Plexus
Annual Report 2022

Plain-text annual report

2022 Annual Report Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________________________________________________________________________________ ____________________________________________________________________________________________________________________________________ FORM 10-K (Mark One) ☒ ☐ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended October 1, 2022 OR TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File Number 001-14423 ____________________________________________________________________________________________________________________________________ PLEXUS CORP. (Exact name of registrant as specified in charter) ____________________________________________________________________________________________________________________________________ Wisconsin (State or other jurisdiction of incorporation) 39-1344447 (I.R.S. Employer Identification No.) One Plexus Way Neenah, Wisconsin 54957 (Address of principal executive offices) (Zip Code) Telephone Number (920) 969-6000 (Registrant’s telephone number, including Area Code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, $0.01 par value Trading Symbol PLXS Name of each exchange on which registered The Nasdaq Global Select Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No  Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes  No  Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. Table of Contents Large accelerated filer Smaller reporting company  ☐ Accelerated filer Emerging growth company ☐ ☐ Non-accelerated filer ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of April 2, 2022, 27,859,064, shares of common stock were outstanding, and the aggregate market value of the shares of common stock (based upon the $82.70 closing price of the registrant's common stock on the last trading day of its fiscal second quarter, as reported on the Nasdaq Global Select Market) held by non-affiliates (excludes 598,740 shares reported as beneficially owned by directors and executive officers – does not constitute an admission as to affiliate status) was approximately $2.3 billion. As of November 14, 2022, there were 27,627,292 shares of common stock outstanding. Parts of Registrant’s Proxy Statement for the 2023 Annual Meeting of Shareholders are incorporated by reference into Part III of this Report. DOCUMENTS INCORPORATED BY REFERENCE: Table of Contents PLEXUS CORP. TABLE OF CONTENTS Form 10-K for the Fiscal Year Ended October 1, 2022 PART I ITEM 1. BUSINESS ITEM 1A. RISK FACTORS ITEM 1B. UNRESOLVED SEC STAFF COMMENTS ITEM 2. PROPERTIES ITEM 3. LEGAL PROCEEDINGS ITEM 4. MINE SAFETY DISCLOSURES PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE ITEM 9A. CONTROLS AND PROCEDURES ITEM 9B. OTHER INFORMATION ITEM 9C. FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE ITEM 11. EXECUTIVE COMPENSATION ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES ITEM 16. FORM 10-K SUMMARY SIGNATURES 2 2 11 23 24 24 24 25 25 27 38 39 70 70 70 70 71 71 72 72 72 72 73 73 77 79 Table of Contents "SAFE HARBOR" CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: The statements contained in this Form 10-K that are guidance or which are not historical facts (such as statements in the future tense and statements including believe, expect, intend, plan, anticipate, goal, target and similar terms and concepts), including all discussions of periods which are not yet completed, are forward-looking statements that involve risks and uncertainties. These risks and uncertainties include the effect of inflationary pressures on our costs of production, profitability, and on the economic outlook of our markets; the effects of shortages and delays in obtaining components as a result of economic cycles, natural disasters or otherwise; the risk of customer delays, changes, cancellations or forecast inaccuracies in both ongoing and new programs; the lack of visibility of future orders, particularly in view of changing economic conditions; the economic performance of the industries, sectors and customers we serve; the effects of tariffs, trade disputes, trade agreements and other trade protection measures; the effects of the volume of revenue from certain sectors or programs on our margins in particular periods; our ability to secure new customers, maintain our current customer base and deliver product on a timely basis; the risks of concentration of work for certain customers; the particular risks relative to new or recent customers, programs or services, which risks include customer and other delays, start-up costs, potential inability to execute, the establishment of appropriate terms of agreements, and the lack of a track record of order volume and timing; the effects of start-up costs of new programs and facilities or the costs associated with the closure or consolidation of facilities; possible unexpected costs and operating disruption in transitioning programs, including transitions between Company facilities; the risk that new program wins and/or customer demand may not result in the expected revenue or profitability; the fact that customer orders may not lead to long-term relationships; our ability to manage successfully and execute a complex business model characterized by high product mix and demanding quality, regulatory, and other requirements; the risks associated with excess and obsolete inventory, including the risk that inventory purchased on behalf of our customers may not be consumed or otherwise paid for by the customer, resulting in an inventory write-off; risks related to information technology systems and data security; the ability to realize anticipated savings from restructuring or similar actions, as well as the adequacy of related charges as compared to actual expenses; increasing regulatory and compliance requirements; any tax law changes and related foreign jurisdiction tax developments; current or potential future barriers to the repatriation of funds that are currently held outside of the United States as a result of actions taken by other countries or otherwise; the potential effects of jurisdictional results on our taxes, tax rates, and our ability to use deferred tax assets and net operating losses; the weakness of areas of the global economy; the effect of changes in the pricing and margins of products; raw materials and component cost fluctuations; the potential effect of fluctuations in the value of the currencies in which we transact business; the effects of changes in economic conditions, political conditions and tax matters in the United States and in the other countries in which we do business; the potential effect of other world or local events or other events outside our control (such as the conflict between Russia and Ukraine, escalating tensions between China and Taiwan or China and the United States, changes in energy prices, terrorism, global health epidemics and weather events); the impact of increased competition; an inability to successfully manage human capital; changes in financial accounting standards; and other risks detailed herein and in our other Securities and Exchange Commission filings. In addition, see Risk Factors in Part I, Item 1A and Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 for a further discussion of some of the factors that could affect future results. * * * 1 Table of Contents ITEM 1. BUSINESS Overview PART I Plexus Corp. and its subsidiaries (together "Plexus," the "Company," "our", or "we") participate in the Electronic Manufacturing Services ("EMS") industry. Since 1979, we have been partnering with companies to create the products that build a better world. We are a global leader with a team of nearly 25,000 individuals focused on providing Design and Development, Supply Chain Solutions, New Product Introduction, Manufacturing and Sustaining Services. We specialize in serving customers in industries with highly complex products and demanding regulatory environments. We deliver customer service excellence to leading global companies in the Industrial, Healthcare/Life Sciences and Aerospace/Defense market sectors by providing innovative, comprehensive solutions throughout the product’s lifecycle. We provide these innovative solutions to customers in the Americas ("AMER"), Asia-Pacific ("APAC") and Europe, Middle East and Africa ("EMEA") regions. Our Vision, Mission and Strategy Our vision is to help create the products that build a better world. Our mission is to be the leader in highly complex products and demanding regulatory environments. Our strategy to fulfill our vision and mission remains consistent and can be summarized in four parts: market focus, superior execution, passion meets purpose and discipline by design. • Market Focus – We engineer innovative solutions for customers in growth markets and focus on partnering with leading as well as disruptive global companies in the Industrial, Healthcare/Life Sciences and Aerospace/Defense sectors. • • Superior Execution – Superior execution is foundational to our differentiation. We are dedicated partners to our customers, committed to achieving zero defects and perfect delivery through operational excellence. Passion Meets Purpose – Through our collective passion, we drive purpose to our actions and decisions in pursuit of operational excellence. Guided by our values and leadership behaviors, we do the right thing to support our team members, communities and customers. • Discipline by Design – Finally, we are committed to delivering shareholder value over the long term through a consistent and disciplined financial model focused on driving industry-leading revenue growth and superior return on invested capital. To deliver on our strategy, we align our operations, processes, workforce and financial metrics to create a high performance, accountable organization with a talented and engaged workforce deeply passionate about driving growth through customer service excellence. We also promote a collaborative, customer- centric culture that continuously evaluates and optimizes our business processes with a goal of creating shareholder value. Finally, we execute to customer- driven and sector-based go-to-market strategies. Financial Model Our financial model aligns with our business strategy. Our primary long-term focus is to achieve a 9-12% compounded annual revenue growth rate while earning a return on invested capital ("ROIC") of 15%, which would exceed our weighted average cost of capital ("WACC") and represent positive economic return. Economic return is the amount by which our ROIC exceeds our WACC, and we believe it is a fundamental driver of shareholder value. We review our internal calculation of WACC annually; for fiscal 2022, our WACC was 9.3%. For more information regarding ROIC and economic return, which are non-GAAP financial measures, refer to "Management’s Discussion and Analysis of Financial Condition - Results of Operations - Return on Invested Capital ("ROIC") and economic return" in Part II, Item 7. For a reconciliation of ROIC and economic return to our financial statements that were prepared using generally accepted accounting principles in the U.S. ("U.S. GAAP" or "GAAP"), see Exhibit 99.1 to this annual report on Form 10-K, which exhibit is incorporated herein by reference. Operations Plexus is a Wisconsin-headquartered corporation with nearly 25,000 employees, including over 4,700 engineers and technologists dedicated to product development and design, test equipment development and design, and manufacturing process development and control, all of whom operate from 28 active facilities, totaling approximately 5.1 million square feet. Plexus' facilities are strategically located to support the global supply chain, engineering, manufacturing and sustaining service needs of customers in our targeted market sectors. Go-to-Market Strategy We accomplish our go-to-market strategy through the three market sectors we serve, Industrial, Healthcare/Life Sciences and 2 Table of Contents Aerospace/Defense. Each sector has a market sector vice president, as well as business development and customer management leaders who together oversee and provide leadership to teams that include business development directors, customer managers and directors, supply chain, engineering and manufacturing subject matter experts, and market sector analysts. These teams maintain expertise related to each market sector and execute sector strategies aligned to that market’s unique delivery, quality and regulatory requirements. Our market sector teams help define Plexus’ strategy for growth with a particular emphasis on expanding the value-add solutions we offer customers. Our sales and marketing efforts focus on targeting new customers and expanding our engagements with existing customers. We believe our ability to provide a full range of services that complement the entire product lifecycle across a global footprint provides a business advantage. Solutions With integrated design and development, supply chain solutions, new product introduction, manufacturing and sustaining services, we proactively tackle tough challenges throughout the product lifecycle. It is how our teams strive to create innovative and efficient paths to get products to market. • Design and Development – Plexus was established with engineering as a core competency and has built a reputation for success. Our customers are able to partner with a collaborative team of over 640 development engineers to create new products. Using the same tools and processes throughout our seven Design Centers worldwide, we leverage the latest technology and state-of-the-art design automation methodologies to provide comprehensive new product development and product commercialization solutions. • Supply Chain Solutions – Delivering an optimal supply chain solution is more than simply getting a product where it needs to be on time. We take a unique approach. Our supply chain experts engage in all of Plexus’ integrated solutions, working closely with our engineers to identify opportunities for supply chain optimization early in the design stage. At Plexus, we take pride in managing the full supply chain to minimize cost, mitigate risk and provide a flexible, scalable solution for our customers. • New Product Introduction – When introducing a new product, customers need to move quickly. Plexus offers a dedicated team focused on decreasing time to market with a full suite of integrated new product introduction services. Through early integration and collaboration, customers can take advantage of Plexus’ capabilities, such as design for excellence, specialized design of test solutions and rapid prototyping, while the program is advanced by a dedicated Plexus team that supports a transition to volume manufacturing. • Manufacturing – Our approach to manufacturing focuses on innovation, continuous improvement and superior quality and delivery. With a global footprint and scalable operations, we aim to tailor our manufacturing environment to meet each customer’s needs worldwide. As we strive for zero defects, we empower all employees with the knowledge that exceptional quality begins with each individual member of our team. We believe our capabilities and our culture position us to support the complex technology and regulatory needs of the industries we serve and to provide customers with innovative and dependable manufacturing services. • Sustaining Services – Plexus Sustaining Services is committed to protecting our customers' brand reputation, supporting the success of each customer's product in the marketplace and extending a product's end of life, while helping to minimize the impact of their products on the environment. From influencing a product design, which creates early access for lifecycle extension services and repair, to spare parts management and distribution, depot repair and refurbishment services, Plexus’ Sustaining Services offers a full range of capabilities in all regions in which we operate. We provide most of our optimized solutions on a turnkey basis, and we typically procure all materials required for product assembly. We provide select services on a consignment basis, meaning the customer supplies the necessary materials and Plexus provides the labor and other services required for product assembly. In addition to manufacturing, turnkey service requires material procurement and warehousing and involves greater resource investments than consignment services. Other than certain test equipment, manufacturing equipment and software used for internal operations, we do not design or manufacture our own proprietary products. Regulatory Requirements All Plexus manufacturing and engineering facilities are certified to a baseline Quality Management System standard per ISO9001:2015. We have capabilities to assemble finished medical devices meeting the U.S. Food and Drug Administration's ("FDA") Quality Systems Regulation requirements and similar regulatory requirements in other countries. 3 Table of Contents We have additional certifications and/or registrations held by certain facilities in the following regions: Medical Standard ISO 13485:2016 21 CFR Part 820 (FDA) (Finished Medical) JMGP accreditation GMP-Korea certification ANVISA accreditation NPMA (National Medical Products Administration) registration ISO 14001(environmental management) ISO 45001 (occupational health and safety) ANSI/ESD (Electrostatic Discharge Control Program) S20.20 ITAR (International Traffic and Arms Regulation) self-declaration Aerospace Standard AS9100 NADCAP certification FAR 145 certification (FAA repair station) EASA repair approval ATEX/IECEx certification IRIS certification (Railway) ISO 50001:2011 (energy management) Customers and Market Sectors Served AMER X X X X X X X X X X X APAC X X X X X X X X X X X X EMEA X X X X X X X X X X X Our customers range from large multinational companies to smaller emerging technology companies. During fiscal 2022, we served approximately 140 customers. General Electric Company ("GE") accounted for 12.9%, 11.2% and 11.7% of our net sales during fiscal 2022, 2021 and 2020, respectively. No other customer accounted for 10.0% or more of our net sales in any of the last three fiscal years. Net sales to our largest customers may vary from time to time depending on the size and timing of customer program commencements, terminations, delays, modifications and transitions. We generally do not obtain firm, long-term purchase commitments from our customers. Customers' forecasts can and do change as a result of changes in their end-market demand and other factors, including global economic conditions. Any material change in forecasts or orders from these major accounts, or other customers, could materially affect our results of operations. The loss of any major customer could have a significant negative impact on our financial results. In addition, as our percentage of net sales to customers in a specific sector becomes larger relative to other sectors, we will become increasingly dependent upon the economic and business conditions affecting that sector. Many of our large customers, including GE, contract with us through multiple independent divisions, subsidiaries, production facilities or locations. We believe that in most cases our sales to any one such division, subsidiary, facility or location are independent of sales to others. The distribution of our net sales by market sectors for the indicated fiscal years is shown in the following table: Industry Industrial* Healthcare/Life Sciences Aerospace/Defense Total net sales 2022 46% 41% 13% 100% 2021 46% 39% 15% 100% 2020 45% 37% 18% 100% *Fiscal 2020 has been revised to reflect the consolidation of the Industrial/Commercial and Communications sectors into the Industrial sector in fiscal 2021. Although our current business development focus is based on our targeted market sectors of Industrial, Healthcare/Life Sciences and Aerospace/Defense, we evaluate our financial performance and allocate our resources geographically (see Note 11 "Reportable Segments, Geographic Information and Major Customers" in Notes to Consolidated Financial Statements regarding our reportable segments). Plexus offers a uniform array of services for customers in each market sector and, aside from the specific go-to-market teams, generally we do not dedicate operational equipment, personnel, facilities or other resources to particular market sectors, nor do we internally track our costs and resources per market sector. 4 Table of Contents Plexus serves a diverse customer landscape that includes industry-leading, branded product companies, along with other technology pioneering start-ups and emerging companies that may or may not maintain manufacturing capabilities. In addition to prime technology advancements, key government and policy trends impact our business, including FDA approval of new medical devices, defense procurement practices and other government and regulatory processes. Plexus may benefit from increasing trends by original equipment manufacturers to outsource the design, manufacture and service of their products. Materials and Suppliers We typically purchase raw materials, including printed circuit boards and electronic components, from a wide variety of manufacturers and their authorized distributors. Under certain circumstances, we will purchase components from independent distributors, customers or competitors. Many of these raw materials are unique to the designed assembly. By customer agreement, we purchase materials according to customer forecast and supplier lead-times. The key electronic components we purchase include: advanced semiconductors, diodes, power management modules, microcontrollers, memory modules, interconnects, inductors, resistors, capacitors, power supplies and cable and wire. Component shortages, extended lead-times and subsequent allocations by our suppliers are an inherent risk within the electronics industry and have particularly been an issue for semiconductors during fiscal 2022. We discuss the causes, implications, and potential implications of these shortages more fully in "Risk Factors" in Part I, Item 1A herein. We also purchase non-electronic, typically custom engineered components such as molded/formed plastics, sheet metal fabrications, aluminum extrusions, robotics, motors, vision sensors, motion/actuation, fluidics, displays, die castings and various other hardware and fastener components. These components are sourced from Plexus preferred suppliers and customer directed suppliers. Altogether, purchased components range from “off the shelf” to highly customized and vary widely in terms of market availability and price. Through our engineering development engagements and through the quoting of new business, Plexus can influence the selection of new product components, and therefore the selection of suppliers who outperform their peers. Amidst a highly dynamic set of supply markets, Plexus' global supply chain management organization works to mitigate potential risks and ensure a steady flow of components at competitive prices. We pursue these goals through supply chain solutions developed in collaboration with our customers and our suppliers, a commitment to strong supplier partnerships, use of proprietary risk management tools and aggressive management of supplier commitments. Competition Plexus operates in a highly competitive market, with a goal to be best-in-class at meeting the unique needs of our customers. With integrated design and development, supply chain solutions, new product introduction, manufacturing and sustaining services, we proactively tackle tough challenges throughout the product lifecycle. A number of competitors may provide services similar to Plexus. Others may be more established in certain industry sectors, or have greater financial, manufacturing or marketing resources. Smaller competitors compete mainly in specific sectors and within limited geographic areas. Plexus also competes with in-house capabilities of current and potential customers. Plexus maintains awareness and knowledge of our competitors' capabilities in order to remain highly competitive within our target markets. Relative to our competition, overriding factors such as lower manufacturing volumes, production flexibility, unique fulfillment requirements and complex regulatory requirements typically result in higher investments in inventory and selling and administrative costs for us. The cost variance from our competitors is especially evident relative to those that provide EMS services for high-volume, less complex products, with less stringent requirements (e.g., consumer electronics). Intellectual Property We own various service marks that we use in our business, which are registered in the trademark offices of the United States and other countries. Although we own certain patents, they are not currently material to our business. We do not have any material copyrights. Information Technology Our core solutions for manufacturing facilities include a single-instance enterprise resource planning ("ERP") system in addition to product data management and advanced planning and scheduling systems, along with consistent solutions for warehouse management and shop floor execution that support our global operations. This consistency augments our other management information systems, allowing us to standardize the translation of data from multiple production facilities into operational and financial information required by the business. The related software licenses are of a general commercial character on terms customary for these types of agreements. In addition, by taking advantage of virtualization technology, we are able to realize gains in efficiency and up-time supporting our critical operations. 5 Table of Contents We strive to promote innovation technologies, solutions and processes within our information technology ("IT") infrastructure to enable Plexus to differentiate from our competition. As technology solutions continue to evolve, so do the myriad of risks introduced to the organization. The delivery of business value through technology is highly dependent on the holistic identification and management of information technology risks. Plexus deploys a robust IT Risk Management Program that promotes data-driven decision making through a collaborative effort to improve IT and cybersecurity resiliency, including a governance framework that facilitates awareness, oversight accountabilities and risk management activities across the business. This framework includes oversight by the Audit Committee of our Board of Directors, which reviews the effectiveness of the Company’s governance and management of information technology risks, including those relating to business continuity, cybersecurity, regulatory compliance and data management. Plexus also utilizes an executive-level IT Steering Committee as well as an IT Cybersecurity Incident Response Team, and has a formal incident response plan in the event of a cyber incident. Continuously enhancing our environment to meet the increasing needs of cybersecurity and privacy regulations remains a top priority. We discuss the risks relating to cybersecurity and their potential impact more fully in "Risk Factors" in Part I, Item 1A herein. Compliance with Laws and Regulations As a global public company that supports manufacturing, designing and servicing highly complex products in demanding regulatory environments, our operations are subject to a variety of laws, regulations and compliance obligations. We strive to implement robust internal controls, quality management systems and management systems of compliance that govern our internal actions and mitigate our risk of non-compliance. We also make efforts to identify non-compliance concerns through internal and external audits, risk assessments as well as an ethics hotline reporting system. We are also subject to a variety of regulations associated with environmental compliance, as well as those governing employee health and safety. These regulations are related to topics such as: monitoring, tracking and reporting of air and water emissions; handling and disposing of hazardous chemicals used during our manufacturing process; and evaluating and mitigating employee health and safety hazards in our facilities. We believe that we are in material compliance with all such applicable laws and regulations, and we do not anticipate any significant additional expenditures related to maintaining our compliance. However, due to the sometimes rapidly evolving nature of these laws and regulations (including as a result of COVID-19), geopolitical complexity and uncertainty and changing requirements applicable to our environmental, social and governance ("ESG") program, there can be no assurance that current expenditures will be adequate or that violations will not occur. Any violations could result in fines, penalties, customer disengagements or reputational damage that may have a material impact on our financial performance. See “Risk Factors” in Part I, Item 1A, herein, for more detail around risks pertaining to compliance with laws and regulations. Environmental, Social and Governance Consistent with our vision to help our customers create the products that build a better world, we are committed to building a better world by the way we innovate and operate. Plexus has established an ESG program that focuses on five key areas: (1) innovator; (2) responsible employer; (3) community partner; (4) global citizen; and (5) corporate governance. • Innovator – We innovate for sustainability to solve today's challenges proactively while focusing on tomorrow's opportunities. Plexus is committed to environmental sustainability across our full value stream of solutions and we consider it an integral aspect of our "zero defect" culture. Integrated design and development, supply chain solutions, new product introduction, manufacturing and sustaining services positions Plexus to systematically drive innovation, value and sustainability in support of a circular economy. • Responsible Employer – We advocate for diversity, combat human trafficking, encourage and provide employee development opportunities, strive to ensure safe and healthy working conditions, promote an appropriate work/life balance for our employees, encourage wellness initiatives and reinforce responsible values in our culture. • Community Partner – We promote and financially contribute to science, technology, engineering and mathematics ("STEM") programs, as well as causes that make a meaningful impact to the communities in which we operate. We encourage our employees’ involvement in community charitable organizations, as well as through our paid volunteer time off program, and we partner with community organizations to promote local business. • Global Citizen – We actively work to reduce waste, water use and greenhouse gas emissions from our operations and work with suppliers to develop similar programs. We partner with customers to help design more efficient and 6 Table of Contents environmentally friendly products as well as limit product end of life environmental impact through our sustaining services solution. • Corporate Governance – Strong leadership and a culture of accountability are foundational at Plexus. Our executive management, in collaboration with our Board of Directors, competently and ethically manage Plexus’ operations for the long-term benefit of shareholders. When we focus on improving outcomes for all of our stakeholders, we maximize our ability to achieve our strategic objectives and deliver long-term financial value for our shareholders. Plexus is committed to responsible business practices throughout our global operations. As a member of the Responsible Business Alliance ("RBA"), we have taken an active role in improving not only our own practices, but influencing and holding others accountable throughout our supply chain. In addition to RBA membership, we consider a variety of standards for responsible practices, including, but not limited to, local and federal legal requirements in the jurisdictions where we operate, the Sustainability Accounting Standards Board ("SASB") and the Carbon Disclosure Project. Human Capital Management We are driven to differentiate Plexus with our talent and by our culture. How we manage our human capital is critical to how we deliver on our strategy and create sustained growth and value for our shareholders. Purpose and Culture We recognize that a great culture is foundational to the success of our vision to create the products that build a better world. We are proud of our culture and the recognition we have received over the years as a great place to work. In building a great culture, we embrace four "non-negotiables": • Our Values and Leadership Behaviors – Our Values and Leadership Behaviors establish the foundation upon which our culture is built, representing key expectations we have of our employees and emblematic of the work environment we strive to create. Our 10 Values and Leadership Behaviors are: Customer Focus, Relationships and Teamwork, Excellence, Open Communication, Integrity, Prioritize our People, Solve Problems, Be Courageous, Be Strategic and Innovate. • Quality Begins with Me – We instill personal responsibility for quality in our employees through our Quality Begins with Me culture, a commitment to delivering zero defects and continuous improvement. A culture concentrated on each individual’s pledge that quality is critical to achieving our strategic goal of superior execution in delivering highly complex products in demanding regulatory environments. • 5Es of Customer Service Excellence – Through the 5Es of Customer Service Excellence, we describe for our employees what is required to exceed our customer’s expectations and enable growth through customer service excellence. In all aspects of our engagements, with both internal and external customers, we reflect the 5Es: We are Empathetic, Entrepreneurial, Empowered, Engaged, and we Ensure Accountability. • One Plexus – One Plexus reflects our sentiment that we are stronger together than the sum of our parts. We embrace the One Plexus mentality through collaboration to ensure consistent operations, globally, and leverage the strengths and best practices of all facets of the organization to drive the best solutions for our customers. Commitment to Values and Ethics Along with our Values and Leadership Behaviors, we act in accordance with our Code of Conduct and Business Ethics ("Code of Conduct"), which creates expectations and provides guidance for all employees and representatives of Plexus to make the right decisions. Our Code of Conduct includes topics such as anti-corruption, discrimination, harassment, privacy, appropriate use of company assets, protecting confidential information and reporting Code of Conduct violations. It is used to reinforce our passion for operating in a fair, honest, responsible and ethical manner and articulates our responsibilities as a trusted leader in the business community. The Code of Conduct also emphasizes the importance of having an open, welcoming environment in which all employees feel empowered to do what is right and are encouraged to voice concerns should violations of the Code of Conduct be observed. All employees are required to complete the training on the Code of Conduct annually. Human Rights Plexus is dedicated to preserving and protecting human rights around the globe. Our Human Rights Policy formalizes Plexus' commitment to respect human rights and embodies principles reflected in the United Nations ("UN") Global Compact, the Universal Declaration of Human Rights, the UN Guiding Principles on Business and Human Rights, core International Labour to Organization Conventions, the Organization for Economic Co-operation and Development Guidelines for Multinational Enterprises, and the laws of the countries in which we operate. The foundation of our commitment to international human rights stems from our values of integrity and excellence and is reinforced in our Code of Conduct, our membership in the RBA and 7 Table of Contents other Plexus policies and training. Our Human Rights Policy applies to all employees, representatives and contingent workers of Plexus and our subsidiaries as well as our business partners, including our supply chain. Diversity and Inclusion At Plexus, diversity and inclusion ("D&I") does not simply mean representation. It means encouraging engagement, inclusion of all employees’ ideas and perspectives and association among the global locations in which we operate—proudly representing approximately 15 countries our team members call home. We have adopted the following D&I mission statement at Plexus, which is directly incorporated into our Code of Conduct: "Our people create our best Plexus. Ingrained in our culture of inclusion is the philosophy that each individual offers diverse perspectives, backgrounds and experiences that create great outcomes when we are united as a team. We respect our people and embrace our differences. We welcome everyone and value the ideas generated by our collective uniqueness. We aspire that all of our teammates reach their full potential and we encourage them to simply, BE YOU!" Our strategy to enhance diversity at Plexus and to foster an inclusive culture includes the following: • D&I Committee and Board Oversight – To oversee strategic objectives and to ensure appropriate accountabilities exist to support our diversity and inclusion efforts, our executive leadership committee structure includes a Diversity and Inclusion Committee, made up of key members of executive management, including our Chief Executive Officer. In addition, our Compensation and Leadership Development Committee of our Board of Directors reviews the initiatives and results to cultivate a diverse workforce and inclusive culture. • Employee Resource Groups – Our Employee Resource Groups ("ERGs") are voluntary, employee-driven groups organized around common interests and legitimate business purposes. Plexus current ERGs include Plexus Young Professionals ("PYP"), UnusPlexus ("UP") and Women in Network ("WiN"). The goal of PYP is to create an environment that fosters collaboration and development for the young professionals at Plexus. UP's purpose is to celebrate the different cultures and diversity existing within Plexus. WiN has a mission to champion the advancement of women in their professional and personal development through various career and life changes. These groups are directly supported by executive-level leadership and management engages regularly in support of ERG programming. Plexus supports further expansion and enhancement efforts of existing ERGs as well as employee-driven creation of new ERGs. • Mentoring & Training – Plexus has established a formal mentoring program that aids in the development and retention of diverse talent, with a specific focus on future leaders within our underrepresented populations. In addition, the Company has invested in D&I leadership training on the value of diversity and how best to foster an inclusive culture. This training focuses on enhancing understanding of unconscious bias and enhancing the skills to being an inclusive leader. • Gender & Underrepresented Minorities Recruitment Strategy – Our talent acquisition teams have a strategic initiative to widen the funnel of talent seeking to join Plexus. Efforts in this space are customized by geography based on the current workforce dynamic. This includes partnerships with organizations such as Society of Women Engineering ("SWE"), universities with diverse student populations and minority groups supporting underrepresented minorities with leadership aspirations across many disciplines. • Employee Benefits & Programs – Plexus has a number of policies and benefits in place to support the unique needs and overall wellbeing of our team members and their families, including flexible workplace, paid parental leave and a Plexus Wellness Program to ensure our employees have access to the resources they need to lead healthy, balanced lives. For our employees, this includes access to our Employee Assistance Program (EAP), or similar program depending on country, which offers confidential support for managing stress and supporting mental health, including offering clinician, counselor, legal or financial resources to employees and members of their households. • Community Involvement & Volunteerism – Community involvement, volunteering and charitable giving are important to ensure we are investing and promoting positive impacts in the communities in which we operate and where our employees live. We offer an employee charitable match program for employees located in our AMER and EMEA regions to use, with plans to expand to our APAC region. Plexus also offers employees paid, volunteer time off for team members who want to give back at qualified organizations or community events. Talent Development & Acquisition In the pursuit of excellence, we nurture and grow our people. Our commitment to holistic talent management means that we expect and reward high performance and address underperformance with urgency, candor and empathy. Our team members receive and provide feedback with humility and a sincere interest to continuously improve. We engage in regular talent reviews to calibrate on the performance and potential of our teammates, their development needs, career pathing and the strength of our 8 Table of Contents succession plans. During these reviews, we also assess retention rates and the diversity composition of our leaders. Competency-based training, leadership development programs and online learning provide the foundation for a learning culture and ongoing development for team members at all levels. While our goal is to develop our own talent, we recruit technical, new graduate and experienced talent by valuing potential as well as experience and personality traits that align with our Values and Leadership Behaviors. Employee Engagement At every facility, in every organization and at all levels, we strive to continuously improve the engagement of our teammates. We survey employee engagement annually through our employee net promotor score and we identify strengths and act on areas of opportunity to enhance our work environment and increase employee satisfaction. In 2022, we received responses from 95% of our team members through the survey. Compensation Our philosophy is to competitively compensate all employees for their contributions to Plexus and to appropriately motivate employees to provide value to Plexus' shareholders. To ensure compensation is competitive, performance-based and fair, we are disciplined in the way we establish and evaluate pay. We assign each role a pay range based on its job accountabilities and the pay practices for similar roles in the marketplace. Employees are compensated within their applicable pay range based on a number of factors, including the employee's education, experience, performance and potential. At least annually, we reevaluate employee pay based on these criteria. Short and long-term incentive pay is designed to be competitive, improve employee retention, reward employees for performance supporting our strategic objectives and align employees with the interests of shareholders to deliver both short-term and long- term results. Approximately 18% and 3% of our employees participate in our short and long-term incentive programs, respectively. Worker Rights, Health, and Safety We are committed to complying with applicable laws, including those associated with labor and employment, across all areas of our operations. In addition, as an active member of RBA, we abide by their global standards, irrespective of legal requirements, regarding the treatment of workers. These include prevention of excessive working hours and unfair wages, controls to prohibit child labor and human trafficking and bolstering workplace health and safety measures. We are one of several companies actively partnering with the RBA to abolish human trafficking by holding foreign labor agencies accountable to upholding sound recruiting processes. Protecting our team members and those within our communities is essential. We strive to be the safest place for our employees away from home. Plexus takes an adaptive and proactive approach to ensure we conduct all of our operations across the globe safely and responsibly and we maintain a method of evaluating environmental, health and safety performance for continual improvement. This includes setting and reviewing environmental, health and safety goals. We are committed to providing a workplace that respects the health and safety of all those who work, visit or are contracted to provide a service in our facilities. Human Capital Management Governance As part of our governance structure, we have established an Organizational Performance Committee, an executive body comprised of the Chief Executive Officer, Senior Vice President ("SVP") of Human Resources and other executives that oversee our human capital strategy. In addition, our SVP of Human Resources and other key leaders within our Human Resources organization provide a quarterly update to the Compensation and Leadership Development Committee of the Board of Directors on our strategy for talent development and retention, including succession planning for key talent. This includes assessing the diversity of successor candidates for key management roles. Management also updates the Board of Directors regularly on employee-related policies and efforts intended to protect our employees and to preserve our corporate culture, such as the regular review of our Code of Conduct and Business Ethics, diversity and inclusion initiatives, employee net promoter survey results and our ethics hotline activity. Employee Data Of our nearly 25,000 team members, 49.9% are female, 50.0% are male and 0.1% choose not to identify. The majority of our workforce, 54.8%, is located in our APAC region, while 34.1% and 11.1% of our employees are located in our AMER and EMEA regions, respectively. Approximately 3,000 and 170 of our respective employees in Mexico and the United Kingdom are covered by union agreements. These union agreements are typically renewed at the beginning of each year, although in a few cases these agreements may last two or more years. Our employees in China, Germany, Malaysia, Romania, Thailand and the United States are not covered by union agreements. We have no history of labor disputes at any of our facilities, and we believe that our employee relationships are positive and stable. Given the quick response times required by our customers, we seek to maintain flexibility to scale our operations as necessary to maximize efficiency. To do so, we use skilled temporary labor in addition to our full-time employees. 9 Table of Contents Additional Information Our global headquarters is located at One Plexus Way, Neenah, Wisconsin, 54957. Plexus maintains a website at www.plexus.com. As soon as is reasonably practical, after we electronically file or furnish all reports to the Securities and Exchange Commission ("SEC"), we provide online copies of such reports, free of charge. These reports include: Proxy Statements, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Specialized Disclosure Reports on Form SD and amendments to those reports. These reports are also accessible at the SEC's website at www.sec.gov. Our Code of Conduct and Business Ethics is also posted on our website. You may access these SEC reports and the Code of Conduct and Business Ethics by following the links under "Investors" at our website. 10 Table of Contents ITEM 1A. RISK FACTORS Material risk factors to our business and financial performance are those that may impact our strategy, which is centered around four strategic pillars: Market Focus, Superior Execution, Passion Meets Purpose and Discipline by Design. This section lays out a number of material risks that may impact those strategic pillars. Other sections of this report also include risks that may impact our strategic business objectives and affect our financial performance. The risks included herein and elsewhere in this report are not exhaustive. In addition, due to the dynamic nature of our business, new risks may emerge from time to time and it is not possible for management to predict or assess the impact of all such risks on our business. Risks impacting our Market Focus The end markets we serve require technologically advanced products and such markets may be impacted by a number of factors that could adversely impact our customers’ demand. Factors affecting the technology-dependent end markets that we serve could adversely affect our customers and, as a result, Plexus. These factors include: • • • • customers’ ability or inability to adapt to rapidly changing technologies and evolving industry standards that can result in short product life-cycles or product obsolescence customers’ ability or inability to develop and market their products, some of which are new and untested the potential failure of our customers’ products to gain widespread commercial acceptance, and the availability of the components required to manufacture and service our customers' products. Even if our customers successfully respond to these market challenges, their responses, including any consequential changes we must make in our business relationships, services offered, or to our operations, can affect our production cycles, working capital levels and results of operations. Our customers do not make long-term commitments to us and may cancel or change their production requirements, which may strain resources and negatively impact our revenue, working capital levels and our operating results. We generally do not obtain firm, long-term purchase commitments from our customers, and frequently do not have visibility as to their future demand for our services. Customers also cancel, change or delay design, production or sustaining service quantities and schedules, or fail to meet their forecasts for a number of reasons beyond our control. Customer expectations can change rapidly, requiring us to take on additional commitments or risks. In addition, customers may fail to meet their commitments to us or our expectations. Cancellations, reductions or delays by a significant customer, or by a group of customers, could seriously harm our operating results and negatively affect our working capital levels. Such cancellations, reductions or delays have occurred from time to time and may continue to occur in the future. This risk continues to be heightened by potential volatility in end market demand for our customers' products or our services as a result of COVID-19, the current inflationary environment, supply chain constraints, global conflicts and general economic uncertainty. In addition, we make significant decisions based on our estimates of customers’ demand, including determining the levels of business that we will seek and accept, production schedules, component procurement commitments, working capital management, facility and capacity requirements, personnel needs and other resource requirements. The short-term nature of our customers’ commitments and the possibility of rapid changes in demand for their products affect our ability to accurately estimate their future requirements. Because certain of our operating expenses are fixed in the short or long term, a reduction in customer demand can harm our operating results. The need for us to correctly anticipate component needs is amplified in times of shortages. The current environment of tight component supply, which continues to be impacted by COVID-19 interruptions and other factors discussed above, can increase the difficulties and cost of anticipating changing demand. Moreover, because our margins vary across customers and specific programs, a reduction in revenue with higher margin customers or programs will have a more significant adverse effect on our operating results. Rapid increases in customer demand may stress personnel and other capacity resources. We may not have sufficient resources, including personnel and components, at any given time to meet all of our customers’ demands or to meet the requirements of a specific program, which could result in a loss of business from such customers. 