

Stretch

%.

(50 %

(100 %

(200 %

Dollar

Incentive

Financial Performance Metric

    

Weight

    

Payout)

    

Payout)

    

Payout)

Value

    

Earned

    

Revenue*

 

40

$

1,350

$

1,540

$

1,695

$

1,796

 

200.0

Non-GAAP Operating Income from Continuing Operations**

 

40

$

128

$

211

$

282

$

289

 

200.0

Adjusted Cash Flow***

 

20

$

108

$

193

$

241

$

183

 

96.0

Overall Achievement

 

 

178.6

%  

*

Revenue targets based on total company operations for 2022. The full year targets include a first half target of $718.0M and a second half target of $822.0M. Achievement for 2022 was $826.0M in the first half and $969.6M in the second half. Performance for 2022 excludes revenue from the SL Power acquisition.

**

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 2022 STI Plan, Non-GAAP Operating Income from continuing operations excludes non- cash related charges and non-recurring items. The full year targets include a first half target of $84.0M and a second half target of $127.0M. Achievement for 2022 was $125.0M for the first half and $164.1M for the second half. Performance for 2022 excludes Non-GAAP Operating Income from the SL Power acquisition.

***

Adjusted cash flow is measured as non-GAAP operating income plus or minus the change in working capital as defined as Accounts Receivable, Inventory, and Accounts Payable. The full year targets include a first half target of $72.2 million and second half target of $121.4 million. Achievement for 2022 was $51.9 million in the first half and $130.9 million the second half. Performance for 2022 excludes adjusted cash flows from the SL Power acquisition.

Note:  Achievement percentages between the threshold and target and between the target and stretch levels are linearly interpolated.

Results of the 2022 Short Term Incentive Plan

Based on the corporate achievement of 178.6% for 2022, the Company’s payouts under the 2022 Short Term Incentive Plan were as follows:

    

Financial

(Actual at 178.6% of Target)

Name

Target

Actual

Stephen Kelley

$ 900,000

$ 1,607,400

Paul Oldham

 

$ 382,500

 

$ 683,145

Eduardo Bernal Acebedo

 

$ 339,843

 

$ 606,960

Elizabeth Vonne (1)

 

$ 176,621

 

$ 315,445

John Donaghey (2)

$ 283,479

$ 506,293

(1) Ms. Vonne’s target reflects pro-ration based on her hire date of April 15, 2022.

(2) Mr. Donaghey’s target reflects the first half of the year in his former role as SVP and the second half of the year in his current role as EVP.

As a new feature in the 2022 STI Plan, the Compensation Committee added 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 2022, the Compensation Committee chose not to modify the 2022 bonus of any executive officer based on individual performance.

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