What is the primary purpose of this supplemental equity award for the CEO?

The award is intended to further align the CEO's compensation with long-term shareholder value creation, ensure leadership continuity through the company's growth phase, and recognize her strong leadership and contributions to Flex's financial and operational performance. A key focus is also to incentivize growth in the data center business.

How is the CEO's supplemental equity award performance measured?

The number of PSUs earned is primarily based on the performance of Flex's data center business, measured at the end of fiscal year 2028. The payout can range from 0% to 250% of the target PSUs. Additionally, an overall payout cap is applied based on the company's relative Total Shareholder Return (rTSR) over a three-year period (June 19, 2025, to June 19, 2028).

Are there any special conditions attached to the vesting of this award?

Yes, the award has more restrictive conditions than standard equity awards. It cliff vests after performance certification at the end of the performance period, subject to continued service. Unlike other awards, retirement or termination due to disability will not entitle Ms. Advaithi to accelerated or continued vesting. Specific provisions for termination without cause or for good reason (with or without a change of control) and death are detailed in the award agreement.

What is the significance of the rTSR component?

The relative Total Shareholder Return (rTSR) component acts as an overall payout cap for the award. This means that even if the data center business performance targets are met and exceed expectations, the total payout of the PSUs will be limited based on how Flex's stock performance compares to a peer group over the specified three-year period.

FLEX 8-K: Leadership Changes

Summary

Flex Ltd. (FLEX) announced on June 25, 2025, a significant executive compensation event involving its Chief Executive Officer, Revathi Advaithi. The Board of Directors, on the recommendation of its Compensation and People Committee, approved a one-time supplemental equity award valued at a target of $25 million. This award is structured as performance-based restricted share units (PSUs) and is primarily tied to the performance of Flex's data center business through fiscal year 2028. The award aims to further align executive compensation with long-term shareholder value creation and ensure leadership continuity, particularly recognizing Ms. Advaithi's contributions. The payout of these PSUs can range from 0% to 250% of the target, contingent on achieving rigorous performance goals. Additionally, the award incorporates a relative Total Shareholder Return (rTSR) component as an overall payout cap, linking a portion of the executive's compensation directly to shareholder experience over a three-year period.

Key Highlights

1Flex Ltd. CEO Revathi Advaithi received a one-time supplemental equity award valued at $25 million (target grant date fair value).
2The award consists entirely of performance-based restricted share units (PSUs).
3Payout of the PSUs is primarily linked to the performance of Flex's data center business, with a performance period ending in fiscal year 2028.
4PSU payouts can range from 0% to 250% of the target award, contingent on rigorous performance goals.
5The award is subject to an overall payout cap based on Flex's relative Total Shareholder Return (rTSR) over a three-year period.
6The equity award has more restrictive vesting and retention conditions compared to standard equity awards, including specific provisions for retirement, disability, termination for cause/good reason, and change of control scenarios.

FLEX LTD. 8-K Report, Executive Changes (Jun 25, 2025)

Summary

Key Highlights

Frequently Asked Questions