Advanced Energy Industries Inc PRE 14A, filed Mar 4, 2024

Advanced Energy Industries Inc (AEIS)

PRE 14A 2024-03-04 For: 2024-04-25

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þ	Preliminary Proxy Statement
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	By Order of the Board of Directors,
Denver, Colorado	Elizabeth K. Vonne
March , 2024	Executive Vice President, General Counsel, and Corporate Secretary


A Message from our CEO	i
Notice of the Annual Meeting of Stockholders	ii
Table of Contents	1
Proxy Summary	2
Proposal No. 1 - Election of Directors	5
Director Compensation	16
Corporate Governance	18
Proposal No. 2 - Ratification of the Appointment of Ernst & Young LLP as Advanced Energy’s Independent Registered Public Accounting Firm for 2024	25
Proposal No. 3 - Advisory Approval of the Company’s Named Executive Officer Compensation	27
Security Ownership of Certain Beneficial Owners and Management	29
Executive Compensation	31
Compensation Discussion and Analysis	31
Compensation Risk Assessment	44
Compensation Committee Report	45
Equity Compensation Plan Information	46
Management	47
Summary Compensation Table for 2023	49
2023 Grants of Plan-Based Awards	50
2023 Outstanding Equity Awards at Fiscal Year-End	51
2023 Option Exercises and Stock Vested	52
Pension Benefits	52
Non-Qualified Deferred Compensation	52
Potential Payments upon Termination or Change in Control	54
Pay versus Performance	56
CEO Pay Ratio	61
Certain Relationships and Related Transactions	62
Proposal No. 4 - Approval of Advanced Energy’s Second Amended and Restated Certificate of Incorporation to Provide Exculpation from Personal Liability for Certain Officers as Permitted by Delaware Law and Make Certain Other Minor, Non-Substantive Updates	63
Conduct and Communications	66
Proposals of Stockholders	66
Form 10-K	67
Delinquent Section 16(a) Reports	67
General Meeting Matters	67
Appendix A - Reconciliation of Non-GAAP Measures	A-1
Appendix B - Second Amended and Restated Certificate of Incorporation	B-1


PROPOSAL		REFERENCE	BOARD RECOMMENDATION	EFFECT OF BROKER NON-VOTES AND ABSTENTIONS	VOTES REQUIRED FOR APPROVAL
1	Election of ten (10) directors	Page 5	FOR ALL NOMINEES	No Effect	Plurality of votes of shares present at the 2024 Annual Meeting (by proxy or in person), subject to the resignation policy described on page 15
2	Ratification of the appointment of Ernst & Young LLP as Advanced Energy’s independent registered public accounting firm for 2024	Page 25	FOR	No Effect	Majority of shares present at the 2024 Annual Meeting (by proxy or in person), excluding broker non-votes and abstentions
3	Advisory approval of the compensation of our named executive officers	Page 27	FOR	No Effect	Majority of shares present at the 2024 Annual Meeting (by proxy or in person), excluding broker non-votes and abstentions
4	Approval of Advanced Energy’s Second Amended and Restated Certificate of Incorporation to provide exculpation from personal liability for certain officers as permitted by Delaware law and make certain other minor, non-substantive updates	Page 63	FOR	Same Effect as a Vote Against	Sixty-six and two-thirds percent (66 ⅔%) of the outstanding shares of voting stock of the Company



Our Mission	Our Vision	Our Strategy
Enable customer innovation by delivering highly engineered, applications-critical, precision power & control solutions.	Drive sustainable growth as the recognized world leader & trusted partner in precision power technology and applications.	Grow by delivering proprietary products with differentiated performance & delivered value that enable our customers’ success in rewarding markets.


	Environment		Social & Community
Energy-Efficient Products. Advanced Energy’s dedicated R&D teams strive to improve power conversion efficiency, balanced with exceptional stability and nimble control and response. Every increase in power conversion efficiency reduces our customers’ power consumption, decreasing their environmental impact and carbon emissions. Advanced Energy’s innovations reduce electricity consumption in a wide range of industries, including semiconductor manufacturing, industrial and medical equipment, as well as data center computing, telecom, and networking. Energy-Efficient Operations. Advanced Energy makes continuous improvements to reduce our energy usage in our global factories. For example, our Philippines factory is a three-time Philippine Economic Zone Authority (PEZA) Hall of Fame Awardee for Outstanding Environmental Performance. By employing novel alternatives, the site reduces the need for thermal testing. We also track our greenhouse gas emissions at several key manufacturing sites. Reducing Waste. Advanced Energy strives to reduce waste and conserve natural resources through efficiency improvements and recycling. Our manufacturing facilities in Asia actively manage and maximize our waste diversion rate, and we have implemented water treatment and wastewater recycling programs. In addition, we are implementing a recycled packaging initiative to reuse packaging material for supplies from our local suppliers.		Charitable Contributions. Our charitable contributions committee, founded in 2010, is supported and led by our employees. The committee provides financial support for 501(c)(3) corporations, nonprofit institutions, and organizations that improve education, the environment and health and social services across the communities in which we operate and where our employees live. Diversity and Inclusion. We have approximately 10,000 employees located across the globe. Each person’s background and unique skill set are fundamental to our success. The Corporate Diversity & Inclusion Steering Committee provides guidance and direction on diversity, equity, and inclusion while enabling local teams to develop specific, targeted initiatives as appropriate. We also have an active Women’s Leadership Forum focused on career development and internal networking. Volunteerism. We offer each employee eight hours of paid time off to volunteer with self-selected 501(c)(3) organizations or other nonprofit organizations. Community Involvement. We work closely with community organizations, including supporting STEM education in local schools, working with universities around the world to facilitate their innovative research projects, participating in local chambers of commerce and partnering with local nonprofit organizations. Advanced Energy’s STEM Scholarship Program, launched in 2020, aims to develop emerging talent in STEM fields. We accept applications from undergraduate and post-graduate students attending leading institutions in the field of power technologies.