11 Table of Contents Increased competition may result in reduced demand or reduced prices for our services. Our industry is highly competitive. We compete against numerous providers with global operations, as well as those which operate on only a local or regional basis. In addition, current and prospective customers continually evaluate the merits of designing, manufacturing and servicing products internally and may choose to design, manufacture or service products (including products or product types that we currently design, manufacture or service for them) themselves rather than outsource such activities. Consolidations and other changes in our industry may result in a changing competitive landscape. Our competitors may: • • • • • • • • • • • • • respond more quickly than us to new or emerging technologies be faster to develop new business models in response to evolving customer needs have greater name recognition, critical mass and geographic and market presence be better able to identify and take advantage of acquisition opportunities adapt more quickly to changes in customer requirements have lower internal cost structures have greater direct buying power with component suppliers and distributors devote greater resources to the development, promotion and sale of their services and execution of their strategy be better positioned to compete on price for their services have technological expertise, engineering capabilities and/or manufacturing resources that are greater than ours have excess capacity, and be better able to utilize such excess capacity be better positioned to add additional resources, and be willing or able to make sales or provide services at lower margins than we do. Our manufacturing processes are generally not subject to significant proprietary protection, and companies with greater resources or a greater market presence may enter our market or otherwise become increasingly competitive. Increased competition could result in significant price reductions, reduced sales and margins, or loss of market share. The majority of our net sales come from a relatively small number of customers and a limited number of market sectors; if we lose a major customer or program or if there are challenges in those market sectors, then our net sales and operating results could decline significantly. Net sales to our 10 largest customers have represented a majority of our net sales in recent periods. Our 10 largest customers accounted for 56.2% and 55.2% of our net sales in fiscal 2022 and 2021, respectively. During each of these periods there was one customer that represented 10.0% or more of our net sales. Our major customers may vary from period to period, and our major customers may not continue to purchase services from us at current levels, or at all, particularly given the volatile or temporary nature of certain programs. In any given period, a higher portion of our sales may be concentrated with customers or projects with relatively lower margins, which could adversely affect our results. We have experienced from time to time, and in the future may experience, significant disengagements with customers or of programs, adverse changes in customer supply chain strategies and the end of life of significant programs. Especially given our discrete number of customers, the loss of, or significant reductions in net sales to, any of our major customers or our failure to make appropriate choices as to the customers we serve could seriously harm our business and results of operations. In addition, we focus our sales efforts on customers in only a few market sectors, as identified in Part I, Item 1, herein. Each of these sectors is subject to macroeconomic conditions, as well as trends and conditions that are sector specific. Any weakness in our customers’ end markets could affect our business and results of operations. Economic, business or regulatory conditions that affect the sector, or our failure to choose to do business in appropriate subsectors, can particularly impact us. For instance, sales in the Healthcare/Life Sciences sector are substantially affected by trends in the healthcare industry, such as government reimbursement rates and uncertainties relating to the U.S. healthcare sector, generally. In addition, the Healthcare/Life Sciences sector is affected by health crises, such as COVID-19. The semiconductor industry has historically been subject to significant cyclicality and volatility. Further, changing U.S. government export regulations including recent regulations relating to the export of advanced semiconductors and chip- manufacturing equipment that may limit our ability to ship certain components or customer products to China, or potential reductions in U.S. government agency spending, including those due to budget cuts or other political developments or issues, could affect opportunities in all of our market sectors. We rely on timely and regular payments from our customers, and the inability or failure of our major customers to meet their obligations to us or their bankruptcy, insolvency or liquidation may adversely affect our business, financial condition and results of operations. We also have receivables factoring agreements in place; therefore, deterioration in the payment experience 12 Table of Contents with or credit quality of our major customers we factor, or issues with the banking counterparties to our factoring agreements, could have a material adverse effect on our financial condition and results of operations due to our inability to factor such receivables. From time to time, our customers have been affected by merger, acquisition, divestiture and spin-off activity. While these transactions may present us with opportunities to capture new business, they also create the risk that these customers will partially reduce their purchases or completely disengage from us as a result of transitioning such business to our competitors or their internal operations. We and our customers are subject to increasingly extensive government regulations, legal requirements and industry standards; a failure to comply with current and future regulations, requirements and standards could have an adverse effect on our business, customer relationships, reputation and profitability. We and our customers are subject to extensive government regulation, legal requirements and industry standards (as well as customer-specific standards) relating to the products we design, manufacture and service as well as how we conduct our business. This includes regulations and standards relating to labor and employment practices, workplace health and safety, the environment, sourcing and import/export practices, the market sectors we support and many other facets of our operations. The regulatory climate in the U.S. and other countries has become increasingly complex and fragmented, and regulatory enforcement activity has increased in recent periods. Regulatory changes and restrictions can be announced with little or no advance notice. A failure to comply with laws, regulations or standards applicable to our business can result in, among other consequences, fines, injunctions, civil penalties, criminal prosecution, recall or seizure of devices, total or partial suspension of production, including debarment, and could have an adverse effect on our reputation, customer relationships, profitability and results of operations. Our Healthcare/Life Sciences sector is subject to statutes and regulations covering the design, development, testing, manufacturing, labeling and servicing of medical devices and the reporting of certain information regarding their safety, including FDA regulations and similar regulations in other countries. We also design, manufacture and service products for certain industries, including certain applications where the U.S. government is the end customer, that face significant regulation by the Department of Defense, Department of State, Department of Commerce, Federal Aviation Authority and other governmental agencies in the U.S. as well as in other countries, and also under the Federal Acquisition Regulation. In addition, whenever we pursue business in new sectors and subsectors, or our customers pursue new technologies or markets, we need to navigate the potentially heavy regulatory and legislative burdens of such sectors, as well as standards of quality systems, technologies or markets. Failure to navigate these regulatory obligations and burdens could impact our operating results as well as cause reputational damage. The regulatory climate can itself affect the demand for our services. For example, government reimbursement rates and other regulations, as well as the financial health of healthcare providers, and changes in how healthcare in the U.S. and other countries is structured, and how medical devices are taxed, could affect the willingness and ability of end customers to purchase the products of our customers in the Healthcare/Life Sciences sector as well as impact our margins. Our customers are also required to comply with various government regulations, legal requirements and industry standards, including many of the industry- specific regulations discussed above. Our customers’ failure to comply could affect their businesses or reputation, which in turn would affect our sales to them and pose potential reputational risk to us. In addition, if our customers are required by regulation or other requirements to make changes in their product lines, these changes could significantly disrupt particular programs we have in place for these customers and create inefficiencies in our business. Failure of our customers to identify or flow down any such requirements to Plexus could result in production of non-compliant product, which could restrict their ability to sell such products, thus affecting our sales to them. We may fail to identify acquisition targets, or successfully complete future acquisitions, and may not successfully integrate acquired operations or recognize the anticipated benefits of an acquisition, which could adversely affect our operating results. If we were to pursue future growth through acquisitions, they would involve significant risks that could have a material adverse effect on us. These include operating risks such as the inability to successfully identify acquisition targets or, once a target is identified, to successfully negotiate and close an acquisition; to integrate businesses, systems and personnel; to navigate potential impacts on customer programs and relationships; and to realize anticipated synergies or economies of scale. They also include strategic risks such as the diversion of management time and attention from other business activities and opportunities and financial risks such as the use of cash or incurrence of additional debt and interest expense as consideration for the acquisition and to fund the activities required to pursue acquisitions, the potential volatility or weakness in our stock price as a 13 Table of Contents result of the announcement of such transactions, the incurrence of large write-offs or write-downs if the acquisition is not successful and other potential financial impacts. Risks impacting our Superior Execution Plexus is a multinational corporation and operating in multiple countries exposes us to increased risks, including adverse local developments and currency risks. We have operations in many countries. Operations outside of the U.S. in the aggregate represent a majority of our net sales and operating income, with a particular concentration in Malaysia. In addition, although we have repatriated a substantial amount of cash since the enactment of the U.S. Tax Cuts and Jobs Act (“U.S. Tax Reform”) in 2017, a significant amount of our cash balances remain held outside of the U.S., with a particular concentration in Malaysia and China. We purchase a significant number of components manufactured in various countries. These international aspects of our operations, which are likely to increase over time, including with the introduction of a new manufacturing facility in Bangkok, Thailand, subject us to the following risks that could materially impact our operations and operating results: • • • • • • • • • • • • • • • economic, political or civil instability civil or international conflicts and war, including the risk of escalation in the Russia-Ukraine war, escalating tensions between China and Taiwan as well as China and the U.S. transportation delays or interruptions exchange rate fluctuations potential disruptions or restrictions on our ability to access cash amounts held outside of the U.S. changes in labor markets, such as government-mandated wage increases (which we are experiencing in Malaysia), increases to minimum wage requirements, changes in union-related laws and regulations, limitations on immigration or the free movement of labor or restrictions on the use of migrant workers, and difficulties in appropriately staffing and managing personnel in diverse cultures customers shifting parts of their manufacturing and supply chains to different countries, often referred to as re-shoring, which may impact footprint needs and create operational disruption due to transition efforts compliance with laws, such as the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and the European Union’s General Data Protection Regulation (the “GDPR”), applicable to companies with global operations changing U.S. government export regulations, particularly relating to advanced semiconductors and chip-manufacturing equipment, may limit the ability to ship certain components or customer product to China, and source the components necessary to manufacture customer product in China changes in the taxation of earnings both in the U.S. and in other countries reputational risks related to, among other factors, varying standards and practices among countries changes in duty rates significant natural disasters and other events or factors impacting local infrastructure the effects of other international political developments, such as tariffs, embargoes, sanctions, boycotts, trade wars, energy disruptions, trade agreements and changes in trade policies, including those which may be effected by the U.S. and other countries’ political reactions to those actions, and regulatory requirements and potential changes to those requirements. As our international operations continue to expand, our failure to appropriately address foreign currency transactions or the currency exposures associated with assets and liabilities denominated in non-functional currencies could adversely affect our consolidated financial condition, results of operations and cash flows. In addition, developments affecting particular countries can adversely affect our ability to access cash or other assets held in such countries. A significant portion of our operations currently occurs in the APAC region, particularly in Malaysia. The concentration of our operations, workforce, assets and profitability in that region exposes us to adverse developments, economic, political or otherwise, in those countries. Changes in policies or trade agreements by or changes in elected officials of the U.S. or other governments could negatively affect our operating results due to trade wars, changes in duties, tariffs or taxes, currency exchange rate fluctuations, higher costs of compliance, or limitations on currency or fund transfers, as well as government-imposed restrictions on producing certain products in, or shipping them to, specific countries. Our current facilities in Mexico operate under the Mexican Maquiladora (“IMMEX”) program. This program provides for reduced tariffs and eased import regulations. We could be adversely affected by changes in the IMMEX program or our failure to comply with its requirements. 14 Table of Contents Additionally, continued uncertainty regarding commercial dealings, tariffs, export regulations and other trade protection measures between the U.S. and China, heightened by escalating geopolitical tensions, may affect our ability to do business in China, may impact the cost of our products originating in China and may impact the demand for our products manufactured in China in the event our customers reduce or eliminate their operations in China. These actions could also affect the cost and/or availability of components that we procure from suppliers in China, as well as create disruptions, delays, shortages or increased costs within our global supply chain. Government-imposed restrictions on where we or our customers can produce certain types of products or source components or with whom we can conduct business, such as named companies or industries identified in the 2021 National Defense Authorization Act and recent export regulations limiting advanced semiconductors and chip-manufacturing equipment, could limit our ability to sell or manufacture products or services in China, or source components from certain companies or geographies. These factors can negatively affect operating results and financial position, including reducing our revenues, costs and profitability as a result of having to minimize engagements in China or requiring us to shift such production or the sourcing of components to the U.S. or other higher-cost locations. Further, the extent to which the conflict between Russia and Ukraine or the escalating tensions between China and Taiwan or China and the U.S. may impact our business or results of operations will depend on future developments, including the severity and duration of any conflicts, their impact on global supply chains and their impact on regional and global economic conditions including the ability of our customers or suppliers to do business in those or surrounding countries and the inflationary effects of such conflicts on our profitability. These tensions have resulted in, and may continue to cause, global disruptions creating significant volatility in financial markets and the global economy. We experience component shortages, delays, price fluctuations and supplier quality concerns. We generally do not have long-term supply agreements. We have experienced from time to time and are currently experiencing significant component shortages and longer lead-times due to supplier capacity constraints. Supply chain constraints and delays can be caused by world events, such as government policies, tariffs, trade wars, trade disputes and trade protection measures, terrorism, armed conflict, natural disasters, economic recession, increased demand due to economic growth, preferential allocations, transportation challenges, and other localized events. For example, escalating tensions between China and Taiwan (and/or any trade restrictions that may be imposed in response) may impact our ability to procure semiconductors and other components. Further, we rely on a limited number of suppliers for many of the components used in the assembly process and, in some cases, may be required to use suppliers that are the sole provider of a particular component. Such suppliers may encounter quality problems, labor disputes or shortages, financial difficulties or business continuity issues that could preclude them from delivering components timely or at all. Supply shortages and delays in deliveries of components may result in delayed production of assemblies, which reduces our revenue and operating profit for the periods affected. Additionally, a delay in obtaining a particular component may result in other components for the related program being held for longer periods of time, increasing working capital, risking inventory obsolescence and negatively impacting our cash flow. We are currently experiencing higher inventory levels as a result of component shortages. Due to the highly competitive nature of our industry, an inability to obtain sufficient inventory on a timely basis or successfully execute on our business continuity processes, could also harm relationships with our customers and lead to loss of business to our competitors. In addition, components that are delivered to us may not meet our specifications or other quality criteria. Certain components provided to us may be counterfeit or violate the intellectual property rights of others. The need to obtain replacement materials and parts may negatively affect our manufacturing operations. The inadvertent use of any such parts or products may also give rise to liability claims. Further, the commitments made to us by our suppliers, and the terms applicable to such relationships, may not match all the commitments we make to, and the terms of our arrangements with our customers, and such variations may lead us to incur additional expense or liability and/or cause other disruptions to our business. Component supply shortages and delays in deliveries, along with other factors such as tariffs, trade disputes or embargos, inflation, and rising energy and transportation costs, can also result in increased pricing. While many of our customers permit quarterly or other periodic adjustments to pricing based on changes in component prices and other factors, we may bear the risk of price increases that occur between any such repricing or, if such repricing is not permitted, during the balance of the term of the particular customer contract. In addition, these repricing or pricing recoveries have been and may continue to be dilutive to our operating margin. Conversely, as a result of our pricing strategies and practices, component price reductions have contributed positively to our operating results in the past. Our inability to continue to benefit from such reductions in the future could adversely affect our operating results, cash flows and inventory levels, which could increase as a result of higher component prices or the negative effects of inflation on customer end- market demand. 15 Table of Contents Our services involve other inventory risk. Most of our services are provided on a turnkey basis, under which we purchase some, or all, of the required materials and components based on customer forecasts or orders. Although, in general, our commercial contracts with our customers obligate our customers to ultimately purchase inventory ordered to support their forecasts or orders, we generally finance these purchases initially. In addition, suppliers may require us to purchase materials and components in minimum order quantities that may exceed customer requirements. A customer’s cancellation, delay or reduction of forecasts or orders can also result in excess inventory or additional expense to us. Engineering changes by a customer may result in obsolete materials or components. While we attempt to cancel, return or otherwise mitigate excess and obsolete inventory, require customers to reimburse us for these items and/or price our services to address related risks, we may not actually be reimbursed timely or in full, be able to collect on these obligations or adequately reflect such risks in our pricing. In addition to increasing inventory in certain instances to support new program ramps, we may also increase inventory if we experience component shortages or longer lead-times for certain components in order to maintain a high level of customer service. In such situations, we may procure components earlier, which has led to an increase in inventory in the short term and may lead to increased, excess, or obsolete inventory in the future. Excess or obsolete inventory, the need to acquire increasing amounts of inventory due to shortages, customer demand or otherwise, or other failures to manage our working capital, could adversely affect our operating results, including our return on invested capital. In addition, we provide managed inventory programs for some of our customers under which we hold and manage finished goods or work-in-process inventories. These managed inventory programs may result in higher inventory levels, further reduce our inventory turns and increase our financial exposure with such customers. In addition, our inventory may be held at a customer’s facility or warehouse, or elsewhere in a location outside of our control, which may increase the risk of loss. Even though our customers generally have contractual obligations to purchase such inventories from us, we remain subject to customers’ credit risks as well as the risk of potential customer default and the need to enforce those obligations. We have a complex business model, and our failure to properly manage or execute on that model could adversely affect our operations, financial results and reputation. Our business model focuses on products and services that are highly complex and subject to demanding regulatory requirements. Our customers’ products typically require significant production and supply-chain flexibility necessitating optimized solutions across an integrated global platform. The products we design, manufacture and service are also typically complex, heavily regulated and require complicated configuration management and direct order fulfillment capabilities to global end customers. Our business model requires working capital, management and technical personnel, and the development and maintenance of systems and procedures to manage diverse manufacturing, regulatory and service requirements for multiple programs of varying sizes simultaneously, including in multiple locations and geographies. We also depend on securing and ramping new customers and programs as well as transitioning production for new customers and programs, which creates added complexities related to managing the start-up risks of such projects, especially for companies that did not previously outsource such activities. The complexity of our model, which encompasses a broad range of services including design and development, supply chain solutions, new product introduction, manufacturing and sustaining services, often results in complex and challenging contractual obligations and unique customer requirements. In addition, program complexity and associated customer expectations have increased in recent years with respect to certain capabilities, commitments, allocation of risk and compliance with third party standards, requiring extraordinary measures to ensure operational execution and compliance within unique, non-standard engagements. This is especially relevant to our expanding sustaining services business, where each customer program presents unique logistical, operational and supply chain risks that differ from those found in our manufacturing or engineering engagements. If we fail to meet those obligations, or are otherwise unable to execute on our commitments or unsuccessfully mitigate such risks, then it could result in claims against us, regulatory violations, or adversely affect our reputation and our ability to obtain future business, as well as impair our ability to enforce our rights (including those related to payment) under those contracts. A failure to adequately understand unique customer requirements may also impact our ability to estimate and ultimately recover associated costs, adversely affecting our financial results. 16 Table of Contents Many of our customers' markets are characterized by rapidly changing technology and evolving process developments. Our internal processes are also subject to these factors. The sustained success of our business will depend upon our continued ability to: • • • • • • attract and retain qualified engineering and technical personnel, especially in times of tight labor markets choose, maintain and enhance appropriate technological and service capabilities successfully manage the implementation and execution of information systems develop and market services that meet changing customer needs effectively execute our services and perform to our customers’ expectations, and successfully anticipate, or respond to, technological changes on a cost-effective and timely basis. Although we believe that our operations utilize the technologies, equipment and processes that are currently required by our customers, we cannot be certain that we will maintain or develop the capabilities required by our customers in the future. The emergence of new technologies, industry standards or customer requirements may render our technical personnel, equipment, inventory or processes obsolete or noncompetitive. In addition, we may have to acquire new skills, technologies and equipment to remain competitive, as well as offer new or additional services, all of which may require significant expense or capital investment that could reduce our liquidity and negatively affect our operating results. Our failure to anticipate and adapt to our customers’ changing technological needs and requirements, or to perform to their expectations or standards, as well as our need to maintain our personnel and other resources during times of fluctuating demand, could have an adverse effect on our business. Natural disasters including weather events caused by global climate change, breaches of security and other events outside our control, and the ineffective management of such events, may harm our business. Some of our facilities are located in areas that may be impacted by natural disasters including tornadoes, hurricanes, earthquakes, water shortages, tsunamis and floods. All facilities are subject to other natural or man-made disasters such as those related to weather events or global climate change, fires, acts of terrorism or war, breaches of security, theft or espionage, workplace violence and failures of utilities. If such an event was to occur and we did not have an effective business continuity plan in place, our business could be harmed due to the event itself or due to our inability to effectively manage the effects of the particular event, with the impact of the event potentially magnified in areas where we have multiple facilities in close proximity. For example, we maintain significant production capacity in Penang, Malaysia, and an event in that geography could materially hinder our production capabilities. Potential harms include the loss of business continuity, financial risk, the loss of business data and damage to infrastructure. These natural disasters and physical climate risks could also disrupt our operations by impacting the availability and cost of materials within our supply chain, and could also increase insurance and other operating costs. These factors may impact our decisions to construct new facilities or maintain existing facilities in areas most prone to physical climate risks, such as our facilities in Malaysia that are at or near sea level. In addition, some of our facilities possess certifications or unique equipment necessary to work on specialized products that our other locations lack. If work is disrupted at one of these facilities, it may be impractical or we may be unable to transfer such specialized work to another facility without significant costs and delays. Thus, any disruption in operations at a facility possessing specialized certifications or equipment could adversely affect our ability to provide products and services to our customers, and potentially have a negative affect our relationships and financial results. Although we have implemented policies and procedures with respect to physical security, we remain at risk of unauthorized access to our facilities and the possible unauthorized use or theft of inventory, information or other physical assets. If unauthorized persons gain physical access to our facilities, or our physical assets or information are stolen, damaged or used in an unauthorized manner (whether through outside theft or industrial espionage), we could be subject to, among other consequences, negative publicity, governmental inquiry and oversight, loss of government contracts, litigation by affected parties or other future financial obligations related to the loss, misuse or theft of our or our customers’ data, inventory or physical assets, any of which could have a material adverse effect on our reputation and results of operations. An inability to successfully manage the procurement, development, implementation or execution of information systems, or to adequately maintain these systems and their security, as well as to protect data and other confidential information, may adversely affect our business and reputation. As a global company with a complex business model, we are heavily dependent on our information systems to support our customers’ requirements and to successfully manage our business. Any inability to successfully manage the procurement, development, implementation, execution or maintenance of our information systems, including matters related to system and data security, cybersecurity, privacy, reliability, compliance, performance and access, as well as any inability of these systems to fulfill their intended purpose within our business, could have an adverse effect on our business. 17 Table of Contents In the ordinary course of business, we collect and store sensitive data and information, including our proprietary and regulated business information and that of our customers, suppliers and business partners, as well as personally identifiable information about our employees. Our information systems, like those of other companies, are susceptible to malicious damage, intrusions and outages due to, among other events, viruses, cyber threats, industrial espionage (internal or external), hacking, break-ins and similar events, other breaches of security, natural disasters, power loss or telecommunications failures. Due to the intellectual property we maintain on our systems related to high technology components, sub-components, manufacturing processes and our customers’ products, we are a likely target from various external cyber threats, such as lone attackers, nation states seeking to gain access to such intellectual property, as well as both unintentional and malicious internal threats. In addition, lone and organized crime elements have been known to extort money by encrypting their victims’ data (ransomware) and utilize their victims’ resources for unauthorized mining of cryptocurrency. The increasing sophistication of cyberattacks requires us to continually evaluate the threat landscape and new technologies and processes intended to detect and prevent these attacks. There can be no assurance that the security measures and systems configurations we choose to implement will be sufficient to protect the data we manage. Any theft or misuse of information resulting from a security breach could result in, among other things, loss of significant and/or sensitive information, litigation by affected parties, financial obligations resulting from such theft or misuse, higher insurance premiums, governmental investigations, fines and penalties, negative reactions from current and potential future customers, and reputational damage, any of which could adversely affect our financial results. Also, the time and funds spent on monitoring and mitigating our exposure and responding to breaches, including the training of employees, the purchase of protective technologies and the hiring of additional employees and consultants to assist in these efforts could adversely affect our financial results. This risk is enhanced as a result of an increase in our remote workforce due to evolving flexible workplace practices, for example by reason of utilizing home networks that may lack encryption or secure password protection, virtual meeting/conference security concerns and increase of phishing/cyber-attacks around our remote workforce's digital resources. Moreover, we are subject to increasing expectations and data security requirements from our customers, generally, as well as specific data handling requirements due to the nature of their end products, including those related to the Export Administration Regulations/International Traffic in Arms, Federal Acquisition Regulation, Defense Federal Acquisition Regulation Supplement and Cybersecurity Maturity Model Certification. Any operational failure or breach of security from increasingly sophisticated cyber threats could lead to the loss or disclosure of our or our customers’ financial, product or other confidential information, result in adverse regulatory or other legal actions and have a material adverse effect on our business and reputation. In addition, we must comply with increasingly complex and rigorous regulatory standards enacted to protect business and personal data in the U.S. and elsewhere. For example, GDPR and similar legislation in jurisdictions in which we operate impose additional obligations on companies regarding the handling of personal data and provides certain individual privacy rights to persons whose data is stored. Compliance with existing, proposed and recently enacted laws and regulations can be costly. Failure to comply with these regulatory standards could subject us to legal and reputational risks. Misuse of or failure to secure personal information could also result in violation of data privacy laws and regulations, proceedings against us by governmental entities or others, fines and penalties, damage to our reputation and credibility and could have a negative impact on our business and results of operations. There may be problems with the products we design, manufacture or service that could result in liability claims against us, reduced demand for our services and damage to our reputation. We design, manufacture and service products to our customers’ specifications, many of which are highly complex, for industries such as healthcare, aerospace and defense that have higher risk profiles. Despite our quality control and quality assurance efforts, problems may occur, or may be alleged, in the design, manufacturing or servicing of these products. Whether or not we are responsible, problems in the products we manufacture, whether real or alleged, whether caused by faulty customer specifications, the design or manufacturing processes, servicing or a component defect, may result in delayed shipments to customers or reduced or canceled customer orders. If these problems were to occur in large quantities or too frequently, our business reputation may also be tarnished. In addition, such problems may result in liability claims against us, whether or not we are responsible. These potential claims may include damages for the recall of a product or injury to person or property. Even if customers or third parties, such as component suppliers, are responsible for defects, they may not, or may not be able to, assume responsibility for any such costs or required payments to us. While we seek to secure contractual protection and/or to insure against many of these risks, we may not have practical recourse against certain suppliers, and contractual protections, insurance coverage or supplier warranties, as well as our other risk mitigation efforts, may be inadequate, not cost effective or unavailable, either in general or for particular types of products or issues. We occasionally incur costs defending claims, and any such disputes could adversely affect our business relationships. 18 Table of Contents A failure to comply with customer-driven policies and standards, and third-party certification requirements or standards could adversely affect our business and reputation. In addition to government regulations and industry standards, our customers may require us to comply with their own or third-party quality standards, commercial terms, or other business policies or standards, which may be more restrictive than current laws and regulations as well as our pre-existing policies and/or terms with our suppliers, before they commence, or continue, doing business with us. Such policies or standards may be customer-driven, established by the industry sectors in which we operate or imposed by third party organizations. Our compliance with these heightened and/or additional policies, standards and third-party certification requirements, and managing a supply chain in accordance therewith, could be costly, and our failure to comply could adversely affect our operations, customer relationships, reputation and profitability. In addition, our adoption of these standards could adversely affect our cost competitiveness, ability to provide customers with required service levels and ability to attract and retain employees in jurisdictions where these standards vary from prevailing local customs and practices. In certain circumstances, to meet the requirements or standards of our customers we may be obligated to select certain suppliers or make other sourcing choices, and we may bear responsibility for adverse outcomes even if these matters are as the result of third-party actions or outside of our control. Intellectual property infringement claims against our customers or us could harm our business. Although our manufacturing processes are generally not subject to significant proprietary protection, our services may and our customers' products do involve the creation and use of intellectual property rights, which subject us and our customers to the risk of claims of intellectual property infringement from third parties. In addition, our customers may require that we indemnify them against the risk of intellectual property infringement. If any claims are brought against us or our customers for infringement, whether or not these have merit, then we could be required to expend significant resources in defense of those claims. In the event of an infringement claim, we may be required to spend a significant amount of money to develop non-infringing alternatives or obtain licenses. We may not be successful in developing alternatives or obtaining licenses on reasonable terms or at all. Infringement by our customers could cause them to discontinue production of some of their products, potentially with little or no notice, which may reduce our net sales to them and disrupt our production. Additionally, if third parties on whom we rely for products or services, such as component suppliers, are responsible for an infringement (including through the supply of counterfeit parts), we may or may not be able to hold them responsible and we may incur costs in defending claims or providing remedies. Such infringements may also cause our customers to abruptly discontinue selling the impacted products, which would adversely affect our net sales of those products and could affect our customer relationships more broadly. Similarly, claims affecting our suppliers could cause those suppliers to discontinue selling materials and components upon which we rely. Risks impacting our Passion Meets Purpose We depend on our workforce, and the inability to attract, develop and retain personnel or other personnel disruptions may harm our business. If we fail to attract, develop and retain sufficient qualified personnel, including key leadership positions and highly skilled technical roles, our operations and, consequently, our financial results, could be adversely affected. A number of factors may adversely affect labor availability in one or more of our locations, including local labor laws and practices or union activities, wage pressure and changing wage requirements, increasing healthcare costs, restrictions on immigration or labor mobility, local competition, high employment rates and high turnover rates. These labor-related issues and labor shortages have become more pronounced. We have been subject to inflationary or other general labor cost increases due to current economic conditions, which have increased our costs. If we are unable to offset these labor cost increases through price increases, growth or operational efficiencies, these inflationary or general labor cost increases could have a material adverse effect on our operating results and cash flows. Further, our adoption of certain third-party health, safety and other employment-related regulatory standards could adversely affect our ability to attract and retain employees in jurisdictions where these standards vary from prevailing local customs and practices. Additionally, any of these factors could drive an increase in turnover rates within our existing workforce, which could lead to decreased efficiency and increased costs, such as increased over time to meet demand and increased wage rates to attract and retain employees. We also depend on good relationships with our workforce. Monitoring employee engagement and maintaining a healthy workplace culture based on our values and leadership behaviors is important to developing these good relationships and 19 Table of Contents retaining a committed workforce. A failure to foster a strong, healthy culture, or a failure to adopt or maintain competitive policies and practices that enhance our workplace culture, such as those related to diversity and inclusion, workplace flexibility or other employee benefits, could adversely impact our ability to attract, develop and retain personnel and could substantially affect our operations and financial results. From time to time, there are changes and developments, such as retirements, promotions, transitions, disability, death and other terminations of service that affect our executive officers and other key employees, including those that are unexpected. Transitions or other changes in responsibilities among officers and key employees without having identified and ready successors for these critical roles, particularly when such changes are unanticipated, unplanned or not executed effectively, inherently can cause disruptions to our business and operations, as well as harm our reputation, which could have an effect on our results. Further, as we grow in size and complexity, a failure to continuously focus on the development of personnel and plan for the succession of critical roles may result in shortfalls in the talent required to execute effectively and affect our operations and financial results. Evolving expectations on environmental, social and governance ("ESG") matters, including global climate change, by various stakeholders could negatively affect our business. Customer, investor and employee expectations relating to ESG have been rapidly evolving and increasing. In addition, government organizations are enhancing or advancing legal and regulatory requirements specific to ESG matters. The heightened stakeholder focus on ESG issues related to our business requires the continuous monitoring of various and evolving laws, regulations, standards and expectations and the associated reporting requirements. Specifically, certain stakeholders are beginning to require that we provide information on our plans relating to certain climate-related matters such as greenhouse gas emissions, and we expect this trend to continue and be amplified by the potential adoption of the proposed U.S. Securities and Exchange Commission ("SEC") regulations relating to climate change disclosure. A failure to adequately meet stakeholder expectations and reporting requirements may result in noncompliance with any imposed regulations, the loss of business, reputational impacts, diluted market valuation, an inability to attract and retain customers, and an inability to attract and retain top talent. In addition, our adoption and the reporting of certain standards or mandated compliance to certain requirements could necessitate additional investments that could impact our profitability. There continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty. Such uncertainty may have an impact on our business, from the demand for our customers’ products in various industries to our costs of compliance in the manufacturing and servicing of our customers’ products, all of which may impact our results of operations. Further, increased public awareness and concern regarding global climate change may result in new or enhanced requirements and/or stakeholder expectations to reduce or mitigate the effects of greenhouse gas emissions and transition to low-carbon alternatives, driven by policy and regulations, low- carbon technology advancement and shifting consumer sentiment and societal preferences. These transition risks could negatively impact our financial condition and results of operations including by means of carbon pricing mechanisms, required investments in lower greenhouse gas emissions technology, increased cost of raw materials and mandates on and regulation of existing products and services. In addition, transition to low-carbon alternatives risks could result in reduced demand or product obsolescence for certain of our customers’ products and/or price modifications for our customers’ products and the resources needed to produce them. This could in turn put pressure on our manufacturing costs and result in reduced profit margin associated with certain of our customer programs, or loss of customer programs that we may not be able to replace. Risks impacting our Discipline By Design Challenges associated with the engagement of new customers or programs, the provision of new services, or start-up costs and inefficiencies related to new, recent or transferred programs could affect our operations and financial results. Our engagement with new customers, as well as the addition of new programs or types of services for existing customers, can present challenges in addition to opportunities. We must initially determine whether it would be in our interests from a business perspective to pursue a particular potential new customer, program or service, including evaluating whether the customer, program or service fits with our value proposition as well as its potential end- market success. If we make the decision to proceed, we need to ensure that our terms of engagement, including our pricing and other contractual provisions, appropriately reflect the strategic nature of the customer, anticipated costs, risks and rewards. The failure to make prudent engagement decisions or to establish appropriate terms of engagement could adversely affect our profitability and margins. 20 Table of Contents Also, there are inherent risks associated with the timing and ultimate realization of anticipated revenue from a new program or service; these factors can sometimes extend for a significant period. Some new programs or services require us to devote significant capital and personnel resources to new technologies and competencies. We may not meet customer expectations, which could damage our relationships with the affected customers and impact our ability to deliver conforming product or services on a timely basis. Further, the success of new programs may depend heavily on factors such as product reliability, market acceptance, regulatory approvals or economic conditions. The failure of a new program to meet expectations on these factors, or our inability to effectively execute on a new program’s or service’s requirements, could result in lost financial opportunities and adversely affect our results of operations. In recent years, ramping new programs has been a key contributor to our revenue growth. The management of resources in connection with the establishment of new or recent programs and customer relationships, as well as program transfers between facilities and geographies, and the need to estimate required resources in advance of production can adversely affect our gross and operating margins and level of working capital. These factors are particularly evident in the early stages of the life-cycle of new programs, which typically lack a track record of order volume and timing as well as production efficiencies in the early stages. We typically manage multiple new programs at any given time; therefore, we are exposed to these factors in varying magnitudes. The effects of these start-up costs and inefficiencies can also occur when we transfer programs between locations and geographies. We conduct these transfers on a regular basis to meet customer needs, seek long-term efficiencies or respond to market conditions, as well as due to facility openings and closures. We may also be required to transfer projects between facilities due to tariffs and other trade measures impacting particular countries such as China. Although we try to recover costs from our customers and minimize the potential losses arising from transitioning customer programs between our facilities and geographies, we may not be successful and there are inherent risks that such transitions can result in operational inefficiencies and the disruption of programs and customer relationships. While these factors tend to affect new, recent or transferred programs, they can also impact more mature or maturing programs and customer relationships, especially programs where end-market demand can be somewhat volatile. Failure to manage periods of growth or contraction may seriously harm our business. Our industry frequently sees periods of expansion and contraction. We regularly contend with these issues and must carefully manage our business to meet changing customer and market requirements. If we fail to manage these growth and contraction decisions effectively, as well as fail to realize the anticipated benefits of these decisions, we can find ourselves with either excess or insufficient resources and our business, as well as our profitability, may suffer. Expansion and consolidation, including the transfer of operations to new or other facilities or due to acquisitions, can inherently include additional costs and start-up inefficiencies. For example, we expanded our geographic locations by constructing a new manufacturing facility in Bangkok, Thailand, to supplement our footprint in the Asia-Pacific region. In addition, we may expand our operations in new geographical areas where currently we do not operate. If we are unable to effectively manage this or other expansions or consolidations, or related anticipated net sales are not realized, our operating results could be adversely affected. Other risks of current or future expansions, acquisitions and consolidations include: • • • • • • • • • the inability to successfully integrate additional facilities or incremental capacity and to realize anticipated efficiencies, economies of scale or other value challenges faced as a result of transitioning programs incurrence of restructuring costs or other charges that may be insufficient or may not have their intended effects additional fixed or other costs, or selling and administrative expenses, which may not be fully absorbed by new business a reduction of our return on invested capital, including as a result of excess inventory or excess capacity at new facilities, as well as the increased costs associated with opening new facilities difficulties in the timing of expansions, including delays in the implementation of construction and manufacturing plans diversion of management's attention from other business areas during the planning and implementation of expansions strain placed on our operational, financial and other systems and resources, and inability to locate sufficient customers, employees or management talent to support the expansion. Periods of contraction or reduced net sales, or other factors affecting particular sites, create other challenges. We must determine whether facilities remain viable, whether staffing levels need to be reduced and how to respond to changing levels of customer demand. While maintaining excess capacity or higher levels of employment entail short-term costs, reductions in capacity or employment could impair our ability to respond to new opportunities and programs, market improvements or to 21 Table of Contents maintain customer relationships. Our decisions to reduce costs and capacity can affect our short-term and long-term results. When we make decisions to reduce capacity or to close facilities, we frequently incur restructuring costs. In addition, to meet our customers' needs, particularly when the production requirements of certain products are site-specific, to achieve increased efficiencies, or to address factors affecting specific locations, such as tariffs and trade disputes, we sometimes require additional capacity in one location while reducing capacity in another. Since customers’ needs and market conditions can vary and change rapidly, we may find ourselves in a situation where we simultaneously experience the effects of contraction in one location and expansion in another location. We may also encounter situations where our lack of a physical presence in certain locations may limit or foreclose opportunities. Changes in tax laws, potential tax disputes, negative or unforeseen tax consequences or further developments affecting our deferred tax assets could adversely affect our results. Our effective tax rate is highly dependent upon the geographic mix of earnings across the jurisdictions where we operate. Changes in tax laws or tax rates in those jurisdictions, including, but not limited to, as a result of actions by the U.S. (including additional guidance and interpretations related to U.S. Tax Reform or potential passage of tax regulation changes under the U.S. presidential administration) or other countries, could continue to have a material impact on our operating results. Among other things, we have been, and are expected to continue to be, affected by the global intangible low-taxed income provisions added by U.S. Tax Reform and related new tax legislation, interpretations and guidance. Our effective tax rate may also be impacted by tax holidays and other various tax credits granted by local taxing authorities. In addition, the implementation of U.S. Tax Reform has required the use of estimates, which may be refined in future periods. All incentives, including a tax holiday granted to our Malaysian subsidiary, are subject to certain terms and conditions, which could be unfavorably altered by the local taxing authorities, changes to U.S. tax policy or the establishment of a global minimum tax. While we expect to comply with these conditions, we would experience adverse tax consequences if we are found to not be in compliance. Our taxable income in any jurisdiction is dependent upon the local taxing authority’s acceptance of our operational and intercompany transfer pricing practices as being at “arm’s length.” Due to inconsistencies among jurisdictions in the application of the arm’s length standard, our transfer pricing methods may be challenged and, if not upheld, could increase our income tax expense. Risks associated with transfer pricing adjustments are further highlighted by the global initiative from the Organisation for Economic Cooperation and Development called the Base Erosion and Profit Shifting (“BEPS’) project. The BEPS project is challenging longstanding international tax norms regarding the taxation of profits from cross-border business. Given the scope of our international operations and the fluid and uncertain nature of how the BEPS project might ultimately lead to future legislation, it is difficult to assess how any changes in tax laws would impact our income tax expense. We review the probability of the realization of our net deferred tax assets each period based on forecasts of taxable income by jurisdiction. This review uses historical results, projected future operating results based upon approved business plans, eligible carryforward periods, tax planning opportunities and other relevant considerations. Adverse changes in the profitability and financial outlook in each of our jurisdictions may require the creation of an additional valuation allowance to reduce our net deferred tax assets. Such changes could result in material non-cash expenses in the period in which the changes are made. Our financial condition and results of operations may be materially adversely affected by a global health crisis such as coronavirus (COVID-19). The full extent to which a global health crisis, such as COVID-19, will impact our business and operating results will depend on future developments that are highly uncertain and cannot be accurately predicted, including new medical and other information that may emerge as a result and the actions by governmental entities or others to contain it or treat its impact. The impacts of a potential resurgence of COVID-19 or the possible impacts of a future and potentially more severe global health crisis could pose the risk that we or our employees, suppliers, customers and others may be restricted or prevented from conducting business activities for indefinite or intermittent periods of time, including as a result of employee health and safety concerns, shutdowns, shelter in place orders, travel restrictions and other actions and restrictions that may be prudent or required by governmental authorities. We, our suppliers, and our customers had modified our business practices for the continued health and safety of our employees during the outbreak of COVID-19. If a resurgence of COVID-19 or a potentially more severe global health crisis occurs, we may be required to take further actions that are in the best interests of our employees, which could result in disruptions or delays and higher costs. The implementation of health and safety practices by us, our suppliers, or our customers could impact customer demand, supplier deliveries, our productivity and costs, which could have a material adverse impact on our business, financial condition, or results of operations. 22 Table of Contents While we currently believe we have ample liquidity to manage the financial impact of a global health crisis, we can give no assurance that this will continue to be the case if the impact is prolonged or if there is an extended impact on us or the economy generally. If our future financing needs increase, then we may need to arrange additional debt or equity financing. However, if our liquidity or access to capital becomes significantly constrained, if costs of capital increase significantly due to the impact of a global health crisis as result of volatility in the capital markets, or there is a reduction in our creditworthiness or other factors, then our financial condition, results of operations and cash flows could be materially adversely affected. The foregoing and other disruptions to our business as a result of a global health crisis has had and could continue to have a material adverse effect on our business, results of operations and financial condition. We may fail to secure or maintain necessary additional financing or capital. Although we have credit facilities, we cannot be certain that our existing credit arrangements will provide all of the financing capacity that we will need in the future or that we will be able to change the credit facilities or revise covenants, if necessary, to accommodate changes or developments in our business and operations and/or increased working capital needs. In addition, if we do not comply with the covenants under our credit facility, our ability to borrow under that facility would be adversely affected. In addition, it is possible that counterparties to our financial agreements, including our credit facility and receivables factoring programs, may not be willing or able to meet their obligations, either due to instability in the global financial markets or otherwise, which could, among other impacts, increase the duration of our cash collection cycle. While we currently believe we have ample liquidity to manage the financial impact of COVID-19 or current economic conditions we can give no assurance that this will continue to be the case if the impact of COVID-19 or current economic conditions are prolonged or if there is an extended impact on us or the economy in general. Our future success may depend on our ability to obtain additional financing and capital to support possible future growth and future initiatives. In addition, we also have receivables factoring programs. Many of our borrowings are at variable interest rates and therefore our interest expense is subject to increase if rates increase. We may seek to raise capital by issuing additional common stock, other equity securities or debt securities, modifying our existing credit facilities or obtaining new facilities, or through a combination of these methods. We may not be able to obtain capital when we want or need it, and capital may not be available on satisfactory terms. If we issue additional equity securities or convertible securities to raise capital, it may be dilutive to shareholders’ ownership interests; we may not be able to offer our securities on attractive or acceptable terms in the event of volatility or weakness in our stock price. Furthermore, any additional financing may have terms and conditions that adversely affect our business, such as restrictive financial or operating covenants, and our ability to meet any current or future financing covenants will largely depend on our financial performance, which in turn will be subject to general economic conditions and financial, business and other factors. ITEM 1B. UNRESOLVED SEC STAFF COMMENTS None. 23 Table of Contents ITEM 2. PROPERTIES Our facilities are comprised of an integrated network of manufacturing and engineering centers with our corporate headquarters located in Neenah, Wisconsin. We own or lease facilities with approximately 5.1 million square feet of active capacity. This includes approximately 2.1 million square feet in AMER, approximately 2.6 million square feet in APAC and approximately 0.4 million square feet in EMEA. Our active facilities as of October 1, 2022 are described in the following table: Location AMER Neenah, Wisconsin Guadalajara, Mexico (1) Nampa, Idaho Appleton, Wisconsin Buffalo Grove, Illinois (1) Neenah, Wisconsin Neenah, Wisconsin Raleigh, North Carolina Portland, Oregon APAC Penang, Malaysia (1) Bangkok, Thailand Hangzhou, China (1) Haining, China Xiamen, China Xiamen, China (1) EMEA Oradea, Romania Livingston, Scotland Kelso, Scotland Darmstadt, Germany Type Size (sq. ft.) Owned/Leased Manufacturing Manufacturing/Engineering Manufacturing Manufacturing Manufacturing Global Headquarters Engineering Engineering Manufacturing Manufacturing/Engineering Manufacturing Manufacturing Manufacturing Manufacturing Manufacturing Manufacturing/Engineering Manufacturing/Engineering Manufacturing Engineering 418,000 Owned 741,000 Leased 216,000 Owned 205,000 Owned 189,000 Leased 104,000 Owned 90,000 Leased 41,000 Leased 29,000 Leased 1,530,000 Owned 400,000 Owned 245,000 Leased 202,000 Leased 133,000 Owned 122,000 Leased 296,000 Owned 62,000 Leased 57,000 Owned 21,000 Leased (1) The facilities in Guadalajara, Mexico; Buffalo Grove, Illinois; Penang, Malaysia; Hangzhou, China; and Xiamen, China include more than one building. In the fourth quarter of fiscal 2022, we took possession of a new leased manufacturing facility in Portland, Oregon. It is expected to become an active facility in fiscal 2023. ITEM 3. LEGAL PROCEEDINGS We are party to certain lawsuits and legal proceedings in the ordinary course of business. Management does not believe that these proceedings, individually or in the aggregate, will have a material adverse effect on our consolidated financial position, results of operations or cash flows. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 24 Table of Contents ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF PART II EQUITY SECURITIES Performance Graph Our common stock trades on the Nasdaq Stock Market in the Nasdaq Global Select Market tier (symbol: PLXS). The following graph compares the cumulative total return on Plexus common stock with the Standard & Poor's ("S&P") MidCap 400 Index and the Nasdaq Stock Market Index for Electronic Components Companies. The values on the graph show the relative performance of an investment of $100 made on September 29, 2017 in Plexus common stock and in each of the indices as of the last business day of the respective fiscal year. Plexus Nasdaq-Electronic Components S&P 400 Shareholders of Record Comparison of Cumulative Total Return 2017 $100 100 100 2018 $104 106 112 2019 $112 110 107 2020 $127 117 106 2021 $162 158 149 2022 $156 132 123 As of November 14, 2022, we had 376 shareholders of record. Dividends We have not paid any cash dividends in the past. We currently anticipate that in the foreseeable future the majority of earnings will be retained to finance the development of our business through capital expenditures and working capital requirements, as well as execution upon our share repurchase authorizations as management deems appropriate and market conditions may allow. However, our Board of Directors evaluates from time to time potential uses of excess cash, which in the future may include additional share repurchases, a special dividend or recurring dividends. See also Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources," for additional 25 Table of Contents discussion of our intentions regarding dividends as well as a description of loan covenants that could restrict our ability to make future dividend payments. Issuer Purchases of Equity Securities The following table provides the specified information about the repurchases of shares by us during the three months ended October 1, 2022: Period July 3, 2022 to July 30, 2022 July 31, 2022 to August 27, 2022 August 28, 2022 to October 1, 2022 Total number of shares purchased Average price paid per share — $ — 38,397 38,397 $ — — 90.63 90.63 Total number of shares purchased as part of publicly announced plans or programs Maximum approximate dollar value of shares that may yet be purchased under the plans or programs (1) — $ — 38,397 $ 38,397 — 50,000,000 46,520,133 (1) On August 18, 2022, the Board of Directors approved a new share repurchase program that authorizes the Company to repurchase up to $50.0 million of its common stock (the "2023 Program"). The 2023 Program became effective immediately and has no expiration. The table above reflects the maximum dollar amount remaining available for purchase under the 2023 Program as of October 1, 2022. 26 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Plexus Corp. and its subsidiaries (together "Plexus," the "Company", "our", or "we") participate in the Electronic Manufacturing Services ("EMS") industry. Since 1979, we have been partnering with companies to create the products that build a better world. We are a global leader with a team of nearly 25,000 individuals who are dedicated to providing Design and Development, Supply Chain Solutions, New Product Introduction, Manufacturing and Sustaining Services. We specialize in serving customers in industries with highly complex products and demanding regulatory environments. We deliver customer service excellence to leading global companies in the Industrial, Healthcare/Life Sciences and Aerospace/Defense market sectors by providing innovative, comprehensive solutions throughout the product's lifecycle. We provide these innovative solutions to customers in the Americas ("AMER"), Asia-Pacific ("APAC") and Europe, Middle East and Africa ("EMEA") regions. The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide an analysis of both short-term results and future prospects from management’s perspective, including an assessment of the financial condition and results of operations, events and uncertainties that are not indicative of future operations and any other financial or statistical data that we believe will enhance the understanding of our company’s financial condition, cash flows and other changes in financial condition and results of operations. The information should be read in conjunction with our consolidated financial statements included herein and "Risk Factors" included in Part I, Item 1A herein. A discussion regarding our financial condition and results of operations for fiscal 2022 compared to fiscal 2021 is presented below. A discussion regarding our financial condition and results of operations for fiscal 2021 compared to fiscal 2020 is incorporated herein by reference from Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," in our Annual Report on the Form 10-K for the fiscal year ended October 2, 2021, which was filed with the SEC on November 19, 2021, and is available on the SEC’s website at www.sec.gov as well as our Investor Relations website at www.plexus.com. Market Pressures Update We have experienced, and expect to continue to experience, an inability to procure certain components on a timely basis due to global supply chain constraints. These constraints have impacted our ability to meet customer demand and may inhibit our ability to capture the demand from our customers. We remain in close contact with our suppliers to understand the impacts on their businesses and operations and continue to take steps to validate their ability to deliver to us on time. However, the extended lead-times have required us to make additional investments in inventory to satisfy customer demand, which we expect to persist. Over the past few quarters, the global supply chain constraints have led to inflation in some of the components we acquire, as well as labor and operating costs. We expect the increase in costs, including labor-related issues which have become more pronounced, to continue in the near future. We have been, and expect to continue to be, subject to such inflationary and general labor cost increases including in our Malaysia operations where the government has imposed a mandatory increase to the minimum wage that went into effect in our third quarter of fiscal 2022. While we have been largely able to mitigate the impacts of inflation through our contractual rights with customers on pricing, the pricing recoveries received may be dilutive to our operating margin. The inability to offset these costs in future periods or the impacts of continued inflation on end markets and our customers may affect our operating results, cash flows and inventory levels, which could increase as a result of higher component prices or the negative effects of inflation on customer end-market demand. We continue to monitor the global impacts of COVID-19 and take steps to mitigate the potential risks to us posed by its spread and related circumstances and impacts. These efforts will continue as requirements change, new risks are identified and infections impact us. The spread and resurgence of COVID- 19 from new variants in jurisdictions where we operate may make our ability to mitigate the impacts of the spread of the virus on our productivity more challenging. The recent conflict between Russia and Ukraine has negatively impacted the global economy and led to various economic sanctions being imposed by the U.S., United Kingdom, European Union and other countries against Russia. While the impacts of the conflict have not been material on our operating results, as we do not have operations or material customers or suppliers in either country, it is not possible to predict the broader consequences of this conflict. Changing U.S. government export regulations, particularly relating to advanced semiconductors and chip-manufacturing equipment, may limit the ability to ship certain customer product to China, and source the components necessary to manufacture customer product in China. 27 Table of Contents We believe our balance sheet is positioned to support the potential future challenges presented by the macro-economic pressures we are facing. As of October 1, 2022, cash and cash equivalents and restricted cash were $275 million, while debt, finance lease obligations and other financing were $462 million. To further ensure our ability to meet the needs of working capital investments to support anticipated revenue growth, we refinanced our revolving credit facility, expanding the maximum commitment from $350 million to $500 million during the third quarter of fiscal 2022. Borrowings under our Credit Facility as of October 1, 2022 were $263 million, leaving $237 million of our revolving commitment of $500 million available for use as of October 1, 2022 as well as the ability to expand our revolving commitment to $750 million upon mutual agreement with the bank. Refer to Note 4, "Debt, Finance Lease Obligations and Other Financing," in Notes to Consolidated Financial Statements and "Management’s Discussion and Analysis Liquidity and Capital Resources" in Part II, Item 7 for further information. RESULTS OF OPERATIONS Consolidated Performance Summary. The following table presents selected consolidated financial data for the indicated fiscal years (dollars in millions, except per share data): Net sales Cost of sales Gross profit Gross margin Operating income Operating margin Other expense Income tax expense Net income Diluted earnings per share Return on invested capital* Economic return* $ $ 2022 2021 $ $ 3,811.4 3,464.1 347.2 9.1 % 178.2 4.7 % 19.9 20.1 138.2 4.86 13.0 % 3.7 % 3,368.9 3,045.6 323.3 9.6 % 176.3 5.2 % 15.9 21.5 138.9 4.76 15.4 % 7.3 % *Non-GAAP metric; refer to "Return on Invested Capital ("ROIC") and economic return" below for more information and Exhibit 99.1 for a reconciliation. Net sales. Fiscal 2022 net sales increased $442.5 million, or 13.1%, as compared to fiscal 2021. Net sales are analyzed by management by geographic segment, which reflects our reportable segments, and by market sector. Management measures operational performance and allocates resources on a geographic segment basis. Our global business development strategy is based on our targeted market sectors. As a percentage of consolidated net sales, net sales attributable to customers representing 10% or more of consolidated net sales as well as the percentage of net sales attributable to our ten largest customers for the indicated fiscal years were as follows: General Electric Company ("GE") Top 10 customers 2022 2021 12.9 % 56.2 % 11.2 % 55.2 % A discussion of net sales by reportable segment is presented below for the indicated fiscal years (in millions): Net sales: AMER APAC EMEA Elimination of inter-segment sales Total net sales 2022 2021 $ $ 1,310.7 $ 2,300.6 316.3 (116.2) 3,811.4 $ 1,317.4 1,850.6 312.7 (111.8) 3,368.9 28 Table of Contents AMER. Net sales for fiscal 2022 in the AMER segment decreased $6.7 million, or 0.5%, as compared to fiscal 2021. The decrease in net sales was driven by net decreased customer end-market demand, a $49.4 million decrease for end-of-life products, a $41.1 million decrease due to the discontinuation of programs with existing customers and the impact of supply chain constraints that have created limitations with meeting available customer demand. These decreases were substantially offset by a $118.4 million increase in production ramps of new products for existing customers and a $43.8 million increase in production ramps for new customers, as well as increased pricing associated with inflated component prices. APAC. Net sales for fiscal 2022 in the APAC segment increased $450.0 million, or 24.3%, as compared to fiscal 2021. The increase in net sales was driven by overall net increased customer end-market demand and increased pricing associated with inflated component prices, a $97.8 million increase in production ramps of new products for existing customers, an $8.8 million increase in production ramps for new customers and a partial recovery of supply chain constraints that had previously created limitations with meeting available customer demand. These increases were partially offset by a $33.1 million decrease for end-of-life products and a $6.9 million decrease due to the discontinuation of a program with an existing customer. EMEA. Net sales for fiscal 2022 in the EMEA segment increased $3.6 million, or 1.2%, as compared to fiscal 2021. The increase in net sales was driven by a $10.0 million increase in production ramps of new products for existing customers, partially offset by overall net decreased customer end-market demand. Our net sales by market sector for the indicated fiscal years were as follows (in millions): Net sales: Industrial Healthcare/Life Sciences Aerospace/Defense Total net sales 2022 2021 $ $ 1,752.7 $ 1,565.8 492.9 3,811.4 $ 1,549.0 1,326.9 493.0 3,368.9 Industrial. Net sales for fiscal 2022 in the Industrial sector increased $203.7 million, or 13.2%, as compared to fiscal 2021. The increase in net sales was driven by overall net increased customer end-market demand and increased pricing associated with inflated component prices, a $73.8 million increase due to production ramps of new products for existing customers and a $41.1 million increase in production ramps for new customers, partially offset by the impact of supply chain constraints that have created limitations with meeting available customer demand. The increase was further offset by a $41.7 million decrease due to the discontinuation of programs with existing customers and an $18.6 million decrease for end-of-life products. Healthcare/Life Sciences. Net sales for fiscal 2022 in the Healthcare/Life Sciences sector increased $238.9 million, or 18.0%, as compared to fiscal 2021. The increase in net sales was driven by overall net increased customer end-market demand and increased pricing associated with inflated component prices, a $115.2 million increase due to production ramps of new products for existing customers and a partial recovery of supply chain constraints that had previously created limitations with meeting available customer demand. These increases were partially offset by a $55.1 million decrease for end-of-life products and a $6.9 million decrease due to the discontinuation of a program with an existing customer. Aerospace/Defense. Net sales for fiscal 2022 in the Aerospace/Defense sector decreased $0.1 million, or less than 0.1%, as compared to fiscal 2021. The decrease was driven by net decreased customer end-market demand and a $9.1 million decrease due to end-of-life products. These decreases were substantially offset by a $37.2 million increase due to production ramps of new products for existing customers and an $8.2 million increase in production ramps for new customers. Cost of sales. Cost of sales for fiscal 2022 increased $418.5 million, or 13.7%, as compared to fiscal 2021. Cost of sales is comprised primarily of material and component costs, labor costs and overhead. In fiscal 2022 and 2021, approximately 89% to 90% of the total cost of sales was variable in nature and fluctuated with sales volumes. Approximately 88% of these costs in fiscal 2022 and 2021 were related to material and component costs. As compared to fiscal 2021, the increase in cost of sales in fiscal 2022 was primarily driven by the increase in net sales, inflated component costs, an increase in fixed costs, reduced operational efficiencies and increased labor costs. Gross profit. Gross profit for fiscal 2022 increased $23.9 million, or 7.4%, as compared to fiscal 2021. Gross margin of 9.1% decreased 50 basis points compared to fiscal 2021. The primary driver of the increase in gross profit as compared to fiscal 2021 was the increase in net sales and reduced employee compensation and supplies costs associated with COVID-19, partially offset by inflated component costs, increased fixed costs, reduced operational efficiencies and increased labor costs. The decrease in gross margin was primarily driven by pass-through effects of recoveries from inflated components and increased labor costs, partially offset by fixed cost leverage. 29 Table of Contents Operating income. Operating income for fiscal 2022 increased $1.9 million, or 1.1%, as compared to fiscal 2021. Operating margin of 4.7% decreased 50 basis points compared to fiscal 2021. The primary driver of the increase in operating income as compared to fiscal 2021 was the result of the increase in gross profit along with a $1.2 million decrease in restructuring and impairment charges, partially offset by a $22.0 million increase in selling and administrative expenses ("S&A"). The increase in S&A was primarily due to an increase in compensation costs. The decrease in operating margin was primarily driven by the decrease in gross margin, driven by the factors previously discussed. A discussion of operating income by reportable segment for the indicated fiscal years is presented below (in millions): Operating income (loss): AMER APAC EMEA Corporate and other costs Total operating income 2022 2021 $ $ 44.7 $ 267.3 8.0 (141.8) 178.2 $ 62.3 238.8 (0.9) (123.9) 176.3 AMER. Operating income decreased $17.6 million in fiscal 2022 as compared to fiscal 2021, primarily as a result of a decrease in net sales, inflated component costs, increased fixed costs, reductions in operational efficiencies and increased labor costs. There was also an increase in bad debt expense compared to recovery of a previously reserved customer receivable in fiscal 2021. This was partially offset by a positive shift in customer mix. APAC. Operating income increased $28.5 million in fiscal 2022 as compared to fiscal 2021, primarily as a result of an increase in net sales, partially offset by inflated component costs, increased fixed costs, increased labor costs and an increase in S&A. EMEA. Operating income increased $8.9 million in fiscal 2022 as compared to fiscal 2021 primarily as a result of an increase in net sales, positive shift in customer mix, and a reduction in fixed costs. This was partially offset by an increase in S&A. Other expense. Other expense for fiscal 2022 increased $4.0 million as compared to fiscal 2021. The increase in other expense for fiscal 2022 was primarily due to the increase in factoring fees of $2.4 million and interest expense of $1.6 million. Income taxes. Income tax expense for fiscal 2022 was $20.1 million compared to $21.5 million for fiscal 2021. The decrease is primarily due to claiming a U.S. Research & Development tax credit and the geographic distribution of worldwide earnings. Our annual effective tax rate varies from the U.S. statutory rate of 21.0% primarily due to the geographic distribution of worldwide earnings as well as a tax holiday granted to a subsidiary located in the APAC segment where we derive a significant portion of our earnings. Our effective tax rate may also be impacted by disputes with taxing authorities, tax planning activities, adjustments to uncertain tax positions and changes in valuation allowances. We have been granted a tax holiday for a foreign subsidiary operating in the APAC segment. This tax holiday will expire on December 31, 2034, and is subject to certain conditions with which we expect to continue to comply. In fiscal 2022 and 2021, the holiday resulted in tax reductions, net of the impact of the global intangible low-taxed income provisions of the U.S. Tax Cuts and Jobs Act, of approximately $35.3 million ($1.27 per basic share, $1.24 per diluted share) and $34.4 million ($1.20 per basic share, $1.18 per diluted share), respectively. See also Note 6, "Income Taxes," in Notes to Consolidated Financial Statements for additional information regarding our tax rate. The annual effective tax rate for fiscal 2023 is expected to be approximately 14.0% to 16.0% assuming no changes to tax laws. Net Income. Net income for fiscal 2022 decreased $0.7 million, or 0.5%, from fiscal 2021 to $138.2 million. Net income decreased primarily as a result of the increase in other expense, partially offset by the increase in operating income and decrease in tax expense as previously discussed. Diluted earnings per share. Diluted earnings per share increased to $4.86 in fiscal 2022 from $4.76 in fiscal 2021, primarily as a result of a reduction in diluted shares outstanding due to repurchase activity under our share repurchase plans, partially offset by decreased net income due to the factors discussed above. Return on Invested Capital ("ROIC") and economic return. We use a financial model that is aligned with our business strategy and includes an ROIC goal of 15% which would exceed our weighted average cost of capital ("WACC") and represent positive economic return. Economic return is the amount our ROIC exceeds our WACC. 30 Table of Contents Non-GAAP financial measures, including ROIC and economic return, are used for internal management goals and decision making because such measures provide management and investors additional insight into financial performance. In particular, we provide ROIC and economic return because we believe they offer insight into the metrics that are driving management decisions. We view ROIC and economic return as important measures in evaluating the efficiency and effectiveness of our long-term capital investments. We also use ROIC as a performance criteria in determining certain elements of compensation as well as economic return performance. We define ROIC as tax-effected operating income before restructuring and other special items divided by average invested capital over a rolling five- quarter period. Invested capital is defined as equity plus debt and operating lease liabilities, less cash and cash equivalents. Other companies may not define or calculate ROIC in the same way. ROIC and other non-GAAP financial measures should be considered in addition to, not as a substitute for, measures of our financial performance prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). We review our internal calculation of WACC annually. Our WACC was 9.3% for fiscal 2022 and 8.1% for fiscal 2021. By exercising discipline to generate ROIC in excess of our WACC, our goal is to create value for our shareholders. Fiscal 2022 ROIC of 13.0% reflects an economic return of 3.7%, based on our weighted average cost of capital of 9.3%, and fiscal 2021 ROIC of 15.4% reflects an economic return of 7.3%, based on our weighted average cost of capital of 8.1%. For a reconciliation of ROIC, economic return and adjusted operating income (tax effected) to our financial statements that were prepared using GAAP, see Exhibit 99.1 to this annual report on Form 10-K, which exhibit is incorporated herein by reference. Refer to the table below, which includes the calculation of ROIC and economic return for the indicated fiscal years (dollars in millions): Adjusted operating income (tax-effected) Average invested capital After-tax ROIC WACC Economic return LIQUIDITY AND CAPITAL RESOURCES $ 2022 2021 156.8 1,207.4 $ 13.0 % 9.3 % 3.7 % 156.2 1,014.7 15.4 % 8.1 % 7.3 % Cash and cash equivalents and restricted cash were $275.5 million as of October 1, 2022, as compared to $270.5 million as of October 2, 2021. As of October 1, 2022, 78% of our cash and cash equivalents balance was held outside of the U.S. by our foreign subsidiaries. Currently, we believe that our cash balance, together with cash available under our Credit Facility, will be sufficient to meet our liquidity needs and potential share repurchases, if any, for the next twelve months and for the foreseeable future. Our future cash flows from operating activities will be reduced by $47.7 million due to cash payments for U.S. federal taxes on the deemed repatriation of undistributed foreign earnings that are payable over an eight year period that began in fiscal 2019 with the first payment. The table below provides the expected timing of these future cash outflows, in accordance with the following installment schedule for the remaining four years (in millions): 2023 2024 2025 2026 Total $ $ 5.7 10.6 14.1 17.3 47.7 31 Table of Contents Cash Flows. The following table provides a summary of cash flows for fiscal 2022 and 2021 (in millions): Cash (used in) provided by operating activities Cash used in investing activities Cash provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents and restricted cash 2022 2021 $ $ (26.2) $ (101.6) 139.3 (6.5) 5.0 $ 142.6 (57.0) (203.9) 0.9 (117.4) Operating Activities. Cash flows used in operating activities were $26.2 million for fiscal 2022, as compared to cash flows provided by operating activities of $142.6 million for fiscal 2021. The decrease was primarily due to cash flow (reductions) improvements of: • • • • • • • $(446.5) million in inventory cash flows primarily attributable to longer lead times for certain components as a result of supply chain constraints, increasing our inventory as we retain components until the entirety of the assembly's materials are received. Supply chain constraints have also led to inflation in some of the components we acquire, increasing inventory. In addition, inventory levels have increased to support the ramp of customer programs. $(196.5) million in accounts receivable cash flows driven by increased net sales as well as timing of customer shipments and payments. $(22.1) million in contract assets cash flows, driven by increased demand from customers who recognize revenue over time in the current year compared to consistent demand in the prior year. $24.8 million in other current and non-current asset cash flows, driven by a greater increase in prepaid expenses and miscellaneous receivables in the prior year. $64.3 million in accounts payables cash flows driven by increased purchasing activity to support the ramp of customer programs as well as supply chain constraints leading to inflation in some of the components we acquire. $167.8 million in other current and non-current liabilities cash flows driven by an increase in advance payments from customers to cover inflated component prices driven by supply chain constraints. $237.7 million in customer deposit cash flows driven by significant deposits received from customers in the current year to cover certain inventory balances associated with longer lead-times and inflation in some of the components we acquire as a result of supply chain constraints. The following table provides a summary of cash cycle days for the periods indicated (in days): Days in accounts receivable Days in contract assets Days in inventory Days in accounts payable Days in cash deposits Annualized cash cycle Three Months Ended October 1, 2022 60 11 144 (72) (43) 100 October 2, 2021 56 13 116 (76) (24) 85 We calculate days in accounts receivable and contract assets as each balance sheet item for the respective quarter divided by annualized sales for the respective quarter by day. We calculate days in inventory, accounts payable and cash deposits as each balance sheet line item for the respective quarter divided by annualized cost of sales for the respective quarter by day. We calculate annualized cash cycle as the sum of days in accounts receivable, days in contract assets and days in inventory, less days in accounts payable and days in cash deposits. 32 Table of Contents As of October 1, 2022, annualized cash cycle days increased fifteen days compared to October 2, 2021 due to the following: Days in accounts receivable for the three months ended October 1, 2022 increased four days compared to the three months ended October 2, 2021. The increase is primarily attributable to the timing of customer shipments and payments and mix of customer payment terms, partially offset by an increase in factored receivables. Days in contract assets for the three months ended October 1, 2022 decreased two days compared to the three months ended October 2, 2021. The decrease is primarily attributable to increased net sales, partially offset by increased demand from customers with arrangements requiring revenue to be recognized over time as products are produced. Days in inventory for the three months ended October 1, 2022 increased twenty-eight days compared to the three months ended October 2, 2021. The increase is primarily attributable to longer lead times for certain components as a result of supply chain constraints, increasing our inventory level as we retain components until the entirety of the assembly's materials are received. Supply chain constraints have also led to inflation in some of the components we acquire, increasing inventory. In addition, inventory levels have increased to support the ramp of customer programs. Days in accounts payable for the three months ended October 1, 2022 decreased four days compared to the three months ended October 2, 2021. The decrease is primarily attributable to timing of materials procurement and payments to suppliers, as well as increased net sales. Days in cash deposits for the three months ended October 1, 2022 increased nineteen days compared to the three months ended October 2, 2021. The increase was primarily attributable to significant deposits received from customers to cover certain increasing inventory balances. Free Cash Flow. We define free cash flow ("FCF"), a non-GAAP financial measure, as cash flow (used in) provided by operations less capital expenditures. FCF was $(127.9) million for fiscal 2022 compared to $85.5 million for fiscal 2021, a decrease of $213.4 million. The decrease in FCF was primarily due to working capital investments, particularly in inventory, to support our customers. Non-GAAP financial measures, including FCF, are used for internal management assessments because such measures provide additional insight to investors into ongoing financial performance. In particular, we provide FCF because we believe it offers insight into the metrics that are driving management decisions. We view FCF as an important financial metric as it demonstrates our ability to generate cash and can allow us to pursue opportunities that enhance shareholder value. FCF is a non-GAAP financial measure that should be considered in addition to, not as a substitute for, measures of our financial performance prepared in accordance with GAAP. A reconciliation of FCF to our financial statements that were prepared using GAAP as follows (in millions): Cash flows (used in) provided by operating activities Payments for property, plant and equipment Free cash flow 2022 2021 $ $ (26.3) $ (101.6) (127.9) $ 142.6 (57.1) 85.5 Investing Activities. Cash flows used in investing activities were $101.6 million for fiscal 2022 compared to $57.0 million for fiscal 2021. The increase in cash used in investing activities was due to a $44.5 million increase in capital expenditures, primarily due to our manufacturing footprint expansion in Bangkok, Thailand. We utilized available cash and financing cash flows as the sources for funding our operating requirements during fiscal 2022. We currently estimate capital expenditures for fiscal 2023 will be approximately $110.0 million to $130.0 million to support new program ramps and replace older equipment. This estimate does not contemplate any site expansions. Financing Activities. Cash flows provided by financing activities were $139.3 million for fiscal 2022 compared to cash flows used in financing activities of $203.9 million for fiscal 2021. The increase was primarily attributable to an increase of $291.0 million in net borrowings on the credit facility and a decrease of $58.1 million in cash used to repurchase our common stock. On August 20, 2019, the Board of Directors approved a share repurchase program under which we were authorized to repurchase $50.0 million of our common stock (the "2019 Program"). The 2019 Program commenced upon completion of previous share repurchase programs. During fiscal 2021, we repurchased 73,560 shares under this program for $5.3 million at an average price of $72.44 per share. 33 Table of Contents On August 13, 2020, the Board of Directors approved a share repurchase program under which we were authorized to repurchase up to $50.0 million of our common stock (the "2021 Program"). On November 18, 2020, the Board of Directors approved an additional $50.0 million in share repurchase authority under the existing 2021 Program such that there then existed a total of $100.0 million in share repurchase authority under the program. The 2021 program commenced upon completion of the 2019 Program. During fiscal 2021, we completed the 2021 Program by repurchasing 1,171,246 shares under this program for $100.0 million at an average price of $85.40 per share. On August 11, 2021, the Board of Directors approved a share repurchase program under which we were authorized to repurchase up to $50.0 million of its common stock (the "2022 Program"). The 2022 Program commenced upon completion of the 2021 Program. During fiscal 2022 and 2021, we completed the 2022 Program by repurchasing 564,718 and 34,381 shares under this program for $46.9 million and $3.1 million at an average price of $83.07 and $90.16 per share, respectively. On August 18, 2022, the Board of Directors approved a share repurchase program under which we are authorized to repurchase up to $50.0 million of its common stock (the "2023 Program"). The 2023 Program became effective immediately and has no expiration. During fiscal 2022, we purchased 38,397 shares under this program for $3.5 million at an average price of $90.63 per share. As of October 1, 2022, $46.5 million of authority remained under the 2023 Program. All shares repurchased under the aforementioned programs were recorded as treasury stock. On June 15, 2018, we entered into a Note Purchase Agreement (the “2018 NPA”) pursuant to which we issued an aggregate of $150.0 million in principal amount of unsecured senior notes, consisting of $100.0 million in principal amount 4.05% Series A Senior Notes, due on June 15, 2025, and $50.0 million in principal amount of 4.22% Series B Senior Notes, due on June 15, 2028 (collectively, the “2018 Notes”), in a private placement. The 2018 NPA includes customary operational and financial covenants with which we are required to comply, including, among others, maintenance of certain financial ratios such as a total leverage ratio and a minimum interest coverage ratio. The 2018 Notes may be prepaid in whole or in part at any time, subject to payment of a make-whole amount; interest on the 2018 Notes is payable semiannually. As of October 1, 2022, we were in compliance with the covenants under the 2018 NPA. On June 9, 2022, we refinanced our then-existing senior unsecured revolving credit facility (as amended by that certain Amendment No. 1 to Credit Agreement dated April 29, 2020, the "Prior Credit Facility") by entering into a new 5-year revolving credit facility (collectively with the Prior Credit Facility, referred to as the "Credit Facility"), which expanded the maximum commitment from $350.0 million to $500.0 million and extended the maturity from May 15, 2024 to June 9, 2027. The maximum commitment under the Credit Facility may be further increased to $750.0 million, generally by mutual agreement of the lenders and us, subject to certain customary conditions. During fiscal 2022, the highest daily borrowing was $385.0 million; the average daily borrowings were $232.1 million. We borrowed $758.0 million and repaid $550.0 million of revolving borrowings ("revolving commitment") under the Credit Facility during fiscal 2022. As of October 1, 2022, we were in compliance with all financial covenants relating to the Credit Facility, which are generally consistent with those in the 2018 NPA discussed above. We are required to pay a commitment fee on the daily unused credit facility based on our leverage ratio; the fee was 0.125% as of October 1, 2022. The Credit Facility and the 2018 NPA allow for the future payment of cash dividends or the repurchase of shares provided that no event of default (including any failure to comply with a financial covenant) exists at the time of, or would be caused by, the dividend payment or the share repurchases. We have not paid cash dividends in the past. However, we evaluate from time to time potential uses of excess cash, which in the future may include share repurchases above those already authorized, a special dividend or recurring dividends. We have Master Accounts Receivable Purchase Agreements with MUFG Bank, New York Branch (formerly known as The Bank of Tokyo-Mitsubishi UFJ, Ltd.) (the "MUFG RPA"), HSBC Bank (China) Company Limited, Xiamen branch (the "HSBC RPA") and other unaffiliated financial institutions, under which we may elect to sell receivables, at a discount. These facilities are uncommitted facilities. The maximum facility amount under the MUFG RPA as of October 1, 2022 is $340.0 million. The maximum facility amount under the HSBC RPA as of October 1, 2022 is $60.0 million. The MUFG RPA will be automatically extended each year unless any party gives no less than 10 days prior notice that the agreement should not be extended. The terms of the HSBC RPA are generally consistent with the terms of the MUFG RPA previously discussed. We sold $787.5 million and $730.5 million of trade accounts receivable under these programs during fiscal 2022 and 2021, respectively, in exchange for cash proceeds of $783.1 million and $728.4 million, respectively. As of October 1, 2022 and October 2, 2021, $222.5 million and $176.0 million, respectively, of accounts receivables sold under trade accounts receivable programs and subject to servicing by us remained outstanding and had not yet been collected. 34 Table of Contents In all cases, the sale discount was recorded within "Miscellaneous, net" in the Consolidated Statements of Comprehensive Income in the period of the sale. For further information regarding the receivable sale programs, see Note 14, "Trade Accounts Receivable Sale Programs," in Notes to Consolidated Financial Statements. Based on current expectations, we believe that our projected cash flows provided by operations, available cash and cash equivalents, potential borrowings under the Credit Facility and our leasing capabilities should be sufficient to meet our working capital and fixed capital requirements, as well as execution upon our share repurchase authorizations as management deems appropriate, for the next twelve months. We believe our balance sheet is positioned to support the potential future challenges presented by macro-economic factors including increased working capital requirements associated with longer lead- times for components, increased component and labor costs, and operating inefficiencies due to supply chain constraints or workplace safety restrictions. As of the end of the fourth quarter of fiscal 2022, cash and cash equivalents and restricted cash were $275 million, while debt, finance lease obligations and other financing were $462 million. To further ensure our ability to meet the needs of working capital investments to support anticipated revenue growth, we refinanced our credit facility, expanding the maximum commitment from $350.0 million to $500.0 million, as discussed above. If our future financing needs increase, then we may need to arrange additional debt or equity financing. Accordingly, we evaluate and consider from time to time various financing alternatives to supplement our financial resources. However, we cannot be assured that we will be able to make any such arrangements on acceptable terms or at all. 35 Table of Contents CONTRACTUAL OBLIGATIONS, COMMITMENTS AND OFF-BALANCE SHEET OBLIGATIONS Our disclosures regarding contractual obligations and commercial commitments are located in various parts of our regulatory filings. Information in the following table provides a summary of our contractual obligations and commercial commitments as of October 1, 2022 (dollars in millions): Contractual Obligations Debt Obligations (1) Finance Lease Obligations Operating Lease Obligations Purchase Obligations (2) Repatriation Tax on Undistributed Foreign Earnings (3) Other Liabilities on the Balance Sheet (4) Other Liabilities not on the Balance Sheet (5) Total Contractual Cash Obligations Payments Due by Fiscal Year Total 2023 2024-2025 2026-2027 $ $ 437.9 $ 119.5 48.1 1,992.5 47.7 12.9 11.1 2,669.7 $ 269.2 $ 10.2 9.5 1,609.3 5.7 1.7 6.5 1,912.1 $ 112.4 $ 14.5 14.0 370.3 24.7 1.3 — 537.2 $ 4.2 $ 10.3 10.1 5.4 17.3 0.1 1.2 48.6 $ 2028 and thereafter 52.1 84.5 14.5 7.5 — 9.8 3.4 171.8 1) 2) 3) 4) 5) Debt obligations includes $150.0 million in principal amount of 2018 Notes and $263.0 million of borrowings on the revolving commitment of the Credit Facility, as well as interest. Purchase obligations consist primarily of purchases of inventory and equipment in the ordinary course of business. Repatriation tax on undistributed foreign earnings consists of U.S. federal income taxes on the deemed repatriation of undistributed foreign earnings due to U.S. Tax Reform. Refer to "Liquidity and Capital Resources" above for further detail. Other obligations on the balance sheet included deferred compensation obligations to certain of our former and current executive officers, as well as other key employees, other financing obligations arising from information technology maintenance agreements and asset retirement obligations related to our buildings. We have excluded from the above table the impact of approximately $9.0 million, as of October 1, 2022, related to unrecognized income tax benefits. We cannot make reliable estimates of the future cash flows by period related to these obligations. Other obligations not on the balance sheet consist of guarantees and a commitment for salary continuation and certain benefits in the event employment of one executive officer is terminated without cause. Excluded from the amounts disclosed are certain bonus and incentive compensation amounts, which would be paid on a prorated basis in the year of termination. 36 Table of Contents DISCLOSURE ABOUT CRITICAL ACCOUNTING ESTIMATES Our accounting policies are disclosed in Note 1 "Description of Business and Significant Accounting Policies" of Notes to Consolidated Financial Statements. During fiscal 2022 there were no material changes to these policies. Our critical accounting estimates are described below: Revenue Recognition: Revenue is recognized over time for arrangements with customers for which: (i) our performance does not create an asset with an alternative use to us, and (ii) we have an enforceable right to payment, including reasonable profit margin, for performance completed to date. If either of the two conditions noted above are not met to recognize revenue over time, revenue is recognized following the transfer of control of such products to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying arrangement. For contracts requiring over time revenue recognition, we calculate the revenue to recognize using the costs incurred to date plus a reasonable profit margin. We use historical information to estimate the profit margin associated with the performance obligation that is satisfied over time. We reevaluate our estimate of profit margins on a quarterly basis. While experience has shown that trends in profit margins are not volatile, changes in pricing or cost efficiencies could create significant fluctuations for certain performance obligations. As actual experience becomes available, we use the data to update the historical averages and compare the results to estimates. Based on review of profits margins we update our estimate to the model as necessary. See Note 15 "Revenue from Contracts with Customers" of Notes to Consolidated Financial Statements for further information on our revenue recognition policies. Income Taxes: Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. We maintain valuation allowances when it is more likely than not that all or a portion of a deferred tax asset will not be realized. In determining whether a valuation allowance is required, we take into account such factors as: • • • Prior earnings history. A pattern of recent financial reporting losses in a jurisdiction is heavily weighted as a source of negative evidence. We also consider the strength and trend of earnings, as well as other relevant factors. In certain circumstances, historical earnings may not be as relevant due to changes in our business operations; Expected future earnings. Future reversals of existing temporary differences are heavily weighted sources of objectively verifiable positive evidence. Projections of future taxable income exclusive of reversing temporary differences are an additional source of positive evidence; Tax planning strategies. If necessary and available, tax planning strategies would be implemented to accelerate taxable amounts to utilize expiring carryforwards. These strategies would be a source of additional positive evidence. See Note 6 "Income Taxes" of Notes to Consolidated Financial Statements for further information on our income tax policies. NEW ACCOUNTING PRONOUNCEMENTS See Note 1, "Description of Business and Significant Accounting Policies," in Notes to Consolidated Financial Statements regarding recent accounting pronouncements. 37 Table of Contents ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to market risk from changes in foreign exchange and interest rates. We selectively use financial instruments to reduce such risks. We do not use derivative financial instruments for speculative purposes. Foreign Currency Risk Our international operations create potential foreign exchange risk. Our policy is to selectively hedge our foreign currency denominated transactions in a manner that partially offsets the effects of changes in foreign currency exchange rates. We typically use foreign currency contracts to hedge only those currency exposures associated with certain assets and liabilities denominated in non-functional currencies. Corresponding gains and losses on the underlying transaction generally offset the gains and losses on these foreign currency hedges. We cannot predict changes in currency rates, nor the degree to which we will be able to manage the impacts of currency exchange rate changes. Such changes could have a material effect on our business, results of operations and financial condition. Our percentages of transactions denominated in currencies other than the U.S. dollar for the indicated fiscal years were as follows: Net Sales Total Costs 2022 9% 16% 2021 10% 16% We have evaluated the potential foreign currency exchange rate risk on transactions denominated in currencies other than the U.S. dollar for the periods presented above. Based on our overall currency exposure, as of October 1, 2022, a 10.0% change in the value of the U.S. dollar relative to our other transactional currencies would not have a material effect on our financial position, results of operations, or cash flows. Interest Rate Risk We have financial instruments, including cash equivalents and debt, which are sensitive to changes in interest rates. The primary objective of our investment activities is to preserve principal, while maximizing yields without significantly increasing market risk. To achieve this, we limit the amount of principal exposure to any one issuer. As of October 1, 2022, our only material interest rate risk was associated with our Credit Facility. Borrowings under the Credit Facility bear interest, at the Company's option, at (a)(1) for borrowings denominated in U.S. dollars, the Term Secured Overnight Financing Rate ("SOFR"), (2) for borrowings denominated in pounds sterling, the Daily Simple Risk-Free Rate, plus, in each case of (a)(1) and (2), 10 basis points, (b) for borrowings denominated in euros, the EURIBOR Rate plus a statutory reserve rate, or (c) an Alternate Base Rate equal to the highest of (i) 100 basis points per annum, (ii) the prime rate last quoted by The Wall Street Journal (or, if not quoted, as otherwise provided in the Credit Facility), (iii) the greater of the federal funds effective rate and the overnight bank funding rate in effect on such day plus, in each case, 50 basis points per annum (or, if neither are available, as otherwise provided in the Credit Facility), and (iv) Term SOFR for a one month interest period on such day plus 110 basis points, plus, in each case of (a), (b), and (c), an applicable interest rate margin based on the Company's then current consolidated total indebtedness (minus certain unrestricted cash and cash equivalents in an amount not to exceed $100 million) to consolidated EBITDA. As of October 1, 2022, the borrowing rate under the Credit Facility was SOFR plus 1.10%. Borrowings under the 2018 NPA are based on a fixed interest rate, thus mitigating much of our interest rate risk. Based on our overall interest rate exposure, as of October 1, 2022, a 10.0% change in interest rates would not have a material effect on our financial position, results of operations, or cash flows. 38 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA PLEXUS CORP. List of Financial Statements and Financial Statement Schedule October 1, 2022 Contents Report of Independent Registered Public Accounting Firm Consolidated Financial Statements: Consolidated Statements of Comprehensive Income for the fiscal years ended October 1, 2022, October 2, 2021 and October 3, 2020 Consolidated Balance Sheets as of October 1, 2022 and October 2, 2021 Consolidated Statements of Shareholders’ Equity for the fiscal years ended October 1, 2022, October 2, 2021 and October 3, 2020 Consolidated Statements of Cash Flows for the fiscal years ended October 1, 2022, October 2, 2021 and October 3, 2020 Notes to Consolidated Financial Statements Financial Statement Schedule: Schedule II - Valuation and Qualifying Accounts for the fiscal years ended October 1, 2022, October 2, 2021 and October 3, 2020 Pages 40 42 43 44 45 46 78 NOTE: All other financial statement schedules are omitted because they are not applicable or the required information is included in the Consolidated Financial Statements or notes thereto. 39 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Plexus Corp. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Plexus Corp. and its subsidiaries (the “Company”) as of October 1, 2022 and October 2, 2021, and the related consolidated statements of comprehensive income, of shareholders' equity and of cash flows for each of the three years in the period ended October 1, 2022, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of October 1, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of October 1, 2022 and October 2, 2021, and the results of its operations and its cash flows for each of the three years in the period ended October 1, 2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 1, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 40 Table of Contents Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition As described in Note 1 to the consolidated financial statements, revenue is recognized over time for arrangements with customers for which: (i) the Company's performance does not create an asset with an alternative use to the Company, and (ii) the Company has an enforceable right to payment, including reasonable profit margin, for performance completed to date. Revenue recognized over time is estimated based on costs incurred to date plus a reasonable profit margin. If either of the two conditions are not met to recognize revenue over time, revenue is recognized following the transfer of controls of such products to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying arrangement. For the year ended October 1, 2022, the Company's net sales were $3.8 billion. The principal consideration for our determination that performing procedures relating to revenue recognition is a critical audit matter is the significant audit effort in performing procedures related to the Company's revenue recognition. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the revenue recognition process. These procedures also included, among others, (i) evaluating revenue transactions by testing the issuance and settlement of invoices and credit memos, (ii) tracing transactions not settled to a detailed listing of accounts receivable, (iii) confirming a sample of outstanding customer invoice balances at year end and obtaining and inspecting source documents, including invoices, sales contracts, and subsequent cash receipts, where applicable, for confirmations not returned, (iv) testing the completeness and accuracy of data provided by management, and (v) testing the appropriateness of the timing and amount of revenue recognized based on whether the contract meets the conditions to recognize revenue over time. /s/ PricewaterhouseCoopers LLP Milwaukee, Wisconsin November 18, 2022 We have served as the Company’s auditor since at least 1985. We have not been able to determine the specific year we began serving as auditor of the Company. 41 Table of Contents PLEXUS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME for the fiscal years ended October 1, 2022, October 2, 2021 and October 3, 2020 (in thousands, except per share data) Net sales Cost of sales Gross profit Selling and administrative expenses Restructuring and impairment charges Operating income Other income (expense): Interest expense Interest income Miscellaneous, net Income before income taxes Income tax expense Net income Earnings per share: Basic Diluted Weighted average shares outstanding: Basic Diluted Comprehensive income: Net income Other comprehensive (loss) income: Derivative instrument and other fair value adjustments Foreign currency translation adjustments Other comprehensive (loss) income Total comprehensive income 2022 2021 2020 3,811,368 $ 3,464,139 347,229 167,023 2,021 178,185 (15,858) 1,305 (5,329) 158,303 20,060 138,243 $ 4.96 $ 4.86 $ 27,862 28,439 3,368,865 $ 3,045,569 323,296 143,761 3,267 176,268 (14,253) 1,372 (2,976) 160,411 21,499 138,912 $ 4.86 $ 4.76 $ 28,575 29,167 3,390,394 3,077,688 312,706 153,331 6,003 153,372 (16,162) 1,878 (3,691) 135,397 17,918 117,479 4.02 3.93 29,195 29,916 138,243 $ 138,912 $ 117,479 (5,201) (27,843) (33,044) 105,199 $ (1,165) 3,240 2,075 140,987 $ 1,831 10,894 12,725 130,204 $ $ $ $ $ $ The accompanying notes are an integral part of these consolidated financial statements. 42 Table of Contents ASSETS Current assets: PLEXUS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS as of October 1, 2022 and October 2, 2021 (in thousands, except per share data) Cash and cash equivalents Restricted cash Accounts receivable, net of allowances of $1,961 and $1,188, respectively Contract assets Inventories, net Prepaid expenses and other Total current assets Property, plant and equipment, net Operating lease right-of-use assets Deferred income taxes Other assets Total non-current assets Total assets LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Current portion of long-term debt and finance lease obligations Accounts payable Customer deposits Accrued salaries and wages Other accrued liabilities Total current liabilities Long-term debt and finance lease obligations, net of current portion Long-term accrued income taxes payable Long-term operating lease liabilities Deferred income taxes payable Other liabilities Total non-current liabilities Total liabilities Commitments and contingencies Shareholders’ equity: Preferred stock, $0.01 par value, 5,000 shares authorized, none issued or outstanding Common stock, $0.01 par value, 200,000 shares authorized, 54,084 and 53,849 shares issued, respectively, and 27,679 and 28,047 shares outstanding, respectively Additional paid-in capital Common stock held in treasury, at cost, 26,405 and 25,802 shares, respectively Retained earnings Accumulated other comprehensive loss Total shareholders’ equity Total liabilities and shareholders’ equity 2022 2021 274,805 $ 665 737,696 138,540 1,602,783 61,633 2,816,122 444,705 65,134 39,075 28,189 577,103 3,393,225 $ 273,971 $ 805,583 480,486 88,876 357,273 2,006,189 187,776 42,019 33,628 6,327 21,555 291,305 2,297,494 270,172 341 519,684 115,283 972,312 53,094 1,930,886 395,094 72,087 27,385 36,441 531,007 2,461,893 66,313 634,969 204,985 75,394 147,042 1,128,703 187,033 47,974 37,970 5,677 26,304 304,958 1,433,661 — — 541 652,467 (1,093,483) 1,572,234 (36,028) 1,095,731 3,393,225 $ 538 639,778 (1,043,091) 1,433,991 (2,984) 1,028,232 2,461,893 $ $ $ $ The accompanying notes are an integral part of these consolidated financial statements. 43 Table of Contents PLEXUS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY for the fiscal years ended October 1, 2022, October 2, 2021 and October 3, 2020 (in thousands) Common stock - shares outstanding Beginning of period Exercise of stock options and vesting of other share-based awards Treasury shares purchased End of period Total stockholders' equity, beginning of period Common stock - par value Beginning of period Exercise of stock options and vesting of other share-based awards End of period Additional paid-in capital Beginning of period Share-based compensation expense Exercise of stock options and vesting of other share-based awards, including tax withholding End of period Treasury stock Beginning of period Treasury shares purchased End of period Retained earnings Beginning of period Net income Cumulative effect adjustment for adoption of new accounting pronouncements (1) End of period Accumulated other comprehensive loss Beginning of period Other comprehensive (loss) income End of period Total stockholders' equity, end of period 2022 2021 2020 28,047 235 (603) 27,679 29,002 323 (1,278) 28,047 29,004 608 (610) 29,002 $ 1,028,232 $ 977,480 $ 865,576 538 3 541 639,778 23,377 (10,688) 652,467 (1,043,091) (50,392) (1,093,483) 1,433,991 138,243 — 1,572,234 535 3 538 621,564 24,326 (6,112) 639,778 (934,639) (108,452) (1,043,091) 1,295,079 138,912 — 1,433,991 (2,984) (33,044) (36,028) 1,095,731 $ (5,059) 2,075 (2,984) 1,028,232 $ $ 529 6 535 597,401 24,280 (117) 621,564 (893,247) (41,392) (934,639) 1,178,677 117,479 (1,077) 1,295,079 (17,784) 12,725 (5,059) 977,480 (1) See Note 1, "Description of Business and Significant Accounting Policies," for a discussion of recently adopted accounting pronouncements. The accompanying notes are an integral part of these consolidated financial statements. 