DEF 14A 1 lflex2021_def14a.htm FLEX LTD. - DEF 14A FLEX LTD. - DEF 14A

UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(A) of the Securities
Exchange Act of 1934

 

 Filed by the Registrant  Filed by a party other than the Registrant

 

Check the appropriate box:
Preliminary Proxy Statement
CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material under §240.14a-12

 

FLEX LTD.

 

(Name of Registrant as Specified in its Charter)

 

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

 

Payment of Filing Fee (Check the appropriate box):
No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1) Title of each class of securities to which transaction applies:
  (2) Aggregate number of securities to which transaction applies:
  (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is calculated and state how it was determined):
  (4) Proposed maximum aggregate value of transaction:
  (5) Total fee paid:
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1) Amount previously paid:
  (2) Form, Schedule or Registration Statement No.:
  (3) Filing Party:
  (4) Date Filed:
 

 

Message from
our CEO

 

“This year, we showed the power of our company, our culture, and our community working together to not just endure, but to make a difference.”

Revathi Advaithi

 

 

CEO

 

June 25, 2021

 

 

Dear fellow shareholder,

 

Over the past year, we have all witnessed unprecedented events and change that touched every person and every industry. In times of crisis, the understandable response is to focus on weathering the storm. I have long believed it is in the toughest situations that we find what we are truly made of, and the culture is tested and shines through. I am very proud of what we accomplished this year. We showed the power of our company, our culture, and our community working together to not just endure, but to make a difference.

 

As the world changed, Flex evolved and helped our customers succeed. When our customers urgently needed help to expand the global availability of critical medical devices, we delivered. When our customers needed to rapidly adapt digital infrastructure to support a tectonic shift in workloads to enable work and education from home, we delivered. As economies began to recover but were faced with new global supply chain and logistical disruptions, again we delivered.

 

We are certainly not immune to the impact of all these extraordinary events. It has been difficult, requiring great effort and sacrifice, but we have proved our resilience and adaptability. We did not stop there, however. Upholding our values, through it all, we supported our employees, their families and communities, particularly in geographies that were exceptionally impacted by COVID-19. Not losing sight of our longer-term responsibilities, we made significant progress on our environmental, social, and governance efforts, improving rankings and taking on new challenges.

 

I want to sincerely thank our Flex colleagues for their incredible dedication and contributions in not only getting us through this very unusual year but delivering our record financial results. Our Flex teams showed empathy and compassion as we helped each other navigate this very difficult pandemic. We saw our employees live our new values every day and strengthen our inclusive, high-performing culture through action. Our efforts to reinvigorate our culture are taking root and I believe we are on the right path to making our culture a key differentiator for Flex. I also want to thank our customers and suppliers for their trust and partnership and our shareholders who have stood by us and believe in the potential of Flex.

 

Staying focused in uncertain times

 

Last year, we outlined our Flex Forward strategy to align our purpose to make great products for our customers that create value and improve people’s lives. Flex touches many industries that are currently going through rapid evolution, which plays to our strengths and positions us to help our customers successfully navigate their dynamic environments.

 

From advanced medical and industrial solutions, to the electric-vehicle and autonomous mobility revolutions, the expansion of cloud and 5G communications, and to a whole new generation of technology and lifestyle convergence, our targeted markets are large, diverse and have strong, long-term secular drivers. To help our customers compete, we not only need to deliver on our current projects but also continue to be at the forefront of technology.

 

Real transformation is difficult in the best of times, but we persevered through the year, leading to progress across the four pillars of our strategy: improving our portfolio mix; continuing to build on our advanced technology and manufacturing capabilities; improving operational efficiency and execution; and adapting our systems to leverage the power of data and intelligence.

 

Our progress this year was validated through record results. In fiscal year 2021, we achieved record full year adjusted gross and operating margins, as well as record level adjusted earnings per share. We also generated the highest level of free cash flow in seven years. It is still early in our transformation; however, the trend is clear: Flex is executing well against its long-term strategy and delivering on our commitments to shareholders.

 

Taking a balanced approach

 

With approximately 160,000 employees at over 100 facilities in approximately 30 countries, taking a balanced stakeholder approach is an operational and moral imperative. It has long been foundational in Flex’s culture to be a leader in environmental, social, and governance issues, given the fact we produce so many diverse products and impact so many people around the world. Even while dealing with the day-to-day challenges of last year, we certainly did not lose sight of our long-term commitment to creating a sustainable future.

 

During extreme times such as we have seen over the last year, this meant making sure our employees and their families were safe both at work and at home. We initiated our Flex Guard mask production program at the beginning of the year, and, one year later, we’ve made over 100 million masks, keeping all of our employees covered daily, while also donating almost 22 million masks to families and local communities. Some of the situations that emerged this past year required even more urgent responses, such as sending care packages to employees’ homes to provide necessities in short supply during extreme lock-down events, or ensuring our employees and their families received the acute medical care they needed, despite chaotic regional outbreaks.

 

We also made progress this year on our goals to improve employees’ day-to-day lives and further their career development. We improved the flexibility and convenience of our health and wellness programs, adding additional on-site health centers in some of our major factories. We rolled out a new e-learning education platform to provide more opportunities for self and career betterment. We continued to expand our access to emotional and mental health programs and reinvigorated our employee resource groups (ERGs) as one of the initiatives to help promote a sense of belonging inside Flex.

 

Flex achieved a number of sustainability milestones this year, building on our nearly 20-year foundation. Flex was included for the second year in a row in the S&P Sustainability yearbook. Sustainalytics ranked Flex #1 in the electronics manufacturing sub-industry category, and we were ranked in the top 50 globally out of approximately 13,000 companies overall. We continued our progress in creating circular economy solutions, which has enabled our customers to improve their lifecycle management, and we developed new revenue streams to help further our sustainability progress.

 

Guided by our purpose and values, we introduced our new 2030 sustainability goals this year. Flex was accepted into the rigorous Science Based Targets initiative to dramatically lower green-house gas emissions. We set new targets for reducing waste and water usage by 2025. We will continue to improve employee safety and certify all of our manufacturing and logistics sites with ‘Responsible Business Alliance factory of choice’ status by 2025. We will also further expand employee training and wellness programs. A full list of our 2030 sustainability goals can be found on our company’s website.

 

Looking toward the future

 

We have outlined our strategy, made significant progress on improving operational efficiencies and systems, and improved our mix by winning and expanding into higher-value businesses and driven the right kind of growth where our capability is valued by customers. Over time, this strategy will continue to drive growth, improve margins, lead to strong cash flow generation, and grow shareholder value.

 

As I look to fiscal year 2022 and beyond, I remain very optimistic and confident in our future. While we recognize that there are near-term challenges (including global component and logistical issues and ongoing regional outbreaks of COVID-19), the underlying near and longer-term demand indicators remain strong.

 

The fundamentals in each of our target markets also remain favorable, as do general trends towards advanced outsourced manufacturing. Through multiple crises, companies are realizing the value of our global supply-chain and manufacturing capabilities. We continue to see increasing product complexity as a driver of our business, as many traditional industries strive to incorporate more features utilizing leading-edge technologies, including expanded capabilities around connectivity, data collection, and compute. We are experiencing new business wins as well as deepening relationships with current customers through the differentiation of our technology, global scale, talented workforce, experience and customer trust. These successes are creating a virtuous cycle that will continue to drive Flex forward.

 

There is certainly still more work to do, but this year’s progress is a testament to the potential of the Flex model and the strength of our culture. I believe in our strategy, I believe in our people, and I am excited to continue on our transformative path.

 

 

 

FLEX LTD.

 

(Incorporated in the Republic of Singapore)

 

(Company Registration Number 199002645H)

 

 

Wednesday

August 4, 2021

 

9:00 a.m., Pacific time

 

Flex Ltd.

6201 America Center Drive,

San Jose, CA 95002, U.S.A.

 

Vote via Internet
at www.proxyvote.com
    
     
Vote by Mail
Sign and return your proxy card in the
postage-paid envelope
 
     
Vote in Person at the Meeting
  on August 4, 2021 at 9:00 a.m., Pacific time
 

 

Please refer to the enclosed proxy materials or the information forwarded by your bank or other holder of record to see which voting methods are available to you.

 

 

 

Notice

of Annual General
Meeting of Shareholders

 

To Be Held on August 4, 2021

 

To Our Shareholders:

 

You are cordially invited to attend, and notice is hereby given of, the annual general meeting of shareholders of Flex Ltd., which will be held at our offices located at 6201 America Center Drive, San Jose, CA 95002, U.S.A., at 9:00 a.m., Pacific time, on August 4, 2021, for the purposes summarized below and described in more detail in the accompanying proxy statement.

 

Special notice regarding COVID-19. The health and safety of our employees, shareholders, and community members is of utmost importance to us. In consideration of current public health concerns, we ask that you follow recommended guidance, mandates, and applicable executive orders from federal and state authorities, particularly as they relate to social distancing and attendance at public gatherings. If you are not feeling well or think you may have been exposed to COVID-19, we ask that you vote by proxy for the 2021 annual general meeting. Should further developments with the COVID-19 situation necessitate that we change any material aspects of the annual general meeting, we will make public disclosure of such changes. We thank you for your cooperation as we prioritize the safety of our community and our shareholders.

 

We urge you to read the entire proxy statement carefully before voting. Unless the context requires otherwise, references in this notice and the proxy statement to “Flex,” “the Company,” “we,” “us,” “our” and similar terms mean Flex Ltd. and its subsidiaries. Flex is incorporated under the Companies Act (Chapter 50) of Singapore, which we refer to as the “Singapore Companies Act” or the “Companies Act.”

 


 

      2021 Proxy Statement    5
 

Important Notice Regarding Electronic Availability of Proxy Statement and Annual Report

 

We are pleased to furnish proxy materials to our shareholders on the Internet, as permitted by Securities and Exchange Commission rules. On or about June 25, 2021, we will mail to our shareholders (including all of our registered shareholders) a Notice of Availability of Proxy Materials on the Internet (referred to as the Notice) containing instructions on how to: (i) access the proxy statement and our annual report, (ii) submit their proxies via the Internet, and (iii) request a printed copy of our proxy materials.

 

Proxy Voting Matters

 

You may revoke your proxies at any time before they are voted. Registered shareholders who are present at the meeting may revoke their proxies and vote in person or, if they prefer, may abstain from voting in person and allow their proxies to be voted.

 

Voting Matters at the Annual General Meeting

 

We are asking shareholders to vote on five proposals at the meeting:

 

To re-elect all of our eleven Directors nominated for re-election (Proposal No. 1);
To approve the re-appointment of Deloitte & Touche LLP as our independent auditors for the 2022 fiscal year and to authorize the Board of Directors, upon the recommendation of the Audit Committee, to fix their remuneration (Proposal No. 2);
To approve, on a non-binding, advisory basis, our executive compensation (Proposal No. 3);
To approve a general authorization for the Board of Directors to allot and issue ordinary shares (Proposal No. 4); and
To approve a renewal of the Share Purchase Mandate permitting Flex to purchase or otherwise acquire its own issued ordinary shares (Proposal No. 5).

 

Resolutions Proposed for Shareholder Approval as Ordinary Business

 

Each of the resolutions proposed for approval by our shareholders is as follows:

 

1. To re-elect each of the following Directors, who will retire pursuant to Article 94 of our Constitution, to the Board of Directors:
  (a) Revathi Advaithi;
  (b) Michael D. Capellas;
  (c) John D. Harris II;
  (d) Michael E. Hurlston;
  (e) Jennifer Li;
  (f) Erin L. McSweeney;
  (g) Marc A. Onetto;
  (h) Willy C. Shih, Ph.D.;
  (i) Charles K. Stevens, III;
  (j) Lay Koon Tan; and
  (k) William D. Watkins.
2. To consider and vote upon a proposal to re-appoint Deloitte & Touche LLP as our independent auditors for the fiscal year ending March 31, 2022, and to authorize our Board of Directors, upon the recommendation of the Audit Committee of the Board of Directors, to fix their remuneration.

 

      2021 Proxy Statement    6
 

Resolutions Proposed for Shareholder Approval as Special Business

 

Each of the resolutions proposed for approval by our shareholders is shown below:

 

3. To consider and vote on the following non-binding, advisory resolution:
 

“RESOLVED THAT, the shareholders of Flex approve, on a non-binding, advisory basis, the compensation of the Company’s named executive officers, as disclosed pursuant to Item 402 of SEC Regulation S-K, including the Compensation Discussion and Analysis and the compensation tables and related disclosures contained in the section of the accompanying proxy statement captioned ‘Executive Compensation’.”

 

This resolution is being proposed to shareholders as required pursuant to Section 14A of the U.S. Securities Exchange Act of 1934, as amended. The shareholders’ vote on this resolution is advisory and non-binding in nature, will have no legal effect and will not be enforceable against Flex or its Board of Directors.

 

4. To pass the following resolution as an Ordinary Resolution:
  “RESOLVED THAT, pursuant to the provisions of Section 161 of the Singapore Companies Act, Cap. 50, but subject otherwise to the provisions of the Singapore Companies Act, Cap. 50 and our Constitution, authority be and hereby is given to our Directors to:
   
  (a) (i) allot and issue ordinary shares in our capital (“Ordinary Shares”); and/or
    (ii) make or grant offers, agreements, options, performance shares, performance units, restricted share units, or other compensatory equity awards, that might or would require Ordinary Shares to be allotted and issued, whether after the expiration of this authority or otherwise (including but not limited to the creation and issuance of warrants, debentures or other instruments convertible into Ordinary Shares),
    at any time to and/or with such persons and upon such terms and conditions and for such purposes as our Directors may in their absolute discretion deem fit, and with such rights or restrictions as our Directors may think fit to impose and as are set forth in the Constitution of the Company; and
  (b) (notwithstanding that the authority conferred by this resolution may have ceased to be in force) allot and issue Ordinary Shares in pursuance of any offer, agreement, option, performance share, performance unit, restricted share unit, or other compensatory equity award, made or granted by our Directors while this resolution was in force,
    and unless revoked or varied by the Company in general meeting, that such authority shall continue in force until (i) the conclusion of our next annual general meeting or (ii) the expiration of the period within which our next annual general meeting is required by law to be held, whichever is the earlier.”
5. To pass the following resolution as an Ordinary Resolution:
  “RESOLVED THAT:
   
  (a) for the purposes of Sections 76C and 76E of the Singapore Companies Act, Cap. 50, the exercise by our Directors of all of our powers to purchase or otherwise acquire issued Ordinary Shares in the capital of the Company not exceeding in aggregate the number of issued Ordinary Shares representing 20% of the total number of issued Ordinary Shares outstanding as of the date of the passing of this resolution (excluding treasury shares and any Ordinary Shares which are held by our subsidiary under Sections 21(4B) or 21(6C) of the Companies Act, as at that date) at such price or prices as may be determined by our Directors from time to time up to the maximum purchase price described in paragraph (c) below, whether by way of:
    (i) market purchases on the Nasdaq Global Select Market or any other stock exchange on which our Ordinary Shares may for the time being be listed and quoted; and/or
    (ii) off-market purchases (if effected other than on the Nasdaq Global Select Market or, as the case may be, any other stock exchange on which our Ordinary Shares may for the time being be listed and quoted) in accordance with any equal access scheme(s) as may be determined or formulated by our Directors as they consider fit, which scheme(s) shall satisfy all the conditions prescribed by the Singapore Companies Act, Cap. 50,
    and otherwise in accordance with all other laws and regulations and rules of the Nasdaq Global Select Market or, as the case may be, any other stock exchange on which our Ordinary Shares may for the time being be listed and quoted as may be applicable, be and hereby is authorized and approved generally and unconditionally;
  (b) unless varied or revoked by our shareholders in a general meeting, the authority conferred on our Directors pursuant to the mandate contained in paragraph (a) above may be exercised by our Directors at any time and from time to time during the period commencing from the date of the passing of this resolution and expiring on the earlier of:
    (i) the date on which our next annual general meeting is held; or
    (ii) the date by which our next annual general meeting is required by law to be held;

 

      2021 Proxy Statement    7
 
  (c) the maximum purchase price (excluding brokerage commission, applicable goods and services tax, and other related expenses) that may be paid for an Ordinary Share purchased or acquired by us pursuant to the mandate contained in paragraph (a) above, shall not exceed:
    (i) in the case of a market purchase of an ordinary share, the highest independent bid or the last independent transaction price, whichever is higher, of our Ordinary Shares quoted or reported on the Nasdaq Global Select Market or, as the case may be, any other stock exchange on which our Ordinary Shares may for the time being be listed and quoted, or shall not exceed any volume weighted average price, or other price determined under any pricing mechanism, permitted under SEC Rule 10b-18, at the time the purchase is effected; and
    (ii) in the case of an off-market purchase pursuant to an equal access scheme, at a premium of up to but not greater than 5 percent above the average of the closing price per Ordinary Share over the five trading days before the day on which the purchases are made; and
       
  (d) our Directors, acting independently or individually, be and hereby are authorized to complete and do all such acts and things (including executing such documents as may be required) as such Director(s) may consider expedient or necessary to give effect to the transactions contemplated and/or authorized by this resolution.”

 

Notes

 

Singapore Financial Statements

At the 2021 annual general meeting, our shareholders will have the opportunity to discuss and ask any questions that they may have regarding our Singapore audited financial statements for the fiscal year ended March 31, 2021, together with the directors’ statement and auditors’ report thereon, in compliance with Singapore law. Shareholder approval of our audited financial statements is not being sought by the accompanying proxy statement and will not be sought at the 2021 annual general meeting.

 

Eligibility to Vote at Annual General Meeting

Receipt of Notice. The Board of Directors has fixed the close of business on June 9, 2021 as the record date for determining those shareholders of the Company who are entitled to receive copies of this notice and accompanying proxy statement. However, all shareholders of record on August 4, 2021, the date of the 2021 annual general meeting, will be entitled to vote at the 2021 annual general meeting.

 

Quorum

Representation of at least 33-1/3% of all outstanding Ordinary Shares of the Company is required to constitute a quorum to transact business at a general meeting of our shareholders.

 

Proxies

A shareholder entitled to attend and vote at the 2021 annual general meeting is entitled to appoint a proxy to attend and vote on the shareholder’s behalf. A proxy need not also be a shareholder. Even if you plan to attend the meeting, we encourage you to vote promptly. You may vote your shares through one of the methods described in the enclosed proxy statement. A proxy card submitted by mail must be received by Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717 not less than 48 hours before the time appointed for holding the 2021 annual general meeting. Please review the instructions on the proxy card and notice of availability of proxy materials regarding the submission of proxies via the Internet, which provide, among other things, for the transmission of voting instructions up until 11:59 p.m. Eastern Time the day before the meeting. You may revoke your proxy at any time before it is voted. Registered shareholders who are present at the meeting may revoke their proxies and vote in person or, if they prefer, may abstain from voting in person and allow their proxies to be voted.

 

      2021 Proxy Statement    8
 

Disclosure Regarding Share Purchase Mandate Funds

Only funds legally available for purchasing or acquiring our issued Ordinary Shares in accordance with our Constitution and the applicable laws of Singapore will be used by us to purchase or acquire our own issued Ordinary Shares pursuant to the proposed renewal of the Share Purchase Mandate referred to in this notice. We intend to use our internal sources of funds and/ or borrowed funds to finance the purchase or acquisition of our issued Ordinary Shares. The amount of financing required for us to purchase or acquire our issued Ordinary Shares, and the impact on our financial position, cannot be ascertained as of the date of this notice, as these will depend on, among other things, the number of Ordinary Shares purchased or acquired, the price at which such Ordinary Shares are purchased or acquired, and whether the Ordinary Shares purchased or acquired are held in treasury or cancelled. Our net tangible assets and the consolidated net tangible assets of the Company and its subsidiaries will be reduced by the purchase price (including any expenses) of any Ordinary Shares purchased or acquired and cancelled or held as treasury shares. We do not anticipate that the purchase or acquisition of our Ordinary Shares in accordance with the Share Purchase Mandate would have a material impact on our financial condition and cash flows.

 

Personal Data Privacy

By submitting an instrument appointing a proxy or representative to attend, speak and vote at the 2021 annual general meeting and any adjournment thereof, a shareholder of the Company (i) consents to the collection, use and disclosure of the shareholder’s personal data by us (or our agents or service providers) so we (or our agents or service providers) can process, administer and analyze proxies and representatives appointed for the 2021 annual general meeting (including any adjournment thereof) and prepare and compile the attendance lists, minutes and other documents relating to the 2021 annual general meeting (including any adjournment thereof), and in order for us (or our agents or service providers) to comply with any applicable laws, listing rules, take-over rules, regulations or guidelines (collectively, the “Purposes”), (ii) warrants that where the shareholder discloses the personal data of the shareholder’s proxy or representative to us (or our agents or service providers), the shareholder has obtained the prior consent of such individual for the collection, use and disclosure by us (or our agents or service providers) of such personal data for the Purposes, and (iii) agrees that the shareholder will indemnify us in respect of any penalties, liabilities, claims, demands, losses and damages as a result of the shareholder’s breach of warranty.

 

By order of the Board of Directors,

 

Tay Hong Chin Regina

Company Secretary
Singapore

June 25, 2021

 

You should read the entire proxy statement carefully before you return your proxy card or otherwise submitting your proxy appointment through electronic communications in the manner set out in the accompanying proxy statement.

 

Important Notice Regarding the Availability of Proxy Materials for the 2021 Annual General Meeting of Shareholders to Be Held on August 4, 2021. This notice of the annual general meeting and the accompanying proxy statement and our annual report to shareholders are available on our website at https://investors.flex.com/financials.

 

      2021 Proxy Statement    9
 

 

Table of Contents

 

Proxy Statement Summary 12
Sustainability 18
Corporate Governance 24
Board of Directors 24
Board Leadership Structure 24
Attendance and Meetings 24
Director Independence 25
Director Candidates 25
Board’s Role in Risk Oversight 26
Board Evaluations 27
Succession Planning 27
Board Committees 27
Director Education 29
Stakeholder Engagement and Outreach 30
Corporate Governance Policies 31
Shareholder Communications with our Board of Directors 31
Fiscal Year 2021 Non-Management Directors’ Compensation 32
Non-Employee Director Compensation Program 32
Fiscal Year 2021 Annual Compensation 33
Fiscal Year 2021 Equity Compensation 33
Compensation for the Non-Employee Chair of the Board 34
Director Share Ownership Guidelines 34
Director Summary Compensation in Fiscal Year 2021 34
Treatment of Unvested Restricted Share Unit Awards upon a Change of Control 35
Proposals to be Considered at the 2021 Annual General Meeting of Shareholders 36
Proposal No. 1: Re-election of Directors 36
Nominees to our Board of Directors 36
Qualifications of Nominees 37
Proposal No. 2: Re-Appointment of Independent Auditors for Fiscal Year 2022 and Authorization of our Board to Fix Their Remuneration 43
Principal Accountant Fees and Services 43
Audit Committee Pre-Approval Policy 43
Message from the Audit Committee 44
Audit Committee Report 44
Proposal No. 3: Non-Binding, Advisory Resolution on Executive Compensation 46
Message from the compensation and People Committee 46
Compensation and People Committee Report 46
Compensation Discussion and Analysis 47
Introduction 47
Executive Summary 47
Compensation Philosophy 53
Compensation-Setting Process and Decisions for Fiscal Year 2021 54
Fiscal Year 2021 Executive Compensation 57
Benefits 64
Compensation Arrangements for Mr. Lundstrom 66
Termination and Change of Control Arrangements 67
Executive Share Ownership Guidelines 69
Executive Incentive Compensation Recoupment Policy 69
Hedging and Pledging Policy 69
Compensation Risk Assessment 70
Executive Compensation 71
Summary Compensation Table 71
Grants of Plan-Based Awards in Fiscal Year 2021 73
Outstanding Equity Awards at 2021 Fiscal Year-End 74
Shares Vested in Fiscal Year 2021 75
Pension Benefits in Fiscal Year 2021 75
Nonqualified Deferred Compensation in Fiscal Year 2021 75
Nonqualified Deferred Compensation Table 76
Potential Payments Upon Termination or Change of Control 76
Potential Payments Upon Termination or Change of Control as of March 31, 2021 78
CEO Pay Ratio 81
Proposal No. 4: Ordinary Resolution to Authorize Ordinary Share Issuances 82
Proposal No. 5: Ordinary Resolution to Renew the Share Purchase Mandate 83
Limit on Allowed Purchases 83
Duration of Share Purchase Mandate 84
Manner of Purchases or Acquisitions of Ordinary Shares 84
Purchase Price 84
Treasury Shares 84
Sources of Funds 85
Status of Purchased or Acquired Ordinary Shares 85
Financial Effects 85
Rationale for the Share Purchase Mandate 86
Take-Over Implications 86
Information about our Executive Officers 87
Equity Compensation Plan Information 88
Security Ownership of Certain Beneficial Owners and Management 89
Certain Relationships and Related-Person Transactions 91
Review of Related-Person Transactions 91
Transactions with Related-Persons 91
Shareholder Proposals for the 2022 Annual General Meeting 92
Incorporation of Certain Documents by Reference 92
Singapore Statutory Financial Statements 92
Other Matters 93
Electronic Delivery of our Shareholder Communications 93
Information About the Meeting 93
Voting Rights and Solicitation of Proxies 93
Annex A: Reconciliation of GAAP to Non-GAAP Financial Measures Flex Ltd Reconciliation of GAAP to Non-GAAP Financial Measures A-1

 

      2021 Proxy Statement    11
 

Proxy Statement Summary

 

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the proxy statement carefully before voting. For more complete information regarding the Company’s 2021 fiscal year performance, please review the Company’s 2021 Annual Report. For additional information regarding voting rights and proxy solicitation, please see “Other Matters” on page 93.

