SEC Filing | Mercury Systems, Inc.

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mrcy-20230921

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 ý 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))

ý Definitive Proxy Statement

¨ Definitive Additional Materials

¨ Soliciting Material Pursuant to §240.14a-12

Mercury Systems, Inc.

(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 all boxes that apply):

ý No fee required

¨ Fee paid previously with preliminary materials

¨ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

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September 21, 2023

Dear Shareholder:

We will hold our 2023 Annual Meeting of Shareholders on October 25, 2023, beginning at 10:00 a.m Eastern Time at the Company's headquarters at 50 Minuteman Road, Andover, Massachusetts 01810. We look forward to your attending the meeting either in person or by proxy. The enclosed notice of meeting, proxy statement, and proxy card describe the proposals to be acted upon at the meeting.

Please refer to the enclosed proxy statement for detailed information on each of the proposals. Your vote is important. Please vote by internet, telephone, or mail as soon as possible to ensure your vote is recorded promptly. Please also note that, if you wish to attend the meeting, you must request an admission ticket in advance. To obtain an admission ticket, please follow the instructions on page 1 of the proxy statement.

On behalf of the Board of Directors, we would like to express our appreciation for your continued interest in our Company.

Sincerely yours,

William L. Ballhaus

President, Chief Executive Officer, and Director

MERCURY SYSTEMS, INC.

50 MINUTEMAN ROAD

ANDOVER, MA 01810

(978) 256-1300

Notice of 2023 Annual Meeting of Shareholders

To Be Held on October 25, 2023

The 2023 Annual Meeting of Shareholders of MERCURY SYSTEMS, INC. will be held on October 25, 2023, at 10:00 a.m. Eastern Time at the Company's headquarters at 50 Minuteman Road, Andover, Massachusetts 01810. The meeting is being held for the following purposes:

1. To elect three Class II directors nominated by the Board of Directors, each to serve for a three-year term, and in each case until their successors are duly elected and qualified.

2. To hold an advisory vote on the fiscal 2023 compensation of our named executive officers (the "say-on-pay" vote).

3. To hold an advisory vote on the frequency of holding future say-on-pay votes.

4. To hold a vote to approve our Amended and Restated 2018 Stock Incentive Plan.

5. To ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal 2024.

6. To consider and act upon any other business that may properly come before the meeting or any adjournment or postponement of the meeting.

Proposal Number One relates solely to the election of three Class II directors and does not include any other matters relating to the election of directors, including, without limitation, the election of directors nominated by any Mercury shareholder.

The Board of Directors has fixed the close of business on August 25, 2023 as the record date for the meeting. All shareholders of record on that date are entitled to notice of and to vote at the meeting.

Your vote is important. Please vote by internet, telephone, or mail as soon as possible to ensure your vote is recorded promptly. To attend the meeting, please follow the instructions on page 1 of the proxy statement.

Important Notice Regarding the Availability of Proxy Materials for the 2023 Annual Meeting of Shareholders To Be Held on October 25, 2023: This proxy statement and Annual Report and Form 10-K for our fiscal year ended June 30, 2023 are available at www.edocumentview.com/MRCY.


			By Order of the Board of Directors

			Christopher C. Cambria Secretary

Andover, Massachusetts

September 21, 2023

EXECUTIVE SUMMARY

This executive summary is an overview of information that you will find elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.

Proposals and Board Recommendations

No.

Proposal Summary

Board's Voting Recommendations

Election of Three Class II Directors

FOR each nominee

Advisory Vote on Fiscal 2023 Executive Compensation ("Say-on-Pay")

FOR

Advisory Vote on the Frequency of Holding Future Say-on-Pay Votes

1 YEAR

Amended and Restated 2018 Stock Incentive Plan

FOR

Ratification of Appointment of Our Independent Registered Public Accounting Firm for Fiscal 2024

FOR

Cautionary Note on Forward-Looking Statements: This proxy statement contains certain forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including those relating to the Company's focus on

enhanced execution of the Company's strategic plan under a refreshed Board and leadership team. You can identify these statements by the words "may," "will," "could," "should," "would," "plans," "expects," "anticipates," "continue," "estimate," "project," "intend," "likely," "forecast," "probable," "potential," and similar expressions. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include, but are not limited to, continued funding of defense programs, the timing and amounts of such funding, general economic and business conditions, including unforeseen weakness in the Company's markets, effects of any U.S. federal government shutdown or extended continuing resolution, effects of geopolitical unrest and regional conflicts, competition, changes in technology and methods of marketing, delays in or cost increases related to completing development, engineering, and manufacturing programs, changes in customer order patterns, changes in product mix, continued success in technological advances and delivering technological innovations, changes in, or in the U.S. government's interpretation of,

federal export control or procurement rules and regulations, changes in, or in the interpretation or enforcement of, environmental rules and regulations, market acceptance of the Company's products, shortages in or delays in receiving components, supply chain delays or volatility for critical components such as semiconductors, production delays or unanticipated expenses including due to quality issues or manufacturing execution issues, failure to achieve or maintain manufacturing quality certifications, such as AS9100, the impact of the COVID pandemic and supply chain disruption, inflation and labor shortages, among other things, on program execution and the resulting effect on customer satisfaction, inability to fully realize the expected benefits from acquisitions, restructurings, and execution excellence initiatives or delays in

realizing such benefits, challenges in integrating acquired businesses and achieving anticipated synergies, effects of shareholder activism, increases in interest rates, changes to industrial security and cyber-security regulations and requirements and impacts from any cyber or insider threat events, changes in tax rates or tax regulations, such as the deductibility of internal research and

development, changes to interest rate swaps or other cash flow hedging arrangements, changes to generally accepted accounting principles, difficulties in retaining key employees and customers, which difficulties may be impacted by the termination of the Company's announced strategic review initiative, unanticipated challenges with the transition of the Company's Chief Executive

Officer and Chief Financial Officer roles, including any dispute arising with the former CEO over his resignation, unanticipated costs under fixed-price service and system integration engagements, and various other factors beyond our control. These risks and uncertainties also include such additional risk factors as are discussed in the Company's filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended June 30, 2023. The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.

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Company Background

We are a technology company that delivers processing power for the most demanding aerospace and defense missions. Headquartered in Andover, Massachusetts, our end-to-end processing platform enables a broad range of aerospace and defense programs, optimized for mission success in some of the most challenging and demanding environments. Processing technologies that comprise our platform include signal solutions, display, software applications, networking, storage, and secure processing. Our innovative solutions are mission-ready, software-defined, and open and modular, meeting our customers' cost and schedule needs today by allowing them to use or modify our products to suit their mission. Customers access our solutions via the Mercury Processing Platform, which encompasses the broad scope of our investments in technologies, companies, products, services, and the expertise of our people. Ultimately, we connect our customers to what matters most to them. We connect commercial technology to defense, people to data, and partners to opportunities. At the most human level, we connect what we do to our customers' missions; supporting the people for whom safety, security, and protecting freedom are of paramount importance.

As a leading manufacturer of essential components, products, modules, and subsystems, we sell to defense prime contractors, the U.S. government, and original equipment manufacturers ("OEM") commercial aerospace companies. We have built a trusted, robust portfolio of proven product solutions, leveraging the most advanced commercial silicon technologies and purpose-built to exceed the performance needs of our defense and commercial customers. Customers add their own applications and algorithms to our specialized, secure, and innovative products and pre-integrated solutions. This allows them to complete their full system by integrating with their platform, the sensor technology and, increasingly, the processing from Mercury. Our products and solutions are deployed in more than 300 programs with over 25 different defense prime contractors and commercial aviation customers.

Our transformational business model accelerates the process of making new technology profoundly more accessible to our customers by bridging the gap between commercial technology and aerospace and defense applications on time constraints that matter. Our long-standing deep relationships with leading high-tech and other commercial companies, coupled with our high level of research and development ("R&D") investments on a percentage basis of sales and industry-leading trusted and secure design and manufacturing capabilities, are the foundational tenets of this highly successful model. We are leading the development and adaptation of commercial technology for aerospace and defense solutions. From chip-scale to system scale and from data, including radio frequency ("RF"), to digital to decision, we make mission-critical technologies safe, secure, affordable, and relevant for our customers.

Our capabilities, technology, people, and R&D investment strategy combine to differentiate Mercury in our industry. We maintain our technological edge by investing in critical capabilities and intellectual property ("IP" or "building blocks") in processing, leveraging open standards and open architectures to adapt quickly those building blocks into solutions for highly data-intensive applications, including emerging needs in areas such as artificial intelligence ("AI").

Our mission critical solutions are deployed by our customers for a variety of applications including command, control, communications, computers, intelligence, surveillance, and reconnaissance ("C4ISR"), electronic intelligence, mission computing avionics, electro-optical/infrared ("EO/IR"), electronic warfare, weapons and missile defense, hypersonics and radar.

Named Executive Officers

Our named executive officers for our 2023 fiscal year are:


Name						Position
William L. Ballhaus(1)						President and Chief Executive Officer
Michelle M. McCarthy(2)						Senior Vice President, Chief Accounting Officer and Former Interim Chief Financial Officer and Treasurer
Christine F. Harbison(3)						Executive Vice President and Chief Growth Officer
James M. Stevison(4)						Executive Vice President and President of Mission Systems
Charles R. Wells, IV						Executive Vice President and President of Microelectronics
Mark Aslett(5)						Former President and Chief Executive Officer
Michael D. Ruppert(6)						Former Executive Vice President, Chief Financial Officer, and Treasurer

(1)Mr. Ballhaus was appointed as our Interim President and Chief Executive Officer on June 24, 2023. Following the completion of a formal search process, he was named as our President and Chief Executive Officer effective August 15, 2023.

(2)Ms. McCarthy was appointed as our Interim Chief Financial Officer and Treasurer effective February 18, 2023 and served in this capacity through July 16, 2023. She also retained her prior title and responsibilities as our Chief Accounting Officer during and after this period. On July 17, 2023, we appointed David E. Farnsworth as our new Chief Financial Officer and Treasurer, who will appear as a named executive officer in our proxy statement for our 2024 Annual Meeting.

(3)Ms. Harbison joined Mercury on March 6, 2023.

(4)Mr. Stevison served as our Chief Growth Officer until October 31, 2022, when he was named as President of our Mission Systems division.

(5)Mr. Aslett served as our President and Chief Executive Officer until his resignation effective June 24, 2023. For a further discussion, see "Compensation Discussion and Analysis—Resignations of Named Executive Officers During Fiscal 2023" on page 63.

(6)Mr. Ruppert served as our Chief Financial Officer and Treasurer until his resignation effective February 17, 2023. For a further discussion, see "Compensation Discussion and Analysis — Resignations of Named Executive Officers During Fiscal 2023" on page 63.

Shareholder Engagement and 2022 Advisory "Say-on-Pay" Vote on Executive Compensation

At our 2022 Annual Meeting of Shareholders, our Say-on-Pay proposal received the support of 20% of the votes cast. In response to this disappointing outcome, we have been focused on understanding and addressing the underlying concerns and perspectives of our shareholders. We assembled an expanded engagement team, with substantially all of our meetings with shareholders led by William K. O’Brien, Chair of the Board, Mary Louise (ML) Krakauer, current Chair of our Committee, and/or Howard L. Lance, a member of the Committee who has been appointed as Committee Chair effective upon Ms. Krakauer's previously announced retirement from the Board and the Committee as of the date of the 2023 Annual Meeting of Shareholders.

In the months leading up to the 2022 Say-on-Pay vote, we reached out to our 20 largest investors and had meetings with 11 of them, representing approximately 74% and 56% of our outstanding shares, respectively. Through these engagements, we heard that the primary concern leading shareholders to vote against our 2022 Say-on-Pay proposal was the grant of special long-term incentive ("LTI") awards in fiscal 2022 under an Equity Retention Plan (the "ERP") to critical business leaders across our enterprise, including our former Chief Executive Officer (our "CEO") and our other named executive officers.

Following the 2022 Annual Meeting, we continued our extensive engagement with shareholders to discuss potential actions to respond to the feedback we received regarding the special LTI awards, as well as other matters relating to our executive compensation program generally. As part of this outreach, we invited 19 shareholders to engage with us and held meetings with 6 of them, representing approximately 71% and 36% of our outstanding shares, respectively.

Throughout the last fourteen months, we had discussions with shareholders representing more than 62% of our outstanding shares as we solicited feedback to develop and refine potential compensation program changes. During the course of this engagement, our shareholders advised us that they were pleased with our commitments regarding future special awards, with the changes already reflected in our fiscal 2023 program design and with the opportunity to provide input on proposed program changes for fiscal 2024 prior to adoption. They were broadly supportive of our prior and pending actions, which they viewed as a comprehensive response to the concerns they had previously shared.

The table below summarizes the feedback we heard from shareholders and the actions we took to enhance our compensation programs, respond to shareholder concerns, and ensure that our programs are aligned with our strategic priorities and shareholder expectations going forward.


What We Heard Concerns Identified Through Shareholder Engagement			How we Responded to Shareholder Feedback Evolution of our Programs for Fiscal 2023 and Fiscal 2024
Special LTI Awards •Scope and magnitude of ERP awards made in fiscal year 2022, and in particular, the participation of our former CEO and other named executive officers. •Concerns about potential issuance of additional special awards to the ERP program participants prior to the completion of the vesting cycle under the ERP awards.			•Consistent with our prior commitment, we did not grant any LTI awards during fiscal 2023 to our former CEO or any other named executive officer for 2022. •The Committee confirms that it will not grant special awards to our 2022 executive officers with outstanding ERP awards absent a promotion or other extraordinary circumstance.
Annual Incentive Plan ("AIP") •Narrow categories of performance captured in measures. •Use of semi-annual performance periods, with second-half targets established mid-year.			Beginning with the AIP for fiscal 2023: •We expanded the performance measures under the AIP by adding revenue (25%) and adjusted free cash flow (25%) to the legacy adjusted EBITDA (50%) measure. •We adopted a full one-year performance period based on performance targets set at the start of the fiscal year, which replaced our prior practice of using two semi-annual performance periods.
Long-Term Incentive Plan •Preference for greater allocation of equity incentives to performance-based awards. •Use of performance measures that could reward M&A activities regardless of value creation. •Rigor of relative performance targets and appropriateness of using our compensation peer group to assess relative performance achievements. •Magnitude of maximum incentive opportunity.			Beginning with annual LTI awards for fiscal 2024: •We increased the allocation of our annual LTI granted in the form of performance awards from 50% to 60% for our CEO, and to 55% for all other executive officers. •Performance awards use absolute financial performance measures instead of relative measures for greater alignment with internal forecasts and better line-of-sight for recipients. •Performance awards use organic revenue instead of total revenue to more effectively drive intended value-creation behaviors. •Performance awards are subject to a modifier based on relative total shareholder return ("TSR") to align payouts with shareholder outcomes. •Relative TSR performance is assessed against the Spade Defense Index components instead of our compensation peer group to promote relative performance against a broader industry index that is more representative of comparable investment opportunities available to our shareholders. •Maximum payouts under our performance awards have been reduced from 300% to 200% of target shares, subject to a modifier based on relative TSR of up to ±25% of target shares.
Compensation Benchmarking •Use of compensation peer groups that are misaligned with current Company size.			Beginning with benchmarking of executive pay levels for fiscal 2024: •Eliminated multiple peer groups intended to reflect future Company growth in favor of a new peer group with median revenues aligned with the Company's current size.

2023 Financial Performance

•Our bookings increased by 1.9% from $1.06 billion in fiscal 2022 to $1.08 billion in fiscal 2023. Our book-to-bill ratio increased from 1.08x in fiscal 2022 to 1.10x in fiscal 2023.

•Our total backlog at year end increased by 9.8% from $1,037.7 million for fiscal 2022 to $1,139.8 million for fiscal 2023.

•Our fiscal 2023 revenues declined by 1.4% to $973.9 million, compared to $988.2 million for fiscal 2022. Our fiscal 2023 results included organic revenue, a non-GAAP financial measure, of $948.8 million, a decrease of 3.4% from fiscal 2022 organic revenue of $982.2 million. The organic revenue results discussed in this paragraph are subject to the adjustments set forth in "Appendix B: Reconciliation of Non-GAAP Measures to GAAP Measures."

•Our net loss was $28.3 million for fiscal 2023, compared to net income of $11.3 million for fiscal 2022. Our adjusted EBITDA, a non-GAAP financial measure, declined from $200.5 million for fiscal 2022 to $132.3 million for fiscal 2023, which includes adverse impacts of $56.3 million in fiscal 2023 from approximately 20 challenged programs. The adjusted EBITDA results discussed in this paragraph are subject to the adjustments set forth in "Appendix B: Reconciliation of Non-GAAP Measures to GAAP Measures."

•Our cash flows used in operating activities were $(21.3) million, compared to $(18.9) million in fiscal 2022. Our free cash flow, a non-GAAP financial measure defined as cash flows from operating activities less capital expenditures from property and equipment, was $(60.1) million for fiscal 2023 and $(46.5) million for fiscal 2022. The free cash flow results discussed in this paragraph are subject to the adjustments set forth in "Appendix B: Reconciliation of Non-GAAP Measures to GAAP Measures."

2023 Compensation Program Highlights

Our compensation philosophy is designed to promote a pay-for-performance culture. We consider market median compensation levels as our reference point in making executive pay decisions, subject to adjustments based on experience, performance, the other individual factors as described in "Compensation Discussion and Analysis – Use of Market Data and Competitive Compensation Positioning" beginning on page 55, and as otherwise appropriate. The majority of each executive's target pay is in the form of incentive compensation that is subject to achieving pre-set performance goals to have any realized value. See the information in "Compensation Discussion and Analysis – Mix of Pay" on page 54.

Consistent with our prior commitment, we did not grant LTI awards during fiscal 2023 to any of our executive officers for fiscal 2022. As detailed in our 2022 proxy statement, a portion of the ERP awards granted in fiscal 2022 represents the value of annual LTI awards that would have ordinarily been granted at the beginning of 2023 as compensation for the 2023 fiscal year. Accordingly, we committed in our 2022 proxy statement that we would not grant any LTI awards during fiscal 2023 to our former CEO or any of our other named executive officers for 2022, all of whom received ERP awards. Consistent with this commitment, none of our executive officers from 2022, including those who continued to serve as named executive officers during 2023 (Messrs. Stevison, Wells, Aslett, and Ruppert), received grants of LTI awards during fiscal 2023. The compensation reported for fiscal 2023 for these executives in the Summary Compensation Table on page 68 is limited to base salary, annual incentive award payouts, and customary benefit payments.

No target pay increases for fiscal 2023 to any of our executive officers in fiscal 2022. The Human Capital and Compensation Committee (the "Committee") did not award any base salary increases for fiscal 2023 to any of our executive officers from 2022 (including Messrs. Stevison, Wells, Aslett and Ruppert), nor did it increase their 2023 target bonuses or (as described above) grant them any LTI awards during 2023.

2023 Annual Incentive Plan paid out significantly below target. With respect to our AIP, our performance for fiscal 2023 fell below threshold requirements for adjusted EBITDA and adjusted free cash flow measures that represented 75% of the value of target bonuses, and above threshold but below our plan targets for the remaining 25% of target bonuses based on revenue performance. Accordingly, aggregate plan payouts to our named executive officers for fiscal 2023 represented only 18.8% of their respective target bonuses. For a further discussion, see "Compensation Discussion and Analysis – Elements of Fiscal 2023 Target Pay – Annual Incentives" beginning on page 59.

No payouts under long-term performance program. We did not make any payouts to our named executive officers under long-term performance awards with performance periods ending in fiscal 2023. None of our named executive officers previously received grants of long-term performance awards for these performance periods other than Messrs. Aslett and Ruppert, who forfeited their awards in connection with their resignation prior to vesting.

2023 Target Pay

The table below details each named executive officer's annual base salary, target annual incentive opportunity ("target bonus"), and grant date target value of annual LTI awards (collectively, "target pay") for fiscal 2023. We use target pay as the basis for benchmarking our named executive officers' annual compensation and for allocating compensation among different pay elements.

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2023 target pay in order to match these awards with the 2023 fiscal year to which they relate. In contrast, the Summary Compensation Table on page 68 reports these accelerated awards as part of each named executive officer's compensation for fiscal 2022, in accordance with SEC rules that provide for such awards to be reported as compensation for the fiscal year in which they are granted.


Target Pay for Fiscal 2023(1)
	Salary(2)	Target Bonus as % of Salary(2)		Annual LTI Awards (including accelerated 2023 awards granted in 2022)(3)	Target Pay
Current Employees:
William L. Ballhaus(4)	$ —	—	%	$ 215,000	$ —
Michelle M. McCarthy(5)	340,000	50%		215,000	725,000
Christine F. Harbison(6)	415,000	100%		800,000	1,630,000
James M. Stevison	425,000	100%		796,000	1,646,000
Charles R. Wells, IV	415,000	100%		830,000	1,660,000
Former Employees:
Mark Aslett(7)	800,060	150%		4,300,000	6,300,150
Michael D. Ruppert(7)	446,351	110%		1,430,000	2,367,337

(1)This table is intended to reflect each executive's ordinary compensation for fiscal 2023. Accordingly, for Ms. McCarthy, the table excludes awards that were made to her in December of 2022 in connection with her promotion to Senior Vice President, and in February and July of 2023 in recognition of her additional responsibilities as our Interim Chief Financial Officer and Treasurer during fiscal 2023. For a further discussion, see "Compensation Discussion and Analysis — Recognition Awards for Michelle McCarthy" on page 63. In the case of Ms. Harbison, this table excludes the value of "new-hire" LTI awards that were granted in connection with the commencement of her employment in March 2023 because they were intended, in part, to restore compensation forfeited to a prior employer in connection with her departure to join Mercury. Instead, the table includes the annual value established by the Committee and set forth in Ms. Harbison's offer letter as the basis for her future LTI awards beginning in fiscal 2024. For a further discussion, see "Compensation Discussion and Analysis — Offer Letter with Christine Harbison" on page 63.

(2)Represents each executive's annual base salary rate and target bonus as a percentage of salary at the beginning of fiscal 2023 or at such later time during fiscal 2023 at which they became an executive officer.

(3)Other than for Mr. Ballhaus and Ms. Harbison as described below in Note 4 and above in Note 1, respectively, the LTI awards granted to our named executive officers for fiscal 2023 were granted on an accelerated basis on February 15, 2022, six months earlier than normal, as part of our 2022 equity retention plan to promote the continuity of our critical talent during a period of heightened industry and labor market challenges. For a further discussion, see "Compensation Discussion and Analysis — Long-Term Incentives – Long-Term Incentives Awarded for Fiscal 2023."

(4)Mr. Ballhaus was appointed as our Interim President and CEO at the end of fiscal 2023, on June 24, 2023. Prior to that time during fiscal 2023, he served as a non-employee member of our Board of Directors. No target pay is disclosed for Mr. Ballhaus because the Committee did not award him any compensation for his service as Interim President and CEO for his seven days of service in fiscal 2023. Mercury later entered into an employment agreement with him as of August 15, 2023 that established his compensation as an executive officer as of the start of fiscal 2024, on July 1, 2023. For a further discussion, see "Compensation Discussion and Analysis — Summary of Compensation Actions for Fiscal 2024" on page 64.

(5)Ms. McCarthy became an executive officer effective February 18, 2023 by virtue of her appointment at that time as our Interim Chief Financial Officer and Treasurer. For a further discussion, see "Compensation Discussion and Analysis — Recognition Awards for Michelle McCarthy" on page 63.

(6)Ms. Harbison became an executive officer on March 6, 2023 in connection with the commencement of her employment as our Executive Vice President, Chief Growth Officer. For a further discussion, see "Compensation Discussion and Analysis — Offer Letter with Christine Harbison" on page 63.