44 Table of Contents PLEXUS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS for the fiscal years ended October 1, 2022, October 2, 2021 and October 3, 2020 (in thousands) Cash flows from operating activities Net income Adjustments to reconcile net income to net cash flows from operating activities: Depreciation and amortization Deferred income taxes Share-based compensation expense and related charges Provision for allowance for doubtful accounts Asset impairment charges Other, net Changes in operating assets and liabilities, excluding impacts of currency: Accounts receivable Contract assets Inventories Other current and non-current assets Accrued income taxes payable Accounts payable Customer deposits Other current and non-current liabilities Cash flows (used in) provided by operating activities Cash flows from investing activities Payments for property, plant and equipment Other, net Cash flows used in investing activities Cash flows from financing activities Borrowings under debt agreements Payments on debt and finance lease obligations Debt issuance costs Repurchases of common stock Proceeds from exercise of stock options Payments related to tax withholding for share-based compensation Cash flows provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents and restricted cash Cash and cash equivalents and restricted cash: Beginning of period End of period Supplemental disclosure information: Interest paid Income taxes paid 2022 2021 2020 $ 138,243 $ 138,912 $ 117,479 62,689 (10,800) 23,336 — — 972 (230,022) (23,445) (652,989) (1,212) (713) 176,037 282,034 209,630 (26,240) (101,612) 51 (101,561) 758,000 (556,726) (898) (50,392) 480 (11,169) 139,295 (6,537) 4,957 61,014 (3,388) 24,763 (2,405) — 1,855 (33,477) (1,385) (206,510) (26,028) (8,746) 111,781 44,359 41,832 142,577 (57,099) 126 (56,973) 376,739 (466,063) — (108,452) 3,555 (9,664) (203,885) 900 (117,381) $ $ $ 270,513 275,470 $ 387,894 270,513 $ 15,293 $ 16,916 $ 14,116 $ 39,932 $ 56,690 (3,583) 24,280 2,405 3,052 1,358 8,796 (22,488) (56,420) 3,343 (9,570) 65,097 18,864 1,065 210,368 (50,088) 237 (49,851) 679,042 (638,298) (699) (41,392) 12,827 (12,938) (1,458) 2,581 161,640 226,254 387,894 14,885 31,458 The accompanying notes are an integral part of these consolidated financial statements. 45 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements 1. Description of Business and Significant Accounting Policies Description of Business: Plexus Corp. and its subsidiaries (together "Plexus," the "Company," or "we") participate in the Electronic Manufacturing Services ("EMS") industry. Since 1979, we have been partnering with companies to create the products that build a better world. We are a global leader with a team of nearly 25,000 individuals focused on providing Design and Development, Supply Chain Solutions, New Product Introduction, Manufacturing, and Sustaining Services. We specialize in serving customers in industries with highly complex products and demanding regulatory environments. We deliver customer service excellence to leading global companies in the Industrial, Healthcare/Life Sciences and Aerospace/Defense market sectors by providing innovative, comprehensive solutions throughout the products lifecycle. We provide these innovative solutions to customers in the Americas ("AMER"), Asia-Pacific ("APAC") and Europe, Middle East and Africa ("EMEA") regions. Significant Accounting Policies Consolidation Principles and Basis of Presentation: The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") and include the accounts of Plexus Corp. and its subsidiaries. All intercompany transactions have been eliminated. Certain prior period amounts have been reclassified to conform to the current period presentation. The Company’s fiscal year ends on the Saturday closest to September 30. The Company also uses a "4-4-5" weekly accounting system for the interim periods in each quarter. Each quarter, therefore, ends on a Saturday at the end of the 4-4-5 period. Periodically, an additional week must be added to the fiscal year to re-align with the Saturday closest to September 30. Fiscal 2020 included 53 weeks; therefore, the first quarter of fiscal 2020 included 14 weeks while all other fiscal quarters presented herein included 13 weeks. Fiscal 2022 and fiscal 2021 each included 52 weeks. The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and notes thereto. The full extent to which current global events and economic conditions will impact the Company's business and operating results will depend on future developments that are highly uncertain and cannot be accurately predicted. The Company has considered information available as of the date of issuance of these financial statements and is not aware of any specific events or circumstances that would require an update to its estimates or judgments, or a revision of the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information becomes available. Actual results could differ materially from these estimates. Cash and Cash Equivalents and Restricted Cash: Cash equivalents include short-term highly liquid investments and are classified as Level 1 in the fair value hierarchy described below. Restricted cash represents cash received from customers to settle invoices sold under accounts receivable purchase agreements that the Company continues servicing and is contractually required to be set aside. The restrictions will lapse when the cash is remitted to the purchaser of the receivables. Restricted cash is also classified as Level 1 in the fair value hierarchy described below. As of October 1, 2022 and October 2, 2021, cash and cash equivalents and restricted cash consisted of the following (in thousands): Cash Money market demand accounts and other Restricted cash Total cash and cash equivalents and restricted cash 2022 2021 $ $ 186,068 $ 88,737 665 275,470 $ 173,018 97,154 341 270,513 Inventories: Inventories are valued at the lower of cost or market. Cost is determined by the first-in, first-out ("FIFO") method. Valuing inventories at the lower of cost or market requires the use of estimates and judgment. Customers may cancel their orders, change production quantities or delay production for a number of reasons that are beyond the Company’s control. Any of these, or certain additional actions, could impact the valuation of inventory. Any actions taken by the Company’s customers that could impact the value of its inventory are considered when determining the lower of cost or market valuations. In certain instances, in accordance with contractual terms, the Company receives customer deposits to offset inventory risks. 46 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements Property, Plant and Equipment and Depreciation: Property, plant and equipment is stated at cost and depreciated using the straight-line method over the estimated useful lives of the respective assets. Estimated useful lives for major classes of depreciable assets are generally as follows: Buildings and improvements Machinery and equipment Computer hardware and software 5-39 years 3-7 years 3-10 years Certain facilities and equipment held under finance leases are classified as property, plant and equipment and amortized using the straight-line method over the term of the lease and the related obligations are recorded as liabilities. Amortization of assets held under finance leases is included in depreciation expense (see Note 3, "Property, Plant and Equipment") and the financing component of the lease payments is classified as interest expense. Maintenance and repairs are expensed as incurred. The Company capitalizes significant costs incurred in the acquisition or development of software for internal use. This includes costs of the software, consulting services and compensation costs for employees directly involved in developing internal use computer software. Impairment of Long-Lived Assets: Long-lived assets, including property, plant and equipment, operating lease right-of-use assets and intangible assets with finite lives are reviewed for impairment and written down to fair value when facts and circumstances indicate that the carrying value of long-lived assets or asset groups may not be recoverable through estimated future undiscounted cash flows. If an impairment has occurred, a write-down to estimated fair value is made and the impairment loss is recognized as a charge against current operations. The impairment analysis is based on management’s assumptions, including future revenue and cash flow projections. Circumstances that may lead to impairment of property, plant and equipment, operating lease right-of- use assets and intangible assets with finite lives include reduced expectations for future performance or industry demand and possible further restructurings, among others. Revenue Recognition: Revenue is recognized over time for arrangements with customers for which: (i) the Company's performance does not create an asset with an alternative use to the Company, and (ii) the Company has an enforceable right to payment, including reasonable profit margin, for performance completed to date. Revenue recognized over time is estimated based on costs incurred to date plus a reasonable profit margin. If either of the two conditions noted above are not met to recognize revenue over time, revenue is recognized following the transfer of control of such products to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying arrangement. The Company recognizes revenue when a contract exists and when, or as, it satisfies a performance obligation by transferring control of a product or service to a customer. Contracts are accounted for when they have approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The Company generally enters into a master services arrangement that establishes the framework under which business will be conducted. These arrangements represent the master terms and conditions of the Company's services that apply to individual orders, but they do not commit the customer to work with, or to continue to work with, the Company nor do they obligate the customer to any specific volume or pricing of purchases. Moreover, these terms can be amended in appropriate situations. Customer purchase orders are received for specific quantities with predominantly fixed pricing and delivery requirements. Thus, for the majority of our contracts, there is no guarantee of any revenue to the Company until a customer submits a purchase order. As a result, the Company generally considers its arrangement with a customer to be the combination of the master services arrangement and the purchase order. Most of the Company's arrangements with customers create a single performance obligation as the promise to transfer the individual manufactured product or service is capable of being distinct. The Company’s performance obligations are satisfied over time as work progresses or at a point in time. A performance obligation is satisfied over time if the Company has an enforceable right to payment, including a reasonable profit margin. Determining if an enforceable right to payment includes a reasonable profit margin requires judgment and is assessed on a contract by contract basis. If an enforceable right to payment for work-in-process does not exist, revenue is recognized following the transfer of control of such products to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contract. 47 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements For contracts requiring over time revenue recognition, the selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. The Company uses a cost-based input measurement of progress because it best depicts the transfer of assets to the customer, which occurs as costs are incurred during the manufacturing process or as services are rendered. Under the cost-based measure of progress, the extent of progress towards completion is measured based on the costs incurred to date. Generally, there are no subjective customer acceptance requirements or further obligations related to goods or services provided; if such requirements or obligations exist, then a sale is recognized at the time when such requirements are completed and such obligations are fulfilled. The Company does not allow for a general right of return. Net sales include amounts billed to customers for shipping and handling and out-of-pocket expenses. The corresponding shipping and handling costs and out-of-pocket expenses are included in cost of sales. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from net sales. Net sales from engineering design and development services, which are generally performed under contracts with a duration of twelve months or less, are typically recognized as program costs are incurred by utilizing the proportional performance model. The completed performance model is used if certain customer acceptance criteria exist. Any losses are recognized when anticipated. Net sales from engineering design and development services were less than 5.0% of consolidated net sales for each of fiscal 2022, 2021 and 2020. Income Taxes: Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company maintains valuation allowances when it is more likely than not that all or a portion of a deferred tax asset will not be realized. In determining whether a valuation allowance is required, the Company takes into account such factors as prior earnings history, expected future earnings, carryback and carryforward periods, and tax strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. Foreign Currency Translation & Transactions: The Company translates assets and liabilities of subsidiaries operating outside of the U.S. with a functional currency other than the U.S. dollar into U.S. dollars using exchange rates in effect at the relevant balance sheet date and net sales, expenses and cash flows at the average exchange rates during the respective periods. Adjustments resulting from translation of the financial statements are recorded as a component of "Accumulated other comprehensive loss." Exchange gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved and remeasurement adjustments for foreign operations where the U.S. dollar is the functional currency are included in the Consolidated Statements of Comprehensive Income as a component of "Miscellaneous, net." Exchange losses on foreign currency transactions were $0.7 million, $1.1 million and $0.4 million for fiscal 2022, 2021 and 2020, respectively. These amounts include the amount of gain recognized in income during each fiscal year due to forward currency exchange contracts entered into to hedge recognized assets or liabilities ("non-designated hedges") the Company entered into during each respective year. Refer to Note 5, "Derivatives and Fair Value Measurements," for further details on derivatives. Derivatives: All derivatives are recognized on the balance sheets at fair value. The Company periodically enters into forward currency exchange contracts and interest rate swaps. On the date a derivative contract is entered into, the Company designates the derivative as a non-designated hedge or a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (a "cash flow" hedge). The Company does not enter into derivatives for speculative purposes. Changes in the fair value of non-designated derivatives are recorded in earnings as are the gains or losses related to the hedged asset or liability. Changes in the fair value of a derivative that qualifies as a cash flow hedge are recorded in "Accumulated other comprehensive loss" within shareholders' equity, until earnings are affected by the variability of cash flows. Certain forward currency exchange contracts are treated as cash flow hedges and, therefore, $(5.0) million, $(2.2) million and $1.8 million was recorded in "Accumulated other comprehensive loss" for fiscal 2022, 2021 and 2020, respectively. See Note 5, "Derivatives and Fair Value Measurements," for further information. Earnings Per Share: The computation of basic earnings per common share is based upon the weighted average number of common shares outstanding and net income. The computation of diluted earnings per common share reflects additional dilution from share-based awards, excluding any with an antidilutive effect. See Note 7, "Earnings Per Share," for further information. 48 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements Share-based Compensation: The Company measures all grants of share-based payments to employees, including grants of employee stock options, at fair value and expenses them in the Consolidated Statements of Comprehensive Income over the service period (generally the vesting period) of the grant. See Note 9, "Benefit Plans," for further information. Comprehensive Income (Loss): The Company follows the established standards for reporting comprehensive income (loss), which is defined as the changes in equity of an enterprise except those resulting from shareholder transactions. Accumulated other comprehensive loss consists of the following as of October 1, 2022 and October 2, 2021 (in thousands): Foreign currency translation adjustments Cumulative derivative instrument fair value adjustments Other fair value adjustments Accumulated other comprehensive loss 2022 2021 $ $ (31,104) $ (5,779) 855 (36,028) $ (3,261) (791) 1,068 (2,984) Refer to Note 5, "Derivatives and Fair Value Measurements," for further explanation regarding the change in fair value of derivative instruments that is recorded to "Accumulated other comprehensive loss." Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Fair Value of Financial Instruments: The Company holds financial instruments consisting of cash and cash equivalents, restricted cash, accounts receivable, certain deferred compensation assets held under trust arrangements, accounts payable, debt, derivatives and finance and operating lease obligations. The carrying values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and finance and operating lease obligations as reported in the consolidated financial statements approximate fair value. Derivatives and certain deferred compensation assets held under trust arrangements are recorded at fair value. Accounts receivable are reflected at net realizable value based on anticipated losses due to potentially uncollectible balances. Anticipated losses are based on management’s analysis of historical losses and changes in customers’ credit status. The fair value of the Company’s debt excluding finance lease and other financing obligations was $401.6 million and $217.1 million as of October 1, 2022 and October 2, 2021, respectively. The carrying value of the Company's debt was $413.0 million and $205.0 million as of October 1, 2022 and October 2, 2021, respectively. The Company uses quoted market prices when available or discounted cash flows to calculate fair value. If measured at fair value in the financial statements, long-term debt (including the current portion) would be classified as Level 2 in the fair value hierarchy described below. The fair values of the Company’s derivatives are disclosed in Note 5, "Derivatives and Fair Value Measurements." The fair values of the deferred compensation assets held under trust arrangements are discussed in Note 9, "Benefit Plans." Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (or exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The accounting guidance establishes a fair value hierarchy based on three levels of inputs that may be used to measure fair value. The input levels are: Level 1: Quoted (observable) market prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability. Business and Credit Concentrations: Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents, trade accounts receivable and derivative instruments, specifically related to counterparties. In accordance with the Company’s investment policy, the Company’s cash, cash equivalents and derivative instruments were placed with recognized financial institutions. The Company’s investment policy limits the amount of credit exposure in any one issue and the maturity date of the investment securities that typically comprise investment grade short-term debt instruments. Concentrations of credit risk in accounts receivable resulting from sales to major customers are discussed in Note 11, "Reportable Segments, Geographic Information and Major Customers". The Company, at times, requires cash deposits for services performed. The Company also closely monitors extensions of credit. 49 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements Recently Adopted Accounting Pronouncements: In February 2016, the FASB issued ASU 2016-02 (“Topic 842”), which is intended to improve financial reporting of lease transactions by requiring lessees to recognize most leases as a right-of-use (“ROU”) asset and lease liability on their balance sheets for the rights and obligations created by leases, but record expenses on their income statements in a similar manner. Topic 842 also requires disclosures regarding the amount, timing and judgments related to accounting for an entity's leases and related cash flows. On September 29, 2019, the Company adopted Topic 842 using the modified retrospective method of adoption, which allows financial information for comparative periods prior to adoption not to be updated. Upon adoption, the Company recognized a $1.1 million reduction in retained earnings as a result of two existing build-to-suit arrangements for facilities in Guadalajara, Mexico that were reassessed to be finance leases under the new standard. Recently Issued Accounting Pronouncements Not Yet Adopted: In September 2022, the FASB issued ASU 2022-04, which requires enhanced disclosures about supplier finance programs. This guidance is effective for the Company beginning in the first quarter of fiscal 2024. Early adoption is permitted. The Company is currently in the process of assessing the impacts of the guidance. The Company believes that no other recently issued accounting standards will have a material impact on its Consolidated Financial Statements, or apply to its operations. 2. Inventories Inventories as of October 1, 2022 and October 2, 2021 consisted of the following (in thousands): Raw materials Work-in-process Finished goods Total inventories, net 2022 2021 $ $ 1,433,353 $ 81,207 88,223 1,602,783 $ 860,538 48,356 63,418 972,312 In certain circumstances, per contractual terms, customer deposits are received by the Company to offset inventory risks. The total amount of customer deposits related to inventory and included within current liabilities on the accompanying Consolidated Balance Sheets as of October 1, 2022 and October 2, 2021 was $463.2 million and $200.6 million, respectively. 3. Property, Plant and Equipment Property, plant and equipment as of October 1, 2022 and October 2, 2021 consisted of the following (in thousands): Land, buildings and improvements Machinery and equipment Computer hardware and software Capital assets in progress Total property, plant and equipment, gross Less: accumulated depreciation Total property, plant and equipment, net 2022 2021 $ $ 386,623 $ 421,717 164,420 28,187 1,000,947 (556,242) 444,705 $ 336,939 420,172 167,584 28,085 952,780 (557,686) 395,094 50 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements Assets held under finance leases and included in property, plant and equipment as of October 1, 2022 and October 2, 2021 consisted of the following (in thousands): Buildings and improvements Machinery and equipment Total property, plant and equipment held under finance leases, gross Less: accumulated amortization Total property, plant and equipment held under finance leases, net 2022 2021 36,270 $ 25,362 61,632 (21,569) 40,063 $ 35,360 26,657 62,017 (23,360) 38,657 $ $ As of October 1, 2022, October 2, 2021 and October 3, 2020, accounts payable included approximately $25.4 million, $17.3 million and $6.7 million, respectively, related to the purchase of property, plant and equipment, which have been treated as non-cash transactions for purposes of the Consolidated Statements of Cash Flows. 4. Debt, Finance Lease Obligations and Other Financing Debt and finance lease obligations as of October 1, 2022 and October 2, 2021, consisted of the following (in thousands): 4.05% Senior Notes, due June 15, 2025 4.22% Senior Notes, due June 15, 2028 Borrowings under the Credit Facility Finance lease and other financing obligations Unamortized deferred financing fees Total obligations Less: current portion Long-term debt and finance lease obligations, net of current portion 2022 2021 $ $ 100,000 $ 50,000 263,000 50,269 (1,522) 461,747 (273,971) 187,776 $ 100,000 50,000 55,000 49,279 (933) 253,346 (66,313) 187,033 On June 15, 2018, the Company entered into a Note Purchase Agreement (the “2018 NPA”) pursuant to which it issued an aggregate of $150.0 million in principal amount of unsecured senior notes, consisting of $100.0 million in principal amount of 4.05% Series A Senior Notes, due on June 15, 2025, and $50.0 million in principal amount of 4.22% Series B Senior Notes, due on June 15, 2028 (collectively, the “2018 Notes”), in a private placement. The 2018 NPA includes customary operational and financial covenants with which the Company is required to comply, including, among others, maintenance of certain financial ratios such as a total leverage ratio and a minimum interest coverage ratio. The 2018 Notes may be prepaid in whole or in part at any time, subject to payment of a make-whole amount; interest on the 2018 Notes is payable semiannually. As of October 1, 2022, the Company was in compliance with the covenants under the 2018 NPA. On June 9, 2022, the Company refinanced its then-existing senior unsecured revolving credit facility (as amended by that certain Amendment No. 1 to Credit Agreement dated April 29, 2020, the "Prior Credit Facility") by entering into a new 5-year revolving credit facility (collectively with the Prior Credit Facility, referred to as the "Credit Facility"), which expanded the maximum commitment from $350.0 million to $500.0 million and extended the maturity from May 15, 2024 to June 9, 2027. The maximum commitment under the Credit Facility may be further increased to $750.0 million, generally by mutual agreement of the Company and the lenders, subject to certain customary conditions. During fiscal 2022, the highest daily borrowing was $385.0 million; the average daily borrowings were $232.1 million. The Company borrowed $758.0 million and repaid $550.0 million of revolving borrowings ("revolving commitment") under the Credit Facility during fiscal 2022. As of October 1, 2022, the Company was in compliance with all financial covenants relating to the Credit Facility, which are generally consistent with those in the 2018 NPA discussed above. The Company is required to pay a commitment fee on the daily unused credit facility based on the Company's leverage ratio; the fee was 0.125% as of October 1, 2022. 51 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements The aggregate scheduled maturities of the Company’s debt obligations as of October 1, 2022, are as follows (in thousands): 2023 2024 2025 2026 2027 Thereafter Total $ $ 263,000 — 100,000 — — 50,000 413,000 The aggregate scheduled maturities of the Company’s finance leases and other financing obligations as of October 1, 2022, are as follows (in thousands): 2023 2024 2025 2026 2027 Thereafter Total $ $ 10,971 3,316 2,362 676 609 32,335 50,269 The Company's weighted average interest rate on finance lease obligations was 17.1% and 17.4% as of October 1, 2022 and October 2, 2021, respectively. 5. Derivatives and Fair Value Measurements All derivatives are recognized in the accompanying Consolidated Balance Sheets at their estimated fair value. The Company uses derivatives to manage the variability of foreign currency obligations. The Company has cash flow hedges related to forecasted foreign currency obligations, in addition to non- designated hedges to manage foreign currency exposures associated with certain foreign currency denominated assets and liabilities. The Company does not enter into derivatives for speculative purposes. The Company designates some foreign currency exchange contracts as cash flow hedges of forecasted foreign currency expenses. Changes in the fair value of the derivatives that qualify as cash flow hedges are recorded in "Accumulated other comprehensive loss" in the accompanying Consolidated Balance Sheets until earnings are affected by the variability of the cash flows. In the next twelve months, the Company estimates that $6.0 million of unrealized losses, net of tax, related to cash flow hedges will be reclassified from other comprehensive income (loss) into earnings. Changes in the fair value of the non-designated derivatives related to recognized foreign currency denominated assets and liabilities are recorded in "Miscellaneous, net" in the accompanying Consolidated Statements of Comprehensive Income. The Company enters into forward currency exchange contracts for its operations in Malaysia and Mexico on a rolling basis. The Company had cash flow hedges outstanding with a notional value of $143.2 million as of October 1, 2022, and a notional value of $107.4 million as of October 2, 2021. These forward currency contracts fix the exchange rates for the settlement of future foreign currency obligations that have yet to be realized. The total fair value of the forward currency exchange contracts was a $6.0 million liability as of October 1, 2022, and a $1.0 million liability as of October 2, 2021. The Company had additional forward currency exchange contracts outstanding as of October 1, 2022, with a notional value of $60.1 million; there were $38.6 million such contracts outstanding as of October 2, 2021. The Company did not designate these derivative instruments as hedging instruments. The net settlement amount (fair value) related to these contracts is recorded on the Consolidated Balance Sheets as either a current or long-term asset or liability, depending on the term, and as an element of "Miscellaneous, net" in the Consolidated Statements of Comprehensive Income. The total fair value of these derivatives was a $0.3 million asset as of October 1, 2022, and a $0.2 million liability as of October 2, 2021. 52 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements The tables below present information regarding the fair values of derivative instruments (as defined in Note 1, "Description of Business and Significant Accounting Policies") and the effects of derivative instruments on the Company’s Consolidated Financial Statements: Derivatives designated as hedging instruments Balance sheet classification Fair Value Fair Value Balance sheet classification Fair Values of Derivative Instruments (in thousands) Derivative Assets October 1, 2022 October 2, 2021 Derivative Liabilities October 1, 2022 October 2, 2021 Fair Value Fair Value Foreign currency forward contracts Prepaid expenses and other $ 715 $ 76 Other accrued liabilities $ 6,747 $ 1,119 Derivatives not designated as hedging instruments Foreign currency forward contracts Balance sheet classification Prepaid expenses and other Fair Value Fair Value $ 1,555 $ 133 Balance sheet classification Other accrued liabilities Fair Value Fair Value $ 1,249 $ 356 Fair Values of Derivative Instruments (in thousands) Derivative Assets October 1, 2022 October 2, 2021 Derivative Liabilities October 1, 2022 October 2, 2021 The Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Loss ("OCL") (in thousands) for the Twelve Months Ended Derivatives in cash flow hedging relationships Foreign currency forward contracts Amount of (Loss) Gain Recognized in OCL on Derivatives October 1, 2022 October 2, 2021 October 3, 2020 $ (7,637) $ 1,238 $ 446 Derivative Impact on (Loss) Gain Recognized in Consolidated Statements of Comprehensive Income (in thousands) for the Twelve Months Ended Derivatives in cash flow hedging relationships Classification of (Loss) Gain Reclassified from Accumulated OCL into Income Foreign currency forward contracts Foreign currency forward contracts Cost of sales Selling and administrative expenses Derivatives not designated as hedging instruments Foreign currency forward contracts Location of (Loss) Gain Recognized on Derivatives in Income Miscellaneous, net Amount of (Loss) Gain Reclassified from Accumulated OCL into Income October 1, 2022 October 2, 2021 October 3, 2020 (2,459) (189) $ $ 3,205 265 $ $ (1,278) (107) Amount of (Loss) Gain on Derivatives Recognized in Income October 1, 2022 October 2, 2021 October 3, 2020 (1,181) $ 98 $ (330) $ $ $ Fair Value Measurements: Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (or exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses quoted market prices when available or discounted cash flows to calculate fair value. The accounting guidance establishes a fair value hierarchy based on three levels of inputs that may be used to measure fair value. The input levels are: Level 1: Quoted (observable) market prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability. 53 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements The following table lists the fair values of assets of the Company’s derivatives as of October 1, 2022 and October 2, 2021, by input level: Fiscal year ended October 1, 2022 Derivatives Foreign currency forward contracts Fiscal year ended October 2, 2021 Derivatives Foreign currency forward contracts Fair Value Measurements Using Input Levels Liability (in thousands) Level 1 Level 2 Level 3 Total $ $ — $ 5,726 $ — $ 5,726 — $ 1,266 $ — $ 1,266 The fair value of foreign currency forward contracts is determined using a market approach, which includes obtaining directly or indirectly observable values from third parties active in the relevant markets. Inputs in the fair value of the foreign currency forward contracts include prevailing forward and spot prices for currency. 6. Income Taxes The domestic and foreign components of income (loss) before income tax expense for fiscal 2022, 2021 and 2020 were as follows (in thousands): U.S. Foreign 2022 2021 2020 $ $ (64,267) $ 222,570 158,303 $ (33,409) $ 193,820 160,411 $ (69,102) 204,499 135,397 Income tax expense (benefit) for fiscal 2022, 2021 and 2020 were as follows (in thousands): Current: Federal State Foreign Deferred: Federal State Foreign 2022 2021 2020 12,506 $ 386 17,968 30,860 (9,931) (315) (554) (10,800) 20,060 $ 9,217 $ 524 15,146 24,887 (1,153) 1 (2,236) (3,388) 21,499 $ 8,779 23 12,699 21,501 (6,498) 3 2,912 (3,583) 17,918 $ $ 54 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements The following is a reconciliation of the federal statutory income tax rate to the effective income tax rates reflected in the Consolidated Statements of Comprehensive Income for fiscal 2022, 2021 and 2020: 2022 2021 2020 Federal statutory income tax rate (Decrease) increase resulting from: Foreign tax rate differences Withholding tax on dividends Permanent differences Excess tax benefits related to share-based compensation Global intangible low-taxed income ("GILTI") Audit settlements Non-deductible compensation Valuation allowances Tax credits, net Other, net Effective income tax rate 21.0 % (23.2) 2.2 (0.8) (1.4) 10.4 3.7 2.5 (1.7) (1.9) 1.9 12.7 % 21.0 % (20.3) 2.9 (0.6) (0.9) 6.4 5.0 3.8 (3.7) — (0.2) 13.4 % 21.0 % (24.0) 1.9 (2.6) (3.0) 13.8 — 2.2 3.6 — 0.3 13.2 % The effective tax rate for fiscal 2022 was lower than the effective tax rate for fiscal 2021 primarily due to claiming a U.S. Research & Development tax credit and the geographic distribution of worldwide earnings. The effective tax rate for fiscal 2021 was relatively consistent compared to the effective tax rate for fiscal 2020. During fiscal 2022, the Company recorded a $2.8 million decrease to its valuation allowance primarily due to a net decrease of the valuation allowance in the EMEA segment driven by the release of the valuation allowance against the net deferred tax assets of a foreign subsidiary. This is partially offset by continuing losses in certain jurisdictions within the AMER segment. During fiscal 2021, the Company recorded a $5.9 million decrease to its valuation allowance primarily due to a net decrease of the valuation allowance in the EMEA segment driven by the release of the valuation allowance against the net deferred tax assets of a foreign subsidiary. This is partially offset by continuing losses in certain jurisdictions within the AMER segment. During fiscal 2020, the Company recorded a $4.8 million increase to its valuation allowance due to continuing losses in certain jurisdictions within the AMER and EMEA segments, partially offset by an expiration of net operating losses that had a valuation allowance recorded. 55 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements The components of the net deferred income tax assets as of October 1, 2022 and October 2, 2021, were as follows (in thousands): Deferred income tax assets: Loss/credit carryforwards Inventories Accrued employee benefits Accrued liabilities Lease obligation Other Total gross deferred income tax assets Less valuation allowances Deferred income tax assets Deferred income tax liabilities: Property, plant and equipment Right-of-use asset Tax on unremitted earnings Acceleration of revenue under Topic 606 Deferred income tax liabilities Net deferred income tax assets/(liabilities) 2022 2021 24,575 $ 21,869 17,224 7,129 17,427 6,536 94,760 (25,562) 69,198 19,878 10,538 6,034 — 36,450 32,748 $ 28,234 15,231 14,488 6,410 18,977 6,719 90,059 (30,321) 59,738 19,055 12,279 4,654 2,042 38,030 21,708 $ $ During fiscal 2022, the Company’s valuation allowance decreased by $4.8 million, including the impact of foreign exchange movement. This decrease is the result of decreases to the valuation allowances against the net deferred tax assets in the EMEA region of $6.1 million, partially offset by increases to the valuation allowances in the AMER region of $1.2 million. As of October 1, 2022, the Company had approximately $198.7 million of pre-tax state net operating loss carryforwards that expire between fiscal 2023 and 2043. Certain state net operating losses have a full valuation allowance against them. The Company also had approximately $46.5 million of pre-tax foreign net operating loss carryforwards that expire between fiscal 2025 and 2034 or are indefinitely carried forward. Certain foreign net operating losses have a full valuation allowance against them. The Company has been granted a tax holiday for a foreign subsidiary in the APAC segment. This tax holiday will expire on December 31, 2034, and is subject to certain conditions with which the Company expects to continue to comply. During fiscal 2022, 2021 and 2020, the tax holiday resulted in tax reductions, net of the impact of the GILTI provisions of U.S. Tax Reform, of approximately $35.3 million ($1.27 per basic share, $1.24 per diluted share), $34.4 million ($1.20 per basic share, $1.18 per diluted share) and $28.3 million ($0.97 per basic share, $0.95 per diluted share), respectively. The Company does not provide for taxes that would be payable if certain undistributed earnings of foreign subsidiaries were remitted because the Company considers these earnings to be permanently reinvested. The deferred tax liability that has not been recorded for these earnings was approximately $10.5 million as of October 1, 2022. The Company has approximately $9.0 million of uncertain tax benefits as of October 1, 2022. The Company has classified these amounts in the Consolidated Balance Sheets as "Other liabilities" (non-current) in the amount of $8.6 million and an offset to "Deferred income taxes" (non-current asset) in the amount of $0.4 million as the payment is not anticipated within one year. 56 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements The following is a reconciliation of the beginning and ending amounts of unrecognized income tax benefits for the indicated fiscal years (in thousands): Balance at beginning of fiscal year Gross increases for tax positions of prior years Gross increases for tax positions of the current year Gross decreases for tax positions of prior years Balance at end of fiscal year 2022 2021 2020 $ $ 4,635 $ 2,421 2,531 (589) 8,998 $ 2,096 $ 623 2,161 (245) 4,635 $ 2,270 509 465 (1,148) 2,096 The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate is $8.6 million and $3.9 million for the fiscal years ended October 1, 2022 and October 2, 2021, respectively. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. The total accrued penalties and net accrued interest with respect to income taxes was approximately $0.5 million for fiscal 2022 and approximately $0.1 million for fiscal 2021 and 2020. The Company recognized $0.3 million of expense for accrued penalties and net accrued interest in the Consolidated Statements of Comprehensive Income for fiscal 2022, and less than $0.1 million in fiscal 2021 and 2020. It is possible that a number of uncertain tax positions may be settled within the next 12 months. Settlement of these matters is not expected to have a material effect on the Company’s consolidated results of operations, financial position and cash flows. The Company files income tax returns, including returns for its subsidiaries, with federal, state, local and foreign taxing jurisdictions. The following tax years remain subject to examination by the respective major tax jurisdictions: Jurisdiction China Germany Malaysia Mexico Romania United Kingdom United States Federal State 7. Earnings Per Share Fiscal Years 2018-2022 2019-2022 2018-2022 2018-2022 2020-2022 2019-2022 2015, 2017-2022 2003-2006, 2009-2022 The following is a reconciliation of the amounts utilized in the computation of basic and diluted earnings per share for fiscal 2022, 2021 and 2020 (in thousands, except per share amounts): Net income Basic weighted average common shares outstanding Dilutive effect of share-based awards and options outstanding Diluted weighted average shares outstanding Earnings per share: Basic Diluted 2022 2021 2020 138,243 $ 138,912 $ 27,862 577 28,439 4.96 $ 4.86 $ 28,575 592 29,167 4.86 $ 4.76 $ 117,479 29,195 721 29,916 4.02 3.93 $ $ $ In each year of fiscal 2022, 2021 and 2020, share-based awards for less than 0.1 million shares were not included in the computation of diluted earnings per share as they were antidilutive. 57 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements 8. Leases The Company’s lease portfolio includes both real estate and non-real estate type leases which are accounted for as either finance or operating leases. Real estate leases generally include office, warehouse and manufacturing facilities and non-real estate leases generally include office equipment and vehicles. The Company determines if a contract is or contains a lease at inception. The Company’s leases have remaining lease terms of less than 1 year to 38 years. Renewal options that are deemed reasonably certain are included as part of the lease term for purposes of calculating the right-of-use (“ROU”) asset and lease liability. Variable lease payments are generally expensed as incurred and include certain index-based changes in rent, certain nonlease components, such as maintenance and other services provided by the lessor, and other charges included in the lease. The Company elected the practical expedient to not separate lease and nonlease components, as such nonlease components are included in the calculation of the ROU asset and lease liability and included in the lease expense over the term of the lease. The Company uses a discount rate to calculate the ROU asset and lease liability. When the implicit rate is known or provided in the lease documents, the Company is required to use this rate. In cases in which the implicit rate is not known, the Company uses an estimated incremental borrowing rate. Operating lease ROU assets and lease liabilities are recorded on the date the Company takes possession of the leased assets with expense recognized on a straight-line basis over the lease term. Leases with an estimated total term of 12 months or less are not recorded on the balance sheet and the lease expense is recognized on a straight-line basis over the lease term. Generally, the Company's lease agreements do not contain material residual value guarantees or material restrictive covenants. The components of lease expense for fiscal years indicated were as follows (in thousands): Finance lease expense: Amortization of right-of-use assets Interest on lease liabilities Operating lease expense Other lease expense Total 2022 2021 2020 $ $ 6,478 $ 4,927 11,278 6,185 28,868 $ 6,290 $ 4,888 11,034 4,794 27,006 $ 4,380 4,956 11,707 3,401 24,444 Based on the nature of the ROU asset, amortization of finance right-of-use assets, operating lease expense and other lease expense are recorded within either cost of goods sold or selling and administrative expenses and interest on finance lease liabilities is recorded within interest expense on the Consolidated Statements of Comprehensive Income. Other lease expense includes lease expense for leases with an estimated total term of twelve months or less and variable lease expense related to variations in lease payments as a result of a change in factors or circumstances occurring after the lease possession date. The following tables sets forth the amount of lease assets and lease liabilities included in the Company’s Consolidated Balance Sheets (in thousands): Financial Statement Line Item 2022 2021 ASSETS Finance lease assets Operating lease assets Total lease assets Property, plant and equipment, net Operating lease right-of-use assets LIABILITIES AND SHAREHOLDERS' EQUITY Current Finance lease liabilities Operating lease liabilities Non-current Finance lease liabilities Operating lease liabilities Total lease liabilities Current portion of long-term debt and finance lease obligations Other accrued liabilities Long-term debt and finance lease obligations, net of current portion Long-term operating lease liabilities 58 $ $ $ $ 40,063 $ 65,134 105,197 $ 38,657 72,087 110,744 5,087 $ 7,948 39,257 33,628 85,920 $ 4,616 9,877 36,919 37,970 89,382 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements Other information related to the Company’s leases was as follows: Weighted-average remaining lease term (in years) Finance leases Operating leases Weighted-average discount rate Finance leases Operating leases 2022 2021 11.1 17.6 17.1 % 2.6 % 2022 2021 2020 Cash paid for amounts included in the measurement of lease liabilities (in thousands) Operating cash flows used in finance leases Operating cash flows used in operating leases Finance cash flows used in finance leases ROU assets obtained in exchange for lease liabilities (in thousands) Operating leases Finance leases $ $ 4,630 $ 10,278 6,148 4,710 $ 7,851 4,571 $ 10,667 5,734 11,897 $ 4,253 Future minimum lease payments required under finance and operating leases as of October 1, 2022, were as follows (in thousands): 11.6 17.4 17.4 % 2.5 % 4,539 10,907 3,321 7,692 2,835 2023 2024 2025 2026 2027 Thereafter Total minimum lease payments Less: imputed interest Present value of lease liabilities Operating leases Finance leases $ $ 9,502 $ 7,810 6,209 5,594 4,461 14,526 48,102 (6,526) 41,576 $ 10,246 7,531 6,967 5,137 5,216 84,389 119,486 (75,142) 44,344 As of October 1, 2022, the Company’s future operating leases that have not yet commenced are immaterial. 9. Benefit Plans Share-based Compensation Plans: The Plexus Corp. 2016 Omnibus Incentive Plan (the "2016 Plan"), which was approved by shareholders, is a stock and cash-based incentive plan, and includes provisions by which the Company may grant executive officers, employees and directors stock options, stock appreciation rights ("SARs"), restricted stock (including restricted stock units ("RSUs"), performance stock awards (including performance stock units ("PSUs"), other stock awards and cash incentive awards. The maximum number of shares of Plexus common stock that may be issued pursuant to the 2016 Plan is 3.2 million shares; in addition, cash incentive awards of up to $4.0 million per employee may be granted annually. The exercise price of each stock option and SAR granted must not be less than the fair market value on the date of grant. The Compensation and Leadership Development Committee (the "Committee") of the Board of Directors may establish a term and vesting period for awards under the 2016 Plan as well as accelerate the vesting of such awards. Generally, stock options vest in two annual installments and have a term of ten years. SARs vest in two annual installments and have a term of seven years. RSUs granted to executive 59 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements officers, other officers and key employees generally vest on the 3 year anniversary of the grant date (assuming continued employment), which is also the date as of which the underlying shares will be issued. Performance stock units ("PSUs") are payable in shares of the Company's common stock and have a performance period of three years. For PSUs, approximately 50% vest based on the relative total shareholder return ("TSR") of the Company's common stock as compared to the companies in the Russell 3000 Index for grants issued in fiscal 2020 and the S&P 400 Index for grants issued in fiscal 2021 and beyond. Both are a market condition. The remaining approximately 50% of PSUs vest based upon a three-point annual average of the Company's absolute economic return, a performance condition, with grants made in fiscal 2021 and beyond being subject to an individual year minimum and maximum absolute economic return. The vesting and payout of awards will range between 0% and 200% of the shares granted based upon metrics during a performance period for PSUs based on economic return and PSUs based on TSR compared to the Russell 3000 Index. For PSUs based on TSR compared to the S&P 400 Index, the vesting and payout of awards will range between 0% and 150% of shares granted. Payout at target, 100% of the shares granted, will occur if the TSR of Plexus stock is at the 50th percentile of companies in the Russell 3000 Index or S&P 400 Index during the performance period and if a 2.5% average economic return is achieved over the performance period of three years. The number of shares that may be issued pursuant to PSUs ranges from zero to 0.5 million and is dependent upon the Company's TSR and economic return performance over the applicable performance periods. The Committee also grants RSUs to non-employee directors, which generally fully vest on the first anniversary of the grant date, which is also the date the underlying shares are issued (unless further deferred). The Company recognized $23.3 million, $24.8 million and $24.3 million of compensation expense associated with share-based awards in fiscal 2022, 2021 and 2020, respectively. A summary of the Company’s stock option and SAR activity follows: Outstanding as of September 28, 2019 Granted Canceled Exercised Outstanding as of October 3, 2020 Granted Canceled Exercised Outstanding as of October 2, 2021 Granted Canceled Exercised Outstanding as of October 1, 2022 Exercisable as of: October 3, 2020 October 2, 2021 October 1, 2022 Number of Options/SARs (in thousands) Weighted Average Exercise Price Aggregate Intrinsic Value (in thousands) 464 $ — (16) (325) 123 $ — — (106) 17 $ — — (12) 5 $ 38.28 — 31.74 39.78 35.12 — — 34.12 41.40 — — 40.32 44.02 $ 215 Number of Options/SARs (in thousands) Weighted Average Exercise Price Weighted Average Remaining Life (years) Aggregate Intrinsic Value (in thousands) 35.12 41.40 44.02 3.46 $ 215 123 $ 17 $ 5 $ 60 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements The following table summarizes outstanding stock option and SAR information as of October 1, 2022 (Options/SARs in thousands): Range of Exercise Prices Number of Options/SARs Outstanding (in thousands) Weighted Average Exercise Price Weighted Average Remaining Life (years) Number of Options / SARs Exercisable (in thousands) Weighted Average Exercise Price $33.06 - $40.64 $40.65 - $41.01 $41.02 - $44.48 $44.49 - $45.45 $33.06 - $45.45 1 $ — $ — $ 4 $ 5 $ 37.80 41.01 44.48 45.45 44.02 1.26 1.80 1.56 4.08 3.46 1 $ — $ — $ 4 $ 5 $ 37.80 41.01 44.48 45.45 44.02 There were no options or SARs granted for fiscal 2022, 2021 or 2020. There were no options or SARs vested for fiscal 2022, 2021 or 2020. For fiscal 2022, 2021 and 2020, the total intrinsic value of options and SARs exercised was $0.6 million, $5.4 million and $10.9 million, respectively. As of October 1, 2022, all previously granted options and SARS have vested. A summary of the Company’s PSU and RSU activity follows: Units outstanding as of September 28, 2019 Granted Canceled Vested Units outstanding as of October 3, 2020 Granted Canceled Vested Units outstanding as of October 2, 2021 Granted Canceled Vested Units outstanding as of October 1, 2022 Number of Shares (in thousands) Weighted Average Fair Value at Date of Grant 56.97 75.91 60.95 54.85 66.33 81.15 70.12 64.00 72.38 75.39 76.68 58.76 79.57 $ 962 $ 377 (37) (451) 851 $ 360 (10) (340) 861 $ 328 (35) (356) 798 $ Aggregate Intrinsic Value (in thousands) 69,889 The Company uses the fair value at the date of grant to value RSUs. As of October 1, 2022, there was $18.0 million of unrecognized compensation expense related to RSUs that is expected to be recognized over a weighted average period of 1.3 years. The Company recognizes share-based compensation expense over the vesting period of PSUs. During the fiscal year ended October 1, 2022, the 0.1 million PSUs granted in fiscal 2019 vested at a 145% payout based upon the TSR performance achieved during the performance period and 200% payout based upon economic return performance achieved during the performance period. There were 0.1 million PSUs granted during each of fiscal years 2022, 2021 and 2020. As of October 1, 2022, at the target achievement level, there was $6.6 million of unrecognized compensation expense related to PSUs that is expected to be recognized over a weighted average period of 1.8 years. 401(k) Savings Plan: The Company’s 401(k) Retirement Plan covers all eligible U.S. employees. The Company matches employee contributions up to 4.0% of eligible earnings. The Company’s contributions for fiscal 2022, 2021 and 2020 totaled $9.3 million, $9.3 million and $9.8 million, respectively. 61 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements Supplemental Executive Retirement Plan (Deferred Compensation Arrangement): The Company maintains a supplemental executive retirement plan (the "SERP") as a deferred compensation plan for executive officers. Under the SERP, a covered executive may elect to defer some or all of the participant’s compensation into the plan, and the Company may credit the participant’s account with a discretionary employer contribution. Participants are entitled to payment of deferred amounts and any related earnings upon termination or retirement from Plexus. The SERP allows investment of deferred compensation into individual accounts and, within these accounts, into one or more designated investments. Investment choices do not include Plexus stock. During fiscal 2022, 2021 and 2020, the Company made contributions to the participants’ SERP accounts in the amount of $0.8 million, $0.7 million and $0.7 million, respectively. As of October 1, 2022 and October 2, 2021, the SERP assets held in the trust totaled $10.0 million and $14.1 million, respectively, and the related liability to the participants totaled approximately $10.0 million and $14.1 million, respectively. As of October 1, 2022 and October 2, 2021, the SERP assets held in the trust were recorded at fair value on a recurring basis, and were classified as Level 2 in the fair value hierarchy discussed in Note 1, "Description of Business and Significant Accounting Policies." The trust assets are subject to the claims of the Company’s creditors. The trust assets and the related liabilities to the participants are included in non- current "Other assets" and non-current "Other liabilities," respectively, in the accompanying Consolidated Balance Sheets. 10. Litigation The Company is party to lawsuits in the ordinary course of business. Management does not believe that these proceedings, individually or in the aggregate, will have a material positive or adverse effect on the Company’s consolidated financial position, results of operations or cash flows. 11. Reportable Segments, Geographic Information and Major Customers Reportable segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or group, in assessing performance and allocating resources. The Company uses an internal management reporting system, which provides important financial data to evaluate performance and allocate the Company’s resources on a regional basis. Net sales for the segments are attributed to the region in which the product is manufactured or the service is performed. The services provided, manufacturing processes used, class of customers serviced and order fulfillment processes used are similar and generally interchangeable across the segments. A segment’s performance is evaluated based upon its operating income (loss). A segment’s operating income (loss) includes its net sales less cost of sales and selling and administrative expenses, but excludes corporate and other expenses. Corporate and other expenses primarily represent corporate selling and administrative expenses, and restructuring costs and other charges, if any, such as the $2.0 million, $3.3 million and $6.0 million of restructuring and impairment costs in fiscal 2022, 2021 and 2020, respectively. These costs are not allocated to the segments, as management excludes such costs when assessing the performance of the segments. Inter-segment transactions are generally recorded at amounts that approximate arm’s length transactions. The accounting policies for the segments are the same as for the Company taken as a whole. 62 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements Information about the Company’s three reportable segments for fiscal 2022, 2021 and 2020 is as follows (in thousands): Net sales: AMER APAC EMEA Elimination of inter-segment sales Operating income (loss): AMER APAC EMEA Corporate and other costs Other income (expense): Interest expense Interest income Miscellaneous, net Income before income taxes Depreciation: AMER APAC EMEA Corporate Capital expenditures: AMER APAC EMEA Corporate Total assets: AMER APAC EMEA Corporate and eliminations 2022 2021 2020 1,310,687 $ 2,300,640 316,315 (116,274) 3,811,368 $ 44,741 $ 267,253 8,018 (141,827) 178,185 $ (15,858) $ 1,305 (5,329) 158,303 $ 1,317,404 $ 1,850,603 312,669 (111,811) 3,368,865 $ 62,338 $ 238,800 (895) (123,975) 176,268 $ (14,253) $ 1,372 (2,976) 160,411 $ 1,327,849 1,824,831 349,102 (111,388) 3,390,394 38,126 246,636 1,492 (132,882) 153,372 (16,162) 1,878 (3,691) 135,397 2022 2021 2020 23,482 $ 23,547 5,861 8,613 61,503 $ 20,024 $ 73,758 2,617 5,213 101,612 $ 24,325 $ 19,924 7,189 8,390 59,828 $ 16,114 $ 31,774 2,504 6,707 57,099 $ 24,217 17,912 6,938 6,437 55,504 13,361 18,902 8,577 9,248 50,088 October 1, 2022 October 2, 2021 1,150,605 $ 1,807,542 302,901 132,177 3,393,225 $ 789,385 1,283,124 275,122 114,262 2,461,893 $ $ $ $ $ $ $ $ $ $ $ $ 63 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements The following information is provided in accordance with the required segment disclosures for fiscal 2022, 2021 and 2020. Net sales were based on the Company’s location providing the product or service (in thousands): Net sales: United States Malaysia China Mexico Romania United Kingdom Germany Thailand Elimination of inter-country sales Long-lived assets: United States Malaysia Mexico Thailand China Romania United Kingdom Other Foreign Corporate 2022 2021 2020 869,144 $ 1,846,086 453,591 441,543 217,052 91,137 8,126 963 (116,274) 3,811,368 $ 914,360 $ 1,495,049 355,554 403,044 202,649 99,365 10,655 — (111,811) 3,368,865 $ 989,888 1,432,154 392,677 337,961 217,295 118,463 13,344 — (111,388) 3,390,394 October 1, 2022 October 2, 2021 105,272 $ 152,317 77,947 56,115 37,608 23,894 6,842 2,899 46,945 509,839 $ 106,577 139,614 75,774 19,394 35,969 29,474 9,073 3,840 47,466 467,181 $ $ $ $ As the Company operates flexible manufacturing facilities and processes designed to accommodate customers with multiple product lines and configurations, it is impracticable to report net sales for individual products or services or groups of similar products and services. Long-lived assets as of October 1, 2022 and October 2, 2021 exclude other long-term assets, deferred income tax assets and intangible assets, which totaled $67.3 million and $63.8 million, respectively. As a percentage of consolidated net sales, net sales attributable to customers representing 10.0% or more of consolidated net sales for fiscal 2022, 2021 and 2020 were as follows: General Electric Company ("GE") 2022 12.9% 2021 11.2% 2020 11.7% During fiscal 2022, 2021 and 2020, net sales attributable to GE were reported in all three reportable segments. GE represented 16.2% and 12.1% of total accounts receivable as of October 1, 2022 and October 2, 2021, respectively. Medtronic, Inc. represented 10.2% and 3.9% of total accounts receivable as of October 1, 2022 and October 2, 2021, respectively. 