FLEX grants $25M performance PSUs to CEO, ties payout to FY28 targets

Flex Ltd. (FLEX) filed an 8-K disclosing a one-time supplemental equity award for CEO Revathi Advaithi.

Rhea-AI Filing Summary

Flex Ltd. (FLEX) filed an 8-K disclosing a one-time supplemental equity award for CEO Revathi Advaithi. On 19 June 2025, the Board, following its Compensation and People Committee’s recommendation and external consultant benchmarking, approved performance-based restricted share units (PSUs) with a grant-date fair value of US$25 million.

Key terms:

• Performance metric: growth and profitability of Flex’s data-center business, measured at FY-end 2028; payout range 0-250 % of target.
• Relative TSR cap: Over 19 Jun 2025-19 Jun 2028, PSU payout is limited to 250 % (≥ median rTSR), 200 % (< median), or 100 % (<25th percentile).
• Vesting: Cliff vesting after performance certification; requires continuous service. Retirement or disability does not accelerate vesting (stricter than standard awards).
• Termination provisions: • Pro-rata vesting if employment ends without cause or for good reason before change-of-control. • 100 % acceleration if such termination occurs within 24 months post change-of-control (actual performance if period complete; target if incomplete).

The award seeks to (1) retain Ms. Advaithi through the next growth phase, especially in data centers, and (2) align pay with long-term shareholder value. The agreement will be filed as an exhibit to the June-quarter 10-Q.

Positive

• Performance-based structure ties 100 % of the award to operational growth and relative TSR, directly linking CEO compensation to shareholder outcomes.
• Retention safeguards (no retirement or disability acceleration) help ensure leadership continuity through FY2028, supporting long-term strategic execution.
• External benchmarking and Board oversight suggest the grant aligns with competitive market pay and governance best practices.

Negative

• Large US$25 million headline value may be perceived as excessive, potentially drawing shareholder or proxy-advisor criticism.
• Potential share dilution upon vesting could modestly impact EPS, particularly if maximum 250 % payout is achieved.

Insights

Corporate Governance Expert

TL;DR – Performance-tied, capped PSU grant strengthens alignment; headline size may trigger pay-for-performance scrutiny.

The Board structured the US$25 million grant entirely as PSUs, tying vesting to both operational (data-center business) and market (relative TSR) outcomes. This dual-metric approach reduces windfall risk and links upside to demonstrable value creation. The absence of retirement or disability acceleration heightens retention, while pro-rata treatment for terminations without cause balances fairness and shareholder protection. Although large, the award follows external benchmarking, implying competitiveness within peer pay levels. Governance observers will focus on rigorous goal setting and forthcoming disclosure of actual targets in the 10-Q. Overall, the design reflects modern pay-for-performance principles.

Portfolio Manager

TL;DR – Neutral near-term impact; sizeable equity grant dilutes slightly but may secure leadership critical to data-center strategy.

From an investor’s lens, the grant does not affect FY25 earnings guidance but could introduce modest dilution depending on share count at settlement. Management stability is valuable as Flex scales its higher-margin data-center segment, a key growth vector. The stringent three-year goals and rTSR cap limit excessive payouts, though the US$25 million headline may raise ISS or Glass Lewis concern at the next proxy vote. Net impact is neutral today; effectiveness will hinge on achieving FY28 performance hurdles.

8-K Event Classification

Item 5.02 — Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers

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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers Governance

Key personnel changes including departures, elections, or appointments of directors and executive officers.

FAQ

What did Flex Ltd. (FLEX) announce in its June 25 2025 Form 8-K?

Flex disclosed a one-time, performance-based PSU award with a target fair value of US$25 million for CEO Revathi Advaithi.

What metrics determine the payout of the new CEO PSUs?

Primary metric is the performance of Flex’s data-center business at FY-end 2028, capped by the company’s relative TSR over 19 Jun 2025-19 Jun 2028.

When do the PSUs granted to Flex’s CEO vest?

They cliff-vest after performance certification following the three-year period, subject to Ms. Advaithi’s continued employment.

How is the award treated upon a change of control?

If terminated without cause or for good reason within 24 months post change-of-control, 100 % of the PSUs accelerate (actual or target performance basis).

Does retirement or disability accelerate vesting of the supplemental award?

No. Unlike standard awards, retirement or disability does not grant accelerated or continued vesting of this PSU grant.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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Accepted by SEC EDGAR 06/25/2025 - 04:05 PM Learn about SEC filing dates

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 19, 2025

FLEX LTD.