 

 

Voting Matters at the Annual General Meeting

 

Proposal Recommendation Page
Reference
1. Re-election of directors FOR each nominee 36
2. Re-appointment of Deloitte & Touche LLP FOR 43
3. Advisory vote on executive compensation FOR 46
4. General authorization to allot and issue ordinary shares FOR 82
5. Authorization to repurchase ordinary shares FOR 83

 

How to Cast Your Vote

 

Each Ordinary Share is entitled to one vote for each director nominee and one vote for each of the other proposals. Your vote is important to us, and we encourage you to vote using one of these methods:

 

Vote in
Person
at the
Meeting
    If you are a beneficial holder and hold your shares through a bank, broker, or other nominee, you must request a “legal proxy” from the nominee in order to vote at the meeting. You will find instructions on how to request a “legal proxy” at www.proxyvote.com.  
Vote via
Internet
   

at www.proxyvote.com

Follow the instructions on your Notice. If you are a beneficial holder and hold your shares through a bank, broker, or other nominee, your nominee may not permit you to vote online.

Vote by
Mail
   

Sign and return your proxy card. If you do not have a proxy card, you can request one by contacting us at:

 

Flex Ltd.
6201 America Center Drive
San Jose, California 95002
(408) 577-4632

 

      2021 Proxy Statement    12
 

Sustainability Highlights (pg. 18)

 

We strive to make a lasting positive impact for our employees, customers and shareholders and aim to follow social and environmental practices that make our partners and shareholders proud. Our efforts have been widely recognized, garnering awards for sustainability including being named one of the World’s Most Admired Companies and inclusion in S&P Global’s Sustainability Yearbook. Below are some highlights of our sustainability practices.

 

       
  2030 Sustainability Goals We established new sustainability goals through 2030 against a refreshed framework centered on our world, our people and our approach spanning several pillars.  
       
  Science Based Targets initiative We joined the Science Based Targets initiative (SBTi), the global movement of leading companies working to reach the Paris Agreement’s goal of limiting global temperature rise, setting ambitious goals, including a commitment to cut operational emissions in half by 2030.  
       
  Inclusion and Diversity We re-committed to our mission to provide a safe environment with growth opportunities for our employees to prosper by establishing clear inclusion and diversity goals and investing in supporting initiatives. As of March 31, 2021, approximately 44% of our global workforce was female and 27% of our Board of Directors were female.  
       
  Flex Foundation We partnered with nonprofit organizations, community leaders and governments to promote inclusive and sustainable economic growth, employment, and decent work for all through grants, corporate and employee donations, and volunteerism. In calendar year 2020, our Flex Foundation donated $1.5 million in grants to support COVID-19 relief efforts and associations that support ethnic and cultural minorities around the globe.  
       

 

Corporate Governance Highlights (pg. 24)

 

Flex strives for excellence in corporate governance practices, which we recognize is fundamental to maintaining the trust of our shareholders, customers, and employees. Flex’s management and Board of Directors, continually evaluate processes and implement procedures designed to maintain strong governance and operational standards. Below are some highlights of our corporate governance practices.

 

       
  Diverse Directors We purposefully elect directors with diverse backgrounds and skillsets to best oversee the management of Flex.  
       
  Refreshed Board We continuously evaluate the composition of the Board. Five new directors have joined Flex in the past three years. Our average tenure is approximately five years.  
       
  Environmental, Social, Governance Oversight We regularly assess our corporate governance structure to ensure comprehensive oversight of Flex’s management, practices, and operations. This year we increased the number of ESG updates to the Board and its committees and supplemented the Board’s areas of oversight to include human capital management and diversity strategy and initiatives.  
       
  Shareholder Outreach We value the input and engagement of our shareholders. As part of our commitment to our shareholders, we maintain an annual outreach program with participation from management and directors. During fiscal year 2021, we proactively contacted twenty firms representing approximately 74% of our share voting power and members of management and our Board chair held discussions with holders of approximately 32% of our share voting power.  
       

 

      2021 Proxy Statement    13
 

Board Nominees (pg. 36)

 

 

The following table provides summary information about each nominee standing for re-election to the Board. All directors, excluding Ms. Advaithi, are independent.

 

Name   Principal Occupation   Committee
Memberships
  Director
Since
  Number of
Additional Public
Company Boards
 
Revathi Advaithi   CEO, Flex Ltd.   None   2019   1  
Michael D. Capellas
Board Chair
  Principal, Capellas Strategic Partners   Nominating and Corporate Governance   2014   2  
John D. Harris II   Retired Vice President of Business Development, Raytheon Company   Compensation and People   2020   1  
Michael E. Hurlston   President and Chief Executive Officer, Synaptics Incorporated   Audit   2020   2*  
Jennifer Li   General Partner, Changcheng Investment Partners   Compensation and People   2018   1  
Erin L. McSweeney   Executive Vice President, Chief of Staff to CEO, UnitedHealth Group Incorporated   Compensation and People
Nominating and Corporate Governance
  2020   0  
Marc A. Onetto   Principal, Leadership from the Mind and the Heart LLC   Audit   2014   0  
Willy C. Shih, Ph.D.   Professor of Management Practice in Business Administration, Harvard Business School   Compensation and People   2008   0  
Charles K. Stevens, III   Retired Chief Financial Officer, General Motors   Audit
Nominating and Corporate Governance
  2018   3  
Lay Koon Tan   Retired President, Chief Executive Officer and member of the Board of Directors, STATS ChipPAC Ltd.   Audit   2012   0  
William D. Watkins   Retired Chief Executive Officer, Imergy Power Systems, Inc.   Nominating and Corporate Governance   2009   2  
Chair
Audit Committee Financial Expert
* On June 21, 2021, Ubiquiti Inc. filed an 8-K disclosing that on June 18, 2021, Mr. Hurlston notified Ubiquiti Inc. of his decision to resign from the Ubiquiti Inc. Board of Directors, effective as of August 3, 2021. As of August 4, 2021, the date of our 2021 annual general meeting of shareholders, Mr. Hurlston will only be on one additional public company board.

 

      2021 Proxy Statement    14
 

Executive Compensation Highlights (pg. 47)

 

Our pay-for-performance compensation philosophy aims to tie actual pay delivery to performance. We believe above-target performance should be rewarded when achieved, and below-target performance should lead to reduced compensation, including zero payouts for incentive elements when performance thresholds are not met. We also believe we should deliver a significant portion of executive pay in the form of equity awards, which are directly aligned with value delivered to shareholders.

 

One-Time COVID-19-Related Pay Actions

 

No merit increases to base salaries and temporary COVID-19-related reductions: In order to address COVID-19-related uncertainty and preserve cash during the initial stage of the pandemic, NEO salaries were reduced for the first half of the fiscal year by 50% for the CEO and 30% for the other NEOs.
The bonus plan was eliminated for the first half of the fiscal year to address COVID-19-related uncertainty and preserve cash, with no offsetting increase in the second half.

 

Annual, Regular Cycle Pay Actions

 

Base Salaries: The only executive to receive an increase to his annualized salary was Mr. Hartung. This increase was designed to align his salary to market and to recognize the increased responsibilities associated with his promotion to the role of President, Agility.
Bonus payouts for the second half of the year were above target, but below target on a full-year basis: We exceeded our financial goals in the second half of the year despite the challenges and uncertainty encountered in fiscal year 2021. Our CEO’s fiscal year 2021 bonus paid out at 82.3% of target (164.6% based on second-half results). Bonuses for the other continuing NEOs paid out between 74.6% and 88.7% (149% and 177% based on second-half results).
Long-term incentive awards were held flat vs. prior year (with PSUs valued at face value), with the exception of Mr. Hartung who received a higher grant than the prior year due to his promotion.
Performance share plan (TSR) payout = 0%: No payouts were earned under the TSR PSUs for the three-year performance cycle ending in fiscal year 2021 (PSUs vesting in June 2020), as the threshold performance level was not achieved.

 

Business Summary

 

What We Do

 

Flex is the manufacturing partner of choice that helps a diverse customer base design and build products that improve the world. Through the collective strength of a global workforce and responsible, sustainable operations, Flex delivers technology innovation, supply chain, and manufacturing solutions to diverse industries and end markets.

 

We provide design, manufacturing and supply chain services through a network of over 100 locations in approximately 30 countries across five continents. We have established global scale through an extensive network of innovation labs, design centers, and manufacturing and services sites in the world’s major consumer and enterprise products markets (Asia, the Americas, and Europe) in order to serve the supply chain needs of both multinational and regional companies. Our services provide customers with a competitive advantage by delivering leading-edge manufacturing technology, supply chain expertise, improved product quality, increased flexibility, faster time to market, and overall value. Our customers leverage our services to meet their requirements throughout the entire lifecycle of their products.

 

Flex offers solutions that span from initial design through ramp-up and volume manufacturing as well as through end of life and circularity offerings. This full range of capabilities provides our customers with expertise across the entire value chain. Technology innovation is at the center of our ability to deliver these end-to-end capabilities.

 

      2021 Proxy Statement    15
 

For fiscal year 2021, our reporting business segments were Flex Agility Solutions and Flex Reliability Solutions.

 

 

Flex Forward: Our Strategy

 

Over the past several years, Flex has been engaged in, and continues to execute on, a long-term strategy focused on operating with discipline through continuous portfolio evolution and driving higher value-added services that align with and service our customers’ needs and requirements in order to drive operating and financial results. In particular, we are working to increase profit margins, capitalize on prior investments, manage our business mix, and return to strong free cash flow generation. The Company is focused on disciplined, sustainable execution on our core business processes as well as disciplined growth in areas that can drive margin improvement and provide value for the Company and our customers. We believe that our continued business transformation is strategically positioning us to take advantage of the long-term, future growth prospects for outsourcing of advanced manufacturing and design capabilities. This transformation is also enabling us to invest in developing our own products and processes that make us a stronger partner to our customers.

 

Fiscal Year 2021 Highlights

 

Performance and Company Highlights for Fiscal Year 2021

During fiscal year 2021, we achieved overall positive results on several fronts. Key financial highlights from the fiscal year include:

 

 

      2021 Proxy Statement    16
 

Who We Are

 

As part of our strategic planning and culture initiative process that started in 2019, we updated our vision and mission statements to align to our strategy and to reflect our aspirations for our major stakeholders. We also developed a purpose statement that is intended to provide clarity and a framework for why Flex exists and what kind of company we want to be. Culture underlies our stakeholder experience. Our values are intended to reflect and guide our behaviors and shape our culture. We endeavor for our value-driven culture to align us as we pursue our purpose, uphold our mission, live our values, advance toward our vision, and activate our strategy.

 

In support of cultivating an inclusive, high-performing culture, we recently introduced four specific behaviors that support our values and continued progress on our Flex Forward strategy. These behaviors, called our Ways of Working, bring our values to life through actions and are intended to provide a framework for how we make decisions. The purpose of these behaviors is to enable us to put our culture into practice and provide an accountability system through training and development as well as performance management systems to ensure our desired behaviors become a part of our everyday working norms.

 

 

 Vision  

Our direction

 

Our vision is to become the world’s most trusted global technology, supply chain and manufacturing solutions partner.

 

 

 Purpose  

Our reason for being

 

Our purpose as a company, why we exist, is to make great products for our customers that create value and improve people’s lives.

 

 

 Mission  

Our approach

 

Our mission has five elements:

 

1. Provide a safe environment with growth opportunities for our employees to prosper.
2. Leverage our global supply chain know-how to minimize risk and complexity for our customers.
3. Use our manufacturing expertise to make products that contribute positively to the world.
4. Steward sustainable manufacturing and operations practices to minimize environmental impact.
5. Deliver consistent results and increased value to our shareholders.

 

 
 Values  

 

Our philosophy

 

How we live our values define our culture:

 

We support each other as we strive to find a better way.
We move fast with discipline and purpose.
We do the right thing always.

 

 

 Ways of Working  

Our behaviors

 

We bring our values to life through four actions:

 

1. Respect and Value Others.
2. Collaborate and Share Openly.
3. Learn and Adapt.
4. Honor Commitments.

 

 

      2021 Proxy Statement    17
 

Sustainability

 

Flex’s purpose is to make great products for our customers that create value and improve people’s lives. Sustainability is at the core of our purpose and is embedded in our culture. We work to have a lasting positive impact in the form of value for our employees, customers and investors and we aim for the social and environmental change that makes our stakeholders proud. We seek to address material issues, risks, and opportunities by conforming to internal and external standards and thoughtfully executing our social and environmental management system, programs, and initiatives.

 

We strive for social and environmental betterment through our robust management systems. Our sustainability system, which is modeled largely on the Responsible Business Alliance (RBA) requirements, consolidates several management systems into one, and incorporates current environmental, labor, human rights, health, safety, and ethics standards. As a founding member of the RBA, Flex is committed to modelling its requirements.

 

In partnership with our customers and suppliers, we are committed to significantly lowering emissions through science-based targets, investing in our communities, advancing a safe, inclusive, and respectful work environment for all, and driving environmental, social and governance (ESG) focused practices with transparency.

 

Sustainability Governance and Strategy

 

 

Given our commitment to sustainability, we recognize the importance of a strong foundation of sustainability governance. Our Board of Directors engages in an annual review of Flex’s sustainability program including our ESG efforts and participates in an annual ESG director education session. Our Nominating and Governance Committee oversees Flex’s sustainability risks and remediation efforts, including the Company’s corporate responsibility and sustainability policies and programs with respect to human rights, climate change, and social and environmental risks.

 

Our executive management team receives regular sustainability updates. In addition, we have a Corporate Sustainability Leadership Committee, a multidisciplinary group composed of global leaders throughout the Company who represent the key functional areas with responsibility for sustainability efforts, including operations, human resources, supply chain, regulatory compliance, account management, and communications. This committee meets quarterly to share information with people across various teams within Flex who are directly responsible for implementing and managing sustainability initiatives.

 

We endeavor to align our efforts with global sustainability organizations and initiatives, including the United Nations Global Compact, that contribute to broader calls to action and collective progress toward a healthier future. This year we joined the Science Based Targets initiative, and in connection with joining such initiative, we have adopted greenhouse gas emissions reduction targets necessary to meet the Paris Agreement goals, including limiting global warming to 1.5°C above preindustrial levels.

 

      2021 Proxy Statement    18
 

2030 Sustainability Goals

 

 

In fiscal year 2021, continuing our purpose-driven journey, we developed our next set of long-term sustainability goals that focus on key areas where we can make a measurable, direct, and positive impact. We’ve set new sustainability goals through 2030 against a refreshed framework centered on our world, our people and our approach spanning several pillars.

 

In partnership with our customers and suppliers, we are committed to:

 

Significantly lowering emissions through science-based targets;
Investing in our communities;
Advancing a safe, inclusive and respectful work environment for all; and
Driving ESG-centric practices with transparency in our communities.

 

Notable 2030 goals include:

 

We commit to reduce absolute scope 1 and 2 GHG emissions 50% by 2030 from a 2019 base year.
We commit to reduce total health and safety case incident rate (TCIR) to below 0.2 by 2030.
We commit that 50% of our ‘Preferred Suppliers’ will set their own GHG emissions reduction targets by 2025 and 100% by 2030.

 

Sustainability and Our People

 

 

Our approximately 160,000 global employees are at the core of who we are and what we do. We believe that our performance is driven by our workforce. As a result, we consistently review and refine our human capital management programs, policies, and procedures to ensure that they attract, select, develop, engage and retain strong, diverse talent. Our policies, philosophy and strategies support the inclusion of all people in our working environment. Further, we’re committed to respecting the human rights of our employees and improving their quality of life.

 

      2021 Proxy Statement    19
 

Human Capital Management Governance

 

Because our employees are central to our success as a business, the Board plays an active role in overseeing our human capital management efforts. The Compensation and People Committee of our Board of Directors is responsible for assisting the Board in discharging this oversight duty and continues to work closely with the executive management team in helping to shape our newly defined culture and focus efforts on developing formal human capital management and talent development initiatives to better support our workforce as the Company continues to evolve.

 

The Compensation and People Committee oversight activities in this area include, among other aspects, receiving periodic updates (not less than twice annually) regarding, and overseeing any significant change to, our human capital management strategy including corporate culture, inclusion, pay and opportunity equity, diversity, social initiatives and results, and talent training, development and retention programs. Additionally, the Compensation and People Committee reviews the performance of and succession planning for our CEO and executive officers.

 

Workplace Culture and Talent Management

 

Recognizing the importance of a healthy workplace culture, we launched a culture initiative in 2019 designed to define and communicate who we are and who we want to be as a company. This process resulted in the promulgation of our vision, purpose, mission, values, and ways of working. We developed and continue to execute on programs to embed our culture into our daily actions including employee engagement through surveys and round table discussions with our executive leadership; virtual development and volunteer programs; and recognition programs.

 

Inclusion & Diversity

 

A key aspect of our corporate mission is to provide a safe environment with growth opportunities for our employees to prosper. One way we pursue this goal is by prioritizing inclusion and diversity. We recognize the value of our human capital as an asset to our business. We also recognize that the sum of the individual differences, life experiences, knowledge, inventiveness, innovation, self-expression, unique capabilities, and talent that our employees invest in their work represents a significant part of our culture, enhances our reputation and contributes to our success. We embrace and encourage our employees’ differences, and nurture a sense of collective pride and belonging. We strive to ensure that all Flex employees are empowered to do their best and advance in their careers.

 

We are proud of the success we have had in making Flex a more inclusive and diverse workplace. Looking forward, we plan to execute on our commitment to inclusion and diversity by establishing, publishing, and working towards corporate goals including:

 

Increasing female representation globally at the director level and above;
Increasing racial and ethnic diversity in the United States at the director level and above so our leadership will reflect our organization and the communities in which we operate;
Holding leadership accountable for inclusion and diversity outcomes; and
Achieving parity in pay in the U.S. by 2022.

 

Talent attraction, development, and retention

 

Talent attraction, development, and retention are critical to our success and core to our mission as a company. To support the advancement of our employees, we provide training and development programs and opportunities encouraging advancement from within while we continue to fill our team with strong and experienced external talent. We leverage both formal and informal programs, including in-person (as health and safety practices and policies allow), virtual, social and self-directed learning, mentoring, coaching, and external development to identify, foster, and retain top talent. Employees have access to courses through our learning and development platform, Flex Learn. In 2020, 31,996 of our employees completed 397,408 hours of training programs. Flex has undertaken initiatives to keep employees who are working from home engaged during COVID-19, including virtual learning programs and check-in sessions.

 

We are also focused on completing talent and performance reviews. Our in-depth talent reviews serve to identify high potential talent to advance in roles with greater responsibility, assess learning and development needs, and establish and refresh succession plans for critical leadership roles across the enterprise. Our performance review process promotes transparent communication of team member performance, which we believe is a key factor in our success. The performance and the talent reviews enable ongoing assessments, reviews, and mentoring to identify career development and learning opportunities for our employees.

 

As a part of our efforts to improve employee experiences at Flex, we conduct the annual enterprise-wide employee engagement Flex Voice survey. Our leadership uses the results of the survey to continue developing our strengths and measure opportunities for improvement. This year 94% of employees completed the Flex Voice survey and the results reflected increased enthusiasm and engagement.

 

      2021 Proxy Statement    20
 

COVID-19 and Employee Health & Safety

 

Flex is committed to providing a safe and injury-free workplace. We promote a “zero-injury” culture through health and safety management systems that implement a data-driven and risk-based approach in monitoring and reporting performance regularly. In calendar year 2020, we decreased our incident rate by 21% compared to 2019. Furthermore, as a part of our 2030 Sustainability Goals, we have committed to reducing total case incident rate to below 0.2 by 2030 and to certifying all manufacturing operations with ‘RBA factory of choice’ by 2025.

 

We provide programs and tools aimed at improving physical, mental, financial, and social well-being, with increased focus during the COVID-19 pandemic. Our programs give our employees access to a variety of innovative, flexible, and convenient health and wellness programs, including on-site health centers in some of our major factories, which were increasingly critical this year for our essential workers who have worked on site since the start of the COVID-19 pandemic.

 

The COVID-19 pandemic is felt by every citizen, country, community, and company. At Flex, our first priority is ensuring the health and safety of our employees, suppliers and business partners, while supporting essential manufacturing for infrastructure services and critical healthcare products to aid in the global response to the pandemic.

 

We took several actions in response to the COVID-19 pandemic:
On a company-wide basis, we deployed the contingency and resiliency plans that are encompassed in our business continuity programs.
  Our leadership teams initiated enhanced health and safety measures across all facilities, as our foremost focus has been the health and safety of our employees.
We modified practices at our manufacturing locations and offices to require personal protective equipment, sanitization measures, temperature checks, and social distancing well before these measures were mandated.

 

As one of the world’s largest medical device manufacturers, we recognized that we had a responsibility to do our part to join the fight against this disease. With many of the products we make for our healthcare customers related to critical care becoming scarce, we ramped up our efforts to expand delivery of critical products, including ventilators, personal protective equipment, oxygen concentrators, patient monitors, infusion pumps, and ICU beds. At the heart of this extraordinary effort are the tens of thousands of Flex workers in our factories who continue to work around the clock to live up to our purpose.

 

Over Over
$1.1M 22,000,000 masks
donated donated

 

2020 Sustainability Impact

 

During the 2020 calendar year, we continued our focus on ESG activities as highlighted below.

 

Our World: Environmental and Community Achievements

 

We achieved a 13% reduction in global gross Scope 1 and 2 emissions compared to 2019, exceeding our CO2 emission reduction goal by at least 10%, normalized for revenue.
We decreased our water consumption by 17% year-over-year, exceeding our goal.
We celebrated Earth Day with an at-home challenge. From 30 sites around the world, participating employees shared hundreds of examples of how they support a more sustainable future at-home.
We completed 544 community activities, despite the challenges of COVID-19.
6,900 of our volunteers gave over 42,000 hours back to their local communities.
91.5% of our sites implemented community activities throughout 2020.
In 2020, we donated masks to our communities, targeting local schools and smaller non-profits.

 

      2021 Proxy Statement    21
 

Our People: Employee, Health and Safety, and Inclusion and Diversity Achievements

 

We re-committed ourselves to fostering a safe, ethical, and inclusive work environment for all employees.
We engaged our employees and received their feedback through coffee talks and town halls, lunch and learn sessions, management workshops, leadership skills trainings, recognition programs and annual surveys, and continue to undertake such employee engagement.
In 2020, more than 5,000 employees benefitted from our Employee Scholarship Program, more than twice as many as in 2019.
We ensure all of our sites have a health and safety management system, which we verify through audits performed by the corporate team. Additionally, all sites are also required to convene committees to address safety issues and concerns and we undertake targeted respect and dignity audits of high-risk sites.
We decreased our health and safetly incident rate by 21%, compared to 2019.
We participate in RBA Task Forces on the UN Guiding Principles, Trafficking and Forced Labor, Transparency, and Environmental Compliance, which set guidelines for the working hours and conditions for employees.
As of March 31, 2021, 44% of our global workforce and 27% of our Board of Directors were female.
24,000 employees across 56 sites participated in our People with Diversabilities Awareness Week, up by 5,000 from 2019.
We launched our cross-functional Global Inclusion Counsel, led by our CEO, of 12 members that represent diverse viewpoints.
In partnership with McKinsey, we offered leadership development opportunities through their Management Accelerator and Executive Leadership Program to 56 Black employees.
We enhanced SheLeads, our leadership development program for women employees.
We launched the Inclusive Leadership Experience for U.S. people managers, which focused on leading with inclusion through unconscious bias training. In 2020, 97% of our U.S. managers undertook such training, and in 2021, we plan to expand this training outside the U.S.
We partnered with organizations such as the Business Roundtable, The Valuable 500, and INROADS to amplify our impact in recruiting and retaining diverse talent.
We invested in seven employee resource groups designed to help to create a sense of belonging and support retention and attraction. These groups have steadily grown in membership and also held cultural awareness activities throughout the past year. Our employee resource groups include Asian Pacific Flex Network, Black Flex Network, LantinX, People with DiversAbilities, Women in Flex, Women in Tech, and Veterans at Flex.