	Governance		Ethical Business Practices
Commitment. Advanced Energy is firmly committed to strong and effective corporate governance practices and accountability to our stockholders. Continuous Improvement. We routinely review our governance practices against evolving best practices and consider feedback and input from our stockholders. We encourage you to review our Board Governance Guidelines on our website at www.advancedenergy.com/ en-us/about/leadership. Core Values. At all levels of our organization, Advanced Energy delivers results by building a culture grounded in our Core Values: innovation, integrity, empowerment, partnership, accountability, and execution. Transparency. We are committed to transparency in all parts of our business to promote accountability, cultivate trust, and foster open communication. We believe that transparency leads to improvements to our processes and policies, and ultimately contributes to our success.		Human Rights. Respecting the human rights of our employees and all those involved in our business operations is a core principle for Advanced Energy. Integrity at our Core, Advanced Energy’s Code of Ethical Conduct, specifically prohibits activities involving slave, forced, bonded, or indentured labor, and child labor, and we require our suppliers use no forced labor themselves or in their supply chains. Integrity at our Core can be viewed on our website at www.advancedenergy.com/en-us/about/environment-social-and-governance. Supply Chain. We are committed to responsible sourcing of the materials that make up our products. We annually request our suppliers to confirm that minerals originating within DRC +9 are conflict-free. Employee Training and Helplines. We actively communicate to our employees on ethical business practices and provide a 24-hour anonymous hotline to address ethics issues.


				Committee Memberships
Name and Principal Occupation	Age	Director Since		Audit and Finance	Nominating, Governance & Sustainability	Compensation
GRANT H. BEARD (Chairman) Currently serves as Sr. Executive Operating Partner for Blue Point Capital, a private equity firm	63	2014
FREDERICK A. BALL Former EVP & Chief Administrative Officer of Marketo Inc.	61	2008				C
ANNE T. DELSANTO Currently serves as a Limited Partner at Operator Collective and Stage 2 Capital	60	2020			M	M
TINA M. DONIKOWSKI Former Vice President, Global Locomotive Business at General Electric Company	64	2018		M*	C
RONALD C. FOSTER Former Chief Financial Officer of Micron Technology, Inc.	73	2014		C*
STEPHEN D. KELLEY Currently serves as President, CEO, and director of Advanced Energy	61	2021
LANESHA T. MINNIX Currently serves as Executive Vice President, General Counsel & Corporate Secretary of Ecolab, Inc.	48	2020		M	M
DAVID W. REED Currently serves as CEO of Vendanta Resources Ltd.’s semiconductor group	65	2022				M
JOHN A. ROUSH Currently serves as Operating Executive Advisor to ACON Investments, LLC, a private equity firm	58	2016			M	M
BRIAN M. SHIRLEY Former Senior Vice President DRAM and Emerging Memory Engineering of Micron Technology, Inc.	54	2022		M*
			* Indicates audit committee financial expert


Grant H. Beard (Chairman)
Independent Director	Age: 63	Director Since: 2014
Business Experience:
Grant H. Beard currently serves as a Senior Executive Operating Partner for Blue Point Capital, a private equity firm, and as a Senior Advisor to Center Rock Capital, a global alternative investment firm. Mr. Beard served as Chairman and Chief Executive Officer of Wynnchurch Industries, LLC, a diversified holding company investing in engineered product businesses, from January 2016 to June 2017. Mr. Beard also served as a Senior Advisor to Wynnchurch Capital Ltd. Prior to joining Wynnchurch, Mr. Beard served as the Chairman and Chief Executive Officer of Wolverine Advanced Materials LLC, a Wynnchurch company, from July 2012 until October 2015. Mr. Beard served as President and Chief Executive Officer of Constar International, Inc. (formerly Nasdaq: CNST) from 2010 to 2012, where he led the financial and operational restructuring of Constar’s global packaging business that was later sold to Plastipak Corporation. Prior to that, Mr. Beard served as President & CEO of TriMas Corporation, Chairman & CEO of Health Media, and Global Group President of Fluid Management Products at Dana/Echlin Corporation. In addition, Mr. Beard served as a Senior Executive Operating Partner with Blue Point Capital from 2009 to 2014. Mr. Beard also has experience at two private equity/merchant banking groups, Anderson Group and Oxford Investment Group, where he was actively involved in corporate development, strategy and operations management.
Key Skills and Qualifications:
● Senior Leadership Experience ● Financial Expertise	● Public Board Experience ● Global Expertise	● Industry Experience
Mr. Beard brings to the Board significant senior management and public board experience, together with global expertise in industrial and related markets and in the private equity/merchant banking industry, as well as experience in strategy, operations, and M&A transactions.