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(7)Messrs. Aslett and Ruppert served as executive officers until their resignations effective June 24, 2023 and February 17, 2023, respectively. For a further discussion, see "Compensation Discussion and Analysis — Resignations of Named Executive Officers During Fiscal 2023" on page 63.

2024 Compensation Program Changes

To further align our LTI programs with our long-term growth strategy and in response to investor feedback received through our comprehensive shareholder engagement process, the Committee adopted a new LTI plan design for fiscal 2024 that places a greater emphasis on performance-based awards with new performance measures and payout opportunities that are designed to more effectively drive intended value-creation behaviors and better reflect shareholder expectations and outcomes. For a further discussion, see "Compensation Discussion and Analysis — Summary of Compensation Actions for Fiscal 2024" on page 63.

Our Board of Directors

The following table provides summary information about our Directors as of the date of this proxy statement.

Committee Memberships

Name

Director Since

Primary Occupation

Independent

NGC

GRC

M&A

William L. Ballhaus Class I Director Term Ending in 2025

2022

President and CEO, Mercury Systems

Orlando P. Carvalho Class III Director Term Ending in 2024

2020

Former Executive Vice President Aeronautics, Lockheed Martin

Yes

Gerard J. DeMuro Class II Director Nominated for a Term Ending in 2026

2023

Co-CEO, Eve Air Mobility

Yes

M,F

Lisa S. Disbrow Class I Director Term Ending in 2025

2017

Under Secretary of the U.S. Air Force (Retired)

Yes

M,F

Mary Louise Krakauer Class II Director Term Ending in 2023

2017

Former Executive, Dell and EMC

Yes

Roger A. Krone Class II Director Nominated for a Term Ending in 2026

2023

Former Chairman and CEO, Leidos

Yes

Howard L. Lance Class I Director Term Ending in 2025

2022

Former President and CEO Maxar Technologies and Harris Corporation

Yes

Barry R. Nearhos Class III Director Term Ending in 2024

2018

Former Managing Partner, PricewaterhouseCoopers

Yes

C,F

William K. O'Brien Chairman of the Board Class II Director Term Ending in 2023

2008

Former Executive Chairman, Enterasys Networks

Yes

M,F

Scott Ostfeld Class II Director Nominated for a Term Ending in 2026

2023

Managing Partner and Portfolio Manager, JANA Partners

Yes

Debora A. Plunkett Class III Director Term Ending in 2024

2021

Federal Senior Executive National Security Agency (Retired)

Yes

AC = Audit Committee

GRC = Government Relations Committee

M = Member

HC = Human Capital and Compensation Committee

M&A = M&A and Finance Committee

C = Committee Chair

NGC = Nominating and Governance Committee

F = Financial Expert

We are proposing that Gerard J. DeMuro, Roger A. Krone, and Scott Ostfeld, three continuing Class II directors, be elected to serve terms of three years, and in each case until their successors are duly elected and qualified or until they sooner die, resign, or are removed. Messrs. DeMuro and Krone were appointed to the Board in June 2023. In connection with a voting agreement with JANA Partners, Mr. Ostfeld was appointed to the Board in July 2023. Mary Louise Krakauer and William K. O'Brien, Class II directors, informed the Board of Directors that they will retire from service on the Board at the end of their current terms effective at the 2023 Annual Meeting of Shareholders. We thank Mr. O'Brien for his service on the Board since 2008 and for his service as Chairman of the Board since 2021, and we thank Ms. Krakauer for her service on the Board since 2017 and for her service as Chairman of the Human Capital and Compensation Committee since 2020.

As previously announced, effective with the 2023 Annual Meeting of Shareholders, William L. Ballhaus, the Company's President and Chief Executive Officer will assume the additional duties of Chairman of the Board, and Barry R. Nearhos will become the Company's Lead Independent Director. Mr. Ballhaus was appointed to the Board in June 2022, became our interim President and CEO in June 2023, and was named our President and CEO in August 2023. Mr. Nearhos was appointed to the Board in November 2018 and has been the Chairman of the Audit Committee since October 2020. Howard L. Lance will assume the duty of Chairman of the Human Capital and Compensation Committee. Mr. Nearhos will assume the duty of Chairman of the Nominating and Governance Committee.

Environmental, Social, and Corporate Governance Highlights

Governance

Our focus on good corporate governance stems from our belief that a strong governance framework creates long-term value for our shareholders, strengthens Board and management accountability, and builds trust in us and our brand. Our governance framework includes the following highlights:


Board and Governance Information (1)		Board and Governance Information (1)
Size of the Board of Directors	9	Board Meetings Held During Fiscal 2023	14
Number/ % of Independent Directors	8/ 89%	Lead Independent Director	Yes
Average Age of Independent Directors	62	Separate Chairman and CEO	No
Average Independent Director Tenure	2 years	Code of Business Conduct and Ethics	Yes
Women Board Members	22%	Stock Ownership Guidelines: Directors & Executives	Yes
Board Committees Chaired by Women	20%	Board Refreshment: New Directors Over Past 5 Years	8
Racial/ Ethnically Diverse Board Members	11%	Board Policy to Reflect Diversity (Gender & Race)	Yes
Classified Board of Directors	Yes	Anti-Hedging and Pledging Policies	Yes
Majority Voting in Uncontested Director Elections	Yes	Compensation Clawback Policy	Yes
Plurality Voting in Contested Director Elections	Yes	Proxy Access	No
Annual Board and Committee Self-Assessments	Yes	Ongoing Shareholder Outreach and Engagement	Yes
Limited Membership on Other Public Co Boards	Yes	Capital Structure with One Vote per Common Share	Yes
Board Committees are 100% Independent Directors	Yes	Succession Planning Process for Senior Management	Yes
Poison Pill	No	Regular Executive Sessions without Management	Yes

(1) Reflects the retirements of Mary Louise Krakauer and William K. O'Brien effective upon the 2023 Annual Meeting of Shareholders as well as the appointments of William L. Ballhaus as Chairman of the Board, Barry R. Nearhos as Lead Independent Director and Chairman of the Nominating and Governance Committee, and Howard L. Lance as Chairman of the Human Capital and Compensation Committee.

Our Board of Directors and executives understand and embrace the importance to all of our primary stakeholders of environmental, social, and governance ("ESG") measurement and reporting. For a number of years, we have been focused on the aspects of ESG we believe have the greatest impact on our business, our stakeholders, and value creation. As it relates to the environment and sustainability, our initial priorities include: talent management and culture; responsible sourcing and operational excellence; cyber security; and environmental stewardship. We have also focused on addressing a number of key governance principles that are generally considered best practices. Of our areas of focus, we are more focused on developing talent management and culture and cyber security because we believe these have the greatest potential to create - and the highest risk to destroy - value for Mercury and our shareholders. We continue to invest in our efforts, results, and reporting accountability, and endeavor to add both to what we do and how we report these efforts over time.

Our executive leadership team oversees and implements our environmental initiatives with a view towards demonstrating our commitment to good corporate citizenship and responsible business practices. The Human Capital and Compensation Committee of the Board of Directors reviews our ESG practices with a view toward how our efforts help attract, develop, and retain employee talent, including our culture and values as well as how we demonstrate our commitment to good corporate citizenship. The Nominating and Governance Committee of our Board of Directors is responsible for reviewing and overseeing Mercury's environmental impact and initiatives as well the oversight of the Company's governance policies and initiatives.

Talent Management

For talent management and culture, we strive to invest in the professional development of our team members, hiring and retaining a diverse workforce. We are focused on ongoing employee training in critical compliance areas and on business ethics, export rules, and our culture of integrity. We adhere to high ethical and security standards and operating with integrity is a foundation of our culture and values. We disclose in the Environmental, Social, and Governance ("ESG") section of our website gender, racial, and ethnicity data, our voluntary and involuntary termination rates, and our OSHA injury rates.

Diversity, Equity, and Inclusion

We are focused on advancing diversity, equity, and inclusion internally and externally through a variety of programs and initiatives and we report our employee diversity statistics at regular meetings of the Human Capital and Compensation Committee.

Cyber and Industrial Security

The layers of cyber security we have built into our business systems and incorporated into our processes help ensure the critical data that drives the development of customer solutions is secure and protects our employees' personal information. Our good work has been recognized and we remain focused on modeling industry best practices. We also have cyber security expertise on our Board of Directors, with Ms. Plunkett having served as a federal senior executive at the National Security Agency (NSA), including roles as Deputy Director and later Director of Information Assurance, where she led the agency's information assurance/ cyber defense mission.

We have deployed and have been relying upon a best in class industrial security program as evidenced by superior ratings from the U.S. Defense Counterintelligence and Security Agency (DCSA). Six of our cleared sites have been recognized with the James S. Cogswell Industrial Security Achievement Award in recent years, with our Cypress, California, and West Caldwell, New Jersey locations being recognized with this award in 2021; less than 1% of the 13,000+ cleared contractor locations receive this award annually.

Responsible Sourcing

We believe responsible sourcing and operational excellence are integral parts of value creation. We work with all our suppliers in an effort to ensure that we all adhere to an equal and high standard of sustainability and ethical principles. We provide opportunities for small businesses to engage with us as we support our customers in the aerospace, defense, and intelligence markets. We work closely with many categories of small businesses, including small disadvantaged, women-owned, veteran-owned, service-disabled veteran-owned, and historically underutilized business zone (HUBZone) companies.

Our execution excellence initiatives include a focus on supply chain efficiency and procurement savings, which we believe will further enhance our competitiveness and value in the coming years.

Environmental Stewardship

As a technology company, we have relatively limited exposure to environmental stewardship risks in our operations. Nonetheless, we are focused on promoting environmental stewardship and introducing innovative processes and technologies that improve our efforts, including quantifying and disclosing our environmental impact along with our efforts to maximize future generations' ability to live, work, and play in our shared natural environment. We disclose in the ESG section of our website details of scope 1, scope 2, and scope 3 greenhouse gas (GHG) emissions from our business activities covering backup-generators and boilers for scope 1 emissions, purchased energy for scope 2 emissions, and business travel for scope 3 emissions. We have partnered with a nationally-recognized waste management vendor to ensure that our by-products and materials are reclaimed, recycled, or disposed of in ways that will reduce environmental impacts and conserve natural resources. As an environmentally-conscious company, we focus on and support efforts that move towards a zero waste future through continuous improvement of production processes, sustainable materials management, and resource efficiency.

xii

Facilities optimization and capital and asset efficiency are significant themes in our execution excellence initiatives, and we believe we will create further value for all of our stakeholders as we use our resources more efficiently.

Further Information

Please see the Environmental, Social, and Governance section of our website, www.mrcy.com, under "Company" for detailed disclosures on our commitment to sustainability and ESG practices. Information contained on our website and social media channels does not constitute part of this proxy statement or our Annual Report on Form 10-K.

xiii

TABLE OF CONTENTS


			Page
QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING			1
PROPOSAL 1: ELECTION OF THREE CLASS II DIRECTORS			4
CORPORATE GOVERNANCE			18
DIRECTOR COMPENSATION			26
EQUITY COMPENSATION PLANS			29
PROPOSAL 2: ADVISORY VOTE ON F ISCAL 2023 EXECUTIVE COMPENSATION ("SAY-ON-PAY")			30
PROPOSAL 3: ADVISORY VOTE ON THE FREQUENCY OF HOLDING FUTURE SAY-ON-PAY VOTES			31
PROPOSAL 4 : APPROVAL OF AMENDED AND RESTATED 2018 STOCK INCENTIVE PLAN			32
PROPOSAL 5 : RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			39
VOTING SECURITIES			40
EXECUTIVE OFFICERS			43
COMPENSATION DISCUSSION AND ANALYSIS			45
REPORT OF THE HUMAN CAPITAL AND COMPENSATION COMMITTEE			67
TABULAR EXECUTIVE COMPENSATION DISCLOSURE			68
REPORT OF THE AUDIT COMMITTEE			86
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			88
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE			88
HOUSEHOLDING			88
SHAREHOLDER PROPOSALS FOR THE 2024 ANNUAL MEETING			89
OTHER MATTERS			89
ANNUAL REPORT ON FORM 10-K			90
Appendix A — Amended and Restated 2018 Stock Incentive Plan			91
Appendix B— Reconciliation of Non-GAAP Measures to GAAP Measures			104

xiv

MERCURY SYSTEMS, INC.

50 MINUTEMAN ROAD

ANDOVER, MA 01810

(978) 256-1300

QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING

Why am I receiving these materials?

We are mailing this proxy statement, with the accompanying proxy card, to you on or about September 21, 2023 in connection with the solicitation of proxies by the Board of Directors of Mercury Systems, Inc. ("Mercury") for the 2023 Annual Meeting of Shareholders to be held on October 25, 2023, and any adjournment or postponement of that meeting. The meeting will be held on October 25, 2023, beginning at 10:00 a.m. Eastern Time at our headquarters at 50 Minuteman Road, Andover, Massachusetts 01810. You are invited to attend the meeting, and we request that you vote on the proposals described in this proxy statement. You do not need to attend the meeting to vote your shares. You may vote by internet, telephone, or mail in order to have your shares voted at the meeting on your behalf.

What am I voting on?

There are five matters scheduled for a vote:

•election of three Class II directors nominated by the Board of Directors, each to serve for a three-year term, and in each case until their successors are duly elected and qualified;

•an advisory vote on the fiscal 2023 compensation of our named executive officers (the "say-on-pay" vote);

•an advisory vote on the frequency of holding future say-on-pay votes;

•approval of our Amended and Restated 2018 Stock Incentive Plan; and

•ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal 2024.

Who can attend and vote at the meeting?

Shareholders of record at the close of business on August 25, 2023, the record date, are entitled to attend and vote at the meeting. Each share of our common stock is entitled to one vote on all matters to be voted on at the meeting, and can be voted only if the record owner is present to vote or is represented by proxy. The proxy card provided with this proxy statement indicates the number of shares of common stock that you own and are entitled to vote at the meeting.

What is the Admission Policy for the 2023 Annual Meeting?

All holders of Mercury shares as of the record date are encouraged to attend the Annual Meeting. In order to ensure the safety of all attendees, we have implemented the following security and admission policies.

•Eligible Attendees. Attendance is limited to registered and beneficial Mercury shareholders as of the record date.

•Admission Procedures. In order to be admitted to the meeting, you must present both an admission ticket and valid government-issued photo identification, such as a driver's license or passport. You must register on or prior to October 13, 2023 in order to obtain an admission ticket.

•Obtaining an Admission Ticket. In order to obtain an admission ticket, please email us at annualmeeting@mrcy.com.

•Security Measures. Upon entering the meeting facility, you may be required to proceed through a security checkpoint. In addition, cameras, recording equipment, electronic devices, large bags, briefcases, and packages will not be permitted in the annual meeting.

What constitutes a quorum at the meeting?

The presence at the meeting, in person or represented by proxy, of the holders of a majority of our common stock outstanding on August 25, 2023, the record date, will constitute a quorum for purposes of the meeting. On the record date, 59,301,176 shares of our common stock were outstanding. For purposes of determining whether a quorum exists, proxies received but marked "abstain" and so-called "broker non-votes" (described below) will be counted as present.

How do I vote my shares?

•Beneficial Shareholders. If you own shares through a broker, bank, or other holder of record (that is, your shares are held in "street name"), you must instruct the holder of record how to vote your shares. In order to provide voting instructions to the holder of record of your shares, please refer to the materials forwarded by your broker, bank, or other holder of record. If your shares are held in "street name" and you wish to vote them at the meeting, you must obtain from your broker a properly executed legal proxy identifying you as a Mercury shareholder, authorizing you to act on behalf of the broker at the meeting, and specifying the number of shares with respect to which the authorization is granted. Proxies submitted by internet or telephone must be received by 1:00 a.m., Eastern Time, on October 25, 2023.

•Registered Shareholders. If you own shares that are registered in your name, you may vote by proxy before the 2023 Annual Meeting by internet at www.envisionreports.com/MRCY, by calling 1-800-652-VOTE (8683), or by signing and returning your proxy card. To vote by internet or telephone, you will need your voting control number, which can be found on your proxy card. Proxies submitted by internet or telephone must be received by 1:00 a.m., Eastern Time, on October 25, 2023. If you return a signed proxy card but do not provide voting instructions for some or all of the matters to be voted on, your shares will be voted on all uninstructed matters in accordance with the recommendations of the Board.

•Shareholders Through the Mercury Systems 401(k) Plan. If you own shares through the Mercury Systems 401(k) plan, you may vote by proxy before the 2023 Annual Meeting by internet at www.envisionreports.com/MRCY, by calling 1-800-652-VOTE (8683), or by signing and returning your proxy card. To vote by internet or telephone, you will need your voting control number, which can be found on your proxy card. Proxies submitted by internet or telephone must be received by 1:00 a.m., Eastern Time, on October 23, 2023. If you return a signed proxy card but do not provide voting instructions for some or all of the matters to be voted on, your shares will be voted on all uninstructed matters in accordance with the recommendations of the Board.

If you sign, date, and return the proxy card but do not specify how your shares are to be voted, then your proxy will vote your shares as follows:

•FOR the election of the three nominees for Class II directors named below under "Proposal 1: Election of Three Class II Directors;"

•FOR the approval of, on an advisory basis, the fiscal 2023 compensation of our named executive officers as disclosed in this proxy statement;

•FOR the approval of, on an advisory basis, the holding of future say-on-pay votes on an ANNUAL basis;

•FOR the approval of our Amended and Restated 2018 Stock Incentive Plan;

•FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal 2024; and

•in the proxy's discretion as to any other business which may properly come before the meeting or any adjournment or postponement of the meeting.

What discretion does my broker have to vote my shares held in "street name"?

A broker holding your shares in "street name" must vote those shares according to any specific instructions it receives from you. If specific instructions are not received, your broker may vote your shares in its discretion, depending on the type of proposal involved. Under applicable rules, brokers may not vote on "non-routine" matters without specific instructions from you, such as the election of directors, the advisory votes on say-on-pay and the frequency of holding future say-on-pay votes, and the approval of our Amended and Restated 2018 Stock Incentive Plan. If such matters come before the meeting and you have not specifically instructed your broker how to vote your shares, your shares will not be voted on those matters, giving rise to what is called a "broker non-vote." Shares represented by broker non-votes will be counted for purposes of determining the existence of a quorum for the transaction of business, but for purposes of determining the number of shares voting on a particular proposal, broker non-votes will not be counted as votes cast or shares voting. Brokers may, however, vote shares held in "street name" with respect to "routine" matters, which include the ratification of the appointment of an independent registered public accounting firm, if the broker's clients do not provide voting instructions. We urge you to give voting instructions to your broker on all voting items.

Can I change my vote after I return my proxy card?

•Beneficial Shareholders. Beneficial shareholders should contact their broker, bank, or other holder of record for instructions on how to revoke their proxies or change their vote.

•Registered Shareholders. Registered shareholders may revoke their proxies or change their voting instructions at any time before 1:00 a.m., Eastern Time, on October 25, 2023, by submitting a proxy via internet, telephone, or mail that is dated later than the original proxy or by delivering written notice of revocation to our Corporate Secretary. Registered shareholders may also revoke their proxies or change their vote by attending the 2023 Annual Meeting and voting by ballot.

•Shareholders Through the Mercury Systems 401(k) Plan. If you hold shares through the Mercury Systems 401(k) plan, you may revoke your proxy or change your voting instructions at any time before 1:00 a.m., Eastern Time, on October 23, 2023, by submitting a proxy via internet, telephone, or mail that is dated later than the original proxy or by delivering written notice of revocation to our Corporate Secretary.

Your attendance at the meeting will not be deemed to revoke a previously delivered proxy unless you clearly indicate at the meeting that you intend to revoke your proxy and vote in person at the meeting.

How are votes counted?

•Election of directors. A director nominee receiving a majority of the votes properly cast at the meeting for the nominee's election (meaning he or she receives more votes cast "FOR" than cast "WITHHOLD") will be elected director. Abstentions and broker non-votes, which are described above, will have no effect on the outcome of voting on these matters.

•All other proposals. All of the other proposals at the meeting require the favorable vote of a majority of the votes cast on the matter. Abstentions and broker non-votes, as applicable, which are described above, will have no effect on the outcome of voting on these matters.

How is Mercury soliciting proxies?

We bear the cost of preparing, assembling, and mailing the proxy material relating to the solicitation of proxies by the Board of Directors for the meeting. In addition to the use of the mails, certain of our officers and regular employees may, without additional compensation, solicit proxies in person, by telephone, or by other means of communication. We will also request brokerage houses, custodians, nominees, and fiduciaries to forward copies of the proxy material to those persons for whom they hold shares, and will reimburse those record holders for their reasonable expenses in transmitting this material.

We have engaged Okapi Partners LLC ("Okapi") to assist in the solicitation of proxies and provide related advice and informational support, for agreed services fees and reimbursement of customary disbursements and expenses. In addition to fees and expenses for services provided through the date of the meeting, Okapi's fee in connection with the proxy solicitation for this meeting is not expected to exceed $75,000.

PROPOSAL 1: ELECTION OF THREE CLASS II DIRECTORS

The following table provides summary information about our Directors as of the date of this proxy statement.

Committee Memberships

Name

Director Since

Primary Occupation

Independent

NGC

GRC

M&A

William L. Ballhaus Class I Director Term Ending in 2025

2022

President and CEO, Mercury Systems

Orlando P. Carvalho Class III Director Term Ending in 2024

2020

Former Executive Vice President Aeronautics, Lockheed Martin

Yes

Gerard J. DeMuro Class II Director Nominated for a Term Ending in 2026

2023

Co-CEO, Eve Air Mobility

Yes

M,F

Lisa S. Disbrow Class I Director Term Ending in 2025

2017

Under Secretary of the U.S. Air Force (Retired)

Yes

M,F

Mary Louise Krakauer Class II Director Term Ending in 2023

2017

Former Executive, Dell and EMC

Yes

Roger A. Krone Class II Director Nominated for a Term Ending in 2026

2023

Former Chairman and CEO, Leidos

Yes

Howard L. Lance Class I Director Term Ending in 2025

2022

Former President and CEO Maxar Technologies and Harris Corporation

Yes

Barry R. Nearhos Class III Director Term Ending in 2024

2018

Former Managing Partner, PricewaterhouseCoopers

Yes

C,F

William K. O'Brien Chairman of the Board Class II Director Term Ending in 2023

2008

Former Executive Chairman, Enterasys Networks

Yes

M,F

Scott Ostfeld Class II Director Nominated for a Term Ending in 2026

2023

Managing Partner and Portfolio Manager, JANA Partners

Yes

Debora A. Plunkett Class III Director Term Ending in 2024

2021

Federal Senior Executive National Security Agency (Retired)

Yes

AC = Audit Committee

GRC = Government Relations Committee

M = Member

HC = Human Capital and Compensation Committee

M&A = M&A and Finance Committee

C = Committee Chair

NGC = Nominating and Governance Committee

F = Financial Expert

Who sits on the Board of Directors?

Our by-laws provide for a Board of Directors of not fewer than three nor more than fifteen directors. As permitted by Massachusetts law, the Board of Directors is divided into three classes, with each class consisting, as nearly as may be possible, of one-third of the whole number of the Board of Directors. The Board of Directors currently consists of eleven members, with: William L. Ballhaus, Lisa S. Disbrow, and Howard L. Lance serving as Class I directors; Gerard J. DeMuro, Mary Louise Krakauer, Roger A. Krone, William K. O'Brien, and Scott Ostfeld serving as Class II directors; and Orlando P. Carvalho, Barry R. Nearhos, and Debora Plunkett serving as Class III directors.