 

Our Approach: Ethics, Supply Chain, Governance, and Partner Achievements

 

99% of our employees completed the annual Code of Business Conduct and Ethics (“CoBCE”) online training.
We continued to prioritize remedying hotline reports, addressing a variety of issues through guidance, review and/or investigation.
Participation in our supplier due diligence assessment increased by 26% compared to the previous year, totaling 2,226 completed social and environmental assessments.
We screened 100% of our new global suppliers using social and environmental criteria.
We have trained and certified 58 social and environmental supplier auditors internally, up nearly 12% from 2019.
In response to the COVID-19 global pandemic, our Board mobilized quickly, working closely with the Brand Protection and Security team to transition to a mobile workforce, manufacture and distribute personal protective equipment, and respond to the unique challenge of being a global company navigating fast-evolving regulation worldwide.
We started a strong partnership with our customers and suppliers to reduce Greenhouse Emissions (“GHG”) through their own emissions reduction targets.

 

      2021 Proxy Statement    22
 

Sustainability Partnerships and Recognition

 

In addition to being a founding member of the RBA, we are also a member of the Responsible Minerals Initiative, Global Business Initiative on Human Rights, GRI Community, the Business for Social Responsibility Network, the Globally Promoting Responsible Waste Stewardship, the Business Ethics Leadership Alliance by Ethisphere Company, the UN Global Compact Network, the Silicon Valley Leadership Group, the Boston College Center for Corporate Citizenship, the Ellen MacArthur Foundation, and the Supplier Ethical Data Exchange. Additionally, Flex has signed the WBCSD Pledge for Access to Safe Water, Sanitation, and Hygiene at the Workplace. Finally, our CEO, who is a member of the Business Roundtable (“BRT”), signed the new BRT Statement on the Purpose of a Corporation, which declares that corporations have a role beyond meeting investors’ financial expectations.

 

Our commitment to sustainability has earned us positive feedback from shareholders and recognition from some of the most prestigious sustainability ratings agencies.

 


Flex
Sustainability
 Rankings
2020

  In February 2021, Flex was named one of the World’s Most Admired Companies by FORTUNE magazine based on nine criteria including social responsibility

 

  Flex received an A- in CDP Climate Change for a second consecutive year and a historic A in Water Security

 

  Flex obtained EcoVadis’ “Platinum Recognition Level” ESG rating

 

  Flex received Negligible Risk (8.6) score from Sustainalytics

 

  Flex was again awarded ISS’ Prime status for Corporate ESG performance

 

  For the 5th consecutive year, Flex is a constituent of Financial Times Stock Exchange-Russell Group’s FTSE4Good Index, receiving a score of 4.1 out of 5

 

  Flex again qualified for inclusion in S&P Global’s Sustainability Yearbook

 

 

Further information regarding our sustainability program and achievements, including demographic data, can be found in our annual sustainability reports at flex.com/about/sustainability. The information on our website and in the sustainability report is not a part of this Proxy Statement and is not incorporated by reference.

 

      2021 Proxy Statement    23
 

Corporate Governance

 

We are proud of Flex’s legacy of corporate governance throughout the past 50+ years. We continually build on that legacy with ethical business oversight, robust risk management, and pay-for-performance compensation programs in order to ensure accountability to our shareholders, customers, employees, and communities.

 

Board of Directors

 

Our Board of Directors oversees and provides policy guidance on our strategic and business planning processes, oversees the conduct of our business by senior management, and is principally responsible for the succession planning for our key executives, including our Chief Executive Officer. We strive to maintain optimal board composition to ensure diverse, insightful and dedicated oversight of our vision, purpose, and mission.

 

Board Leadership Structure

 

Our Board of Directors believes the most effective leadership structure for Flex at the present time is for the roles of CEO and Chair of the Board to be separated, and for the Chair of the Board to be an independent director. Flex has separated the roles of Chair and CEO since 2003. Our Board of Directors believes that having an independent Chair ensures a greater role for the independent directors in the oversight of the Company, and also provides the continuity of leadership necessary for the Board to fulfill its responsibilities. The Board retains the authority to modify this leadership structure as appropriate to best address the Company’s needs at any given time and to serve the best interests of our shareholders, customers, and employees.

 

Ms. Advaithi has served as our Chief Executive Officer and a member of our Board of Directors since February 11, 2019. The Board appointed Mr. Capellas, an independent director, as Chair of the Board in 2017. The following chart demonstrates how the Company has separated these two leadership roles.

 

Michael D. Capellas   Revathi Advaithi
Board Chair Chief Executive Officer

●   Oversees CEO succession

●   Oversees the board evaluation process

●   Calls meetings of the Board and independent directors

●   Provides management with feedback regarding the information that is necessary for the independent directors to effectively and responsibly perform their duties

●   Acts as a liaison between the independent directors and the CEO on sensitive/critical issues

●   Sets strategic direction for the Company

●   Provides day-to-day leadership over Company operations

●   Focuses on execution of business strategy, growth and development

●   Sets the tone-at-the-top for company culture

●   Develops and oversees enterprise-wide initiatives

 

Attendance and Meetings

 

Each of our directors is committed to providing prudent oversight of our business through regularly scheduled meetings, special meetings, ad hoc conversations, and time spent with management. In fiscal year 2021, our Board of Directors held a total of 10 meetings, and our committees held a collective total of 29 meetings. We have a rigorous attendance tracking program and recorded an average attendance rate of 99% (with every director attending over 75% of the Board and applicable committee meetings held during their period of service in fiscal 2021).

 

All directors are encouraged to attend the annual general meeting, but attendance is not required. Every director who was on the Board at the time attended the Company’s 2020 annual general meeting.

 

Our non-employee directors meet at regularly scheduled executive sessions without management participation. During fiscal year 2021, our non-employee directors met in executive session 9 times.

 

      2021 Proxy Statement    24
 

Director Independence

 

As required by the listing standards of The Nasdaq Stock Market LLC (“Nasdaq”), a majority of the members of our Board must qualify as “independent,” as affirmatively determined by our Board. Flex’s director independence guidelines incorporate the definition of “independence” adopted by Nasdaq. Using these guidelines, our Board has determined that each of the Company’s directors, other than Ms. Advaithi, is independent. Ms. Jill Greenthal was determined to be independent during the period that she served as a director. This means that the directors designated as “independent” do not have any business or family relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director or has any otherwise disqualifying relationship.

 

In making the independence determinations, the Board and the Nominating and Corporate Governance Committee considered certain transactions, relationships, and arrangements involving some of the directors and concluded that such transactions, relationships, and arrangements did not impair the independence of the director. In particular, the following relationships were considered:

 

Mr. Hurlston is the Chief Executive Officer of Synaptics Incorporated (“Synaptics”). Flex has purchased or sold goods and services from Synaptics on an arms’-length basis in the ordinary course of its business during fiscal year 2021. The amount that Flex paid to Synaptics, and the amount received in each fiscal year by Flex from Synaptics, did not exceed the greater of $1 million or 2% of Flex’s consolidated gross revenues.

 

Messrs. Capellas, Harris, Stevens, and, Watkins, and Ms. Li, are non-employee directors of other companies with respect to which Flex purchased or sold goods and services on an arms’-length basis in the ordinary course of its business during fiscal year 2021, including of ABB Ltd., Avaya Holdings Corp., Cisco Systems, Inc., Eastman Chemical Company, Masco Corporation, Maxim Integrated Products, Inc., Synaptics Incorporated, and Tenneco Inc.

 

Director Candidates

 

Our Nominating and Corporate Governance Committee strives to achieve a balance and diversity of knowledge, experience, and capabilities on our Board and to ensure that our Board has the benefit of a variety of skills derived from our directors’ business and professional experience. To that end, the Nominating and Corporate Governance Committee engages in Board succession planning by assessing the need to adjust the size of the Board or supplement the Board’s expertise in a substantive area, and by determining whether prospective nominees have relevant skills and experience. For more information on specific qualities and skills we look for in potential directors, see Proposal 1, which begins on page 36.

 

As part of its continuous review of our Board composition, the Nominating and Corporate Governance Committee decided that our Board would benefit from a broader array of perspectives and skills and engaged a third-party search firm to assist it in identifying and assessing potential director candidates. In September 2020, the Board appointed a new independent director, Mr. Michael Hurlston. Mr. Hurlston brings a wealth of business and technology leadership experience, to the Board of Directors. Furthermore, in November 2020, the Board appointed a new independent director, Mr. John D. Harris II. Mr. Harris provides extensive sales and marketing expertise, along with a familiarity with the manufacturing and technology industries, to the Board of Directors. Both Messrs. Hurlston and Harris were identified as potential candidates by the third-party search firm.

 

The 2020 additions of Messrs. Hurlston and Harris further enhance the diversity of background and expertise of the Board of Directors, which will aid the Company as we continue to execute on our strategy and solidify our culture. These additions to the Board underpin our commitment to fostering a diverse and inclusive workplace and inviting fresh perspectives to support and oversee management in its day-to-day operations, while maintaining a balance between the institutional wisdom and experience of long-serving directors and the agility and novel viewpoints of newer directors. Messrs. Hurlston and Harris are being nominated by the Board of Directors for re-election by our shareholders at our 2021 annual general meeting.

 

The Nominating and Corporate Governance Committee generally recruits, evaluates, and recommends nominees for our Board based upon recommendations from our directors and management. From time to time, we retain a third-party search firm to help identify potential candidates. The Nominating and Corporate Governance Committee will consider recommendations submitted by shareholders and will evaluate such prospective nominees using the same standards that are applicable for all Board candidates. Shareholders can recommend qualified candidates for our Board by contacting our corporate secretary at Flex Ltd., No. 2 Changi South Lane, Singapore 486123. Submissions for individuals who meet the criteria outlined above will be forwarded to the Nominating and Corporate Governance Committee for review and consideration. Shareholder recommendations for our 2022 annual general meeting should be made before February 25, 2022 to ensure adequate time for meaningful consideration. We did not receive any such recommendations from our shareholders for the 2021 annual general meeting.

 

      2021 Proxy Statement    25
 

Board’s Role in Risk Oversight

 

Flex’s enterprise risk management process is designed to identify risks that could affect our ability to achieve business goals and strategies, to assess the likelihood and potential impact of significant risks to the Company’s business, and to prioritize risk control and mitigation.

 

Our Board of Directors’ role in risk oversight involves both the full Board of Directors and each of its committees. The Board as a group is regularly updated on specific risks in the course of its review of corporate strategy and business plans and as part of reports to the Board by its standing committees. The Board believes that Flex’s leadership structure, with an independent Chair, supports the Board’s risk oversight function by ensuring a strong role for the independent directors.

 

 

Flex has a resiliency framework that includes crisis management, information technology, disaster recovery and business continuity planning. Combined, these programs form a readiness umbrella for crisis situations designed to meet the needs of our Company. Every crisis is situational, and the framework we have adopted is adaptable. For example, to address the multifaceted implications of COVID-19, Flex has assembled a worldwide crisis management team of senior leadership, which gives us both a centralized view of the global impact of COVID-19 and a single point of strategic orchestration. Additionally, we organized several global specialized teams to focus on specific areas. Regionally, we activated seven crisis management teams, chaired by regional leaders to guide the response to COVID-19 in specified geographies for all Flex sites and operations. Finally, every major Flex site has a local crisis management team to execute actions and measures.

 

Our Board of Directors is regularly informed by our resiliency advisory, crisis management, and executive leadership teams and remains actively engaged in identifying, monitoring, and mitigating the risks to Flex’s stakeholders that arise from time to time. The Board continues to focus on overseeing and managing risks associated with the COVID-19 pandemic, including financial, cybersecurity and employee health and safety risks. As the world continues to address the ongoing global pandemic and recover in certain areas, the Board continues to meet regularly and work closely with our management teams to review information, assess potential issues, and oversee the development and implementation of strategies to effectively navigate this ongoing global pandemic.

 

      2021 Proxy Statement    26
 

Board Evaluations

 

Self-evaluations are a critical component of a well-functioning Board and an annual undertaking at Flex. Each year, our Nominating and Corporate Governance Committee determines the substance and structure of the evaluation for the Board, the Board committees, and each individual director based on prevailing corporate governance practices.

 

 

Succession Planning

 

On at least an annual basis, the Board, with the assistance of the Compensation and People Committee, reviews and assesses succession plans for the Chief Executive Officer position and for other executive officers in order to ensure that Flex continues to have the talent we need to successfully develop and execute our strategy and conduct our business. This review includes a broader discussion about developing and retaining executive talent. Directors become familiar with potential successors for key executive positions through various means, including regular organization and talent reviews, presentations to the Board, and formal and informal meetings.

 

Board Committees

 

Our Board has delegated oversight responsibility for certain risks and operations to its three standing committees: Audit, Compensation and People, and Nominating and Corporate Governance. The directors who serve on each committee have in-depth and relevant experience, knowledge and expertise. In addition, all three standing committees are composed entirely of independent directors, including, for the Audit and Compensation and People Committees, directors who meet the heightened independence requirements prescribed by the Securities and Exchange Commission (“SEC”) and Nasdaq for members of such committees. Our Board has adopted, and annually reviews, a charter for each standing committee. All three charters are available on our website under “Investor Relations—Corporate Governance.” All committees regularly meet in executive session without members of management present.

 

      2021 Proxy Statement    27
 

Audit Committee

 

Members:

●  Charles K. Stevens, III (Ind)

●  Michael E. Hurlston (Ind)

●  Marc A. Onetto (Ind)

●  Lay Koon Tan (Ind)

   Chair

 

 

Purpose:

To assist the Board in overseeing Flex’s financial statements, accounting and financial reporting processes and systems of internal control, independent auditors, capital structure and financial risk, cybersecurity, and compliance with legal and regulatory requirements.

 

Key Responsibilities:

●   

Facilitate Communication: Coordinate and facilitate communication regarding our financial statements and accounting and financial reporting processes and systems of internal control among our independent auditors, our financial and senior management and our Board.

 

●   

Auditor Appointment & Pre-Approval of Audit Services: Select, appoint and determine the compensation of our independent auditors.

 

●   

Enterprise Risk Management: Regularly review and guide management’s identification, monitoring, and mitigation of risk.

 

●   

Cybersecurity: Regularly review our cybersecurity programs and policies and oversee other risks relating to the Company’s information controls and security.

 

Meetings during fiscal 2021: 10

 

Average attendance during fiscal 2021: 97%

 

 
Each director on our Audit Committee is financially literate and our Board has determined that Messrs. Stevens and Tan qualify as “audit committee financial experts” as defined in SEC rules.

 

 

 

 

 

Compensation and People Committee

 

Members:

●  Erin L. McSweeney (Ind)

●  John D. Harris II (Ind)

●  Jennifer Li (Ind)

●  Willy C. Shih, Ph.D. (Ind)

   Chair

 

 

Purpose:

To assist the Board in overseeing Flex’s compensation and succession of executive officers, administer equity plans, and direct our global human capital management strategy.

 

Key Responsibilities:

●   

NEO Compensation: Determine the compensation of the Company’s Chief Executive Officer and the other NEOs.

 

●   

CEO Succession: Assist the Board of Directors in succession planning for our CEO and other executive officers.

 

●   

Equity Compensation: Administer our equity compensation plans, including the granting of our incentive, equity-based compensation awards.

 

●   

Human Capital Management Strategy: Oversee the Company’s global human capital management strategy, including corporate culture, inclusion and diversity initiatives, and high-level talent attraction, retention, and training programs.

 

Meetings during fiscal 2021: 12

 

Average attendance during fiscal 2021: 97%

 







 

 

Delegation of Authority

When appropriate, our Compensation and People Committee may form and delegate authority to subcommittees. In addition, the Compensation and People Committee may delegate to our Chief Executive Officer its authority to grant equity awards to employees who are not directors, executive officers, or other senior level employees who report directly to the Chief Executive Officer.

 

Compensation and People Committee Interlocks and Insider Participation

No member of the Compensation and People Committee has ever served as an officer of Flex. None of our directors has an interlocking or other relationship with another board or compensation committee that would require disclosure under Item 407(e)(4) of SEC Regulation S-K.

 

      2021 Proxy Statement    28
 

Nominating and Corporate Governance Committee

 

Members:

●  Michael Capellas (Ind)

●  Erin L. McSweeney (Ind)

●  Charles K. Stevens, III (Ind)

●  William D. Watkins (Ind)

  Chair

 

 

Purpose:

To assist the Board in overseeing Flex’s board composition, shareholder communications, and environmental, social, and corporate governance policies and procedures.

 

Key Responsibilities:

●   

Board Performance and Composition: Regularly review the composition and performance of the Board and its committees and make recommendations to the Board regarding Board and committee membership.

 

●   

Director Nominations: Recruit, evaluate, and recommend to the Board, individuals for appointment or election to serve as directors.

 

●   

Environmental, Social, and Corporate Governance Policies: Shape and oversee our corporate governance, including the Company’s environmental, social, and corporate governance policies and procedures. Review and enhance on an ongoing basis our corporate governance policies, principles, and practices.

 

●   

Shareholder Communications: Oversee Board communications with shareholders.

 

Meetings during fiscal 2021: 7

 

Average attendance during fiscal 2021: 100%

 








 

 

Director Education

 

Flex is a complex company operating in an ever-changing, multi-national geopolitical landscape. To ensure our directors stay abreast of the new and changing risks we face, we maintain a robust continuing director education program.

 

The key objectives of our program are to:
Keep directors current on leading and next-level boardroom practices
Ensure decisions and judgments are based on sound interpretations of the current and expected future environment
Guarantee that directors understand emerging issues so they can engage management in knowledge-based discussions about associated opportunities, risks, and challenges
Strengthen any weaknesses of individual board members
Update directors’ knowledge about corporate governance issues, compliance matters and industry trends

 

Each year, the Nominating and Corporate Governance Committee designs the structure and substance of the annual director continuing education program.

 

In fiscal year 2021, our director education program was conducted utilizing briefings prepared by internal experts and education sessions conducted by external experts.

 

The director education topics included:

 
Corporate governance trends
Inclusion and diversity oversight and evolving best practices
   

 

We also encourage our directors to participate in appropriate educational programs offered by organizations outside of the Company, such as shareholder advisory firms, accounting firms, corporate governance trade organizations, law firms, and universities, to assist our directors in maintaining their expertise in areas related to the work of the Board and the directors’ committee assignments. The Company reimburses directors for all reasonable fees and expenses associated with attending such programs, up to $10,000 per director in any fiscal year.

 

      2021 Proxy Statement    29
 

Stakeholder Engagement and Outreach

 

Our Board and management team engage on a year-round basis with a range of stakeholders, including not only our shareholders, but also our dedicated workforce, trusted vendors, and global customers. As part of Flex’s dedication to having a positive impact on all of our stakeholders the Company has designed an engagement program that offers ongoing opportunities to provide feedback and influence Flex’s corporate activity and sustainable growth.

 

Year-Round Shareholder Engagement

 

The Company’s Board of Directors and management team understand that engagement benefits our shareholders and the Company equally. Because ongoing shareholder engagement is a priority, we maintain a robust engagement program throughout the year, as shown below.

 

 

2021 Shareholder Engagement Highlights

 

Over the past twelve months, in addition to the other shareholder engagement activities described above, our Chair of the Board, Michael Capellas, along with certain members of our executive leadership, proactively reached out to shareholders to solicit feedback about our business, corporate governance, and executive compensation programs in one-on-one sessions.

 

 

      2021 Proxy Statement    30
 

During these meetings, we listened to our shareholders provide feedback on our environmental, social, and governance programs, policies, and procedures, as well as additional considerations. Mr. Capellas played an integral role in conducting these meetings and shared the feedback with our Board of Directors.

 

Shareholder Outreach Focus Areas   Feedback and Response
Corporate governance highlights:   We received positive feedback from our shareholders regarding our corporate governance program and enhancements made – including our director recruiting efforts, the strength of our diverse and skilled Board and our sustainability program.
●   Board structure and refreshment  
●   Diversity on the Board  
●   Sustainability and ESG  
●   Human capital management initiatives  
●   Global Response to COVID-19  

 

Corporate Governance Policies

 

Built upon our dedication to corporate governance, Flex has implemented a comprehensive corporate governance framework that includes our Code of Business Conduct and Ethics (“CoBCE”), Corporate Governance Guidelines, and Board Committee Charters. All are available on the Corporate Governance page of the Investor Relations section of our website.

 

Flex is a company built on relationships, and trust is the cornerstone of all relationships. We build on that trust by striving to do the right thing. Our values are shaped by a commitment to transparency, accountability, respect and inclusion.

 

Our CoBCE provides the framework of ethics that governs our business. Among other things, our CoBCE provides guidance and policy regarding ethics, compliance, harassment, conflicts of interests, antitrust and competition, bribery, insider trading, cyber and information security, and environmental protection. The CoBCE applies to all of our directors, officers, and employees, and we require everyone to participate in annual training on the CoBCE and related topics. In calendar year 2020, we achieved our goal to conduct in-person CoBCE training at every Flex site with direct labor employees and 99% of our employees worldwide completed CoBCE training. In keeping with SEC rules, we use the Investor Relations section of our website to disclose any substantive amendment to, or material waiver from, any provision of the CoBCE that applies to our principal executive officer, principal financial officer, principal accounting officer, controller, or any individual who performs similar functions. The CoBCE is reviewed at least every three years.

 

Our Corporate Governance Guidelines provides guidance and policy regarding director qualifications, committee structure, director and officer share ownership, director independence, and related-party transactions. The Corporate Governance Guidelines apply to all of our directors and officers and are reviewed on an annual basis.

 

Shareholder Communications with our Board of Directors

 

Our shareholders may communicate with our Board of Directors by sending an e-mail to Board@flex.com. Communications submitted to this e-mail address are regularly reviewed by the Company’s CEO, CFO, or General Counsel, and are submitted to the Chair of the Board, the entire Board of Directors, or individual directors, as appropriate, depending on the nature of the communication. Correspondence that is unrelated to the duties and responsibilities of the Board of Directors will be redirected or excluded, as appropriate.

 

      2021 Proxy Statement    31
 

Fiscal Year 2021 Non-Management Directors’ Compensation

 

Non-Employee Director Compensation Program

 

Objective of Non-Employee Director Compensation Program

 

The key objective of our non-employee director compensation program is to attract and retain a diverse group of highly-qualified directors with the necessary skills, experience, and character to serve on the Company’s Board of Directors. By using a combination of cash and equity-based compensation, the Nominating and Corporate Governance Committee intends to recognize the time commitment, expertise, and potential liability relating to active Board service, while also aligning the interests of our directors with the long-term interests of our shareholders. For a further discussion of the specific experience, attributes, skills and qualifications our directors bring to the Company, see “Proposal No. 1: Re-election of Directors – Qualifications of Nominees” on page 37.

 

Review of Non-Employee Director Compensation Program

 

The Nominating and Corporate Governance Committee, annually at minimum, reviews and makes recommendations to our Board for the compensation of our non-employee directors. Management, with input and guidance from our independent compensation consultant, assists the Nominating and Corporate Governance Committee in this task by compiling director compensation data from the annual reports and proxy statements of companies in our peer comparison group. For information regarding our peer group, see “Compensation Discussion and Analysis–Competitive Positioning” on page 56.

 

In fiscal year 2021, the Nominating and Corporate Governance Committee retained Frederic W. Cook & Co., Inc. (“FW Cook”), to help the Committee determine whether the compensation paid to our non-employee directors is competitive when compared to the practices of our peers. The Nominating and Corporate Governance Committee reviewed, among other things, the existing cash compensation of our non-employee directors and the grant date fair value of restricted share unit awards. With FW Cook’s assistance, the Nominating and Corporate Governance Committee also considered compensation trends and share ownership guidelines for non-employee directors. The Nominating and Corporate Governance Committee concluded that our program remains competitive.

 

Components of Non-Employee Director Compensation Program

 

Our non-employee director compensation program consists of two components:

 

Annual cash compensation, in amounts that vary based on committee and chair services; and
Annual discretionary restricted share unit awards.

 

Non-employee directors can elect to receive their annual cash compensation, or any portion thereof, in the form of fully-vested, unrestricted shares of the Company.

 

The share election option and structure of our non-employee director compensation program emphasizes equity compensation, which rewards increases in stock price, over cash fees. The Board of Directors believes our overall pay mix, which is consistent with peer practice, supports alignment of directors’ interests with those of Flex’s shareholders.

 

In addition to the compensation provided to our non-employee directors, each non-employee director is reimbursed for any reasonable out-of-pocket expenses incurred in connection with attending in-person meetings of the Board of Directors and Board committees, as well as for any fees incurred in attending continuing education courses for directors up to $10,000 per director in any fiscal year.

 

We do not pay Management directors for Board service in addition to their regular employee compensation. The compensation paid to our Management director, Ms. Advaithi, for services provided as our CEO is discussed in the sections of this proxy statement titled “Compensation Discussion and Analysis” and “Executive Compensation.”