Frederick A. Ball
Independent Director	Age: 61	Director Since: 2008
Committees: Compensation (Chair)
Business Experience:
Frederick A. Ball previously served as Executive Vice President and Chief Administrative Officer of Marketo Inc. (formerly Nasdaq: MKTO), a leading provider of a cloud-based marketing platform, from February 2016 through August 2016. Prior to that, Mr. Ball was Marketo’s Senior Vice President and Chief Financial Officer from May 2011 to February 2016. Prior to joining Marketo, Mr. Ball was the Chief Financial Officer for several private and public technology companies, including Webroot Software, BigBand Networks, Inc., and Borland Software Corporation (formerly Nasdaq: BORL). Mr. Ball also served as Vice President, Mergers and Acquisitions for KLA-Tencor Corporation (now KLA Corp., Nasdaq: KLAC), a manufacturer of semiconductor equipment, and prior to that as its Vice President of Finance. Mr. Ball was with PricewaterhouseCoopers LLC for over 10 years. Mr. Ball previously served as a director of Electro Scientific Industries, Inc. (formerly Nasdaq: ESIO), Sendgrid, Inc. (formerly NYSE: SEND), and FirstMark Horizon Acquisition Corporation (formerly NYSE: FMAC). Mr. Ball has served, and currently serves on other private company boards, including Alchemer, Contentful, and Webgility.
Key Skills and Qualifications:
● Senior Leadership Experience ● Financial Expertise	● Public Board Experience ● Global Expertise	● Industry Experience
Mr. Ball brings to the Board significant experience in senior management, operations, finance, and auditing, having served as the Chief Financial Officer of a leading provider of cloud-based marketing software, as well as experience in strategy and executive compensation.


Anne T. DelSanto
Independent Director	Age: 60		Director Since: 2020
Committees: Compensation and Nominating, Governance & Sustainability
Business Experience:
Anne T. DelSanto currently serves as a Limited Partner at Operator Collective and Stage 2 Capital, both venture capital funds that invest in early-stage companies supporting entrepreneurial efforts aimed at next generation technology and software. From February 2018 to April 2019, Ms. DelSanto served as the Executive Vice President and General Manager of Platform at Salesforce, Inc. (NYSE: CRM), a customer relationship management company, following six years of other senior leadership roles at the company. Prior to Salesforce, Ms. DelSanto served as Group Vice President of Sales Engineering at Oracle Corp. (NYSE: ORCL), an information technology and services company. She began her career as an Account Systems Engineer with International Business Machines Corporation (NYSE: IBM), where she spent several years building solutions for the health care market. Ms. DelSanto serves on the board of Juniper Networks, Inc. (NYSE: JNPR), and New Relic, Inc. (NYSE: NEWR). Ms. DelSanto graduated with a degree in mathematics from St. John’s University and earned a Master of Science in administrative studies from Boston College.
Key Skills and Qualifications:
● Senior Leadership Experience ● Public Board Experience ● Global Expertise		● Technical Expertise ● Financial Expertise
Ms. DelSanto brings to the Board significant experience as a veteran technology executive with more than three decades driving organizations towards exponential growth and provides valuable insight relative to the Company’s growth strategies in data center computing and telecom networking markets.


Tina M. Donikowski
Independent Director	Age: 64		Director Since: 2018
Committees: Audit and Finance and Nominating, Governance & Sustainability (Chair)
Business Experience:
Tina M. Donikowski retired from General Electric Company (NYSE: GE), a diversified industrial company, in October 2015 after 38 years with the company. Ms. Donikowski served in a number of senior positions during her career at General Electric Company, including most recently as Vice President, Global Locomotive Business, GE Transportation, from January 2013 until her retirement. Ms. Donikowski currently serves on the board of directors of TopBuild Corp. (NYSE: BLD), a leading installer and distributor of insulation and building material products to the U.S. construction industry based in Florida, and Eriez Magnetics, a privately held manufacturer and designer of magnetic, vibratory, and metal detection applications based in Pennsylvania. Ms. Donikowski also serves as a member of the Board of Trustees of Gannon University. She previously served as a board member of CIRCOR International (formerly NYSE: CIR), a leading provider of flow control solutions and other highly engineered products and subsystems used in energy, aerospace and industrial markets and Atlas Copco AB (Stockholm: ATCO), a world-leading provider of sustainable productivity solutions based in Sweden. Ms. Donikowski holds a Bachelor of Science degree in Industrial Engineering, as well as an Honorary Doctorate, from Gannon University.
Key Skills and Qualifications:
● Senior Leadership Experience ● Public Board Experience ● Global Expertise		● Technical Expertise ● Financial Expertise
Ms. Donikowski brings to the Board broad senior management, operations, and global experience having served for 38 years in various leadership positions at General Electric Company. Her experience provides the Board with valuable input on strategic, operational, market, and product strategies.