64 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements 12. Guarantees The Company offers certain indemnifications under its customer manufacturing agreements. In the normal course of business, the Company may from time to time be obligated to indemnify its customers or its customers’ customers against damages or liabilities arising out of the Company’s negligence, misconduct, breach of contract, or infringement of third-party intellectual property rights. Certain agreements have extended broader indemnification, and while most agreements have contractual limits, some do not. However, the Company generally does not provide for such indemnities and seeks indemnification from its customers for damages or liabilities arising out of the Company’s adherence to customers’ specifications or designs or use of materials furnished, or directed to be used, by its customers. The Company does not believe its obligations under such indemnities are material. In the normal course of business, the Company also provides its customers a limited warranty covering workmanship, and in some cases materials, on products manufactured by the Company. Such warranty generally provides that products will be free from defects in the Company’s workmanship and meet mutually agreed-upon specifications for periods generally ranging from 12 months to 24 months. The Company’s obligation is generally limited to correcting, at its expense, any defect by repairing or replacing such defective product. The Company’s warranty generally excludes defects resulting from faulty customer-supplied components, design defects or damage caused by any party or cause other than the Company. The Company provides for an estimate of costs that may be incurred under its limited warranty at the time product revenue is recognized and establishes additional reserves for specifically identified product issues. These costs primarily include labor and materials, as necessary, associated with repair or replacement and are included in the Company's accompanying Consolidated Balance Sheets in "other accrued liabilities." The primary factors that affect the Company’s warranty liability include the value and the number of shipped units and historical and anticipated rates of warranty claims. As these factors are impacted by actual experience and future expectations, the Company assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Below is a table summarizing the activity related to the Company’s limited warranty liability for fiscal 2022, 2021 and 2020 (in thousands): Limited warranty liability, as of September 28, 2019 Accruals for warranties issued during the period Settlements (in cash or in kind) during the period Limited warranty liability, as of October 3, 2020 Accruals for warranties issued during the period Settlements (in cash or in kind) during the period Limited warranty liability, as of October 2, 2021 Accruals for warranties issued during the period Settlements (in cash or in kind) during the period Limited warranty liability, as of October 1, 2022 13. Shareholders' Equity $ $ 6,276 2,852 (2,742) 6,386 3,277 (3,018) 6,645 2,786 (2,506) 6,925 On August 20, 2019, the Board of Directors approved a share repurchase program under which the Company is authorized to repurchase $50.0 million of its common stock (the "2019 Program"). The 2019 Program commenced upon completion of the 2018 Program. During fiscal 2021, 2020 and 2019, the Company completed the 2019 Program by repurchasing 73,560, 609,935 and 54,965 shares under this program for $5.3 million, $41.4 million and $3.3 million at an average price of $72.44, $67.86 and $59.66 per share, respectively. On August 13, 2020, the Board of Directors approved a share repurchase program under which the Company is authorized to repurchase up to $50.0 million of its common stock (the "2021 Program"). On November 18, 2020, the Board of Directors approved an additional $50.0 million in share repurchase authority under the existing 2021 Program such that there then existed a total of $100.0 million in share repurchase authority under the program. The 2021 Program commenced upon completion of 65 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements the 2019 Program. During fiscal 2021, the Company completed the 2021 Program by repurchasing 1,171,246 shares under this program for $100.0 million at an average price of $85.40 per share. On August 11, 2021, the Board of Directors approved a share repurchase program under which the Company is authorized to repurchase up to $50.0 million of its common stock (the "2022 Program"). The 2022 Program commenced upon completion of the 2021 Program. During fiscal 2022 and 2021, the Company completed the 2022 Program by repurchasing 564,718 and 34,381 shares under this program for $46.9 million and $3.1 million at an average price of $83.07 and $90.16 per share, respectively. On August 18, 2022, the Board of Directors approved a share repurchase program under which the Company is authorized to repurchase up to $50.0 million of its common stock (the "2023 Program"). The 2023 Program became effective immediately and has no expiration. During fiscal 2022, the Company repurchased 38,397 shares under this program for $3.5 million at an average price of $90.63 per share. As of October 1, 2022, $46.5 million of authority remained under the 2023 Program. All shares repurchased under the aforementioned programs were recorded as treasury stock. 14. Trade Accounts Receivable Sale Programs The Company has Master Accounts Receivable Purchase Agreements with MUFG Bank, New York Branch (formerly known as The Bank of Tokyo- Mitsubishi UFJ, Ltd.) (the "MUFG RPA"), HSBC Bank (China) Company Limited, Xiamen branch (the "HSBC RPA") and other unaffiliated financial institutions, under which the Company may elect to sell receivables; at a discount. All facilities are uncommitted facilities. The maximum facility amount under the MUFG RPA as of October 1, 2022 is $340.0 million. The maximum facility amount under the HSBC RPA as of October 1, 2022 is $60.0 million. The MUFG RPA will be automatically extended each year unless any party gives no less than 10 days prior notice that the agreement should not be extended. The terms of the HSBC RPA are generally consistent with the terms of the MUFG RPA previously discussed. Transfers of receivables under the programs are accounted for as sales and, accordingly, receivables sold under the programs are excluded from accounts receivable on the Consolidated Balance Sheets and are reflected as cash provided by operating activities on the Consolidated Statements of Cash Flows. Proceeds from the transfer reflect the face value of the receivables less a discount. The sale discount is recorded within "Miscellaneous, net" in the Consolidated Statements of Comprehensive Income in the period of the sale. The Company continues servicing receivables sold and performing all accounts receivable administrative functions, in exchange receives a servicing fee, under both the MUFG RPA and HSBC RPA. Servicing fees related to trade accounts receivable programs recognized during fiscal 2022, 2021 and 2020 were not material. The Company sold $787.5 million, $730.5 million and $834.4 million of trade accounts receivable under these programs, or their predecessors, during fiscal 2022, 2021 and 2020, respectively, in exchange for cash proceeds of $783.1 million, $728.4 million and $831.2 million, respectively. As of October 1, 2022 and October 2, 2021, $222.5 million and $176.0 million, respectively, of accounts receivables sold under trade accounts receivable programs and subject to servicing by the Company remained outstanding and had not yet been collected. 15. Revenue from Contracts with Customers Revenue is recognized over time for arrangements with customers for which: (i) the Company's performance does not create an asset with an alternative use to the Company, and (ii) the Company has an enforceable right to payment, including reasonable profit margin, for performance completed to date. Revenue recognized over time is estimated based on costs incurred to date plus a reasonable profit margin. If either of the two conditions noted above are not met to recognize revenue over time, revenue is recognized following the transfer of control of such products to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying arrangement. The Company recognizes revenue when a contract exists and when, or as, it satisfies a performance obligation by transferring control of a product or service to a customer. Contracts are accounted for when they have approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The Company generally enters into a master services arrangement that establishes the framework under which business will be conducted. These arrangements represent the master terms and conditions of the Company's services that apply to individual 66 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements orders, but they do not commit the customer to work with, or to continue to work with, the Company nor do they obligate the customer to any specific volume or pricing of purchases. Moreover, these terms can be amended in appropriate situations. Customer purchase orders are received for specific quantities with predominantly fixed pricing and delivery requirements. Thus, for the majority of our contracts, there is no guarantee of any revenue to the Company until a customer submits a purchase order. As a result, the Company generally considers its arrangement with a customer to be the combination of the master services arrangement and the purchase order. Most of the Company's arrangements with customers create a single performance obligation as the promise to transfer the individual manufactured product or service is capable of being distinct. The Company’s performance obligations are satisfied over time as work progresses or at a point in time. A performance obligation is satisfied over time if the Company has an enforceable right to payment, including a reasonable profit margin. Determining if an enforceable right to payment includes a reasonable profit margin requires judgment and is assessed on a contract by contract basis. Generally, there are no subjective customer acceptance requirements or further obligations related to goods or services provided; if such requirements or obligations exist, then a sale is recognized at the time when such requirements are completed and such obligations are fulfilled. The Company does not allow for a general right of return. Net sales include amounts billed to customers for shipping and handling and out-of-pocket expenses. The corresponding shipping and handling costs and out-of-pocket expenses are included in cost of sales. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from net sales. Contract Costs For contracts requiring over time revenue recognition, the selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. The Company uses a cost-based input measurement of progress because it best depicts the transfer of assets to the customer, which occurs as costs are incurred during the manufacturing process or as services are rendered. Under the cost-based measure of progress, the extent of progress towards completion is measured based on the costs incurred to date. There were no other costs to obtain or fulfill customer contracts. Disaggregated Revenue The table below includes the Company’s revenue for the fiscal years indicated disaggregated by geographic reportable segment and market sector (in thousands): Market Sector: Industrial Healthcare/Life Sciences Aerospace/Defense External revenue Inter-segment sales Segment revenue 2022 Reportable Segment: AMER APAC EMEA Total $ $ 398,743 $ 645,881 255,779 1,300,403 10,285 1,310,688 $ 1,288,577 $ 744,216 165,432 2,198,225 102,415 2,300,640 $ 65,398 $ 175,674 71,668 312,740 3,575 316,315 $ 1,752,718 1,565,771 492,879 3,811,368 116,275 3,927,643 67 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements Market Sector: Industrial Healthcare/Life Sciences Aerospace/Defense External revenue Inter-segment sales Segment revenue Market Sector (1): Industrial Healthcare/Life Sciences Aerospace/Defense External revenue Inter-segment sales $ $ $ 2021 Reportable Segment: AMER APAC EMEA Total 462,789 $ 566,693 277,870 1,307,352 10,052 1,317,404 $ 1,010,833 $ 605,249 134,842 1,750,924 99,679 1,850,603 $ 75,353 $ 154,830 80,406 310,589 2,080 312,669 $ 1,548,975 1,326,772 493,118 3,368,865 111,811 3,480,676 2020 Reportable Segment: AMER APAC EMEA Total 481,301 $ 464,134 371,685 1,317,120 10,729 1,327,849 $ 954,925 $ 618,250 157,301 1,730,476 94,355 1,824,831 $ 84,215 $ 176,001 82,582 342,798 6,304 349,102 $ 1,520,441 1,258,385 611,568 3,390,394 111,388 3,501,782 Segment revenue (1) During fiscal 2021, the Company consolidated the previously reported Industrial/Commercial and Communications market sectors to form the Industrial market sector. Fiscal 2020 amounts have been reclassified to conform to the current period presentation. $ For fiscal 2022 approximately 84% and for fiscal 2021 and 2020 approximately 91% of the Company's revenue was recognized as products and services were transferred over time. Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, contract assets and deferred revenue on the Company’s accompanying Consolidated Balance Sheets. Contract Assets: For performance obligations satisfied at a point in time, billing occurs subsequent to revenue recognition, at which point the customer has been billed and the resulting asset is recorded within accounts receivable. For performance obligations satisfied over time as work progresses, the Company has an unconditional right to payment, which results in the recognition of contract assets. The following table summarizes the activity in the Company's contract assets during fiscal 2022 and 2021 (in thousands): Contract assets, beginning of period Revenue recognized during the period Amounts collected or invoiced during the period Contract assets, end of period 2022 2021 $ $ 115,283 $ 3,180,108 (3,156,851) 138,540 $ 113,946 3,048,875 (3,047,538) 115,283 Deferred Revenue: Deferred revenue is recorded when consideration is received from a customer prior to transferring goods or services to the customer under the terms of the contract, which is included in other accrued liabilities on Consolidated Balance Sheets. As of October 1, 2022 and October 2, 2021 the balance of advance payments from customers that remained in other accrued liabilities was $298.8 million and $101.1 million, respectively. The advance payment is not considered a significant financing component because it is used to meet working capital demands that can be higher in the early stages of a contract and to protect the company from the other party failing to adequately complete some or all of its obligations under the contract. Deferred revenue is recognized into revenue when all revenue recognition criteria are met. For performance obligations satisfied over time, recognition will occur as work progresses; otherwise deferred revenue will be recognized based upon shipping terms. 68 Table of Contents Plexus Corp. Notes to Consolidated Financial Statements 16. Restructuring and Impairment Charges During fiscal 2022, the Company recorded $2.0 million of restructuring and impairment charges primarily due to employee severance costs associated with a facility transition in the Company's APAC segment. During fiscal 2021, the Company recorded $3.3 million of restructuring and impairment charges which consisted of severance from the reduction of the Company's workforce, primarily in the AMER and EMEA segments. During fiscal 2020, the Company recorded $6.0 million of restructuring and impairment charges in the Company's AMER segment primarily related to the closure of our Boulder Design Center. These charges are recorded within restructuring and impairment charges on the Consolidated Statements of Comprehensive Income. Restructuring liabilities are recorded within other accrued liabilities on the Consolidated Balance Sheets. The Company recognized a tax benefit of $0.2 million, $0.3 million and $0.6 million related to restructuring and impairment charges in fiscal 2022, 2021 and 2020, respectively. The Company's restructuring accrual activity for fiscal 2022, 2021 and 2020 is included in the table below (in thousands): Accrual balance, as of September 28, 2019 Restructuring and impairment costs Amounts utilized Accrual balance, as of October 3, 2020 Restructuring and impairment costs Amounts utilized Accrual balance, as of October 2, 2021 Restructuring and impairment costs Amounts utilized Accrual balance, as of October 1, 2022 Employee Termination and Severance Costs Total 1,297 $ 2,949 (4,210) 36 $ 3,267 (3,232) 71 $ 1,766 (1,725) 112 $ 1,297 6,003 (7,264) 36 3,267 (3,232) 71 2,021 (1,980) 112 Fixed Asset and Operating Right-of- Use Asset Impairment $ — $ 3,054 (3,054) — $ — — — $ 255 (255) — $ $ $ $ 69 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures The Company maintains disclosure controls and procedures designed to ensure that the information the Company must disclose in its filings with the Securities and Exchange Commission ("SEC") is recorded, processed, summarized and reported on a timely basis. The Company’s Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") have reviewed and evaluated, with the participation of the Company’s management, the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of the end of the period covered by this report. Based on such evaluation, the CEO and CFO have concluded that, as of October 1, 2022, the Company’s disclosure controls and procedures are effective, at the reasonable assurance level, (a) in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports the Company files or submits under the Exchange Act, and (b) in assuring that information is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Management’s Annual Report on Internal Control Over Financial Reporting Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Management of the Company, including its CEO and CFO, has assessed the effectiveness of its internal control over financial reporting as of October 1, 2022, based on the criteria established in "Internal Control - Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") (2013). Based on its assessment and those criteria, management has reached the conclusion that the Company's internal control over financial reporting was effective. The independent registered public accounting firm of PricewaterhouseCoopers LLP has audited the Company’s internal control over financial reporting as of October 1, 2022, as stated in its report included herein. Changes in Internal Control Over Financial Reporting There have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Limitations on the Effectiveness of Controls Our management, including our CEO and CFO, does not expect that our disclosure controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision- making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, a control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Notwithstanding the foregoing limitations on the effectiveness of controls, we have nonetheless reached the conclusion that the Company's disclosure controls and procedures and internal control over financial reporting are effective. ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURES REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 70 Table of Contents ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE PART III Information in response to this item is incorporated herein by reference to "Election of Directors" and "Corporate Governance" in the Company’s Proxy Statement for its 2023 Annual Meeting of Shareholders ("2023 Proxy Statement"), which will be filed within 120 days of the end of the Company's fiscal year. Our Code of Conduct and Business Ethics is posted on our website at www.plexus.com. You may access the Code of Conduct and Business Ethics by following the links under "Investors" and then "Corporate Governance" at our website. Plexus’ Code of Conduct and Business Ethics applies to all members of the board of directors, officers and employees; and includes provisions related to accounting and financial matters that apply to the Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and Controller. Information about our Executive Officers The following table sets forth our executive officers, their ages as of November 18, 2022, and the positions held by each person: Name Todd P. Kelsey Steven J. Frisch Patrick J. Jermain Oliver K. Mihm Angelo M. Ninivaggi Ronnie Darroch Scott Theune Victor Tan Age 57 56 56 50 55 57 58 58 Position Chief Executive Officer President and Chief Strategy Officer Executive Vice President and Chief Financial Officer Executive Vice President and Chief Operating Officer Executive Vice President, Chief Administrative Officer, General Counsel and Secretary Executive Vice President – Global Operations and Regional President – EMEA Regional President – AMER Regional President – APAC Todd P. Kelsey joined Plexus in 1994 and has served as Chief Executive Officer since 2016; prior thereto, he served as President from 2016 to 2022 and Executive Vice President and Chief Operating Officer since 2013. Previously, Mr. Kelsey served as Executive Vice President – Global Customer Services since 2011 and as Senior Vice President prior thereto. Steven J. Frisch joined Plexus in 1990 and has served as President and Chief Strategy Officer since 2022. Prior thereto, he served as Executive Vice President and Chief Operating Officer since 2016 and Executive Vice President and Chief Customer Officer since 2014. Previously, Mr. Frisch served as Executive Vice President – Global Customer Services from 2013 to 2014. Mr. Frisch was Regional President – Plexus EMEA from 2010 to 2013. Mr. Frisch also served as Senior Vice President – Global Engineering Solutions from 2007 to 2013. Patrick J. Jermain joined Plexus in 2010 and has served as Chief Financial Officer since 2014; he was named a Senior Vice President in 2015 and Executive Vice President in 2019. Previously, Mr. Jermain served as Treasurer and Vice President of Finance since 2013 and as Corporate Controller since 2010. Oliver Mihm joined Plexus in 2000 and has served as Executive Vice President and Chief Operating Officer since 2022. Prior thereto, he served as Executive Vice President – Global Supply Chain and Operational Solutions, previously serving as Executive Vice President Supply Chain since 2019. From 2015 to 2019, Mr. Mihm served as Regional President – EMEA. Prior to that, Mr. Mihm was Industrial Market Sector Vice President, led our Global Engineering Solutions and held various leadership roles within our Engineering Solutions organization. Angelo M. Ninivaggi joined Plexus in 2002 and has served as Chief Administrative Officer since 2013. Mr. Ninivaggi has also served as Vice President, General Counsel and Secretary since 2006, was named a Senior Vice President in 2011 and Executive Vice President in 2019. Mr. Ninivaggi also served as Corporate Compliance Officer from 2007 to 2013. Ronnie Darroch joined Plexus in 2012 and has served as Executive Vice President and Regional President – EMEA since May 2019 and Executive Vice President – Global Operations since 2022. Previously, Mr. Darroch served as Regional President – AMER from 2016 to 2019, Senior Vice President – Global Manufacturing Solutions from 2014 to 2019, was named an Executive Vice President in 2016, Regional President – EMEA from 2013 to 2014 and Vice President of Operations – EMEA prior thereto. 71 Table of Contents Scott Theune joined Plexus in 1993 and has served as Regional President – AMER since May 2019. Previously, Mr. Theune served as Senior Vice President of Global Supply Chain from 2016 to 2019, Vice President of Supply Chain from 2005 to 2016, and General Manager and Global Director of Manufacturing Process and Technology prior thereto. Victor Tan joined Plexus in 2007 and has served as Regional President – APAC since 2020. Previously, Mr. Tan served as Senior Vice President of Global Operations since 2019. In 2010, he was promoted to Vice President of Customer Management in APAC, later appointed to lead all Penang operations and support functions in the region in 2013 and further expanded to lead APAC operations in 2018. Prior thereto, he served as the General Manager for Plexus' Penang-Hillside site in Malaysia. ITEM 11. EXECUTIVE COMPENSATION Incorporated herein by reference to "Corporate Governance – Board and Committee Responsibilities – Compensation & Leadership Development Committee," "Director Compensation for Fiscal 2022," "Compensation Discussion & Analysis," "Executive Compensation" and "Compensation Committee Report" in the 2023 Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Incorporated herein by reference to "Security Ownership of Certain Beneficial Owners and Management" in the 2023 Proxy Statement. Equity Compensation Plan Information The following table chart gives aggregate information regarding grants under all Plexus equity compensation plans through October 1, 2022: Plan category Equity compensation plans approved by security holders Equity compensation plans not approved by security holders Total Number of securities to be issued upon exercise of outstanding options, warrants and rights (1) Weighted-average exercise price of outstanding options, warrants and rights (2) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in 1 column) st 803,127 $ — 803,127 $ 44.02 $ n/a 44.02 $ 979,811 — 979,811 (1) Represents options, stock-settled SARs, PSUs and RSUs granted under the 2016 Omnibus Incentive Plan and the 2008 Long-Term Incentive Plan, both of which were approved by shareholders. No further awards may be made under the 2008 Long-Term Incentive Plan. (2) The weighted average exercise prices exclude PSUs and RSUs. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Incorporated herein by reference to "Corporate Governance – Director Independence" and "Certain Transactions" in the 2023 Proxy Statement. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Our independent registered public accounting firm is PricewaterhouseCoopers LLP, Milwaukee, Wisconsin, Auditor Firm ID: 238. Incorporated herein by reference to the subheading "Ratify Independent Auditors - Fees and Services" in the 2023 Proxy Statement. 72 Table of Contents ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) Documents filed PART IV Financial Statements and Financial Statement Schedule. See the list of Financial Statements and Financial Statement Schedule in Item 8. (b) Exhibits. The list of exhibits is included below: Exhibit No. 3(i) 3(ii) 4.1 4.2 4.3 10.1 (a) 10.1 (b) 10.1 (c) 10.2 (a) 10.2 (b) 10.3 (a) Exhibit Form Exhibit Filing Date Incorporate by Reference Herein Restated Articles of Incorporation of Plexus Corp. Amended and Restated Bylaws of Plexus Corp., as amended through November 18, 2020 Restated Articles of Incorporation of Plexus Corp. Amended and Restated Bylaws of Plexus Corp., as amended through November 18, 2020 Description of Common Stock Credit Agreement, dated as of May 15, 2019, among Plexus Corp., the banks, financial institutions and other institutional lenders listed on the signature pages thereto, JPMorgan Chase Bank, N.A., as administrative agent, U.S. Bank National Association, as syndication agent, PNC Bank, National Association, Bank of America, N.A., MUFG Bank, Ltd., HSBC Bank USA, N.A., Bank of the West and Wells Fargo Bank, National Association, as co-documentation agents, and JPMorgan Chase Bank, N.A. and U.S. Bank National Association, as joint lead arrangers and joint book runners (including the related subsidiary guaranty). 10-Q 8-K 10-Q 8-K 10-K 8-K 3.1 3.1 3.1 3.1 4.3 10.1 5/14/2004 11/19/2020 5/14/2004 11/19/2020 10/2/2021 5/15/2019 Amendment No. 1 to Credit Agreement, dated as of April 29, 2020, among Plexus Corp., the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. 8-K 10.1 4/30/2020 Amended and Restated Credit Agreement, dated June 9, 2022, by and among Plexus Corp., certain of its subsidiaries from time to time party thereto as borrowers, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent. Note Purchase Agreement, dated as of June 15, 2018, between Plexus Corp. and the Purchasers named therein relating to an aggregate of $150,000,000 in principal amount of 4.05% Series A Senior Notes, due June 15, 2025, and 4.22% Series B Senior Notes, due June 15, 2028. First Amendment, dated as of June 25, 2019, to the Note Purchase Agreement, dated as of June 15, 2018, between Plexus Corp. and the Noteholders named therein relating to an aggregate of $150,000,000 in principal amount of 4.05% Series A Senior Notes, due June 15, 2025, and 4.22% Series B Senior Notes, due June 15, 2028. Master Accounts Receivable Purchase Agreement between Plexus Corp. and Plexus Manufacturing Sdn. Bhd., and each additional seller party thereto from time to time as the Sellers, Plexus Corp., as Seller Representative, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as the Purchaser, dated as of October 4, 2016. 8-K 10.1 6/13/2022 8-K 10.1 6/18/2018 10-Q 10.1 8/2/2019 8-K 10.1 10/7/2016 73 Table of Contents 10.3 (b) 10.3 (c) 10.3 (d) 10.3 (e) 10.3 (f) 10.3 (g) 10.3 (h) Amended and Restated Master Accounts Receivable Purchase Agreement between Plexus Corp. and Plexus Manufacturing Sdn. Bhd., Plexus Intl. Sales & Logistics, LLC, and each additional seller party thereto from time to time as the Sellers, Plexus Corp., as Seller Representative, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as the Purchaser, dated as of December 14, 2016. Amendment No. 3 to Amended and Restated Master Accounts Receivable Purchase Agreement between Plexus Corp. and Plexus Manufacturing Sdn. Bhd., Plexus Intl. Sales & Logistics, LLC, Plexus Services Ro SRL, Plexus Corp. (UK) Limited and each additional seller party thereto from time to time as the Sellers, Plexus Corp., as Seller Representative, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as the Purchaser, dated as of March 28, 2017. Amendment No. 4 to Amended and Restated Master Accounts Receivable Purchase Agreement between Plexus Corp. and Plexus Manufacturing Sdn. Bhd., Plexus Intl. Sales & Logistics, LLC, Plexus Services Ro SRL, Plexus Corp. (UK) Limited and each additional seller party thereto from time to time as the Sellers, Plexus Corp., as Seller Representative, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as the Purchaser, dated as of September 11, 2017. Amendment No. 5 to Amended and Restated Master Accounts Receivable Purchase Agreement between Plexus Corp. and Plexus Manufacturing Sdn. Bhd., Plexus Intl. Sales & Logistics, LLC, Plexus Services Ro SRL, Plexus Corp. (UK) Limited and each additional seller party thereto from time to time as the Sellers, Plexus Corp., as Seller Representative, and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as the Purchaser, dated as of October 19, 2017. Amendment No. 6 to Amended and Restated Master Accounts Receivable Purchase Agreement between Plexus Corp. and Plexus Manufacturing Sdn. Bhd., Plexus Intl. Sales & Logistics, LLC, Plexus Services Ro SRL, Plexus Corp. (UK) Limited and each additional seller party thereto from time to time as the Sellers, Plexus Corp., as Seller Representative, and MUFG Bank Ltd. (f/k/a The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch), as the Purchaser, dated as of May 4, 2018. Amendment No. 7 to Amended and Restated Master Accounts Receivable Purchase Agreement between Plexus Corp. and Plexus Manufacturing Sdn. Bhd., Plexus Intl. Sales & Logistics, LLC, Plexus Services Ro SRL, Plexus Corp. (UK) Limited and each additional seller party thereto from time to time as the Sellers, Plexus Corp., as Seller Representative, and MUFG Bank Ltd. (f/k/a The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch), as the Purchaser, dated as of September 19, 2018. Amendment No. 8 to Amended and Restated Master Accounts Receivable Purchase Agreement between Plexus Corp. and Plexus Manufacturing Sdn. Bhd., Plexus Intl. Sales & Logistics, LLC, Plexus Services Ro SRL, Plexus Corp. (UK) Limited and each additional seller party thereto from time to time as the Sellers, Plexus Corp., as Seller Representative, and MUFG Bank Ltd. (f/k/a The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch), as the Purchaser, dated as of March 20, 2019. 10-Q 10.2 2/3/2017 10-Q 10.1 5/5/2017 10-K 10.3(d) 11/16/2018 10-K 10.3(d) 11/17/2017 10-Q 10.1 8/3/2018 10-K 10.3(g) 11/16/2018 10-Q 10.1 5/3/2019 74 Table of Contents 10.3 (i) 10.3 (j) 10.3 (k) 10.4 10.5 10.6 10.7 10.8 (a) 10.8 (b) Amendment No.9 to Amended and Restated Master Accounts Receivable Purchase Agreement between Plexus Corp. and Plexus Manufacturing Sdn. Bhd., Plexus Intl. Sales & Logistics, LLC, Plexus Services Ro SRL, Plexus Corp. (UK) Limited and each additional seller party thereto from time to time as the Sellers, Plexus Corp., as Seller Representative, and MUFG Bank Ltd. (f/k/a The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch), as the Purchaser, dated as of June 21, 2019. Amendment No.10 to Amended and Restated Master Accounts Receivable Purchase Agreement between Plexus Corp. and Plexus Manufacturing Sdn. Bhd., Plexus Intl. Sales & Logistics, LLC, Plexus Services Ro SRL, Plexus Corp. (UK) Limited and each additional seller party thereto from time to time as the Sellers, Plexus Corp., as Seller Representative, and MUFG Bank Ltd. (f/k/a The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch), as the Purchaser, dated as of December 23, 2019. Amendment No.11 to Amended and Restated Master Accounts Receivable Purchase Agreement between Plexus Corp. and Plexus Manufacturing Sdn. Bhd., Plexus Intl. Sales & Logistics, LLC, Plexus Services Ro SRL, Plexus Corp. (UK) Limited and each additional seller party thereto from time to time as the Sellers, Plexus Corp., as Seller Representative, and MUFG Bank Ltd. (f/k/a The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch), as the Purchaser, dated as of September 10, 2020. Retirement and Transition Agreement, dated August 17, 2016, by and between Plexus Corp. and Dean A. Foate.*. Employment Agreement, dated August 17, 2016, by and between Plexus Corp. and Todd P. Kelsey.* Form of Change of Control Agreement with executive officers.* Summary of Directors' Compensation (1/22).* Plexus Corp. Executive Deferred Compensation Plan.* Plexus Corp Executive Deferred Compensation Plan Trust dated April 1, 2003 between Plexus Corp. and Bankers Trust Company.* 10.9 Plexus Corp. Non-employee Directors Deferred Compensation Plan.* 10.10 (a) Amended and Restated Plexus Corp. 2016 Omnibus Incentive Plan.* 10.10 (b) Forms of award agreements thereunder* (i) Form of Stock Option Agreement. (ii) Form of Restricted Stock Unit Award. (iii) Form of Performance Stock Unit Agreement. (iv) Form of Stock Appreciation Rights Agreement. (v) Form of Restricted Stock Unit Award Agreement for Directors. (vi) Form of Plexus Corp. Variable Incentive Compensation Plan - Plexus Leadership Team. 10-Q 10.2 8/2/2019 10-Q 10.1 2/7/2020 10-K 10.3(k) 11/20/2020 8-K 8-K 8-K 10-Q 10-K 10-K 10-K 10-Q 10-Q 10-Q 10-Q 10-Q 10-Q 10-K 10.1 10.2 10.2 10.2 10.17 10.14 10.10 10.2 10.1 10.2 10.1 10.3 10.1 8/19/2016 8/19/2016 5/21/2008 2/4/2022 12/19/2000 12/15/2003 11/19/2012 5/5/2017 8/8/2016 8/8/2016 2/5/2021 8/8/2016 2/3/2017 10.1(b)(vi) 11/17/2017 75 Table of Contents 10.11 (a) Amended and Restated Plexus Corp. 2008 Long-Term Incentive Plan* (superseded except as to outstanding awards). 10-Q 10.3 5/5/2017 10.11(b) Forms of award agreements thereunder* 10-Q 10-Q 10-Q 10.2 10.5(b) 10.5(c) 2/4/2010 5/8/2008 5/8/2008 (i) Form of Stock Option Agreement. (ii) Form of Restricted Stock Unit Award. (iii) Form of Stock Appreciation Rights Agreement. List of Subsidiaries. Consent of PricewaterhouseCoopers LLP. Powers of Attorney (see signature page). Certification of Chief Executive Officer pursuant to Section 302(a) of the Sarbanes- Oxley Act of 2002. Certification of Chief Financial Officer pursuant to Section 302(a) of the Sarbanes- Oxley Act of 2002. Certification of the CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Certification of the CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 21** 23** 24** 31.1** 31.2** 32.1** 32.2** 99.1** Reconciliation of ROIC to GAAP and Economic Return Financial Statements. 101 The following materials from Plexus Corp.’s Annual Report on Form 10-K for the fiscal year ended October 1, 2022, formatted in Inline Extensible Business Reporting Language ("XBRL"): (i) the Consolidated Statements of Comprehensive Income, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Shareholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements. 101.INS Inline XBRL Instance Document (the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document). 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 104 * ** The cover page from the Company’s Annual Report on Form 10-K for the fiscal year ended October 1, 2022, formatted in Inline XBRL and contained in Exhibit 101. Designates management compensatory plans or agreements. Filed or furnished herewith. 76 Table of Contents ITEM 16. FORM 10-K SUMMARY None. 77 Table of Contents Plexus Corp. and Subsidiaries Schedule II – Valuation and Qualifying Accounts For fiscal 2022, 2021 and 2020 (in thousands): Descriptions Fiscal Year 2022: Allowance for losses on accounts receivable (deducted from the asset to which it relates) Valuation allowance on deferred income tax assets (deducted from the asset to which it relates) Fiscal Year 2021: Allowance for losses on accounts receivable (deducted from the asset to which it relates) Valuation allowance on deferred income tax assets (deducted from the asset to which it relates) Fiscal Year 2020: Allowance for losses on accounts receivable (deducted from the asset to which it relates) Valuation allowance on deferred income tax assets (deducted from the asset to which it relates) $ $ $ $ $ $ Balance at beginning of period Additions charged to costs and expenses Additions charged to other accounts Deductions Balance at end of period 1,188 $ 2,117 $ — $ (1,344) $ 1,961 30,321 $ 1,338 $ — $ (6,097) $ 25,562 3,597 $ 1,232 $ — $ (3,641) $ 1,188 34,948 $ 4,499 $ — $ (9,126) $ 30,321 1,537 $ 4,051 $ — $ (1,991) $ 3,597 29,170 $ 5,778 $ — $ — $ 34,948 78 Table of Contents Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES Date: November 18, 2022 Plexus Corp. Registrant /s/ Todd P. Kelsey Todd P. Kelsey Chief Executive Officer 79 Table of Contents POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Todd P. Kelsey, Patrick J. Jermain and Angelo M. Ninivaggi, and each of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this report, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and any other regulatory authority, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the date indicated.* SIGNATURE AND TITLE /s/ Todd P. Kelsey Todd P. Kelsey, Chief Executive Officer (Principal Executive Officer) and Director /s/ Patrick J. Jermain Patrick J. Jermain, Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) /s/ Dean A. Foate Dean A. Foate, Chairman /s/ Joann M. Eisenhart Joann M. Eisenhart, Director /s/ Rainer Jueckstock Rainer Jueckstock, Director /s/ Peter Kelly Peter Kelly, Director *Each of the above signatures is affixed as of November 18, 2022. 80 /s/ Randy J. Martinez Randy J. Martinez, Director /s/ Joel Quadracci Joel Quadracci, Director /s/ Karen M. Rapp Karen M. Rapp, Director /s/ Paul A. Rooke Paul A. Rooke, Director /s/ Michael V. Schrock Michael V. Schrock, Director Entity Name Plexus Corp. List of Subsidiaries of Plexus Corp. Plexus Aerospace, Defense and Security Services, LLC Plexus Asia, Ltd. Plexus Corp. (UK) Limited Plexus Corp. Limited Plexus Corp. Services (UK) Limited Plexus Deutschland GmbH Plexus Electronica S. de R.L. de C.V. Plexus (Hangzhou) Co., Ltd. Plexus International Services, Inc. Plexus Intl. Sales & Logistics, LLC Plexus Management Services Corporation Plexus Manufacturing Sdn. Bhd. Plexus QS, LLC Plexus Services RO S.R.L. Plexus Services Americas S. de R.L. de C.V. Plexus (Thailand) Co., Ltd. Plexus (Xiamen) Co., Ltd. Plexus Corp (Singapore) Pte. Ltd. (Singapore) Plexus Electronic (Zhejiang) Co., Ltd. Omits inactive and dormant subsidiaries. Exhibit 21 Plexus Corp. 2022 Form 10-K Incorporation Jurisdiction USA - Wisconsin British Virgin Islands UK - Scotland UK - Scotland UK - Scotland Germany Mexico China USA - Nevada USA - Delaware USA - Nevada Malaysia USA - Delaware Romania Mexico Thailand China Singapore China Exhibit 23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-76728, 333-150967 and 333-211236) of Plexus Corp. of our report dated November 18, 2022, relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10‑K. /s/ PricewaterhouseCoopers LLP Milwaukee, Wisconsin November 18, 2022 CERTIFICATION Exhibit 31.1 I, Todd P. Kelsey, certify that: 1. I have reviewed this annual report on Form 10-K of Plexus Corp.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: November 18, 2022 /s/ Todd P. Kelsey Todd P. Kelsey Chief Executive Officer CERTIFICATION Exhibit 31.2 I, Patrick J. Jermain, certify that: 1. I have reviewed this annual report on Form 10-K of Plexus Corp.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: November 18, 2022 /s/ Patrick J. Jermain Patrick J. Jermain Executive Vice President and Chief Financial Officer CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Exhibit 32.1 In connection with the Annual Report of Plexus Corp. (the “Company”) on Form 10-K for the fiscal year ended October 1, 2022, as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Todd P. Kelsey, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Todd P. Kelsey Todd P. Kelsey Chief Executive Officer November 18, 2022 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Plexus Corp. and will be retained by Plexus Corp. and furnished to the Securities and Exchange Commission or its staff upon request. CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Exhibit 32.2 In connection with the Annual Report of Plexus Corp. (the “Company”) on Form 10-K for the fiscal year ended October 1, 2022, as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Patrick J. Jermain, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Patrick J. Jermain Patrick J. Jermain Executive Vice President and Chief Financial Officer November 18, 2022 A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Plexus Corp. and will be retained by Plexus Corp. and furnished to the Securities and Exchange Commission or its staff upon request. Return on Invested Capital ("ROIC") and Economic Return Calculations GAAP to non-GAAP reconciliation (dollars in thousands): Exhibit 99.1 Operating income, as reported Restructuring and impairment charges Adjusted operating income Tax rate Adjusted operating income (tax effected) Average invested capital ROIC WACC Economic Return October 1, 2022 Fiscal year ended October 2, 2021 October 3, 2020 $ $ $ 178,185 2,021 180,206 13.0 % 156,779 1,207,357 $ $ $ 13.0 % 9.3 % 3.7 % 176,268 3,267 179,535 13.0 % 156,195 1,014,742 $ $ $ 15.4 % 8.1 % 7.3 % 153,372 6,003 159,375 14.0 % 137,062 979,981 14.0 % 8.8 % 5.2 % Average Invested Capital Fiscal 2022 October 1, 2022 July 2, 2022 April 2, 2022 2022 January 1, October 2, Average invested capital Equity Plus: Debt and finance lease obligations - current Operating lease obligations - current (1) Debt and finance lease obligations - long-term Operating lease obligations - long-term Less: Cash and cash equivalents $ 1,095,731 $ 1,058,190 $ 1,040,591 $ 1,044,095 273,971 7,948 187,776 33,628 250,012 8,640 184,707 32,270 222,393 9,266 186,069 34,347 151,417 9,507 187,075 36,343 (274,805) 1,324,249 $ (276,608) 1,257,211 $ (307,964) 1,184,702 $ (217,067) 1,211,370 $ $ $ $ $ $ $ $ 2021 1,028,232 66,313 9,877 187,033 37,970 (270,172) 1,059,253 $ 1,207,357 Average Invested Capital Fiscal 2021 Equity Plus: Debt and finance lease obligations - current Operating lease obligations - current (1) Debt and finance lease obligations - long-term Operating lease obligations - long-term Less: Cash and cash equivalents October 2, 2021 July 3, 2021 April 3, 2021 January 2, October 3, 2021 2020 Average invested capital $ 1,028,232 $ 1,020,450 $ 1,013,952 $ 1,006,959 $ 977,480 66,313 9,877 187,033 37,970 60,468 9,130 187,690 33,193 50,229 9,314 188,730 34,751 148,408 9,351 188,148 37,052 146,829 7,724 187,975 36,779 (270,172) 1,059,253 $ (303,255) 1,007,676 $ (294,370) 1,002,606 $ (356,724) 1,033,194 $ (385,807) 970,980 $ $ 1,014,742 Average Invested Capital Fiscal 2020 Equity Plus: Debt and finance lease obligations - current Operating lease obligations - current (1) (2) Debt and finance lease obligations - long-term Operating lease obligations - long-term (2) Less: Cash and cash equivalents October 3, 2020 July 4, 2020 April 4, 2020 January 4, September 28, 2020 2019 Average invested capital $ 977,480 $ 944,821 $ 892,558 $ 908,372 $ 865,576 146,829 7,724 187,975 36,779 145,993 8,061 188,626 38,077 107,880 8,546 186,327 39,617 67,847 9,102 186,827 41,764 100,702 — 187,278 — (385,807) 970,980 $ (296,545) 1,029,033 $ (225,830) 1,009,098 $ (252,914) 960,998 $ (223,761) 929,795 $ $ 979,981 (1) (2) Included in other accrued liabilities on the Consolidated Balance Sheets. In fiscal 2021, Plexus adopted and applied Topic 842 to all leases using the modified retrospective method of adoption. The prior year comparative information has not been restated and continues to be reported under the accounting standards in effect for fiscal 2019. TABLE OF CONTENTS PLEXUS CORP. 2023 NOTICE OF ANNUAL MEETING TABLE OF CONTENTS NOTICE OF ANNUAL MEETING OF SHAREHOLDERS December 16, 2022 To the Shareholders of Plexus Corp. You are invited to the Annual Meeting of Shareholders of Plexus Corp., a Wisconsin corporation: DATE AND TIME February 15, 2023 8:00 a.m. EST ITEMS OF BUSINESS ACCESS THE VIRTUAL ANNUAL MEETING This year’s annual meeting will be held virtually. Shareholders may participate in the virtual annual meeting by logging in at the following link and providing the control number found in the Notice of Internet Availability of Proxy Materials: www.virtualshareholdermeeting.com/PLXS2023 1 Elect 11 Directors (pg. 9) 2 Approve executive compensation by an advisory vote (pg. 69) RECORD DATE Shareholders of record at the close of business on December 9, 2022, are entitled to attend and vote at the annual meeting. As of the Record Date, Plexus had 27,649,534 shares of common stock outstanding. Each outstanding share of common stock is entitled to one vote on each matter presented. Any shareholder entitled to vote may vote either at the virtual meeting or by duly authorized proxy. 3 Approve frequency of future advisory votes to approve executive compensation by an advisory vote (pg. 70) 4 Ratify the selection of PricewaterhouseCoopers LLP as our independent auditors (pg. 73) 5 Transact such other business as may properly come before the meeting We call your attention to the proxy statement accompanying this notice, which contains important information about the matters to be acted upon at the meeting. By Order of the Board of Directors, Angelo M. Ninivaggi Executive Vice President, Chief Administrative Officer, General Counsel and Secretary Important notice regarding the availability of proxy materials for the shareholder meeting to be held on February 15, 2023. The proxy statement and the Company’s 2022 annual report to shareholders are available at www.proxyvote.com. At www.proxyvote.com, shareholders can view the proxy material, vote and request to receive paper copies of the proxy materials by mail. Index of frequently accessed information Beneficial Owners Board’s Role in Risk Oversight Certain Transactions Compensation & Risk Compensation Committee Report Compensation Discussion & Analysis Corporate Governance Director Compensation for Fiscal 2022 Environmental, Social & Governance Executive Compensation Householding & Solicitation Items of Business Meeting & Voting Information Pay Ratio Disclosure Proposal 1 Proposal 2 Proposal 3 Proposal 4 Report of the Audit Committee Who We Are 7 29 71 68 52 33 19 26 31 53 74 5 3 67 9 69 70 73 72 1 TABLE OF CONTENTS TABLE OF CONTENTS Who We Are Meeting & Voting Information Items of Business Security Ownership of Certain Beneficial Owners & Management Proposal 1 – Election of Directors Corporate Governance Plexus Corp. Board of Directors Shareholder Protections & Corporate Governance Best Practices Board Composition & Structure Board & Committee Responsibilities Board Governance Processes Director Compensation for Fiscal 2022 Director Fees & Arrangements Stock Ownership Guidelines & Stock Compensation for Directors Director Participation in Deferred Compensation Plan Board’s Role in Risk Oversight Cybersecurity Risk Environmental, Social & Governance (ESG) Compensation Discussion & Analysis Executive Summary Executive Compensation Philosophy, Goals & Process Elements & Analysis of Direct Compensation Elements & Analysis of Other Compensation Compensation Committee Report Executive Compensation Summary Compensation Table for Fiscal 2022 Grants of Plan-Based Awards for Fiscal 2022 Outstanding Equity Awards at Fiscal 2022 Year-End Option Exercises & Stock Vested in Fiscal 2022 Nonqualified Deferred Compensation in Fiscal 2022 Employment Agreements & Potential Payments Pay Ratio Disclosure Compensation & Risk Proposal 2 – Advisory Vote to Approve Named Executive Officer Compensation Proposal 3 – Advisory Proposal Related to Frequency of Future Advisory Votes Certain Transactions Report of the Audit Committee Proposal 4 – Ratify Independent Auditors Fees & Services Householding & Solicitation 1 3 5 7 9 19 19 19 20 22 24 26 27 27 28 29 30 31 33 33 35 38 50 52 53 53 56 57 59 59 61 67 68 69 70 71 72 73 73 74 TABLE OF CONTENTS WHO WE ARE Our Vision Our Mission We’ll help you create the products that build a better world. The leader in highly complex products and demanding regulatory environments. Plexus by the Numbers $3.81B 2022 Revenue 13.0% 2022 ROIC $4.86 11.9% 2022 Diluted earnings per share 2022 electricity intensity reduction across global manufacturing sites (normalized, fiscal 2020 baseline) 25,000 Employees 640 28/8 5.1M Development Engineers Facilities / Countries Square Feet Plexus Market Sectors & Subsectors INDUSTRIAL HEALTHCARE / LIFE SCIENCES AEROSPACE / DEFENSE Automation and Robotics Medical Devices and Equipment Aerospace Transportation and Energy Management Life Sciences and Diagnostics Semiconductor and Test and Measurement Advanced Surgical Systems and Medical Robotics Defense Security Space Communications 1 TABLE OF CONTENTS WHO WE ARE Our People We recognize that a great culture is foundational to the success of our vision to create the products that build a better world. We are proud of our culture and the recognition we have received over the years as a great place to work. In building a great culture, we embrace four “non-negotiables”: Our Values and Leadership Behaviors - Our Values and Leadership Behaviors establish the foundation upon which our culture is built; Customer Focus, Relationships and Teamwork, Excellence, Open Communications, Integrity, Prioritize our People, Solve Problems, Be Courageous, Be Strategic and Innovate. Quality Begins with Me - We instill personal responsibility for quality in our employees through our Quality Begins with Me culture; a commitment to delivering zero defects and continuous improvement. 5E’s of Customer Service Excellence - In all aspects of our engagements with both internal and external customers, we reflect the 5E’s. We are Empathetic, Entrepeneurial, Empowered, Engaged and we Ensure Accountability. One Plexus - One Plexus reflects our sentiment that we are stronger together than the sum of our parts. We embrace the One Plexus mentality through collaboration to ensure consistent operations, globally, and leverage the strengths and best practices of all facets of the organization to drive the best solutions for our customers. Committed to a diverse and inclusive workplace Diversity and Inclusion (“D&I”) Statement Be you. Our people create our best Plexus. Ingrained in our culture of inclusion is the philosophy that each individual offers diverse perspectives, backgrounds and experiences that create great outcomes when we are united as a team. We respect our people and embrace our differences. We welcome everyone and value the ideas generated by our collective uniqueness. We aspire that all of our people reach their full potential. Employee Resource Groups ("ERGs") Plexus Young Professionals (PyP) Fosters development and collaboration for young professionals. Women in Network (WiN) Champions the advancement of women in professional and personal development. UnusPlexus Created to celebrate different cultures and diversity at Plexus. • D&I Committee (including the CEO) and Board Oversight of D&I initiatives and results • Formal mentorship program with a specific focus on future leaders within underrepresented populations and D&I leadership training provided D&I Highlights • Gender & underrepresented minorities recruitment strategy • Flexible workplace policy, paid parental leave & equitable pay practices • Community involvement, charitable match program & paid volunteer time off Diversity by the Numbers 15 49.9% 2 4 different home countries represented in our global workforce of our global workforce is female of 15 of our Plexus Leadership Team members are female of 11 director nominees are female or underrepresented minorities 2 TABLE OF CONTENTS PROXY STATEMENT Plexus Corp. Global Headquarters One Plexus Way Neenah, WI 54957-0156 MEETING AND VOTING INFORMATION Plexus Corp. will hold its annual meeting of shareholders virtually on February 15, 2023 at 8 a.m. EST. Shareholders may participate in the virtual annual meeting by logging in at the following link and providing the control number found in the Notice of Internet Availability of Proxy Materials: www.virtualshareholdermeeting.com/PLXS2023. How to Access Your Proxy Materials On or about December 16, 2022, we mailed to shareholders a Notice of Internet Availability of Proxy Materials (“Notice”) containing instructions on how to access our proxy materials, including our proxy statement and annual report, and how to vote via the internet. Shareholders will not receive printed copies of the proxy materials unless requested via the procedures described in the Notice. To assure timely delivery of printed copies of the proxy materials before the annual meeting, shareholders need to request a copy no later than January 25, 2023. How to Vote Shareholders of record at the close of business on December 9, 2022 (the “Record Date”), are entitled to participate and vote at the virtual annual meeting. As of the Record Date, Plexus had 27,649,534 shares of common stock outstanding. If you are a shareholder of record as of the Record Date, then you may vote either at the virtual annual meeting or in advance of the meeting by authorizing—by internet, telephone or mail—the persons named as proxies on the proxy card, Dean A. Foate, Todd P. Kelsey, Patrick J. Jermain and Angelo M. Ninivaggi, to vote your shares in accordance with your directions. We encourage you to vote as soon as possible, even if you are planning to attend the virtual annual meeting (by virtual presence online), so that the vote count will not be delayed. By internet Go to www.proxyvote.com. You will need your 16-digit control number included on the Notice in order to vote by Internet. By telephone On a touch-tone telephone, call 1-800-690-6903. You will need your 16-digit control number included on the Notice in order to vote by telephone. By mail Virtually Please request written materials by following the instructions in the Notice. Complete, sign and date the proxy card, and return it to the address indicated on the proxy card. If you attend the virtual annual meeting, you will be able to cast your vote via the online meeting platform during a designated portion of the meeting. Have your Notice, proxy card or proxy form with your 16-digit control number available when you access the virtual annual meeting. 3 TABLE OF CONTENTS If for any reason you desire to revoke your proxy, you may do so at any time before it is voted, either by written notice filed with the Secretary, or Acting Secretary, of the meeting. Questions may be asked during the virtual meeting by submitting such questions in writing via the online platform. For those investors whose shares are held by a broker or other nominee, you must complete and return the voting instruction form provided by your broker, bank or nominee to provide instruction on how to cast your vote. In the absence of your voting instructions, brokers or other nominees may or may not be able to vote your shares at their discretion depending upon the particular proposal. For example, brokers may not vote your shares at their discretion in the election of directors; therefore, you must vote your shares if you want them to be counted in the election of directors. In addition, your broker is not permitted to vote your shares at its discretion regarding matters related to executive compensation, including the advisory vote to approve named executive officer compensation or the advisory vote on the frequency of the vote on compensation. If a broker or other nominee holds your shares and you wish to change your proxy prior to the voting thereof, please contact the broker or other nominee. Shareholders who own shares as part of Plexus’ 401(k) Retirement Plan (the “401(k) Plan”) will receive a separate means for voting the shares held in each account. Shares held by the 401(k) Plan for which participant designations are received will be voted in accordance with those designations. Those shares for which designations are not received will be voted proportionally based upon the shares for which voting directions have been received from participants in the 401(k) Plan. Shareholder Proposals The Secretary must receive a shareholder proposal no later than August 18, 2023 for the proposal to be considered for inclusion in our proxy materials for the 2024 annual meeting pursuant to Rule 14a-8 of the rules of the Securities and Exchange Commission. The 2024 annual meeting of shareholders is tentatively scheduled for February 14, 2024. To bring a proposal or nomination before the 2024 annual meeting, you must comply with our bylaws, which require written notice to the Secretary between October 2, 2023 and November 1, 2023. The purpose of this requirement is to assure adequate notice of, and information regarding, any such matter as to which shareholder action may be sought. If we receive your notice after November 1, 2023, then your proposal or nomination would be untimely and it will not be presented to shareholders for action at the 2024 annual meeting of shareholders. To comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide the additional information required by Rule 14a-19(b) under the Securities Exchange Act of 1934. Such additional information must be received by Secretary by no later than December 17, 2023. In addition, your proposal or nomination must comply with the procedural provisions of our bylaws. If you do not comply with these procedural provisions, your proposal or nomination can be excluded. Should the board nevertheless choose to present your proposal, the named proxies will be able to vote on the proposal using their best judgment. 