The terms of the Class I, Class II, and Class III directors expire in 2025, 2023, and 2024, respectively. With the expiration of its respective term, each class is nominated for election for a subsequent three-year term. We are proposing that Gerard J. DeMuro, Roger A. Krone, and Scott Ostfeld, three continuing Class II directors, be elected to serve terms of three years, and in each case until their successors are duly elected and qualified or until they sooner die, resign, or are removed. Messrs. DeMuro and Krone were appointed to the Board in June 2023. In connection with a voting agreement with JANA Partners, Mr. Ostfeld was appointed to the Board in July 2023. Mary Louise Krakauer and William K. O'Brien, Class II directors, informed the Board of Directors that they will retire from service on the Board at the end of their current terms effective at the 2023 Annual Meeting of Shareholders. We thank Mr. O'Brien for his service on the Board since 2008 and for his service as Chairman of the Board since 2021, and we thank Ms. Krakauer for her service on the Board since 2017 and for her service as Chairman of the Human Capital and Compensation Committee since 2020.

Directors' Qualifications and Diversity

The Board of Directors believes that the Board, as a whole, should possess a combination of skills, professional experience, and backgrounds necessary to oversee the Company's business. In addition, the Board of Directors believes that there are certain attributes that every director should possess, as reflected in the Board's membership criteria. Accordingly, the Board of Directors and the Nominating and Governance Committee consider the qualifications of directors and director candidates individually and in the broader context of the Board of Directors' overall composition and the Company's current and future needs.

The Nominating and Governance Committee is responsible for developing and recommending Board of Director membership criteria to the Board for approval. The criteria include independent and sound judgment, integrity, the ability to commit sufficient time and attention to Board of Director activities, and the absence of conflicts with the Company's interests. In addition, the Nominating and Governance Committee periodically evaluates the composition of the Board of Directors to assess the skills and experience that are currently represented on the Board of Directors as well as the skills and experience that the Board of Directors will find valuable in the future, given the Company's current situation and strategic plans.

Our Board of Directors Policy recognizes the benefits that diversity brings to the Board and states that the Board has a goal to reflect gender, ethnic, and racial diversity in its membership. Having a Board composed of individuals with diverse skills, experience, backgrounds and perspectives means: competitive advantage; robust understanding of opportunities, issues and risks; inclusion of different concepts, ideas, and relationships; enhanced decision-making and dialogue; and heightened capacity for oversight of the organization and its governance. For purposes of Board composition, diversity includes, but is not limited to, business and industry skills and experience, gender, race, and ethnicity. The Board shall make good use of these differences and distinctions among individuals in determining the optimum composition of the Board. All Board appointments should collectively reflect the diverse nature of the business environment in which the Company operates and be made on merit, in the context of the skills, experience, independence, and knowledge which the Board requires to be effective.

In evaluating director candidates, and considering incumbent directors for renomination to the Board of Directors, the Nominating and Governance Committee considers, among other things, each nominee's independence, financial literacy, personal and professional accomplishments, and experience, including the following:

Experience/ Qualification

Relevance to Mercury

Public Co. CEO

Experience as the chief executive officer of a publicly-traded company provides us with insights and understanding of the challenges of operating a business with multiple stakeholders with various and at times competing time horizons for return on investment.

Senior Leadership

Experience in significant leadership positions provides us with new insights and demonstrates key management disciplines that are relevant to the oversight of our business.

Defense Industry

Extensive experience in the aerospace and defense industry provides an understanding of the complex environment in which we operate and is highly important to strategic planning and oversight of our business operations.

Technology Industry

Experience with secure sensor processing, rugged servers, mission computers, safety-critical avionics, radio frequency components, multifunction assemblies and subsystems provides an understanding of the complex operations of our business as well as the labor markets in which we compete for talent.

Corporate Governance

An understanding of organizations and governance supports management accountability, transparency, and protection of shareholder interests.

Risk Management

Risk management experience is critical in overseeing the risks we face today and those emerging risks that could present in the future.

Finance and Accounting

Finance and accounting experience is important in understanding and reviewing our business operations, strategy, and financial results.

Business Operations and Strategic Planning

An understanding of business operations and processes, and experience making strategic decisions, are critical to the oversight of our business, including the assessment of our strategic operating plan and business strategy.

Regulatory

An understanding of laws and regulations is important because we operate in a highly regulated industry and we are directly affected by government actions.

Talent Management

We place great importance on attracting and retaining superior talent, and motivating employees to achieve desired enterprise and individual performance objectives.

Mergers & Acquisitions (M&A)

Experience with acquiring and integrating companies through M&A transactions is important to understanding our acquisition growth strategy.

Debt and Equity Capital Markets

Debt and equity capital markets experience is important because we use the capital markets, along with cash generated from operations, to finance our growth agenda.

Board Skills Matrix for Continuing Non-Employee Directors

Skill/ Qualification

Orlando P. Carvalho

Gerard J. DeMuro

Lisa S. Disbrow

Roger A. Krone

Howard L. Lance

Barry R. Nearhos

Scott Ostfeld

Debora A. Plunkett

Public Co. CEO

•

Senior Leadership

•

Defense Industry

•

Technology Industry

•

Corporate Governance

•

Risk Management

•

Finance and Accounting

•

Business Operations & Strategic Planning

•

Regulatory

•

Talent Management

•

Mergers & Acquisitions

•

Debt & Equity Capital Markets

•

Mercury Board Tenure (years)

—

Current Other Public Company Boards

—


Board Diversity Matrix as of October 25, 2023 (Continuing Directors)
Total # of Directors:	9
Part I: Gender Identity	Female	Male
Directors	2	7
Part II: Demographic Background
African American or Black	1
White	1	7

Based on the Board Diversity Matrix Instructions and Templates issued by Nasdaq, our Board Diversity Matrix from the proxy statement for our prior Annual Meeting is included below.


Board Diversity Matrix as of October 26, 2022 (Prior Annual Meeting)
Total # of Directors:	9
Part I: Gender Identity	Female	Male
Directors	3	6
Part II: Demographic Background
African American or Black	1
White	2	6

Recommendation

The Board of Directors recommends a vote FOR the election of the nominees listed below.

Information about the Directors

The persons named as proxies in the accompanying proxy card will vote, unless authority is withheld, for the election of the three Class II nominees named below. We have no reason to believe that any of the nominees will be unavailable for election. However, if any one of them becomes unavailable, the persons named as proxies in the accompanying proxy card have discretionary authority to vote for a substitute chosen by the Board. Any vacancies not filled at the meeting may be filled by the Board.

The following information was provided by each of the incumbent directors whose term will continue after the meeting.

Class II Directors - Nominated for a Term Ending in 2026:

https://cdn.kscope.io/0d4af541ec63b6bb816a2685ec843c07-DeMuro_BW_2inch.jpg

Gerard J. DeMuro

Age: 66

Committee Memberships:

Director Since: 2023

Audit

Primary Occupation:

Co-CEO, Eve Air Mobility and Former President and CEO, BAE Systems, Inc.

Description of Business Experience:

Skills and Qualifications:

Mr. DeMuro currently serves as Co-CEO of Eve Air Mobility, a publicly traded producer of eVTOL aircraft and urban air mobility infrastructure. From 2014 to 2020, Mr. DeMuro served as President and CEO of BAE Systems, Inc., the U.S.-based subsidiary of BAE Systems PLC, a provider of technology-led defense, aerospace, and security solutions. From 1999 to 2013, he held several roles of increasing responsibility at General Dynamics, a global aerospace and defense company, including Executive Vice President and Corporate Vice President of Information Systems & Technology. Earlier in his career, Mr. DeMuro held roles at GTE Corporation (now part of Verizon Communications) and the U.S. Department of Defense. Mr. DeMuro's qualifications to serve on our Board of Directors include his extensive experience in the defense industry and his executive and operational experience with public and private companies.

Public Co. CEO Senior Leadership Defense Industry Technology Industry Corporate Governance Risk Management Finance and Accounting Business Operations & Strategy Regulatory Talent Management Mergers & Acquisitions Debt and Equity Capital Markets

Other Public Company Directorships Held in the Last Five Years:

BAE Systems Plc (Ticker: BAESY) (2014 - 2020)

Zanite Acquisition Corporation (Ticker: ZNTE) (2020 - 2021)

https://cdn.kscope.io/0d4af541ec63b6bb816a2685ec843c07-Krone_BW_2inch.jpg

Roger A. Krone

Age: 67

Committee Memberships:

Director Since: 2023

M&A and Finance Nominating and Governance

Primary Occupation:

Former Chairman and CEO, Leidos

Description of Business Experience:

Skills and Qualifications:

Mr. Krone served as the Chairman and CEO at Leidos, a Fortune 500 science and technology company focused on the software, hardware, and complex integrated system solutions of large- and small-scale defense, civil, and health applications, from 2014 until his retirement in 2023. Mr. Krone spent over 15 years at Boeing, where he served in several leadership positions, including President of its Network & Space Systems business, and was previously a Vice President at McDonnell Douglas Corporation, which was later acquired by Boeing. Mr. Krone began his career at General Dynamics Corporation. Mr. Krone has served on the Board of Directors of Lear Corporation, a publicly traded global automotive technology company, since 2020. He previously served on the Board of Directors of BorgWarner, a publicly traded automotive supplier, from 2017 to 2019. Mr. Krone's qualifications to serve on our Board of Directors include his extensive experience in the defense industry and his executive and operational experience with public companies.

Other Public Company Directorships Held in the Last Five Years:

Lear Corporation (Ticker: LEA) (2020 - present)

Leidos Holdings, Inc. (Ticker: LDOS) (2014 - 2023)

BorgWarner Inc. (Ticker: BWA) (2017 - 2019)

https://cdn.kscope.io/0d4af541ec63b6bb816a2685ec843c07-Ostfeld_BW_2inch.jpg

Scott Ostfeld

Age: 46

Committee Memberships:

Director Since: 2023

Human Capital & Compensation M&A and Finance

Primary Occupation:

Managing Partner and Portfolio Manager, JANA Partners

Description of Business Experience:

Skills and Qualifications:

Mr. Ostfeld is a Managing Partner and Portfolio Manager at JANA Partners where he has nearly 20 years of experience enhancing value as an engaged shareholder. Prior to joining JANA in 2006, Mr. Ostfeld was at GSC Partners, where he served in their distressed debt private equity group and focused on acquiring companies through the restructuring process and enhancing value as an equity owner. He was previously an investment banker at Credit Suisse First Boston Corporation. Mr. Ostfeld currently serves on the Board of Directors of TreeHouse Foods, a publicly traded private label food company. He was previously a director at Conagra Brands, a publicly traded packaged good company from 2019 to 2022, HD Supply Holdings, a publicly traded industrial distribution company, from 2017 until its sale to Home Depot in 2020, and Team Health, publicly traded physician services company, from 2016 until its sale to Blackstone Group in 2017. Mr. Ostfeld serves on the Board of Columbia University’s Richman Center for Business, Law and Public Policy. Mr. Ostfeld's qualifications to serve on our Board of Directors include his experience investing in companies and driving shareholder value as well as his expertise in capital markets, M&A, strategy, corporate governance, and talent and risk management.

Senior Leadership Corporate Governance Risk Management Finance and Accounting Business Operations & Strategy Talent Management Mergers & Acquisitions Debt and Equity Capital Markets

Other Public Company Directorships Held in the Last Five Years:

TreeHouse Foods, Inc. (Ticker: THS) (2022 - present)

Conagra Brands, Inc. (Ticker: CAG) (2019 - 2022)

HD Supply Holdings, Inc. (Ticker: HDS) (2017 - 2020)

Class I Directors - Serving a Term Ending in 2025:

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William L. Ballhaus

Age: 56

Committee Memberships:

Director Since: 2022

None

Primary Occupation:

President and CEO, Mercury Systems

Description of Business Experience:

Skills and Qualifications:

Mr. Ballhaus joined the Company's Board of Directors as a non-employee director in June 2022, was appointed interim President and Chief Executive Officer on June 24, 2023, and was appointed President and CEO effective August 15, 2023. As previously announced, Mr. Ballhaus will become the Company's Chairman of the Board effective with the 2023 Annual Meeting of Shareholders. Mr. Ballhaus has significant experience in the aerospace, defense, and technology industries, including multiple CEO roles, as well as experience in operational transformations and delivering strong results. He previously served as Chairman and CEO of Blackboard, Inc., a leading EdTech company, from 2016 until its merger with Anthology in 2021. Prior to that, he served as CEO and President of SRA International, Inc., a provider of information technology services, from 2011 until the creation of CSRA Inc. from SRA International Inc.'s and CSC's U.S. public sector business. Before that, Mr. Ballhaus served as CEO and President of government contractor DynCorp International from 2008 to 2010. Mr. Ballhaus has also held senior leadership positions at BAE Systems, Boeing, and Hughes, where he led global government and commercial technology businesses particularly focused on software and IT.

Other Public Company Directorships Held in the Last Five Years:

None

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Lisa S. Disbrow

Age: 60

Committee Memberships:

Director Since: 2017

Audit Government Relations (Chair) Human Capital & Compensation

Primary Occupation:

Under Secretary of the Air Force (Retired)

Description of Business Experience:

Skills and Qualifications:

Ms. Disbrow is an appointed member of the President's Export Council; an appointed Commissioner on the U.S. Congress' Commission on DoD Planning, Programming, Budgeting and Execution Reform; and serves on the Secretary of Defense's Reserve Forces Policy Board. She is a Senior Fellow at Johns Hopkins University Applied Physics Lab, and the Vice Chairman of the National Defense Industrial Association's Board. Ms. Disbrow retired from federal service in 2017 as U.S. Senate-confirmed Air Force Under Secretary, responsible for organizing, training, equipping, and welfare of approximately 660,000 military Airmen and civilians, worldwide. She oversaw an annual budget of over $132 billion dollars and directed strategy, risk management, business processes, weapons requirements and acquisition, military force development, technology investments, and personnel management across a global enterprise. She was Acting Secretary of the Air Force during the change of Presidential administrations, and previously served as the Air Force's Assistant Secretary for Financial Management and Comptroller, the principal senior official on financial matters with a workforce of 10,000 personnel world-wide. Over a 32-year national security career, she held numerous senior civilian positions on the United States Joint Chiefs of Staff, leading joint warfighting requirements and operational assessments as the Vice Director of J8; in the National Reconnaissance Office as a Systems Engineer; and on the National Security Council in the White House. Her recognitions include the Distinguished and the Meritorious Presidential Rank awards, and DoD's Distinguished Civilian Service award. She is a retired U.S. Air Force Colonel with over 23 years of total active and reserve service in intelligence, operational plans, and programming. Ms. Disbrow's qualifications to serve on our Board of Directors include her extensive military and budget experience in the Company's target defense market, her defense procurement experience, and her knowledge of defense and aerospace technology.

Senior Leadership Defense Industry Technology Industry Risk Management Finance and Accounting Business Operations & Strategy Regulatory Talent Management

Other Public Company Directorships Held in the Last Five Years:

Blackberry Limited (Ticker: BB) (2019 - present)

CACI International Inc. (Ticker: CACI) (2021 - present)

Perspecta, Inc. (Ticker: PRSP) (2018 - 2021)

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Howard L. Lance

Age: 67

Committee Memberships:

Director Since: 2022

Government Relations Human Capital & Compensation M&A and Finance Nominating & Governance

Primary Occupation:

Former President and CEO, Maxar Technologies, Inc. and Harris Corporation

Description of Business Experience:

Skills and Qualifications:

Mr. Lance is currently Managing Partner at Lance Advisors LLC, an advisory firm serving private equity and institutional investors. He serves as non- executive Chairman of Summit Materials, a publicly traded provider of aggregates and cement, non-executive Chairman of privately held Covanta Energy LLC, a leading provider of sustainable environmental solutions, and a director of Mercury Systems, a leading defense electronics supplier. He previously served on the public company boards of New Vista Acquisition Corp., Ferrovial S.A., Eastman Chemical Company, Stryker Corporation, and Aviat Networks. Mr. Lance was President and Chief Executive Officer of Maxar Technologies, a publicly traded provider of space technology solutions including satellites, robotics, geospatial imagery, and services from 2016 to 2019. Previously, he was Executive Advisor – Private Equity at the Blackstone Group from 2012 to 2016. He served as Chairman, President and Chief Executive Officer of Harris Corporation (now L3Harris), a publicly traded provider of communications and information technology products, software, systems and services to government, defense, and commercial markets, from 2003 to 2012. He was Co-President of NCR Corporation and Chief Operating Officer of its Retail and Financial Group from 2001 to 2002. Previously, he spent 17 years at Emerson Electric Company including as Executive Vice President of its Electronics and Telecom businesses, Group President of its Climate Technologies businesses, and Chief Executive Officer of Astec PLC, a UK-listed subsidiary based in Hong Kong. Mr. Lance’s qualifications to serve on our Board of Directors include his extensive experience in the defense industry and his executive and operational experience as the Chief Executive Officer of public companies.

Public Co. CEO Senior Leadership Defense Industry Technology Industry Corporate Governance Risk Management Finance and Accounting Business Operations & Strategy Talent Management Mergers & Acquisitions Debt and Equity Capital Markets

Other Public Company Directorships Held in the Last Five Years:

Summit Materials, Inc. (Ticker: SUM) (2015 - present)

Change Healthcare, Inc. (Ticker: CHNG) (2017 - 2022)

New Vista Acquisition Corp. (Ticker: NVSA) (2021 - 2022)

Maxar Technologies Inc. (Ticker: MAXR) (2016 - 2019)

Class III Directors - Serving a Term Ending in 2024:

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Orlando P. Carvalho

Age: 65

Committee Memberships:

Director Since: 2020

Human Capital & Compensation M&A and Finance Nominating and Governance

Primary Occupation:

Former Executive Vice President, Aeronautics, Lockheed Martin

Description of Business Experience:

Skills and Qualifications:

Mr. Carvalho has over 38 years of experience in the aerospace and defense industry with Lockheed Martin. Before his retirement from Lockheed Martin in 2018, he was Executive Vice President of Lockheed Martin's Aeronautics business, a 24,000-employee enterprise. Mr. Carvalho held several integral leadership positions with Lockheed Martin, including Executive Vice President and General Manager of the F-35 Lightning II Joint Strike Fighter program, President of Lockheed Martin Mission Systems & Sensors, and General Manager and Vice President of Surface-Sea Based Ballistic Missile Defense Systems. Mr. Carvalho presently serves on the Board of Advisors for the University of Maryland Robert H. Smith School of Business and he is an Associate Fellow of the American Institute of Aeronautics and Astronautics. Mr. Carvalho's qualifications to serve on our Board of Directors include his executive experience with defense contracting and his knowledge of defense and aerospace technology, operations, and program management.

Senior Leadership Defense Industry Technology Industry Corporate Governance Risk Management Finance and Accounting Business Operations & Strategy Regulatory Talent Management Mergers & Acquisitions

Other Public Company Directorships Held in the Last Five Years:

None

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Barry R. Nearhos

Age: 65

Committee Memberships:

Director Since: 2018

Audit (Chair) M&A and Finance Nominating and Governance

Primary Occupation:

Former Managing Partner, PricewaterhouseCoopers

Description of Business Experience:

Skills and Qualifications:

Mr. Nearhos has over 35 years of experience with PricewaterhouseCoopers (PwC) providing assurance, business advisory, and other services to clients across multiple industries, including technology, life sciences, telecom, and manufacturing. Before his retirement from PwC in 2015, Mr. Nearhos was Market Managing Partner for PwC's Northeast region, responsible for directing the strategy and operations of the firm's Boston, Hartford, and Albany offices. During his tenure, he also served as the leader of PwC's Northeast Assurance practice, a position he held from 2005 until 2008, and as a partner in PwC's Assurance practice from 1989 to 2015. He was a director of Virtusa Corporation, a publicly-traded IT services and outsourcing company, from 2016 until its acquisition by private equity in 2021. Mr. Nearhos is one of our "audit committee financial experts" and will become our lead independent director effective with the 2023 Annual Meeting of Shareholders. Mr. Nearhos' qualifications to serve on our Board of Directors include his strong accounting and financial expertise.

Senior Leadership Corporate Governance Risk Management Business Operations & Strategy Finance and Accounting Mergers & Acquisitions Talent Management Debt and Equity Capital Markets

Other Public Company Directorships Held in the Last Five Years:

Virtusa Corporation (Ticker: VRTU) (2016 - 2021)

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Debora A. Plunkett

Age: 63

Committee Memberships:

Director Since: 2021

Audit Human Capital & Compensation Government Relations

Primary Occupation:

Federal Senior Executive, National Security Agency (Retired)

Description of Business Experience:

Skills and Qualifications:

Ms. Plunkett's previous National Security Agency (NSA) positions include Director of Information Assurance from April 2010 to November 2014 and Deputy Director of Information Assurance from August 2008 to April 2010, where she led the agency's information assurance/cyber defense mission and directed thousands of NSA professionals worldwide. She also conceived and established the National Cyber Security Assistance Program to qualify commercial organizations for accreditation in performing cyber security services for national security systems, and advised Executive Branch decision-makers, including the National Security Council, on cyber issues. Most recently, Ms. Plunkett was the first person to serve in the newly established position of Senior
Advisor to the NSA Director, from November 2014 to January 2016, with a focus on enhancing equality, diversity, and inclusion for the agency's highly technical workforce. A highly credentialed professional, Ms. Plunkett received the Distinguished Service Medal and Exceptional Civilian Service Award from the NSA Director. She was awarded the Rank of Distinguished Executive by President Barack Obama, and the Rank of Meritorious Executive by President George W. Bush. As a recognized expert in national security, she has appeared on CBS/60 Minutes and Federal News Radio, been interviewed in the Washington Post, and given keynote addresses at high-profile cyber security and defense conferences. She currently serves on the CACI International and Nationwide Mutual Insurance Boards of Directors, is a Senior Fellow at Harvard University’s Belfer Center, and a professor in the cybersecurity graduate program at the University of Maryland. Ms. Plunkett's qualifications to serve on our Board of Directors include her extensive experience in cyber and national security as well as information assurance.

Senior Leadership Defense Industry Technology Industry Risk Management Finance & Accounting Business Operations & Strategy Regulatory Talent Management

Other Public Company Directorships Held in the Last Five Years:

CACI International Inc. (Ticker: CACI) (2018 - present)

J. C. Penney Company, Inc. (Ticker: JCP) (2017 - 2020)

CORPORATE GOVERNANCE

Corporate Governance Highlights

Our commitment to good corporate governance stems from our belief that a strong governance framework creates long-term value for our shareholders, strengthens Board and management accountability, and builds trust in us and our brand. Our governance framework includes the following highlights:


Board and Governance Information (1)		Board and Governance Information (1)
Size of the Board of Directors	9	Board Meetings Held During Fiscal 2023	14
Number/ % of Independent Directors	8/ 89%	Lead Independent Director	Yes
Average Age of Independent Directors	62	Separate Chairman and CEO	No
Average Independent Director Tenure	2 years	Code of Business Conduct and Ethics	Yes
Women Board Members	22%	Stock Ownership Guidelines: Directors & Executives	Yes
Board Committees Chaired by Women	20%	Board Refreshment: New Directors Over Past 5 Years	8
Racial/ Ethnically Diverse Board Members	11%	Board Policy to Reflect Diversity (Gender & Race)	Yes
Classified Board of Directors	Yes	Anti-Hedging and Pledging Policies	Yes
Majority Voting in Uncontested Director Elections	Yes	Compensation Clawback Policy	Yes
Plurality Voting in Contested Director Elections	Yes	Proxy Access	No
Annual Board and Committee Self-Assessments	Yes	Ongoing Shareholder Outreach and Engagement	Yes
Limited Membership on Other Public Co Boards	Yes	Capital Structure with One Vote per Common Share	Yes
Board Committees are 100% Independent Directors	Yes	Succession Planning Process for Senior Management	Yes
Poison Pill	No	Regular Executive Sessions without Management	Yes

Independence

The Board of Directors has determined that a majority of the members of the Board should consist of "independent directors," determined in accordance with the applicable listing standards of the Nasdaq Global Select Market as in effect from time to time. Directors who are also Mercury employees are not considered to be independent for this purpose. For a non-employee director to be considered independent, he or she must not have any direct or indirect material relationship with Mercury. A material relationship is one which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In determining whether a material relationship exists, the Board considers, among other things, the circumstances of any direct compensation received by a director or a member of a director's immediate family from Mercury, any professional relationship between a director or a member of a director's immediate family and Mercury's outside auditors, any participation by a Mercury executive officer in the compensation decisions of other companies employing a director or a member of a director's immediate family as an executive officer, and commercial relationships between Mercury and other entities with which a director is affiliated (as an executive officer, partner, or controlling shareholder). The Board has determined that directors who serve on the Audit Committee must qualify as independent under the applicable rules of the Securities and Exchange Commission ("SEC"), which limit the types of compensation an Audit Committee member may receive directly or indirectly from Mercury and require that Audit Committee members not be "affiliated persons" of Mercury or its subsidiaries. In addition, the Board of Directors has determined that directors who serve on the Human Capital and Compensation Committee must satisfy the standards for being considered a "non-employee director" within the meaning of SEC Rule 16b-3.