Ronald C. Foster
Independent Director	Age: 73		Director Since: 2014
Committees: Audit and Finance (Chair)
Business Experience:
Ronald C. Foster previously served as Chief Financial Officer and Vice President of Finance of Micron Technology, Inc. (Nasdaq: MU), a global corporation that produces various forms of semiconductor devices, from April 2008 to March 2015. Mr. Foster was appointed to that position in 2008 after serving as a member of Micron’s Board of Directors from June 2004 to April 2005. Before joining Micron, Mr. Foster was the Chief Financial Officer and Senior Vice President of FormFactor, Inc. (Nasdaq: FORM), a semiconductor wafer test equipment company. Prior to joining FormFactor, Mr. Foster served as the Chief Financial Officer for JDS Uniphase, Inc. and Novell, Inc., and served in various financial and operational roles at Applied Materials, Inc. (Nasdaq: AMAT), and Hewlett Packard Company (NYSE: HPE). He previously served as a board member of Everspin Technologies, Inc. (Nasdaq: MRAM), Inotera Memories Inc., a public company on the Taiwan stock exchange, LUXIM Corporation and Aptina Company.
Key Skills and Qualifications:
● Senior Leadership Experience ● Financial Expertise ● Industry Experience		● Public Board Experience ● Global Expertise
Mr. Foster brings to the Board significant senior management experience in the semiconductor and high-tech industries as well as significant experience in financial management, accounting, and finance issues, having served as Chief Financial Officer for various companies.


Stephen D. Kelley
Age: 61		Director Since: 2021

Business Experience:
Stephen D. Kelley currently serves as President & Chief Executive Officer of Advanced Energy, and as a member of our Board of Directors since March 2021. Mr. Kelley served as President & CEO and a board member of Amkor Technology, Inc. (Nasdaq: AMKR), a leading semiconductor package and test company, from May 2013 to June 2020. Prior to joining Amkor, Mr. Kelley served as Senior Advisor to Advanced Technology Investment Company, the Abu Dhabi-sponsored investment company that owns GlobalFoundries, until December 2012. Mr. Kelley served as Executive Vice President and Chief Operating Officer of Cree, Inc. (now Wolfspeed, Inc., NYSE: WOLF) from 2008 to 2011. Previously, Mr. Kelley held executive leadership roles of various businesses at companies including Texas Instruments, Philips Semiconductors, National Semiconductor, and Motorola. Since January 2023, Mr. Kelley has served on the board of directors of ONTO Innovation Inc. (NYSE: ONTO), a leader in the process control for the semiconductor and related industries. Mr. Kelley holds an SB ChE from the Massachusetts Institute of Technology and a JD from Santa Clara University.
Key Skills and Qualifications:
● Senior Leadership Experience ● Public Board Experience ● Industry and Technical Expertise	● Global Operations Expertise ● Financial Expertise
Mr. Kelley brings more than 30 years of significant senior management experience in the global semiconductor and electronics industry, as well as broad management experience in strategic planning, business development, technology, manufacturing, and operations.

2024 ANNUAL
PROXY STATEMENT

	2024 ANNUAL
		PROXY STATEMENT


	PRECISION \| POWER \| PERFORMANCE	1

2024 ANNUAL
PROXY STATEMENT


Lanesha T. Minnix
Independent Director	Age: 48		Director Since: 2020
Committees: Audit and Finance and Nominating, Governance & Sustainability
Business Experience:
Lanesha T. Minnix is Executive Vice President, General Counsel, and Corporate Secretary for Ecolab Inc. (NYSE: ECL), a global leader in water, hygiene, and infection prevention solutions that protect people, planet, and business health. Ms. Minnix tendered her resignation from Ecolab in February 2024 and expects to join Walgreens Boots Alliance, Inc. (Nasdaq: WBA) as Executive Vice President and Global Chief Legal Officer in April 2024. Prior to joining Ecolab in June 2022, Ms. Minnix served as Senior Vice President, Chief Legal Officer and Corporate Secretary of Flowserve Corporation (NYSE: FLS), a manufacturer of products for a range of industries, including oil and gas, power, chemical, water, pharmaceuticals, and food processing, and was responsible for the company’s legal, compliance, and regulatory matters from June 2018 to June 2022. Previously, Ms. Minnix served as Senior Vice President and General Counsel for BMC Stock Holdings, Inc., a leading provider of diversified building products and services, from June 2017 until June 2018. Earlier in her career, Ms. Minnix held roles with increasing responsibility at ABM Industries, Shell Oil Company, and Sprint Corporation. Ms. Minnix began her career as a Corporate Associate at the law firm of K&L Gates LLP. Ms. Minnix holds a juris doctor and an MBA from the University of Tulsa, and a bachelor’s degree in Marketing from St. Louis University.
Key Skills and Qualifications:
● Senior Leadership Experience ● Industry Expertise		● Global Operations Expertise
Ms. Minnix brings to the Board leadership and public company experience and has broad exposure to advanced industrial markets for a range of applications. Her legal and business skills add significant value to the Board.