4 TABLE OF CONTENTS ITEMS OF BUSINESS Board Recommendation Proposal 1 The election of 11 directors named in the proxy statement to serve on Plexus’ board of directors for a one-year term. FOR Proposal 2 An advisory proposal to approve the compensation of the Company’s named executive officers, as disclosed under the headings “Compensation Discussion and Analysis” and “Executive Compensation.” FOR Proposal 3 An advisory proposal related to the frequency of future advisory votes to approve the compensation of the Company’s named executive officers. 1 YEAR Proposal 4 Ratify the selection of PricewaterhouseCoopers LLP as our independent auditors for fiscal 2023. FOR Voting Procedures & Votes Required To conduct the annual meeting, more than 50% of Plexus’ outstanding shares entitled to vote must be present at the virtual meeting or by duly authorized proxy. This is referred to as a “quorum.” Abstentions and shares that are the subject of broker non-votes will be counted for the purpose of determining whether a quorum exists. Shares represented at a meeting for any purpose are counted in the quorum for all matters to be considered at the meeting. Each outstanding share of common stock is entitled to one vote on each matter presented. If you own shares as a registered holder and you do not vote, your shares will not be represented at the meeting and will not count toward the quorum requirement. If a quorum is obtained, then the shares that you have not voted will not affect whether a proposal is approved or rejected. If you are a shareholder whose shares are not registered in your name and you do not vote, then your bank, broker or other holder of record may still represent your shares at the meeting for purposes of obtaining a quorum. Assuming a quorum is present, directors are elected by a plurality of the votes cast at the meeting or by proxy by the holders of Plexus common stock entitled to vote in the election at the meeting. “Plurality” means that the individuals who receive the highest number of votes are elected as directors, up to the maximum number of directors to be chosen at the meeting. Any votes attempted to be cast “against” a candidate are not given legal effect and are not counted as votes cast in the election of directors. Therefore, any shares that are not voted, whether by withheld authority, broker non-vote or otherwise, have no effect in the election of directors except to the extent that the failure to vote for any individual results in another individual receiving a relatively larger number of votes. 5 TABLE OF CONTENTS Our bylaws provide that if any nominee for director does not receive, in an uncontested election, a majority of the votes cast for his or her election, the board will determine whether to accept the individual’s irrevocable, contingent resignation from the board (which must be submitted to, or on file with, the Company in order for that person to be nominated for board service). Assuming a quorum is present, the results of the non-binding, advisory vote to approve the compensation of our named executive officers will also be determined by a majority of shares voting on such matter. In addition, ratification of PricewaterhouseCoopers LLP as our independent auditors for 2023 will be determined by a majority of the shares voting on such matter, assuming a quorum is present. Abstentions and broker non-votes will not affect these votes, except insofar as they reduce the number of shares that are voted. To determine the results of the advisory vote related to the frequency of future advisory votes to approve named executive officer compensation, the frequency receiving the greatest number of votes, whether every year, every two years, or every three years, will be considered the frequency approved by shareholders. Abstention and broker non-votes do not constitute votes for any particular frequency and will have no effect on the outcome of this advisory vote. Broadridge Financial Solutions, Inc. will use an automated system to tabulate the votes and its representative(s) will also serve as the election inspector(s). 6 TABLE OF CONTENTS SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table presents certain information as of the Record Date (December 9, 2022), regarding the beneficial ownership of Plexus common stock by each current director or nominee for director, each named executive officer appearing in the “Summary Compensation Table” included in “Executive Compensation” herein, all directors or nominees for director and current named executive officers as a group, and each known 5%-or-greater beneficial owner of Plexus common stock. The specified individuals and entities have sole voting and sole dispositive powers as to all shares, except as otherwise indicated. SHARES BENEFICIALLY OWNED1 PERCENTAGE OF SHARES OUTSTANDING Joann M. Eisenhart Dean A. Foate Steven J. Frisch Patrick J. Jermain Rainer Jueckstock Peter Kelly Todd P. Kelsey Randy J. Martinez Oliver Mihm Angelo M. Ninivaggi Joel Quadracci Karen M. Rapp Paul A. Rooke Michael V. Schrock Jennifer Wuamett All directors, director nominees and current named executive officers as a group (15 persons) BlackRock, Inc.2 The Vanguard Group, Inc.3 Disciplined Growth Investors, Inc.4 Dimensional Fund Advisors LP5 16,535 114,259 59,369 54,047 24,570 32,950 139,319 1,918 19,372 41,109 4,758 8,765 10,821 39,159 0 566,951 4,338,213 3,215,591 2,291,467 1,815,967 * * * * * * * * * * * * * * * 2.05% 15.69% 11.63% 8.29% 6.57% * Less than 1% 1 2 3 The amounts reported in the table include shares subject to acquisition within 60 days of the Record Date, upon the vesting of restricted stock units (“RSUs”) granted under Plexus’ equity plans as follows: Dr. Eisenhart (1,918), Mr. Foate (1,918), Mr. Frisch (11,820), Mr. Jermain (8,310), Mr. Jueckstock (1,918), Mr. Kelly (1,918), Mr. Kelsey (32,500), Mr. Martinez (1,918), Mr. Mihm (5,170), Mr. Ninivaggi (6,460), Mr. Quadracci (1,918), Ms. Rapp (1,918), Mr. Rooke (1,918) and Mr. Schrock (1,918), and all directors and current named executive officers as a group (81,522). BlackRock, Inc. filed a report on Schedule 13G/A on January 27, 2022, reporting sole voting power as to 4,369,325 shares and sole dispositive power as to 4,410,139 shares of common stock. BlackRock subsequently filed a report on Form 13F for the quarter ended on September 30, 2022, showing sole voting power as to 4,308,322 shares and sole dispositive power as to 4,338,213 shares. The address of BlackRock, a parent holding company of certain institutional investment managers, is 55 East 52nd Street, New York, New York 10055. The Vanguard Group, Inc. filed a report on Schedule 13G/A on February 10, 2022, reporting shared voting power as to 49,762 shares, sole dispositive power as to 3,046,842 shares and shared dispositive power as to 75,263 shares of common stock. Vanguard Group subsequently filed a report on Form 13F for the quarter 7 TABLE OF CONTENTS 4 5 ended on September 30, 2022, showing shared voting power as to 41,890 shares, sole dispositive power as to 3,149,650 shares and shared dispositive power as to 65,941 shares of common stock. The address of Vanguard Group, an investment adviser, is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. Disciplined Growth Investors, Inc. filed a report on Schedule 13G on August 1, 2008, reporting that it held sole voting power as to 1,899,904 shares, shared voting power as to 268,950 shares and sole dispositive power as to 2,168,854 shares of common stock. Disciplined Growth Investors, Inc. filed a report on Form 13F for the quarter ended on September 30, 2022, showing sole voting power as to 1,925,586 shares and sole dispositive power as to 2,291,467 shares. The address of Disciplined Growth Investors, an investment advisor, is 150 South Fifth Street, Suite 2550, Minneapolis, MN 55402. Dimensional Fund Advisors LP filed a report on Schedule 13G/A on February 8, 2022, reporting sole voting power as to 1,776,157 shares and sole dispositive power as to 1,810,426 shares of common stock. Dimensional Fund Advisors subsequently filed a report on Form 13F for the quarter ended on September 30, 2022, showing sole voting power as to 1,724,462 shares, shared voting power as to 62,151, shared dispositive power as to 24,322 and sole dispositive power as to 1,791,645 shares. The address of Dimensional Fund Advisors, an investment advisor, is Building One, 6300 Bee Cave Road, Austin, Texas 78746. 8 TABLE OF CONTENTS PROPOSAL 1 – ELECTION OF DIRECTORS Board Recommendation The election of 11 directors named in the proxy statement to serve on Plexus’ board of directors for a one-year term. FOR Plexus currently has 10 directors, listed below, as of the Record Date. Plexus’ bylaws currently authorize up to 12 directors, as determined by the board. The Plexus board may elect directors to fill empty seats, including those created by an expansion, between meetings of shareholders. PLEXUS' BOARD OF DIRECTORS (AS OF RECORD DATE) Joann M. Eisenhart Todd P. Kelsey Paul A. Rooke Dean A. Foate Randy J. Martinez Michael V. Schrock Rainer Jueckstock Peter Kelly Joel Quadracci Karen M. Rapp Board Nominees In accordance with Plexus’ bylaws, the board has set the size of the board to be 11 directors, increased from the current board size of 10 directors, effective immediately following the annual meeting of shareholders, with such directors to serve until their successors are duly elected and qualified. The individuals who are nominated as directors, and for whom proxies will be voted unless a shareholder specifies otherwise, are named below. If any of the nominees should decline or be unable to act as a director, which is unforeseen, the proxies will be voted with discretionary authority for a substitute nominee designated by the board of directors. Each of the director nominees named below was elected at the 2022 annual meeting except for Ms. Wuamett, who was first identified as a possible director candidate by a non-management director. After a thorough review, our Governance and Sustainability Committee (“Governance Committee”) recommended Ms. Wuamett as a nominee to the board. 9 TABLE OF CONTENTS Board Nominee Overview The composition of the board of directors is reviewed annually to ensure that an appropriate mix of skills, experiences and backgrounds is represented; the membership mix of the board may also be changed as necessary to meet business needs. Your board nominees offer a diverse range of skills and experience in relevant areas, as set forth in the matrix below. Unless otherwise noted, all directors have been employed in their principal occupation listed for the past five years or more. Each of the attributes identified, which together with the directors’ principal occupations and business experience, as well as the Company’s board member selection criteria, outlined in the next section, provide the reasons that each individual has been nominated to serve on the board. 10 TABLE OF CONTENTS 11 TABLE OF CONTENTS 12 TABLE OF CONTENTS DR. JOANN M. EISENHART Independent Executive VP & Chief People Officer, The Northwestern Mutual Life Insurance Company (retired) Age: 63 Tenure: 7 years Other Public Boards: 0 Committee Assignment: Compensation & Leadership Development (Chair) Skills and Experience: Global Business Supply Chain Management Technology and Cybersecurity experience Human Capital Development and Compensation Manufacturing Management Sales, Marketing or Innovation Environmental, Social & Governance Dr. Eisenhart retired as Executive Vice President and Chief People Officer at The Northwestern Mutual Life Insurance Company, a financial services and insurance provider, in 2019. Prior thereto, she served as Senior Vice President - Human Resources, Facilities and Philanthropy at Northwestern Mutual from 2013 until 2018, and as Senior Vice President - Human Resources since 2011. Dr. Eisenhart previously served as Senior Vice President - Human Resources at Pfizer Inc., a global biopharmaceutical company, and held various leadership positions at Rohm and Haas Company, a manufacturer of specialty chemicals. She earned a B.S. in Chemistry from the University of Illinois at Urbana-Champaign and a Ph.D. in Inorganic Chemistry from the University of Wisconsin-Madison. She also earned an M.A. and a Ph.D. in Human and Organizational Development from Fielding Graduate University. DEAN A. FOATE Chairman of the Board President & CEO Plexus Corp. (retired) Age: 64 Tenure: 22 years (9 as Chairman) Other Public Boards: 0 Skills and Experience: Public Company CEO/COO Manufacturing Management Financial and Accounting Supply Chain Management Global Business Human Capital Development and Compensation Technology and Cybersecurity experience Sales, Marketing or Innovation Environmental, Social & Governance Mr. Foate is not an independent director and therefore is not eligible for membership on a Board committee under Nasdaq rules or the committees’ charters. Mr. Foate has served as Plexus’ Chairman of the Board since 2013. Mr. Foate retired as President and Chief Executive Officer of Plexus in 2016 after serving in such roles since 2002. He joined Plexus in 1984 and held various other executive roles, including prior services as its Chief Operating Officer. He was a director of Regal Rexnord Corporation, a manufacturer of electric motors, electrical motion controls, power generation and power transmission products, as well as a member of its Corporate Governance & Director Affairs Committee, until 2021. Mr. Foate earned a B.S. in Electrical and Computer Engineering from the University of Wisconsin-Madison and a Master of Science in Engineering Management from the Milwaukee School of Engineering. 13 TABLE OF CONTENTS RAINER JUECKSTOCK Independent Executive VP, Tenneco Inc. Age: 63 Tenure: 9 years Other Public Boards: 0 Committee Assignment: Audit (Chair) Skills and Experience: Public Company CEO/COO Manufacturing Management Financial and Accounting Supply Chain Management Global Business Human Capital Development and Compensation Technology and Cybersecurity experience Sales, Marketing or Innovation Environmental, Social & Governance Mr. Jueckstock has served as an Executive Vice President of Tenneco Inc., a producer of automotive emission control and ride control products and systems, since 2018, when Tenneco acquired Federal- Mogul LLC, an automotive and industrial equipment supplier. Mr. Jueckstock has also served as President of Federal-Mogul Powertrain since 2018, after having served as its Chief Executive Officer since 2012. Prior to the acquisition of Federal-Mogul, he also served as its co-Chief Executive Officer and as a director since 2012, and as co-Chairman of the Board since 2015. Before joining Federal-Mogul, he was a member of the German Military. Mr. Jueckstock earned a degree in Engineering from the Military College at Zittau, Germany. PETER KELLY Independent Executive VP, NXP Semiconductors N.V. (retired) Age: 65 Tenure: 17 years Other Public Boards: 0 Committee Assignment: Audit Governance & Sustainability Skills and Experience: Public Company CEO/COO Manufacturing Management Financial and Accounting Supply Chain Management Global Business Human Capital Development and Compensation Technology and Cybersecurity experience Sales, Marketing or Innovation Environmental, Social & Governance Mr. Kelly retired as Executive Vice President and Chief Financial Officer of NXP Semiconductors N.V., a global semiconductor company and a long-standing supplier in the industry, in February 2022. Mr. Kelly also previously served as Executive Vice President - Strategy and Mergers & Acquisitions since 2015, Executive Vice President and Chief Financial Officer since 2017 and Executive Vice President and General Manager of Operations prior thereto. He was a director of Graphic Packaging Holding Company, a provider of paper-based packaging solutions, as well as a member of its Audit Committee and Compensation and Benefits Committee, until 2018. Mr. Kelly earned a B.S. from the University of Manchester (U.K.) Institute of Science and Technology and is a fellow of the Chartered Institute of Management Accountants. 14 TABLE OF CONTENTS TODD P. KELSEY CEO Plexus Corp. Age: 57 Tenure: 6 years Other Public Boards: 1 Skills and Experience: Public Company CEO/COO Manufacturing Management Financial and Accounting Supply Chain Management Global Business Human Capital Development and Compensation Technology and Cybersecurity experience Sales, Marketing or Innovation Environmental, Social & Governance Mr. Kelsey is not an independent director and therefore is not eligible for membership on a Board committee under Nasdaq rules or the committees’ charters. Mr. Kelsey has served as Chief Executive Officer to Plexus since 2016. He was previously President and Chief Executive Officer until January 2022 and prior to that he served as Plexus’ Executive Vice President and Chief Operating Officer from 2013 until 2016, and its Executive Vice President - Global Customer Services prior thereto. Mr. Kelsey joined Plexus in 1994 as a Design Engineer in the Company’s Engineering Solutions Group, and has held various other positions with increasing responsibility since that time, including Senior Vice President - Global Customer Services and Senior Vice President - Engineering Solutions. He is also a director of Steelcase Inc., a global provider of workplace products, furnishings and services as well as the chair of its Audit Committee. Mr. Kelsey earned a B.S. and a M.S. in electrical engineering from the University of Wisconsin-Madison and an M.B.A. from the University of Wisconsin-Oshkosh. RANDY J. MARTINEZ Independent President & CEO, MTS Systems Corp. (retired) Age: 67 Tenure: 1 year Other Public Boards: 0 Committee Assignment: Audit Governance & Sustainability Skills and Experience: Public Company CEO/COO Manufacturing Management Financial and Accounting Supply Chain Management Global Business Human Capital Development and Compensation Technology and Cybersecurity experience Sales, Marketing or Innovation Environmental, Social & Governance Mr. Martinez served as President and Chief Executive Officer of MTS Systems Corporation, a leading global supplier of advanced test systems, motion simulators and precision sensors, until 2021. Prior thereto, Mr. Martinez served in several leadership roles at AAR Corporation, a provider of aviation services to the worldwide commercial aviation and aerospace & defense industries, including President & CEO of the Airlift Group and Group Vice President, Aviation Services. Mr. Martinez served with distinction in the U.S. Air Force for 21 years, retiring as a Colonel and Command Pilot and having held a wide variety of leadership roles, including command and senior staff positions. Mr. Martinez also holds Master of Science degrees from the University of Arkansas and the National Defense University. 15 TABLE OF CONTENTS JOEL QUADRACCI Independent Chairman, President & CEO, Quad/Graphics Inc. Age: 53 Tenure: 2 year Other Public Boards: 1 Committee Assignment: Compensation & Leadership Development Governance & Sustainability Skills and Experience: Public Company CEO/COO Manufacturing Management Financial and Accounting Supply Chain Management Global Business Human Capital Development and Compensation Technology and Cybersecurity experience Sales, Marketing or Innovation Environmental, Social & Governance Mr. Quadracci has served as the Chairman, President and Chief Executive Officer of Quad/Graphics, Inc., a worldwide marketing solutions partner, since 2010. Mr. Quadracci joined Quad in 1991 and, prior to assuming his current role, served in various other positions with increasing responsibility including Senior Vice President of Sales & Administration and President and Chief Operating Officer. Mr. Quadracci received a B.A. in Philosophy from Skidmore College in 1991. KAREN M. RAPP Independent Executive VP & CFO, National Instruments Corp. Age: 55 Tenure: 4 years Other Public Boards: 1 Committee Assignment: Audit Compensation & Leadership Development Skills and Experience: Financial and Accounting Supply Chain Management Global Business Human Capital Development and Compensation Sales, Marketing or Innovation Technology and Cybersecurity experience Environmental, Social & Governance Manufacturing Management Ms. Rapp has served as Executive Vice President and Chief Financial Officer, of National Instruments Corp., a producer of automated test equipment and virtual instrumentation software, since 2017. Ms. Rapp also previously served as National Instruments' Treasurer. Prior thereto, she served as the Senior Vice President of Corporate Development at NXP Semiconductors N.V., a global semiconductor company and a long-standing supplier in the industry, where she led the integration efforts for the NXP/Freescale Semiconductor, Ltd. merger, from 2015 to 2017. Prior to the merger, Ms. Rapp held several leadership positions at Freescale with increasing responsibility, including Vice President and Chief Information Officer, Director of Operations and Finance, Global Sales and Marketing, Director of Finance, Supply Chain, and Director of Finance, Continuous Development. Ms. Rapp is also a director of Microchip Technology Incorporated, a leading provider of smart, connected and secure embedded control solutions, as well as a member of its Audit Committee. Ms. Rapp holds an M.B.A from The University of Texas at Austin and a B.S. in Finance from Northern Illinois University. 16 TABLE OF CONTENTS PAUL A. ROOKE Independent Chairman & CEO Lexmark International, Inc. (retired) Age: 64 Tenure: 5 years Other Public Boards: 0 Committee Assignment: Governance & Sustainability (Chair) Skills and Experience: Public Company CEO/COO Manufacturing Management Financial and Accounting Supply Chain Management Global Business Human Capital Development and Compensation Technology and Cybersecurity experience Sales, Marketing or Innovation Environmental, Social & Governance Mr. Rooke retired as Chairman and Chief Executive Officer, as well as a director, of Lexmark International, Inc., a provider of document imaging and enterprise software solutions, in 2016. Mr. Rooke also previously served as President of Lexmark. Prior to becoming President and CEO of Lexmark in 2010, he held several leadership positions with increasing responsibility, including Executive Vice President and President, Imaging Solutions, Executive Vice President and President, Printing Solutions and Services, and Vice President and President, Business Printer. Mr. Rooke holds an M.B.A. from the University of Kentucky and a B.S. in Mechanical Engineering from the University of Michigan. MICHAEL V. SCHROCK Independent Lead Director Senior Advisor & Operating Consultant, Oak Hill Capital Partners Age: 69 Tenure: 16 years (8 as Lead Director) Other Public Boards: 1 Committee Assignment: Compensation & Leadership Development Skills and Experience: Public Company CEO/COO Manufacturing Management Financial and Accounting Supply Chain Management Global Business Human Capital Development and Compensation Technology and Cybersecurity experience Sales, Marketing or Innovation Environmental, Social & Governance Mr. Schrock, who has served as the Lead Director of Plexus’ board since 2013, has served as a Senior Advisor and Operating Consultant to Oak Hill Capital Partners, a private equity firm, since 2014. Prior thereto, he served as President and Chief Operating Officer at Pentair LLC, a global water, fluid, thermal management, and equipment protection company. Mr. Schrock also serves as Chairman of the Board of Directors of Atkore International Group Inc., a manufacturer of electrical raceway products and mechanical products and solutions; he is also the chair of Atkore’s Executive Committee. Mr. Schrock earned a B.S. from Bradley University and an M.B.A. from Northwestern University, Kellogg School of Management. Mr. Schrock served as a director of MTS Systems Corporation, a global supplier of high- performance test systems and position sensors, from 2014 to 2021. 17 TABLE OF CONTENTS JENNIFER WUAMETT Independent Executive VP, General Counsel, Corporate Secretary & Chief Sustainability Officer, NXP Semiconductors N.V. Age: 57 Tenure: 0 years Other Public Boards: 0 Skills and Experience: Global Business Supply Chain Management Technology and Cybersecurity experience Environmental, Social & Governance Manufacturing Management Human Capital Development and Compensation Financial and Accounting Jennifer Wuamett is Executive Vice President, General Counsel, Corporate Secretary and Chief Sustainability Officer of NXP Semiconductors N.V., a global semiconductor company and a long-standing supplier in the industry. She is responsible for worldwide legal, governance, compliance and intellectual property matters for NXP. Ms. Wuamett also leads NXP’s environmental, social and governance (ESG) and enterprise risk programs. Ms. Wuamett has over twenty-five years of experience in the electronics industry. She joined NXP in 2015 with the merger of Freescale Semiconductor, Ltd., to become NXP’s Deputy General Counsel and Chief Intellectual Property Officer. Before joining NXP, she was Freescale’s General Counsel and Chief Intellectual Property Officer. Prior to joining Freescale, Ms. Wuamett worked for Motorola starting in 1997 focusing on intellectual property and complex transactions. Before joining Motorola, Ms. Wuamett was an attorney in private practice with the law firm Quarles & Brady. 18 TABLE OF CONTENTS CORPORATE GOVERNANCE Plexus Corp. Board of Directors Plexus believes that it needs to attract and retain talented, focused and motivated leadership to develop and execute the Company’s long-term strategy and to deliver shareholder value. For Plexus, the concept of leadership is not limited to leadership within the Company; leadership also includes the individuals who serve on Plexus’ board of directors. The Company believes it is important for its board to be comprised of individuals with diverse backgrounds, skills and experiences. All board members are expected to meet Plexus’ board member selection criteria, which are listed below: • • • • • • • • • Impeccable honesty and integrity, and conduct in accordance with the Company’s values. A high level of knowledge gained through formal education and/or specific practical experience. Broad based business acumen, including a general understanding of operations management, marketing, finance, human resources management, ESG, cybersecurity, corporate governance and other elements relevant to the success of a large publicly-traded company. An understanding of the Company’s business on a technical level. Global thinking and focus as well as a general understanding of the world economy. Strategic thinking and an ability to envision future opportunities and risks. A willingness to engage in thoughtful debate and challenging discussions in a respectful manner. A network of important contacts that can bring knowledge and assistance to Plexus. A commitment to spend requisite time on board responsibilities. In addition to the general criteria for each Board member, the diversity of the Board should endeavor to include those board qualifications, attributes, skills and experience set forth in the matrix above. In the selection of board members, the Governance Committee also considers the demographic diversity among members in identifying areas that could be augmented by new members. Shareholder Protections & Corporate Governance Best Practices We are committed to governance structures and practices that drive shareholder value and protect important shareholder rights, which are regularly reviewed and include the following: INDEPENDENCE BEST PRACTICES ACCOUNTABILITY ✔ 9 of 11 director nominees ✔ Strategy & risk oversight by ✔ Annual election of all are independent ✔ Strong independent Lead Director with clearly delineated duties ✔ All standing board committees composed entirely of independent directors ✔ Regular executive sessions of independent directors without management present the full board and its committees ✔ Full board and committee oversight of ESG issues ✔ Stock ownership guidelines for executive officers and non-employee directors ✔ Overboarding limits ✔ No poison pill ✔ No dual class shares ✔ Periodic rotation of committee members ✔ Director education and onboarding directors ✔ Annual election of Chair and Independent Lead Director by independent directors ✔ Majority voting with director resignation policy (plurality voting in contested elections) ✔ Annual self-evaluation process for directors ✔ Strong investor outreach program 19 TABLE OF CONTENTS Board Composition & Structure BOARD OF DIRECTORS MEETINGS 4 100% 100% 2022 board meetings Directors then serving attended each 2022 board meeting Directors then serving attended the 2022 Annual Meeting Our independent directors have the opportunity to meet in executive session, without management present, as part of each regular board and committee meeting. Mr. Schrock, the board’s Lead Director, presides at board executive sessions. Plexus generally holds a board meeting coincident with the annual meeting of shareholders to minimize director travel obligations and facilitate their attendance at the shareholders’ meeting. DIRECTOR INDEPENDENCE As a matter of good corporate governance, we believe that the board of directors should provide a strong voice in the governance of our company. Therefore, under our corporate governance policies and in accordance with Nasdaq Global Select Market rules, at least a majority of our directors must be “independent directors.” When the board of directors makes its determinations regarding which directors are independent, it first considers and follows the Nasdaq Global Select Market rules. The board also reviews other transactions and relationships, if any, involving Plexus and its directors or their family members or related parties; see “Certain Transactions” herein for a discussion of our policy regarding such transactions. Plexus expects its directors to disclose any transaction, whether direct or indirect, such as through an immediate family member or an affiliated business entity, involving Plexus and the director; Plexus also surveys directors periodically to confirm this information. Plexus does not use any dollar amount to screen transactions that should be reported to the Company. The board reviews the information submitted by its directors for its separate determination of materiality and compliance with Nasdaq and other standards when it determines independence. Based on the applicable standards and the board’s review and consideration, the board of directors has determined that, of the director nominees, Dr. Eisenhart and Mses. Rapp and Wuamett, as well as Messrs. Jueckstock, Kelly, Martinez, Quadracci, Rooke and Schrock, are each “independent” under applicable Nasdaq rules and guidelines. In reaching its determinations regarding the independence of Ms. Wuamett and Ms. Rapp, the board considered that Ms. Wuamett serves as an executive officer of NXP Semiconductors N.V., which is a supplier to Plexus, and that Ms. Rapp is an executive officer of National Instruments Corp. and a director of Microchip Technology, Inc., both of which are also suppliers to Plexus. The board determined that these relationships did not affect the independence of Mses. Wuamett or Ms. Rapp. Mr. Foate, our Non-Executive Chair and former Chief Executive Officer, and Mr. Kelsey, our current Chief Executive Officer, are not considered to be “independent” under applicable Nasdaq rules. BOARD LEADERSHIP STRUCTURE Mr. Foate has served as Chair of the Board since 2013. Pursuant to a retirement and transition agreement (the “Transition Agreement”), which is described in “Directors’ Compensation” below, Mr. Foate began serving as Non-Executive Chair (which is not an executive officer position) in fiscal year 2018. 20 TABLE OF CONTENTS Mr. Foate serves as the Chair of the Board primarily due to his in-depth knowledge of the Company and EMS industry, keen understanding of the Company’s operations and strategies, and proven leadership of, as well as vision for, Plexus, all of which position him to provide strong and effective leadership of the board. Mr. Foate joined Plexus in 1984 and served as CEO from 2002 until his retirement in 2016. In addition to his experience and long service with Plexus, the board currently believes that Mr. Foate is in the best position as Chair to lead board discussions regarding the Company’s business and strategy, and to help the board respond quickly and effectively to any challenges faced by the Company. While currently the roles of Chair and CEO are held by Mr. Foate and Mr. Kelsey, respectively, the board does not have a policy that requires the separation of these roles and believes the Company should adopt the board leadership structure that best serves its needs at any particular time. Pursuant to the Company’s Corporate Governance Guidelines, since Mr. Foate is not an independent director, the independent directors, meeting in executive session, elected a Lead Director from among the independent directors. THE DUTIES OF THE BOARD’S LEAD DIRECTOR The Company believes that the designation of an independent Lead Director, whose duties are described below, provides essentially the same benefits as having an independent chair in terms of oversight, access and an independent voice with significant input into corporate governance. Mr. Schrock currently serves as the board’s Lead Director. • Preside at all meetings of the board at which the Chair is not present • Serve as a liaison between the Chair and independent directors • Together with the Chair, approve agendas for board meetings and approve meeting schedules to ensure sufficient time allocation per topic • Authority to call meetings of the independent directors and develop the agendas for such meetings with input from other independent directors • Serve as a liaison for consultation and direct communication with major shareholders • Perform such other duties as the board or Chair may from time to time delegate • Provide input to the Chair as to the content, quality, quantity and timeliness of information from Company management to the board 21 TABLE OF CONTENTS Board and Committee Responsibilities AUDIT COMMITTEE MEMBERS Rainer Jueckstock, Chair Peter Kelly Randy Martinez Karen Rapp Meetings in 2022: 8 Attendance: 100%* Report page: 72 *Reflects directors then serving The Audit Committee’s duties and responsibilities include the following: • chooses and makes retention decisions related to the Company’s independent auditors, • reviews the Company’s general policies and procedures to reasonably assure the adequacy and effectiveness of internal controls over financial reporting, • discusses the Company’s material financial risk exposures and the steps management has taken to monitor and control such exposures, • reviews the annual audited financial statements and quarterly financial statements of the company, • generally oversees the Company’s audit process as well as the accounting, finance and tax functions, • reviews the effectiveness of the Company’s governance and management of information technology risks, including those relating to business continuity, cybersecurity, regulatory compliance and data management, and • oversees the Company’s ethics and whistle-blowing reporting programs in conjunction with the Governance Committee. All of the members of the Audit Committee are “independent” of Plexus under SEC and Nasdaq rules. The board has determined that Mr. Kelly and Ms. Rapp are “audit committee financial experts” based on a review of each individual’s educational background and business experience. All members of the Audit Committee are “financially literate” and meet the other SEC and Nasdaq requirements for Audit Committee membership. COMPENSATION & LEADERSHIP DEVELOPMENT COMMITTEE MEMBERS Joann Eisenhart, Chair Joel Quadracci Karen Rapp Michael Schrock Meetings in 2022: 7 Attendance: 92.9%* Report page: 52 *Reflects directors then serving The Compensation & Leadership Development Committee’s duties and responsibilities include the following: • reviews Plexus’ leadership structure, talent management, diversity and inclusion efforts, leadership development strategies and programs, and the Company’s succession planning efforts, including executive succession plans, • establishes the general compensation philosophies and plans for Plexus, • reviews and determines the compensation of the CEO, and approves the compensation of the other executive officers as well as equity grants and awards under Plexus’ incentive compensation plans, • oversees how compensation programs may incentivize risk taking and whether such risk taking is aligned with the Company’s business objectives and risk tolerance, • considers and makes recommendations to the board with respect to other compensatory plans and arrangements, and • reviews Plexus’ human capital management strategy, including organizational structure and leadership development. All of the members of the Committee are “independent” under SEC and Nasdaq rules. The Committee may, in its sole discretion, retain or obtain the advice of compensation consultants, legal counsel or other advisers. The Committee is directly responsible for the appointment, termination, compensation and oversight of the work of any compensation consultant, and considers the independence of any such consultant prior to retention. 22 TABLE OF CONTENTS GOVERNANCE & SUSTAINABILITY COMMITTEE MEMBERS Paul Rooke, Chair Peter Kelly Randy Martinez Joel Quadracci Meetings in 2022: 5 Attendance: 100%* *Reflects directors then serving The Governance & Sustainability Committee’s duties and responsibilities include the following: • maintains oversight over the operations, structure and effectiveness of the Board and its committees, • develops and maintains criteria and procedures for the identification and recruitment of candidates for election to serve as directors of the Company, • reviews the structure of the Board to assure proper skills, experience, and diversity of backgrounds are represented, • reviews the effectiveness of management’s enterprise risk management program that identifies, prioritizes, monitors and manages key risks facing the Company, • reviews ethics and compliance risk assessments conducted by management and assesses the efficacy of the ethics and compliance program in place to monitor and control such exposures, • makes recommendations to the board regarding directors’ compensation, and • evaluates as well as oversees corporate governance and related issues, and oversees the Company's environmental, social and governance (“ESG”) program, including strategy, policies, initiatives, sustainability reporting and trends that could impact the Company. All of the members of the Committee are “independent” under SEC and Nasdaq rules. 23 TABLE OF CONTENTS Board Governance Processes DIRECTOR RECRUITMENT & THE NOMINATION PROCESS The Governance Committee engages in a continuous process of identifying and assessing potential director candidates in light of the board’s collective set of skills and the future needs of the Company. In addition to the board member selection criteria listed above, the Governance Committee considers the diversity of backgrounds, skills and experiences among board members in identifying areas that could be augmented by new members. To help assure that directors have the time to devote to their duties, Plexus directors may not serve on the boards of more than three additional public companies. The Governance Committee may utilize a director search firm to identify candidates, but, if so, it evaluates those individuals on its own; the Governance Committee would also consider candidates suggested by outside directors, management and/or shareholders. If a qualified individual expresses a serious interest and there is a position available, the Governance Committee would review that person’s background and experience to determine whether that individual may be an appropriate addition to the board, and, if appropriate, would meet with the individual. A decision would then be made whether to nominate that person to the board. The Governance Committee’s policy is not to evaluate proposed nominees differently depending upon who has proposed the potential nominee. In addition, the Governance Committee is committed to prioritizing the inclusion of racially and ethnically diverse candidates in the pool from which director nominees are selected. If a shareholder wishes to propose someone as a director for the Governance Committee’s consideration, the name of that nominee and related personal information should be forwarded to the Governance Committee, in care of the Secretary, at least six months before the next annual meeting of shareholders to assure time for meaningful consideration by the Governance Committee. In 2022, Plexus did not receive any recommendations for director nominees put forward by any shareholders. BOARD AND COMMITTEE SELF-EVALUATION PROCESS The Plexus board of directors conducts an annual self-evaluation, which focuses on the performance of each individual director, the board’s committees and the board as a whole, as well as the composition of each of the board’s committees. The annual self-evaluation process provides an opportunity for anonymous peer review and specific feedback, which is intended to strengthen board leadership. The Chair of the Board is responsible for providing feedback to individual directors, while the Lead Director may also provide feedback and serve as a liaison between independent directors and the Chair. We believe this process encourages actionable feedback, which provides context for decisions about board composition, committee member rotation and succession planning processes. BOARD REFRESHMENT & SUCCESSION The Governance Committee supervises a comprehensive, ongoing board refreshment and succession planning process to best position the board for continued success in alignment with the Company’s strategic objectives. This includes regularly assessing director skills and qualifications, reviewing director tenure, evaluating board diversity and board size, and performing annual board, committee and individual director assessments, as detailed above. In addition, the Governance Committee, with input from the Chair of the Board, reviews committee membership at least biennially and recommends committee assignments and committee rotation for approval by the entire board to ensure director skillsets are applied appropriately and to avoid director entrenchment. The Governance Committee believes board refreshment is crucial to aligning board expertise with the Company’s evolving corporate strategy, but recognizes new directors need time to become familiar with the Company’s business and to develop relationships with other board members and management over time. As a result, the Governance Committee believes a continuum of tenure is required to enable 24 TABLE OF CONTENTS the success of the board, with new members offering fresh perspectives while longer-serving directors offer necessary continuity and a deep understanding of the Company’s business. As applied in practice, 40% of our independent director nominees have been on the board fewer than 5 years. In furtherance of this philosophy, the Company deploys a new director onboarding process and encourages continuing education to help augment and expedite the effectiveness of its newest board members. The Company also maintains a mandatory retirement policy, which states any individual age 72 or above is not eligible for election or re-election to the board of directors, unless such candidate is also a full-time employee of Plexus at the time or the board of directors, by majority vote, waives the restriction for a particular individual prior to such person’s election or re-election. The board’s succession oversight extends to management, as well. The board has developed and maintains an appropriate succession plan with respect to the position of CEO and other key executive positions. In addition, the Compensation and Leadership Development Committee (“Compensation Committee”) reviews and recommends to the board development plans for the CEO and other members of senior management. COMMUNICATIONS WITH THE BOARD Any communications to the board of directors should be sent to Plexus’ Global Headquarters in care of Plexus’ Secretary, Angelo M. Ninivaggi. Any communication sent to the board in care of the Chief Executive Officer, the Secretary or any other corporate officer also is forwarded to the board. There is no screening process and any communication will be delivered directly to the director or directors to whom it is addressed. CORPORATE GOVERNANCE WEBSITE Information related to our corporate governance practices, in addition to any new or proposed changes to procedures, are posted on our Corporate Governance page of our website at www.plexus.com under the link titled “Investors,” then “Corporate Governance” including: • • • • • Plexus Leadership Team • Director Stock Ownership Guidelines Board of Directors • Executive Officer Stock Ownership Guideliness Committee Composition • Clawback Policy Committee Charters • Plexus Code of Conduct & Business Ethics Corporate Governance Guidelines 25 TABLE OF CONTENTS DIRECTOR COMPENSATION FOR FISCAL 2022 Stephen P. Cortinovis Joann M. Eisenhart Dean A. Foate Rainer Jueckstock Peter Kelly Randy J. Martinez Joel Quadracci Karen M. Rapp Paul A. Rooke Fees Earned or Paid in Cash1 $42,813 $96,625 $247,500 $98,000 $88,438 $83,750 $87,813 $89,375 $95,563 Michael V. Schrock $116,250 Stock Awards2 $148,683 $148,683 $148,683 $148,683 $148,683 $148,683 $148,683 $148,683 $148,683 $148,683 Other Benefits3 — — $27,901 — — — — — — — Total $191,496 $245,308 $424,084 $246,683 $237,121 $232,433 $236,496 $238,058 $244,246 $264,933 1 2 3 Includes annual retainer, committee and chair fees and, in the case of Mr. Schrock, his fee for serving as Lead Director of the board. For Mr. Foate, this amount reflects his retainer for serving as Non-Executive Chair. Mr. Cortinovis retired from the board of directors following the annual meeting on February 16, 2022, and fees earned represent fees paid through the end of the fiscal second quarter. The amounts shown represent the grant date fair value of RSUs granted in fiscal 2022 computed in accordance with Accounting Standards Codification Topic 718. Generally accepted accounting principles (“GAAP”) require us to determine compensation expense for stock related awards granted to our directors based on the estimated fair value of the equity instrument at the time of grant. Compensation expense is recognized over the vesting period. The assumptions used to determine the valuation of the awards are discussed in footnote 9 to our consolidated financial statements. On January 31, 2022, each then-serving non-employee director was granted RSUs for 1,918 shares, with a grant date fair value of $175,000. These RSUs vested for Mr. Cortinovis upon his retirement from the Board following the 2022 annual meeting. For all other non-employee directors, these RSUs remained unvested as of October 1, 2022. The number of RSUs granted was determined by dividing $175,000 by the average closing price of our shares on the Nasdaq Global Select Market during the 90 calendar day period ended December 1, 2021, which was $91.248. The grant date fair value is below $175,000 because the closing price of our shares on the grant date was $77.52. Includes the following amounts paid to Mr. Foate: $27,339 for the Company car benefit and $562 for the phone benefit, each as offered to Mr. Foate as a part of the Transition Agreement discussed below. The other non- employee directors do not generally receive any additional benefits, although they are reimbursed for their actual expenses of attending board, committee and shareholder meetings, as well as one external educational seminar per year. 26 TABLE OF CONTENTS Director Fees and Arrangements The Governance Committee of the board of directors recommends, subject to board approval, compensation paid to non-employee directors, including equity awards under Company plans. In determining the compensation paid to the non-employee directors, the Governance Committee considers similar types of factors, including comparisons with the peer companies discussed below and Company performance that are considered by the Compensation Committee when determining executive compensation. The Governance Committee aims to set the compensation level of our directors and the Non-Executive Chair near the median of peer and market comparisons. Non-employee director compensation is reviewed at least biennially. As part of the most recent review of the non-employee director compensation program in fiscal 2022, the Governance Committee approved an increase in director base compensation upon review of peer and market data and in consultation with Exequity. In addition, director retainers for individual committees were eliminated and the director retainers for committee chairs were reduced. As a result, beginning January 1, 2022, each non-employee director is compensated per the tables below. There was no change for 2023. 2022 2023 Board Retainer1 $90,000 $90,000 Non-Executive Chair Retainer $250,000 $250,000 Lead Director Retainer $120,000 $120,000 RSU Grant $175,000 $175,000 1 Mr. Foate and Mr. Schrock do not receive the Board Retainer. AUDIT COMMITTEE COMPENSATION COMMITTEE GOVERNANCE COMMITTEE 2022 2023 2022 2023 2022 2023 Committee Chair Retainer $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 In certain circumstances directors may be reimbursed for attending educational seminars or, in each individual’s capacity as a director, other meetings at Plexus’ behest. Directors do not receive board or committee meeting attendance fees. For Mr. Foate’s service as Non-Executive Chair, he currently receives an annual retainer as reflected above, which was determined based upon a review of market and peer group practices, and he is eligible to receive an annual equity grant at least equal to the grants made to the Company’s other non-employee directors. In accordance with the Transition Agreement, Mr. Foate is eligible to participate in the Company’s executive car and phone programs, and he and his dependents are also eligible to participate in the Company’s health plan until he reaches age 65, subject to his payment of the required premiums. Mr. Foate is otherwise compensated in accordance with Plexus’ policies for non-employee directors. Stock Ownership Guidelines & Stock Compensation for Directors Plexus believes that it is important for directors to maintain an equity stake in Plexus to further align their interests with those of our shareholders. Therefore, directors must comply with stock ownership guidelines as determined by the board. The ownership guidelines currently require each director to own and maintain shares of common stock with a value equal to at least five times the director’s annual base cash retainer. The required ownership must be achieved within five years from the 27 TABLE OF CONTENTS director’s initial election or appointment. Restricted stock (including RSUs) that has yet to vest does not count toward a director’s ownership for purposes of these guidelines. Seven of our nine non-employee directors are currently in compliance with the ownership requirements of the guidelines. Mr. Quadracci has until 2025 and Mr. Martinez has until 2026 to meet these requirements. Stock ownership guidelines for executives are discussed in “Compensation Discussion and Analysis— Elements and Analysis of Direct Compensation—Equity Ownership Guidelines.” For information regarding the Company’s anti-hedging and anti-pledging policy, which is applicable to directors as well as executive officers and other employees, see “Compensation Discussion and Analysis —Elements and Analysis of Director Compensation—Anti-Hedging and Anti-Pledging Policy.” Directors participate in the 2016 Omnibus Incentive Plan (the “Incentive Plan”), which permits the grant of stock options, stock appreciation rights (“SARs”), restricted stock, which may be designated as restricted stock shares or RSUs, performance stock awards (which may be settled in cash or stock and designated as performance stock shares or performance stock units (“PSUs”)), other stock awards and cash incentive awards. The Incentive Plan provides for an annual cap on the amount of awards to individual non-employee directors. The use of equity awards is designed to align directors’ interests with the long- term ownership interests of our shareholders. In the second quarter of fiscal 2022, each non-employee director serving on the grant date received a grant of RSUs worth approximately $175,000. The number of RSUs granted was determined based on the average closing price of the Company’s stock during the 90 calendar day period ended December 1, 2021. The restrictions on the RSUs generally lapse on the first anniversary of the grant date, except for Mr. Cortinovis, whose RSUs vested upon his retirement from the board following the 2022 annual meeting. Director Participation in Deferred Compensation Plan Directors are eligible to defer their cash fees, as well as stock awards (excluding options), through the Non-Employee Directors Deferred Compensation Plan. Amounts in deferred cash accounts are credited with interest, compounded monthly, at the prime rate of interest, which is determined quarterly. Directors were previously eligible to defer their cash fees through Plexus’ supplemental executive retirement plan, which is described in “Compensation Discussion and Analysis” below. 28 TABLE OF CONTENTS BOARD’S ROLE IN RISK OVERSIGHT The Company has established a robust enterprise risk management (“ERM”) program to facilitate the identification, assessment, mitigation, monitoring and strategic integration of risks to, from or of the Company’s strategic priorities. This framework combines the organizational structure described below with the establishment of risk management policies and controls to manage the most significant risks impacting the Company’s strategic objectives. The Company also employs independent internal and external audit procedures to help validate key controls related to identified risks, the results of which are reported to the board regularly. In addition to ongoing monitoring of key risk areas, each of the Company's functional teams completes an annual risk assessment designed to identify top enterprise risks to help management prioritize the risks that should be brought before the board. This framework establishes an effective risk oversight program that successfully integrates risk management practices throughout the organization, enables open communication between management and directors and ensures all directors are actively involved in the risk oversight function. In addition, our board oversight structure expressly provides committee oversight over top areas of enterprise risk, including cybersecurity, human capital risks and ESG matters. 29 TABLE OF CONTENTS Cybersecurity Risk As technology solutions continue to evolve, so do the myriad of risks introduced to the organization. The delivery of business value through technology is highly dependent on the holistic identification and management of information technology risks. Given the dynamic nature and the criticality of managing cybersecurity risk, we deploy a robust IT Risk Management program in conjunction with our Enterprise Risk Management program to promote data-driven decision making to improve IT and cybersecurity resiliency. This includes the governance framework below that facilitates awareness, oversight accountabilities and risk management activities across all levels of our business. Plexus also has a formal incident response plan it would activate in the event of a cyber-incident that uses as a framework the computer security incident response lifecycle based on the National Institute of Standards and Technology Special Publication 800-61 Revision 2 Computer Security Incident Handling Guide (NIST SP 800-61r2). The overall lifecycle defines four major activities: Preparation; Detection and Analysis; Containment, Eradication, and Recovery; and Post-Incident Activity. Continuously enhancing our environment to meet the increasing needs of cybersecurity and privacy regulations is a top priority for the organization. 