 

      2021 Proxy Statement    32
 

Fiscal Year 2021 Annual Compensation

 

Under the Singapore Companies Act, we may only provide cash compensation to our non-employee directors for services rendered in their capacity as directors with the prior approval of our shareholders at a general meeting. Our shareholders approved the current cash compensation arrangements for our non-employee directors at certain of our previous annual general meetings, with the most recent modifications approved at our 2017 annual general meeting. The current arrangements include the following annual cash retainers, all of which are paid quarterly in arrears:

 

Amount
($)
Who receives
90,000 Each non-employee director
15,000 Each member of the Audit Committee and the Compensation and People Committee, including the chairs
40,000 Chairs of the Audit Committee and the Compensation and People Committee
8,000 Each member of the Nominating and Corporate Governance Committee, including the chair
15,000 Chair of the Nominating and Corporate Governance Committee
50,000 Chairman of the Board, in addition to applicable retainers listed above

 

The cash compensation for non-employee directors who serve less than a full quarter is pro-rated for the number of days actually served. Non-employee directors do not receive any non-equity incentive compensation or participate in any pension plan or deferred compensation plan.

 

At our 2013 annual general meeting of shareholders, our shareholders approved a change in the structure of our non-employee director compensation program that allows non-employee directors to receive compensation in the form of Company shares, cash, or a combination thereof, at the director’s election. Accordingly, each non-employee director can elect to receive the annual retainer(s) described above, in whole or in part, in the form of fully-vested, unrestricted Flex Ordinary Shares. A director making such an election will receive shares having an aggregate value equal to the portion of cash compensation exchanged, with the value based on the closing price of our shares on the date the compensation would otherwise have been paid in cash.

 

COVID-19 Related Non-Employee Director Compensation Changes

 

At end of fiscal year 2020, in light of the uncertainty created by the effects of the COVID-19 pandemic and the Company’s initiatives to reduce operating and corporate costs, our Board of Directors decreased all non-employee director cash compensation payments by 30% for the first two quarters of fiscal year 2021.

 

Fiscal Year 2021 Equity Compensation

 

Yearly Restricted Share Unit Awards

 

Each non-employee director is eligible to receive grants of restricted share unit awards at the discretion of our Board of Directors. In accordance with the compensation program recommended by the Nominating and Corporate Governance Committee and approved by the Board, each non-employee director receives, following each annual general meeting, a restricted share unit award with an aggregate fair market value of $185,000 on the date of grant. These yearly restricted share unit awards vest in full on the day immediately prior to the next year’s annual general meeting. During fiscal year 2021, each non-employee director received restricted share unit awards covering 15,866 Ordinary Shares under this program.

 

Initial Awards

 

Upon initially becoming a director of the Company, each non-employee director receives a pro-rated portion of the annual restricted share unit award granted to our continuing directors. These awards vest on the date immediately prior to our next annual general meeting. In connection with her appointment to the Board on June 3, 2020, Ms. McSweeney received a restricted share unit award covering 3,097 Ordinary Shares under this program. In connection with his appointment to the Board on September 15, 2020, Mr. Hurlston received a restricted share unit award covering 14,707 Ordinary Shares. In connection with his appointment to the Board on November 23, 2020, Mr. Harris received a restricted share unit award covering 7,988 Ordinary Shares.

 

      2021 Proxy Statement    33
 

Compensation for the Non-Employee Chair of the Board

 

In keeping with the Company’s philosophy pertaining to non-employee director compensation, the Nominating and Corporate Governance Committee seeks to provide competitive compensation to the non-employee Chair of the Board that recognizes the extensive time commitment and additional responsibilities the Chair role entails while ensuring the Chair’s interests remain aligned with the long-term interests of our shareholders. Flex’s Chair, Mr. Capellas, brings deep experience, a dedication to serving the Company, institutional knowledge, and strong leadership to Flex, among other skills and qualifications (see also “Proposal No. 1: Re-election of Directors – Qualifications of Nominees” on page 37).

 

The Nominating and Corporate Governance Committee, with the assistance of FW Cook, reviewed the compensation of the Chair of the Board.As with the review of compensation for the non-employee directors generally, this review considered whether the compensation paid to our Chair was competitive when compared to the practices of our peer group of companies. The review by FW Cook supported the view that our Chair compensation is competitive with the market and aligned with shareholder interests.

 

Components of Compensation for the Non-Employee Chair

 

In June 2017, in connection with his appointment as Chair of the Board and as Chair and member of the Nominating and Corporate Governance Committee, Mr. Capellas elected to continue his previous practice of receiving fully-vested Ordinary Shares of the Company under the director share election program in lieu of cash compensation. In addition to the cash and equity grants described above, our non-employee Chair is entitled to receive, following each annual general meeting, an additional yearly restricted share unit award with an aggregate fair market value of $50,000 on the date of grant. These shares will vest on the day immediately prior to the next year’s annual general meeting.

 

Director Share Ownership Guidelines

 

We increased Flex’s director share ownership guidelines during fiscal year 2020 to require our non-employee directors to hold a minimum number of our Ordinary Shares equivalent to five (5) times their annual cash retainer (currently $90,000) for serving as a director. Directors should reach this goal within five years of the date they are elected to our Board. As the minimum holding requirements were increased in fiscal year 2020 (from the previous requirement of four times the annual cash retainer), non-employee directors then in office were given an additional three-year grace period to meet this obligation. All of our non-employee directors have already met the higher minimum share ownership requirements or are on target to be in compliance with the requirements before the applicable deadline.

 

Director Summary Compensation in Fiscal Year 2021

 

The following table sets forth the fiscal year 2021 compensation for our non-employee directors.

 

Name Fees Earned or
Paid in Cash
($)(1)
Share Awards
($)(2)
All Other
Compensation
($)
Total
($)
Michael D. Capellas(3) 373,550 373,550
Jill A. Greenthal(4) 25,965 25,965
John D. Harris II(5)(6) 164,650 164,650
Michael E. Hurlston(5)(7) 3,196 216,489 219,685
Jennifer Li(8) 44,625 229,625 7,649 281,899
Erin L. McSweeney(5) 76,529 218,636 295,165
Marc A. Onetto 89,250 185,000 274,250
Willy C. Shih, Ph.D. 89,250 185,000 274,250
Charles K. Stevens, III 118,272 185,000 303,272
Lay Koon Tan(9) 274,250 274,250
William D. Watkins 130,050 185,000 315,050
Lawrence A. Zimmerman(10) 88,462 185,000 273,462

 

(1) This column represents the amount of cash compensation earned in fiscal year 2021 for Board and committee service. Non-employee director cash compensation payments were decreased by 30% for the first two quarters of fiscal year 2021 as part of the Company’s efforts to reduce costs in response to the COVID-19 pandemic.

 

      2021 Proxy Statement    34
 
(2) This column represents the grant date fair value of restricted share unit awards granted in fiscal year 2021 in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. The grant date fair value of restricted share unit awards is the closing price of our Ordinary Shares on the date of grant. For additional information regarding the assumptions made in calculating the amounts reflected in this column, see Note 5 to our audited consolidated financial statements for the fiscal year ended March 31, 2021,“Share-Based Compensation,” included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021. No option awards were granted in fiscal year 2021.
(3) In lieu of his cash compensation, Mr. Capellas elected to receive fully vested Ordinary Shares of the Company under the director share election program for his Board and Committee service. As a result, Mr. Capellas received 9,344 restricted share units, the value of which is reflected in the table above under “Share Awards.”
(4) Ms. Greenthal did not stand for re-election at the Company’s 2020 Annual General Meeting on August 7, 2020.
(5) Mr. Harris, Mr. Hurlston and Ms. McSweeney were appointed to the Board of Directors on November 23, 2020, September 15, 2020 and June 3, 2020, respectively.
(6) In lieu of his cash compensation, Mr. Harris elected to receive fully vested Ordinary Shares of the Company under the director share election program for his Board and Committee service.As a result, Mr. Harris received 1,909 restricted share units, the value of which is reflected in the table above under “Share Awards.”
(7) In lieu of his cash compensation, Mr. Hurlston elected to receive fully vested Ordinary Shares of the Company under the director share election program for his Board and Committee service. As a result, Mr. Hurlston received 2,873 restricted share units, the value of which is reflected in the table above under “Share Awards.”
(8) In lieu of half of her cash compensation for her Board and Committee service, Ms. Li elected to receive fully vested Ordinary Shares of the Company under the director share election program. As a result, Ms. Li received 3,008 restricted share units, the value of which is reflected in the table above under “Share Awards.” In addition, Ms. Li incurred U.S. Federal and California state taxes as a result of serving on our Board of Directors. The Company agreed to compensate Ms. Li in equity in connection with her double taxation. Ms. Li received a net amount of $7,649 in cash for her tax equalization in 2018 and 2019, on October 29, 2020.These amounts are reflected in the table above under “All Other Compensation.”
(9) In lieu of his cash compensation for his Board and Committee service, Mr. Tan elected to receive fully vested Ordinary Shares of the Company under the director share election program. As a result, Mr. Tan received 6,018 restricted share units, the value of which is reflected in the table above under “Share Awards.”
(10) Mr. Zimmerman retired from the Company’s Board of Directors effective February 28, 2021.

 

The table below shows the aggregate number of Ordinary Shares underlying unvested restricted share units held by our non-employee directors as of the 2021 fiscal year-end:

 

Name Number of Ordinary Shares
Underlying Outstanding
Restricted Share Units
(#)
Michael D. Capellas 20,154
Jill A. Greenthal 0
John D. Harris II 7,988
Michael E. Hurlston 14,707
Jennifer Li 15,866
Erin L. McSweeney 15,866
Marc A. Onetto 15,866
Willy C. Shih, Ph.D. 15,866
Charles K. Stevens, III 15,866
Lay Koon Tan 15,866
William D. Watkins 15,866
Lawrence A. Zimmerman 15,866

 

The directors do not hold any share options.

 

Treatment of Unvested Restricted Share Unit Awards upon a Change of Control

 

All of our non-employee directors have outstanding restricted share unit awards. Information regarding the treatment of outstanding restricted share units is described in the section titled “Potential Payments Upon Termination or Change in Control.”

 

      2021 Proxy Statement    35
 

Proposals to be Considered at the 2021 Annual General Meeting of Shareholders

 

Proposal No. 1: Re-election of Directors

 

Article 94 of our Constitution requires that at each annual general meeting, all of the current directors must retire from office.

 

Retiring directors are eligible for re-election. Upon the recommendation of our Nominating and Corporate Governance Committee, the Board of Directors has nominated all 11 of our incumbent directors, who will retire from office at the 2021 annual general meeting as required by Article 94 of our Constitution, for re-election.

 

If any nominee under Proposal No. 1 fails to receive the affirmative vote of a majority of the shares present and voting on the resolution to approve his or her re-election (that is, if the number of shares voted “FOR” the director nominee does not exceed the number of votes cast “AGAINST” that nominee), he or she will not be re-elected and the size of the Board will be reduced accordingly. Abstentions, if any, will have no effect.

 

The Singapore Companies Act provides that we must have at all times at least one director ordinarily resident in Singapore. As Mr. Tan is the only member of our Board of Directors who is ordinarily resident in Singapore, if Mr. Tan is not re-elected at the 2021 annual general meeting, he shall be deemed to continue in his role as a director until we appoint another director to the Board who is ordinarily resident in Singapore.

 

The proxy holders intend to vote all proxies for the nominees for directors listed below under “Nominees to our Board of Directors.” If any nominee is unable or declines to serve as a director at the time of the 2021 annual general meeting, the proxies will be voted for any nominee designated by the present Board of Directors, in accordance with Article 99 of our Constitution, to fill the vacancy. As of the date of this proxy statement, our Board of Directors is not aware of any nominee who is unable or will decline to serve as a director.

 

The Board recommends a vote “FOR” the re-election of each of the Director nominees.

 

Nominees to our Board of Directors

 

Flex is committed to having a diverse and predominantly independent Board of Directors representing a range of critical skills. Our nominees represent a responsible blend of long-serving directors who have in-depth knowledge of our business and newer members who bring fresh perspectives and additional skills.

 

Board refreshment

 

 

      2021 Proxy Statement    36
 

Qualifications of Nominees

 

Our Nominating and Corporate Governance Committee is responsible for assessing the composition and performance of the Board of Directors and its committees, and for recruiting, evaluating, and recommending candidates to be presented for appointment or election to our Board. The general attributes we expect all directors to have are high professional and personal ethics and values, an understanding of the Company’s business and industry, advanced education, broad-based business acumen, and the ability to think strategically. In addition, the Company and the Nominating and Corporate Governance Committee are committed to actively seeking highly-qualified diverse candidates (including diversity of experience, expertise, gender, race, and ethnicity) for consideration when the Board undertakes director searches.

 

The following matrix highlights many of the specific experience, attributes, skills and qualifications that our nominees for director bring to the Company and that are considered when evaluating and recommending candidates for appointment or election to our Board. Each director candidate has self-identified the following demographic information.

 

          Revathi
Advaithi
  Michael
Capellas
  John
Harris
  Michael
Hurlston
  Jennifer
Li
  Erin
McSweeney
  Marc
Onetto
  Willy
Shih
  Charles
Stevens
  Lay Koon
Tan
  William
Watkins
    Environmental
and
Sustainability
                               
    Human
Capital
Management
                             
Strategic Skills   Global
Operations
                           
    Supply Chain                                  
  Technology                        
    Business
Development
and Strategic
Planning
                       
    Corporate
Governance
                             
Core Competencies   Financial
and Audit
                           
    Risk and
Compliance
                             
  Industry
Leadership
                             
    Number of Additional Public Company Boards   1   2   1   2*   1   0   0   0   3   0   2
    Gender   Female   Male   Male   Male   Female   Female   Male   Male   Male   Male   Male
Background   Race/Ethnicity   Asian   White   Black |
Native
American
  White   Asian   White   White   Asian   White   Asian   White
    Independence                        
    Tenure on Flex’s Board   2   7   0   0   3   1   7   13   2   9   12

 

* On June 21, 2021, Ubiquiti Inc. filed an 8-K disclosing that on June 18, 2021, Mr. Hurlston notified Ubiquiti Inc. of his decision to resign from the Ubiquiti Inc. Board of Directors, effective as of August 3, 2021. As of August 4, 2021, the date of our 2021 annual general meeting of shareholders, Mr. Hurlston will only be on one additional public company board.

 

      2021 Proxy Statement    37
 
  Environmental and Sustainability Experience in environmental and sustainability topics, which is instrumental to Flex’s foundation of sustainability governance and the Company’s position as a leader in sustainability efforts.
Human Capital Management Experience in human resources, compensation and benefits, recruiting and retaining employees, succession planning, and developing and maintaining a strong workplace culture. Our Board recognizes that human capital management is a high priority for the Company as an important component to maintaining our competitiveness and world-class capabilities and as we focus on hiring and retaining the world’s best talent.
Global Operations Experience operating in a global context by managing international enterprises, residence abroad, and studying other cultures adds impactful insight and diversity to our Board’s oversight of Flex’s global footprint, including its workforce and operations in 30 countries across five continents, and enables our Board to support management in producing solutions across international markets.
Supply Chain Experience in executive positions overseeing supply chain management and exposure to supply chain issues, which is invaluable in overseeing and guiding Flex’s supply chain services that involve a network of over 100 locations across the globe.
Technology Experience in the technology sector enables our Board to guide Flex’s strategy regarding the design and manufacturing of enterprise and consumer products.
Business Development and Strategic Planning Executive level experience with business and customer development and long-term strategic planning and execution, allowing our Board to actively support the development and execution of Flex’s long-term strategy and continued business transformation.
Corporate Governance Experience on other public company boards, demonstrating an understanding of Flex’s reporting obligations and responsibilities to our shareholders, and positioning our Board to adopt best practices in public company corporate governance
  Financial and Audit Experience in accounting and audit functions and the ability to analyze financial statements and oversee budgets, providing critical oversight and support of Flex’s financial reporting and responsibility to shareholders and other stakeholders.
Risk and Compliance Experience identifying, mitigating, and managing risk in enterprise operations, which allows our Board to fulfill its risk oversight responsibilities.
Industry Leadership Experience in executive positions within the technology sector or within the manufacturing sector – areas that are fundamental to Flex’s business, strategic plan, and growth

 

The Nominating and Corporate Governance Committee considered the specific experience described in the biographical snapshots below in determining that each individual nominee should serve on our Board of Directors.

 

Revathi Advaithi  

CEO, Flex Ltd

 

Director Since: 2019

Age: 53

 

Board Committee(s):

●  None

 

Other Public Company Boards:

●  Uber Technologies, Inc.

 

Career Highlights:

CEO of Flex since February 2019
President and Chief Operating Officer, Electrical Sector, of Eaton Corporation plc, a power management company (September 2015 to February 2019)
President of Electrical Sector, Americas of Eaton (April 2012 to August 2015)
Other positions of increasing responsibility at Eaton between 2008 and 2012, including vice president and general manager of the Electrical Components Division
Several senior roles within the sourcing and supply chain functions at Honeywell between 2002 and 2008, including vice president and general manager of Honeywell’s Field Solutions business
Various positions at Eaton between 1995 and 2002, including leading the Electrical Sector in the Americas and Asia-Pacific, with a three-year assignment in Shanghai

 

      2021 Proxy Statement    38
 
Michael D. Capellas, Chair of the Board

Principal, Capellas Strategic Partners

 

Director Since: 2014

Chair Since: 2017

Age: 66

 

INDEPENDENT

 

Board Committee(s):

●  Nominating and Corporate Governance

 

Other Public Company Boards:

●  Cisco Systems, Inc. (since 2006)

 

●  The Beauty Health Company (since 2020)

 

Recent Prior Public Company Experience:

●  MuleSoft, Inc. (from 2015 to 2018)

Career highlights:

Principal at Capellas Strategic Partners since June 2013
Chairman of the Board of VCE Company, LLC (a joint venture between EMC Corporation and Cisco, with investments from VMware, Inc. and Intel Corporation) (January 2011 to November 2012)
Chief Executive Officer of VCE (May 2010 to September 2011)
Chairman and Chief Executive Officer of First Data Corporation (September 2007 to March 2010)
Senior Advisor at Silver Lake Partners (October 2006 to July 2007)
Chief Executive Officer of MCI, Inc., previously WorldCom, Inc., (November 2002 to January 2006)
President of MCI (March 2004 to January 2006)
Chairman of the Board of WorldCom (November 2002 to March 2004), and a member of the board of directors of MCI until January 2006
President of Hewlett-Packard Company (May 2002 to November 2002)
Mr. Capellas held various positions with Compaq, including President and Chief Executive Officer for three years and Chairman of the Board for two years
Other positions of increasing responsibility at Compaq, including Chief Information Officer and Chief Operating Officer

 

John D. Harris II  

Retired Vice President of Business Development, Raytheon Company

 

Director Since: 2020

Age: 60

 

INDEPENDENT

 

Board Committee(s):

●  Compensation and People

 

Other Public Company Boards:

●  Cisco Systems, Inc. (since 2021)

Career highlights:

Retired Vice President of Business Development for Raytheon Company, and chief executive officer of Raytheon International, Inc. (September 2013 to April 2020)
Vice President and General Manager of Raytheon Intelligence, Information and Services for Raytheon Company (April 2012 to September 2013)
President, Raytheon Technical Services Company (May 2010 to April 2012)
Vice President, Contracts and Supply Chain for Raytheon Company (May 2005 to May 2010)
Vice President, Contracts for Raytheon Company (June 2003 to May 2005)
Other positions of increasing responsibility at Raytheon, including Chief Information Officer and Chief Operating Officer

 

Michael E. Hurlston  

President and Chief Executive Officer, Synaptics Incorporated

 

Director Since: 2020

Age: 54

 

INDEPENDENT

 

Board Committee(s):

●  Audit

 

Other Public Company Boards:

●  Synaptics Incorporated (since 2019)

 

●  Ubiquiti Inc.*
(since 2020)

Career highlights:

President and Chief Executive Officer of Synaptics Incorporated since August 2019
Chief Executive Officer and a member of the Board of Directors of Finisar Corporation (January 2018 to August 2019)
Senior Vice President and General Manager of the Mobile Connectivity Products/Wireless Communications and Connectivity Division and other positions of increasing responsibility over a 16-year career at Broadcom Limited and its predecessor corporation

 

* On June 21, 2021, Ubiquiti Inc. filed an 8-K disclosing that on June 18, 2021, Mr. Hurlston notified Ubiquiti Inc. of his decision to resign from the Ubiquiti Inc. Board of Directors, effective as of August 3, 2021.As of August 4, 2021, the date of our 2021 annual general meeting of shareholders, Mr. Hurlston will only be on one additional public company board.

 

Chair

 

      2021 Proxy Statement    39
 
Jennifer Li  

General Partner, Changcheng Investment Partners

 

Director Since: 2018

Age: 53

 

INDEPENDENT

 

Board Committee(s):

●  Compensation and People

 

Other Public Company Boards:

●  ABB Ltd. (since 2018)

 

Recent Prior Public Company Experience:

●  Philip Morris International Inc. (2010 to 2021)

Career highlights:

General Partner of Changcheng Investment Partners (since 2018)
Chief Executive Officer and General Managing Director of Baidu Capital, the investment arm of Baidu, Inc. (the largest Internet search engine in China and the third-largest independent search engine in the world) (2017 to 2018)
Chief Financial Officer, Baidu, Inc. (2008 to 2017), responsible for a wide range of corporate functions, including Finance, Human Resources, International Operations, Marketing, Communications, and Purchasing
Various senior finance positions at General Motors companies in China, Singapore, the United States, and Canada (1994 to 2008), rising to Chief Financial Officer of GM China and Financial Controller of the North American Operations of GMAC

 

Erin L. McSweeney  

Executive Vice President, Chief of Staff to CEO, UnitedHealth Group Incorporated

 

Director Since: 2020

Age: 56

 

INDEPENDENT

 

Board Committee(s):

●  Compensation and People

 

Other Public Company Boards:

●  None

Career highlights:

Executive Vice President, Chief of Staff for CEO, UnitedHealth Group Incorporated (since February 2021)
Executive Vice President, Chief Human Resource Officer, Optum, Inc. (the health services platform of UnitedHealth Group) (2017 to February 2021)
Several positions of increasing responsibility at EMC (now Dell EMC), including Executive Vice President and Chief Human Resources Officer (2015-2017); Senior Vice President, Human Resources, Products and Marketing (2013-2015); and Chief Human Resources Officer and Vice President,Virtual Computing Environment (2009-2012)
 

 

Marc A. Onetto  

Principal, Leadership from the Mind and the Heart LLC

 

Director Since: 2014

Age: 70  

 

INDEPENDENT

 

Board Committee(s):

●  Audit

 

Other Public Company Boards:

●  None

 

Career highlights:

Principal providing executive leadership consulting through his company “Leadership from the Mind and the Heart LLC” (since 2013)
Senior Vice President of Worldwide Operations and Customer Service for Amazon.com (2006 to 2013)
Executive Vice President of Worldwide Operations for Solectron Corporation, which was acquired by Flex in 2007 (June 2003 to June 2006)
Various positions over a 15-year career with General Electric, including Vice President of GE Corporate’s European operations and head of global supply chain and operations, global quality, and global Component Division for GE Medical Systems
Various positions over a 12-year career with Exxon Corporation in supply operations, information systems, and finance
Serves on the Business Board of Advisors of the Tepper School of Business at Carnegie-Mellon University

 

  Chair

 

      2021 Proxy Statement    40
 
Willy C. Shih, Ph.D.  

Professor of Management Practice in Business Administration, Harvard Business School

 

Director Since: 2008

Age: 70

 

INDEPENDENT

 

Board Committee(s):

●  Compensation and People

 

Other Public Company Boards:

●  None

Career Highlights:

Professor of Management Practice in Business Administration, Harvard Business School (since January 2007)
Executive Vice President of Thomson, a provider of digital video technologies (August 2005 to September 2006)
Intellectual property consultant (from February to August 2005) and Senior Vice President (1997 to 2005) of Eastman Kodak Company
Ph.D. in Chemistry, the University of California, Berkeley
Broad industry career experience, including significant roles at globally recognized organizations including IBM and Silicon Graphics

 

Charles K. Stevens, III  

Retired Chief Financial Officer, General Motors

 

Director Since: 2018

Age: 61

 

INDEPENDENT

 

Board Committee(s):

●  Audit

●  Nominating and Corporate Governance

 

Other Public Company Boards:

●  Eastman Chemical Company (since 2020)

 

●  Masco Corporation (since 2018)

●  Tenneco Inc. (since 2020)

Career Highlights:

Advisor to General Motors Company (September 2018 to March 2019)
Chief Financial Officer and Executive Vice President of General Motors Company (January 2014 to September 2018), responsible for leading the financial and accounting operations on a global basis
Chief Financial Officer for North America at General Motors North America, Inc. (January 2010 to 2014)
Led GM’s financial operations for U. S. Sales, Service and Marketing, GM Canada (2006 to 2008), GM Mexico (2008 to 2010), North America Manufacturing, Customer Care and Aftersales, and Global Connected Consumer
Interim Chief Financial Officer of GM South America (December 2011 to January 2013)
Various leadership positions at GM in China, Singapore, Indonesia, and Thailand

 

Lay Koon Tan  

Retired President, Chief Executive Officer and member of the Board of Directors, STATS ChipPAC Ltd.