Consistent with these considerations, the Board has determined that all of the members of the Board are independent directors, except Mr. Ballhaus, who is Mercury's President and Chief Executive Officer. There are no family relationships among any of our current directors, director nominees, and executive officers.

How are nominees for the Board selected?

Our Nominating and Governance Committee is responsible for identifying and recommending nominees for election to the Board. The Committee will consider nominees recommended by a shareholder if the shareholder submits the nomination in compliance with applicable requirements. With respect to the nominees for Class II director standing for election at the meeting, (i) Messrs. DeMuro and Krone were appointed to the Board in June 2023 and (ii) Mr. Ostfeld was appointed to the Board in July 2023 in connection with a voting agreement with JANA Partners. Mary Louise Krakauer and William K. O'Brien, Class II directors, informed the Board of Directors that they will retire from service on the Board at the end of their current terms effective at the 2023 Annual Meeting of Shareholders. We thank Mr. O'Brien for his service on the Board since 2008 and for his service as Chairman of the Board since 2021, and we thank Ms. Krakauer for her service on the Board since 2017 and for her service as Chairman of the Human Capital and Compensation Committee since 2020. As previously announced, effective with the 2023 Annual Meeting of Shareholders, William L. Ballhaus, the Company's President and Chief Executive Officer will assume the additional duties of Chairman of the Board, and Barry R. Nearhos will become the Company's Lead Independent Director. Mr. Ballhaus was appointed to the Board in June 2022, became our interim President and CEO in June 2023, and was named our President and CEO in August 2023. Mr. Nearhos was appointed to the Board in November 2018 and has been the Chairman of the Audit Committee since October 2020. Howard L. Lance will assume the duty of Chairman of the Human Capital and Compensation Committee.

When considering a potential candidate for membership on the Board, the Nominating and Governance Committee will consider any criteria it deems appropriate, including, among other things, the experience and qualifications of any particular candidate as well as such candidate's past or anticipated contributions to the Board and its committees. At a minimum, each nominee is expected to have high personal and professional integrity and demonstrated ability and judgment, and to be effective, with the other directors, in collectively serving the long-term interests of our shareholders. In addition to these minimum qualifications, when considering potential candidates for the Board, the Committee seeks to ensure that the Board is comprised of a majority of independent directors and that the committees of the Board are comprised entirely of independent directors. The Nominating and Governance Committee may also consider any other standards that it deems appropriate, including whether a potential candidate has direct experience in our industry and whether such candidate, if elected, would assist in achieving a mix of directors that represents a diversity of backgrounds and experiences. While we do not have a formal diversity policy, our Board Policy recognizes the benefits that diversity brings to the Board and states that the Board has a goal to reflect gender, ethnic, and racial diversity in its membership. The Committee generally will evaluate and consider all candidates recommended by our directors, officers, and shareholders. The Committee intends to consider shareholder recommendations for directors using the same criteria that would be used with potential nominees recommended by members of the Committee or others.

Shareholders who wish to submit director candidates for consideration should send such recommendations to our Secretary at our executive offices not less than, unless a lesser time period is required by applicable law, 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders or special meeting in lieu of an annual meeting. Such recommendations must include the information required by our by-laws as to each person whom the shareholder proposes to nominate for election as well as each shareholder providing the nomination. We may require any proposed nominee to furnish such other information as may reasonably be required by us to determine the eligibility of such proposed nominee to serve as a director. Shareholders must also submit any other information regarding the proposed director candidate that is required to be included in a proxy statement filed pursuant to SEC rules. See also the information contained elsewhere in this proxy statement under the heading "Shareholder Proposals for the 2024 Annual Meeting."

In addition to satisfying the requirements set forth in our by-laws, to comply with the SEC's universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than the Company's nominees must provide notice that sets forth the additional information required by Rule 14a-19 ("Rule 14a-19") under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), not less than 90 days nor more than 120 days prior to the first anniversary of the prior year's annual meeting.

Under Rule 14a-8 of the Exchange Act ("Rule 14a-8"), a shareholder who intends to present a proposal at an annual meeting of shareholders and who wishes the proposal to be included in the proxy materials for that meeting must submit the proposal in writing to us so that it is received by our Secretary at our executive offices not less than 120 calendar days before the date our proxy statement was released to shareholders in connection with the previous year's annual meeting. Any proposals received after such deadline will be considered untimely under Rule 14a-8. Please refer to Rule 14a-8 for the requirements that apply to these proposals.

Can I communicate with Mercury’s directors?

Yes. Shareholders who wish to communicate with the Board or with a particular director may send a letter to Mercury Systems, Inc., 50 Minuteman Road, Andover, Massachusetts 01810, attention: Secretary. The mailing envelope should contain

a clear notation that the enclosed letter is a "Shareholder-Board Communication" or "Shareholder-Director Communication." All such letters should clearly state whether the intended recipients are all members of the Board or certain specified individual directors. Our Secretary will make copies of all such letters and circulate them to the appropriate director or directors if they relate to important substantive matters and include suggestions or comments that our Secretary considers to be important for members of the Board of Directors to know. In general, communications relating to corporate governance and corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances, and duplicative communication.

What committees has the Board established?

The Board of Directors has standing Audit, Human Capital and Compensation, Nominating and Governance, M&A and Finance, and Government Relations Committees. As described above under the heading "Independence," all of the members of the Board committees are deemed to be independent directors. Each of our Board committees acts under a written charter, copies of which can be found on our website at www.mrcy.com on the "Investor Relations" page under "Corporate Governance."

Audit Committee

The Audit Committee assists the Board in its oversight of management's conduct of our accounting and financial reporting processes, including by providing oversight with respect to the financial reports and other financial information provided by our systems of internal accounting and financial controls, and the annual audit of our financial statements. The Audit Committee also reviews the qualifications, independence, and performance of our independent registered public accounting firm, pre-approves all audit and non-audit services provided by such firm and its fees, and discusses with management and our independent registered public accounting firm the quality and adequacy of our internal control over financial reporting. The Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of the work of our independent registered public accounting firm, which reports directly to the Audit Committee. The Audit Committee also is responsible for reviewing and approving related-person transactions in accordance with our Code of Business Conduct and Ethics and the Audit Committee charter.

Human Capital and Compensation Committee

The Human Capital and Compensation Committee is responsible for:

•setting the compensation of our executive officers;

•reviewing and approving employment agreements, consulting arrangements, severance or retirement arrangements, and change-in-control arrangements or provisions covering any of our current or former executive officers;

•overseeing the administration of our equity-based and other long-term incentive plans;

•reviewing the compensation and benefits for non-employee directors and making recommendations for any changes to our Board;

•overseeing the development and implementation of succession planning for our senior executives; and

•overseeing our human capital management practices, including our culture, talent recruitment, development, and retention, employee engagement, workplace safety, and diversity, equity, and inclusion.

All of the independent directors on the Board annually review and approve our CEO's corporate financial performance objectives, and evaluate the CEO's performance in light of those goals and objectives. Based on the foregoing, the Human Capital and Compensation Committee sets the CEO's compensation, including salary, target bonus, bonus and over-achievement payouts, and equity-based compensation, and any other special or supplemental benefits, which is then subject to ratification by a majority of the independent directors on our Board. Our CEO annually evaluates the contribution and performance of our other executive officers and provides input to the Human Capital and Compensation Committee, and the Committee sets their compensation. Our Senior Vice President, Chief Human Resources Officer and the Committee's independent compensation consultant also make recommendations to the Committee regarding compensation for our executives.

The Human Capital and Compensation Committee may delegate to the Chief Executive Officer, the Chief Financial Officer, the General Counsel, and the Chief Human Resources Officer the authority to grant equity awards under our 2018 Stock Incentive Plan to individuals who are not subject to the reporting and other requirements of Section 16 of the Exchange Act. The Committee may also delegate the administration of the health, benefit, and welfare plans within the scope of its oversight to our human resources and finance departments and to outside service providers, as appropriate.

The Human Capital and Compensation Committee is authorized to obtain advice and assistance from independent compensation consultants, outside legal counsel, and other advisors as it deems appropriate, at our expense. The Committee has engaged an outside compensation consultant to assist the Committee in applying our compensation philosophy for our executive officers and non-employee directors, analyzing current compensation conditions in the marketplace generally and among our peers specifically, and assessing the competitiveness and appropriateness of compensation levels for our executive officers. The Committee retained Mercer as its outside compensation consultant for fiscal 2023, a role which Mercer began in 2018. Following the results of the say-on-pay vote at the 2022 Annual Meeting, the Committee initiated a formal process to consider whether to retain a new independent compensation advisor. Effective as of January 2023, the Committee engaged Meridian Compensation Partners as its outside compensation consultant. Representatives of Meridian regularly attend Committee meetings, both with and without members of management present, and interact with members of our human resources department with respect to its assessment of the compensation for our executive officers.

The Human Capital and Compensation Committee's independent compensation consultant provides input to the Committee regarding compensation for non-employee directors. The Committee then recommends any changes in the compensation and benefits for non-employee directors to the full Board for its consideration and approval.

The Human Capital and Compensation Committee considered the services provided by Meridian, as well as informational responses provided by Meridian to the Committee on topics relevant to assessing Meridian's relationship with Mercury and our management team, and determined that such services do not compromise Meridian's independence as the Committee's independent compensation consultant.

Information regarding fees paid to Meridian can be found in the Compensation Discussion & Analysis section of this proxy statement under "Role of the Compensation Consultant".

Nominating and Governance Committee

The Nominating and Governance Committee assists the Board in identifying individuals qualified to become Board members, and recommends to the Board persons to be nominated for election as directors by the shareholders at the annual meeting of shareholders or by the Board to fill vacancies. The Committee has recommended the nominees for election at the 2023 Annual Meeting. The Committee oversees the process by which the Board and Committees each assesses its effectiveness as well as the individual director peer assessment process. The Committee reviews our Board of Directors Policy and reviews our environmental sustainability policies, strategies, and related disclosures and reports to the Board any recommendations for changes in the Company's governance of environmental risks and opportunities. The Committee is authorized to obtain advice and assistance from independent consultants, director search firms, outside counsel, and other advisors as it deems appropriate, at our expense.

M&A and Finance Committee

The M&A and Finance Committee assists the Board in reviewing and assessing M&A transactions. The Committee is comprised of at least three members, all independent directors, as appointed by the Board. The Committee also serves as the pricing committee for any of the Company's capital markets activities.

Government Relations Committee

The Government Relations Committee, consisting of three or more members as appointed by the Board, assists the Board with the following functions:

•identifying and evaluating global security, political, budgetary, regulatory, and other issues, trends, opportunities, and challenges that could impact our business activities and performance;

•making recommendations to continue to raise our visibility in the marketplace and awareness of our commercial business model, as well as our products and capabilities; and

•making recommendations concerning our government relations activities, including our interactions with the federal government on matters of impact to our business with the aim of enhancing our customer base.

In carrying out its duties and responsibilities, the Government Relations Committee has the authority to meet with and make inquiries of our employees as well as obtain advice and assistance from external advisors.

How often did the Board and Committees meet during fiscal 2023?

The Board of Directors met 14 times during fiscal 2023. The table below reports information about the membership of the committees as of August 25, 2023 and the number of committee meetings held during fiscal 2023:

Name

Audit
Committee(1)

Human Capital & Compensation
Committee

Nominating
& Governance
Committee

M&A and Finance
Committee

Government Relations Committee

Orlando P. Carvalho

Chair

Gerard J. DeMuro

Lisa S. Disbrow

Chair

Mary Louise Krakauer

Chair

Roger A. Krone

Howard L. Lance

Barry R. Nearhos

Chair

William K. O'Brien

Chair

Scott Ostfeld

Debora A. Plunkett

Number of Meetings During Fiscal 2023

(1) The Board has determined that each of Messrs. Nearhos, DeMuro, and O'Brien and Ms. Disbrow qualifies as an "audit committee financial expert" and that Ms. Plunkett qualifies as "financially literate" under SEC rules. The Board has further determined that each of Messrs. Nearhos, DeMuro, and O'Brien and Mses. Disbrow and Plunkett meet all applicable independence requirements under the listing standards of the Nasdaq Global Select Market and applicable SEC rules and regulations.

All of the directors attended at least 75% of the meetings of the Board of Directors and committees of the Board on which they served.

Our independent directors regularly meet in executive sessions outside the presence of management. The independent directors met six times during the last fiscal year in executive session without management present. All meetings, or portions of meetings, of the Board at which only independent directors were present were presided over by Mr. O'Brien, our Chairman of the Board.

How Does Mercury Approach Board Refreshment?

To garner new ideas and perspectives, and to respond to the ever-changing needs of our stakeholders, the Board actively seeks candidates representing a range of tenures, areas of expertise, industry experience, and backgrounds. In 2017, the Board added Lisa S. Disbrow and Mary Louise Krakauer, in 2018 the Board added Barry R. Nearhos, in 2020 the Board added Orlando P. Carvalho, in 2021 the Board added Debora A. Plunkett, in 2022 the Board added William L. Ballhaus and Howard L. Lance, and in 2023 the Board added Gerard J. DeMuro, Roger A. Krone, and Scott Ostfeld. Eight of the nine directors that will continue on the Board following the 2023 Annual Meeting were elected during the last five years. Mary Louise Krakauer and William K. O'Brien, both Class II directors, informed the Board of Directors that they will retire from service on the Board at the end of their current term effective at the 2023 Annual Meeting of Shareholders.

Does Mercury have a policy regarding director attendance at annual meetings of the shareholders?

Directors are encouraged to attend the annual meeting of shareholders, or special meeting in lieu thereof; however, we do not have a formal policy with respect to attendance at shareholder meetings. All of the directors then in office attended the 2022 Annual Meeting of Shareholders.

Does Mercury have stock ownership guidelines for directors?

Each non-employee director is expected to own or control, directly or indirectly, shares of the Company's common stock equal to five times the value of the annual director cash retainer within five years of first becoming a non-employee director. Each non-employee director is expected to retain such investment in the Company as long as he or she is a non-employee director. Exceptions to this stock ownership guideline may be approved from time to time by the Board as it deems

necessary to address individual circumstances. All of our non-employee directors are in compliance with the stock ownership guidelines.

Does Mercury have a Code of Business Conduct and Ethics?

Yes. We have adopted a Code of Business Conduct and Ethics applicable to our officers, directors, and employees. This code is posted on our website at www.mrcy.com on the "Investor Relations" page under "Corporate Governance." We intend to satisfy our disclosure requirements regarding any amendment to, or waiver of, a provision of our Code of Business Conduct and Ethics by disclosing such matters on our website.

Does Mercury have a Human Rights Policy?

Yes. We have adopted a Human Rights Policy applicable to our employees and our suppliers. Our Human Rights Policy is posted on our website at www.mrcy.com on the "Investor Relations" page under "Corporate Governance." This Policy goes beyond mere compliance with law. When differences arise between standards and legal requirements, the stricter standard applies, in compliance with applicable law. We also expect our employees and suppliers to conduct themselves in accordance with all other Mercury policies, including the Code of Business Conduct and Ethics.

Does Mercury have a Supplier Code of Conduct?

Yes. We have adopted a Supplier Code of Conduct. Our Supplier Code of Conduct is posted on our website at www.mrcy.com. Our Supplier Code establishes minimum expectations and requirements for suppliers, as well as their employees, subcontractors, and agents in connection with their business dealings with Mercury. We encourage suppliers to go beyond the principles outlined in the Supplier Code and to observe the highest international standards. If a matter is not expressly addressed in the Supplier Code, we expect suppliers to use good judgment and respect the spirit of the Supplier Code.

Does Mercury have a method for the anonymous reporting of accounting, legal, and ethical concerns?

Yes. Our Code of Business Conduct and Ethics, our Human Rights Policy, and our Supplier Code of Conduct each include a means for the anonymous reporting of any concerns about accounting, legal, and ethical matters. Any employee, supplier, customer, shareholder, or other interested party can submit a report via the following anonymous methods:

•by telephone voicemail at 866-277-5739; or

•by submitting a complaint via the internet at www.whistleblowerservices.com/mrcy.

Does Mercury have a written policy governing related-person transactions?

Yes. We have adopted a written policy which provides for the review and approval by the Audit Committee of transactions involving Mercury in which a related person is known to have a direct or indirect interest and that are required to be reported under Item 404(a) of Regulation S-K promulgated by the SEC. For purposes of this policy, a related person includes: (1) any of our directors, director nominees, or executive officers; (2) any known beneficial owner of more than 5% of any class of our voting securities; or (3) any immediate family member of any of the foregoing. In situations where it is impractical to wait until the next regularly scheduled meeting of the Audit Committee or to convene a special meeting of the Committee, the Chair of the Committee has been delegated authority to review and approve related-person transactions. Transactions subject to this policy may be pursued only if the Audit Committee (or the Chair of the Committee acting pursuant to delegated authority) determines in good faith that, based on all the facts and circumstances available, the transactions are in, or are not inconsistent with, the best interests of Mercury and our shareholders.

Does Mercury make corporate political contributions?

No, we do not use corporate funds for political contributions. If we were to use corporate funds for political activities, per our Code of Business Conduct and Ethics, any such contribution would require approval by the Board of Directors.

Does Mercury have a shareholder rights agreement (i.e. poison pill)?

No.

Does Mercury regularly engage with its shareholders?

Yes. Our executive officers and the Board believe that shareholder engagement is an important component of our governance practices. The Chairman of the Board and the Chair of the Human Capital and Compensation Committee, as well as members of management, engage with shareholders on a variety of matters, such as corporate governance, executive compensation, and sustainability and have been responsive to the feedback provided by shareholders. Our shareholder engagement program is a year-round process that includes an investor day, regular participation at investment conferences, and our engagement with shareholders on non-deal roadshows at which our executives regularly meet with shareholders.

How Does the Board of Directors Exercise Its Oversight of Risk?

Our Chief Executive Officer and senior management are principally responsible for risk identification, management, and mitigation. Our senior management engages in an enterprise risk management ("ERM") process each fiscal year. The process consists of an annual assessment of risks and an ongoing review of risk mitigation efforts and assessment of new risk developments. At regularly scheduled Board meetings, our Senior Director of Internal Audit reviews the key risks identified in the ERM process and management's plans for mitigating such risks. Our directors have the opportunity to evaluate such risks and mitigation plans, to ask questions of management regarding those risks and plans, and to offer their ideas and insights to management as to these and other perceived risks and the implementation of risk mitigation plans.

In addition to discussions at regular Board meetings, our Board of Directors administers its risk oversight responsibilities by delegating certain business and governance activities to the appropriate committees for more detailed consideration and evaluation. In performing this oversight function, each committee has full access to management, as well as the ability to engage advisors or other experts it deems necessary in the performance of its duties. The committees regularly report their risk oversight activities to our Board of Directors. The Audit Committee focuses on risks related to accounting, internal controls, financial and tax reporting, and related-party transactions; the Human Capital and Compensation Committee focuses on risks associated with our executive compensation policies and practices, executive succession planning, and human capital management practices and metrics; the Nominating and Governance Committee focuses on risks associated with non-compliance with SEC and Nasdaq requirements for director independence, the implementation of our corporate governance policies, and environmental sustainability policies, strategies, and disclosures; the M&A and Finance Committee focuses on risks related to our acquisition activities; and the Government Relations Committee focuses on risks to our business from governmental actions, including the defense budget and continuing budget resolutions.

How is the Leadership of the Board of Directors Structured and How Does this Leadership Structure Impact Risk Oversight?

Our Board Policy provides that the Chairman of the Board will be elected from among the independent directors, barring the Board's specific determination otherwise. If, in its judgment the Board determines that election of a non-independent Chairman would best serve the Company at a particular time, such a Chairman would be excluded from executive sessions of the independent directors. In such case, a Lead Independent Director would preside over executive sessions and would perform such other duties as might be determined from time to time by the Board.

The Board has determined that having a Chairman who is also our Chief Executive Officer is the most appropriate leadership structure for the Board of Directors at this time, and Mr. Ballhaus will take on the duties of Chairman in addition to his CEO role effective with the 2023 Annual Meeting of Shareholders, and Mr. Nearhos will become our Lead Independent Director at that time.

As discussed above, our Chief Executive Officer and senior management are principally responsible for risk identification, management, and mitigation through our ERM process. Our Chairman of the Board is responsible for providing leadership for the Board, including the Board's evaluation of management's ERM process, and the Lead Independent Director is responsible for developing and shaping Board meeting agendas, leading and facilitating discussions and deliberations with the independent directors, and reporting and acting as liaison to the independent directors.

The Board of Directors meets in executive session without management present at each quarterly Board meeting and the Audit Committee meets in executive session at most quarterly Committee meetings, as well as having regular executive sessions with our Senior Director of Internal Audit and our independent registered public accounting firm.

Does Mercury have a commitment to sustainability and provide information on its Environmental, Social, and Governance ("ESG") practices?

Please see the Executive Summary of this proxy statement as well as the Environmental, Social, and Governance section of our website, www.mrcy.com, under "Company" for detailed disclosures on our commitment to sustainability and ESG practices. Information contained on our website and social media channels does not constitute part of this proxy statement or our annual report on Form 10-K.

Does Mercury have a commitment to culture and values?

We are aware that the workforce required to grow our business and deliver creative solutions is rich in diversity of thought, experience, and culture. Our diversity and inclusion focus on building and maintaining the talent that will create cohesive and collaborative teams that drive innovation.

Our industry leadership is attributable to the spirit and commitment of our employees.

We are a destination employer for high performing, diverse, global talent. We strive to deliver a world-class employee experience in a fast paced, energetic, and innovative environment that values results, caring, and learning.

We are dedicated to providing a world class employee experience and maximizing the potential of our greatest asset — our people. We embrace growth and the opportunity it brings, with a focus on: a healthy, vibrant, high performance culture; organizational effectiveness; a robust talent pipeline; compensation that recognizes and rewards success; and lifelong learning and mentoring.

We are committed to making Mercury a great place to work, no matter where our employees are located. We offer a casual and enjoyable work environment and encourage employees to get involved. Our social committees at each site organize a range of engagement activities including: holiday celebrations, participation in community events such as blood drives and organized family-friendly events.

