DEF: Plexus Corp. Details Strong Fiscal 2025, Governance Ahead of Annual Meeting

Plexus Corp. outlines robust fiscal 2025 performance, executive compensation, and corporate governance practices in its definitive proxy statement for the upcoming February 2026 Annual Meeting.

Summary

• Plexus Corp. reported fiscal 2025 revenue of $4.03 billion, diluted earnings per share of $6.26, and a Return on Invested Capital (ROIC) of 14.6%.
• The company employs over 20,000 team members globally across 26 facilities in 7 countries.
• Shareholders will vote on the election of 10 directors, an advisory proposal to approve executive compensation, and the ratification of PricewaterhouseCoopers LLP as independent auditors for fiscal 2026 at the Annual Meeting on February 18, 2026.
• Executive compensation for fiscal 2025 saw total payments to named executive officers under the Variable Incentive Compensation Plan (VICP) ranging from 110% to 114% of target.
• Performance Share Units (PSUs) granted in 2022, based on relative Total Shareholder Return (TSR), paid out at 150.0% of target (84.9 percentile of S&P 400 Index).
• PSUs granted in early 2023, based on average economic return, paid out at 138.0% of target, with an average economic return of 3.4% for the three-year period.
• The CEO's total annual compensation for fiscal 2025 was $10,839,258, resulting in a pay ratio of 639 to the median employee's annual compensation of $16,963.
• Plexus achieved over 10% global absolute Scope 1 & 2 emissions reduction and over 30% global waste-to-landfill intensity reduction in 2025.
• The company completed workplace pay equity analyses for all countries with physical facilities and assessed over 50% of its global supply chain spend on sustainability criteria.
• Plexus was named 'Manufacturer of the Year Mega Category' by Wisconsin Manufacturers & Commerce and listed as one of 'America's Greatest Workplaces in Manufacturing 2025' by Newsweek.

Sentiment

Score: 8

Explanation: The filing presents strong fiscal 2025 financial performance, robust corporate governance practices, and significant achievements in sustainability. Executive compensation is well-aligned with performance, and the company has received external recognition as a top workplace. While a proxy statement, the content reflects a well-managed and performing company.

Positives

• Strong fiscal 2025 financial performance with $4.03 billion in revenue, $6.26 diluted EPS, and 14.6% ROIC.
• Executive compensation payouts exceeded target, with VICP at 110%-114% of target, and PSUs vesting at 150% (TSR) and 138% (economic return) of target.
• Robust corporate governance practices include 80% independent directors, an independent Lead Director, annual director elections, and majority voting with a director resignation policy.
• Significant advancements in sustainability, including exceeding carbon emissions neutrality goals with over 10% Scope 1 & 2 emissions reduction and over 30% waste-to-landfill intensity reduction.
• Commitment to human capital development, evidenced by completed workplace pay equity analyses and substantial global volunteer hours (32,000+) and community donations ($1 million+).
• All named executive officers are in compliance with stock ownership guidelines, aligning management interests with shareholders.
• A new clawback policy was adopted in early fiscal 2024, enhancing accountability and compliance with SEC and Nasdaq regulations.
• Comprehensive cybersecurity governance and oversight are in place, including a 24x7x365 Cybersecurity Operations Center and periodic incident response plan testing.
• The company received external recognition as 'Manufacturer of the Year Mega Category' and one of 'America's Greatest Workplaces in Manufacturing 2025'.

Negatives

• Revenue performance for the Variable Incentive Compensation Plan (VICP) in fiscal 2025 was between the threshold and target levels, not reaching the maximum payout for that component.
• One director, Ms. Wuamett, has until 2028 to meet the required stock ownership guidelines.
• Non-recurring charges of $4.683 million were excluded from the ROIC calculation for VICP awards, which could be seen as an adjustment to performance metrics.

Risks

• Information Technology & Security Risk Management, including cybersecurity, data privacy, business continuity, malware, regulatory compliance, and data management.
• Risks related to compensation, leadership development, and succession planning, which are overseen by the Compensation Committee.
• Risks associated with ethics and compliance, reviewed by the Governance Committee.
• Risks associated with governance and sustainability matters, including those caused by climate change, geopolitical dynamics, social unrest, and related market disruption.
• Potential for excessive risk-taking incentivized by compensation programs, which the company assesses and mitigates through its risk oversight framework.

Future Outlook

The company plans to adjust its equity allocation formula for fiscal 2026 executive awards to 60% Performance Share Units (PSUs) and 40% Restricted Stock Units (RSUs), with PSUs weighted 40% on average economic return and 20% on relative total shareholder return. Director compensation, including base retainers and RSU grants, will increase effective January 1, 2026. The Compensation Committee will evaluate the relative TSR performance of fiscal 2023 PSUs at its February 2026 meeting. Shareholder proposals for the 2027 annual meeting are due by August 24, 2026, with the meeting tentatively scheduled for February 17, 2027.

Management Comments

• 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.
• People are the heart of who we are and what we do; our success depends on the well-being and inclusive engagement of each individual on our team.
• We are proud of our culture and the recognition we have received over the years as a great place to work.
• The Company continues to emphasize annual and long-term incentive opportunities as a predominant 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 Companys WACC.