David W. Reed
Independent Director	Age: 65		Director Since: 2022
Committees: Compensation
Business Experience:
David W. Reed is the Chief Executive Officer of Vendanta Resources Ltd.’s semiconductor group, which position he commenced in February 2023. Prior to that, Mr. Reed retired from NXP Semiconductors N.V. (Nasdaq: NXPI), where he principally served as Executive Vice President – Operations. NXP is a world leader in secure connectivity solutions, and Mr. Reed was responsible for NXP’s internal and external manufacturing operations, supply chain, information technology, total quality, and procurement. Mr. Reed joined NXP in 2015, having served as General Manager at Freescale Semiconductor, Ltd. until its merger with NXP. Mr. Reed has 37 years of extensive international experience with global execution of water fab, assembly/test, packaging, R&D, foundries, and joint ventures for analog, automotive, logic, and wireless customers. Mr. Reed joined Freescale Semiconductor in 2012 as Senior Vice President, Manufacturing Operations. Previously, Mr. Reed was Vice President and General Manager at GLOBALFOUNDRIES and began his career at Texas Instruments in 1984, where he held multiple overseas and leadership assignments. Mr. Reed has served on several private boards, including SSMC Foundry, a joint venture between NXP and TSMC, as its chairman, the Dwight Look College of Engineering at Texas A&M University, and Circle 10 Council of the Boy Scouts of America. Mr. Reed received an undergraduate degree from Austin College, an undergraduate degree in Chemical Engineering from Texas A&M University, and an MBA from the University of Dallas.
Key Skills and Qualifications:
● Senior Leadership Experience ● International Experience		● Global Operations Expertise ● Industry and Technical Expertise
Mr. Reed brings to the Board significant senior management and operations experience in the semiconductor capital equipment and manufacturing industry, particularly in the areas of global operations and supply chain management.


John A. Roush
Independent Director	Age: 58		Director Since: 2016
Committees: Compensation and Nominating, Governance & Sustainability
Business Experience:
John A. Roush currently serves as an Operating Executive Advisor to ACON Investments, LLC, a private equity firm. Mr. Roush serves on the board of two privately held ACON portfolio companies: Pine Environmental LLC, a provider of test equipment and services for environmental consultants; and Novipax LLC, a producer of absorbent pads for the poultry industry. Mr. Roush also serves as a director and member of the audit and compensation committees of Lemaitre Vascular, Inc. (Nasdaq: LMAT), a global provider of medical devices and implants for the treatment of peripheral vascular disease, and as a director of Targan, Inc. (formerly Applied Life Sciences & Systems), a privately held company that is developing automated vaccine delivery technology for the poultry industry. Mr. Roush previously served as Chief Financial Officer and Chairman of ACON S2 Acquisition Corp., a special purpose acquisition company (now ESS Tech, Inc., NYSE: GWH) from September 2020 to October 2021. He also previously served as Chief Executive Officer and a director of Novanta Inc. (Nasdaq: NOVT, formerly GSI Group Inc.), a leading global supplier of precision photonic components and subsystems to original equipment manufacturers in the medical and industrial technology markets, from December 2010 to September 2016. Mr. Roush joined Novanta after a twelve-year career with PerkinElmer, Inc., a provider of technology and services to the diagnostics, research, environmental, safety and security, industrial, and laboratory services markets, where he was a corporate officer and served in several leadership positions. Prior to joining PerkinElmer, Mr. Roush held management positions with Outboard Marine Corporation, AlliedSignal, Inc., (now Honeywell International), McKinsey & Company Inc., and General Electric Company (NYSE: GE).
Key Skills and Qualifications:
● Senior Leadership Experience ● Public Board Experience ● Technical Expertise		● Global Operations Expertise ● Financial Expertise
Mr. Roush brings to the Board significant senior management level experience and leadership in the medical and advanced industrial markets and applications, as well as significant public board experience and experience in private equity.


Brian M. Shirley
Independent Director	Age: 54		Director Since: 2022
Committees: Audit and Finance
Business Experience:
Mr. Shirley retired from Micron Technology, Inc. (Nasdaq: MU), a global corporation that produces various forms of semiconductor devices, as Senior Vice President DRAM and Emerging Memory Engineering in December 2019. He joined Micron as a Product Engineer in 1988, and held positions of increasing responsibility across product design, engineering, and business unit management. Mr. Shirley is listed as an inventor on 82 U.S. patents and helped drive Micron’s expansion into specialized memory for servers, mobile and networking solutions, in addition to maintaining a focus on cost leadership and power reduction. After retirement from Micron, Mr. Shirley consults for various U.S. government departments, advising on the semiconductor geopolitical landscape, supply chain resilience, and national security. Mr. Shirley holds a Bachelor of Science degree in electrical engineering from Stanford University.
Key Skills and Qualifications:
● Senior Leadership Experience ● Industry and Technical Expertise		● Global Operations Expertise
Mr. Shirley brings to the Board significant experience as a veteran technology executive with more than three decades of experience in semiconductor product technologies, including as an inventor on 82 U.S. patents, and an extensive track record of advancing innovation and growth.