At Mercury, we believe in building strong communities both inside our Company and in the areas where we live and work. We are committed to our vision for strong communities, and we are taking action to achieve our goals. We strive to positively impact our local and global communities and understand that an important part of our success is giving back. As a community, we participate in charitable and educational initiatives around the world, donating time and contributing financially to community organizations focused on our country's youth and armed/veteran services. Additionally, our team members are involved in numerous community service and fundraising events throughout the year.

DIRECTOR COMPENSATION

The Human Capital and Compensation Committee performs an annual review of non-employee director compensation. Our director compensation philosophy is to provide our non-employee directors with competitive compensation. Our compensation philosophy is intended to offer compensation that attracts highly qualified non-employee directors and retain the leadership and skills necessary to build long-term shareholder value. Directors who are also our employees receive no additional compensation for serving on the Board of Directors.

Fiscal 2023

During fiscal 2023, our non-employee directors received an annual cash retainer of $65,000 and the following positions received additional cash retainers:


Independent Chairman of the Board						$45,000 per annum
Chairman of the Audit Committee						25,000 per annum
Chairman of the Human Capital and Compensation Committee						20,000 per annum
Chairman of the Nominating and Governance Committee						12,000 per annum
Chairman of the Government Relations Committee						12,000 per annum
Chairman of the M&A and Finance Committee						12,000 per annum

All of these retainers are paid in cash in quarterly installments. Directors are also reimbursed for their reasonable expenses incurred in connection with attendance at Board and committee meetings.

New non-employee directors are granted restricted stock awards in connection with their first election to the Board. These awards are granted by the Board of Directors and consist of shares of restricted stock for the number of shares of common stock equal to $225,000 divided by the average closing price of our common stock during the 30 calendar days prior to the date of grant. These awards vest as to 50% of the covered shares on each of the first two anniversaries of the date of grant.

Non-employee directors also receive annual restricted stock awards for the number of shares of common stock equal to $175,000 divided by the average closing price of our common stock during the 30 calendar days prior to the date of grant. These awards vest on the first anniversary of the date of grant.

Non-employee directors will not be eligible to receive an annual restricted stock award for the fiscal year in which they are first elected.

The compensation paid to the non-employee members of the Board of Directors with respect to fiscal 2023 was as follows:

Non-Employee Director Compensation


Name	Fees Earned		Stock Awards ($)(1)		Total
William L. Ballhaus (2)	$	65,000	$	190,967	$	255,967
James K. Bass (3)	32,500		—		32,500
Orlando P. Carvalho (4)	74,000		190,967		264,967
Michael A. Daniels (5)	38,500		—		38,500
Gerard J. DeMuro (6)	16,250		195,446		211,696
Lisa S. Disbrow (7)	77,000		190,967		267,967
Mary Louise Krakauer (8)	85,000		190,967		275,967
Roger A. Krone (9)	16,250		200,518		216,768
Howard L. Lance (10)	65,000		190,967		255,967
Barry R. Nearhos (11)	90,000		190,967		280,967
William K. O'Brien (12)	122,000		190,967		312,967
Debora A. Plunkett (13)	65,000		190,967		255,967

(1)This column represents the grant date fair value of restricted stock awards for fiscal 2023 in accordance with FASB ASC Topic 718. The grant date fair value of the restricted stock awards granted to non-employee directors in fiscal 2023 has

been calculated by multiplying the number of shares granted by the closing price of our common stock as reported on the Nasdaq Global Select Market on the date of grant.

(2)Mr. Ballhaus became our interim President and CEO on June 24, 2023 (fiscal 2023) and was appointed our President and CEO on August 15, 2023 (fiscal 2024). The compensation in the table above reflects his fees as an independent director prior to becoming an employee on June 24, 2023 and these fees are also reflected in the Summary Compensation Table as he did not receive any compensation for his seven days of interim service as President and CEO during fiscal 2023. His fees reflect four quarters as a non-employee director as well as the grant of 3,976 restricted shares on October 26, 2022 when the closing price per share was $48.03.

(3)Mr. Bass' service on our Board of Directors ended in October 2022 at our 2022 Annual Meeting of Shareholders. He did not receive a restricted stock award for fiscal 2023 and his fees reflect service on the Board during the first and second quarter of fiscal 2023.

(4)Mr. Carvalho served on our Board of Directors for all of fiscal 2023. His fees reflect four quarterly Board retainer fees plus additional fees for service as Chair of the M&A and Finance Committee for three quarters. He received a grant of 3,976 restricted shares on October 26, 2022 when the closing price per share was $48.03.

(5)Mr. Daniels' service on our Board of Directors ended in October 2022 at our 2022 Annual Meeting of Shareholders. He did not receive a restricted stock award for fiscal 2023 and his fees earned reflect service on the Board during the first and second quarter of fiscal 2023 as well as serving as the Chair of the M&A and Finance Committee during such period.

(6)Mr. DeMuro joined our Board of Directors in June 2023. His fees reflect one quarter as a non-employee director as well the grant of 5,605 restricted shares with a closing price of $34.87 on June 23, 2023.

(7)Ms. Disbrow served on our Board of Directors for all of fiscal 2023. Her fees reflect four quarterly Board retainer fees plus additional fees for service as Chair of the Government Relations Committee for four quarters. She received a grant of 3,976 restricted shares on October 26, 2022 when the closing price per share was $48.03.

(8)Ms. Krakauer served on our Board of Directors for all of fiscal 2023. Her fees reflect four quarterly Board retainer fees plus additional fees for service as Chair of the Human Capital and Compensation Committee for four quarters. She received a grant of 3,976 restricted shares on October 26, 2022 when the closing price per share was $48.03. Ms. Krakauer will retire from her service on the Board at the end of her current term effective at the 2023 Annual Meeting of Shareholders.

(9)Mr. Krone joined our Board of Directors in June 2023. His fees earned reflect one quarter as a non-employee director as well as the grant of 5,797 restricted shares with a closing price of $34.59 on June 30, 2023.

(10)Mr. Lance served on our Board of Directors for all of fiscal 2023. His fees reflect four quarterly Board retainer fees. He received a grant of 3,976 restricted shares on October 26, 2022 when the closing price per share was $48.03.

(11)Mr. Nearhos served on our Board of Directors for all of fiscal 2023. His fees reflect four quarterly Board retainer fees plus additional fees for service as Chair of the Audit Committee for four quarters. He received a grant of 3,976 restricted shares on October 26, 2022 when the closing price per share was $48.03.

(12)Mr. O'Brien served on our Board of Directors for all of fiscal 2023. His fees reflect four quarterly Board retainer fees plus additional fees for service as Chairman of the Board and Chair of the Nominating and Governance Committee for four quarters. He received a grant of 3,976 restricted shares on October 26, 2022 when the closing price per share was $48.03. Mr. O'Brien will retire from his service on the Board at the end of his current term effective at the 2023 Annual Meeting of Shareholders.

(13)Ms. Plunkett served on our Board of Directors for all of fiscal 2023. Her fees reflect four quarterly Board retainer fees. She received a grant of 3,976 restricted shares on October 26, 2022 when the closing price per share was $48.03.

The aggregate number of unvested restricted stock awards outstanding for each non-employee director at July 1, 2023 was as follows:


Name			Aggregate Unvested Stock Awards (# of shares) (1)
Orlando P. Carvalho			3,976
Gerard J. DeMuro			5,605
Lisa S. Disbrow			3,976
Mary Louise Krakauer			3,976
Roger A. Krone			5,796
Howard L. Lance			5,859
Barry R. Nearhos			3,976
William K. O'Brien			3,976
Debora A. Plunkett			6,238

(1) Mr. Ballhaus's unvested restricted stock awards for his prior service on the Board of Directors are disclosed in the Outstanding Equity Awards table for named executive officers since he became our interim President and Chief Executive Officer in June 2023 (fiscal 2023), and accordingly he did not quality as a non-employee director as of July 1, 2023.

Mr. Ostfeld joined the Board in July 2023 (fiscal 2024) and accordingly is not reflected in the director compensation tables for fiscal 2024.

Fiscal 2024

The Human Capital and Compensation Committee, with the assistance of the Committee's independent compensation consultant, performed its annual review of the Company's compensation for non-employee directors. Based on market data, including data for our peer group, the Committee recommended, and the Board of Directors approved, no changes to the compensation for non-employee directors for fiscal 2024, other than an annual cash retainer fee for the Lead Independent Director in the amount of $35,000.

EQUITY COMPENSATION PLANS

The following table sets forth information as of June 30, 2023 with respect to existing compensation plans under which our equity securities are authorized for issuance.


Plan Category	Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (1)		Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in the first column)
Equity compensation plans approved by shareholders (2)	—	(3)	$	—	3,680,408	(4)
Equity compensation plans not approved by shareholders	—		—		—
TOTAL	—		$	—	3,680,408

(1)Does not include outstanding unvested restricted stock awards.

(2)Consists of our 2018 Stock Incentive Plan, as amended and restated to date ("2018 Plan"), and our 1997 Employee Stock Purchase Plan, as amended and restated to date ("ESPP").

(3)Does not include purchase rights under the ESPP, as the purchase price and number of shares to be purchased is not determined until the end of the relevant purchase period.

(4)Includes 3,512,873 shares available for future issuance under the 2018 Plan and 167,535 shares available for future issuance under the ESPP.

PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION ("SAY-ON-PAY")

Pursuant to Section 14A of the Exchange Act, we provide our shareholders with the opportunity to vote to approve, on a nonbinding, advisory basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the compensation disclosure rules of the Securities and Exchange Commission.

As described in greater detail under the heading "Compensation Discussion and Analysis," we seek to closely align the interests of our named executive officers with the interests of our shareholders. Our compensation programs are designed to reward our named executive officers for the achievement of short-term and long-term strategic and operational goals, which should result in increased value for our shareholders, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking.

Required Vote

This vote is advisory, which means that the vote on executive compensation is not binding on us, our Board of Directors, or the Human Capital and Compensation Committee. The vote on this resolution is not intended to address any specific element of compensation, but rather relates to the overall compensation of our named executive officers, as described in this proxy statement in accordance with the compensation disclosure rules of the Securities and Exchange Commission. To the extent there is a significant vote against our named executive officer compensation as disclosed in this proxy statement, the Human Capital and Compensation Committee will evaluate whether any actions are necessary to address our shareholders' concerns. The Board has adopted a policy providing for annual say-on-pay advisory votes. We have included in this proxy statement a proposal regarding the frequency of the say-on-pay advisory vote ("say-on-frequency" vote) and the Board has recommended that the shareholders vote to approve an annual say-on-pay vote. Unless the Board modifies our policy, the next say-on-pay advisory vote will be held at our 2024 Annual Meeting of Shareholders and the next say-on-frequency advisory vote will be held at our 2029 Annual Meeting of Shareholders.

The affirmative vote of a majority of the votes properly cast is required to approve this Proposal 2.

Accordingly, we ask our shareholders to vote on the following resolution at the 2023 Annual Meeting:

"RESOLVED, that the Company's shareholders approve, on an advisory basis, the compensation of the named executive officers for fiscal 2023, as disclosed in the Company's Proxy Statement for the 2023 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table, and the other related tables and disclosure."

Recommendation

The Board of Directors recommends a vote FOR the approval of the compensation of our named executive officers, as disclosed in this proxy statement.

PROPOSAL 3: ADVISORY VOTE ON THE FREQUENCY OF HOLDING FUTURE SAY-ON-PAY VOTES

Pursuant to Section 14A of the Exchange Act, we provide our shareholders with the opportunity to vote, on a non-binding, advisory basis, for their preference as to how frequently to hold future say-on-pay votes.

Shareholders may indicate whether they would prefer that we conduct future say-on-pay votes once every one, two, or three years. Shareholders also may abstain from casting a vote on this proposal.

The Board of Directors has determined that an annual advisory vote on executive compensation will permit our shareholders to provide direct input on our executive compensation philosophy, policies, and practices as disclosed in the proxy statement each year, which is consistent with our efforts to engage in an ongoing dialogue with shareholders on executive compensation and corporate governance matters.

In accordance with Section 14A of the Exchange Act, the next say-on-frequency vote will be held at our 2029 Annual Meeting of Shareholders.

Required Vote

This vote is advisory, which means that the vote on executive compensation is not binding on the Company, our Board of Directors, or the Human Capital and Compensation Committee of the Board of Directors. The Company recognizes that shareholders may have different views as to the best approach for the Company, and therefore we look forward to hearing from our shareholders as to their preferences on the frequency of an advisory vote on executive compensation. The Board of Directors and the Human Capital and Compensation Committee will take into account the outcome of the vote; however, when considering the frequency of future say-on-pay votes, the Board of Directors may decide that it is in the best interests of our shareholders and the Company to hold future say-on-pay votes more or less frequently than the frequency receiving the most votes cast by our shareholders.

The proxy card provides shareholders with the opportunity to choose among four options (holding the vote every one, two, or three years, or abstain from voting) and, therefore, shareholders will not be voting to approve or disapprove the recommendation of the Board of Directors.

Recommendation

The Board of Directors recommends a vote for the option of "1 YEAR" as the preferred frequency for future say-on-pay votes.

PROPOSAL 4: APPROVAL OF AMENDED AND RESTATED 2018 STOCK INCENTIVE PLAN

In September 2023, our Board of Directors adopted, subject to the approval of our shareholders, our amended and restated 2018 Stock Incentive Plan (the "2018 Plan") to increase the number of shares available for issuance by 3,450,000 shares.

Summary of Changes

In order to be able to make anticipated grants, the Board has amended the 2018 Plan to increase the number of shares authorized for issuance under the 2018 Plan by an additional 3,450,000 shares. If the shareholders approve the proposed amendment and restatement of the 2018 Plan, the additional shares to be issued under the 2018 Plan will be authorized but unissued shares.

Expected Share Pool Duration

We believe the additional 3,450,000 shares requested for the plan, together with the shares available under the plan, should last for approximately two fiscal years depending on our organic growth, future M&A transactions, and changes in the price of our common stock.

Updated Share Information as of August 25, 2023, the Record Date

The information included in this proxy statement and our 2023 Annual Report is updated by the following information regarding all existing equity compensation plans as of August 25, 2023:


Total number of stock options outstanding(1)			934,000
Weighted-average exercise price of stock options outstanding ($/ share)			$ 45.00
Weighted-average remaining term of stock options outstanding (years)			4.5
Total number of full value awards outstanding (includes restricted stock, deferred stock, and performance stock awards ("PSAs"))(2)(3)			2,199,564
Total number of shares remaining available for future grant under the 2018 Plan(4)			521,232
Total number of shares of common stock outstanding as of the Record Date			59,301,176

(1)No stock appreciation rights were outstanding as of August 25, 2023.

(2)The number of shares included for outstanding PSAs assumes target performance is achieved thereunder.

(3)Includes 208,414 PSAs issued prior to fiscal 2024 and 244,983 PSAs issued during fiscal 2024. PSAs issued prior to fiscal 2024 and during fiscal 2024 can vest up to 300% and 225% of the target shares granted, respectively, depending on the performance achieved thereunder.

(4)The 2018 Plan is our only active employee equity incentive plan, and replaced our 2005 Stock Incentive Plan (as defined below). The number of shares remaining available for future grant under the 2018 Plan assumes target performance is achieved under outstanding PSAs.

Burn Rate

The table below sets forth the following information regarding the awards granted under the 2018 Plan: (i) the burn rate for each of the last three calendar years, and (ii) the average burn rate over the last three calendar years. The burn rate for each fiscal year has been calculated as (a) the sum of (1) the number of shares underlying time-based equity awards granted during the fiscal year; and (2) the number of shares earned under PSAs during the fiscal year, divided by (b) the weighted average number of shares of our Common Stock outstanding for the applicable year. No stock options or stock appreciation rights have been granted in the last three fiscal years.


Element	2023	2022	2021	Three-Year Average
Time-based equity awards granted (composed of restricted shares and deferred shares)	212,913	1,523,301	434,376	723,530
PSAs earned	105,698	172,901	155,863	144,821
Total full value awards	318,611	1,696,202	590,239	868,351
Weighted average number of shares of common stock outstanding as of applicable fiscal year end	56,554,185	55,527,051	55,069,676	55,716,971
Burn rate (based on time-based equity granted and PSAs earned)	0.56%	3.05%	1.07%	1.56%

As set forth above, we used a three-year average of 1.56% of our weighted average shares outstanding for RSAs granted and PSAs earned over the past three years under the 2018 Plan.

The table below sets forth details regarding performance-based awards granted and earned in each year for the last three fiscal years:


Performance-Based Awards						Number of Shares(1)
Outstanding/Non-Vested as of 7/3/2020						228,409
Granted						60,879
Vested(2)						80,588
Forfeited(3)						8,777
Outstanding/Non-Vested as of 7/2/2021						199,923
Granted						384,599
Vested(4)						86,681
Forfeited(3)						21,418
Outstanding/Non-Vested as of 7/1/2022						476,243
Granted						38,124
Vested(5)						59,146
Forfeited(3)						230,126
Outstanding/Non-Vested as of 06/30/2023						225,095

(1)The number of shares reflected in the table are based on the target number of shares underlying the performance-based awards. In the case of shares vested, the number of shares disclosed reflects the number of target shares that vested (up to 100% of the target shares). For further information regarding awards that vested above target, see Notes 2, 4 and 5 below. Awards vested exclude awards that have not fully vested by reason of an unsatisfied service condition, regardless of whether the performance periods of the awards have been completed.

(2)PSAs vested/earned in fiscal 2021 were tied to PSA awards granted in fiscal 2018 and achieved a 250% payout, resulting in the vesting of an additional 75,275 shares that are not reflected in the table.

(3)Represents PSAs forfeited due to terminations of employment.

(4)PSAs vested/earned in fiscal 2022 were tied to PSA awards granted in fiscal 2019 and achieved a 250% payout, resulting in the vesting of an additional 86,220 shares that are not reflected in the table.

(5)PSAs vested/earned in fiscal 2023 were tied to PSA awards granted in fiscal 2020 and achieved a 200% payout, resulting in the vesting of an additional 46,552 shares that are not reflected in the table.

Corporate Governance and Best Practice Highlights

The 2018 Plan and our corporate guidelines reflect best practices in equity compensation:

•the plan does not provide accelerated vesting of awards solely on account of a change in control (accelerated vesting is further conditioned upon a qualifying termination following a change in control or an acquiring company refusing to assume outstanding awards);

•the plan prohibits repricing of stock options or stock appreciation rights;

•the plans prohibits discounted grants of stock options or stock appreciation rights;

•awards granted under the plan are subject to forfeiture provisions;

•the plan does not allow for "liberal share counting" (that is, reuse of shares tendered, exchanged or withheld to cover withholding taxes or option exercise costs, or reuse of shares underlying an award of stock appreciation rights once such stock appreciation rights are exercised);

•the plan does not contain any "evergreen" provisions that automatically add shares to the plan reserve;

•the plan includes a fungible share ratio, whereby each grant of (i) a stock option or a stock appreciation right will be counted as an award of one share of common stock for each such share actually subject to the award and (ii) an award other than a stock option or a stock appreciation right will reduce the number of shares of common stock available for issuance under the plan by 2.0 shares of common stock for each such share actually subject to the award;

•the plan does not contain tax gross-ups;

•the plan prohibits payment of dividends or dividend equivalents on unvested awards;

•the plan contains limits on individual awards;

•the plan contains minimum vesting and performance periods;

•the plan is administered by a committee of independent directors;

•we regularly present the plan to shareholders for approval (the plan was last submitted for approval in 2022);

•we require executives and directors to comply with meaningful stock ownership guidelines; and

•we prohibit hedging and pledging of Company stock.

Summary of the Amended and Restated 2018 Plan

The following is a summary of the material terms of the 2018 Plan. This summary is subject to the specific provisions contained in the full text of the 2018 Plan, which is attached as Appendix A to this proxy statement.

Plan Administration. The Human Capital and Compensation Committee has full power to select, from among the individuals eligible for awards, the individuals to whom awards will be granted, to make any combination of awards to participants, and to determine the specific terms and conditions of each award, subject to the provisions of the 2018 Plan. The Human Capital and Compensation Committee may delegate to our CEO, our Chief Human Resources Officer, or any executive officer the authority to grant awards at fair market value to employees who are not subject to the reporting and other provisions of Section 16 of the Exchange Act.

Eligibility and Limitations on Grants. Persons eligible to participate in the 2018 Plan are those full or part-time officers, employees, non-employee directors, and other key persons (including consultants) of the Company and its subsidiaries as selected from time to time by the Human Capital and Compensation Committee. As of July 1, 2023, approximately 2,600 officers and employees and nine non-employee directors were eligible to participate in the 2018 Plan. The closing price per share of our common stock as reported by the Nasdaq Global Select Market was $34.97 on July 3, 2023, the first business day of fiscal 2024.

Shares Reserved for Issuance. Of the 7,862,000 shares of our common stock, par value $.01 per share, authorized for issuance under the 2018 Plan, there were only 521,232 shares remaining available for issuance as of August 25, 2023. If the proposed amendment to the plan is approved by shareholders, the aggregate number of shares reserved and available for issuance will be increased by 3,450,000 shares, and the total number of shares authorized for issuance under the 2018 Plan from its inception will be increased from 7,862,000 shares to 11,312,000 shares. With this change, the maximum number of shares of stock reserved and available for issuance under the 2018 Plan will be 11,312,000 shares, plus the number of shares of stock reserved and available for issuance under the Company's Amended and Restated 2005 Stock Incentive Plan (the "2005 Stock Incentive Plan") as of October 24, 2018, the date of shareholder approval of the original 2018 Plan. For purposes of this

limitation, the shares of stock underlying any awards that are forfeited, are canceled, expire or are terminated (other than by exercise) under (i) the 2018 Plan and (ii) from and after shareholder approval of the 2018 Plan, the 2005 Stock Incentive Plan, shall be added to the shares of stock available for issuance under the 2018 Plan. Shares tendered or held back upon exercise of an option or settlement of an award to cover the exercise price or tax withholding shall not be available for future issuance under the 2018 Plan. In addition, upon exercise of stock appreciation rights, the gross number of shares exercised shall be deducted from the total number of shares remaining available for issuance under the 2018 Plan. Also, shares purchased in the open market using proceeds received upon the exercise of a stock option shall not be available for future issuance under the 2018 Plan. The maximum award of stock options or stock appreciation rights granted to any one individual will not exceed 500,000 shares of common stock (subject to adjustment for stock splits and similar events) for any calendar year period.

Fungible Share Ratio. The grant of any award other than a stock option or a stock appreciation right will reduce the number of shares of common stock available for issuance under the 2018 Plan by 2.0 shares of common stock for each such share actually subject to the award. The grant of a stock option or a stock appreciation right will be deemed as an award of one share of common stock for each such share actually subject to the award.

Stock Options. The 2018 Plan permits the granting of (1) options to purchase common stock intended to qualify as incentive stock options under Section 422 of the Code and (2) options that do not so qualify. Options granted under the 2018 Plan will be non-qualified options if they fail to qualify as incentive options or exceed the annual limit on incentive stock options. Non-qualified options may be granted to any persons eligible to receive incentive options and to non-employee directors and key persons. The option exercise price of each option will be determined by the Human Capital and Compensation Committee but may not be less than 100% of the fair market value of the common stock on the date of grant. The 2018 Plan provides for 11,312,000 shares that can be granted in the form of incentive stock options. No dividends or dividend equivalents shall be paid on stock options.

The term of each option will be fixed by the Human Capital and Compensation Committee and may not exceed seven years from the date of grant. The Human Capital and Compensation Committee will determine at what time or times each option may be exercised. Options may be made exercisable in installments and the exercisability of options may be accelerated by the Human Capital and Compensation Committee. Options may be exercised in whole or in part with written notice to the Company.