 

Director Since: 2012

Age: 62

 

INDEPENDENT

 

Board Committee(s):

●  Audit

 

Other Public Company Boards:

●  None

Career Highlights:

Founding President and Chief Executive Officer and a member of the Board of Directors of STATS ChipPAC Ltd. (a leading service provider of semiconductor packaging design, bump, probe, assembly, test and distribution solutions) (August 2004 to November 2015) after leading the formation of the company, and of its predecessor, ST Assembly Test Services Ltd. (June 2002 to 2004)
Chief Financial Officer, ST Assembly Test Services Ltd. (May 2000 to August 2004)
Investment banker with Salomon Smith Barney, the global investment banking unit of Citigroup Inc.
Various senior positions in government and financial institutions in Singapore

 

  Chair

 

      2021 Proxy Statement    41
 
William D. Watkins  

Retired Chief Executive Officer, Imergy Power Systems, Inc.

 

Director Since: 2009

Age: 68  

 

INDEPENDENT

 

Board Committee(s):

●  Compensation and People

●  Nominating and Corporate Governance

 

Other Public Company Boards:

●  Maxim Integrated Products, Inc. (since 2008)

●  Avaya Holdings Corp. (since 2017, Chair of the Board)

Career Highlights:

Chief Executive Officer (September 2013 to August 2016) and Chairman of the Board (January 2015 to August 2016) of Imergy Power Systems, Inc., a leading innovator in cost-effective energy storage products
Chairman of the Board (February 2013 to December 2013) and Chief Executive Officer (January 2010 to February 2013) of Bridgelux, Inc.
Chief Executive Officer (2004 to January 2009) and President and Chief Operating Officer (2000 to 2004) of Seagate Technology, responsible for Seagate’s hard disc drive operations, including recording heads, media, and other components, and related R&D and product development organizations
Various other positions with Seagate (1996 to 2000)

 

      2021 Proxy Statement    42
 
Proposal No. 2: Re-Appointment of Independent Auditors for Fiscal Year 2022 and Authorization of our Board to Fix Their Remuneration

 

Our Audit Committee has approved, subject to shareholder approval, the re-appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm to audit our financial statements and records for the fiscal year ending March 31, 2022, and to perform other appropriate services. In addition, pursuant to Section 205(16) of the Singapore Companies Act, our Board of Directors is requesting that the shareholders authorize the directors, upon the recommendation of the Audit Committee, to fix the auditors’ remuneration for services rendered through the 2022 annual general meeting. We expect that a representative from Deloitte & Touche LLP will be present at the 2021 annual general meeting. This representative will have the opportunity to make a statement and is expected to be available to respond to appropriate questions.

 

Deloitte & Touche LLP has been the Company’s independent registered public accounting firm since 2002. The Company has been advised by Deloitte & Touche LLP that neither it nor any of its associates has any direct or material indirect financial interest in the Company.

 

Principal Accountant Fees and Services

 

Set forth below are the aggregate fees billed by Deloitte & Touche LLP, a member firm of Deloitte Touche Tohmatsu, and its respective affiliates for services performed during fiscal years 2021 and 2020. All audit and permissible non-audit services reflected in the fees below were pre-approved by the Audit Committee in accordance with established procedures.

 

   Fiscal year 
   2021   2020 
(in millions)  ($)   ($) 
Audit Fees   11.6    11.5 
Audit-Related Fees   0.1    0.1 
Tax Fees   0.9    1.0 
All Other Fees   0.0    0.0 
Total   12.6    12.6 

 

Audit Fees consist of fees for professional services rendered by our independent registered public accounting firm for the audit of our annual consolidated financial statements included in our Annual Report on Form 10-K (including services related to rendering an opinion under Section 404 of the Sarbanes-Oxley Act of 2002) and the review of our consolidated financial statements included in our Quarterly Reports on Form 10-Q. These fees include fees for services that are normally incurred in connection with statutory and regulatory filings or engagements, such as comfort letters, statutory audits, and consents and the review of documents filed with the SEC.

 

Audit-Related Fees consist of fees for assurance and related services by our independent registered public accounting firm that are reasonably related to the performance of the audit and not included in Audit Fees.

 

Tax Fees consist of fees for professional services rendered by our independent registered public accounting firm for tax compliance, tax advice, and tax planning services, including assistance regarding federal, state and international tax compliance, return preparation, tax audits and customs and duties.

 

All Other Fees consist of fees for professional services rendered by our independent registered public accounting firm for permissible non-audit services.

 

Audit Committee Pre-Approval Policy

 

Our Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year, and any pre-approval is detailed as to the particular service or category of services. The independent registered public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. The Audit Committee also may pre-approve particular services on a case-by-case basis.

 

Our Audit Committee has determined that the provision of non-audit services under appropriate circumstances may be compatible with maintaining the independence of Deloitte & Touche LLP, and that all such services provided by Deloitte & Touche LLP to us in the past were compatible with maintaining such independence. The Audit Committee is sensitive to the concern that some non-audit services, and related fees, could impair independence. However, the Audit Committee also recognizes that in some areas, services that are identified by the relevant regulations as “tax fees” or “other fees” are sufficiently related to the audit work performed by Deloitte & Touche LLP that it would be highly inefficient and unnecessarily expensive

 

      2021 Proxy Statement    43
 

to use a separate firm to perform those non-audit services. The Audit Committee intends to evaluate each such circumstance on its own merits, and to approve the performance of non-audit services where it believes efficiency can be obtained without meaningfully compromising independence.

 

The Board recommends a vote “FOR” the re-appointment of Deloitte & Touche LLP as our independent auditors for fiscal year 2022 and authorization of the Board, upon the recommendation of the Audit Committee, to fix their remuneration.

 

Message from the Audit Committee

 

We, the members of Flex’s Audit Committee, assist our Board of Directors in overseeing financial accounting and reporting processes; systems of internal controls; the appointment, compensation and oversight of our external auditor; and our compliance with legal and regulatory requirements. We are committed to the values of independence and transparency in the discharge of our duties.

 

In furtherance of independent oversight, our committee is composed entirely of independent and financially literate directors, including two audit committee financial experts. Further, we annually assess the independence of our external auditors considering any non-audit fees or services and the tenure of our lead audit partner.

 

We also take measures to ensure transparency between ourselves, members of management, and our external auditors including holding regular private sessions with external auditors, maintaining open lines of communication with members of management, and performing annual assessments of the qualifications and work quality of our external auditors.

 

We typically hold 6 meetings each fiscal year, in connection with regularly scheduled Board meetings and the filing of year-end financial results. Additionally, we meet as needed to address emerging concerns including financial and accounting practices and ethics and compliance concerns. Specifically, in discharging our oversight duties at each regularly scheduled Audit Committee meeting, we:

 

review and discuss with management and Deloitte our quarterly earnings press releases, related periodic reports filed with the SEC, and our audited financial statements for the fiscal year, as well as the overall quality of our financial reporting process;
receive updates from Flex’s Chief Ethics and Compliance Officer regarding legal and compliance matters including reports about the receipt and resolution of employee or other concerns raised regarding financial reporting and other compliance matters;
receive and discuss Audit and Risk Management Services (“ARMS”) reports;
review and discuss accounting and tax regulatory, proceedural, and program updates;
review and discuss with management, internal audit and Deloitte the evaluation, execution, and effectiveness of the Company’s internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002; and
inquire about significant business, operational and reporting risks and assessed the steps management is taking to control these risks.

 

Additionally, each quarter, we review and discuss updates from Flex’s Chief Information Officer regarding topics such as cybersecurity and information security. For an exhaustive discussion of our responsibilities we invite you to review our Audit Committee charter which we assess on an annual basis and revise, if necessary.

 

Audit Committee Report

 

The Audit Committee has reviewed and discussed with management and with our independent auditors, Deloitte & Touche LLP, our audited consolidated financial statements for the fiscal year ended March 31, 2021, as well as management’s assessment and our independent auditors’ evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2021. Flex management represented to the Audit Committee that our audited consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America.

 

The Audit Committee also discussed with our independent auditors the matters required to be discussed by the applicable rules of the Public Company Accounting Oversight Board and the SEC. The Audit Committee also has discussed with our independent auditors the firm’s independence from Company management and the Company, and reviewed the written disclosures and letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence. The Audit Committee also has considered whether the provision of non-audit services by our independent auditors is compatible with maintaining the independence of the auditors. The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by our independent auditors. All audit and permissible non-audit services performed by our independent auditors during fiscal years 2021 and 2020 were pre-approved by the Audit Committee in accordance with established procedures.

 

      2021 Proxy Statement    44
 

Our independent auditors perform an independent audit of our consolidated financial statements in accordance with generally accepted auditing standards and express an opinion on these consolidated financial statements. In addition, our independent auditors express their own opinion on the effectiveness of our internal control over financial reporting.The Audit Committee monitors these processes.

 

Based on the Audit Committee’s discussions with management and our independent auditors and based on the Audit Committee’s review of our audited consolidated financial statements together with the reports of our independent auditors on the consolidated financial statements and the representations of our management with regard to these consolidated financial statements, the Audit Committee recommended to the Company’s Board of Directors that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021, which was filed with the SEC on May 19, 2021.

 

Submitted by the Audit Committee of the Board of Directors:

 

Charles K. Stevens, III Michael E. Hurlston Marc A. Onetto Lay Koon Tan

 

      2021 Proxy Statement    45
 
Proposal No. 3: Non-Binding, Advisory Resolution on Executive Compensation

 

We are asking our shareholders to approve, in a non-binding, advisory vote, the compensation of our named executive officers (NEOs) as reported in this proxy statement in the “Compensation Discussion and Analysis” and the compensation tables and accompanying narrative disclosure under “Executive Compensation.”

 

Flex’s compensation philosophy is that pay should be meaningfully aligned with performance. Our pay programs are designed to tie actual pay delivery for our executives to performance against the Company’s short-term and long-term performance goals and the creation of shareholder value. A key objective of our compensation programs is to attract, retain and motivate superior executive talent by providing competitive pay opportunities and then paying for the achievement of rigorous Company objectives, while balancing the need to avoid excessive or inappropriate risk-taking and maintaining an appropriate cost structure.

 

We urge shareholders to carefully read the Compensation Discussion and Analysis section of this proxy statement. The Compensation Discussion and Analysis describes how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives and shows the link between our performance and our executives’ incentive compensation.We also encourage shareholders to review the Summary Compensation Table and the other related compensation tables and narrative, which provide detailed information on the compensation of our NEOs.

 

While the vote on this resolution is advisory and not binding on the Company, each member of the Compensation and People Committee and the Board values the opinions of our shareholders and will consider the outcome of the vote on this resolution when making decisions regarding future executive compensation arrangements. We have held a say-on-pay advisory vote on an annual basis since 2011; the next say-on-pay vote is anticipated to occur at our 2022 annual general meeting.

 

The Board recommends a vote “FOR” the approval of the non-binding, advisory resolution on executive compensation.

 

Message from the Compensation and People Committee

 

Over the course of the year, our CEO, Ms. Advaithi, led our progress, guided by four strategic business goals: improving our portfolio mix; continuing to build on our advanced technology and manufacturing capabilities; improving operational efficiency and execution; and adapting our systems to leverage the power of data and intelligence. We, the Compensation and People Committee, are committed to compensation programs that help drive Flex’s focus on disciplined growth. We periodically assess our compensation programs to ensure they are appropriately aligned with our business strategy and are achieving their objectives. In addition, we regularly review external data and best practices in executive compensation to ensure our compensation programs and associated governance provisions remain shareholder-friendly and keep pace with evolving market trends. For fiscal year 2021, we recommended, and our Board approved certain changes in our compensation policies and practices that enhance our alignment with best practices. For information regarding these changes, see “Compensation Discussion and Analysis– Summary of Compensation Program Changes for Fiscal Year 2021” (page 50).

 

Compensation and People Committee Report

 

The Compensation and People Committee of the Board of Directors has reviewed and discussed with management the Compensation Discussion and Analysis that follows this report. Based on this review and discussion, the Compensation and People Committee recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in the Company’s proxy statement for the 2021 annual general meeting of shareholders.

 

Submitted by the Compensation and People Committee of the Board of Directors:

 

Erin L. McSweeney John D. Harris II Jennifer Li Willy C. Shih, Ph.D.

 

      2021 Proxy Statement    46
 

Compensation Discussion and Analysis

 

This CD&A is organized into the following key sections:  
Executive Summary 47
Compensation Philosophy 53
Compensation-Setting Process and Decisions for Fiscal Year 2021 54
Fiscal Year 2021 Executive Compensation 57

 

Introduction

 

In this Compensation Discussion and Analysis (CD&A) section, we discuss the material elements of our compensation programs and policies, including our overall compensation philosophy and program objectives, and how and why the Compensation and People Committee arrived at specific compensation policies and decisions involving our NEOs. Our NEOs for fiscal year 2021 were:

 

Name Position
Revathi Advaithi Chief Executive Officer
Christopher Collier(1) Former Chief Financial Officer
Paul R. Lundstrom(2) Chief Financial Officer
Francois P. Barbier President, Global Operations and Components
Paul Humphries(3) Former President, Flex Reliability Solutions
Michael Hartung(4) President, Flex Agility Solutions
Scott Offer Executive Vice President, General Counsel
(1) Mr.Collier resigned from his position of Chief Financial Officer effective September 1, 2020 and remained with the Company as an advisor through March 31, 2021.
(2) Mr. Lundstrom became our Chief Financial Officer effective September 1, 2020
(3) Mr. Humphries retired from his position of President, Flex Reliability Solutions effective November 30, 2020 and remained with the Company as an advisor through March 31, 2021.
(4) Mr. Hartung was promoted to his position of President, Flex Agility Solutions, and became an NEO, effective April 7, 2020

 

Executive Summary

 

Our pay programs are designed to align executives’ compensation with performance against the Company’s short-term and long-term objectives and the creation of shareholder value. We use a mix of performance metrics that are intended to reward different aspects of Company achievement.

 

      2021 Proxy Statement    47
 

Performance and Company Highlights for Fiscal Year 2021

 

Flex’s operating performance set a number of records in fiscal year 2021 despite macroeconomic headwinds, translating into shareholder return (TSR) of 64%.

 

In fiscal year 2021, we continued to execute against and made significant progress on strategic transformation goals, despite global disruptions:

 

Revenue saw only a small decline of approximately 0.4% year-over-year despite the macroeconomic challenges, and in part due to the transformational strategy to shift mix to higher margin markets.
Adjusted operating profit (OP) improved by 15% year-over-year and adjusted free cash flow (FCF) improved by 1%.
In addition to the achievements above, the Company set fiscal year records on adjusted gross margin (7.3%), adjusted operating margin (4.3%), and adjusted earnings per share (EPS) ($1.57) and GAAP EPS ($1.21). We also closed the year at an all-time high quarter-end cash position ($2.6B).

 

Within the short-term program for the NEOs in fiscal 2021, we used the following metrics: revenue, adjusted OP, and adjusted FCF. These were the same metrics we focused on in our quarterly performance updates to shareholders. In the past, we had a fourth metric—adjusted EPS which was removed for fiscal year 2021 because it overlapped with adjusted OP, and because it was added to the fiscal year 2022 performance share units (PSUs) plan as a three-year measurement.

 

Our recent history of performance on the three short-term metrics, shown below, highlights our improved margins, profitability, and cash flow in fiscal year 2021.(1)

 

 

Our adjusted FCF performance and improved profitability, achieved despite the COVID-19 pandemic, supported our return of capital to shareholders through our share repurchase program, as shown below. Although the rate of repurchases slowed in fiscal year 2021 compared to the prior year, this was due to temporary efforts to enhance liquidity during the early part of the COVID-19 pandemic. Despite the challenges experienced in fiscal year 2021, the volume of repurchases nearly matched the fiscal year 2019 amount.

 

(1) See Annex A to the proxy statement for a reconciliation of non-GAAP and GAAP financial metrics.

 

      2021 Proxy Statement    48
 

 

We consider the operating performance measures described above to be the key drivers of our total TSR, which is compared to the return of the S&P 500 index (TSR) to determine the funding for our PSUs. Absolute stock price performance is an implicit metric for our PSUs and our service-based restricted share unit awards (RSUs) because it determines the value our NEOs ultimately realize from their PSU and RSU awards at vesting. As noted above, our absolute TSR for fiscal year 2021 was 64%, and our TSR percentile rank for each of the past three fiscal years is shown below.

 

 

Compensation Highlights for Fiscal Year 2021

 

Our pay-for-performance compensation philosophy aims to tie actual pay delivery to performance. We believe above-target performance should be rewarded when achieved, and below-target performance should lead to reduced compensation, including zero payouts for incentive elements when performance thresholds are not met. We also believe we should deliver a significant portion of executive pay in the form of equity awards, which are directly aligned with value delivered to shareholders.

 

One-Time COVID-19-Related Pay Actions

 

No merit increases to base salaries and temporary COVID-19-related reductions: In order to address COVID-19-related uncertainty and preserve cash during the initial stage of the pandemic, NEO salaries were reduced for the first half of the fiscal year by 50% for the CEO and 30% for the other NEOs.
The bonus plan was eliminated for the first half of the fiscal year to address COVID-19-related uncertainty and preserve cash, with no offsetting increase in the second half.

 

      2021 Proxy Statement    49
 

Annual, Regular Cycle Pay Actions

 

Base Salaries: The only executive to receive an increase to his annualized salary was Mr. Hartung. This increase was designed to align his salary to market and to recognize the increased responsibilities associated with his promotion to the role of President, Agility.
Bonus payouts for the second half of the year were above target, but below target on a full-year basis: We exceeded our financial goals in the second half of the year despite the challenges and uncertainty encountered in fiscal year 2021. Our CEO’s fiscal year 2021 bonus paid out at 82.3% of target (164.6% based on second-half results). Bonuses for the other continuing NEOs paid out between 74.6% and 88.7% (149% and 177% based on second-half results).
Long-term incentive awards were held flat vs. prior year (with PSUs valued at face value), with the exception of Mr. Hartung who received a higher grant than the prior year due to his promotion as described in Base Salaries section below.
Performance share plan (TSR) payout = 0%: No payouts were earned under the TSR PSUs for the three-year performance cycle ending in fiscal year 2021 (PSUs vesting in June 2020), as the threshold performance level was not achieved.

 

Impact of COVID-19 Related Executive Compensation Reductions

 

The COVID-19-related pay actions listed above (temporary salary and bonus target reductions) reduced the pay opportunity in fiscal year 2021 as illustrated below for the CEO.

 

 

Summary of Compensation Program Changes for Fiscal Year 2021

 

The Company made a number of program design changes for fiscal year 2021, driven by the need to adapt to a rapidly changing business environment during the COVID-19 pandemic and continuously evolve our compensation programs to ensure we are offering a compelling value proposition to employees in a manner that aligns their interests with those of our shareholders. The following is a summary of key program changes, in addition to temporary salary reductions and bonus elimination during the first half of fiscal year 2021 described above.

 

      2021 Proxy Statement    50
 
Program Element Fiscal Year 2021 Design Changes Rationale for Change
Compensation Peer Group Market cap was added as an additional screening criterion to the existing revenue filter in order to better reflect Flex’s profitability within the peer group. This change resulted in a peer group with a lower median market cap. Adjust the peer group to include companies more representative of the Company’s market cap.
Bonus Metrics Bonus metrics and weightings were changed to place greater emphasis on elements of performance that management could most directly influence during a period of heightened uncertainty. Adapt to greater uncertainty of the business environment as a result of COVID-19. Eliminate overlap between adjusted OP and adjusted EPS.
RSUs RSU vesting schedules were changed from four years to three years, ratable. This change impacted all participants in the plan, representing over 1,000 employees. Align to dominant practice within the technology industry to remain competitive.
TSR PSUs(1) TSR PSU measurement methodology was changed from a point-to-point measurement to three distinct performance periods—12 months, 24 months and 36 months—within a three-year vesting cycle. Minimize the potential impact of short-term share price volatility at the end of the performance period. Provide a payout more reflective of the shareholder experience over the entire three-year cycle.
Retirement, Death and Disability Treatment of RSUs, PSUs, and NQDC The treatment of RSU, PSUs, and Non-Qualified Deferred Contributions (“NQDC”) following termination due to retirement, death and disability was updated. Align treatment to current market norms. In the case of retirement, align participants’ interests with the Company’s need to ensure a smooth transition of their responsibilities.
(1) For fiscal year 2022, PSUs will be equally weighted between TSR and adjusted EPS growth.

 

Pay and Performance Alignment for Fiscal Year 2021

 

The key vehicles we use to ensure that compensation realized by our executives is aligned with results generated for our shareholders are the annual incentive bonus and PSU programs. We set rigorous targets under our annual bonus plan, resulting in funding of our NEO bonuses that has averaged 66% of target over the last three years (82.3% in fiscal year 2021). Over the first two years of this period, performance results fell short of target. There was no bonus opportunity in the first half of fiscal year 2021, but performance results substantially exceeded target for the second half of the year, resulting in a payout of 164.6% of target for the final two fiscal quarters or 82.3% of the full year target opportunity, as shown below.

 

 

      2021 Proxy Statement    51
 

PSUs are a major component of our NEOs’ target total direct compensation. As illustrated below, our most recently completed performance cycle funded at 0% (for the cycle ending in fiscal year 2021), based on TSR that was below the threshold performance level against the S&P 500.

 

 

Fiscal Year 2021 Executive Compensation Summary

 

Our executive compensation program is structured to be competitive and allow us to attract and retain a high caliber leadership team. Further, it is intended to provide direct alignment between pay and performance. The illustrations below describe the key elements of direct compensation for our executives in fiscal year 2021 and show how those elements were allocated. A significant portion of pay is performance-based and 89% of target compensation is at risk for our CEO and 80% is at risk for our other NEOs.

 

 

(1) PSUs are shown at face value (the target number of shares awarded multiplied by the closing stock price on the grant date).
(2) Based on annualized salary and annual cash incentive values excluding the impact of temporary salary reductions as well as the elimination of bonuses for the first 6 months of fiscal year 2021.


 

      2021 Proxy Statement    52
 

 

Compensation Philosophy

 

Flex’s compensation philosophy is that pay should be meaningfully aligned with performance. Our pay programs are designed to tie actual pay delivery for our executives to performance against the Company’s short-term and long-term objectives and the creation of shareholder value. A key purpose of our compensation programs is to attract, retain and motivate superior executive talent by providing competitive pay opportunities and then paying for the achievement of rigorous performance goals, while balancing the need to avoid excessive or inappropriate risk-taking and maintaining an appropriate cost structure. We actively manage our pay-for-performance philosophy as described below.

 

Element   Overview
Base salaries and target cash compensation  

  We regularly benchmark pay against a set of industry peers.

  Base salaries and target cash compensation are competitively positioned for our NEOs to manage fixed costs and emphasize paying for performance.

Substantial emphasis on at-risk compensation  

  Programs are designed to link pay delivery to the achievement of pre-determined performance goals that directly correlate with enhanced shareholder value.

  89% of Ms. Advaithi’s fiscal year 2021 target total direct compensation was at-risk and 80% of target total direct compensation for our other NEOs, on average, was at-risk.

  100% of at-risk compensation is based on achievement of core financial metrics or is subject to market risk based on absolute or relative TSR performance. All incentive outcomes were based on a formulaic calculation of results against pre-determined financial or TSR-based performance targets.

  The Board, or the Compensation and People Committee if so delegated by the Board, maintains the authority to adjust annual incentive bonus payouts if such payouts do not align with the Company’s overall performance.

Focus on long-term performance  

  While measurement of short-term results maintains day-to-day focus, we believe that shareholder value is built over the long term.

  For Ms. Advaithi’s fiscal year 2021 target total direct compensation, 72% was in the form of long-term incentives, half of which are linked to achievement of TSR performance versus the S&P 500. On average, 58% of target total direct compensation for our other NEOs was in the form of long-term incentives, half of which are tied to achievement of long-term TSR performance versus the S&P 500.

  We emphasize the NEOs’ alignment with our shareholders’ long-term interests by enforcing rigorous, and recently increased, share ownership guidelines.

 

      2021 Proxy Statement    53
 

Our compensation program is highly responsive to changes in our operating and stock price performance, as illustrated below with respect to our CEO’s total direct compensation.

 

 

Illustrative Assumptions Bonus & PSU Payouts Stock Price
Low Performance Scenario 50% of Target $5.43 (Grant Price – 50%)
High Performance Scenario 150% of Target $16.29 (Grant Price + 50%)

Compensation Element   Description Base salary   In fiscal year 2021, only one NEO received a salary increase (of 27.3%) because he assumed a new role. Short-Term Incentive     Corporate Business Unit NEOs Corporate executives are measured entirely on Flex financial objectives. 20% 25% For fiscal year 2021, 100% of the award opportunity was based on objectives for the second half of the year. Revenue BU Revenue 40% 25% Business unit (BU) NEO metrics are evenly split between corporate and BU results (BU revenue and BU OP). Adjusted OP BU OP     For fiscal year 2021, we removed the EPS metric due to its significant overlap with OP.   50% Vehicles & Weights 40% Corporate We increased the weightings of adjusted OP (from 30% to 40%) and FCF (from 25% to 40%) to focus participants on meeting profit commitments and converting this profit into FCF. Adj. FCF Results + 0 - 20% Corporate ITO Modifier We added an inventory turnover measure (ITO) as a modifier of other metrics, as this is an area the Company was striving to improve in fiscal year 2021. Long-Term Incentive     50% Relative TSR PSUs   50% are PSUs that may be earned based on Flex’s TSR versus that of the S&P 500 over 12-, 24- and 36-month periods within a three-year vesting cycle.   50% are RSUs that vest equally over a three-year period. 50% Vehicles & Weights Service-Based RSUs         Long-term cash incentives under our Deferred Compensation Plan have a Deferred Compensation target value equal to 30% of salary for each NEO, with 50% of funding fixed     and 50% of funding linked to corporate bonus payout results.