30 TABLE OF CONTENTS ENVIRONMENTAL, SOCIAL & GOVERNANCE (“ESG”) Our commitment to building a better world. Plexus Corp. has established an ESG program defined by five pillars that reinforce our vision to build a better world by being an innovator, a responsible employer, a community partner, a global citizen and a promoter of good corporate governance. Consistent with our vision to help create the products that build a better world, we are committed to building a better world by the way we innovate and operate. Plexus’ ESG program strives to build strong communities, develop our team members in an inclusive and diverse culture, protect our environment, embrace strong governance practices and set similar expectations on our partners. We recognize that by improving outcomes for society and all of our stakeholders, we maximize our ability to achieve our strategic objectives and deliver long-term value for our shareholders. We have demonstrated this commitment since our founding in 1979; it is authentic and core to our culture and long-term success. A Plexus leadership committee chaired by our Chief Administrative Officer (CAO), which includes membership of our CEO, CFO and COO, governs our ESG program. Our board of directors is also highly engaged in our ESG efforts and strategy. The Governance Committee of the board oversees the effectiveness of our ESG program, including ESG strategy, policies and initiatives, sustainability reporting and trends that could impact the Company’s business operations, performance, reputation and sustainable growth. In addition, our Compensation Committee oversees our human capital strategy, including diversity and inclusion efforts and global compensation policies and philosophies, while our Audit Committee oversees the effectiveness of our internal controls over reporting, our whistle-blower reporting program and management and governance of information technology. In addition to our focus on ESG, we are accustomed to establishing non-financial goals that are important to position Plexus for sustainable long-term success. The Compensation Committee works with Plexus management to identify these goals that often comprise objectives under our short-term incentive compensation plan. As discussed further in the Compensation Discussion & Analysis section, in fiscal 2022, our objectives under our executive short-term incentive plan included a 5% energy intensity reduction target across all manufacturing sites, expansion of our Employee Resource Groups, which help to foster an inclusive workplace, as well as continued enhancements and testing of our cybersecurity incident response plan. 31 TABLE OF CONTENTS Building a better world by the way we innovate and operate. ESG principles are integrated into our broader corporate strategy and our core business practices. We are in a unique position to leverage the talent of our team members and our role in our industry to drive positive change—for Plexus as well as other interconnected stakeholders across the globe. In addition to our executive incentive initiatives, our fiscal 2022 ESG advancement efforts across our five ESG pillars included: ESG F22 Highlights Innovator Enhanced our Design for Environment (DfE) capabilities Broader deployment of product life extension services to reduce product waste to landfill and reduce burden of materials in new product designs Partnered with customers on ESG initiatives to support our customers’ ESG journeys and needs Responsible Employer Community Partner Global Citizen Expanded ERG charters & chapters D&I education fully deployed to all Plexus people leaders Workplace flexibility philosophy established, and enhanced our parental leave policy Expanded our Global Wellness Program and associated perqs and policies Volunteer Time Off (VTO) policy established and implemented, offering each employee 8 hours of paid time to volunteer with team members Expanded deployment of our charitable match software program to help increase matched charitable giving Plexus Charitable Foundation gave over $1.0M Surpassed energy intensity reduction goals in F22; new targets set Progressed waste stream inventory baselining Water & gas sub- metering installation in progress Launched environmental sustainability category in our B.E.S.T. (Bringing Employee Successes Together) contest Corporate Governance Completed third party materiality assessment on Plexus’ ESG program Adjusted pay-for- performance metrics by raising ROIC target to ensure appropriate balance of enterprise productivity and incentivization for plan participants Enhanced cyber- incident response plan Enhanced ESG disclosure practices to ensure transparency and accountability Plexus’ commitment to ESG is not only the right thing to do, but the right thing to do for our business. To deliver enduring value, we must have sustainable practices in the way we innovate and operate to create and deliver solutions, develop and engage our people, protect the environment, support our communities and govern our company. Through adopting and integrating ESG principles into our business strategy and decision-making, we can advance social and environmental causes in parallel with our business success. 32 TABLE OF CONTENTS COMPENSATION DISCUSSION & ANALYSIS Our continued success depends on our ability to attract, motivate, and retain critical talent dedicated to our long- term strategy. The Compensation Committee (in this section, the “Committee”) of the board of directors sets the general compensation philosophy for Plexus and ensures appropriate controls are in place to govern its application. The Committee makes decisions with respect to the compensation of the Chief Executive Officer (the “CEO”) and the Company’s other executive officers, and grants equity and other awards. NAMED EXECUTIVE OFFICERS FOR FISCAL 2022 Todd P. Kelsey Chief Executive Officer Patrick J. Jermain Executive VP & Chief Financial Officer Steven J. Frisch President & Chief Strategy Officer This section discusses the Committee’s executive compensation philosophy and key decisions designed to align pay to performance that drives shareholder value, in each case as they relate to the Company’s named executive officers. Plexus provides further detail regarding executive compensation in the tables and other information included in the “Executive Compensation” section of this proxy statement. Angelo M. Ninivaggi Executive VP, Chief Administrative Officer, General Counsel & Secretary Oliver Mihm Executive VP & Chief Operating Officer Executive Summary FISCAL 2022 COMPENSATION ACTIONS • • • • • • The Committee performed a review of the peer group that we use to benchmark compensation in fiscal 2022 and made several changes for fiscal 2023 compensation planning purposes, as discussed below in "Elements and Analysis of Direct Compensation - Use of Peer Companies." The Committee reviewed the Company’s ESG initiatives during 2022 and has established ESG goals for executive officers in fiscal 2023 that will comprise a portion of their personal objectives under the Variable Incentive Compensation Plan (the “VICP”), as further detailed in the “Annual Incentive Compensation (At Risk)” section of this proxy statement. Under the Committee’s equity allocation formula for fiscal 2022, annual equity awards to executive officers were granted as 50% PSUs and 50% RSUs. The equity grant allocation formula is intended to further strengthen the alignment of shareholders’ and executives’ interests, retain executive talent, and motivate our executives to succeed long-term. Consistent with prior years, PSUs granted in 2022 are weighted 50% on total shareholder return ("TSR") and 50% on average economic return, which we define as the difference between return on invested capital (“ROIC”) and weighted average cost of capital (“WACC”). In 2020, the Committee reviewed the performance peer group used to benchmark relative TSR and the S&P 400 Index was chosen to replace the Russell 3000 Index starting with fiscal 2021 grants. The Committee approved a change to the financial metrics for the ROIC portion of the VICP for fiscal 2022. The maximum payout was adjusted to be equal to 15% ROIC. Previously the maximum payout was WACC plus 500 basis points. The TSR of Plexus stock during the three year performance period that ended January 2022 was at the 61.2 percentile of companies in the Russell 3000 Index. Consequently, the portion of the PSUs granted in 2019 that vested based on TSR performance paid out at 144.8% of target. Average economic return for the three year performance period that ended at the conclusion of fiscal 2022 was 5.1%. As a result, the portion of the PSUs granted in 2019 that vested based on economic return performance paid out at 200% of target. 33 TABLE OF CONTENTS • Based on fiscal 2022 performance, total payments to named executive officers under all components of the VICP represented 157-159% of the target payout, with corporate financial performance representing 145% as compared to the target payout of 80% for such performance. EXECUTIVE COMPENSATION GOVERNANCE BEST PRACTICES WHAT WE DO WHAT WE DON’T DO ✔ Base a majority of total compensation on ✘ Have excise tax gross-up provisions in any change in control agreements or compensation programs ✘ Enter into employment contracts with executives other than our CEO ✘ Permit hedging transactions, pledging and short sales by our executive officers compensation that is at risk through our annual and long-term performance-based and retention incentives ✔ Set annual and long-term incentive targets based on clearly disclosed, objective performance measures ✔ Conduct annual assessments of risk associated with our executive compensation programs, policies and procedures ✔ Mitigate undue risk associated with our compensation programs through a Clawback Policy ✔ Enter into “double trigger” change in control agreements with executive officers OTHER COMPENSATION AND GOVERNANCE PRACTICES & POLICIES Practices Relating to Compensation Consultants • • • • The Committee uses outside compensation consultants to assist it in analyzing Plexus’ compensation programs and in determining appropriate levels of compensation and benefits. The Company provides appropriate funding, as determined by the Committee, for the payment of compensation to any compensation consultant employed by the Committee. During fiscal 2022, the Committee retained Exequity LLP (“Exequity”) as its compensation consultant. After considering the factors set forth in SEC and Nasdaq rules, in accordance with its charter, the Committee concluded that its relationships with Exequity has not given rise to any conflict of interest. Exequity’s services to the Committee relating to fiscal 2022 included, among other things, providing perspective on current trends and developments in executive and director compensation as well as analysis of benchmarking data and confirmation of our peer group composition. All executive compensation services provided by Exequity were conducted under the direction or authority of the Committee, and all work performed by Exequity was pre- approved by the Committee. 34 TABLE OF CONTENTS Management Involvement • Members of management, particularly the CEO and human resources personnel, regularly participate in the Committee’s meetings at the Committee’s request. Management’s role is to contribute information to the Committee and provide staff support and analysis for its discussions. However, management does not make any recommendation for the CEO’s compensation, nor does management make the final determination of the CEO’s or the other executive officers’ amount or form of executive compensation. The CEO does recommend compensation for the other executive officers to the Committee, subject to the Committee’s final decision. To assist in determining compensation recommendations for the other executive officers, the CEO considers Plexus’ compensation philosophy and, in partnership with the human resources management team, utilizes the same compensation decision-making process as the Committee. • Decisions regarding the compensation of the CEO are made in executive sessions at which the Committee members participate with Exequity to review competitive practices and overall compensation expense; the CEO and management are not present for these discussions. The sessions generally focus on the CEO’s performance achievement and the elements of CEO compensation. The Committee discusses and reviews materials comparing the CEO’s compensation to peer group and survey data as well as Plexus’ overall performance relative to competitors and companies in our peer group. Materials presented also include a pay comparison of the CEO to our other executive officers and a review of the CEO’s vested and unvested equity grants, as well as accumulated value, in an effort to assess possible retention risks. Executive Compensation Philosophy, Goals & Process The Committee’s philosophy is to competitively compensate all employees, including executives, for their contributions to Plexus, to appropriately motivate employees to provide value to Plexus’ shareholders and to consider the ability of Plexus to fund any compensation decisions, plans or programs. Competitive compensation must balance both short-term and long-term considerations and take into account external forces, best practices, and the performance of Plexus and the employee. Compensation packages should also motivate executives to make decisions and pursue opportunities that are aligned with the interests of our shareholders, while not exposing the Company to excessive risk. Finally, the Committee considers Plexus’ financial condition, the conditions in Plexus’ industry and end markets, Plexus’ performance compared to its competitors, and the effects of those conditions on Plexus’ sales and profitability in making compensation decisions as well as the outcome of the advisory vote on executive compensation at the prior annual shareholders meeting. At our last annual meeting, nearly 87% of the shareholder votes cast on the proposal were cast in favor of the resolution, demonstrating that shareholders generally approve of our executive compensation program. PERFORMANCE MEASURES INTENDED TO MAXIMIZE SHAREHOLDER VALUE The Company continues to emphasize annual and long-term incentive opportunities as a portion of total compensation since they are performance-based, represent compensation that is at risk, promote the creation of shareholder value and are intended to align the interests of executive officers with those of our shareholders. The Committee and the Company believe that shareholder value is maximized through revenue growth and generating a ROIC that exceeds the Company’s WACC. We refer to the amount of excess return when comparing these measures as economic return. The importance of achieving revenue growth and economic return goals has been emphasized by making a substantial component of each executive officer’s compensation dependent on the Company’s achievement of these goals, with executives maximizing their annual incentive compensation opportunity if the Company achieves its organic revenue growth and economic return goals. 35 TABLE OF CONTENTS Within our long term incentive plan we use economic return as a performance measure for PSUs. Relative TSR is also used as a performance measure for PSUs. The Committee believes it is important to balance absolute and relative measures in an effort to account for both internal and external influences on Company performance. The performance measures used by the Company’s annual and long-term incentive plans are described further in “Elements and Analysis of Direct Compensation.” MEASURE PLAN PAYMENT PURPOSE Revenue Growth Annual – VICP Cash ROIC Annual – VICP Cash Economic Return Long-term PSU Equity Relative TSR Long-term PSU Equity Revenue growth is the result of a sound strategy effectively executed and increases shareholder value when combined with economic return. We deliver economic return by driving improvements in ROIC through a combination of operating margin performance and prudent capital investment. Delivering economic return over the long-term generates shareholder wealth and mitigates short-termism. Relative TSR is an appropriate performance metric primarily because it is objectively determinable, provides rewards that are aligned to relative performance through varying economic cycles and reflects the delivery of value to shareholders. Finally, the Committee recognizes that certain non-financial goals are important to position the Company for sustainable long-term success. The Committee works with management to identify these goals and they often comprise personal objectives under the VICP. These goals could include execution metrics, important system and process improvements, talent development priorities, and ESG initiatives, amongst others. 36 TABLE OF CONTENTS Below are illustrations of the performance of our compensation program measures and their relationship to creating shareholder value. To drive value, both growth and economic return are critical. 37 TABLE OF CONTENTS Plexus uses the following compensation reward components, which work together to create competitive compensation arrangements for our executive officers. Greater detail is described in “Elements and Analysis of Direct Compensation.” PAY ELEMENT DESCRIPTION PAYOUT MEDIUM, TIMING AND AMOUNT Base Salary (Fixed) Annual Incentive (Variable) Long- Term Incentive (Variable) Market competitive base salary reflecting knowledge, skills, experience, responsibility, potential, and performance Paid in Cash Paid Currently Fixed Amount Cash incentive based on the achievement of annual Company financial metrics (40% revenue growth, 40% ROIC) and personal objectives (20%) Paid in Cash Paid Annually 0%-200% of Target 25% PSUs based on TSR 25% PSUs based on economic return 50% Restricted Stock Units Paid in Equity Paid After Three Year Performance Vesting 0%-200% of Target (for grants prior to fiscal 2021) or 0%-150% of Target (for grants in fiscal 2021 and ongoing) Paid in Equity Paid After Three Year Vesting Period 0%-200% of Target Paid in Equity Paid After Three Year Vesting Period Plexus also offers other reward components to competitively compensate our employees: • • • Health and Welfare Benefits: to promote the health and well-being of our employees and families, such as health and life insurance. Retirement Plans: to help our employees plan for their retirement. In addition to a 401(k) Plan, the Company also provides a supplemental executive retirement plan under which certain executives may elect to defer compensation; the Company also makes additional contributions on their behalf. Agreements: Only our current Chief Executive Officer has an employment agreement, which is intended to help assure the continuing availability of his services over a period of time and protect the Company from competition post-employment. All executive officers have change in control agreements to help assure that they will not be distracted by personal interests in the case of a potential acquisition of Plexus. The change in control agreements utilize a double trigger and do not include excise tax gross-up provisions. Elements & Analysis of Direct Compensation OVERVIEW OF DIRECT COMPENSATION Total direct compensation for executive officers at Plexus consists of three primary components—salary, annual cash incentive payments under the VICP and long-term equity-based awards. Each of these components is complementary to the others, addressing different aspects of direct compensation and seeking to motivate employees, including executive officers, in varying ways. The Committee reviews the total compensation package of each executive officer to determine whether it is reasonable. 38 TABLE OF CONTENTS Setting Compensation Levels The Committee uses a combination of peer company data and several published general industry and electronics industry surveys to provide insight into the competitiveness of each component of compensation offered to Plexus’ executive officers. This data is compiled and analyzed by Plexus human resources leaders, who then meet with the Committee’s compensation consultant to help the consultants understand Plexus’ business model, organizational structure and compensation philosophy. The compensation consultant, Plexus human resources' personnel, and our CEO discuss the analysis, rationale and methodology, and make recommendations to the Committee. Our CEO is excluded from CEO compensation discussions. When assessing the competitiveness of compensation and making compensation determinations, the Committee’s process includes a review and analysis of various factors, including: • • • • • • • Company financial results; An internal calibration of base compensation as well as short-term and long-term award levels; Individual stock ownership and grant practices for the CEO and other officers; The proportion of pay between the CEO compared to those at other levels in the organization; Pay-for-performance and retention incentives; Deferred compensation arrangements and accumulated value; and Reasonableness of compensation as a whole. In performing these analyses, the Committee uses tally sheets, which incorporate these factors to provide a comprehensive view of Plexus’ total compensation for each executive and payout exposure under various performance scenarios. When determining the competitive target compensation for each executive, the Committee uses comparable pay information as a point for reference. Through this form of benchmarking, the Committee does not aim for any particular numerical or percentage tests as compared to peer company data or surveys; however, it generally views the 50th percentile of market data as a reasonable comparison and uses its judgment following the review of multiple data points to arrive at individual pay determinations. In that consideration, the Committee discusses total compensation (including outstanding equity awards) for all executive officers, the level of experience and leadership each provides, and financial and personal performance results. The Committee seeks to properly position the total target direct compensation of the Company’s executive officers and to balance different types of compensation (including equity) in order to promote retention and strong Company performance. The Committee believes this approach results in a comprehensive and thoughtful compensation review process because it allows the Committee to use discretion when appropriate in responding to particular circumstances. The Committee intends to continue these practices in the future. Use of Peer Companies For compensation planning purposes, the Committee has constructed a peer group in order to compare the compensation of Plexus’ executive officers with that paid by other companies. Companies were chosen for the peer group using filtering criteria such as: • • • • Company size and performance (revenue, assets, market capitalization, performance criteria); Companies identified as competitors and/or in the same industry; Geographic footprint; Company image; 39 TABLE OF CONTENTS • • Organizational complexity; and Financial structure. The Committee has established a group of peer companies for comparison purposes using the selection criteria discussed above. The Committee conducts reviews of the peer group and selection criteria on a periodic basis to ensure that both are appropriate. For setting 2022 pay, the Committee used the same peer group that was used to set 2021 pay, which consisted of the companies set forth in the table below. PEER GROUP FOR SETTING 2022 PAY Amkor Technology, Inc. Benchmark Electronics, Inc. Flex Ltd. Jabil Inc. Teledyne Technologies Inc. Trimble Inc. Bruker Corporation Keysight Technologies, Inc. Triumph Group, Inc. Celestica Inc. Moog Inc. TTM Technologies, Inc. CommScope Holding Company, Inc. PerkinElmer, Inc. Vishay Intertechnology, Inc. Curtiss-Wright Corporation Regal Rexnord Corporation Waters Corporation Fabrinet Sanmina Corporation During fiscal 2022, the Committee, with the assistance of Exequity, made adjustments to the peer group for fiscal 2023 compensation planning purposes. Using the selection criteria above, Triumph Group, Inc. and TTM Technologies, Inc. were removed. Triumph Group, Inc. was removed due to mergers and acquisitions activity. Parsons Corporation was added primarily due to comparable size as well as its alignment with financial selection criteria. PEER GROUP FOR SETTING 2023 PAY Amkor Technology, Inc. Benchmark Electronics, Inc. Flex Ltd. Jabil Inc. Sanmina Corporation Teledyne Technologies Inc. Bruker Corporation Keysight Technologies, Inc. Trimble Inc. Celestica Inc. Moog Inc. Vishay Intertechnology, Inc. CommScope Holding Company, Inc. Parsons Corporation Waters Corporation Curtiss-Wright Corporation PerkinElmer, Inc. Fabrinet Regal Rexnord Corporation DISTRIBUTION OF PAY COMPONENTS The Committee believes that a majority of executive compensation should be at risk and that the CEO’s percentage at risk should be the highest. VICP targets for the named executive officers other than Mr. Kelsey ranged from 70% to 85% of base salary in fiscal 2022, with the opportunity to earn cash incentives beyond those levels if Plexus exceeded its targeted financial goals. In the case of Mr. Kelsey, the VICP target as a percentage of base salary was 130% in fiscal 2022, reflecting his overall greater responsibility for the Company. In fiscal 2022, long-term incentives for executive officers were granted in the form of: (i) RSUs that vest based on continued service, which promotes a long-term ownership mentality; and (ii) PSUs, which represent compensation that is at risk since these awards will be forfeited if performance is below a threshold level. Except in the case of promotions or other special circumstances, compensation adjustments and equity awards for executive officers are targeted for implementation in the second quarter of each fiscal year 40 TABLE OF CONTENTS to align with the Company’s internal performance management cycle and changes to the compensation of its other non-executive employees. The Committee considers both individual and Company performance in making these determinations, and believes that this timing forges a strong link between performance and pay. The resulting total targeted direct compensation mix used for fiscal 2022 for Mr. Kelsey and the average for the other named executive officers is illustrated in the charts below: BASE SALARY Factors Considered In Determining Base Salary Prior to establishing the base salary level for the CEO and approving salary levels for other executive officers, the Committee takes into consideration various factors. These factors include: • • • • Compensation data from our peer group; Salary increase trends for executive base pay and other information provided in published surveys; An in-depth total rewards analysis with comparisons to peer group and survey data; and Individual executive officers’ performance, duties and responsibilities, and their relative authority within Plexus. The Committee uses this information and meets in executive session to discuss appropriate pay positioning and pay mix based on the data gathered. The data gathered in the determination process help the Committee to test for fairness, reasonableness and competitiveness. While the Committee takes into account the Company’s compensation philosophy and goals and follows a holistic approach to executive compensation packages, its final determination may incorporate the subjective judgment of its members, as well. Executive officer base salary changes may include the following two components: • • Competitive Adjustments. If executive officer salaries fall out of alignment with the competitive median range of our peer group and survey data, we consider changing the salaries to a more competitive level. Competitive adjustments may take place over a multi-year period and may depend on individual performance. Performance-Based Merit Increases. Separate merit increase may be provided based on individual performance, if appropriate. 2022 Base Salary Adjustments Base salary adjustments for 2022 were approved by the Committee in December 2021 for all executive officers. Mr. Mihm became an executive officer in January 2022 upon his promotion to Executive VP & Chief Operating Officer. As a result, he received a base salary adjustment approved by the Committee in January 2022. When considering compensation adjustments, the Company has placed a greater emphasis on annual and long-term incentive opportunities, as opposed to base salary, since they are performance-based, represent compensation that is at risk, promote the creation of shareholder value 41 TABLE OF CONTENTS and are intended to further align the interests of executive officers with those of our shareholders. Our CEO’s base salary is higher than those of our other executive officers because of the more extensive and challenging duties and responsibilities associated with that position. In addition, the CEO’s total compensation is more heavily weighted toward performance-based compensation when compared to the total compensation of our other executive officers. For 2022, Mr. Kelsey’s base salary was set at $1,030,000 which represented an increase of 3.0% from his previous salary. As a result, the base salary for Mr. Kelsey is positioned near the median of peer group and market comparisons. Increases for our other named executive officers excluding Mr. Mihm varied from 2.7% to 3.3%. Base salary increases for 2022 for these named executive officers were due to merit increases. Mr. Mihm received a promotional base salary adjustment of 12.3%. Variations between these named executive officers reflected competitive conditions and the Committee’s view of the named executive officers’ duties, responsibilities and performance. The Committee believed that base salaries for those named executive officers were appropriately aligned with peer group and market comparisons, and were awarded based on individual performance. Presented below are the 2022 base salaries and percentage increases as compared to the prior year for our named executive officers: EXECUTIVE OFFICER 2022 BASE SALARY PERCENTAGE INCREASE COMPARED TO 2021 Mr. Kelsey Mr. Frisch Mr. Jermain Mr. Ninivaggi Mr. Mihm $1,030,000 $625,000 $580,000 $505,000 3.0% 3.3% 2.7% 3.1% $480,000 12.3% ANNUAL INCENTIVE COMPENSATION (AT RISK) The VICP provides annual cash incentives to approximately 4,100 participants, including all of our executive officers. The award opportunity levels for each participant are expressed as a percentage of base salary. For executive officers, the VICP is a sub-plan of the Incentive Plan with the opportunity to earn above their targeted award opportunities based on the achievement of corporate financial goals. Higher levels of duties and responsibilities within Plexus lead to higher cash incentive opportunities under the VICP because the Committee believes that heightened responsibility leads to more influence on corporate performance. For each executive officer, 80% of the targeted award is keyed to the corporate financial goals; the remaining 20% of the targeted award is keyed to the achievement of individual objectives. Offering a greater percentage of compensation tied to performance measures is intended to more strongly link executive compensation with Company performance and shareholder returns. 42 TABLE OF CONTENTS The table below lists the fiscal 2022 VICP award opportunities for the named executive officers, expressed as a percentage of base salary. The targeted award for Mr. Kelsey was increased from 125% to 130% of base salary based on alignment with the peer group and market comparisons. The Committee set the targeted award for Mr. Mihm based on his expanded responsibilities in his new role, as well as the alignment to the peer group and market comparisons. EXECUTIVE OFFICER 2022 THRESHOLD AWARD (%) 2022 TARGETED AWARD (%) 2022 MAXIMUM AWARD (%) Mr. Kelsey Mr. Frisch Mr. Jermain Mr. Ninivaggi Mr. Mihm 0% 0% 0% 0% 0% 130% 85% 80% 70% 75% 260% 170% 160% 140% 150% The VICP provides for payments relating to corporate financial goals both below and above the targeted awards by establishing specific threshold levels of corporate performance at which payments begin to be earned and maximum payout levels beyond which no further payment is earned. The payout for our executive officers at the maximum payout level is 200% of the targeted award. The Committee believes that the opportunity to receive a payout above target should be based solely on achieving corporate financial goals. Therefore, to achieve the maximum payout of 200% of the targeted award, executive officers must achieve 90% payouts for each of the revenue and ROIC components of the VICP, with the individual objectives component comprising the balance at a maximum of 20%. Payments to participants are not permitted under the VICP unless the Company achieves positive net income for the plan year. The VICP provides that extraordinary items or charges should be excluded from fiscal year results. In addition, the Committee has the authority to exclude non-recurring charges, when determining the achievement of the corporate financial goals. In 2022, the Company did not make adjustments to financial goals under the VICP. 2022 Plan Design – Company Financial Goals Our financial and compensation models align with our business strategy. The specific corporate financial goals for fiscal 2022, each of which stood independently of the other with regard to award opportunities, were revenue and ROIC. The goals were chosen because they aligned performance-based compensation to the key financial metrics that the Company used internally to measure its ongoing performance and that it used in its financial plans. The fiscal 2022 targets for these goals were set as part of our annual financial planning process and continue to align with our enduring financial goals. For each of the corporate financial goals, we also established specific “threshold” and “maximum” payout levels of achievement as part of that process. The “maximum” payout for ROIC was adjusted to 15% in accordance with our enduring goal and aligned with the interests of our shareholders. For the purposes of the VICP, ROIC is defined as tax-effected annual operating income divided by the average invested capital over a five quarter period for the fiscal year and the prior fiscal year fourth quarter. Invested capital is defined as equity plus debt and operating lease liabilities, less cash and cash equivalents. Revenue is defined as the fiscal 2022 net recognized sales of the Company for financial statement purposes. The Committee has discretion to adjust ROIC to account for the effects of extraordinary items. No award is payable to any participant under the VICP unless we have positive net income for the fiscal year. In the event of results that are below the revenue and the ROIC 43 TABLE OF CONTENTS threshold levels, the VICP may pay out only in respect to the portion based on individual objectives. When determining ROIC for VICP awards, extraordinary items or charges, and non-recurring charges, are disregarded, except as otherwise determined by the Committee in its discretion. Discretion was not exercised by the Committee in fiscal 2022. For fiscal 2022, in accordance with Plexus’ strategic plan and the Committee’s philosophy of aligning compensation with the Company’s enduring goals, the Committee established the performance goals described below: Threshold Target Maximum Payout Revenue Equal to prior year revenue Midpoint between threshold and maximum payout Equal to 12% revenue growth ROIC Equal to Plexus’ WACC Midpoint between threshold and maximum payout Equal to 15% ROIC The Committee believes that setting the maximum payout levels for revenue and ROIC consistent with our financial goals fully aligns employees with financial results that maximize value to our shareholders, without encouraging excessive risk-taking. Threshold levels for both metrics were set at the minimum levels of performance at which Plexus believes it begins generating value for our shareholders. Target levels for revenue and ROIC, which were set between the threshold and maximum payout levels, were intended to be challenging, but achievable, based on industry conditions and Plexus’ financial plan. Awards for performance between the threshold and target level, and between the target and maximum levels, are calculated by straight-line interpolation. The following table sets forth the fiscal 2022 financial targets and potential VICP payout amounts (as a percent of targeted VICP cash incentive) for the named executive officers, at the threshold, target and maximum payout performance levels: THRESHOLD TARGET MAXIMUM PAYOUT Component Goal Payout Goal Payout Goal Payout Revenue (in millions) ROIC $3,369 9.3% 0% 0% $3,571 40% $3,773 90% 12.2% 40% 15.0% 90% Individual Objectives up to 20% up to 20% up to 20% Total Potential Incentive = Revenue + ROIC + Individual Objectives up to 20% up to 100% up to 200% In fiscal 2022, revenue was $3,811 million and ROIC was 13.0%. Therefore, the Company’s performance was above the maximum payout for revenue and above the target payout level for ROIC. As a result, Plexus paid awards for corporate financial performance to executive officers and other employees based on revenue and ROIC performance; total payments to executives represented 145% versus the target of 80% for corporate financial performance. 2022 Plan Design – Individual Objectives The Committee determines and approves the individual objectives established for the CEO and the other executive officers. For fiscal 2022, common individual objectives were shared by all executive officers, including Mr. Kelsey and the other named executive officers. Attainment of the individual objectives represents 20% of the potential targeted VICP award; however, no such award may be earned based on individual objectives unless the Company achieves positive net income for the plan year. The Committee’s assessment of individual objectives is based on their likely impact on the achievement of the Company’s annual financial plan and other longer-term strategic priorities, their effect on shareholder value and their alignment with one another. 44 TABLE OF CONTENTS The fiscal 2022 shared individual objectives for all of our named executive officers concentrated on (a) reduction in transformation cost, which are the costs required to convert raw inventory into finished goods; (b) continued pursuit of the Company’s “zero defects” cultural journey, focused on quality improvement initiatives and goals; (c) enterprise resource planning (ERP) system enhancements and process improvements; and (d) ESG initiatives relating to energy reduction, employee resource groups, and cybersecurity. Mr. Kelsey provided the Committee with an assessment of the executive team’s performance on each shared individual objective and the Committee determined the ultimate award percentage level for each objective. Actual achievement of individual objectives for fiscal 2022 was based upon the Committee’s determination of the degree to which the objectives were completed by each member of the executive team. As a result, all named executive officers were awarded a 62.5-70.0% payout of the personal objectives portion of the VICP, or a 12.5-14.0% payout versus the target of 20% for individual objectives. 2022 Annual Incentive Compensation (At Risk) – Actual Payout The following table sets forth the fiscal 2022 VICP total payout as a percentage of each named executive officer’s target award, capturing the fiscal 2022 results for the Company’s revenue and ROIC goals combined with the individual objectives payout. ACTUAL PAYOUT Component Results Payout Revenue (in millions) ROIC $3,811 13.0% 90% 55% Individual Objectives 62.5-70.0% 12.5-14.0% Total Payout as a Percent of Target 157-159% 2023 – Individual Objectives A portion of the fiscal 2023 shared individual objectives for all of our named executive officers will include goals associated with the Company’s ESG program, specifically: (a) global reduction targets in energy intensity in furtherance of the Company’s environmental sustainability activities; (b) expansion of talent sourcing strategy and tools to ensure we are recruiting diverse talent; and (c) measuring waste to landfill. LONG-TERM INCENTIVES Plan Structure Total compensation, consistent with practices in our industry, places a particular emphasis on equity- based compensation for executive officers. The shareholder-approved Incentive Plan allows, and its predecessor allowed, for various award types, including options, SARs, restricted stock awards (including RSUs), performance stock awards (including PSUs), other stock awards and cash incentive awards. Equity-based awards are intended to provide incentives to enhance corporate performance as well as to further align the interests of our executive officers with those of our shareholders. The reported values of the long-term incentive opportunities under equity plans can vary significantly from year to year as a percentage of total direct compensation because they are determined by valuing the equity-based awards on the same basis that we use for financial statement purposes; that value depends significantly on our stock price and its volatility at the time of the awards. For fiscal 2022 grants, and in furtherance of its emphasis on at-risk performance-based compensation, the Committee’s annual equity grant allocation formula for named executive officers consisted of 50% PSUs and 50% RSUs. The Committee believes that this equity grant allocation formula promotes a strong pay-for-performance link and further enhances the alignment of the interests of our executives with those of our shareholders. The equity grant allocation formula also is intended to promote share 45 TABLE OF CONTENTS ownership (along with our equity ownership guidelines) and motivate our executives to succeed in the long-term. The Committee intends to continue to emphasize the use of performance-based awards for executive officers in future years. The Committee’s long-term incentive strategy allows for use of a portfolio approach when granting awards. Each element of the portfolio for fiscal 2022 was intended to address a different aspect of long- term incentive compensation, as set forth below: • • • PSUs provide an additional incentive for executive officers to create shareholder value. 50% of the PSUs granted vest over a three year period based on average economic return performance. Economic return, which is calculated as a three-point annual average, is used as a performance measure for the PSUs because it is a key focus of the Company’s financial model and is a metric that the Committee believes, when combined with revenue growth, is highly correlated with driving shareholder value. For any individual fiscal year, the economic return performance measure will be a minimum of 0% and a maximum of 5%. The other 50% of PSUs granted vest based on the relative TSR performance of Plexus common stock as compared to companies in the S&P 400 Index over a three year performance period. The Committee believes that measuring TSR on a relative, rather than on an absolute, basis provides a more relevant measure of the performance of the Company’s stock. By mitigating the impact of macroeconomic factors (both positive and negative) that are beyond the control of the Company and its executives, relative TSR provides rewards that are better aligned to relative performance through varying economic cycles. PSUs also provide a retention incentive since these awards generally do not vest until the end of the three year performance period. RSUs provide an interest in the value of the Company’s shares, because, even though they vest over time, they provide recipients with a certain equity interest, assuming continued employment. In addition to promoting retention, RSUs align the interests of executives and other employees who receive RSU grants with the interests of shareholders by building a long-term ownership mentality and providing motivation to succeed in the long term. Annual Award Determination and Allocation Process Each year the Committee reviews market data, individual performance and the estimated value of the entire pool of equity awards prior to making grants to executive officers, including when making grants in connection with promotions or other increases in responsibilities. Pursuant to its portfolio approach, in fiscal 2022, the Committee distributed awards in the form of PSUs and RSUs to eligible participants, as discussed above. When making these determinations, PSUs that vest based on the relative TSR of Plexus common stock are valued using a Monte Carlo simulation model, while the values of PSUs that vest based on economic return performance and RSUs are determined based on the fair market value of Plexus common stock. The Committee determines the grant for the CEO and approves grants for all other executive officers. The CEO provides the Committee with initial grant recommendations for each executive officer other than himself by balancing the need to provide competitive compensation with the desire to keep related compensation value and expense relatively stable from period to period. The Committee considers each executive officer’s duties, responsibilities and performance, as well as internal and external comparisons (for example, peer group comparisons and other third-party market surveys, as described above), when approving the grant value for each executive officer. Those in positions with more responsibility tend to receive larger grants to reflect their role in the Company and the market comparisons for their compensation. Also, as discussed above, for the CEO, the Committee uses the vested and unvested equity information, as well as the accumulated value analysis, to balance the level of existing awards with the desire to reward performance and to provide retention incentives. The Committee continues its focus on increasing incentive award opportunities for our executive officers as a portion of total potential compensation in order to more strongly link executive compensation with Company performance and shareholder returns. 46 TABLE OF CONTENTS Timing of Grants Grants of PSUs are made in the fiscal second quarter; however, the performance goals for the PSUs are set in the fiscal first quarter. Grants of RSUs are generally made once a year during the fiscal second quarter, but may also be made in connection with new hires, promotions, other increases in responsibilities or in special situations. The Committee anticipates continuing to follow this grant schedule and practice for future grants. Fiscal 2022 Awards Based on the Committee’s long-term incentive strategy, as well as individual responsibility and performance considerations, and reflecting all of the grants discussed above, the Committee granted the following equity awards to Mr. Kelsey and the other named executive officers in fiscal 2022. Executive Officer PSUs (#) RSUs (#) Mr. Kelsey Mr. Frisch Mr. Jermain Mr. Ninivaggi Mr. Mihm 24,790 26,770 10,150 10,960 6,340 13,100 4,780 5,150 6,090 6,580 Vesting of 50% of the PSUs granted in fiscal 2022 is based on a three-point annual average of the Company’s absolute economic return performance during the performance period; vesting of the other 50% is based on the relative TSR of Plexus stock as compared to the companies in the S&P 400 Index. Performance on these metrics will be determined following the conclusion of the relevant three year performance period. In order to further align the Company’s financial model and business strategy to the payout of long-term incentives, the maximum payout on 50% of the PSUs is achieved when the three-point annual average economic return is at or above 5.0% over the three year performance period. If the maximum payout level is achieved, 200% of this portion of the PSUs will be earned. A target payout on this portion of the award will be achieved if the three-point annual average economic return is 2.5%; the Committee believes that this target is meaningfully difficult, but is achievable and appropriate for our industry. The Committee believes it is appropriate for a portion of these awards to vest when the three-point annual average economic return exceeds 0.0% because any positive level of economic return generates shareholder value. If the Company does not achieve a positive three-point annual average economic return, this portion of the PSUs will not pay out. Below is the payout matrix for the portion of the PSUs that may be earned based on economic return performance (if performance is between the specified levels, the payout will be interpolated): AVERAGE ECONOMIC RETURN PAYOUT PERFORMANCE FACTOR 0% (Threshold) 0% 2.5% (Target) 100% 5.0% (Maximum) 200% The TSR calculations will be based on the percentage change from the initial price to the final price during the performance period, which is three years from the date of grant, and will reflect the reinvestment of dividends, if any. The initial price is calculated using the average closing price of 47 TABLE OF CONTENTS common stock over the 30 calendar day period ending on the trading day immediately preceding the first day of the three year performance period. The final price is the average closing price of common stock over the 30 calendar day period ending on the last day of the three year performance period. The TSR calculations will be adjusted to reflect stock splits, recapitalizations and other similar events. The portion of the PSUs that may be earned based on relative TSR performance will vest at target if the TSR of Plexus stock is at the 50th percentile of companies in the S&P 400 Index. A payout at maximum, which is 150% of the target award for this portion, may be achieved if the relative TSR of Plexus stock is at or above the 75th percentile of companies in the S&P 400 Index. The Committee believes that a relative TSR at or above this level would be reflective of significant achievement during the performance period. In order to receive a payout at threshold, which is 50% of the target award for this portion, the relative TSR of Plexus stock must be at or above the 25th percentile of companies in the S&P 400 Index. If the relative TSR of Plexus stock is below the 25th percentile, none of the PSUs will be earned and the awards will be forfeited. The payout matrix for the portion of the PSUs granted in fiscal 2022 that may be earned based on relative TSR performance is presented in the table below (if performance is between the specified levels, the payout will be interpolated): RELATIVE TSR PERCENTILE RANK PAYOUT PERFORMANCE FACTOR Below 25th 0% 25th (Threshold) 50% 50th (Target) 100% 75th and above (Maximum) 150% For information regarding the performance of PSUs granted in fiscal 2022 and prior fiscal years as of October 1, 2022, see the “Outstanding Equity Awards at Fiscal Year-End” table below. Annual awards of RSUs generally vest on the third anniversary of the grant, subject to early vesting on a change in control. Fiscal 2019 PSUs The TSR of Plexus stock during the three year performance period for the fiscal 2019 PSUs that ended in fiscal 2022 was at the 61.2 percentile of companies in the Russell 3000 Index. As a result, and according to the payout matrix applicable to this grant, this portion of the PSUs vested and paid out at approximately 144.8% of target after certification by the Committee. Fiscal 2020 PSUs The performance period with respect to the portion of the fiscal 2020 PSUs that vested based on a three- point annual average of the Company’s absolute economic return concluded at the end of fiscal 2022. Average economic return for the three year performance period was 5.1%. As a result, and according to the matrix established for the fiscal 2020 PSUs, this portion of the PSUs vested and paid out at 200% of target after certification by the Committee. The Committee plans to evaluate the performance of the portion of the fiscal 2020 PSUs that vests based on relative TSR at its February 2023 meeting. 48 TABLE OF CONTENTS EQUITY OWNERSHIP GUIDELINES The Company’s executive stock ownership guidelines are intended to increase the alignment between the interests of management and our shareholders. To accomplish these objectives, we require our CEO to own Plexus stock with a minimum market value equal to five times their annual base salary, our CSO, COO and CFO to own three times their annual base salary and other executive officers, including those named in the “Summary Compensation Table,” to own Plexus stock with a minimum market value equal to two times their annual base salary. Other Plexus leadership team members are required to own a value of Plexus common stock as determined by the CEO. Stock options and unvested PSUs do not count toward the satisfaction of the guidelines. Unvested RSUs will count toward the satisfaction of these guidelines. There is no specific time requirement to meet these guidelines. However, an executive officer is generally not permitted to sell Plexus shares that were acquired or awarded while an executive officer unless the applicable ownership requirement has been met; there are exceptions, including financing the exercise of stock options and any applicable taxes when the shares will be held, in connection with any applicable tax consequence related to the vesting of an equity award or with prior approval under special circumstances. All of our named executive officers, including Mr. Kelsey, have met the ownership amounts required by the guidelines and are in compliance with the procedural requirements of the guidelines. CLAWBACK POLICY Pursuant to the Plexus Corp. Executive Compensation Clawback Policy, in the event of a material restatement of the Company’s financial results as a result of significant non-compliance with financial reporting requirements, the Committee will review incentive compensation that was paid to the Company’s executive officers under the VICP (or any successor plan thereto) based solely on the achievement of specific corporate financial goals (“covered compensation”) during the period of the restatement. If any covered compensation would have been lower had the covered compensation been calculated based on the Company’s restated financial results, the Committee will, as and to the extent it deems appropriate, recoup any portion of covered compensation paid in excess of what would have been paid based on the restated financial results. The Committee may seek the recovery of covered compensation for up to three years preceding the date on which the Company is required to restate its financial results. This policy applies in addition to any right of recoupment against the Company’s Chief Executive Officer and Chief Financial Officer pursuant to the Sarbanes-Oxley Act of 2002. The policy does not apply in any situation where a restatement is not the result of significant non-compliance with financial reporting requirements, such as any restatement due to a change in applicable accounting rules, standards or interpretations, a change in segment designations or the discontinuance of an operation. ANTI-HEDGING AND ANTI-PLEDGING POLICY The Company’s Insider Trading Policy explicitly prohibits directors, officers and employees from engaging in transactions designed to hedge or offset a decrease in the price of the Company’s common stock, including, but not limited to, prepaid variable forward contracts, equity swaps, collars and exchange funds. Pledges and short sales of the Company’s securities are also prohibited under the Insider Trading Policy. 49 TABLE OF CONTENTS Elements & Analysis of Other Compensation In addition to direct compensation, Plexus uses several other types of compensation, some of which are not subject to annual Committee action. These include benefits, retirement plans and employment or change in control agreements. These are intended to supplement the previously described compensation methodologies by focusing on long-term employee security and retention. Certain of these plans allow employees to acquire Plexus stock. BENEFITS We generally provide health and welfare benefits to our executive officers on the same basis as other salaried employees in the United States, although some benefit programs, as discussed elsewhere, are specifically targeted to our executive officers’ specific circumstances. On January 1, 2020, the executive flexible perquisite benefit, valued up to $15,000 per calendar year, was eliminated; however there may be some benefit showing in the Summary Compensation Table due to the difference between the fiscal and calendar years. The flexible perquisite benefit was intended to be used for expenses such as personal financial planning, spouse travel costs in connection with business-related travel, club membership and/or tax and estate advice. The Committee also approved additional perquisites and other benefits for our CEO and the other executive officers in addition to those received by all U.S. salaried employees. The additional perquisites and other benefits for certain of our executive officers are: a company car and additional life and disability insurance due to the dollar limits of the Company’s disability insurance policies. As a result of local law and custom, different but comparable insurance programs and other benefits may apply to personnel who are located in countries outside of the United States, as well as to executive officers who may be temporarily assigned outside of the United States, if any. RETIREMENT PLANNING – 401(K) PLAN The 401(k) Plan, which is available to substantially all U.S. employees, allows employees to defer a portion of their annual salaries into their personal accounts maintained under the 401(k) Plan. In addition, Plexus matches a portion of each employee’s contributions, up to the maximum allowed per calendar year pursuant to the terms of the plan. For the 2022 calendar year, the maximum allowed is $12,200. Employees have a choice of investment alternatives, including a Plexus stock fund. RETIREMENT PLANNING – SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN In response to Internal Revenue Code (the “Code”) limitations on compensation that may be attributed to tax qualified retirement plans (such as the 401(k) Plan), we have also developed a supplemental executive retirement plan. Plexus’ supplemental executive retirement plan (the “SERP”) is a deferred compensation plan that allows participants to defer taxes on current income. The SERP covers our executive officers and certain other executives, and provides a retirement savings alternative to address their particular circumstances and promote a long-term commitment to Plexus until retirement. All U.S.