(Exact Name of Registrant as Specified in Its Charter)

Singapore			0-23354			98-1773351
(State or other jurisdiction of incorporation)			(Commission File Number)			(IRS Employer Identification No.)
12515-8 Research Blvd, Suite 300, Austin, Texas						78759
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area code: (512) 425-7929

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Ordinary Shares, No Par Value			FLEX			The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
			Emerging growth company			☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.						☐

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e) On June 19, 2025, the Board of Directors (the “Board”) of Flex Ltd. (“Flex” or the “Company”), upon the recommendation of its Compensation and People Committee (the “Committee”), approved a grant of a one-time supplemental equity award (the “Supplemental Equity Award”) under the Company’s Amended and Restated 2017 Equity Incentive Plan, as amended (the “Plan”), to Revathi Advaithi, the Company’s Chief Executive Officer and a named executive officer of the Company.

The Supplemental Equity Award is designed to further align executive compensation with long-term shareholder value creation and ensure leadership continuity through the next phase of the Company’s growth plan. The Supplemental Equity Award for Ms. Advaithi also reflects the Committee’s and the Board’s consideration of her outstanding leadership and contributions to Flex’s strong financial and operational performance throughout her tenure as Chief Executive Officer. The Committee and the Board determined that granting this one-time Supplemental Equity Award is in the best interests of the Company and its shareholders and that the amounts and terms of the award have been carefully tailored to fit the Company’s strategic objective of growing its data center business which is a key opportunity for Flex, as well as its consistent long-term goal of incremental shareholder value creation. The Supplemental Equity Award was approved with the advice and input from the Committee’s independent compensation consultant, which included a review of relevant benchmarking data.

The Supplemental Equity Award for Ms. Advaithi has a grant date fair value at target of $25,000,000 and consists entirely of performance-based restricted share units (“PSUs”), as further described below.

The Supplemental Equity Award cliff vests after performance is certified following the end of the performance period, subject to Ms. Advaithi’s continued service through such date. The number of PSUs earned, if any, will be primarily based on the performance of the Company’s data center business measured at the end of fiscal year 2028, with payouts ranging from 0% to 250% of the target PSUs granted. The underlying performance goals are rigorous and, if achieved, expected to drive significant shareholder value creation.

Further, in order to strengthen alignment to our shareholders’ experience, the Supplemental Equity Award is subject to an overall payout cap based on the Company’s relative total shareholder return (“rTSR”) over a three-year period beginning on June 19, 2025 and ending on June 19, 2028. The maximum number of PSUs underlying the Supplemental Equity Award is capped at:

•250% of target if rTSR is at or above the median,

•200% of target if rTSR is below the median, and

•100% of target if rTSR is below the 25th percentile.

To further enhance its retentive effect, the Supplemental Equity Award is subject to continued service requirements that are more restrictive than those applicable to the Company’s standard equity awards. Unlike other outstanding equity awards held by Ms. Advaithi, if Ms. Advaithi retires, such retirement will not entitle her to accelerated or continued vesting of the Supplemental Equity Award. Moreover, unlike other outstanding equity awards held by Ms. Advaithi, if Ms. Advaithi’s employment with the Company is terminated due to her Disability

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(as such term is defined in the Plan), such termination will not entitle her to accelerated or continued vesting of the Supplemental Equity Award.

The agreement evidencing the Supplemental Equity Award provides that if Ms. Advaithi’s employment with the Company is terminated (i) by the Company without “cause” or (ii) due to a voluntary termination for “good reason” (as each such term is defined in the award agreement), in either case absent a change of control of the Company, Ms. Advaithi is entitled to ratable vesting of the Supplemental Equity Award determined by multiplying (x) the number of shares vesting based on actual performance measured at the conclusion of the three-year performance period by (y) a fraction, the numerator of which is the number of days Ms. Advaithi provided services to the Company from the date of grant until her termination of employment, and the denominator of which is the total number of days from the date of grant through the completion of the three-year performance period. The treatment of the Supplemental Equity Award in the event of Ms. Advaithi’s death will be the same as for other awards of PSUs granted to the Company’s executive officers, as previously disclosed.

Additionally, if Ms. Advaithi’s employment is terminated (i) by the Company without “cause” or (ii) due to a voluntary termination for “good reason”, in either case during the period beginning on the consummation of a change of control of the Company and ending 24 months following such change of control, Ms. Advaithi is entitled to 100% accelerated vesting of the Supplemental Equity Award based upon (x) actual performance if the three-year performance period is complete as of the date of such termination, or (y) target performance if the three-year performance period is incomplete as of such termination.

The information set forth above reflects a summary description of the Supplemental Equity Award and is qualified in its entirety by reference to the terms and conditions of the restricted share unit award agreement governing the Supplemental Equity Award, the form of which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ending June 27, 2025.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

						FLEX LTD.
Date: June 25, 2025
			By:			/s/ Kevin Krumm
						Name:			Kevin Krumm
						Title:			Chief Financial Officer

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