 

Compensation-Setting Process and Decisions for Fiscal Year 2021

 

Alignment with Compensation and Corporate Governance Best Practices

 

The Compensation and People Committee regularly reviews our compensation programs, peer company data, and best practices in executive compensation. We have adopted corporate governance and compensation practices and policies that our Compensation and People Committee, along with our Board, believes help to advance our compensation goals and philosophy.


 

      2021 Proxy Statement    54
 

 

Compensation and People Committee

 

The Compensation and People Committee is responsible for recommending to our Board the compensation of our Chief Executive Officer and all other NEOs. The Compensation and People Committee also oversees management’s decisions concerning the compensation of other Company officers, administers our equity compensation plans, and evaluates the effectiveness of our overall executive compensation programs. Our Compensation and People Committee also reviews the Company’s talent assessment and succession planning.

 

The Compensation and People Committee regularly assesses our compensation programs to ensure they are appropriately aligned with our business strategy and are achieving their objectives. The Compensation and People Committee also reviews market trends and changes in competitive pay practices. Based on its review and assessment, the Compensation and People Committee regularly approves changes in our compensation programs or recommends such changes to our Board.

 

Independent Consultants and Advisors

 

The Compensation and People Committee has the authority to retain and terminate any independent, third-party compensation consultants and to obtain advice and assistance from internal and external legal, accounting, and other advisors. During fiscal year 2021, the Compensation and People Committee retained FW Cook as its independent compensation consultant.

 

In fiscal year 2021, FW Cook furnished the Compensation and People Committee with reports on the following topics: peer group composition, compensation data and analysis relating to the compensation of our NEOs, short- and long-term compensation program design, compensation program risk assessment, annual share utilization and shareholder dilution levels resulting from equity plans, and executive share ownership and retention values.

 

FW Cook informed the Compensation and People Committee, and the committee agreed, that there are no personal or business relationships between any FW Cook employee and any member of the Compensation and People Committee or any NEO beyond the Flex relationship. Based on this information and other factors, including the factors set forth under Rule 10C-1 under the Securities Exchange Act of 1934, as amended (referred to in this proxy statement as the Exchange Act), the Compensation and People Committee assessed the independence of FW Cook and concluded that no conflict of interest exists that would prevent FW Cook from independently advising the Compensation and People Committee. Outside of engaging on executive and Board member compensation and related matters, FW Cook does not provide any other services to the Company.

 

      2021 Proxy Statement    55
 

Role of Executive Officers in Compensation Decisions

 

The Compensation and People Committee meets with our Chief Executive Officer and other executives to obtain recommendations with respect to the structure of our compensation programs. The CEO and certain other executives also assess the performance of other individual executives and make recommendations regarding their compensation. Decisions related to the compensation of the CEO (including recommendations to the Board regarding the same) are made independently by the Compensation and People Committee, without input from management. In addition, our CEO and other executives develop recommendations for performance measures and target payout opportunities under our incentive bonus plan based on management’s business forecast—both at the Company and business unit levels. These recommendations are approved by the Compensation and People Committee as well as by our Board when appropriate.

 

Competitive Positioning

 

Relying upon data provided by our independent compensation consultant, the Compensation and People Committee undertakes a review, on an annual basis, of the compensation peers that we use to provide insight into market-competitive pay programs, levels and practices. The criteria used to develop the peer group was updated from prior years to widen the revenue screen and add a market capitalization screen. These changes resulted in a peer group that is better aligned with Flex’s size and that naturally evolves with Flex over time. In January 2020, FW Cook presented, and the Compensation and People Committee approved, 14 companies that are comparable to Flex as our compensation peers for fiscal year 2021 considering the following criteria:

 

 

Our peer group for fiscal year 2021 compensation decisions consisted of the following companies:

 

Arrow Electronics, Inc. Jabil, Inc. Synnex Corporation
Avnet, Inc. PACCAR Inc Textron
Corning Incorporated Parker-Hannifin Corporation Western Digital Corporation
Cummins Inc. Sanmina Corporation Xerox Holdings Corporation
Hewlett Packard Enterprise Company Seagate Technology Plc  

 

      2021 Proxy Statement    56
 

The peer group revenue and market cap summary statistics, as of the time of the analysis, are shown below.

 

 

In addition to our peer group companies, the Compensation and People Committee reviews standardized surveys of large technology and manufacturing firms to evaluate the competitiveness of Flex’s compensation programs in the context of general compensation practices.

 

Fiscal Year 2021 Executive Compensation

 

Base Salary

 

The Compensation and People Committee typically reviews base salaries every year and makes recommendations to the Board of Directors about adjusting or maintaining salary levels to reflect competitive market data, individual performance, internal equity and promotions or changes in responsibilities. At the end of fiscal year 2020, in light of the uncertainty created by the effects of the COVID-19 pandemic and the Company’s initiatives to reduce costs, the CEO and the other NEOs proposed, and the Compensation and People Committee and the Board of Directors approved, reductions of base salaries for our NEOs – by 50% for the CEO and by 30% for the other NEOs—during the first two quarters of fiscal year 2021.

 

The following table sets forth the base salaries of our NEOs for fiscal year 2021.

 

Name and Title Annualized
Base Salary
for Fiscal Year
2020
($)
Annualized
Base Salary
for Fiscal Year
2021
($)
Percentage
Change
($)
Actual Base
Salary for
Fiscal Year
2021 (with
Reduction)
($)
Percentage
Change (with
Reduction)
Revathi Advaithi          
Chief Executive Officer 1,150,000 1,150,000 0% 862,500 -25%
Christopher Collier          
Chief Financial Officer 710,000 710,000 0% 603,500 -15%
Paul R. Lundstrom          
Chief Financial Officer N/A 700,000 N/A 390,833 N/A
Francois P. Barbier          
President, Global Operations and Components 710,000 710,000 0% 603,500 -15%
Paul Humphries,          
President, Reliability Solutions 710,000 710,000 0% 603,500 -15%
Michael Hartung(1)          
President, Agility Solutions N/A 700,000 N/A 514,023 N/A
Scott Offer          
Executive Vice President, General Counsel 629,200 629,200 0% 534,820 -15%

 

(1) Mr. Hartung was the only executive to receive an increase to his annualized salary. During fiscal year 2021, Mr. Hartung’s salary was increased from $550,000 to $700,000 to align his salary to market and to recognize the increased responsibilities associated with his promotion to the role of President, Agility.

 

      2021 Proxy Statement    57
 

Incentive Bonus Plan

 

The Company cancelled the incentive bonus plan for the first half of fiscal year 2021. This decision was made as our fiscal year 2021 (which began on April 1, 2020) closely coincided with the global outbreak of the COVID-19 pandemic and peak uncertainty in the business environment and our ability to forecast financial performance. The bonus plan was restored for the second half of fiscal year 2021, and the incentive payouts were based entirely on achievement of the financial performance objectives listed below during those six months (with bonus opportunities set at 50% of the full year target amounts).

 

In designing the incentive bonus plan, our Chief Executive Officer and management team develop and recommend performance metrics and targets, which are reviewed and are subject to final approval by the Compensation and People Committee. Fiscal year 2021 corporate level performance metrics, weightings, and changes relative to fiscal year 2020 were as follows:

 

Metrics Fiscal Year 2020 Weightings Fiscal Year 2021 Weightings
Adjusted OP 30% 40%
Adjusted EPS 25% None, removed
Adjusted FCF 25% 40%
Revenue Growth 20% 20%
Inventory Turnover (ITO)   Used as a modifier

 

The adjusted EPS metric was removed because it overlapped with adjusted OP. Concurrent with this change, we increased the weightings of adjusted OP and FCF to focus participants on meeting profit commitments and converting this profit into free cash flow by being efficient with working capital and inventory management. We added ITO as this is an area the Company was focused on improving in fiscal year 2021.The ITO metric incentivizes participants to focus on improving the efficiency of our capital spend (not tying it up in inventory) and minimizing inventory obsolescence risk. The ITO modifier could have added 5% to 20% to the aggregate payout achieved on other metrics, if the targeted ITO performance range had been achieved. Targeted performance range on this metric was not reached.

 

Adjusted OP acts as both a metric within the plan, and the overall funding metric of our global bonus program, as illustrated below. Adjusted OP achievement generates an enterprise-wide funding pool based on the same adjusted OP targets as used for the Corporate NEO bonus plan. To the extent corporate OP funding is either above or below the enterprise-wide payout, a corresponding adjustment is made to align the two. The funding generated by our OP achievement acts to ensure affordability and alignment to shareholder returns.

 

 

Performance for BU Presidents is measured at both the corporate and segment (business unit) levels, with a 50% weighting on each. The corporate performance is as defined above. The metrics for segment performance are segment OP and revenue, weighted equally. We reduced the weighting of segment results (from 100% in fiscal year 2020 to 50% in fiscal year 2021) to emphasize the importance of enterprise-wide performance, and to encourage a balanced approach between accountability for segment performance and cooperation across the enterprise.

 

      2021 Proxy Statement    58
 

The following table summarizes the key features of our fiscal year 2021 incentive bonus plan.

 

Feature Component Objectives
Performance
targets
●  Based on key short-term Company and business unit financial metrics

●  Aligns executive incentives with performance

●  Rewards achievement of short-term objectives

Performance
measures

●  Revenue growth and adjusted OP at the Company and business unit level, and adjusted FCF and ITO at the company level

●  Weightings for these metrics are fixed, and measured at the corporate level for all executives and at the business unit level for business unit executives

●  Emphasizes pay-for-performance by linking individual compensation to performance on metrics that are key drivers of shareholder value

●  Promotes accountability by tying payouts to achievement of minimum performance thresholds

Bonus
payments

●  Based entirely on achievement of financial performance objectives, with no individual performance component

●  Target bonus opportunities set at percentage of base salary, based on executive’s level of responsibility

●  Annual bonuses range from 0% of target to a maximum of 200% of target (subject to elimination of first half bonuses for fiscal year 2021)

●  No payout awarded for any measure where threshold performance is not achieved

●  The Board, or the Compensation and People Committee if so delegated by the Board, has the authority to adjust bonus payouts if appropriate in the context of the Company’s overall performance

●  Reflects the Company’s emphasis on pay-for-performance by linking individual compensation to financial performance

●  Encourages accountability by conditioning bonus payments on the achievement of at least the minimum performance thresholds

 

Non-GAAP Adjustments

 

We used adjusted non-GAAP performance measures (adjusted OP and adjusted FCF) for our incentive bonus plan in fiscal year 2021. Using adjusted measures eliminates the distorting effect of certain unusual income or expense items. The adjusted performance measures are consistent with those used in our quarterly earnings releases. The adjustments were intended to align award payout opportunities with the underlying growth of our business and avoid misalignment in outcomes based on unusual items.

 

In calculating non-GAAP financial measures, we excluded certain items to make it easier to compare the Company’s operating performance on a period-to-period basis because such items are not, in the Compensation and People Committee’s view, related to the Company’s ongoing operational performance. The non-GAAP measures are used to evaluate more accurately the Company’s operating performance, to calculate return on investment, and to benchmark performance against competitors. For fiscal year 2021, non-GAAP adjustments consisted of excluding after-tax stock-based compensation expense; amortization of intangible, customer-related assets impairments; restructuring charges; the impact of adopting a new revenue standard; legal and other; interest and other, net; and other charges (income), net. All adjustments are subject to approval by the Compensation and People Committee to ensure that payout levels are consistent with performance. See Annex A to this proxy statement for a reconciliation of non-GAAP and GAAP financial measures.

 

      2021 Proxy Statement    59
 

Target Incentive Awards

Fiscal year 2021 bonus targets for the NEOs as a percent of base salary were not increased from fiscal year 2020 and are shown below.

 

Name and Title Fiscal year 2021
Target Bonus
(% of Salary)
Fiscal year
2021 Target(1) ($)
Revathi Advaithi
Chief Executive Officer
150% 1,725,000
Christopher Collier(2)
Chief Financial Officer
110% 0
Paul R. Lundstrom(3)
Chief Financial Officer
110% 449,167
Francois P. Barbier
President, Global Operations and Components
110% 781,000
Paul Humphries
President, Reliability Solutions
110% 781,000
Michael Hartung
President, Agility Solutions
100% 700,000
Scott Offer
Executive Vice President, General Counsel
100% 629,200
(1) Targets shown exclude the impact of first half fiscal year 2021 temporary pay reductions.
(2) Mr. Collier resigned from his position with the Company prior to the payout of fiscal year 2021 bonuses. Under the terms of our bonus plan, due to the timing of his resignation, Mr. Collier was not eligible for payment of a fiscal year 2021 bonus.
(3) Target bonus value shown is pro-rated for Mr. Lundstrom’s September 1, 2020 hire date.

 

Incentive Payouts for CEO, CFO, General Counsel and President, Global Operations and Components

The table below sets forth the payout opportunities that were available to Ms. Advaithi, and Messrs. Lundstrom, Barbier, and Offer based on different levels of corporate performance. These targets are considered rigorous and were validated within the context of analyst expectations. Bonuses for Messrs. Humphries and Hartung were based on the results of their respective business units.

 

No payout is made with respect to any metric if the threshold performance level is not achieved. Payouts at the maximum level for the annual bonus would require sustained strong performance.

 

Performance targets are determined based on Board-approved financial plans—both at company and business unit levels. Maximum payout levels were tied to “stretch” levels of performance.

 

 

      2021 Proxy Statement    60
 

The targeted ITO performance was not reached and there was no modification based on this measure.

 

For fiscal year 2021, the Company’s performance resulted in payouts as shown below:

 

 

The 113% adjusted OP funding factor was calculated based on funding achieved at 157% of target (based on adjusted OP performance above), and an enterprise-wide average payout before application of funding metric, of approximately 138%.

 

Incentive Payouts for Business Unit Presidents

We treat the business unit performance measures as confidential. As described above, 50% of the annual bonus for the business unit presidents was based on the results of their respective business units, evenly split between revenue and adjusted OP. The remaining 50% of the performance measure weighting, including the impact of the ITO modifier and the plan funding, was the same as for corporate executives outlined previously. The combination of these inputs resulted in a payout of 149% of target for Mr. Humphries, and 177% of target for Mr. Hartung.

 

Final Incentive Awards for the NEOs

The bonus payout levels for our NEOs were as follows:

 

Name Fiscal Year 2021 Annual
Incentive Bonus Target
(Potential Bonus as a
percentage of Base Salary)
Fiscal Year 2021
Annual Incentive
Actual Bonus
($)
Fiscal Year 2021 Actual
Annual Incentive Bonus
as a Percentage of Full
Year Target Bonus
(1)
Revathi Advaithi 150% 1,419,503 82.3%
Christopher Collier(2) 110% 0 0%
Paul R. Lundstrom 110% 633,633 82.3%
Francois P. Barbier 110% 642,685 82.3%
Paul Humphries 110% 582,275 74.6%
Michael Hartung 100% 621,145 88.7%
Scott Offer 100% 517,769 82.3%
(1) Percentages shown are based on an unreduced salary and annual bonus target.
(2) Mr. Collier resigned from his position with the Company prior to the payout of fiscal year 2021 bonuses. Under the terms of our bonus plan, due to the timing of his resignation, Mr. Collier was not eligible for payment of a fiscal year 2021 bonus.

 

Long-Term Share-Based Incentive Compensation

 

In fiscal year 2021, the Board, upon the recommendation of the Compensation and People Committee, granted share-based long-term incentives to our senior executives as an incentive to maximize the Company’s long-term performance and drive shareholder value creation. These long-term incentives are designed to align the interests of the NEOs with those of our shareholders and to give each NEO a significant incentive to manage the Company from the perspective of an owner with a direct stake in the business. Long-term equity awards are also intended to promote retention, as unvested shares are forfeited if an executive voluntarily leaves the Company.

 

Restricted Share Unit Awards (RSUs)

Fifty percent of each NEOs’ share-based long-term incentive award is in the form of RSUs. Starting with fiscal year 2021 awards, these service-based RSUs vest in three equal installments on the first three anniversaries of the grant date, subject to continued employment. Payouts are made in shares, so the value of an RSU award goes up or down based on share price performance from the grant date, further aligning the interests of the executive with long-term shareholder value creation. Before an RSU vests, the holder has no ownership rights in our shares and is not entitled to dividends or dividend equivalents.

 

      2021 Proxy Statement    61
 

Performance Share Units (PSUs)

The other fifty percent of our NEOs’ share-based long-term incentive awards (based on face value of the awards) is in the form of TSR-based PSUs. (The actual grant value mix may deviate somewhat from this 50/50 RSU/PSU split due to fluctuations in the Monte Carlo valuations for the TSR-based PSUs.) The Compensation and People Committee believes this allocation between RSUs and PSUs promotes retention, links long-term compensation to the Company’s long-term performance and shareholder outcomes, and limits the dilutive effect of equity awards.

 

The PSU awards granted in fiscal year 2021 will be earned (or not) based upon Flex’s percentile rank of TSR over a three-year period compared to the S&P 500 constituents. In prior years, our PSU awards used a point-to-point measurement of TSR over the entire three-year performance cycle. For fiscal year 2021, the Compensation and People Committee moved to three discrete measurement periods—of 12-, 24-, and 36- months—within each three-year cycle, as illustrated below.TSR PSU final payout will be based on the average payouts of these three performance periods.

 

 

The use of discrete measurement periods aims to minimize the potential impact of short-term share price volatility at the end of the performance period. The Compensation and People Committee believes this approach focuses NEOs on the achievement of sustainable long-term stockholder returns and provides a payout that is more reflective of the shareholder experience over the entire three-year cycle. Except in the event of an employee’s death or disability, no portion of a PSU award is earned or distributed until the conclusion of the full three-year performance period.

 

The number of shares earned is dependent on the percentile rank achieved, within each of the 12-, 24- and 36- month periods, as shown below.

 

 

Note: Straight-line interpolation is used to determine shares earned when results are between targets.

 

      2021 Proxy Statement    62
 

Grants During Fiscal Year 2021

The Compensation and People Committee and the Board considered the following factors when determining the value of the 2021 NEO equity awards:

 

Peer group compensation data for similarly situated executives;
Future potential to contribute to the Company’s growth and potential to grow in current role and expand scope of responsibility and contribution over time;
Individual performance and internal equity; and
Peer group data on annual share usage and overall shareholder dilution.

 

Long-Term Incentive Awards

 

The table below summarizes the approved PSU and service-based RSU awards granted to our NEOs in fiscal year 2021.

 

Executive Officer Target TSR-Based
PSUs (Shares)
Service-Based
RSUs (Shares)
Target Total
Equity Award
Value ($)
Revathi Advaithi 345,303 345,304 7,499,992
Christopher Collier 129,673 129,673 2,816,498
Paul R. Lundstrom 135,622 316,455 4,999,972
Francois P. Barbier 100,550 100,550 2,183,946
Paul Humphries 100,550 100,550 2,183,946
Michael Hartung 55,248 55,249 1,199,997
Scott Offer 80,570 80,571 1,749,991

 

The target award values shown above vary from the values shown in the Summary Compensation Table because the accounting cost of our PSUs is based on a Monte Carlo valuation. The intended award value above was calculated as the target number of shares multiplied by the share price on the date of the grant. The actual value to be earned will depend on Flex’s multi-year TSR performance versus the S&P 500 as well as its absolute TSR performance.

 

Payouts of Prior PSUs

The performance period for the TSR-based PSUs granted in fiscal year 2018 ended in fiscal 2021. The fiscal year 2018 TSR PSU grants measured our TSR versus the constituents of the S&P 500 from June 29, 2017 (the grant date) through June 29, 2020 (the performance period end), using a trailing 90-day average trading price for both the beginning and the end of the performance period. Our three-year TSR achievement of -42.4% over the performance period was below the 30th percentile threshold level, resulting in a 0% payout for this award.

 

Administration of Equity Award Grants

As a matter of good corporate governance, equity awards are not timed in relation to the release of material information.

 

      2021 Proxy Statement    63
 

Benefits

 

Non-qualified Deferred Compensation Awards

 

Each of the NEOs participates in the 2010 Deferred Compensation Plan (NQDC plan), intended to promote retention by providing a long-term savings opportunity on a tax-efficient basis. In addition to voluntary contributions, Flex makes annual awards to the NEOs under the NQDC plan; the key terms of which are summarized below.

 

NQDC Plan Design Element Description
Annual Targeted Amount ●   Target amount is 30% of each participant’s base salary (for ongoing contributions).
  ●   Maximum amount is 37.5% of each participant’s base salary, if the performance-based portion is funded at maximum.
  ●   Subject to approval of Compensation and People Committee
  ●   Subject to offsets for non-U.S. executives’ pension and other benefits
Funding Basis ●   50% of the targeted funding (15% of salary at target) is based on the corporate funding level of the annual corporate bonus plan.
  ●   50% of the targeted funding (15% of salary) is not tied to performance.
Vesting Schedule ●   Flex’s contributions, together with earnings on those contributions, will vest in full after four years, provided the participant remains employed by the Company.
Investment of Balances ●   Deferred balances in a participant’s account are deemed to be invested in hypothetical investments designated by the participant.
  ●   Investment options generally mirror those available under the Company’s tax-qualified 401(k) plan.
  ●   The appreciation, if any, in the account balances is due solely to the performance of these underlying investments.
Distribution Options ●   Vested balances may be distributed upon termination of employment either through a lump sum payment or in installments over a period of up to ten years, as elected by the participants.
  ●   Participants also may elect in-service distributions through a lump sum payment or in installments over a period of up to ten years.

 

The deferred account balances are unfunded and unsecured obligations of the Company, receive no preferential standing, and are subject to the same risks as any of the Company’s other general obligations.

 

Initial Company contributions are 50% of base salary and are not tied to Company performance. Thereafter, annual Company contributions are equal to 30% at target (37.5% at maximum) of each participant’s base salary (subject to offsets for non-U.S. executives’ pension and other benefits). Mr. Barbier receives Company contributions to his French pension in lieu of deferred compensation contributions.

 

The Company may make an additional discretionary matching contribution in connection with voluntary deferrals to reflect limitations on our matching contributions under our 401(k) plan.

 

Company Deferred Compensation Awards for Fiscal 2021

For fiscal year 2021, Ms. Advaithi and Messrs. Collier, Humphries and Offer each received deferred cash awards with a value that averaged about 22.3% of their respective fiscal year 2020 base salaries. Mr. Hartung received a deferred cash award with a value of 14.9% of his fiscal year 2020 base salary. Mr. Lundstrom received his initial deferred cash contribution of 50% of his base salary in connection with his hiring.

 

Voluntary Contributions

Under the 2010 Deferred Compensation Plan, participants may defer up to 70% of their base salary and bonus, net of certain statutory and benefit deductions. Participants are 100% vested in their own deferrals at all times.

 

Additional Information

For additional information about the NEOs’ contributions to their respective deferral accounts, Company contributions to the NEOs’ deferral accounts, earnings on the NEOs’ deferral accounts, withdrawals from the NEOs’ deferral accounts, and deferral account balances as of the end of fiscal year 2021, see the section titled “Executive Compensation—Nonqualified Deferred Compensation in Fiscal Year 2021.”

 

      2021 Proxy Statement    64
 

Executive Perquisites

Perquisites represent a small part of the overall compensation program for the NEOs. In fiscal year 2021, we paid the premiums on long-term disability insurance for all of our NEOs.

 

While Company aircraft are generally used for Company business only, under our Policy Regarding Use of Corporate Airplanes effective in fiscal year 2020, our Chief Executive Officer and Chief Financial Officer and their spouses and guests were permitted to use Company aircraft for personal travel if the aircraft were not needed for business purposes at the time.

 

Commencing in fiscal year 2021, our Chief Executive Officer and Chief Financial Officer and their spouses and guests are not permitted to use Company aircraft for personal travel.

 

Relocation Assignments

We agreed to reimburse documented and reasonable expenses that Ms. Advaithi incurred in her relocation to the San Francisco Bay Area where Flex is headquartered. In fiscal year 2021 these expenses consisted of a $140,505 reimbursement for home sale commission and associated expenses, $2,550 for car shipment, $435 for relocation management fees and a $158,351 tax equalization payment for federal and state income taxes imposed on these reimbursements, consistent with our standard relocation policy at the executive officer level. These expenses were incurred and reimbursed during September and October of 2020, and reimbursed by December of the same year, which was within 22 months of Ms. Advaithi’s start date with the Company. These were the final expenses associated with Ms. Revathi’s relocation. These benefits are quantified under the “All Other Compensation” column in the Summary Compensation Table.