	Directors who have served in senior leadership positions are important to the Company, as they bring experience and perspective in analyzing, shaping, and overseeing the execution of important operational and policy issues at a senior level. These directors’ insights and guidance and their ability to assess and respond to situations encountered in serving on our Board may be enhanced if their leadership experience has been developed at businesses or organizations that operated on a global scale, faced significant competition, and/or involved technology or other rapidly evolving business models.
Senior Leadership Experience

	Directors who have served on other public company boards can offer advice and insights with regard to the dynamics and operation of a board of directors, the relations of a board to the chief executive officer and other management personnel, the importance of particular agenda and oversight matters, and oversight of a changing mix of strategic, operational, and compliance-related matters.
Public Board Experience

	Because the Company is a global leader in innovative power solutions for the semiconductor, data center, telecom, and industrial and medical markets, experience in relevant technology is useful in understanding the Company’s research and development efforts, competing technologies, the various products and processes the Company develops, the manufacturing and assembly-and-test operations, and the market segments in which the Company competes.
Industry & Technical Expertise

	Because the Company is a global organization with research and development, manufacturing, assembly and test facilities, and sales and other offices in many countries, directors with global expertise can provide a useful business and cultural perspective regarding many significant aspects of our business.
Global Expertise

	Knowledge of financial markets, financing and funding operations, and accounting and financial reporting processes is important because it assists the directors in understanding, advising, and overseeing the Company’s capital structure, financing and investing activities, financial reporting, and internal control of such activities.
Financial Expertise

Board Diversity Matrix
	As of February 1, 2024
Total Number of Directors	10
	Female	Male
Part I: Gender Identity
Directors	3	7
Part II: Demographic Background
African American or Black	1	0
White	2	7


Compensation Elements for Non-Employee Directors
Compensation Element		2023 Compensation Program
Annual Board Cash Retainer		● $60,000 annual cash retainer paid in equal quarterly installments to each Board member.
		● $65,000 additional annual cash retainer for the Chairman of the Board, paid in equal quarterly installments.
Annual Board Equity Retainer		● Restricted stock units with an approximate value of $200,000 granted annually to each non-employee director on the date of his or her re-election at the 2024 Annual Meeting; each annual grant will vest one year from the date of grant. ● Additional restricted stock units with an approximate value of $50,000 granted annually to the Chairman of the Board on the date of his or her reelection at the 2024 Annual Meeting; each annual grant will vest one year from the date of grant. ● The Board may (but is not required to) grant restricted stock units to a new non-employee director upon initial election or appointment to the Board.
Annual Chair Cash Fees		● $30,000 annual cash retainer fee for Audit and Finance Committee Chair. ● $25,000 annual cash retainer fee for Compensation Committee Chair. ● $15,000 annual cash retainer fee for Nominating, Governance & Sustainability Committee Chair.
Annual Committee Member Retainer		● $13,000 annual cash retainer fee for Audit and Finance Committee members. ● $10,000 annual cash retainer fee for Compensation Committee members. ● $5,000 annual cash retainer fee for Nominating, Governance & Sustainability Committee members.


2023 Director Compensation
							Change in
							Pension Value
							and
							Nonqualified
						Non-Equity	Deferred
	Fee Earned or				Option	Incentive Plan	Compensation	All Other
	Paid in Cash		Stock Awards		Awards	Compensation	Earnings	Compensation	Total
Name	($)		($) (1)		($)	($)	($)	($)	($)
Grant H. Beard		125,000		245,201	—	—	—	—		370,201
Frederick A. Ball		85,000		196,178	—	—	—	—		281,178
Anne T. DelSanto		75,000		196,178	—	—	—	—		271,178
Tina M. Donikowski		88,000		196,178	—	—	—	—		284,178
Ronald C. Foster		90,000		196,178	—	—	—	—		286,178
Edward C. Grady*		36,500		—	—	—	—	—		36,500
Lanesha T. Minnix		78,000		196,178	—	—	—	—		274,178
David W. Reed		70,000		196,178	—	—	—	—		266,178
John A. Roush		75,000		196,178	—	—	—	—		271,178
Brian M. Shirley		73,000		196,178	—	—	—	—		269,178
Stephen D. Kelley		—		—	—	—	—	—		—