Upon exercise of options, the option exercise price must be paid in full (1) in cash, by certified or bank check, or other instrument acceptable to the Human Capital and Compensation Committee, (2) by delivery (or attestation to the ownership) of shares of common stock that are beneficially owned by the optionee, (3) subject to applicable law, by a broker pursuant to irrevocable instructions to the broker from the optionee, or (4) by net exercise.

To qualify as incentive options, options must meet additional federal tax requirements, including a $100,000 limit on the value of shares subject to incentive options that first become exercisable by a participant in any one calendar year.

In the event stock options awarded to employees have a performance-based goal, the vesting period will be at least one year, and in the event any stock options awarded to employees have a time-based restriction, the vesting period will be at least three years, but vesting can occur incrementally over the three-year period. No portion of any stock option granted to employees may vest prior to the first anniversary of the grant date.

Stock Appreciation Rights. The Human Capital and Compensation Committee may award a stock appreciation right either as a freestanding award or in tandem with a stock option. The Committee may award stock appreciation rights subject to such conditions and restrictions as the Committee may determine, provided that (1) upon exercise of a stock appreciation right granted in tandem with an option, the applicable portion of any related option shall be surrendered, and (2) stock appreciation rights granted in tandem with options are exercisable at such time or times and to the extent that the related stock options are exercisable. The term of each stock appreciation right may not exceed seven years. No dividends or dividend equivalents shall be paid on stock appreciation rights.

In the event awards made to employees have a performance-based goal, the restriction period will be at least one year, and in the event any awards made to employees have a time-based restriction, the restriction period will be at least three years, but vesting can occur incrementally over the three-year period. No portion of any stock appreciation right granted to employees may vest prior to the first anniversary of the grant date.

Restricted Stock. The Human Capital and Compensation Committee may award shares of common stock to participants subject to such conditions and restrictions as the Committee may determine. These conditions and restrictions may include the achievement of certain performance goals and/or continued employment with the Company through a specified restricted period. However, in the event awards made to employees have a performance-based goal, the restriction period will be at least one year, and in the event any awards made to employees have a time-based restriction, the restriction period will be at least three years, but vesting can occur incrementally over the three-year period. No portion of any restricted stock award granted to employees may vest prior to the first anniversary of the grant date. Cash dividends and stock dividends, if any, with

respect to restricted stock shall be withheld by the Company for the grantee's account, and shall be subject to forfeiture to the same degree as the shares of restricted stock to which such dividends relate. Except as otherwise determined by the Committee, no interest will accrue or be paid on the amount of any cash dividends withheld.

Deferred Stock Awards. The Human Capital and Compensation Committee may award phantom stock units as deferred stock awards to participants. Deferred stock awards are ultimately payable in the form of shares of common stock and may be subject to such conditions and restrictions as the Committee may determine. These conditions and restrictions may include the achievement of certain performance goals and/or continued employment with the Company through a specified vesting period. However, in the event awards made to employees have a performance-based goal, the restriction period will be at least one year, and in the event any awards have a time-based restriction, the restriction period will be at least three years, but vesting can occur incrementally over the three-year period. No portion of any deferred stock award granted to employees may vest prior to the first anniversary of the grant date. In the Committee's sole discretion and subject to the participant's compliance with the procedures established by the Committee and requirements of Section 409A of the Code, it may permit a participant to make an advance election to receive a portion of his or her future cash compensation otherwise due in the form of a deferred stock award. During the deferral period, a grantee shall have no rights as a shareholder; provided, however, that the grantee may be credited with dividend equivalent rights with respect to the phantom stock units underlying his or her deferred stock award, subject to such terms and conditions as the Committee may determine, but shall not be entitled to dividends, if any, or dividend equivalents prior to settlement.

Performance-Based Awards. The 2018 Plan provides that the Human Capital and Compensation Committee may require that the vesting of awards be conditioned on the satisfaction of one or more of the performance criteria.

Detrimental Activity. The Human Capital and Compensation Committee may cancel, rescind, suspend, or otherwise limit any award to a participant if the participant engages in detrimental activities, including rendering services to a competitor of the Company, disclosing confidential information without permission, refusing to assign inventions to the Company, soliciting employees or customers of the Company, engaging in an activity that results in a termination for cause, materially violating any internal policies of the Company, or being convicted of, or pleading guilty to, a crime.

Tax Withholding. Participants in the 2018 Plan are responsible for the payment of any federal, state, or local taxes that we are required by law to withhold upon any option exercise or vesting of other awards. Subject to approval by the Human Capital and Compensation Committee, depending on the withholding method, a grantee may elect to have such grantee’s tax withholding obligation satisfied at the minimum or other applicable withholding rate in the grantee’s applicable jurisdiction, including maximum applicable rates that may be utilized without creating adverse accounting treatment under Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor pronouncement thereto) and permitted under applicable withholding rules promulgated by the Internal Revenue Service or another applicable governmental entity, in whole or in part, by (i) authorizing the Company to withhold from shares of stock to be issued pursuant to any award a number of shares with an aggregate fair market value (as of the date the withholding is effected) that would satisfy such withholding amount, or (ii) transferring to the Company shares of stock owned by the grantee with an aggregate fair market value (as of the date the withholding is effected) that would satisfy such withholding amount.

Change of Control Provisions. The 2018 Plan provides that, if there is a change in control of the Company that is approved by the Board of Directors, if within six months of the consummation of the change of control, the grantee’s employment is involuntarily terminated by us for reasons other than for "cause" or the grantee resigns for "good reason", 100% of such grantee’s unvested awards will become vested and immediately exercisable. If, in connection with the change of control, awards granted under the 2018 Plan are cancelled or otherwise terminated upon consummation of the change of control, then instead of accelerated vesting, the grantee will receive a cash payment for 100% of the value of his or her unvested awards (determined based on the price of our common stock at the time of consummation of the change of control). The foregoing is conditioned on the grantee’s execution of an effective release of claims if the value of the accelerated vesting or cash payment exceeds $25,000.

If there is a change of control that is not approved by the Board of Directors, all of the unvested awards under the 2018 Plan (regardless of the grant date) will become vested and immediately exercisable upon the change of control. Further, upon any change of control all outstanding awards held by non-employee directors will automatically become fully vested.

Amendments and Termination. The Board may at any time amend or discontinue the 2018 Plan, and the Human Capital and Compensation Committee may at any time amend or cancel any outstanding award for the purpose of satisfying changes in the law or for any other lawful purpose. However, no such action may adversely affect any rights under any outstanding award without the holder's consent. Any amendments that materially change the terms of the 2018 Plan, including any amendments that increase the number of shares reserved for issuance under the 2018 Plan, expand the types of awards available under the 2018 Plan, materially expand the eligibility to participate in the 2018 Plan, materially extend the term of the 2018 Plan, or materially change the method of determining the fair market value of common stock, will be subject to approval by shareholders. Amendments shall also be subject to approval by our shareholders if and to the extent determined by the

Human Capital and Compensation Committee to be required by the Code to preserve the qualified status of incentive options. In addition, except in connection with a reorganization or other similar change in the capital stock of the Company or a merger or other transaction, without prior shareholder approval, the Committee may not reduce the exercise price of an outstanding stock option or stock appreciation right or effect repricing of an outstanding stock option or stock appreciation right through cancellation or regrants.

No Repricing of Awards Without Stockholder Approval. Notwithstanding any other provision of the 2018 Plan, the repricing of awards shall not be permitted without stockholder approval. For this purpose, a "repricing" means any of the following (or any other action that has the same effect as any of the following): (1) changing the terms of an award to lower its exercise or base price (other than on account of capital adjustments resulting from share splits, etc.); (2) any other action that is treated as a repricing under GAAP; and (3) repurchasing for cash or canceling an award in exchange for another award at a time when its exercise or base price is greater than the fair market value of the underlying share of stock, unless the cancellation and exchange occurs in connection with a capital adjustment event.

Grantees Outside of the United States. The Human Capital and Compensation Committee may modify the terms of any award under the 2018 Plan made to or held by a grantee who is then a resident, or is primarily employed or providing services, outside of the United States in any manner deemed by the Committee to be necessary or appropriate in order that such award shall conform to laws, regulations, and customs of the country in which the grantee is then a resident or primarily employed or providing services, or so that the value and other benefits of the award to the grantee, as affected by non–U.S. tax laws and other restrictions applicable as a result of the grantee's residence, employment, or providing services abroad, shall be comparable to the value of such award to a grantee who is a resident, or is primarily employed or providing services, in the United States. An award may be modified in a manner that is inconsistent with the express terms of the 2018 Plan, so long as such modifications will not contravene any applicable law or regulation or result in actual liability under Section 16(b) of the Exchange Act for the grantee whose award is modified. Additionally, the Committee may adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the 2018 Plan by eligible persons who are non–U.S. nationals or are primarily employed or providing services outside the United States.

Data Privacy. As a condition of receipt of any award, each grantee explicitly and unambiguously consents to the collection, use, and transfer, in electronic or other form, of personal data by and among, as applicable, the Company and its affiliates for the exclusive purpose of implementing, administering, and managing the 2018 Plan and awards. The Company and its affiliates may hold certain personal information about a grantee, including, but not limited to, the grantee’s name, home address, telephone number, date of birth, social security or insurance number or other identification number, salary, nationality, job title(s), information regarding any securities of the Company or any of its affiliates, and details of all Awards (the "Data"). In addition to transferring the Data amongst themselves as necessary for the purpose of implementation, administration, and management of the 2018 Plan and awards, the Company and its affiliates may each transfer the Data to any third parties assisting the Company in the implementation, administration, and management of the 2018 Plan and awards. Recipients of the Data may be located in the grantee's country or elsewhere, and the grantee's country and any given recipient's country may have different data privacy laws and protections. The Company may cancel the grantee’s eligibility to participate in the 2018 Plan, and in the Committee's discretion, the grantee may forfeit any outstanding awards if the grantee refuses or withdraws the consents described above.

U.S. Federal Income Tax Considerations

Awards of restricted stock under the 2018 Plan generally are not subject to federal income tax when awarded, unless the participant properly elects to accelerate the tax recognition. Restricted stock is generally subject to ordinary income tax at the time the restrictions lapse. We are entitled to a corresponding deduction at the time the participant recognizes taxable income on the restricted stock.

Stock options under the 2018 Plan may either be granted as incentive stock options, which are intended to comply with the requirements of Internal Revenue Code Section 422 or as non-qualified stock options. Generally, no federal income tax is payable by the recipient upon the grant of an incentive stock option and no deduction is taken by us. If certain holding periods are met, the exercise of an incentive stock option does not result in taxation to the recipient; rather, the recipient is taxed only at the time of sale. If the shares have been held for at least one year after the date of exercise and at least two years from the date of grant of the option, the recipient will be taxed on any appreciation in excess of the exercise price as long-term capital gains. In that event, we are not entitled to a deduction for the amount of the capital gains. Under current tax laws, if a recipient exercises a non-qualified stock option, the recipient will be taxed on the difference between the fair market value of the stock on the exercise date and the exercise price and, thereafter, the recipient would receive capital gains on any appreciation in stock value after the exercise date, depending upon the length of time the recipient held the stock after exercise. When the option is exercised, we will be entitled to a corresponding tax deduction.

New Plan Benefits

It is not possible to state the persons who will receive options or awards under the 2018 Plan in the future or the amount of options or awards that will be granted under the 2018 Plan. The following table provides information with respect to the value of annual long-term incentive ("LTI") awards for fiscal 2023.


	Restricted Stock
Current Employees:	Dollar Value(1)	Number of Shares(2)
William L. Ballhaus(3)	$ 190,967	3,976
Michelle M. McCarthy	341,140	6,596
Christine F. Harbison	1,468,650	30,344
James M. Stevison	—	—
Charles R. Wells, IV	—	—

Former Employees:
Mark Aslett	—	—
Michael D. Ruppert	—	—

Totals:
All named executive officers as a group	2,000,757	40,916
All non-employee directors as a group	1,731,166	39,234
Employees as a group (excluding named executive officers)	8,249,491	170,923

(1)Reflects the dollar value of all grants awarded in fiscal 2023.

(2)Reflects the dollar value set forth in the table divided by the closing price of our common stock on the date of grant.

(3)Reflects the restricted stock award that Mr. Ballhaus received for his service as a non-employee director prior to him becoming interim President and CEO on June 24, 2023.

Required Vote

Approval of the amended and restated 2018 Plan requires the affirmative FOR vote of a majority of the votes cast on the proposal. Unless marked to the contrary, proxies received will be voted FOR approval of the amended and restated 2018 Plan.

Recommendation

The Board of Directors recommends a vote FOR the amendment and restatement of the 2018 Plan.

PROPOSAL 5: RATIFICATION OF APPOINTMENT OF

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of the Board of Directors has appointed KPMG LLP as our independent registered public accounting firm for the fiscal year ending June 28, 2024. We are asking shareholders to ratify this appointment. Although ratification by shareholders is not required by law or by our by-laws, the Audit Committee believes that submission of its selection to shareholders is a matter of good corporate governance. Even if the selection is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time if the Audit Committee believes that such a change would be in the best interests of Mercury and our shareholders. If our shareholders do not ratify the selection of KPMG, the Audit Committee will take that fact into consideration, together with such other factors it deems relevant, in determining its next selection of an independent registered public accounting firm.

Representatives of KPMG will attend the 2023 Annual Meeting, where they will have the opportunity to make a statement if they wish to do so and will be available to answer appropriate questions from shareholders.

Required Vote

Approval of the ratification of the appointment of KPMG as our independent registered public accounting firm for fiscal 2024 requires the affirmative FOR vote of a majority of the votes cast on the proposal. Unless marked to the contrary, proxies received will be voted FOR approval of the ratification of the appointment.

Recommendation

The Board of Directors recommends a vote FOR the ratification of the appointment of KPMG as our independent registered public accounting firm for fiscal 2024.

VOTING SECURITIES

Who owns more than 5% of our stock?

On August 25, 2023, the record date, there were 59,301,176 shares of our common stock outstanding. On that date, to our knowledge, there were four shareholders who owned beneficially more than 5% of our common stock. The table below contains information, as of the dates noted below, regarding the beneficial ownership of these persons or entities. The "Percent of Class" was calculated using the number of shares of our common stock outstanding as of August 25, 2023.


Name of Beneficial Owner	Number of Shares Beneficially Owned	Percent of Class
BlackRock, Inc. (1)	5,878,104	9.9%
William Blair Investment Management, LLC (2)	5,205,968	8.8
The Vanguard Group, Inc. (3)	5,117,078	8.6
JANA Partners LLC (4)	4,711,386	7.9

(1)Based on a Schedule 13G/A filed by Black Rock, Inc. ("Black Rock") with the SEC on August 8, 2023, reporting beneficial ownership as of July 31, 2023. In such Schedule 13G/A, Black Rock reported that it had sole voting power of 5,699,427 shares of our common stock, shared voting power of 0 shares of our common stock, sole dispositive power of 5,878,104 shares of our common stock, and shared dispositive power of 0 shares of our common stock. The reporting entity's address is 50 Hudson Yards, New York, New York 10001.

(2)Based on a Schedule 13G/A filed by William Blair Investment Management, LLC ("William Blair") with the SEC on February 9, 2023, reporting beneficial ownership as of December 31, 2022. In such Schedule 13G/A William Blair reported that it had sole voting power of 4,511,914 shares of our common stock, shared voting power of 0 shares of our common stock, sole dispositive power of 5,205,968 shares of our common stock, and shared dispositive power of 0 shares of our common stock. Following the August 25, 2023 record date for our 2023 Annual Meeting, William Blair filed a Schedule 13G/A on September 6, 2023 reporting beneficial ownership of 6,740,439 shares of our common stock as of August 31, 2023. The reporting entity's address is 150 North Riverside Plaza, Chicago, IL 60606.

(3)Based on a Schedule 13G/A filed by Vanguard Group, Inc. ("Vanguard") with the SEC on February 9, 2023, reporting beneficial ownership as of December 30, 2022. In such Schedule 13G/A, Vanguard reported that it had sole voting power of 0 shares of our common stock, shared voting power of 17,325 shares of our common stock, sole dispositive power of 5,050,841 shares of our common stock, and shared dispositive power of 66,237 shares of our common stock. The reporting entity's address is 100 Vanguard Boulevard, Malvern, PA 19355.

(4)Based on a Form 4 filed by JANA Partners LLC with the SEC on August 22, 2023, reporting beneficial ownership as of August 18, 2023. The reporting entity's address is 767 Fifth Avenue, 8th Floor, New York, New York 10153.

How much stock does each of Mercury’s directors and executive officers own?

The following information is furnished as of August 25, 2023, the record date, with respect to common stock beneficially owned by: (1) our directors and director nominees (including our CEO); (2) our CFO and the three most highly compensated executive officers other than the CEO and the CFO; and (3) all directors and executive officers as a group. Unless otherwise indicated, the individuals named below held sole voting and investment power over the shares listed. The address for each director and executive officer is c/o Mercury Systems, Inc., 50 Minuteman Road, Andover, Massachusetts 01810.

Number of Shares Beneficially Owned (1)

Percent of Class (1)

William L. Ballhaus (2)

291,999

Orlando P. Carvalho (3)

12,572

Gerard J. DeMuro (4)

5,605

Lisa S. Disbrow (5)

19,360

Mary Louise Krakauer (6)

19,360

Roger A. Krone (7)

20,797

Howard L. Lance (8)

21,993

Barry R. Nearhos (9)

15,989

William K. O'Brien (10)

67,091

Scott Ostfeld (11)

—

Debora A. Plunkett (12)

8,500

David E. Farnsworth (13)

123,051

Christine F. Harbison (14)

52,462

James M. Stevison (15)

88,490

Charles R. Wells, IV (16)

92,217

All directors and executive officers as a group (17 persons) (17)

1,043,919

1.8

* Less than 1.0%.

(1)The number and percent of the shares of common stock with respect to each beneficial owner are calculated by assuming that all shares which may be acquired by such person within 60 days of August 25, 2023 are outstanding.

(2)Includes (a) 20,191 shares owned by Mr. Ballhaus individually; (b) 26,683 shares owned by Mr. Ballhaus jointly with his spouse; and (c) 245,125 restricted shares awarded to Mr. Ballhaus under our stock-based plans (as to which Mr. Ballhaus has sole voting power, but which are subject to restrictions on transfer). Excludes 934,000 shares underlying stock options which are not exercisable within 60 days of August 25, 2023.

(3)Includes (a) 8,596 shares owned by Mr. Carvalho individually; and (b) 3,976 restricted shares awarded to Mr. Carvalho under our stock-based plans (as to which Mr. Carvalho has sole voting power, but which are subject to restrictions on transfer).

(4)Includes 5,605 restricted shares awarded to Mr. DeMuro under our stock-based plans (as to which Mr. DeMuro has sole voting power, but which are subject to restrictions on transfer).

(5)Includes (a) 15,384 shares owned by Ms. Disbrow individually; and (b) 3,976 restricted shares awarded to Ms. Disbrow under our stock-based plans (as to which Ms. Disbrow has sole voting power, but which are subject to restrictions on transfer).

(6)Includes (a) 15,384 shares owned by Ms. Krakauer individually; and (b) 3,976 restricted shares awarded to Ms. Krakauer under our stock-based plans (as to which Ms. Krakauer has sole voting power, but which are subject to restrictions on transfer).

(7)Includes (a) 15,000 shares owned by family trusts controlled by Mr. Krone; and (b) 5,797 restricted shares awarded to Mr. Krone under our stock-based plans (as to which Mr. Krone has sole voting power, but which are subject to restrictions on transfer).

(8)Includes (a) 6,884 shares owned by Mr. Lance individually; (b) 9,250 shares owned by family trusts controlled by Mr. Lance; and (c) 5,859 restricted shares awarded to Mr. Lance under our stock-based plans (as to which Mr. Lance has sole voting power, but which are subject to restrictions on transfer).

(9)Includes (a) 12,013 shares owned by Mr. Nearhos individually; and (b) 3,976 restricted shares awarded to Mr. Nearhos under our stock-based plans (as to which Mr. Nearhos has sole voting power, but which are subject to restrictions on transfer).

(10)Includes (a) 9,124 shares owned by Mr. O'Brien individually; (b) 53,991 shares owned by family trusts controlled by Mr. O’Brien; and (c) 3,976 restricted shares awarded to Mr. O’Brien under our stock-based plans (as to which Mr. O’Brien has sole voting power, but which are subject to restrictions on transfer).

(11)Mr. Ostfeld assigns all of his restricted shares that he receives as a director to JANA Partners, LLC ("JANA"). JANA may be deemed to be a director by deputization by virtue of the fact that Mr. Ostfeld currently serves on our Board of Directors. JANA's common stock ownership is included within the table above titled "Who owns more than 5% of our common stock?"

(12)Includes (a) 2,262 shares owned by Ms. Plunkett individually; and (b) 6,238 restricted shares awarded to Ms. Plunkett under our stock-based plans (as to which Ms. Plunkett has sole voting power, but which are subject to restrictions on transfer).

(13)Includes 123,051 restricted shares awarded to Mr. Farnsworth under our stock-based plans (as to which Mr. Farnsworth has sole voting power, but which are subject to restrictions on transfer).

(14)Includes (a) 52,220 restricted shares awarded to Ms. Harbison under our stock-based plans (as to which Ms. Harbison has sole voting power, but which are subject to restrictions on transfer); and (b) 242 shares owned indirectly by Ms. Harbison through the Company stock fund in our 401(k) plan.

(15)Includes (a) 7,198 shares owned by Mr. Stevison individually; (b) 80,829 restricted shares awarded to Mr. Stevison under our stock-based plans (as to which Mr. Stevison has sole voting power, but which are subject to restrictions on transfer); and (b) 463 shares owned indirectly by Mr. Stevison through the Company stock fund in our 401(k) plan.

(16)Includes (a) 10,877 shares owned by Mr. Wells individually; (b) 80,886 restricted shares awarded to Mr. Wells under our stock-based plans (as to which Mr. Wells has sole voting power, but which are subject to restrictions on transfer); and (c) 454 shares owned indirectly by Mr. Wells through the Company stock fund in our 401(k) plan.

(17)Includes (a) 293,761 shares owned by directors and executive officers individually or by family trusts controlled by directors individually; (b) 748,067 restricted shares awarded to the directors and executive officers under our stock-based plans (as to which each has sole voting power, but which are subject to restrictions on transfer); and (c) 2,091 shares owned indirectly by executive officers through the Company stock fund in our 401(k) plan. This group includes, in addition to those individuals named in the table, Messrs. Cambria and Couture.

EXECUTIVE OFFICERS

Who are Mercury’s executive officers?

The following persons are our executive officers as of August 25, 2023:

Name

Age

Position

William L. Ballhaus

President and Chief Executive Officer

Christopher C. Cambria

Executive Vice President, General Counsel, and Secretary

Allen Couture

Executive Vice President, Execution Excellence

David E. Farnsworth

Executive Vice President, Chief Financial Officer, and Treasurer

Christine F. Harbison

Executive Vice President and Chief Growth Officer

James M. Stevison

Executive Vice President and President of Mission Systems

Charles R. Wells, IV

Executive Vice President and President of Microelectronics

Our executive officers are appointed to office by the Board of Directors at the first board meeting following the 2023 Annual Meeting of Shareholders or at other board meetings as appropriate, and hold office until the first board meeting following the next Annual Meeting of Shareholders and until a successor is chosen, subject to prior death, resignation or removal.