 

In accordance with our executive relocation policy, we agreed to reimburse documented and reasonable expenses that Mr. Lundstrom incurred in his relocation to the San Francisco Bay Area where Flex is headquartered. In fiscal year 2021 these expenses consisted of $29,649 for moving expenses, $17,185 for temporary housing, $6,305 for home purchase closing costs, $8,000 relocation allowance to cover miscellaneous expenses, and $57,910 tax equalization payment for federal and state income taxes imposed on these reimbursements, consistent with our standard relocation policy at the executive officer level. These were the final expenses associated with Mr. Lundstrom’s relocation. These benefits are quantified under the “All Other Compensation” column in the Summary Compensation Table.

 

The Company does not provide tax equalization payments in scenarios outside of a relocation, where in certain limited circumstances, in order for the executive to receive a true reimbursement of a relocation-related expense, such payments are necessary.

 

In connection with Mr. Barbier’s international assignment to the Company’s San Jose facility, we agreed to reimburse him for certain relocation expenses, including a housing allowance of $6,600 per month and an auto allowance of up to $1,200 per month. These benefits are quantified under the “All Other Compensation” column in the Summary Compensation Table. For Mr. Barbier, the amount includes $163,458 in tax equalization payments related to his international assignment.

 

401(k) Plan; French Defined Contribution Pension Plan

Under our 401(k) Plan, all of our employees are eligible to receive matching contributions. We also offer annual discretionary matching contributions based on Company performance and other economic factors as determined at the end of the fiscal year. For fiscal year 2021, we elected not to make discretionary contributions on behalf of any NEO. We do not provide an excess 401(k) plan for our executive officers.

 

Mr. Barbier participates in defined contribution pension schemes mandated under French law. For fiscal year 2021, the Company made required contributions aggregating approximately $36,580 (this amount was converted into dollars from Euros based on the average exchange rate for the 2021 fiscal year) consistent with the terms of his international assignment. To avoid duplication of benefits, the Company’s contributions to the defined contribution schemes mandated under French law on Mr. Barbier’s behalf make Mr. Barbier ineligible for Company-paid non-qualified deferred compensation contributions (equal to 30% of base salary at target for other NEOs). Had Mr. Barbier been a participant in the Company-paid non-qualified deferred compensation program, his target contribution for fiscal year 2021 would have been approximately $213,000.

 

Other Benefits

Executive officers are eligible to participate in all of the Company’s employee benefit plans, such as medical, dental, vision, group life, disability, and accidental death and dismemberment insurance, in each case on the same basis as other U.S. employees, subject to applicable law.

 

      2021 Proxy Statement    65
 

Compensation Arrangements for Mr. Lundstrom

 

In connection with Mr. Lundstrom’s appointment as Chief Financial Officer, we entered into an offer letter with Mr. Lundstrom on August 7, 2020. Key terms of the offer letter are as summarized below.

 

Regular Compensation Elements

 

Pay Element   Value   Note
Annual Base Salary   $700,000   Salary was subject to 30% salary reduction for the first half of fiscal year 2021 due to COVID-19-related economic uncertainty, in line with the treatment of other NEOs (other than the 50% reduction for the CEO)
Annual Bonus Target   110% of salary   Mr. Lundstrom became a participant in our fiscal year 2021 Bonus Plan at the same time as the other NEOs, when it was reintroduced for the second half of fiscal year 2021
Annual LTI Grant   $2,000,000   Annual LTI grant design is the same as for other NEOs in every respect, other than the grant date tied to commencement of employment
Deferred Compensation
Plan – Initial, One-Time
Company Contribution
  $350,000 (50% of annualized salary)   Per the terms of our Deferred Compensation Plan, new executive officer hires are credited with an initial funding payment of 50% of salary, which cliff vests on the fourth anniversary of funding date
Deferred Compensation
Plan – Annual Company
Contribution
  Target is 30% of base salary   Participation will be on the same terms as the other NEOs, as described in the section entitle “Benefits.” Half of the 30% contribution target will be performance-based (tied to the funding of our bonus plan)

 

The total value of buy-out and inducement compensation elements listed below was significantly lower than the value of forfeited compensation at Mr. Lundstrom’s prior employer as of the date of his resignation. The buy-out was delivered in the form of cash bonus and time-vested RSUs to offset Mr. Lundstrom’s forfeiting of substantial incentive value at his prior employer which was not replaced by Flex.

 

Pay Element   Value   Purpose and Explanation
Cash Sign-on Bonus   $500,000   Partial buy-out of compensation forfeited upon leaving prior employer
          Mr. Lundstrom is required to repay this bonus, if, within 24 months of the employment commencement date, either he voluntarily terminates his employment with the Company (other than for “good reason”) or the Company terminates his employment for “cause” (as such terms are defined in the Company’s Executive Severance Plan)
RSUs   $2,500,000   Partial buy-out of compensation forfeited upon leaving prior employer
          RSUs vest in three equal annual installments, subject to continued employment through the vesting dates
TSR PSUs   $500,000   Inducement to join the Company is 100% performance-based
          The design of this award is the same as the TSR PSUs granted to the other NEOs, as described on page 62
Total   $3,500,000        

 

Mr. Lundstrom’s termination benefits are the same as those of other NEOs.


 

      2021 Proxy Statement    66
 

Termination and Change of Control Arrangements

 

The NEOs are entitled to certain termination and change of control benefits. These benefits are described and quantified under the section titled “Executive Compensation—Potential Payments Upon Termination or Change of Control.”

 

The Compensation and People Committee has adopted the Flex Ltd. Executive Severance Plan (the “Severance Plan”), which covers senior level employees of the Company, including all of the NEOs except the Chief Executive Officer, whose severance benefits were defined under a letter agreement entered into in connection with her hiring. Under the Severance Plan, in the event of a termination of employment by the Company without “cause” or by a participant for “good reason” (as each such term is defined in the Severance Plan), the participant will receive the following benefits, subject to the participant entering into and complying with a transition and release agreement in a form provided by the Company (“Transition Agreement”):

 

Severance Plan Termination Benefit   Description
Salary and Benefits Continuation   Salary and benefits coverage continuation for duration of transition period provided in the Transition Agreement
Bonus Treatment   Pro-rated portion of annual bonus, based on actual performance through the end of the performance period
Equity Vesting   Time-vested and performance-based RSUs, PSUs, and deferred compensation awards continue vesting during the transition period
    Following the transition period, accelerated vesting of RSUs and deferred compensation awards that would have vested during the one-year period following the transition period.
      Continued vesting is subject to the participant’s release of claims and compliance with post-termination covenants under the Transition Agreement
      All other unvested awards are forfeited

 

During the period when an NEO is transitioning out of his or her role, participants are required to discharge their transition duties and comply with other terms and conditions set forth in the Transition Agreement, including customary non-competition, non-solicitation, non-disclosure, non-disparagement, and cooperation provisions.Any violation of such obligations may result in cessation of benefits and trigger clawback rights of the Company.

 

Ms. Advaithi’s employment may be terminated by Ms. Advaithi or the Company at any time, with or without “cause.” Pursuant to the letter agreement entered into with Ms. Advaithi at her hiring, in the event that Ms. Advaithi terminates her employment for “good reason” or is terminated without cause, Ms. Advaithi would be entitled to receive, subject to execution and non-revocation of a standard release of claims, the benefits summarized below:

 

Termination Benefit Description   Description
Sign-On Compensation Acceleration   Acceleration of sign-on equity and deferred compensation contribution
Cash Compensation Continuation   Two years’ continued payment of base salary and two years of her target annual bonus amount
Equity and Deferred Compensation Vesting  

Two years’ continued vesting of outstanding equity awards and deferred compensation

Benefits Coverage   Two years’ continued benefits coverage
“Good Reason” Definition   Material diminution in position, authority, duties or responsibilities; assignment of any duties materially inconsistent with status as an officer
    Failure by the Company to obtain the written assumption of the Executive Severance Plan by a successor to the Company
    Material reduction in target base salary and target bonus opportunity
    Mandatory relocation of 50 miles or more


 

      2021 Proxy Statement    67
 

The following are the termination benefits applicable for all NEOs in the event of a change of control:

 

Termination Benefit   Description
Deferred Compensation Vesting   Under our 2010 Deferred Compensation Plan, vesting of initial and annual awards will accelerate
    Acceleration triggered only if employment is terminated without cause or by the executive for good reason within two years of the change of control (i.e.,“double trigger” accelerated vesting)
Equity Vesting   Under the terms of our equity incentive plans, unvested awards will automatically accelerate if not assumed or replaced by the acquirer on an economically equivalent basis (double trigger)
    Under the terms of our equity plans, the Compensation and People Committee also has the ability to provide that certain awards may automatically accelerate upon an involuntary termination of service within a designated time period (not to exceed eighteen months) following a change of control

 

The Company reviewed and updated termination benefits applicable to all NEOs in the event of death, disability and retirement. The purpose of this review and resulting policy updates was to align treatment to current market norms, and in the case of retirement, to align participants’ interests with the Company’s need to ensure a smooth transition of their responsibilities. Updated provisions became effective starting with fiscal year 2021 RSU, PSU and NQDC awards, and are summarized below.

 

Termination Scenario   Description of RSU, PSU and NQDC Treatment
Death or Disability   RSU and NQDC vesting will accelerate upon the occurrence of these events
    PSU vesting will accelerate based upon actual TSR performance for completed periods during the measurement period and target TSR performance for unfinished periods during the measurement period, and pro-rated for length of time employed during the performance period.
Retirement   Retirement is defined as:
      Sum of age and service credits is equal to at least 65
      Minimum length of service is 5 years
      Minimum age is 55
    Unvested RSUs and NQDC would continue to vest, with PSUs vesting based on actual performance at the end of the performance cycle
      Unvested PSUs would be pro-rated for length of time employed during the performance period, and would continue to vest based on actual performance at the end of the performance cycle

 

Termination Arrangements for Mr. Collier

 

In connection with Mr. Collier’s resignation, the Company and Mr. Collier entered into an Executive Transition Agreement, effective as of August 6, 2020. Pursuant to the Executive Transition Agreement, effective September 1, 2020, Mr. Collier was no longer an executive officer. Instead, he became a senior advisor to the Company’s Chief Executive Officer and provided services related to the transition of duties to the new Chief Financial Officer and several key business initiatives for the period from September 1, 2020, through March 31, 2021 (the “Collier Transition Period”).

 

  Mr. Collier was not eligible for separation payments under the terms of the Company’s Executive Severance Plan and all equity compensation awards that remained unvested upon the expiration of the Transition Period were forfeited.

 

Mr. Collier received his base salary payable pursuant to the Company’s standard payroll schedule during the Collier Transition Period, but he was not eligible for an annual bonus with respect to fiscal year 2021. Mr. Collier’s outstanding equity awards continued to vest during the Collier Transition Period in accordance with their terms. All equity compensation awards that remained unvested upon the expiration of the Transition Period were forfeited.The Executive Transition Agreement provides that Mr. Collier will be subject to perpetual confidentiality and non-disparagement covenants, and includes a general release and a customary cooperation provision. Mr. Collier was not eligible for separation payments under the terms of the Company’s Executive Severance Plan based on his resignation from the Company.

 

Termination Arrangements for Mr. Humphries

 

Mr. Humphries announced his retirement effective November 30, 2020. In connection with his retirement, Mr. Humphries entered into an Executive Transition Agreement with the Company, effective November 26, 2020. Pursuant to the Executive Transition Agreement, Mr. Humphries was no longer an executive officer but remained an employee of the Company and provided services related to the transition of his duties through March 31, 2021 (the “Humphries Transition Period”).

 


 

      2021 Proxy Statement    68
 

Mr. Humphries received his base salary payable pursuant to the Company’s standard payroll schedule during the Humphries Transition Period. The Executive Transition Agreement provides that Mr. Humphries will be subject to perpetual confidentiality and non-disparagement covenants, and includes a general release and a customary cooperation provision. Mr. Humphries was not eligible for separation payments, nor was he provided any preferential vesting of outstanding equity compensation.

 

Due to Mr. Humphries’s retirement eligibility, and independent of the terms of the Executive Transition Agreement, on March 31, 2021, he was eligible for and received a bonus payment based on actual performance under the Company’s fiscal year 2021 incentive bonus plan pursuant to the Company’s bonus policy. Mr. Humphries was also eligible for continued vesting of his deferred compensation award that was granted in July 2020 pertaining to fiscal year 2020 under the Company’s deferred compensation plan. His PSU awards were prorated through his service end date and will be paid out based on performance at the end of the original performance periods. Mr. Humphries’s fiscal year 2021 RSU award will continue vesting in accordance with the terms of the award. All other RSU and NQDC awards that remained unvested at the expiration of the Humphries Transition Period were forfeited.

 

Actual termination benefits received by Mr. Humphries are disclosed in “Executive Compensation—Potential Payments Upon Termination or Change of Control” below.

 

Executive Share Ownership Guidelines

 

We maintain robust share ownership guidelines in order to closely align the interests of management with those of our shareholders.The ownership guidelines for our NEOs are summarized below.

 

Ownership Guideline Design Element   Description
Targeted Ownership Value   CEO – 6x salary
    CFO – 3.5x salary
    Other NEOs – 2.5x salary
Forms of Ownership Counted   All Ordinary Shares held outright by our executives
Toward Guideline   Unvested service-based RSUs
Compliance Period   5 years for new hires or newly promoted executives
    If an executive’s stock ownership requirement is increased, a three-year compliance transition period will be provided to acquire the incremental shares

 

Our Nominating and Corporate Governance Committee monitors the share ownership of management.The Company has determined that the NEOs either are in compliance or are on target to be in compliance with the applicable ownership requirements by the applicable deadline.

 

Executive Incentive Compensation Recoupment Policy

 

Our Executive Incentive Compensation Recoupment Policy covers our executive officers and the direct reports of our Chief Executive Officer, and applies to bonuses or awards under the Company’s short- and long-term incentive plans, awards under our equity incentive plans, and contributions under our deferred compensation plans where the contributions are based on the achievement of financial results. In the event of a material restatement of financial results where a covered officer engaged in fraud or misconduct that caused the need for the restatement, the Board will have discretion to recoup incentive compensation of any covered officer if and to the extent the amount of compensation that was paid or that vested would have been lower if the financial results had been properly reported. In the case of equity awards that vested based on the achievement of financial results that were subsequently reduced, the Board also may seek to recover gains from the sale or disposition of vested shares (including shares purchased upon the exercise of options that vested based on the achievement of financial results). In addition, the Board will have discretion to cancel outstanding equity awards where the financial results that were later restated were considered in granting such awards.The Board may seek recoupment only in cases where the restatement occurs within 36 months of the publication of the audited financial statements that are restated.

 

Hedging and Pledging Policy

 

Our insider trading policy prohibits short-selling, trading in options or other derivatives on our shares, and engaging in hedging transactions by all employees (including executive officers) and directors. Our insider trading policy also prohibits using our shares as collateral for margin accounts or pledging our shares as collateral for loans.

 


 

      2021 Proxy Statement    69
 

Compensation Risk Assessment

 

With the assistance of FW Cook, the Compensation and People Committee reviewed our compensation policies and practices and determined that our compensation programs do not encourage excessive or inappropriate risk-taking.The Compensation and People Committee believes that the design and mix of our compensation programs appropriately encourage our executive and senior officers to focus on the creation of long-term shareholder value. In its review, the Compensation and People Committee noted the following features:

 

The Company’s pay levels are generally aligned with market pay levels.
The Company’s compensation programs utilize best practices designed to mitigate risk, including:
Balanced mix of short-term cash and long-term equity pay;
Incentive programs that pay out based on a mix of performance metrics over varying time frames;
Long-term incentive program that includes both service-based RSUs and performance-based PSUs;
Incentive programs that have payout caps and reasonable leverage;
Share ownership guidelines and anti-hedging/pledging policies that encourage long-term equity ownership;
Compensation and People Committee having the ability to exercise discretion over formulaic incentive plan outcomes; and
Board-adopted, incentive compensation recoupment policy.


 

      2021 Proxy Statement    70
 

Executive Compensation

 

The following table sets forth the fiscal years 2019, 2020 and 2021 compensation for:

 

Revathi Advaithi, our Chief Executive Officer;
Christopher Collier, our former Chief Financial Officer;
Paul R. Lundstrom, our Chief Financial Officer; and
Francois P. Barbier, Paul Humphries, Michael Hartung, and Scott Offer.

 

The executive officers included in the Summary Compensation Table are referred to in this proxy statement as our NEOs. A detailed description of the plans and programs under which our NEOs received the following compensation can be found in the section titled “Compensation Discussion and Analysis” of this proxy statement. Additional information about these plans and programs is included in the additional tables and discussions that follow the Summary Compensation Table.

 

Summary Compensation Table

 

Name and
Principal Position
  Year   Salary
($)(5)
  Bonus
($)(6)
  Share
Awards
($)(7)
  Non-Equity
Incentive Plan
Compensation
($)(8)
  Change
in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(9)
  All Other
Compensation
($)(10)
  Total
($)
Revathi Advaithi
Chief Executive Officer(1)
  2021   862,500     8,970,983   1,419,503     317,264   11,570,250
  2020   1,150,000     8,566,406   843,698     252,827   10,812,931
  2019   165,865   3,000,000   1,999,995   234,792     118,113   5,518,765
Christopher Collier
Chief Financial Officer(2)
  2021   603,500   205,998   3,368,905     8,275   15,219   4,201,897
  2020   707,500   283,685   3,216,965   381,987     57,681   4,647,818
  2019   700,000   279,966   5,349,008   512,849   90,201   79,222   7,011,246
Paul R. Lundstrom
Chief Financial Officer(3)
  2021   390,833   500,000   5,550,597   633,633     127,610   7,202,673
Francois P. Barbier
President, Global Operations
and Components
  2021   603,500     2,612,289   642,685   151,598   361,865   4,371,937
  2020   710,000     2,494,472   381,987     433,362   4,019,821
  2019   710,000     5,194,693   520,176   23,717   422,750   6,871,336
Paul Humphries
President, High Reliability
Solutions(4)
  2021   603,500   243,099   2,612,289   582,275   1,291,305   14,024   5,346,492
  2020   710,000   278,411   2,494,472   177,459     13,528   3,673,870
  2019   710,000   288,532   5,194,693   815,264   66,465   13,476   7,088,430
Michael Hartung
President, Agility Solutions
  2021   514,023     1,435,354   621,145     17,000   2,587,522
Scott Offer
Executive Vice President,
General Counsel
  2021   534,820     2,093,219   517,769   20,610   14,496   3,180,914
  2020   623,150     1,998,820   307,742   20,393   12,368   2,962,473
  2019   559,116     4,514,224   370,803     14,115   5,458,258

 

(1) Ms. Advaithi was appointed Chief Executive Officer effective February 11, 2019, approximately one and a half months before the end of the fiscal year 2019.
(2) Mr. Collier resigned from his position of Chief Financial Officer effective September 1, 2020.
(3) Mr. Lundstrom was appointed as Chief Financial Officer effective September 1, 2020.
(4) Mr. Humphries retired from his position of President, Reliability Solutions effective November 30, 2020.
(5) Includes amounts contributed by executive to deferred compensation plan and 401(k) savings plan accounts.
(6) This column shows (except with respect to Ms. Advaithi and Mr. Lundstrom) the unvested portion of deferred compensation accounts that vested during these respective fiscal years. For additional information about the Company’s deferred compensation arrangements, see the section titled “Compensation Discussion and Analysis—Deferred Compensation Awards” of this proxy statement and the discussion under the section titled “Nonqualified Deferred Compensation in Fiscal Year 2021” of this proxy statement. The amount shown for Ms. Advaithi for fiscal year 2019 is a sign-on bonus paid upon commencement of employment with Flex. The amount shown for Mr. Lundstrom for fiscal year 2021 is a sign-on bonus paid upon commencement of employment with Flex, which he is required to repay, if, within 24 months of the employment commencement date, either he voluntarily terminates his employment with the Company (other than for “good reason”) or the Company terminates his employment for “cause” (as such terms are defined in the Company’s Executive Severance Plan).

 

      2021 Proxy Statement    71
 
(7) Share awards consist of service-based RSUs and TSR PSUs. The amounts in this column do not reflect compensation actually received by the NEOs, nor do they reflect the actual value that will be realized by the NEO. Instead, the amounts reflect the grant date fair value for grants made by us in fiscal years 2019, 2020 and 2021, calculated in accordance with FASB ASC Topic 718. The TSR PSUs included in this column are at the target number of shares as follows for fiscal year 2021: 345,303 PSUs, or $5,220,981 for Ms. Advaithi; 129,673 PSUs, or $1,960,656 for Mr. Collier; 135,622 PSUs, or $2,050,605 for Mr. Lundstrom; 100,550 PSUs, or $1,520,316 for Mr. Barbier; 100,550 PSUs, or $1,520,316 for Mr. Humphries; 55,248 PSUs, or $835,350 for Mr. Hartung; and 80,570 PSUs, or $1,218,218 for Mr. Offer.
  For additional information regarding the assumptions made in calculating the amounts reflected in this column, see Note 5 to our audited consolidated financial statements, “Share-Based Compensation,” included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021.
(8) The amounts in this column represent incentive cash bonuses earned in fiscal year 2021. For additional information, see the section titled “Compensation Discussion and Analysis—Fiscal Year 2021 Executive Compensation—Incentive Bonus Plan” of this proxy statement.
(9) The amounts in this column represents the above-market earnings on the vested portions of the nonqualified deferred compensation account of our NEOs. None of our NEOs participated in any defined benefit or actuarial pension plans in any period presented. Above-market earnings represent the difference between market interest rates determined pursuant to SEC rules and earnings credited to the vested portion of the NEOs’ deferred compensation accounts. See the Nonqualified Deferred Compensation in Fiscal Year 2021 table of this proxy statement for additional information.
(10) The following table provides a breakdown of compensation included in the “All Other Compensation” column for fiscal year 2021:

 

Name  Pension/
Savings Plan
Company
Match
Expenses/
Social Security
($)(1)
  Medical/
Enhanced
Long-Term
Disability
($)(2)
  Relocation/
Expatriate
Assignment
Expenses
($)(3)
  Tax
Reimbursements
($)(4)
  Other
($)
  Total
($)
Revathi Advaithi  12,458  2,965  143,490  158,351    317,264
Christopher Collier  13,132  2,087        15,219
Paul R. Lundstrom  7,000  1,560  61,140  57,910    127,610
Francois P. Barbier  36,580  38,678  93,600  193,007    361,865
Paul Humphries  11,548  2,476        14,024
Michael Hartung  14,968  2,032        17,000
Scott Offer  11,531  2,965        14,496

 

  (1) The amounts in this column represent the Company’s regular employer matching contributions to the 401(k) saving plan accounts for Ms. Advaithi and Messrs. Collier, Lundstrom, Humphries, Hartung and Offer. In the case of Mr. Barbier, it represents Company contributions to the mandatory social security programs under applicable French law. Amounts for Mr. Barbier have been converted into dollars from Euros based on the average exchange rate for the 2021 fiscal year.
  (2) The amounts in this column represent the Company’s contribution to the executive long-term disability program, which provides additional benefits beyond the basic employee long-term disability program. An amount equal to $36,147 represents medical and accidental death and disability premiums paid for Mr. Barbier for his French benefits. The amount was converted into dollars from Euros based on the average exchange rate for the 2021 fiscal year.
  (3) These amounts represent the costs associated with Ms. Advaithi’s, Mr. Lundstrom’s and Mr. Barbier’s respective relocation and commuting to the Company’s San Jose facility. The relocation amounts for Ms. Advaithi represent home sale expenses of $140,505, automobile shipment of $2,550 and a relocation management fee of $435. The relocation and commuting amounts for Mr. Lundstrom represent home purchase expenses of $6,305, household goods shipment of $29,649, temporary living expenses of $17,185 and miscellaneous allowance of $8,000. The relocation amounts for Mr. Barbier represent housing allowances of $79,200 and vehicle allowances of $14,400.
  (4) For Mr. Barbier, the amount includes reimbursement of $163,458 for the incremental taxes due as a result of his relocation to the Company’s San Jose facility, $24,947 for taxes dues on tax preparation fees and $4,602 for the payment of Basic Social Security (which amount was converted into dollars from Euros based on the average exchange rate for the 2021 fiscal year). See the section titled “Compensation Discussion and Analysis—Benefits—Executive Perquisites” of this proxy statement.

 

      2021 Proxy Statement    72
 

Grants of Plan-Based Awards in Fiscal Year 2021

 

The following table presents information about non-equity incentive plan awards and RSU and PSU awards that we granted in our 2021 fiscal year to our NEOs. We did not grant any stock options to our NEOs during our 2021 fiscal year.