WHAT WE DO		WHAT WE DO NOT DO
✔ We specify in our Board Governance Guidelines that the Chairman of the Board and CEO positions must be held by separate persons in order to ensure effective management oversight. ✔ We aim to have a substantial portion of executive compensation be performance-based. ✔ We maintain a highly independent and diverse Board of Directors. ✔ We maintain robust stock ownership requirements for directors and executives. ✔ We have annual elections of directors. ✔ We conduct annual Board, committee, and director evaluations. ✔ We have regular executive sessions of independent directors.		Ñ We do not have any interlocking relationships among our directors. Ñ We do not have excise tax gross-up arrangements with any of our executive officers. Ñ We do not guarantee incentive awards. Ñ We do not permit hedging or pledging of company stock. Ñ We do not provide significant perquisites or separate pension programs to our executive officers. Ñ We do not have a poison pill.
do

	AUDIT AND FINANCE COMMITTEE

Meetings: 9
Chair: Ronald C. Foster
Other Members:
● Brian M. Shirley		● Tina M. Donikowski	● Lanesha T. Minnix
Independence: 100% compliance with Nasdaq and SEC rules. The Board of Directors determined that each of the members of the Audit and Finance Committee is “independent” in accordance with the Nasdaq Stock Market Rules and Rule 10A-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Financial Expertise: 100% compliance with SEC rules. The Board of Directors has evaluated the credentials of Messrs. Foster and Shirley, and Ms. Donikowski and determined that they are “audit committee financial experts” as defined under the rules promulgated by the SEC.
Charter: Available at www.advancedenergy.com/en-us/about/leadership
Key Responsibilities:
● appoint and oversee Advanced Energy’s independent registered public accounting firm;
● pre-approve audit, audit-related, and non-audit services, terms, and fees charged by the independent registered public accounting firm;
● supervise and monitor the performance of the Company’s internal audit department;
● monitor the integrity of the Company’s financial reporting process and review the adequacy and effectiveness of Company’s internal control over financial reporting;

● review and discuss the financial statements and disclosure thereof, quarterly earnings press releases, any financial information, and earnings guidance;
● establish and maintain procedures for confidential and anonymous submission of concerns regarding internal control over financial reporting or auditing matters and reporting of potential misconduct or undue risk;
● review and discuss the Company’s capital structure, potential capital market transactions, and capital allocation strategies;
● review and approve related party transactions;
● at least annually receive reports from the General Counsel and discuss the adequacy of the Company’s policies and practices related compliance with applicable laws and regulations;
● oversee financial-related risks, enterprise risk management program, and data privacy and cybersecurity risks.
Audit Fees: The Audit and Finance Committee pre-approves all audit and permissible non-audit services provided by Advanced Energy’s independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval is provided by category of service, with approvals for specific fees within each pre-approved category made by management. In 2023, the Audit and Finance Committee pre-approved all of the services provided by Ernst & Young LLP, Advanced Energy’s independent registered public accounting firm.
Financial Statements: The Audit and Finance Committee also conducts financial reviews with Advanced Energy’s independent registered public accounting firm prior to the release of financial information in the Company’s Forms 10-K and 10-Q. Management has primary responsibility for Advanced Energy’s financial statements and the overall reporting process, including systems of internal controls. The independent registered public accounting firm audits the annual financial statements prepared by management, expresses an opinion as to whether those financial statements fairly present the financial position, results of operations and cash flows of Advanced Energy in conformity with accounting principles generally accepted in the United States and discusses with the Audit and Finance Committee any issues they believe should be raised.

	NOMINATING, GOVERNANCE & SUSTAINABILITY COMMITTEE

Meetings: 4
Chair: Tina M. Donikowski
Other Members:
● Anne T. DelSanto		● Lanesha T. Minnix	● John A. Roush
Independence: 100% compliance with Nasdaq rules. Each of the members of the Nominating, Governance & Sustainability Committee is an “independent director” within the meaning of the Nasdaq Stock Market Rules.
Charter: Available at www.advancedenergy.com/en-us/about/leadership
Key Responsibilities:
● review and determine the appropriate composition and size of the Board;
● establish skills, experience, qualifications, and other criteria to serve as a director;
● identify and screen individuals qualified to become directors, consider candidates recommended by stockholders, and recommend to the Board the slate of director nominees for election by stockholders and any candidates to appointed by the Board to fill vacancies between stockholder meetings;
● assist with assessment of director independence and ensure the majority of directors are independent;
● recommend to the Board directors to be appointed to serve on Board committees and as chairs of each committee;
● sponsor and oversee performance evaluations for each of the Board committees and the Board as a whole and conduct director peer evaluations
● oversee director succession planning and review succession plans for the Chief Executive Officer;
● develop and review periodically, at least annually, key corporate governance policies of Advanced Energy and recommend any changes to the Board;
● periodically review and reassess the adequacy of Advanced Energy’s charter and by-laws;
● review the Company’s sustainability program and goals and the Company’s progress towards achieving those goals; and
● review ESG trends that could impact the Company’s business operations, performance, and reputation.

