Benefit Plans

12 Months Ended

Oct. 02, 2021

Share-based Compensation Plans: The Plexus Corp. 2016 Omnibus Incentive Plan (the "2016 Plan"), which was approved by shareholders, is a stock and cash-based incentive plan, and includes provisions by which the Company may grant executive officers, employees and directors stock options, stock appreciation rights ("SARs"), restricted stock (including restricted stock units ("RSUs"), performance stock awards (including performance stock units ("PSUs"), other stock awards and cash incentive awards.

The maximum number of shares of Plexus common stock that may be issued pursuant to the 2016 Plan is 3.2 million shares; in addition, cash incentive awards of up to $4.0 million per employee may be granted annually. The exercise price of each stock option and SAR granted must not be less than the fair market value on the date of grant. The Compensation and Leadership Development Committee (the "Committee") of the Board of Directors may establish a term and vesting period for awards under the 2016 Plan as well as accelerate the vesting of such awards. Generally, stock options vest in two annual installments and have a term of ten years. SARs vest in two annual installments and have a term of seven years. RSUs granted to executive officers, other officers and key employees generally vest on the 3 year anniversary of the grant date (assuming continued employment), which is also the date as of which the underlying shares will be issued. Beginning for fiscal 2017 grants, 50% of PSUs vest based on the relative total shareholder return ("TSR") of the Company's common stock as compared to the companies in the Russell 3000 Index for grants issued from fiscal 2017 through fiscal 2020 and the S&P 400 Index for grants issued in fiscal 2021. Both are a market condition. The remaining 50% of PSUs vest based upon a three-point annual average of the Company's absolute economic return, a performance condition, each during a performance period of three years with the fiscal 2021 grants being subject to an individual year minimum and maximum absolute economic return. The vesting and payout of awards will range between 0% and 200% of the shares granted based upon performance on the metrics during a performance period for PSUs based on economic return and PSUs based on TSR compared to the Russell 3000 Index. The vesting and payout of awards will range between 0% and 150% of shared granted for PSUs based on TSR compared to the S&P 400 Index. Payout at target, 100% of the shares granted, will occur if the TSR of Plexus stock is at the 50th percentile of companies in the Russell 3000 Index or S&P 400 Index during the performance period and if a 2.5% average economic return is achieved over the performance period of three years. The number of shares that may be issued pursuant to PSUs ranges from zero to 0.4 million. The Committee also grants RSUs to non-employee directors, which generally fully vest on the first anniversary of the grant date, which is also the date the underlying shares are issued (unless further deferred).

The Company recognized $24.8 million, $24.3 million and $21.3 million of compensation expense associated with share-based awards in fiscal 2021, 2020 and 2019, respectively. Deferred tax benefits related to equity awards of $7.0 million, $8.2 million and $9.2 million were recognized in fiscal 2021, 2020 and 2019, respectively.

A summary of the Company’s stock option and SAR activity follows:


	Number of Options/SARs (in thousands)	Weighted Average Exercise Price		Aggregate Intrinsic Value (in thousands)
Outstanding as of September 29, 2018	554	$	37.18
Granted	—	—
Canceled	(2)	26.96
Exercised	(88)	31.55
Outstanding as of September 28, 2019	464	$	38.28
Granted	—	—
Canceled	(16)	31.74
Exercised	(325)	39.78
Outstanding as of October 3, 2020	123	$	35.12
Granted	—	—
Canceled	—	—
Exercised	(106)	34.12
Outstanding as of October 2, 2021	17	$	41.40	$	837


	Number of Options/SARs (in thousands)	Weighted Average Exercise Price		Weighted Average Remaining Life (years)	Aggregate Intrinsic Value (in thousands)
Exercisable as of:
September 28, 2019	464	$	38.28
October 3, 2020	123	$	35.12
October 2, 2021	17	$	41.40	4.41	$	837

The following table summarizes outstanding stock option and SAR information as of October 2, 2021 (Options/SARs in thousands):