 

      Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1)
  Estimated Future Payouts Under
Equity Incentive Plan Awards(2)
  All Other Share
Awards: Number
  Grant Date
Fair Value
Name  Grant Date  Threshold
($)
  Target
($)
  Maximum
($)
  Threshold
(#)
  Target
(#)
  Maximum
(#)
  of Shares of
Stock or Units
(#)(3)
  of Share
Awards
($)(4)
Revathi Advaithi  6/03/2020           86,325  345,303  690,606     5,220,981
   6/03/2020                    345,304  3,750,001
      431,250  862,500  1,725,000               
Christopher Collier  6/03/2020           32,418  129,673  259,346     1,960,656
   6/03/2020                    129,673  1,408,249
      195,250  390,500  781,000               
Paul R. Lundstrom  9/15/2020           11,301  45,207  90,414     683,530
   9/15/2020           22,603  90,415  180,830     1,367,075
   9/15/2020                    226,039  2,499,991
   9/15/2020                    90,416  1,000,001
      192,500  385,000  770,000               
Francois P. Barbier  6/03/2020           25,137  100,550  201,100     1,520,316
   6/03/2020                    100,550  1,091,973
      195,250  390,500  781,000               
Paul Humphries  6/03/2020           25,137  100,550  201,100     1,520,316
   6/03/2020                    100,550  1,091,973
      195,250  390,500  781,000               
Michael Hartung  6/03/2020           13,812  55,248  110,496     835,350
   6/03/2020                    55,249  600,004
      175,000  350,000  700,000               
Scott Offer  6/03/2020           20,142  80,570  161,140     1,218,218
   6/03/2020                    80,571  875,001
      157,300  314,600  629,200               

 

(1) These amounts show the range of possible payouts under our cash incentive programs for fiscal year 2021. The amounts correspond to the range of possible payouts under the incentive bonus plan. The targets reflect that the bonus plan was eliminated for the first half of the fiscal year. The maximum payment represents 200% of the target payment. The threshold payment represents 50% of target payout levels. For the annual incentive bonus plan, the amounts actually earned for fiscal year 2021 are reported as Non-Equity Incentive Plan Compensation in the Summary Compensation Table. For additional information, see the section titled “Compensation Discussion and Analysis—Fiscal Year 2021 Executive Compensation—Incentive Bonus Plan” of this proxy statement.
(2) These rows show the range of estimated future vesting of TSR PSUs granted in fiscal year 2021 under our 2017 Plan. The TSR PSUs cliff vest after three years, with vesting based on the percentile rank of the Company’s TSR relative to the return of the S&P 500 Index. The maximum payout for each executive officer represents 200% of the target payout. The threshold payout for each NEO represents 25% of target payout levels. For additional information, see the section titled “Compensation Discussion and Analysis—Fiscal Year 2021 Executive Compensation—Long-Term Share- Based Incentive Compensation” of this proxy statement.
(3) Shows the number of service-based RSUs granted in fiscal year 2021 under our 2017 Plan. For each NEO, the RSUs vest in three annual installments at a rate of 33% per year, provided that the executive continues to remain employed on the vesting dates. For additional information, see the section titled “Compensation Discussion and Analysis—Long-Term Share-Based Incentive Compensation—Grants During Fiscal Year 2021” of this proxy statement.
(4) This column shows the grant date fair value of service-based RSUs and TSR PSUs, at the target level, under FASB ASC Topic 718 granted to our NEOs in fiscal year 2021. The grant date fair value is the amount that we will expense in our financial statements over the awards’ vesting schedule. For service-based RSUs, the grant date fair value is the closing price of our Ordinary Shares on the grant date. For TSR PSUs where vesting is contingent on meeting a market condition, the grant date fair value was calculated using a Monte Carlo simulation. Additional information on the valuation assumptions is included in Note 5 of our audited consolidated financial statements, “Share-Based Compensation,” included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

 

      2021 Proxy Statement    73
 

Outstanding Equity Awards at 2021 Fiscal Year-End

 

The following table presents information about outstanding share awards held by our NEOs as of March 31, 2021. The table shows information about: (i) service-based RSUs and (ii) PSUs.

 

The market value of the share awards is based on the closing price of our Ordinary Shares as of March 31, 2021, which was $18.31. For PSUs, the number of unearned shares and the market values shown assume all performance criteria are met at either threshold, or target, depending on performance through March 31, 2021. For additional information on our equity incentive programs, see the section titled “Compensation Discussion and Analysis—Long-Term Share-Based Incentive Compensation” of this proxy statement.

 

   Share Awards
Name  Number of Shares
or Units of Stock
That Have Not
Vested
(#)
   Market Value of
Shares or Units of
Stock That Have Not
Vested
($)
   Equity Incentive Plan
Awards: Number of
Unearned Shares,
Units or Other Rights
That Have Not Vested
(#)(1)
   Equity Incentive Plan
Awards: Market or Payout
Value of Unearned Shares,
Units or Other Rights That
Have Not Vested
($)(2)
Revathi Advaithi  65,104 (3)   1,192,054      
   292,969 (3)   5,364,262    781,250 (11)   14,304,688
   345,304 (3)   6,322,516    690,606 (12)   12,644,996
Christopher Collier  21,038 (4)   385,206      
   41,153 (4)   753,511    82,306 (10)   1,507,023
   110,020 (4)   2,014,466    293,384 (11)   5,371,861
   129,673 (4)   2,374,313    259,346 (12)   4,748,625
Paul R. Lundstrom  316,455 (5)   5,794,291    271,244 (12)   4,966,478
Francois P. Barbier  19,446 (6)   356,056      
   38,450 (6)   704,020    76,899 (10)   1,408,021
   85,311 (6)   1,562,044    227,494 (11)   4,165,415
   100,550 (5)   1,841,071    201,100 (12)   3,682,141
Paul Humphries  19,656 (7)   359,901      
   38,450 (7)   704,020    76,899 (10)   1,408,021
   85,311 (7)   1,562,044    227,494 (11)   4,165,415
   100,550 (7)   1,841,071    201,100 (12)   3,682,141
Michael Hartung  3,443 (8)   63,041      
   7,138 (8)   130,697    14,275 (10)   261,375
   21,778 (8)   398,755    58,074 (11)   1,063,335
   55,249 (8)   1,011,609    110,496 (12)   2,023,182
Scott Offer  13,388 (9)   245,134      
   26,188 (9)   479,502    52,376 (10)   959,005
   68,360 (9)   1,251,672    182,290 (11)   3,337,730
   80,571 (9)   1,475,255    161,140 (12)   2,950,473

 

(1) This column includes TSR PSUs granted in fiscal years 2019, 2020 and 2021 under our 2017 Plan, where vesting is based on the Company’s TSR relative to the return of the S&P 500 Index.
(2) The projected payout for the TSR PSUs for the 2018-2021 cycle is shown at target. The projected payouts for the TSR PSUs for the 2019-2022 and 2020-2023 cycles are reported at maximum.
(3) 65,104 will vest on February 11, 2022; 292,969 shares vest at a rate of 97,656 shares per year for three years, with the first vesting date on June 11, 2021; and 345,304 shares vest at a rate of 115,101 shares per year for three years, with the first vesting date on June 3, 2021.
(4) 21,038 vest on June 29, 2021; 41,153 shares vest at a rate of 20,576 shares per year for two years, with the first vesting date on June 19, 2021; 110,020 shares vest at a rate of 36,673 shares per year for three years, with the first vesting date on June 11, 2021; and 129,673 shares vest at a rate of 43,224 shares per year for three years, with the first vesting date on June 3, 2021. Mr. Collier resigned from his position of Chief Financial Officer effective September 1, 2020, and the unvested shares were forfeited upon the end of his transition date on March 31, 2021.
(5) 316,455 shares vest at a rate of 105,485 shares per year for three years, with the first vesting date on September 15, 2021.
(6) 19,446 shares vest on June 29, 2021; 38,450 shares vest at a rate of 19,225 shares per year for two years, with the first vesting date on June 19, 2021; 85,311 shares vest at a rate of 28,437 shares per year for three years, with the first vesting date on June 11, 2021; and 100,550 shares vest at a rate of 33,516 shares per year for three years, with the first vesting date on June 3, 2021.

 

      2021 Proxy Statement    74
 
(7) 19,656 shares vest on June 29, 2021; 38,450 shares vest at a rate of 19,225 shares per year for two years, with the first vesting date on June 19, 2021; 85,311 shares vest at a rate of 28,437 shares per year for three years, with the first vesting date on June 11, 2021; and 100,550 shares vest at a rate of 33,516 shares per year for three years, with the first vesting date on June 3, 2021. Mr. Humphries retired from his position of President, Flex Reliability Solutions effective November 30, 2020. The unvested shares granted prior to June 3, 2020 forfeited upon the end of his transition date on March 31, 2021.The awards granted on June 3, 2020 will continue to vest per the retirement clause in the award agreement.
(8) 3,443 shares vest on June 29, 2021; 7,138 shares vest at a rate of 3,569 shares per year for two years, with the first vesting date on June 14, 2021; 21,778 shares vest at a rate of 7,259 shares per year for three years, with the first vesting date on June 14, 2021; and 55,249 shares vest at a rate of 18,416 shares per year for three years, with the first vesting date on June 3, 2021.
(9) 13,388 shares vest on June 29, 2021; 26,188 shares vest at a rate of 13,094 share per year for two years, with the first vesting date on June 19, 2021; 68,360 shares vest at a rate of 22,787 per year for three years, with the first vesting date of June 11, 2021; and 80,571 shares vest at a rate of 26,857 shares per year for three years, with the first vesting date on June 3, 2021.
(10) Shares vest on June 19, 2021 assuming a target payout.
(11) Shares vest on June 11, 2022 assuming a maximum payout.
(12) Shares vest on June 3, 2023 assuming a maximum payout.

 

Shares Vested in Fiscal Year 2021

 

The following table presents information for each of our NEOs regarding the number of shares acquired upon the vesting of share awards in the form of RSUs and PSUs during fiscal year 2021 and the value realized, in each case before payment of any applicable withholding tax and broker commissions. There were no option exercises by our NEOs in 2021 and the NEOs do not hold any unexercised options.

 

   Share Awards
Name  Number of Shares
Acquired on Vesting
(#)
  Value Realized
on Vesting
($)(1)
Revathi Advaithi  162,760  2,237,462
Christopher Collier  374,946  5,669,309
Paul R. Lundstrom   
Francois P. Barbier  363,007  5,547,629
Paul Humphries  363,621  5,553,971
Michael Hartung  18,270  189,126
Scott Offer  366,712  5,850,635

 

(1) The amounts in this column reflect the aggregate dollar amount realized upon the vesting of RSUs determined by multiplying the number of Ordinary Shares underlying such awards by the market value of the underlying shares on the vesting date.

 

Pension Benefits in Fiscal Year 2021

 

Our NEOs do not receive any compensation in the form of pension benefits.

 

Nonqualified Deferred Compensation in Fiscal Year 2021

 

Each of our NEOs participates in our 2010 Deferred Compensation Plan, except for Mr. Barbier, who no longer participates in this plan. Our deferred compensation program is intended to promote retention by providing a long-term savings opportunity on a tax-efficient basis. Beginning in fiscal year 2011, we replaced our existing deferred compensation plans with the 2010 Deferred Compensation Plan. Under the 2010 plan, participating officers may defer up to 70% of their base salary and bonus, net of certain statutory and benefit deductions. The Company may make a discretionary matching contribution for these deferrals to reflect limitations on our matching contribution under our 401(k) plan. Under this plan, we may also make annual contributions, in amounts up to 37.5% of each participant’s base salary (subject to offsets for non-U.S. executives’ pension and other benefits), which will cliff vest after four years. For these annual contributions, 50% of the funding is paid as a percent of base salary and the remaining 50% is performance-based, up to a maximum of 150%. This aligns to the distribution of performance and time-based elements in our long-term compensation programs. Amounts credited to the deferral accounts are deemed to be invested in hypothetical investments selected by a participant or an investment manager on behalf of each participant. Participants in the 2010 Deferred Compensation Plan may receive their vested deferred compensation balances upon termination of employment at such time as is specified in their deferral agreements, which may include a lump sum payment or installment payments made over a period of years. Participants also may elect in-service distributions through a lump sum payment or in installments over a period of up to ten years.

 

      2021 Proxy Statement    75
 

Under each of our deferred compensation plans, we entered into trust agreements providing for the establishment of irrevocable trusts into which we are required to deposit cash or other assets as specified in the applicable deferral agreement, equal to the aggregate amount required to be credited to the participant’s deferral account, less any applicable taxes to be withheld. The deferred account balances of the participants in deferred compensation plans are unfunded and unsecured obligations of the Company, receive no preferential standing, and are subject to the same risks as any of our other general obligations.

 

For a discussion of the contributions granted to each of the NEOs and their vesting terms, including vesting upon the executive’s termination or a change of control of the Company, see the sections titled “Compensation Discussion and Analysis—Fiscal Year 2021 Executive Compensation—Deferred Compensation Awards” of this proxy statement and “Executive Compensation—Potential Payments Upon Termination or Change of Control” below.

 

The following table presents information for fiscal year 2021 about: (i) contributions to the NEOs deferred compensation plan accounts by the executive; (ii) contributions to the NEOs’ deferred compensation plan accounts by the Company; (iii) aggregate earnings (or losses) on the deferred compensation plan accounts; (iv) aggregate withdrawals and distributions from the deferred compensation plan accounts; and (v) the deferred compensation plan account balances as of the end of the fiscal year. For fiscal year 2021, Ms. Advaithi and Messrs. Collier, Humphries and Offer each received deferred cash awards with a value that averaged about 22.3% of their respective 2020 base salaries. Mr. Hartung received a deferred cash award with a value of 14.9% of his 2020 base salary. Mr. Lundstrom received his initial deferred cash contribution of 50% of his base salary in connection with his hiring.

 

Nonqualified Deferred Compensation Table

 

Name  Executive
Contributions in
Last Fiscal Year
($)(1)
  Registrant
Contributions in
Last Fiscal Year
($)(2)
  Aggregate
Earnings (Losses)
in Last Fiscal Year
($)(3)
  Aggregate
Withdrawals/
Distributions
($)
  Aggregate
Balance at Fiscal
Year-End
($)(4)
Revathi Advaithi    256,870  74,737    2,351,688
Christopher Collier  95,497  158,589  94,470  549,351  3,459,782
Paul R. Lundstrom    350,000  23,054    373,054
Francois P. Barbier(5)      170,596    1,147,872
Paul Humphries  88,729  158,589  1,609,376  1,101,793  5,565,544
Michael Hartung    53,335  334  57,564  239,330
Scott Offer  65,731  140,541  87,259    923,239

 

(1) Reflects the salary payments deferred by our NEOs during the fiscal year. These amounts are included in the Summary Compensation Table under the “Salary” and “Bonus” columns, as applicable.
(2) These amounts represent contributions under the 2010 deferred compensation plan. These awards cliff vest after four years. None of these awards have vested under this plan as of March 31, 2021. These amounts, including any earnings or losses thereon, will be reported under the “Bonus” column of the Summary Compensation Table upon vesting in future years if the executive continues to be a NEO. For additional information on these contributions and their vesting terms, including vesting upon the executive’s termination or change of control of the Company, see the sections titled “Compensation Discussion and Analysis—Fiscal Year 2021 Executive Compensation—Deferred Compensation Awards” of this proxy statement and “Executive Compensation—Potential Payments Upon Termination or Change of Control.
(3) Reflects earnings (or losses) for each NEO on both the vested and unvested portions of the executive’s deferred compensation account(s). The above-market portion of the earnings on the vested portion of the executive’s deferred compensation account(s) is included under the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column in the Summary Compensation Table. Any earnings that vest in a given year are reported in the “Bonus” column in the Summary Compensation Table.
(4) The amounts in this column have previously been reported in the Summary Compensation Table for this and prior fiscal years as follows: Christopher Collier—$2,550,637; Francois P. Barbier—$1,241,756; and Paul Humphries—$3,064,819, and Scott Offer—$20,610. The amounts in this column include the following unvested balances related to the respective 2010 deferred compensation plan account of the NEOs: Revathi Advaithi—$2,351,688; Christopher Collier—$446,568; Paul R. Lundstrom—$373,054; Paul Humphries—$435,082; Michael Hartung—$239,330 and Scott Offer—$682,502.
(5) Mr. Barbier does not participate in the 2010 Deferred Compensation Plan. The information in the table reflects earnings on the account balance of his senior management plan account.

 

Potential Payments Upon Termination or Change of Control

 

As described in the section titled “Compensation Discussion and Analysis” of this proxy statement, our NEOs do not have employment agreements with us. Our NEOs are eligible for certain termination and change of control benefits under our Executive Severance Plan, the 2010 Deferred Compensation Plan and under our equity incentive plans. Additionally, severance benefits for Ms. Advaithi were included in her employment offer letter.

 

      2021 Proxy Statement    76
 

Acceleration of Vesting of Deferred Compensation

 

If the employment of any participant in the 2010 Deferred Compensation Plan is involuntarily terminated by the Company without cause or is terminated by the executive with good reason within two years following a change of control (as defined in the 2010 Deferred Compensation Plan), the entire unvested portion of the deferred compensation account of the NEO will vest.

 

Acceleration of Vesting of Equity Awards

 

The number of unvested equity awards held by each NEO as of March 31, 2021 is listed above in the Outstanding Equity Awards at 2021 Fiscal Year-End table. All unvested outstanding equity awards held by our NEOs at the end of fiscal year 2021 were granted under the 2010 Plan and 2017 Plan, which provide certain benefits to plan participants in the event of the termination of such participant’s employment or a change of control of the Company. The terms of these benefits are described below.

 

Treatment of Certain Awards Upon Retirement

 

Subject to any waiver by the Compensation and People Committee, all unvested RSU awards and unvested stock options held by a plan participant will be forfeited if the participant ceases to provide services to the Company for any reason. However, certain award agreements for TSR PSUs granted under our 2017 Plan prior to June 2020 provide that if a plan participant ceases to provide services to the Company due to a qualifying retirement (meaning a voluntary termination of service after the participant has attained the age of sixty (60) years and completed at least ten (10) years of service as an employee of the Company), then the award will not terminate and a pro-rata number of shares subject to the award shall be issued to the participant upon the vesting of the award agreement pursuant to the original performance criteria. Also, certain award agreements for RSUs and TSR PSUs granted under our 2017 Plan starting in June 2020 provide that if a plan participant ceases to provide services to the Company due to a qualifying retirement (meaning a voluntary termination of service after the participant has attained the age of fifty-five (55) years; completed at least five (5) years of service as an employee of the Company; and the sum of age and service is equal to at least 65), then the award will not terminate. RSUs would continue to vest, and a pro-rata number for the length of time employed during the performance period shall be issued to the participant at the end of the performance cycle for TSR PSUs. At the current time, Messrs. Barbier and Humphries are the only NEOs that satisfy the retirement criteria.

 

Treatment of Certain Awards Upon Death or Disability

 

Certain award agreements for RSUs and TSR PSUs granted under our 2017 Plan starting in June 2020 provide that if a plan participant ceases to provide services to the Company due to death or disability, then the awards will accelerate after the qualifying termination. RSUs will immediately vest. TSR PSUs will be pro-rated and immediately vest as follows: completed cycles will vest based on actual performance and unfinished cycles will vest at target.

 

Double-Trigger Vesting Upon a Change of Control

 

Our equity incentive plans are “double trigger” plans, meaning that unvested RSU awards vest immediately only if (i) there is a change of control of the Company and (ii)(x) such awards are not converted, assumed or replaced by the successor or survivor corporation or (y) if provided by the Compensation and People Committee as described below, the service of the award recipient is involuntarily terminated within a designated period following the effective date of such change of control.

 

Under the terms of the 2010 Plan and the 2017 Plan (together, the “Plans”), unless otherwise provided in the applicable award agreement or other agreement between the Company and the participant, in the event of a change of control of the Company (as defined in the Plans) in which the participant’s awards are not converted, assumed, or replaced by a successor or survivor corporation, or a parent or subsidiary thereof, then all forfeiture restrictions on such awards will lapse immediately prior to the change of control and, following the consummation of such a change of control, all such awards will terminate and cease to be outstanding.

 

Where awards under the Plans are assumed or continued after a change of control, the Compensation and People Committee may provide that one or more awards will automatically accelerate upon an involuntary termination of service within a designated period (not to exceed eighteen (18) months) following the effective date of such change of control. If the Compensation and People Committee so determines, immediately upon an involuntary termination of service following a change of control all forfeiture restrictions on such award will lapse.

 

2019 Executive Severance Plan

 

On January 17, 2019, the Compensation and People Committee adopted the Flex Ltd. Executive Severance Plan (the “Severance Plan”). The Severance Plan covers senior level employees of the Company, including the Company’s Chief Financial Officer and other NEOs, but not including the Company’s Chief Executive Officer. Under the Plan, in the event of a termination of

 

      2021 Proxy Statement    77
 

employment by the Company without “cause” or by a participant for “good reason” (each such term as defined in the Plan), the participant will receive the following benefits, subject to the participant entering into and complying with a transition and release agreement in a form provided by the Company (“Transition Agreement”):

 

continuation of base salary and benefits coverage during the transition period provided in the Transition Agreement and pro rata payment of annual bonus;
continued vesting of RSUs, PSUs and deferred compensation awards during the transition period; and
following the transition period, accelerated vesting of RSUs and deferred compensation awards that would have vested during the one-year period following the transition period.

 

During the transition period, the participant will be required to discharge his or her transition duties and comply with other terms and conditions to be set forth in the Transition Agreement, including customary non-competition, non-solicitation, non-disclosure, non-disparagement and cooperation provisions. Any violation of such obligations may result in cessation of benefits and clawback rights of the Company.

 

There are no tax gross-ups in the severance plan.

 

CEO Severance Benefits

Pursuant to the terms of the CEO offer letter, dated February 11, 2019, in the event of a termination of employment by the Company without “cause” or by the CEO for “good reason” (each such term as defined in the Severance Plan), the CEO will receive the following benefits:

 

continuation of base salary, target bonus and benefits coverage for 24 months;
2 years continued vesting on outstanding RSUs, PSUs, and deferred compensation awards; and
subject to execution of a release agreement, accelerated vesting and immediate payment of sign-on compensation (cash bonus, deferred compensation contribution, and sign-on equity RSU award).

 

Potential Payments Upon Termination or Change of Control as of March 31, 2021

 

The following table and accompanying notes show the estimated payments and benefits that would have been provided to each NEO as a result of (i) the accelerated vesting of deferred compensation in the case of a change of control with a termination of employment and (ii) the accelerated vesting of restricted and performance share unit awards in the event of a change of control if such awards are not assumed by the successor company in connection with the change of control, (iii) involuntary termination without cause or voluntary termination for good reason under the Company’s Severance Plan, (iv) retirement, or (v) death or disability. Mr. Collier voluntarily terminated from the Company on September 1, 2020 and under the terms of applicable plans was not eligible for any termination benefits. Mr. Humphries retired from the Company on November 30, 2020 and remained on as an advisor through March 31, 2021. Under the terms of the applicable plans, he was therefore not eligible for termination benefits for any other scenario outside of retirement.

 

Calculations for this table assume that the triggering event took place on March 31, 2021, the last business day of fiscal year 2021, and are based on the price per share of our Ordinary Shares on such date, which was $18.31. The following table does not include potential payouts under our NEOs’ nonqualified deferred compensation plans relating to vested benefits.

 

Name  Change in Control
with Termination
($)
   Change in
Control and No
Assumption of
Award(1)
($)
   Involuntary Termination
without Cause or
Voluntary Termination for
Good Reason(2)
($)
   Retirement(3)
($)
   Death or
Disability
($)(4)
Revathi Advaithi                       
Base Salary Continuation(5)  2,300,000       2,300,000      
Benefits Continuation(5)  44,381       44,381      
Bonus Payments(5)  3,450,000       3,450,000       1,419,503
Vesting of Deferred Compensation(5)(6)  2,351,688       2,094,764       256,924
Vesting of Service-based RSUs(5)  8,983,216    12,878,833    8,983,216       6,322,516
Vesting of Performance-based RSUs  7,152,344    13,474,842    7,152,344      
Pro Rata Vesting of PSUs              1,737,949
Total  24,281,629    26,353,675    24,024,705       9,736,892

 

      2021 Proxy Statement    78
 
Name  Change in Control
with Termination
($)
   Change in
Control and No
Assumption of
Award(1)
($)
   Involuntary Termination
without Cause or
Voluntary Termination for
Good Reason(2)
($)
   Retirement(3)
($)
   Death or
Disability
($)(4)
Christopher Collier                       
Base Salary Payment Continuation(7)             
Benefits Continuation(7)             
Bonus Payments(8)             
Vesting of Deferred Compensation(6)             
Vesting of Service-based RSUs(5)             
Vesting of Performance-based RSUs             
Pro Rata Vesting of PSUs             
Total             
Paul R. Lundstrom                       
Base Salary Payment Continuation(7)  700,000       700,000      
Benefits Continuation(7)  20,981       20,981      
Bonus Payments(8)  633,633       633,633       633,633
Vesting of Deferred Compensation  370,914             370,914
Vesting of Service-based RSUs(9)  3,862,842