	COMPENSATION COMMITTEE

Meetings: 5
Chair: Frederick A. Ball
Other Members:
● Anne T. DelSanto		● David W. Reed	● John A. Roush
Independence: 100% compliance with Nasdaq rules. Each of the members of the Compensation Committee is an “independent director” within the meaning of the Nasdaq Stock Market Rules.
Non-Employee: 100% compliance with SEC rules. Each of the members of the Compensation Committee is an “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act.
Charter: Available at www.advancedenergy.com/en-us/about/leadership
Key Responsibilities:
● annually review and approve, or review and recommend to the Board for approval, the salaries, incentives, and other forms of compensation for the Chief Executive Officer and other senior executives of Advanced Energy;
● review and approve, or recommend to the Board for approval, senior executive employment agreements, severance agreements and change in control agreements/provisions;
● adopt, administer, approve, and ratify incentive compensation and stock plans and awards thereunder;
● review and make recommendations to the Board regarding incentive-based compensation recovery, or “clawback,” policies, and administer as appropriate;
● review and propose to the Board from time to time changes in director compensation;
● review human resources management strategy, executive management succession planning, CEO succession planning in the context of executive compensation;
● periodically review benefit, incentive compensation, and stock plans, compensation agreements, plans, policies, and arrangements, and establish procedures and mechanisms designed to cause the same to comply with applicable laws and regulation; and
● approve, or recommend to the Board for approval, policies relating to compensation and benefit plans.
Compensation Consultant: The Compensation Committee retains an independent compensation consultant to assist and advise the Compensation Committee in fulfilling the above responsibilities. For the 2023 fiscal year, the Compensation Committee engaged Compensia, Inc. to conduct a competitive review of executive compensation and advise the Compensation Committee on other compensation related matters, such as the Company’s long-term incentive compensation programs for its executive officers and its compensation program for its non-employee directors.


Fee Category		2023			2022
			(In thousands)
Audit Fees	(1)	$	4,451	$	3,676
Audit Related Fees	(2)		—		—
Tax Fees	(3)		796		389
All Other Fees	(4)		—		—
Total Fees		$	5,247	$	4,065

This advisory vote, commonly referred to as “say on pay,” is not intended to address any specific item of compensation, but instead relates to our overall compensation philosophy as described in “Compensation Discussion and Analysis,” the tabular disclosures regarding named executive officer compensation, and the narrative disclosure accompanying the tabular presentation. These disclosures allow you to view the trends in our executive compensation program and the application of our compensation philosophies for the years presented.
		97%
		At the 2023 Annual Meeting, over 97% of the votes cast approved our “say on pay” proposal.


	Shares of Common
	Stock Beneficially
Name of Stockholder	Owned **		Percent Owned
BlackRock, Inc.	5,986,069	(1)	16.0%
The Vanguard Group	4,470,367	(2)	12.0%
FMR LLC	4,146,831	(3)	11.1%
Ameriprise Financial, Inc.	2,492,027	(4)	6.7%
Stephen D. Kelley, President, Chief Executive Officer, and Director	59,501	(5)(6)	*
Paul R. Oldham, Executive Vice President and Chief Financial Officer	35,654	(5)(6)	*
Elizabeth K. Vonne, Executive Vice President and General Counsel	2,716	(5)(6)	*
Eduardo Bernal Acebedo, Executive Vice President and Chief Operations Officer	19,735	(5)(6)	*
John Donaghey, Executive Vice President and Global Head of Sales	13,029	(5)(6)	*
Grant H. Beard, Chairman of the Board of Directors	60,157	(7)	*
Frederick A. Ball, Director	40,572	(7)	*
Anne T. DelSanto, Director	5,500	(7)	*
Tina M. Donikowski, Director	7,955	(7)	*
Ronald C. Foster, Director	36,850	(7)	*
Lanesha T. Minnix, Director	3,835	(7)	*
David W. Reed, Director	3,233	(7)	*
John A. Roush, Director	33,468	(7)	*
Brian M. Shirley, Director	2,468	(7)	*
All executive officers and directors, as a group (14 persons)	324,673		*


Stephen D. Kelley		7,436
Paul R. Oldham		12,084
Eduardo Bernal Acebedo		12,084
Elizabeth K. Vonne		—
John Donaghey		6,507


Stephen D. Kelley		27,155
Paul R. Oldham		7,549
Eduardo Bernal Acebedo		5,164
Elizabeth K. Vonne		1,752
John Donaghey		3,129


Name	Position
Stephen Kelley	President and Chief Executive Officer
Paul Oldham	Executive Vice President and Chief Financial Officer
Eduardo Bernal Acebedo	Executive Vice President and Chief Operations Officer
Elizabeth Vonne	Executive Vice President, General Counsel & Corporate Secretary
John Donaghey	Executive Vice President, Global Sales


	Pay Principles
	Pay Principles
The Company strives to provide compensation to its executive officers that is: ● linked to stockholder value creation, ● reflective of the overall performance of the Company, and ● considerate of the competitive market levels of compensation needed to recruit, retain and motivate top executive talent, while remaining consistent with the other objectives.