Industry Context

Plexus operates in the highly complex and regulated Aerospace/Defense, Healthcare/Life Sciences, and Industrial sectors, providing design, manufacturing, and service solutions. The company's executive compensation benchmarking against a peer group of similar publicly traded companies (e.g., Amkor Technology, Flex Ltd., Jabil Inc.) reflects competitive practices in the manufacturing and technology industries. The strategic shift in executive equity award allocation towards a higher percentage of PSUs (60%) aims to further align executive incentives with long-term shareholder value creation, a trend observed across industries to motivate and retain top talent. The company's strong focus on sustainability, including emissions reduction and supply chain assessments, positions it favorably within an emerging climate economy and addresses increasing market and regulatory demands for responsible business practices.

Comparison to Industry Standards

• Executive compensation is benchmarked against a peer group including Amkor Technology, Flex Ltd., Jabil Inc., and Sanmina Corporation, with a general aim for the 50th percentile of market data, indicating a competitive but not leading compensation strategy.
• Change in control agreements for executive officers, providing three times annual base salary plus targeted bonus and continuation of benefits, are stated to be 'in line with competitive standards' and 'necessary and appropriate to attract and retain executive talent'.
• The use of relative Total Shareholder Return (TSR) against the S&P 400 Index for Performance Share Units (PSUs) is a common practice among publicly traded companies to measure performance against a broad market benchmark.
• The company's commitment to global standards of employment, the UN's Sustainable Development Goals, and the Responsible Business Alliance aligns with growing industry expectations for Environmental, Social, and Governance (ESG) practices.
• The board's policy limiting directors to serving on no more than three additional public company boards is a common 'overboarding' best practice to ensure adequate time commitment.

Corporate Governance

Related Party Transactions

• Andy Kelsey, the adult son of Todd Kelsey (President & CEO), is employed as a Senior Director of Global Product Development with an annual base salary of $225,060 and participates in company incentive and benefit plans on the same basis as other salaried employees. This transaction was approved by a disinterested majority of the board or the Audit Committee.
• Ms. Wuamett serves as an executive officer of NXP Semiconductors N.V., which is a supplier to Plexus. The board determined this relationship did not affect her independence.
• Ms. Rapp was an executive officer of National Instruments Corp. and is a director of Microchip Technology, Inc., both of which are suppliers to Plexus. The board determined these relationships did not affect her independence.

Stakeholder Impact

• **Shareholders**: Direct impact through voting on key governance matters (director elections, executive compensation, auditor ratification). The company's strong financial performance and governance practices aim to maximize shareholder value and align executive interests with long-term returns.
• **Employees (Team Members)**: Over 20,000 global team members are impacted by the company's commitment to global employment standards, human rights policy, UN Sustainable Development Goals, and Responsible Business Alliance. Initiatives like workplace pay equity analyses and a focus on culture, development, and inclusive engagement aim to attract and retain talent.
• **Customers**: The company's vision to 'help create the products that build a better world' and mission to be 'the leader in highly complex products and demanding regulatory environments' indicates a focus on delivering innovative solutions and exceeding customer expectations.
• **Suppliers**: The company's sustainability efforts include assessing over 50% of its global supply chain spend on sustainability criteria, indicating a focus on responsible sourcing and partnerships.
• **Local Communities**: Significant contributions through over 32,000 paid global volunteer hours and over $1 million donated globally through the Plexus Community Foundation, demonstrating a positive social impact.

Next Steps

• Shareholders will vote on the election of 10 directors at the Annual Meeting on February 18, 2026.
• Shareholders will cast an advisory vote on executive compensation at the Annual Meeting on February 18, 2026.
• Shareholders will ratify the selection of PricewaterhouseCoopers LLP as independent auditors for fiscal 2026 at the Annual Meeting on February 18, 2026.
• The Compensation Committee plans to evaluate the performance of the relative TSR portion of fiscal 2023 PSUs at its February 2026 meeting.
• New director compensation rates, including base retainers and RSU grants, will become effective on January 1, 2026.
• Fiscal 2026 equity awards to executive officers will be granted using a revised allocation formula of 60% PSUs and 40% RSUs.
• Shareholder proposals for the 2027 annual meeting must be received by August 24, 2026, for inclusion in proxy materials.

Key Dates

Recommendation

This filing is a definitive proxy statement, primarily providing information for the upcoming annual shareholder meeting, including details on corporate governance, executive compensation, and historical fiscal 2025 performance. While the fiscal 2025 results and executive compensation payouts were strong, this information is largely historical and likely already factored into the stock price. The document does not contain new material financial guidance, strategic shifts, or unforeseen events that would warrant a 'buy' or 'sell' recommendation based solely on its content. The focus is on routine corporate actions and transparency, suggesting a 'hold' position for investors awaiting more forward-looking operational or financial news.

Keywords

Plexus Corp, SEC filing, Proxy Statement, Corporate Governance, Executive Compensation, Sustainability, Financial Performance, Board of Directors, Shareholder Meeting, Risk Management, Cybersecurity, ESG, Manufacturing, Electronics Manufacturing Services