Information regarding our executive officers as of the date of filing of this proxy statement is presented below.

https://cdn.kscope.io/0d4af541ec63b6bb816a2685ec843c07-Ballhaus_BW_2inch.jpg

William L. Ballhaus

William L. Ballhaus joined Mercury's Board of Directors as a non-employee director in June 2022, was appointed interim President and Chief Executive Officer on June 24, 2023, and was appointed President and CEO effective August 15, 2023. As previously announced, Mr. Ballhaus will become the Company's Chairman of the Board effective with the 2023 Annual Meeting of Shareholders. Mr. Ballhaus has significant experience in the aerospace, defense, and technology industries, including multiple CEO roles, as well as experience in operational transformations and delivering strong results. He previously served as Chairman and CEO of Blackboard, Inc., a leading EdTech company, from 2016 until its merger with Anthology in 2021. Prior to that, he served as CEO and President of SRA International, Inc., a provider of information technology services, from 2011 until the creation of CSRA Inc. from SRA International Inc.'s and CSC's U.S. public sector business. Before that, Mr. Ballhaus served as CEO and President of government contractor DynCorp International from 2008 to 2010. Mr. Ballhaus has also held senior leadership positions at BAE Systems, Boeing, and Hughes, where he led global government and commercial technology businesses particularly focused on software and IT.

https://cdn.kscope.io/0d4af541ec63b6bb816a2685ec843c07-mrcy-mgmt-cambria-chris-thmb.jpg

Christopher C. Cambria

Christopher C. Cambria joined Mercury in 2016 as Senior Vice President, General Counsel, and Secretary and was appointed Executive Vice President, General Counsel, and Secretary in 2017. Prior to joining Mercury, he was Vice President, General Counsel, and Secretary of Aerojet Rocketdyne Holdings, Inc. from 2012 to 2016 and Vice President, General Counsel from 2011 to 2012. He was with L-3 Communications Holdings, Inc. from 1997 through 2009 serving as Senior Vice President and Senior Counsel, Mergers and Acquisitions from 2006 to 2009, Senior Vice President, Secretary and General Counsel from 2001 to 2006, and Vice President, General Counsel and Secretary from 1997 to 2001. Prior to L-3, Mr. Cambria was an Associate with Fried, Frank, Harris, Shriver & Jacobson and Cravath, Swaine & Moore.

https://cdn.kscope.io/0d4af541ec63b6bb816a2685ec843c07-Couture_BW_2inch.jpg

Allen Couture

Allen Couture joined Mercury in October 2022 as Senior Vice President, Execution Excellence and became Executive Vice President, Execution Excellence in July 2023. Mr. Couture joined Mercury from Raytheon Technologies, where he spent 10 years in leadership roles, most recently serving as Vice President of Operations & Security at Raytheon Missiles & Defense. Earlier in his career, Mr. Couture held senior manufacturing and operations roles with Hawker Beechcraft, including Vice President of Program Management and Vice President of Engineering & Product Development. He spent 15 years in the Canadian Armed Forces Infantry Reserves.

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David E. Farnsworth

David E. Farnsworth joined Mercury in July 2023 as Executive Vice President, Chief Financial Officer, and Treasurer. Mr. Farnsworth was the Chief Financial Officer of HawkEye 360, a radio frequency data analytics company from 2020 to 2023. Before joining HawkEye 360, Mr. Farnsworth was Vice President and Chief Financial Officer for Integrated Defense Systems of Raytheon Company from 2018 to 2020. Before that, he was CFO for the Intelligence, Information, and Services segment of Raytheon.

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Christine F. Harbison

Christine F. Harbison joined Mercury in March 2023 as Executive Vice President, Chief Growth Officer. Ms. Harbison joined Mercury from Northrop Grumman's Defense Systems sector, where she served as Vice President and General Manager of the Combat Systems and Mission Readiness division from 2021 to 2023. Prior to that, she was Vice President of Northrop's C4MB business from 2020 to 2021 and Vice President of Northrop's Advanced Ground Sensors business from 2018 to 2019. Prior to her joining Northrop, Ms. Harbison held roles of increasing importance at Raytheon Company.

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James M. Stevison

James M. Stevison joined Mercury in October 2021 as Executive Vice President and Chief Growth Officer and became Executive Vice President and President of Mercury's Mission Systems Division in October 2022. Dr. Stevison has more than 18 years of global experience in the aerospace and defense industry including technology development, operations management, mergers, acquisitions, and business growth. Prior to joining Mercury, he was Vice President of Strategy for Raytheon Missiles & Defense from 2020 to 2021. He also served as Vice President and General Manager of Strategic and Naval Systems at Raytheon Missiles Systems from 2019 to 2020 as well as Vice President and General Manager for Air and Missile Defense Systems at Raytheon Missile Systems from 2015 to 2019. Prior to that, he was the senior director of the SM-3® program, where he was responsible for all variants of the SM-3® missile portfolio, both domestically and internationally. Dr. Stevison has previously held senior leadership roles at Lockheed Martin and at Miltec Systems, a Ducommun Company. A U.S. Army veteran, Dr. Stevison retired from the Army in 2005, following an accomplished 20-year military career that included leadership roles with the Missile Defense Agency and the U.S. Army Aviation and Missile Command.

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Charles R. Wells, IV

Charles R. Wells, IV joined Mercury in November 2021 as its Executive Vice President and President of Mercury's Microelectronics Division. Mr. Wells has more than 25 years' experience across multiple disciplines including engineering, business development, program management, and executive management. Previously, he served as Vice President and General Manager for the Unmanned & Integrated Solutions Business Unit of Teledyne FLIR with full P&L responsibility while ensuring high levels of product quality and customer satisfaction. Earlier in his career, he worked as a Department of Defense civilian supporting the development and fielding of world-wide C4ISR networks and information systems. He also held positions in Northrop Grumman and ICX Technologies and served as a private consultant for large aerospace and defense companies.

COMPENSATION DISCUSSION AND ANALYSIS

LETTER FROM THE HUMAN CAPITAL AND COMPENSATION COMMITTEE

Dear Fellow Shareholders,

The Human Capital and Compensation Committee of Mercury's Board of Directors is committed to aligning our executive compensation programs with our strategy to create long-term shareholder value. We have listened to shareholder feedback and have implemented changes to our executive compensation programs to better align with market practices and shareholder returns. Following low support for our 2022 Say-on-Pay vote, we took decisive action to understand and respond to shareholder feedback. Over the past two years, we added two new Committee members who bring fresh perspectives to our work, including Howard L. Lance, who has been appointed as our new Committee Chair effective on the date of the 2023 Annual Meeting. We are confident that the changes made by the Committee to our executive compensation programs for fiscal 2023 and 2024 address shareholder concerns and support our business objectives.

Deliberate Engagement and Responsiveness to Address Shareholder Concerns

The Committee was disappointed in the outcome of the 2022 Say-on-Pay vote, and we have been focused over the last year on understanding and addressing the underlying concerns and perspectives of our shareholders. In the months leading up to and following the 2022 Say-on-Pay vote, the Committee executed an expanded engagement program designed specifically around executive compensation. We reached out to, and had meetings with, shareholders representing approximately 74% and 56%, respectively, of our outstanding shares during 2022, and 71% and 36%, respectively, of our outstanding shares prior to the filing of this proxy statement. Substantially all of these meetings were led by William K. O’Brien, Chair of the Board, Mary Louise (ML) Krakauer, current Chair of our Committee, and/or Howard L. Lance, incoming Chair of our Committee as discussed above.

Our shareholders are diverse, and we appreciated the candid and constructive feedback we received that reflected their individual perspectives. Following our initial consideration of these views, the Committee developed a set of comprehensive changes in response to the shareholder feedback that was received. In follow-on discussions that we held with shareholders in 2023, we consistently heard that the changes we were contemplating were on-target to address their concerns. We are confident that these changes, which have now been implemented, directly address the feedback we received from shareholders and further set the foundation for strong alignment between pay and performance going forward. The Compensation Discussion and Analysis in this proxy statement details the comprehensive changes we made, and we encourage you to review the alignment between the feedback we received and the actions we have taken. We will continue to engage with our shareholders on an ongoing basis and consider feedback when making future decisions about our executive compensation programs.

Committee Refreshment

The Committee firmly believes in the importance of ongoing rotation that brings in fresh perspectives while ensuring that we have directors who have the expertise to provide strong oversight of all aspects of our executive compensation programs. To that end, we are pleased to share that the Committee has added two new directors over the past two years who bring differentiated expertise, backgrounds, and perspectives to our oversight role – Howard L. Lance, who previously served as President and Chief Executive Officer of Maxar Technologies, Inc. and Harris Corporation, and Scott Ostfeld, who brings an investor perspective as Managing Partner and Portfolio Manager at JANA Partners. We also wish to thank our Committee Chair, Mary Louise (ML) Krakauer, for her leadership and service on the Committee since 2017. Ms. Krakauer will be retiring from the Board and the Committee on the date of the 2023 Annual Meeting and will be succeeded by Mr. Lance as Committee Chair at that time.

The Committee considers our executive compensation programs to be a key lever to drive our strategic and financial success, and we welcome continued dialogue with our shareholders regarding Mercury's compensation programs. We appreciate your support and investment in Mercury.

The Human Capital and Compensation Committee

Mary Louise (ML) Krakauer, Committee Chair

Howard L. Lance, Committee Chair-Elect

Orlando P. Carvalho

Lisa S. Disbrow

Scott Ostfeld

Debora A. Plunkett

EXECUTIVE SUMMARY

This Compensation Discussion and Analysis describes our executive compensation program for our 2023 fiscal year. This section details the compensation framework applied by the Human Capital and Compensation Committee of our Board of Directors (the "Committee") in determining the pay levels and programs available to our named executive officers for whom compensation is disclosed in the compensation tables included in the Tabular Executive Compensation Disclosure section of this proxy statement beginning on page 68. The named executive officers for our 2023 fiscal year are:


Name						Position
William L. Ballhaus(1)						President and Chief Executive Officer
Michelle M. McCarthy(2)						Senior Vice President, Chief Accounting Officer and Former Interim Chief Financial Officer and Treasurer
Christine F. Harbison(3)						Executive Vice President and Chief Growth Officer
James M. Stevison(4)						Executive Vice President and President of Mission Systems
Charles R. Wells, IV						Executive Vice President and President of Microelectronics
Mark Aslett(5)						Former President and Chief Executive Officer
Michael D. Ruppert(6)						Former Executive Vice President, Chief Financial Officer, and Treasurer

(3)Ms. Harbison joined Mercury on March 6, 2023.

(4)Mr. Stevison served as our Chief Growth Officer until October 31, 2022, when he was named as President of our Mission Systems division.

(5)Mr. Aslett served as our President and Chief Executive Officer until his resignation effective June 24, 2023. For a further discussion, see "—Resignations of Named Executive Officers During Fiscal 2023" on page 63.

(6)Mr. Ruppert served as our Chief Financial Officer and Treasurer until his resignation effective February 17, 2023. For a further discussion, see "—Resignations of Named Executive Officers During Fiscal 2023" on page 63.

Shareholder Engagement and 2022 Advisory "Say-on-Pay" Vote on Executive Compensation

At our 2022 Annual Meeting of Shareholders, our Say-on-Pay proposal received the support of 20% of the votes cast. In response to this disappointing outcome, we have been focused on understanding and addressing the underlying concerns and perspectives of our shareholders. We assembled an expanded engagement team, with substantially all of our meetings with shareholders led by William K. O’Brien, Chair of the Board, Mary Louise (ML) Krakauer, current Chair of our Committee, and/or Howard L. Lance, a member of the Committee who has been appointed as Committee Chair effective upon Ms. Krakauer’s previously announced retirement from the Board and the Committee as of the date of the 2023 Annual Meeting of Shareholders.

In the months leading up to the 2022 Say-on-Pay vote, we reached out to our 20 largest investors and had meetings with 11 of them, representing approximately 74% and 56% of our outstanding shares, respectively. Through these engagements, we heard that the primary concern leading shareholders to vote against our 2022 Say-on-Pay proposal was the grant of special long-term incentive (“LTI”) awards in fiscal 2022 under an Equity Retention Plan (the “ERP”) to critical business leaders across our enterprise, including our former Chief Executive Officer (our “CEO”) and our other named executive officers.

The table below summarizes the feedback we heard from shareholders and the actions we took to enhance our compensation programs, respond to shareholder concerns and ensure that our programs are aligned with our strategic priorities and shareholder expectations going forward.


What We Heard Concerns Identified Through Shareholder Engagement			How we Responded to Shareholder Feedback Evolution of our Programs for Fiscal 2023 and Fiscal 2024
Special LTI Awards •Scope and magnitude of ERP awards made in fiscal year 2022, and in particular, the participation of our former CEO and other named executive officers. •Concerns about potential issuance of additional special awards to the ERP program participants prior to the completion of the vesting cycle under the ERP awards.			•Consistent with our prior commitment, we did not grant any LTI awards during fiscal 2023 to our former CEO or any other named executive officer for 2022. •The Committee confirms that it will not grant special awards to our 2022 executive officers with outstanding ERP awards absent a promotion or other extraordinary circumstance.
Annual Incentive Plan ("AIP") •Narrow categories of performance captured in measures. •Use of semi-annual performance periods, with second-half targets established mid-year.			Beginning with the AIP for fiscal 2023: •We expanded the performance measures under the AIP by adding revenue (25%) and adjusted free cash flow (25%) to the legacy adjusted EBITDA (50%) measure. •We adopted a full one-year performance period based on performance targets set at the start of the fiscal year, which replaced our prior practice of using two semi-annual performance periods.
Long-Term Incentive Plan •Preference for greater allocation of equity incentives to performance-based awards. •Use of performance measures that could reward M&A activities regardless of value creation. •Rigor of relative performance targets and appropriateness of using our compensation peer group to assess relative performance achievements. •Magnitude of maximum incentive opportunity.			Beginning with annual LTI awards for fiscal 2024: •We increased the allocation of our annual LTI granted in the form of performance awards from 50% to 60% for our CEO, and to 55% for all other executive officers. •Performance awards use absolute financial performance measures instead of relative measures for greater alignment with internal forecasts and better line-of-sight for recipients. •Performance awards use Organic Revenue instead of Total Revenue to more effectively drive intended value-creation behaviors. •Performance awards are subject to a modifier based on relative total shareholder return ("TSR") to align payouts with shareholder outcomes. •Relative TSR performance is assessed against the Spade Defense Index components instead of our compensation peer group to promote relative performance against a broader industry index that is more representative of comparable investment opportunities available to our shareholders. •Maximum payouts under our performance awards have been reduced from 300% to 200% of target shares, subject to a modifier based on relative TSR of up to ±25% of target shares.
Compensation Benchmarking •Use of compensation peer groups that are misaligned with current Company size.			Beginning with benchmarking of executive pay levels for fiscal 2024: •Eliminated multiple peer groups intended to reflect future Company growth in favor of a new peer group with median revenues aligned with the Company's current size.

Company Background

Mercury is a technology company that delivers processing power for the most demanding aerospace and defense missions. Our end-to-end processing platform enables a broad range of aerospace and defense programs, optimized for mission success in some of the most challenging and demanding environments. Processing technologies that comprise our

platform include signal solutions, display, software applications, networking, storage, and secure processing. As a leading manufacturer of essential components, products, modules, and subsystems, we sell to defense prime contractors, the U.S. government, and original equipment manufacturers (OEM) commercial aerospace companies. Our products and solutions are deployed in more than 300 programs with over 25 different defense prime contractors and commercial aviation customers.

2023 Financial Performance

•Our bookings increased by 1.9% from $1.06 billion in fiscal 2022 to $1.08 billion in fiscal 2023. Our book-to-bill ratio increased from 1.08x in fiscal 2022 to 1.10x in fiscal 2023.

•Our total backlog at year end increased by 9.8% from $1,037.7 million for fiscal 2022 to $1,139.8 million for fiscal 2023.

2023 Compensation Program Highlights

Our compensation philosophy is designed to promote a pay-for-performance culture. We consider market median compensation levels as our reference point in making executive pay decisions, subject to adjustments based on experience, performance, the other individual factors as described in "– Use of Market Data and Competitive Compensation Positioning" beginning on page 55 and as otherwise appropriate. The majority of each executive's target pay is in the form of incentive compensation that is subject to achieving pre-set performance goals to have any realized value. See the information in "– Mix of Pay" on page 54.

Consistent with our prior commitment, we did not grant LTI awards during fiscal 2023 to any of our executive officers for fiscal 2022. As detailed in our 2022 proxy statement, a portion of the ERP awards granted in fiscal 2022 represents the value of annual LTI awards that would have ordinarily been granted at the beginning of 2023 as compensation for the 2023 fiscal year. Accordingly, we committed in our 2022 proxy statement that we would not grant any LTI awards during fiscal 2023 to our former CEO or any of our other named executive officers for 2022, all of whom received ERP awards. Consistent with this commitment, none of our executive officers from 2022, including those who continued to serve as named executive officers during 2023 (Messrs. Stevison, Wells, Aslett and Ruppert), received grants of LTI awards during fiscal 2023. The compensation reported for fiscal 2023 for these executives in the Summary Compensation Table on page 68 is limited to base salary, annual incentive award payouts and customary benefit payments.

No target pay increases for fiscal 2023 to any of our executive officers in fiscal 2022. The Committee did not award any base salary increases for fiscal 2023 to any of our executive officers from 2022 (including Messrs. Stevison, Wells, Aslett and Ruppert), nor did it increase their 2023 target bonuses or (as described above) grant them any LTI awards during 2023.

2023 Annual Incentive Plan paid out significantly below target. With respect to our AIP, our performance for fiscal 2023 fell below threshold requirements for adjusted EBITDA and adjusted free cash flow measures that represented 75% of the value of target bonuses, and above threshold but below our plan targets for the remaining 25% of target bonuses based on revenue performance. Accordingly, aggregate plan payouts to our named executive officers for fiscal 2023 represented only 18.8% of their respective target bonuses. For a further discussion, see “– Elements of Fiscal 2023 Target Pay – Annual Incentives” beginning on page 59.

2023 Target Pay

The table below details each named executive officer's annual base salary, target annual incentive opportunity ("target bonus") and grant date target value of annual LTI awards (collectively, "target pay") for fiscal 2023. We use target pay as the basis for benchmarking our named executive officers’ annual compensation and for allocating compensation among different pay elements.

As noted above, a portion of the ERP awards granted in fiscal 2022 were made in lieu of annual LTI awards that would have ordinarily been granted at the beginning of fiscal 2023 as compensation for the 2023 fiscal year. The value of these “accelerated” awards are reflected in this Compensation, Discussion and Analysis as part of each named executive officer’s 2023 target pay in order to match these awards with the 2023 fiscal year to which they relate. In contrast, the Summary Compensation Table on page 68 reports these accelerated awards as part of each named executive officer’s compensation for fiscal 2022, in accordance with SEC rules that require such awards to be reported as compensation for the fiscal year in which they are granted.


Target Pay for Fiscal 2023(1)
	Salary(2)	Target Bonus as % of Salary(2)		Annual LTI Awards (including accelerated 2023 awards granted in 2022)(3)	Target Pay
Current Employees:
William L. Ballhaus(4)	$ —	—	%	$ —	$ —
Michelle M. McCarthy(5)	340,000	50%		215,000	725,000
Christine F. Harbison(6)	415,000	100%		800,000	1,630,000
James M. Stevison	425,000	100%		796,000	1,646,000
Charles R. Wells, IV	415,000	100%		830,000	1,660,000
Former Employees:
Mark Aslett(7)	800,060	150%		4,300,000	6,300,150
Michael D. Ruppert(7)	446,351	110%		1,430,000	2,367,337

(1)This table is intended to reflect each executive's ordinary compensation for fiscal 2023. Accordingly, for Ms. McCarthy, the table excludes awards that were made to her in December of 2022 in connection with her promotion to Senior Vice President, and in February and July of 2023 in recognition of her additional responsibilities as our Interim Chief Financial Officer and Treasurer during fiscal 2023. For a further discussion, see "—Recognition Awards for Michelle McCarthy" on page 63. In the case of Ms. Harbison, this table excludes the value of "new-hire" LTI awards that were granted in connection with the commencement of her employment in March 2023 because they were intended, in part, to restore compensation forfeited to a prior employer in connection with her departure to join Mercury. Instead, the table includes the annual value established by the Committee and set forth in Ms. Harbison's offer letter as the basis for her future LTI awards beginning in fiscal 2024. For a further discussion, see "—Offer Letter with Christine Harbison" on page 63.

(3)Other than for Mr. Ballhaus and Ms. Harbison as described below in Note 4 and above in Note 1, respectively, the LTI awards granted to our named executive officers for fiscal 2023 were granted on an accelerated basis on February 15, 2022, six months earlier than normal, as part of our 2022 equity retention plan to promote the continuity of our critical talent during a period of heightened industry and labor market challenges. For a further discussion, see "—Long-Term Incentives – Long-Term Incentives Awarded for Fiscal 2023."

(4)Mr. Ballhaus was appointed as our Interim President and CEO at the end of fiscal 2023, on June 24, 2023. Prior to that time during fiscal 2023, he served as a non-employee member of our Board of Directors. No target pay is disclosed for Mr. Ballhaus because the Committee did not award him any compensation for his service as Interim President and CEO for his seven days of service in fiscal 2023. Mercury later entered into an employment agreement with him as of August 15, 2023 that established his compensation as an executive officer as of the start of fiscal 2024, on July 1, 2023. For a further discussion, see "Summary of Compensation Actions for Fiscal 2024" on page 64.

(5)Ms. McCarthy became an executive officer effective February 18, 2023 by virtue of her appointment at that time as our Interim Chief Financial Officer and Treasurer. For a further discussion, see "—Recognition Awards for Michelle McCarthy" on page 63.

(7)Messrs. Aslett and Ruppert served as executive officers until their resignations effective June 24, 2023 and February 17, 2023, respectively. For a further discussion, see "—Resignations of Named Executive Officers During Fiscal 2023" on page 63.

2024 Compensation Program Changes

To further align our LTI programs with our long-term growth strategy and in response to investor feedback received through our comprehensive shareholder engagement process, the Committee adopted a new LTI plan design for fiscal 2024 that places a greater emphasis on performance-based awards with new performance measures and payout opportunities that are designed to more effectively drive intended value-creation behaviors and better reflect shareholder expectations and outcomes. For a further discussion, see "—Summary of Compensation Actions for Fiscal 2024" on page 64.

SOUND PAY PRACTICES

The Committee believes that Mercury's executive compensation program reinforces our pay-for-performance culture and includes corporate governance practices that are considered by investors to promote strong alignment with, and appropriate protections of, their interests. Following our disappointing 2022 Say-on-Pay vote, the Committee engaged a new independent advisor, Meridian Compensation Partners, to provide a fresh perspective in connection with the Committee's reassessment of our executive compensation philosophy, design and practices, and to recommend improvements to strengthen the alignment of our program with shareholder expectations.

The table below highlights key features of our executive compensation program, with recent changes or enhancements appearing in italics.


Executive Compensation Program Features
Executive Compensation Program Includes			•Transparent, formulaic incentive plans designed to promote short- and long-term business success based on expanded measures tied to our strategic priorities and better aligned with investor outcomes •Limits on maximum payouts under incentive plans •Stronger emphasis on long-term, performance-based compensation •Limited perquisites consistent with competitive practices •Enhanced stock ownership guidelines that align executive and shareholder interests •New clawback policy that provides for recoupment of performance-based compensation and time-based LTI awards in connection with restatements of financial results that reduce previously earned payouts, regardless of individual culpability, in compliance with Nasdaq’s new rules •New tally-sheet reviews that provide the Committee with a better understanding of named executive officers’ current and accumulated compensation and benefits •Double trigger provisions for accelerated equity vesting and cash severance payable in connection with a change in control
Executive Compensation Program Does not Include or Prohibits			•Excise tax gross-ups on severance/change in control payments •Repricing of stock options or other stock-based awards without shareholder approval •Excessive severance or change in control provisions •Hedging or pledging of Company stock by executives, employees and non-employee directors

PROGRAM OVERVIEW

The table below outlines the principal elements of our executive compensation program for fiscal 2023. Detailed descriptions of each element of compensation and discussion of how the Committee determined compensation levels for fiscal 2023 can be found in the section "— Elements of Fiscal 2023 Target Pay" beginning of page 58.