Range of Exercise Prices	Number of Options/SARs Outstanding (in thousands)	Weighted Average Exercise Price		Weighted Average Remaining Life (years)	Number of Options / SARs Exercisable (in thousands)	Weighted Average Exercise Price
$33.06 - $36.79	5	$	34.45	3.75	5	$	34.45
$36.80 - $41.84	5	$	41.54	4.23	5	$	41.54
$41.85 - $45.35	4	$	45.31	4.71	4	$	45.31
$45.36 - $45.45	3	$	45.45	5.08	3	$	45.45
$33.06 - $45.45	17	$	41.40	4.41	17	$	41.40

The Company uses the Black-Scholes valuation model to value options and SARs. The Company used its historical stock prices as the basis for its volatility assumptions. The assumed risk-free rates were based on U.S. Treasury rates in effect at the time of grant with a term consistent with the expected option and SAR lives. The expected options and SARs lives represent the period of time that the options and SARs granted are expected to be outstanding and were based on historical experience.

There were no options or SARs granted for fiscal 2021, 2020 or 2019.

There were no options and SARs vested for fiscal 2021 or 2020. The fair value of options and SARs vested for fiscal 2019 was $0.3 million.

For fiscal 2021, 2020 and 2019, the total intrinsic value of options and SARs exercised was $5.4 million, $10.9 million and $2.4 million, respectively.

As of October 2, 2021, all previously granted options and SARS have vested.

A summary of the Company’s PSU and RSU activity follows:


	Number of Shares (in thousands)	Weighted Average Fair Value at Date of Grant		Aggregate Intrinsic Value (in thousands)
Units outstanding as of September 29, 2018	1,033	$	51.19
Granted	375	55.76
Canceled	(38)	54.03
Vested	(408)	41.51
Units outstanding as of September 28, 2019	962	$	56.97
Granted	377	75.91
Canceled	(37)	60.95
Vested	(451)	54.85
Units outstanding as of October 3, 2020	851	$	66.33
Granted	360	81.15
Canceled	(10)	70.12
Vested	(340)	64.00
Units outstanding as of October 2, 2021	861	$	72.38	$	78,464

The Company uses the fair value at the date of grant to value RSUs. As of October 2, 2021, there was $18.9 million of unrecognized compensation expense related to RSUs that is expected to be recognized over a weighted average period of 1.3 years.

The Company recognizes share-based compensation expense over the vesting period of PSUs. During the fiscal year ended October 2, 2021, the 0.1 million PSUs granted in fiscal 2018 vested at a 150% payout based upon the TSR performance achieved during the performance period. There were 0.1 million PSUs granted during each of fiscal years 2021, 2020 and 2019.

As of October 2, 2021, at the target achievement level, there was $8.4 million of unrecognized compensation expense related to PSUs that is expected to be recognized over a weighted average period of 1.8 years.

401(k) Savings Plan: The Company’s 401(k) Retirement Plan covers all eligible U.S. employees. The Company matches employee contributions up to 4.0% of eligible earnings. The Company’s contributions for fiscal 2021, 2020 and 2019 totaled $9.3 million, $9.8 million and $9.3 million, respectively.

Supplemental Executive Retirement Plan (Deferred Compensation Arrangement): The Company maintains a supplemental executive retirement plan (the "SERP") as a deferred compensation plan for executive officers. Under the SERP, a covered executive may elect to defer some or all of the participant’s compensation into the plan, and the Company may credit the participant’s account with a discretionary employer contribution. Participants are entitled to payment of deferred amounts and any related earnings upon termination or retirement from Plexus.

The SERP allows investment of deferred compensation into individual accounts and, within these accounts, into one or more designated investments. Investment choices do not include Plexus stock. During fiscal 2021, 2020 and 2019, the Company made contributions to the participants’ SERP accounts in the amount of $0.7 million, $0.7 million and $0.6 million, respectively.

As of October 2, 2021 and October 3, 2020, the SERP assets held in the trust totaled $14.1 million and $12.6 million, respectively, and the related liability to the participants totaled approximately $14.1 million and $12.6 million, respectively. As of October 2, 2021 and October 3, 2020, the SERP assets held in the trust were recorded at fair value on a recurring basis, and were classified as Level 2 in the fair value hierarchy discussed in Note 1, "Description of Business and Significant Accounting Policies."

The trust assets are subject to the claims of the Company’s creditors. The trust assets and the related liabilities to the participants are included in non-current "Other assets" and non-current "Other liabilities," respectively, in the accompanying Consolidated Balance Sheets.