- based executive officers participate in the SERP. Under the SERP, those executive officers may elect to defer compensation and Plexus may also make discretionary contributions. The SERP allows the investment of deferred compensation amounts on behalf of the participants into individual accounts and, within these accounts, into one or more designated mutual funds or other investments. These investment choices do not include Plexus stock. Deferred amounts and any earnings that may be credited become payable upon termination, retirement from Plexus or in accordance with the executive’s individual deferral election. Additionally, the Company may credit a participant’s account with a discretionary employer contribution. Any employer contributions to the SERP require approval of the Committee. The SERP provides a vehicle for the Company to restore the lost deferral and matching opportunity caused by tax regulation limitations on such deferrals and matched contributions for highly compensated individuals; 50 TABLE OF CONTENTS the Committee believes these limitations make supplemental retirement plans common practice in general industry. The Committee also believes that further retirement compensation through the SERP is appropriate based on the market for executive compensation and its desire to provide an incentive for executives to remain with Plexus through retirement. FISCAL 2022 PLAN ACTIVITY • • • Contribution Formula. The SERP provides for an annual discretionary contribution of 9% of the executive’s total targeted cash compensation, and we made such a contribution in fiscal 2022. Total targeted cash compensation is defined as base salary plus the targeted annual incentive plan cash incentive at the time of the Company’s contribution. Employer Contributions. For fiscal 2022, the total employer contributions to the SERP accounts was $555,904 for all named executive officer participants as a group, including $210,738 for Mr. Kelsey. See footnote 6 to the “Summary Compensation Table.” Special Contributions. The SERP also allows the Committee to make discretionary contributions over and above the annual contribution noted above, and such contributions have been made in individual cases from time to time. However, in fiscal 2022, the Committee did not make any such contributions on behalf of the named executive officers. EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS We do not generally have employment agreements with our executive officers other than our Chief Executive Officer. All executive officers, including Mr. Kelsey, have change in control agreements to help assure that these individuals will not be distracted by personal interests and will maintain their focus on shareholders in the case of a potential acquisition of Plexus, as well as to maintain their continuing loyalty. Mr. Kelsey’s employment agreement and the change in control agreements for Mr. Kelsey and our other executive officers are described below in “Executive Compensation–Employment Agreements and Potential Payments Upon Termination or Change in Control.” Please refer to the discussions therein for a further explanation of those agreements. TAX ASPECTS OF EXECUTIVE COMPENSATION The Committee considers the potential tax deductibility under the Code for executive compensation. However, at times and under certain circumstances, it believes that it is more important to provide appropriate incentives irrespective of tax consequences. Section 280G of the Code imposes a 20% excise tax upon executive officers who receive “excess parachute payments” upon a change in control to the extent the payments received by them meet or exceed an amount approximating three times their average annual compensation. The excise tax applies to all payments over one times average annual compensation. Plexus would also lose its tax deduction for the “excess” payments. Excise tax gross-up provisions have been eliminated from all change in control agreements, and our agreements use a “best net” approach to minimize the possibility that an excise tax might be due or that a loss of the tax deduction might occur. The Code also provides a surtax under Section 409A relating to various features of deferred compensation arrangements that do not comply with the requirements of Section 409A. We generally seek to structure our compensation arrangements either to comply with Section 409A or qualify for an exemption from Section 409A. 51 TABLE OF CONTENTS COMPENSATION COMMITTEE REPORT The duties and responsibilities of the Compensation Committee of the board of directors are described above under “Corporate Governance—Board Committees—Compensation and Leadership Development Committee” and are set forth in a written charter adopted by the board, which is available on the Company’s website. The Committee reviews and reassesses this charter annually and recommends any changes to the board for approval. As part of the exercise of its duties, the Committee has reviewed and discussed with management the above “Compensation Discussion and Analysis” contained in this proxy statement. Based upon that review and those discussions, the Committee recommended to the board of directors that the Compensation Discussion and Analysis be incorporated by reference in Plexus’ annual report to shareholders on Form 10-K and included in this proxy statement. MEMBERS OF THE COMPENSATION AND LEADERSHIP DEVELOPMENT COMMITTEE: Joann M. Eisenhart, Chair Joel Quadracci Karen M. Rapp Michael V. Schrock 52 TABLE OF CONTENTS EXECUTIVE COMPENSATION This section provides further information about the compensation paid to, and other compensatory arrangements with, our named executive officers. Summary Compensation Table for Fiscal 2022 The following table sets forth a summary of the compensation of our named executive officers. More detailed information is presented in the other tables and explanations that follow. Name Year Salary ($)1 Bonus ($)2 Stock Awards ($)3 Option Awards ($)4 Non-Equity Incentive Plan Compensation ($)5 All Other Compensation ($)6 Total ($) Todd P. Kelsey Chief Executive Officer Patrick J. Jermain Executive VP & CFO Steve Frisch President & Chief Strategy Officer Angelo M. Ninivaggi Executive VP, CAO, GC & Secretary Oliver Mihm Executive VP & COO 2022 $1,023,076 — $4,077,029 2021 $1,000,000 — $5,078,974 2020 $1,010,481 — $4,977,568 2022 $576,538 — $1,549,737 2021 $555,769 — $1,310,953 2020 $531,346 — $1,272,295 2022 $620,385 — $1,669,231 2021 $599,231 — $1,856,954 2020 $586,779 — $1,810,030 2022 $501,538 — $785,218 2021 $485,385 — $983,486 2020 $475,288 — $989,848 2022 $459,375 — $1,001,834 2021 — 2020 — — — — — — — — — — — — — — — — — — — — $2,092,884 $247,486 $7,440,475 $1,309,375 $234,872 $7,623,221 $1,979,778 $234,696 $8,202,523 $725,225 $125,655 $2,977,155 $469,296 $120,815 $2,456,833 $624,622 $117,584 $2,545,847 $837,062 $136,597 $3,263,275 $533,554 $133,447 $3,123,186 $781,757 $129,079 $3,307,645 $552,022 $112,471 $1,951,249 $363,563 $106,666 $1,939,100 $521,475 $100,211 $2,086,822 $536,055 $104,937 $2,102,201 — — — — — — 1 2 Includes amounts voluntarily deferred by the named persons under the Company’s retirement plans. The amounts deferred under the SERP are also included in the “Executive Contributions in Last FY” column of the “Nonqualified Deferred Compensation” table below. The “Bonus” column, in accordance with SEC regulations, would include only discretionary bonus payments apart from VICP. Payments under the VICP, including payments for achieving individual objectives, are set forth in the “Non-Equity Incentive Plan Compensation” column. Since our named executive officers’ individual objectives are specific and performance against them is measured, we believe that payments under the VICP that relate to the achievement of individual objectives are properly reflected in the “Non-Equity Incentive Plan Compensation” column. 53 TABLE OF CONTENTS 3 4 5 6 These columns represent the grant date fair value computed in accordance with Accounting Standards Codification Topic 718 (“ASC 718”) of equity awards granted under the Incentive Plan and its predecessor, which are explained further below under “Grants of Plan-Based Awards.” GAAP requires us to determine compensation expense for stock options and other stock-related awards granted to our employees based on the estimated fair value of the equity instrument at the time of grant. Compensation expense is recognized over the vesting period. The assumptions that we used to determine the valuation of the awards are discussed in footnote 9 to our consolidated financial statements. Grants of stock options and RSUs are not subject to performance conditions, although the ultimate value of stock options depend on the appreciation in the Company’s stock price. The Company has not granted stock options to its executive officers since fiscal 2017. For 2020, vesting of 50% of the PSUs reported in each fiscal year above is based on a three-point annual average of the Company’s absolute economic return performance and vesting of the other 50% depends on the relative TSR of Plexus stock as compared to companies in the Russell 3000 Index, each over a three year performance period. The 2020 PSUs are reported in the “Stock Awards” column at “target” performance; participants can earn twice the number of PSUs granted for performance at “maximum.” For 2021 and 2022, vesting of 50% of the PSUs reported in each fiscal year above is based on a three-point annual average of the Company’s absolute economic return performance and vesting of the other 50% depends on the relative TSR of Plexus stock as compared to companies in the S&P 400 Index, each over a three year performance period. The 2022 PSUs are reported in the “Stock Awards” column at “target” performance; participants can earn twice the number of PSUs granted for performance at “maximum” for the economic return portion and one and a half times the number of PSUs granted for performance at “maximum” for the TSR portion. The value of the fiscal 2022 PSUs at the maximum performance level would be as follows for each named executive officer: Mr. Kelsey—$3,521,337; Mr. Jermain—$900,522; Mr. Frisch—$1,441,822; Mr. Ninivaggi— $678,985; and Mr. Mihm—$865,150. Please also see the “Grants of Plan-Based Awards” table below for further information about equity awards granted in fiscal 2022, and the “Outstanding Equity Awards at Fiscal Year End” table below for information regarding all outstanding equity awards at the end of fiscal 2022. No stock options were granted to named executive officers in fiscal 2022. The “Non-Equity Incentive Plan Compensation” column represents amounts that were earned during each fiscal year under the VICP. Under the VICP, annual cash incentives for executive officers are determined by a combination of the degree to which Plexus achieves specific pre-set corporate financial goals during the fiscal year and the executive officer’s performance on individual objectives. We include more information about the VICP under “Compensation Discussion and Analysis—Elements and Analysis of Direct Compensation—Annual Incentive” above, as well as under “Grants of Plan-Based Awards” below. The amounts shown in the “2022” row were earned in fiscal 2022 and were paid in fiscal 2023, the amounts shown in the “2021” row were earned in fiscal 2021 and were paid in fiscal 2022, and the amounts shown in the “2020” row were earned in fiscal 2020 and were paid in fiscal 2021. There were no deferrals of the amounts payable in fiscal 2023 related to the VICP award earned based on fiscal 2022 performance. There were no deferrals of the amounts payable in fiscal 2022 related to the VICP award earned based on fiscal 2021 performance. Mr. Frisch deferred $156,351 of the amount payable in fiscal 2021 related to the VICP award earned based on fiscal 2020 performance. The amounts listed under the column entitled “All Other Compensation” in the table include Company contributions to the 401(k) Plan and the SERP, reimbursements made by Plexus under its executive flexible perquisite benefit (which was eliminated January 1, 2020), the value of the company car benefit provided to the executive, additional life and disability insurance coverage and relocation. Per person detail is listed in the table below: 54 TABLE OF CONTENTS Company Matching Contribution to 401(k) Plan Company Contribution to SERP Executive Flexible Perquisite Benefit Company Car Benefit Additional Life and Disability Insurance Relocation Total ($) Name Year Todd P. Kelsey Patrick J. Jermain Steven J. Frisch 2022 $12,200 $210,738 2021 $11,600 $202,500 2020 $11,400 $201,822 2022 $12,200 $93,399 2021 $11,600 $89,489 — — — — — $23,912 $20,383 $21,085 $19,420 $19,337 2020 $11,400 $80,887 $8,819 $16,089 2022 $12,200 $103,294 2021 $11,600 $99,772 — — $20,467 $21,686 2020 $11,400 $94,899 $4,431 $17,779 2022 $12,200 $76,735 2021 $11,600 $74,264 — — $22,902 $20,430 Angelo M. Ninivaggi 2020 $11,400 $69,919 $520 $17,843 2022 $12,200 $71,738 Oliver Mihm 2021 — 2020 — — — — — — $20,410 — — $636 $389 $389 $636 $389 $389 $636 $389 $570 $634 $372 $529 $589 — — — — — — — — — — — — — — — — — $247,486 $234,872 $234,696 $125,655 $120,815 $117,584 $136,597 $133,447 $129,079 $112,471 $106,666 $100,211 $104,937 — — The amounts in the “Executive Flexible Perquisite Benefit” column, above, include the reimbursements under that program prior to the cessation date of the executive flexible perquisite on January 1, 2020. 55 TABLE OF CONTENTS Grants of Plan-Based Awards for Fiscal 2022 The table below sets forth information about equity awards that were granted to the named executive officers in fiscal 2022 under the Incentive Plan, as well as information about potential cash incentive awards dependent on quantifiable corporate performance and individual goals that those executive officers could have earned for fiscal 2022 performance under the VICP. As a result of corporate performance, cash incentive awards based on these criteria were earned under the VICP for fiscal 2022, as set forth under the “Non-Equity Incentive Compensation” column in the “Summary Compensation Table” above. We provide further information about potential compensation under the VICP and awards under the Incentive Plan in fiscal 2022, as well as additional information about those plans, following the table. Estimated Future Payouts Under Non-Equity Incentive Plan Awards Estimated Future Payouts Under Equity Incentive Plan Awards Name Award Type Grant Date Thre- shold ($)1 Target ($)1 Maximum ($)1 Thre- shold (#)1 Target (#)1 Maximum (#)1 VICP 12/15/2021 $0 $1,318,462 $2,636,923 — — — Todd P. Kelsey PSUs2 1/31/2022 — RSUs3 1/31/2022 — — — — — 5,705 24,790 43,875 VICP 12/15/2021 $0 $461,231 $922,462 — Patrick J. Jermain PSUs2 1/31/2022 — RSUs3 1/31/2022 — RSUs4 5/12/2022 — — — — — — — 1,460 6,340 11,220 — — — — — — — — — — — — — — — — — — — — — — — VICP 12/15/2021 $0 $527,327 $1,054,654 — PSUs2 1/31/2022 — RSUs3 1/31/2022 — — — — — 2,335 10,150 17,965 VICP 12/15/2021 $0 $351,077 $702,154 — PSUs2 1/31/2022 — RSUs3 1/31/2022 — — — — — 1,100 4,780 8,460 VICP 1/6/2022 $0 $337,700 $580,008 — Steven J. Frisch Angelo M. Ninivaggi Oliver Mihm All Other Stock Awards: Number of Shares of Stocks or Units (#) — — Grant Date Fair Value of Stock and Option Awards ($) — $2,001,819 26,770 $2,075,210 — — 6,850 6,250 — — — $511,975 $531,012 $506,750 — $819,611 10,960 $849,619 — — — $385,990 5,150 $399,228 — — — $491,753 PSUs2 1/31/2022 — RSUs3 1/31/2022 — — — — — 1,400 6,090 10,780 — — — 6,580 $510,082 1 2 3 4 Amounts in the rows labeled “VICP” reflect potential cash incentive payments for fiscal 2022. As a result of Plexus’ actual performance in fiscal 2022, overall cash incentive awards were earned based on corporate financial performance between the target and maximum payout levels, as reflected in the “Summary Compensation Table” and discussed under the caption “Compensation Discussion and Analysis—Annual Incentive Compensation (At Risk).” For more information regarding these awards, see the discussion under the caption “Compensation Discussion and Analysis—Long-Term Incentives.” The RSUs vest on January 31, 2025, assuming continued employment. See the discussion under the caption “Compensation Discussion and Analysis—Long-Term Incentives.” The RSUs vest on May 12, 2025, assuming continued employment. See the discussion below under the caption “Compensation Discussion and Analysis—Long-Term Incentives.” 56 TABLE OF CONTENTS Outstanding Equity Awards at Fiscal 2022 Year-End The following table sets forth information about Plexus stock awards held by the named executive officers that were outstanding as of October 1, 2022. No named executive officers held stock options at the end of fiscal 2022. Name Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($)1 Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)1 Mr. Kelsey Mr. Jermain Mr. Frisch Mr. Ninivaggi Mr. Mihm 32,5002 32,0703 26,7704 — — — 8,3102 8,2803 6,8504 6,2505 — — — 11,8202 11,7203 10,9604 — — — 6,4602 6,2103 5,1504 — — — 5,1702 5,1703 6,5804 — — — $2,845,700 $2,808,049 $2,343,981 — — — $727,624 $724,997 $599,786 $547,250 — — — $1,034,959 $1,026,203 $959,658 — — — $565,638 $543,748 $450,934 — — — $452,685 $452,685 $576,145 — — — — — — 55,5006 52,7157 43,8758 — — — — 14,1806 13,6057 11,2208 — — — 20,1806 19,2807 17,9658 — — — 11,0406 10,2057 8,4608 — — — 8,8406 8,5107 10,7808 — — — $4,859,580 $4,615,725 $3,841,695 — — — — $1,241,601 $1,191,254 $982,423 — — — $1,766,961 $1,688,157 $1,573,015 — — — $966,662 $893,550 $740,758 — — — $774,030 $745,136 $943,897 1 2 Based on the $87.56 per share closing price of our common stock on October 1, 2022, the last trading day of fiscal 2022. Consists of RSUs awarded in fiscal 2020 under the Incentive Plan. The RSUs vest on January 27, 2023, based on continued service through that date. 57 TABLE OF CONTENTS 3 4 5 6 7 8 Consists of RSUs awarded in fiscal 2021 under the Incentive Plan. The RSUs vest on January 25, 2024, based on continued service through that date. Consists of RSUs awarded in fiscal 2022 under the Incentive Plan. The RSUs vest on January 31, 2025, based on continued service through that date. Consists of RSUs awarded in fiscal 2022 under the Incentive Plan. The RSUs vest on May 12, 2025 based on continued service through that date. Consists of PSUs awarded in fiscal 2020 under the Incentive Plan. Vesting of 50% of the PSUs is based on a three-point annual average of the Company’s absolute economic return performance during the three year performance period, and vesting of the other 50% of the PSUs depends on the relative TSR of our common stock as compared to the Russell 3000 Index over a three year performance period that concludes on January 27, 2023. As of the end of fiscal 2022, the Company’s economic return performance was between the target and maximum levels; therefore, this portion of the award is reflected in the aggregate amount reported above for the fiscal 2020 PSUs at the maximum achievement level. The relative TSR of our common stock was between the target and maximum levels; therefore, this portion of the award is reflected in the aggregate amount reported above for the fiscal 2020 PSUs at the maximum achievement level. Consists of PSUs awarded in fiscal 2021 under the Incentive Plan. Vesting of 50% of the PSUs is based on a three-point annual average of the Company’s absolute economic return performance during the three year performance period, and vesting of the other 50% of the PSUs depends on the relative TSR of our common stock as compared to the S&P 400 Index over a three year performance period that concludes on January 25, 2024. As of the end of fiscal 2022, the Company’s economic return performance was between the target and maximum levels; therefore, this portion of the award is reflected in the aggregate amount reported above for the fiscal 2021 PSUs at the maximum achievement level. The relative TSR of our common stock was between the target and maximum levels; therefore, this portion of the award is reflected in the aggregate amount reported above for the fiscal 2021 PSUs at the maximum achievement level. Consists of PSUs awarded in fiscal 2022 under the Incentive Plan. Vesting of 50% of the PSUs is based on a three-point annual average of the Company’s absolute economic return performance during the three year performance period, and vesting of the other 50% of the PSUs depends on the relative TSR of our common stock as compared to the S&P 400 Index over a three year performance period that concludes on January 31, 2025. As of the end of fiscal 2022, the Company’s economic return performance was between the target and maximum levels; therefore, this portion of the award is reflected in the aggregate amount reported above for the fiscal 2022 PSUs at the maximum achievement level. The relative TSR of our common stock was between the target and maximum levels; therefore, this portion of the award is reflected in the aggregate amount reported above for the fiscal 2022 PSUs at the maximum achievement level. See “Compensation Discussion and Analysis—Elements and Analysis of Direct Compensation—Long- Term Incentives” for additional information regarding awards. 58 TABLE OF CONTENTS Option Exercises & Stock Vested in Fiscal 2022 The following table sets forth information about the Plexus stock options that were exercised by the named executive officers as well as the PSUs and RSUs that vested in fiscal 2022. Option Awards Stock Awards Number of Shares Acquired on Exercise (#) Value Realized on Exercise ($)1 Number of Shares Acquired on Vesting (#) Value Realized on Vesting ($)2 0 0 0 0 0 $0 $0 $0 $0 $0 80,026 22,708 30,291 18,386 14,064 $6,866,592 $1,948,377 $2,599,096 $1,577,601 $1,206,825 Name Mr. Kelsey Mr. Jermain Mr. Frisch Mr. Ninivaggi Mr. Mihm 1 2 Based on the difference between the exercise prices and sale prices on the date of exercise for stock options with the exception of shares that were held upon the exercise of options; in such case, the value realized on exercise is based on the difference between the exercise prices and the average of the high and low trading prices of the Company’s common stock on the Nasdaq Global Select Market on the exercise date. Based on the closing share price of the Company’s common stock on the vesting dates for PSUs and RSUs. Nonqualified Deferred Compensation in Fiscal 2022 Plexus does not maintain any defined benefit pension plans. Plexus’ only retirement savings plans are defined contribution plans—the 401(k) Plan for all qualifying U.S. employees, the SERP for executive officers (and certain other executives) and certain foreign plans. Since these are defined contribution plans, Plexus’ obligations are fixed at the time contributions are made, rather than Plexus being liable for future potential shortfalls in plan assets to cover the fixed benefits that are promised in defined benefit plans. The 401(k) Plan is open to all U.S. Plexus employees meeting specified service and related requirements. Under the plan, employees may voluntarily contribute up to 75% of their annual compensation, up to a maximum Code mandated limit of $20,500 ($27,000 if age 50 or older) in calendar year 2022; Plexus will match 100% of the first 4.0% of salary which an employee defers, up to $12,200 in calendar year 2022. There are several investment options available to participants under the 401(k) Plan, including a Plexus stock fund. Plexus maintains the SERP as an additional deferred compensation mechanism for its executives. Under the SERP, an executive may elect to defer compensation through the plan, and Plexus may credit the participant’s account with a discretionary employer contribution. Participants are entitled to the payment of deferred amounts and any earnings which may be credited thereon upon termination or retirement from Plexus, subject to the participants’ deferral elections and Section 409A of the Code. The SERP allows the investment of deferred compensation held on behalf of the participants into individual accounts and, within these accounts, into one or more designated mutual funds or investments, which are intended to mirror the options available under the 401(k) Plan; however, the investment choices in the SERP do not include Plexus stock. 59 TABLE OF CONTENTS The SERP also allows for discretionary Plexus contributions. As discussed in “Compensation Discussion and Analysis—Elements and Analysis of Other Compensation—Retirement Planning – Supplemental Executive Retirement Plan,” the Committee determined the current Company contribution to the SERP after reviewing a competitive analysis prepared by Willis Towers Watson. As a result, the discretionary contribution is 9% of the executive’s total targeted cash compensation. The Committee may also choose to make additional or special contributions from time to time; no such contributions were made in fiscal 2022 to the named executive officers. The following table includes information regarding contributions under the SERP. Since the 401(k) Plan is a tax-qualified plan generally available to all qualified U.S. employees, contributions on behalf of the executive officers and earnings in that plan are not included in this table; however, Company contributions under both the SERP and the 401(k) plan are among the items included in the “All Other Compensation” column in the “Summary Compensation Table” above. Name Mr. Kelsey Mr. Jermain Mr. Frisch Mr. Ninivaggi Mr. Mihm Executive Contributions in Last FY ($) Registrant Contributions in Last FY ($) Aggregate Earnings in Last FY ($) Aggregate Withdrawals/ Distributions ($) Aggregate Balance at Last FYE ($)1 — — — — — $210,738 $(437,877) $93,399 $(335,706) $103,294 $(426,499) $76,735 $71,738 $(186,090) $(165,990) — — — — — $2,085,092 $1,522,485 $1,562,335 $1,084,900 $426,242 1 Of the amounts reported in the “Aggregate Balance at Last Fiscal Year End” column, the following amounts were previously reported in the Summary Compensation Tables in the Company’s Proxy Statements for its prior annual meetings of shareholders: Mr. Kelsey—$1,307,173; Mr. Jermain—$1,193,203; Mr. Frisch—$1,330,097; Mr. Ninivaggi—$390,082; and Mr. Mihm—$0. 60 TABLE OF CONTENTS Employment Agreements & Potential Payments UPON TERMINATION OR CHANGE IN CONTROL This section provides information about specific agreements with our named executive officers relating to employment and post-employment compensation. Plexus does not generally have employment agreements with its executive officers. However, the Committee and the board continue to believe that it is important to have an employment agreement with our CEO to set forth the terms of their employment, to provide incentives for him to continue with the Company over the long term and to protect the Company from competition post-employment. The Company entered into an employment agreement with Mr. Kelsey in 2016 in connection with his appointment as our President and CEO (the “Employment Agreement”). All of our executive officers have change in control agreements that provide, in certain circumstances, for payments to the executive officers in the event of a change in control of Plexus. Employment Agreement with Mr. Kelsey The Employment Agreement between the Company and Mr. Kelsey specifies when the Company may terminate Mr. Kelsey for cause, as well as when Mr. Kelsey may leave the Company for good reason, and determines the compensation payable upon termination. The definitions of “cause” and “good reason” are substantially similar to those under the Company’s change in control agreements. If Mr. Kelsey is terminated for cause or voluntarily leaves without good reason, dies or becomes disabled, the Company is not required to make any further payments to Mr. Kelsey other than with respect to obligations accrued on the date of termination. If Mr. Kelsey’s termination is due to his death or disability, any previously granted equity awards without performance goals, such as RSUs, would automatically vest and any performance stock units would vest pro rata based on his length of service during the performance period and actual Company performance. If the Company terminates Mr. Kelsey without cause, or he resigns with good reason, Mr. Kelsey is entitled to receive his base salary for a two year period following his separation date (the “Separation Period”), a VICP cash incentive award keyed to the actual attainment of performance targets for the year in which Mr. Kelsey is involuntarily terminated, prorated based on the number of the days in the period in which he was employed, and a payment equal to 100% of his target annual VICP cash incentive award as in effect prior to the separation date on each December 15 during the Separation Period. In addition, Mr. Kelsey would also receive an amount equal to the maximum allowable Company contributions for a full plan year under the 401(k) Plan and the Company’s deferred compensation plans during the Separation Period. Mr. Kelsey would also be eligible to participate in the Company’s medical, dental and vision plans, subject to his payment of any premiums required by such plans, for a two year period following his separation; if a non-active employee is not eligible to participate in such plans, the Company will instead provide Mr. Kelsey with the cost of premium continuation coverage. In addition, Mr. Kelsey would receive a lump-sum payment equal to the value of continued participation in the Company’s other welfare plans, company car and other similar plans and arrangements for two years. Any payments triggered by a termination of employment are to be delayed until six months after termination, as required by Section 409A of the Code (except if such payment(s) qualify for an exception thereto). The Employment Agreement does not provide for any tax gross-up payments. 61 TABLE OF CONTENTS Mr. Kelsey would also receive accrued and vested benefits under the 401(k) Plan and the SERP, and payment for accrued but unused vacation, upon a termination of employment for any reason; those amounts are not included in “Potential Benefits Table” below. See “Nonqualified Deferred Compensation” above for further information. If Mr. Kelsey is terminated by Plexus without cause or he resigns with good reason, his equity awards would be treated in accordance with the terms of the Incentive Plan and predecessor plans, with Mr. Kelsey being deemed a continuing employee for purposes of applying the vesting and exercisability provisions of any equity awards held by him on his separation date that were granted more than one year prior to such date; see “Treatment of Equity Awards” below for more information. Under Mr. Kelsey’s Employment Agreement, the Company is protected from competition by Mr. Kelsey after the termination of his employment. Upon termination, Mr. Kelsey agrees to not interfere with the relationships between the active customers and suppliers, as well as employees, of the Company for two years, and to not compete with the Company over the same period. Further, Mr. Kelsey has agreed to related confidentiality requirements after the termination of his employment. Pursuant to his change in control agreement, Mr. Kelsey is eligible to receive three times salary plus benefits in the event of a termination of his employment in connection with a change in control. If both the Employment Agreement and the change in control agreement apply to a particular termination, Mr. Kelsey will receive benefits under whichever agreement provides the higher amount of benefits in the aggregate. As discussed below, the Company’s change in control agreements with its executive officers, including Mr. Kelsey, do not contain excise tax gross-up provisions. CHANGE IN CONTROL AGREEMENTS Plexus has change in control agreements with its executive officers and certain other key employees. Under the terms of these agreements, if there is a change in control of Plexus, as defined in the agreement, the executive officers’ authorities, duties and responsibilities shall remain at least commensurate in all material respects with those prior to the change in control. Their compensation may not be reduced, their benefits must be commensurate with those of similarly situated executives of the acquiring firm and their location of employment must not be changed significantly as a result of the change in control. Determination of Benefit Levels In general, the change in control agreements with our executive officers provide that, upon termination in the event of a change in control, executive officers will receive compensation equaling three times annual base salary plus targeted bonus, and an amount equal to a continuation of health and retirement benefits for that period. Certain other key employees also have change in control agreements on substantially the same terms, although generally with multipliers of one or two times annual base salary plus targeted bonus. In determining which employees should have change in control agreements, the Committee utilizes its guidelines, which focus on position, responsibilities and compensation level in order to minimize subjectivity. There are not any excise tax gross-up provisions in any of the change in control agreements. As discussed below, the change in control agreements with all participants allow for a reduction in payments under a “best net” approach, providing either the full amount of the total payment or an amount equal to the total payment reduced by an amount necessary to avoid adverse excise tax consequences to the executive officer. 62 TABLE OF CONTENTS In addition, under the Incentive Plan and its predecessor, upon a change in control, unvested awards will generally automatically vest for all award holders (for PSUs, the performance period will be deemed to have concluded as of the date of the change in control, performance will be calculated and vesting will be determined). The Committee reviews the benefit levels under these agreements annually. It is the Committee’s view that the level of benefits, combined with the “double trigger” requiring both a change in control and a termination of employment, as well as the elimination of excise tax gross-up provisions, provides an appropriate balancing of the interests of the Company, its shareholders and its executives. Benefit levels are believed to be in line with competitive standards and Plexus’ overall compensation policy and level of other benefits, as well as necessary and appropriate to attract and retain executive talent. Therefore, offering a package that is consistent with market practices is appropriate to help motivate executives to focus on the Company’s shareholders, even when the circumstance might jeopardize their employment. The Committee periodically reviews the scope and context of the change in control agreements. The Committee continues to believe that the change in control agreements will help motivate executive officers to respond appropriately, for the benefit of the Company and its shareholders, in the case of a proposed acquisition of the Company that they might perceive would jeopardize their employment. Operation of Change in Control Agreements Within 24 months after a change in control, in the event that any covered executive officer is terminated other than for cause, death or disability, or if an executive officer terminates his or her employment with good reason, Plexus is obligated to pay the executive officer, in a cash lump sum, an amount equal to three times (one to two times for other key employees) the executive officer’s base salary plus targeted cash incentive payment, and to continue retirement payments and certain other benefits. There are not any excise tax gross-up provisions in any of the change in control agreements. The agreements provide that a cap may apply if the total potential payments would be subject to any excise taxes imposed by Section 4999 of the Code because such potential payments would exceed three times base compensation determined under that section. In that case, total potential payments would be capped just below the excise tax threshold if the net uncapped amount that otherwise would have been retained by the executive officer (after such individual would pay the excise tax) would be less than the capped amount (with no imposed excise tax). The agreements do not preclude termination of the executive officer, or require payment of any benefit, if there has not been a change in control of Plexus, nor do they limit the ability of Plexus to terminate these persons thereafter for cause. Under our change in control agreements: • • • A termination for “cause” would occur if the executive officer willfully and continually fails to perform substantial duties or willfully engages in illegal conduct or gross misconduct which injures Plexus. After a change in control, an executive may terminate for “good reason” which would include: requiring the executive to perform duties inconsistent with the duties provided under his or her agreement; Plexus not complying with provisions of the agreement or requiring the executive to move; or any attempted termination of employment which is not permitted by the agreement. A change in control would occur in the event of a successful tender offer for Plexus, other specified acquisitions of a substantial portion of the Company’s outstanding stock, a merger or other business combination involving the Company, a sale of substantial assets of the Company, a contested director’s election or a combination of these actions followed by any or all of the following actions: change in management or a majority of the board of the Company or a declaration of a “change in control” by the board of directors. 63 TABLE OF CONTENTS TREATMENT OF EQUITY AWARDS None of the named executive officers’ held outstanding stock options as of the end of fiscal 2022. RSUs that have yet to vest are generally forfeited on termination of employment, but immediately vest upon a change in control. PSUs that have yet to vest are also generally forfeited on a termination of employment, but are prorated following the conclusion of the performance period on death or retirement prior to the end of such period; on a change in control, the performance period is deemed over and any PSUs earned based on performance during such period vest at that time. See “Outstanding Equity Awards at Fiscal Year End” above for information as to the named executive officers’ outstanding equity awards at October 1, 2022. SEVERANCE Plexus does not have employment agreements with its executive officers other than Mr. Kelsey. It also does not have a formal severance plan for other types of employment termination, except in the event of a change in control as described above. Although Plexus has a general practice of providing U.S. salaried employees with two weeks’ severance pay for every year worked (generally to a maximum of 13 weeks) in the case of termination without cause, actual determinations are made on a case-by-case basis. Therefore, whether and to what extent Plexus would provide severance benefits to the named executive officers, or other executive officers, upon termination (other than due to death, permanent disability or a change in control) would depend upon the facts and circumstances at that time. As such, we are unable to estimate the potential payouts under other employment termination scenarios. POTENTIAL BENEFITS TABLE The following table provides information as to the amounts which will be payable (a) to Mr. Kelsey under his Employment Agreement if he is terminated by Plexus or if he resigns, (b) to the named executive officers in the event of death or permanent disability, and (c) to the named executive officers in the event they were terminated without cause, or the executive terminated with good reason, in the event of a change in control. The payments are calculated assuming a termination as of October 1, 2022, the last day of our previous fiscal year. The table includes only benefits that would result from the stated event, not vested benefits that are payable irrespective of the reason for termination. 64 TABLE OF CONTENTS Executive Officer; Context of Termination Cash Payments1 Early Vesting of Stock Options2 Early Vesting of RSUs3 Early Vesting of PSUs4 Additional Retirement Benefits5 Other Benefits6 Total Mr. Kelsey – Termination by Plexus for Cause or Resignation without Good Reason Mr. Kelsey – Termination by Plexus without Cause or Resignation with Good Reason Mr. Kelsey – Death or Disability Mr. Kelsey – Change in Control — — — — — — — $6,077,000 — — — $445,876 $29,090 $6,551,966 —7 — $7,997,730 $3,122,351 — — $11,120,081 $7,107,000 — $7,997,730 $5,786,840 $668,814 $264,188 $21,824,572 Mr. Jermain –Death or Disability —7 — $2,599,656 $802,178 — — $3,401,834 Mr. Jermain – Change in Control $3,132,000 — $2,599,656 $1,485,893 $309,642 $270,714 $7,797,905 Mr. Frisch – Death or Disability —7 — $3,020,820 $1,166,719 — — $4,187,539 Mr. Frisch – Change in Control Mr. Ninivaggi – Death or Disability Mr. Ninivaggi – Change in Control $3,468,750 — $3,020,820 $2,209,139 $346,482 $272,100 $9,317,291 —7 — $1,560,319 $608,983 — — $2,169,302 $2,575,500 — $1,560,319 $1,124,270 $266,805 $283,589 $5,810,483 Mr. Mihm – Death or Disability —7 — $1,481,515 $553,548 — — $2,035,063 Mr. Mihm – Change in Control $2,520,000 — $1,481,515 $1,114,639 $249,909 $261,357 $5,627,420 1 2 3 Cash payments in the context of a termination in connection with change in control represent payments relating to the executives’ base salary and VICP cash incentive awards to the extent they would be paid after termination, based on the salary in effect at the end of fiscal 2022 and the target VICP cash incentive payment for fiscal 2022. Under the change in control agreements, this payment equals three years’ salary, as it was in effect at the time of termination, plus three times the targeted VICP compensation for the year of termination. As discussed above, pursuant to Mr. Kelsey’s employment agreement, if he is terminated without cause, or he resigns with good reason, he is entitled to receive his base salary for a two year period following his separation date and a pro-rated VICP cash incentive award for the year of involuntary termination. In addition, Mr. Kelsey would also receive two annual payments following his termination each equal to 100% of his target annual VICP cash incentive award as in effect prior to the separation date. All outstanding unvested stock options would become vested upon a change in control, as well as upon death or disability. No stock options are currently outstanding for the named executive officers. All outstanding unvested RSUs would become vested upon a change in control. The amount shown is the value of the unvested RSUs based on Plexus’ closing stock price of $87.56 per share on the last trading date of fiscal 2022. 65 TABLE OF CONTENTS 4 5 6 7 The performance period for outstanding PSUs would be deemed to end upon a change in control and vesting would be determined at that time. The amount shown is the value of all outstanding unvested PSUs, assuming target payout for fiscal year 2020 (TSR-based PSUs only), fiscal 2021 and fiscal 2022 performance as of the change in control date. Amounts reported for the Death and Disability scenario are pro-rated at target performance for the portions of the cycles unearned at the end of fiscal 2022. The amounts above were calculated using Plexus’ closing stock price of $87.56 per share on the last trading day of fiscal 2022. Under the change in control agreements, the Company would be required to continue payments to the 401(k) Plan and SERP for three years at the same level during the year preceding the change in control. Similar provisions for a termination without cause apply with respect to Mr. Kelsey’s Employment Agreement, with such obligations continuing for two years. This column represents the total amount of those payments. The executive officers would also receive accrued and vested benefits under the 401(k) Plan and the SERP, and payment for accrued but unused vacation, upon a termination of employment for any reason; those amounts are not included in the table. See “Nonqualified Deferred Compensation” for further information. The amounts in the context of a termination in connection with a change in control include continuing payments of health and welfare benefits, company car and other benefits for three years, as provided in the agreements. Mr. Kelsey would receive similar benefits for two years in the event he is terminated without cause, or he resigns with good reason, as described above. Excludes life or disability insurance payments from third party insurers. 66 TABLE OF CONTENTS PAY RATIO DISCLOSURE Pursuant to Item 402(u) of Regulation S-K, we are providing the following information for fiscal 2022, which includes a ratio of the total annual compensation of Mr. Kelsey to the median annual total compensation of all employees other than our CEO (the “Pay Ratio”): • CEO total annual compensation: $7,440,475 • Median employee total annual compensation: $15,075 • Ratio of CEO to median employee compensation: 494:1 The determination of the median employee was made in fiscal 2021. In determining our median employee, a list was prepared of all of our global employees (excluding the CEO) and their annual compensation as of October 2, 2021. Annual compensation included base pay, which was determined via payroll records and annualized for those employees who were not employed for a full year at the time of the calculation. For foreign employees, we used the then-current exchange rate in order to convert such amounts into U.S. dollars. For purposes of the Pay Ratio disclosed above, the total compensation of both the CEO and the median employee for fiscal 2022 were calculated based on the definition of total compensation for purposes of the Summary Compensation Table. SEC rules for identifying the median employee and calculating the pay ratio allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions. No employees were excluded when constructing the list of our global employees, but the Pay Ratio reported above may not be comparable to the pay ratio calculated by other companies, as other companies have different circumstances, employee populations and compensation practices, and may utilize different methodologies, exclusions, estimates and assumptions. 67 TABLE OF CONTENTS COMPENSATION & RISK During fiscal 2022, the Company reviewed its compensation policies, programs and procedures, including the incentives they create and mitigating factors that may reduce the likelihood of excessive risk taking, to determine whether they present a significant risk to the Company. Management assessed risk factors associated with specific compensation programs, as well as enterprise-level compensation risk factors, and a risk rating was assigned to each factor. The program-specific risk factors assessed included payout potential, payout as a percentage of total compensation, risk of manipulation, discretion to modify awards, overall plan design and market appropriateness. Enterprise-level risk factors evaluated included the balance between performance rewarded and the sustainability of that performance, the overall compensation mix, consistency between annual and long-term objectives as well as metrics, achievability of performance goals without undue risk-taking, the relationship of long-term awards to the Company’s pay philosophy, stock ownership requirements, the weighting and duration of performance metrics, the value of severance packages, the degree to which pay programs (including retirement benefits) and/or grants may be considered disproportionate, and the interaction of compensation plans with the Company’s financial performance and strategy. The Compensation Committee reviewed management’s evaluation process as well as its results, and determined that both the process and conclusions reached were reasonable. Based on this review, the Company has concluded that its compensation policies, programs and procedures are not reasonably likely to have a material adverse effect on the Company. 68 TABLE OF CONTENTS PROPOSAL 2 – ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION Board Recommendation An advisory proposal to approve the compensation of the Company’s named executive officers, as disclosed under the headings “Compensation Discussion and Analysis” and “Executive Compensation” FOR SEC rules require publicly-traded companies like Plexus to hold an advisory vote of their shareholders at least once every three years to approve the named executive officer compensation, as disclosed in the company’s proxy statement pursuant to Item 402 of Regulation S-K; Plexus discloses this information in “Compensation Discussion and Analysis” and “Executive Compensation” herein. Plexus currently holds these votes annually. As described in “Compensation Discussion and Analysis” above, we design our executive compensation programs to attract, motivate and retain the talent needed to lead a complex global organization, to drive global financial and operational success, to create an ownership mindset and to appropriately balance Company performance and individual contributions towards the achievement of success. A meaningful portion of our executive officers’ compensation is at risk, reflecting the Company’s emphasis on pay that reflects performance and drives long-term shareholder value. We believe the Company’s compensation program as a whole is well suited to promote the Company’s objectives in both the short and long term. Accordingly, the following resolution will be submitted to our shareholders for approval at the annual meeting: “RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.” As an advisory vote, this proposal is not binding on the Company. However, the Compensation Committee, which is responsible for designing and administering the Company’s executive compensation programs, values the opinions expressed by our shareholders, and will consider the outcome of the vote when making future compensation decisions on the Company’s executive compensation programs. The board unanimously recommends that shareholders vote FOR approval of the compensation of the Company’s named executive officers as described in this proxy statement. 69 TABLE OF CONTENTS PROPOSAL 3 – ADVISORY PROPOSAL RELATED TO FREQUENCY OF FUTURE ADVISORY VOTES Board Recommendation An advisory proposal related to the frequency of future advisory votes to approve the compensation of the Company’s named executive officers. 1 Year SEC rules require publicly-traded companies to hold advisory votes at least every six years related to the frequency of future advisory votes to approve named executive officer compensation. Advisory votes to approve named executive officer compensation may be held every one, two or three years. At the fiscal 2017 annual meeting, shareholders voted in favor of advisory votes every year. For the reasons discussed below, the board is recommending that Plexus continue to hold such votes annually. Plexus’ executive compensation programs are designed to drive long-term shareholder value. We believe that advisory votes to approve named executive officer compensation should continue to be held every year so that shareholders may annually express their views on our programs. Plexus considers this input as it assesses whether these programs are appropriately motivating employees and driving shareholder value. Similar to the advisory vote to approve named executive officer compensation, this proposal is also an advisory vote and is not binding on the Company. However, as noted above, Plexus values the opinions expressed by its shareholders, and will consider the outcome of the advisory votes to approve named executive officer compensation itself and on the frequency of future advisory votes when making decisions on the frequency of future votes. The board unanimously recommends that shareholders vote FOR the holding of future advisory votes to approve the Company’s named executive officer compensation EVERY YEAR (i.e., “1 Year”). 70 TABLE OF CONTENTS CERTAIN TRANSACTIONS Plexus has a written policy requiring that transactions, if any, between Plexus and its executive officers, directors or employees (or related parties) must be on a basis that is fair and reasonable to the Company and in accordance with Plexus’ Code of Conduct and Business Ethics and other policies. Plexus’ policy focuses on related party transactions in which its insiders or their families have a significant economic interest; while the policy requires disclosure of all transactions, it recognizes that there may be situations where Plexus has ordinary business dealings with other large companies in which insiders may have some role, but little, if any, stake in a particular transaction. Although these transactions are not prohibited, any such transaction involving an executive officer, director or related party must be approved by either a disinterested majority of the board of directors or by the Audit Committee. Jacob Foate, the adult son of Mr. Foate, Plexus’ Non-Executive Chair, began working for Plexus in fiscal 2019 and is currently the Global Information Security and ESG Management Systems Director. His annual base salary is $187,000. Andy Kelsey, the adult son of Todd Kelsey, Plexus’ Chief Executive Officer, began working for Plexus in 2015 and is currently serving as the Sr. Site Director for our Livingston and Penang Design Centers. His annual base salary is $193,000. Jacob and Andy participate in the Company’s incentive plans, as well as its other benefit plans, on the same basis as other salaried employees. Please see “Corporate Governance–Director Independence” for a discussion of certain transactions and relationships that the board considered when determining the independence of Plexus’ directors. There were no other transactions in an amount or of a nature that were reportable under applicable SEC rules in fiscal 2022. 71 TABLE OF CONTENTS REPORT OF THE AUDIT COMMITTEE The Audit Committee of the board of directors, which was established in accordance with Section 3(a)(58) (A) of the Securities Exchange Act of 1934, oversees and monitors the participation of Plexus’ management and independent auditors throughout the financial reporting process and approves the hiring and retention of, and fees paid to, the independent auditors. The Audit Committee also generally reviews other transactions between the Company and interested parties that may involve a potential conflict of interest. No member of the Audit Committee is employed by, or has any other material relationship with, Plexus. The members are all “independent directors” as defined in Rule 5605(a)(2) of the listing standards applicable to the Nasdaq Global Select Market and relevant SEC rules. The Plexus board of directors has adopted a written charter for the Audit Committee, and the current version is available on Plexus’ website. In connection with its function to oversee and monitor the financial reporting process of Plexus, and in addition to its quarterly review of interim unaudited financial statements, the Audit Committee has done the following: • • • Reviewed and discussed the audited financial statements for the fiscal year ended October 1, 2022, with Plexus management; Discussed with PwC, Plexus’ independent auditors, those matters which are required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC; and Received the written disclosure and the letter from PwC required by the applicable standards of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with PwC its independence. Based on the foregoing, the Audit Committee recommended to the board of directors that the audited financial statements be included in Plexus’ annual report on Form 10-K for the fiscal year ended October 1, 2022. The Audit Committee further confirmed the independence of PwC. MEMBERS OF THE AUDIT COMMITTEE: Rainer Jueckstock, Chair Randy J. Martinez Peter Kelly Karen M. Rapp 72 TABLE OF CONTENTS PROPOSAL 4 – RATIFY INDEPENDENT AUDITORS Ratify the selection of PricewaterhouseCoopers LLP as our independent auditors for fiscal 2023. FOR Board Recommendation PwC has served as Plexus’ independent auditors since at least 1985. Subject to ratification by shareholders, the Audit Committee intends to reappoint the firm of PwC as independent auditors to audit the financial statements of Plexus for fiscal 2023. In making its decision to reappoint PwC for fiscal 2023, the Audit Committee considered the qualifications, performance and independence of PwC and the audit engagement team, the quality of its discussions with PwC and the fees charged for the services provided. Although shareholder ratification of the independent auditors is not required by our bylaws or otherwise, we are submitting this matter for ratification to permit shareholders to participate in this important decision. If shareholders fail to ratify the selection of PwC as the Company’s independent auditors for fiscal 2023, the Audit Committee will reconsider the selection, although it will not be required to select a different independent auditor. Representatives of PwC are expected to participate at the annual meeting of shareholders to respond to questions and make a statement if they desire to do so. Fees and Services Fees (including reimbursements for out-of-pocket expenses) paid to PwC for services in the last two fiscal years were as follows: 2021 2022 Audit fees: 1,644,964 1,697,843 Audit-related fees: Tax fees: All other fees: — — — — — — The above amounts relate to services provided in the indicated fiscal years, irrespective of when they were billed. Audit fees relate to Plexus’ annual integrated audit and quarterly professional reviews. The Audit Committee considered the compatibility of the non-audit services provided by PwC with the maintenance of that firm’s independence. The Audit Committee generally approves all engagements of the independent auditor in advance, including approval of the related fees. The Audit Committee approves an annual budget (and may from time to time approve amendments thereto), which specifies projects and the approved levels of fees for each. To the extent that items are not covered in the annual budget or fees exceed the budget, management must have such items approved by the Audit Committee or, if necessary between Audit Committee meetings, by the Audit Committee chair on behalf of the Audit Committee. There were no services in fiscal 2021 or 2022 that were not approved in advance by the Audit Committee under this policy. 73 TABLE OF CONTENTS Householding & Solicitation A copy (without exhibits) of Plexus’ annual report to the SEC on Form 10-K for the fiscal year ended October 1, 2022, will be provided without charge to each record or beneficial owner of shares of Plexus’ common stock as of December 9, 2022, on the written request of that person directed to: Shawn Harrison, VP – Communications and Investor Relations, Plexus Corp., One Plexus Way, P.O. Box 156, Neenah, Wisconsin 54957-0156. See also the Notice page of this proxy statement. In addition, copies are available on Plexus’ website at www.plexus.com under the link titled “Investors,” then “Financial Info.” To save printing and mailing costs, in some cases only one notice, annual report and/or proxy statement will be delivered to multiple holders of securities sharing an address unless Plexus has received contrary instructions from one or more of those security holders. Upon written or oral request, we will promptly deliver a separate copy of the annual report or proxy statement, as applicable, to any security holder at a shared address to which a single copy of the document was delivered. You may request additional copies by written request to the address set forth in the paragraph above or as set forth on the first page of this proxy statement. You may also contact Mr. Harrison at that address or at 1.920.969.6000 if you wish to receive a separate annual report and/or proxy statement in the future, or if you share an address with another security holder and wish for delivery of only a single copy of the annual report and/or proxy statement if you are currently receiving multiple copies. This solicitation is being made on behalf of Plexus by its board of directors. Plexus will pay the expenses in connection with the solicitation of proxies. Upon request, Plexus will reimburse brokers, dealers, banks and voting trustees, or their nominees, for reasonable expenses incurred in forwarding copies of the proxy materials and annual report to the beneficial owners of shares which such persons hold of record. Plexus will solicit proxies by mailing a Notice of Internet Availability of Proxy Materials to all shareholders; paper copies of the proxy materials will be sent upon request as provided above as well as in the Notice of Internet Availability of Proxy Materials. Proxies may be solicited in person, or by telephone, e-mail or facsimile, by officers and regular employees of Plexus who will not be separately compensated for those services. SAFE HARBOR AND FAIR DISCLOSURE STATEMENT The statements contained in this proxy statement that are not historical facts (such as statements in the future tense and statements including believe, expect, intend, plan, anticipate, goal, target and similar terms and concepts), including all discussions of periods which are not yet completed, are forward-looking statements that involve risks and uncertainties. These risks and uncertainties include the evolving effect, which may intensify, of COVID-19 on our employees, customers, suppliers, and logistics providers, including the impact of governmental actions being taken to curtail the spread of the virus, and statements about our ESG efforts and strategies. Other risks and uncertainties are described in our other SEC filings, particularly within Risk Factors in our fiscal 2022 Form 10-K and any subsequently filed Form 10-Q. By order of the Board of Directors Neenah, Wisconsin December 16, 2022 Angelo M. Ninivaggi Executive Vice President, Chief Administrative Officer, General Counsel and Secretary 74 TABLE OF CONTENTS TABLE OF CONTENTS 

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