2023 Compensation Program Design

Plan

Annual Pay

Element

Performance

Period

Performance

Measures

Payout Range

(vs. Target)

Fiscal 2023/2024 Highlights

—

Base Salary

—

Fiscal 2023:

•No base salary increases for continuing executive officers from 2022 (including Messrs. Stevison, Wells, Aslett, and Ruppert)

Annual

Incentive Plan

Cash Bonus

Annual

Adjusted EBITDA (50%)

0% to 150%

Fiscal 2023:

•Diversified performance measurement by adding revenue and adjusted free cash flow to our adjusted EBITDA measure

•Eliminated semi-annual performance periods and target setting in favor of one annual performance period with pre-established targets

Fiscal 2024:

•Tailored relative weightings of performance measures to reflect our strategic priorities for 2024, in particular our near-term emphasis on stronger free cash flow generation, with 2024 payouts based 50%, 35%, and 15% on adjusted EBITDA, adjusted free cash flow and revenue performance, respectively

Revenue (25%)

Adjusted Free Cash Flow (25%)

Long-Term

Incentive Plan

Restricted

Stock Awards (50%)

Three Years with Annual Vesting

—

Fiscal 2024:

•Increased the allocation of annual LTI granted in the form of performance awards from 50% to 60% for the CEO and 55% for all other executive officers

•Modified principal performance measures (absolute instead of relative measures, organic revenue instead of total revenue) to more effectively drive value-creation behaviors

•Added a relative TSR modifier, with performance measured against Spade Defense Index component companies, to align payouts with investor outcomes

•Reduced maximum payout opportunities under performance awards to reflect market norms and shareholder expectations (payouts capped at 200% of target shares, subject to a relative TSR modifier of up to ±25% of target shares)

Performance

Stock Awards

(50%)

Three Years with Cliff Vesting

Relative EBITDA

Margin (50%)

0% to 300%

Relative Total Revenue

Growth (50%)

DETERMINING EXECUTIVE COMPENSATION

Role of the Human Capital and Compensation Committee

Our executive compensation program is administered by the Committee. The Committee is primarily responsible for the review and approval of compensation for all of our executive officers. Compensation for our Chief Executive Officer is further subject to ratification by a majority of the independent directors on the Board. For a further discussion of the Committee's key areas of responsibility, see "Corporate Governance — What committees has the Board established? — Human Capital and Compensation Committee" beginning on page 20.

Role of Management and the Chief Executive Officer

Our human resources, finance and legal departments assist the Committee in the design and development of competitive compensation programs by providing data and analyses to the Committee and its independent compensation consultant in order to ensure that our programs and incentives align with and support our business strategy. Management also recommends incentive plan metrics, performance targets, and other plan objectives to be achieved, based on our expected performance and subject to Committee approval.

In connection with setting target compensation for fiscal 2023, our former CEO reviewed the performance of our other executive officers and submitted recommendations to the Committee for proposed target pay adjustments, but had no role in determining his own compensation. Our former CEO also submitted pay recommendations for executive officer candidates for hire. No other executive officer participated in the setting of his or her own compensation and, except as described above, no executive officer other than our former CEO participated in the setting of the compensation of any other executive officer during fiscal 2023.

Role of the Compensation Consultant

The Committee has the sole authority to select, retain, terminate, and approve the fees payable to outside consultants to provide it with advice on various aspects of executive compensation design and delivery.

During fiscal 2023, the Committee retained Mercer to provide information, analysis, and advice regarding executive compensation decisions through December 2022 and incurred $204,332 in expenditures for such services. In addition to its work for the Committee, Mercer assisted management by providing other services that are unrelated to the work performed for the Committee. During fiscal 2023, we incurred $108,967 with Mercer for the performance of these unrelated services, including a comprehensive study on our broad-based compensation levels and practices and support on long-term incentive valuations.

Following our disappointing 2022 Say-on-Pay vote, the Committee initiated a formal process to consider whether to retain a new independent advisor to provide a fresh perspective on executive compensation matters. Upon the conclusion of this review in December 2022, the Committee engaged Meridian Compensation Partners as its new compensation consultant effective January 2023. Meridian advises the Committee on executive and non-employee director compensation generally, and performs no other services for management.

In the course of conducting its activities for the Committee during fiscal 2023, representatives of Meridian attended meetings of the Committee and presented findings and recommendations to the Committee for discussion. Representatives of Meridian also met with management to obtain and validate data and review materials. Beyond providing advice and recommendations on the amount and form of executive and director compensation, Meridian provided no additional services to either the Committee or management during fiscal 2023.

MIX OF PAY

The Committee believes that Mercury's pay mix strongly supports the Company's pay-for-performance culture. For fiscal 2023, 87% of our former CEO's target pay was in the form of variable pay that was subject to future performance. Base salary is the only element of target pay that does not fluctuate based on future performance. As illustrated below, the mix of incentive compensation for our named executive officers is balanced to avoid the risk of emphasizing short-term gains at the expense of long-term performance. The emphasis on long-term incentives demonstrates our strong commitment to the alignment of management and shareholder interests over time.

(1)For a further discussion of the amounts underlying our named executive officers' target pay for fiscal year 2023, see "Executive Summary — 2023 Target Pay" beginning on page 50.

(2)"Other Named Executive Officers" refers to our non-CEO executive officers serving in a non-interim capacity for fiscal 2023 (Ms. Harbison and Messrs. Stevison, Wells, and Ruppert). The target pay mix for these officers was calculated on an aggregate basis.

USE OF MARKET DATA AND COMPETITIVE COMPENSATION POSITIONING

Compensation Peer Groups

The Committee believes that Mercury's success is dependent upon its ability to continue to attract and retain high-performing executives. To ensure the comparability of our executive compensation practices and pay levels, the Committee has historically monitored executive pay at selected technology, aerospace and defense, and other industrial companies ("peers") with whom Mercury competes for business, executive talent or investor capital. The Committee evaluates each peer on an annual basis to determine its continued suitability from a pay benchmarking perspective. The selection criteria examined include:

•Operational Fit: companies in the same or similar industries with a comparable business model, mix, and client base.

•Financial Scope: companies of similar size as measured by annual corporate revenues. In connection with the benchmarking of target pay for fiscal 2023, the Company approved the use of two compensation peer groups differentiated by financial scope.

◦The "Primary Peer Group" consists of peers that generally fall within a range of one-half to two times the size of Mercury (targeted at approximately $1 billion in annual revenues).

◦The "Reference Peer Group" consists of peers that generally fall within a range of one-half to two times of a target value that is double the size of Mercury (targeted at approximately $2 billion in annual revenues).

The primary peer group was used as the principal group of peer companies used to benchmark executive pay levels and practices, and to assess Mercury's relative performance achievements under long-term incentive awards. The reference peer group was used as a supplemental reference when considering appropriate pay levels in light of Mercury's strong historical rate of growth and the need for Mercury to attract top talent suitable for Mercury's next stage of growth.

The table below shows the composition of our primary peer group that was established by the Committee in January 2022 for use in benchmarking target pay levels and practices at the end of fiscal 2022 and in connection with making pay decisions for fiscal 2023.


Primary Peer Group for Fiscal 2023
Astronics Corporation	II-VI Incorporated	NetScout Systems, Inc.
Belden Inc.	Infinera Corporation	Novanta Inc.
Cognex Corporation	iRobot Corporation	OSI Systems, Inc.
Comtech Telecommunications Corp.	Kratos Defense & Security Solutions, Inc.	Ribbon Communications Inc.
Diodes Incorporated	Methode Electronics, Inc.	Rogers Corporation
Ducommun Incorporated	MKS Instruments, Inc.
HEICO Corporation	NETGEAR, Inc.

The table below shows the composition of our reference peer group that was established by the Committee in January 2022 for use as a supplemental reference in considering appropriate pay levels at the end of fiscal 2022, and in connection with making pay decisions for fiscal 2023.


Reference Peer Group for Fiscal 2023
Belden Inc.(1)	Keysight Technologies, Inc.	Rogers Corporation
Curtis-Wright Corporation	Maxar Technologies Inc.	Teledyne Technologies Incorporated
Diodes Incorporated(1)	Methode Electronics, Inc.(1)	Teradyne, Inc.
HEICO Corporation(1)	MKS Instruments, Inc.(1)	TTM Technologies, Inc.
Hexcel Corporation	Moog Inc.	Viasat, Inc.
II-VI Incorporated(1)	NetScout Systems, Inc.(1)
Infinera Corporation(1)	OSI Systems, Inc.(1)

(1)Reflects companies that are also contained in the primary peer group for fiscal 2023.

As compared to the primary and reference peer groups used to evaluate fiscal 2022 pay levels and practices, the Committee removed Brooks Automation from the primary peer group and FLIR Systems from both peer groups after recent mergers and dispositions activities that rendered them no longer suitable for these groups.

The Committee subsequently met in April 2023 to consider potential changes to its benchmarking methodology in connection with its evaluation of executive pay levels and practices for fiscal 2024. Consistent with the recommendations of its new independent compensation advisor and in response to investor feedback received through our comprehensive shareholder engagement process, the Committee eliminated its practice of using multiple peer groups intended to reflect future growth in favor of a single peer group with median revenues aligned with the Company's current size. The Committee selected component companies for our 2024 compensation peer group using a scorecard approach that took relevant factors into account for each potential peer considered, including comparable industry and financial demographics; representation in defense and aerospace stock indices; use as a Mercury comparator by one of Mercury's stock analysts or by nationally-recognized proxy advisors; use of Mercury by the potential peer as one of its own peers for executive pay benchmarking; and inclusion by Mercury as a component in one of its 2023 compensation peer groups. Using this approach, the Committee approved the following peer group of companies to use for benchmarking executive pay levels and practices for fiscal 2024.


Compensation Peer Group for Fiscal 2024
3D Systems Corporation	FormFactor, Inc.	Novanta Inc.
Aerojet Rocketdyne Holdings, Inc.	Infinera Corporation	Onto Innovation Inc.
AeroVironment, Inc.	iRobot Corporation	OSI Systems, Inc.
Axcelis Technologies, Inc.	Kaman Corporation	RBC Bearings Incorporated
Belden Inc.	Kratos Defense & Security Solutions, Inc.	Rogers Corporation
BWX Technologies, Inc.	Leonardo DRS, Inc.	Viasat, Inc.
Curtiss-Wright Corporation	MACOM Technology Solutions Holdings, Inc.
Diodes Incorporated	Maxar Technologies Inc.

Use of Market Data

In reviewing competitive compensation levels of our named executive officers at the beginning of fiscal 2023 (or at such later time during fiscal 2023 at which they became an executive officer), the Committee considered compensation peer group data for all named executive officers, except for the role of Chief Growth Officer due to the limited number of benchmarking matches for this position within our compensation peer groups. Instead, the Committee used survey data from the Radford Global Technology Survey (the "Survey Data") for this purpose. For Messrs. Stevison and Wells (who served as the respective Presidents of our Mission Systems and Microelectronics divisions in fiscal 2023), the Committee considered competitive compensation levels based on the average of the compensation peer group data and the Survey Data because it believed that including a broader survey group more accurately reflects the labor market for division presidents and ensures a meaningful sample size given the revenues of our divisions. The Survey Data utilized was size adjusted by our independent consultant to reflect the annual revenues of our Company and of our divisions, as applicable, and an aging factor of 3.5% per year was applied to reported base salary and annual incentive data in order to approximate the impact of market movements between the survey publication date and the time at which our benchmarking activities took place.

Competitive Market Positioning

The Committee's practice is to make pay decisions regarding the elements of compensation that compose each named executive officer's target pay (base salary, target bonus, and grant date target value of long-term incentives) in July or August of each fiscal year, in light of benchmarking data reviewed at the end of the prior fiscal year. As part of its decision-making process, the Committee compares each named executive officer's target pay for the fiscal year against the market median as its reference point in making executive pay decisions; however, the Committee does not use market data in isolation in determining pay. Instead, competitive market data serves as one of many considerations used by the Committee in determining base salary adjustments and target pay opportunities for both annual and long-term incentives. The primary factors considered by the Committee in making its annual pay determinations are shown below.


Target Pay Determinants
•Positioning to competitive market median	•Long-term financial and individual performance	•Role and responsibilities relative to benchmark
•Competitive mix of fixed and variable pay	•Tenure and experience in role	•Internal pay equity
•Competitive mix of cash and equity	•Expected future contributions and market conditions	•Prior year's compensation levels

Based on the most recent benchmarking conducted by the Committee in July 2023, target pay for our non-interim named executive officers in fiscal 2023 (that is, all of our named executive officers other than Mr. Ballhaus or Ms. McCarthy) fell, on average, within a competitive range of 80% to 120% of peer median target pay levels. For a further discussion of the amounts underlying our named executive officers' target pay for fiscal year 2023, see "Executive Summary — 2023 Target Pay" beginning on page 50.

ELEMENTS OF FISCAL 2023 TARGET PAY

The sections below detail the base salaries, annual incentives, and long-term incentive grants awarded to our named executive officers as part of their fiscal 2023 compensation. Mr. Ballhaus, who was appointed as our Interim President and CEO at the end of fiscal 2023 on June 24, 2023, does not appear in the sections below because the Committee did not award him any compensation for his service as an executive officer for his seven days of service in fiscal 2023. Mercury later entered into an employment agreement with him as of August 15, 2023 that established his compensation as an executive officer as of the start of fiscal 2024, on July 1, 2023.

Base Salary

Base salary serves as the foundation of an executive's compensation and is an important component in our ability to attract and retain executive talent. On an individual basis, the Committee considers each executive's role and responsibilities, experience, tenure, business results and individual performance, competitive market pay levels, and internal pay equity considerations in making base salary adjustments.

For fiscal 2023, the Committee approved the initial base salary of Ms. Harbison in connection with the commencement of her employment on March 6, 2023. For a further discussion, see "— Offer Letter with Christine Harbison" beginning on page 63. The Committee did not award any base salary increases to our continuing executive officers from 2022 (including Messrs. Stevison, Wells, Aslett, and Ruppert), nor did it award such an increase to Ms. McCarthy upon the commencement of her additional role as our Interim Chief Financial Officer and Treasurer on February 18, 2023. However, in her capacity as our Chief Accounting Officer at the beginning of the fiscal year, Ms. McCarthy received a customary merit increase in her base salary of 4.0% effective on September 24, 2022. Thereafter, she received a base salary increase of 8.5% effective December 3, 2022 in connection with her promotion to Senior Vice President, resulting in a total base salary increase of 12.8% for fiscal 2023.


	Fiscal 2023 Base Salary(1)	Fiscal 2022 Base Salary(2)	Percent Change
Current Employees:
Michelle M. McCarthy(3)	340,000	301,394	12.8%
Christine F. Harbison(4)	415,000	N/A	N/A
James M. Stevison	425,000	425,000	0.0%
Charles R. Wells, IV	415,000	415,000	0.0%
Former Employees:
Mark Aslett(5)	800,060	800,060	0.0%
Michael D. Ruppert(5)	446,351	446,351	0.0%

(1)Reflects each executive's annual base salary rate at the beginning of fiscal 2023 or at such later time during fiscal 2023 at which they became an executive officer.

(2)Reflects each executive's annual base salary rate at the beginning of the second quarter of fiscal 2022 (the time at which annual increases for that fiscal year became effective).

(3)Ms. McCarthy became an executive officer effective February 18, 2023 by virtue of her appointment at that time as our Interim Chief Financial Officer and Treasurer. For a further discussion, see "—Recognition Awards for Michelle McCarthy" on page 63.

(4)Ms. Harbison became an executive officer on March 6, 2023 in connection with the commencement of her employment as our Executive Vice President, Chief Growth Officer. For a further discussion, see "—Offer Letter with Christine Harbison" on page 63.

(5)Messrs. Aslett and Ruppert served as executive officers until their resignations effective June 24, 2023 and February 17, 2023, respectively. For a further discussion, see "—Resignations of Named Executive Officers During Fiscal 2023" on page 63.

Annual Incentives

The AIP provides our executives with the opportunity to earn annual cash incentive awards based on their respective target bonuses and on Company performance relative to pre-established goals. Beginning with the AIP for fiscal 2023, we expanded the measures under the plan that are used to evaluate our annual performance by adding revenue and adjusted free cash flow to the legacy adjusted EBITDA measure that was previously used as the sole metric on which our performance was based. We chose these performance measures for our annual incentive plan because we believe that they constitute the most important financial measures that drive long-term shareholder value creation.

Under the AIP for fiscal 2023, 50% of our plan payouts are tied to our adjusted EBITDA results, while 25% of payouts are tied to our achievements for revenue and adjusted free cash flow, respectively. We selected these different weightings for the performance measures under the AIP to align with their relative importance in respect of our strategic priorities for fiscal 2023.

In addition to these changes, we established full-year targets for each of our performance measures at the beginning of the 2023 fiscal year, rather than using semi-annual performance periods that were determined at the start of each period, to better align with market norms and in response to investor feedback received through our comprehensive shareholder engagement process.


Key Features of the AIP for Fiscal 2023
•Performance criteria defined at the beginning of the fiscal year
•Performance compared to pre-established annual goals for adjusted EBITDA, revenue and adjusted free cash flow that reflect or are aligned with the mid-point of our published guidance at the beginning of the fiscal year
•Payouts can range from 0% to 150% of target bonus based on performance
•The Committee retains discretion to adjust payouts, including in the event that calculated results under the plan do not appropriately reflect our overall performance for the year

Target Bonuses for Fiscal 2023

AIP target bonuses are established at the beginning of each fiscal year for each named executive officer as a percentage of their base salary. For fiscal 2023, the target bonus for each of our continuing executive officers from 2022 (including Messrs. Stevison, Wells, Aslett, and Ruppert), as a percentage for their respective base salaries, was held constant at fiscal 2022 levels. Ms. McCarthy's target bonus was increased from 40% to 50% of base salary in connection with her promotion from Vice President to Senior Vice President in December 2022. Finally, the Committee approved a target bonus percentage for Ms. Harbison in connection with the commencement of her employment in fiscal 2023. For a further discussion, see "— Offer Letter with Christine Harbison" beginning on page 63.


	Fiscal 2023 Base Salary(1)	Fiscal 2023 Target Bonus (%)	Fiscal 2023 Target Bonus ($)
Current Employees:
Michelle M. McCarthy	340,000	50%	170,000
Christine F. Harbison(2)	121,042	100%	121,042
James M. Stevison	425,000	100%	425,000
Charles R. Wells, IV	415,000	100%	415,000
Former Employees:
Mark Aslett(3)	800,060	150%	1,200,090
Michael D. Ruppert(3)	446,351	110%	490,986

(1)Except as set forth in Note 2 below, reflects annualized base salary rates in effect as of the beginning of the second quarter (when annual increases typically become effective) or, in the case of Ms. McCarthy, as of the date she became an executive officer.

(2)For the purpose of calculating Ms. Harbison's AIP payout for fiscal 2023, her base salary was prorated to reflect the commencement of her employment with Mercury on March 6, 2023.

(3)Messrs. Aslett and Ruppert served as executive officers until their resignations effective June 24, 2023 and February 17, 2023, respectively. For a further discussion, see "—Resignations of Named Executive Officers During Fiscal 2023" on page 63.

Performance Goals and Payout Ranges for Fiscal 2023

The Committee established threshold, target, and maximum performance goals for each of our performance measures under the AIP at the beginning of our fiscal year in early August. Our target performance goal for each measure reflects, or is aligned with, the mid-point of our published guidance at the beginning of the fiscal year. The table below sets forth the specific performance goals and related payout factors established by the Committee under the AIP for fiscal 2023.

Achievement Levels

Performance Goals for Fiscal 2023(1)

Payout Factor
(% of Target Bonus)(2)

Adjusted EBITDA

(50% Weighting)

Revenue

(25% Weighting)

Adjusted Free Cash Flow

(25% Weighting)

Maximum

≥ 270.0

≥ 1,154.0

≥ 135.0

200%

Target

207.5

1,025.0

103.8

100%

Threshold

182.6

922.5

72.6

50%

Below Threshold

< 182.6

< 922.5

< 72.6

(1)All performance goals are expressed in millions.

(2)Payouts for performance between the stated achievement levels are calculated using linear interpolation.

Actual Results and AIP Payouts for Fiscal 2023

For purposes of calculating actual financial results under the AIP, the Committee excludes the effects of pre-established categories of items that it believes are not reflective of operating performance. For a further discussion of these adjustments with respect to adjusted EBITDA, see "Appendix B: Reconciliation of Non-GAAP Measures to GAAP Measures." Our calculation of adjusted free cash flow excludes similar items relevant to cash flow calculations.

After giving effect to these adjustments, our performance under the AIP for fiscal 2023 fell below threshold for both adjusted EBITDA and adjusted free cash below, and between threshold and target for revenue. As a result, executives earned a payout of 18.8% of their target bonus under the AIP for fiscal 2023.


Actual Results under the AIP for Fiscal 2023
Performance Goal	Performance Achieved(1)	Payout Factor	Weighting	Payout Earned (% of Target Bonus)
Adjusted EBITDA	132.3	0.0%	50%	0.0%
Revenue	973.9	75.1%	25%	18.8%
Adjusted Free Cash Flow	(40.3)	0.0%	25%	0.0%
Total				18.8%

(1)Performance results are expressed in millions.

Individual executives who participate in the AIP must remain employed with Mercury through the date of payment in order to receive a bonus payable thereunder. For fiscal 2023, bonuses earned under the AIP were paid to executives on August 31, 2023. Messrs. Aslett and Ruppert did not receive a bonus payout under the AIP for fiscal 2023 by virtue of their earlier resignations during the fiscal year. For a further discussion, see "—Resignations of Named Executive Officers During Fiscal 2023" on page 63. The amounts earned under the AIP by other named executive officers for fiscal 2023 are set forth below.


	Fiscal 2023 Target Bonus	Fiscal 2023 AIP Earned (%)	Fiscal 2023 AIP Earned ($)
Current Employees:
Michelle M. McCarthy	170,000	18.8%	31,960
Christine F. Harbison	121,042	18.8%	22,756
James M. Stevison	425,000	18.8%	79,900
Charles R. Wells, IV	415,000	18.8%	78,020
Former Employees:
Mark Aslett(1)	1,200,090	—	—
Michael D. Ruppert(1)	490,986	—	—

(1)Messrs. Aslett and Ruppert forfeited their fiscal 2023 payouts under the AIP by virtue of their resignations effective June 24, 2023 and February 17, 2023, respectively. For a further discussion, see "—Resignations of Named Executive Officers During Fiscal 2023" on page 63.

Long-Term Incentives

LTI awards are intended to align the interests of the named executive officers with shareholders by linking a meaningful portion of executive pay to shareholder value creation over a multi-year period. LTI awards are also provided to drive the performance of our long-term business strategy, engage and retain our key executives, and facilitate ownership of our common stock. The Committee grants long-term incentives to our named executive officers in the form of restricted stock awards ("RSAs") and performance stock awards ("PSAs").

Long-Term Incentives Awarded for Fiscal 2023

The Committee typically grants LTI awards on an annual basis in mid-August of each fiscal year. However, the LTI awards granted to our named executive officers as part of their annual compensation for fiscal 2023 were granted on an accelerated basis on February 15, 2022, six months earlier than normal, as part of our 2022 equity retention plan to promote the continuity of our critical talent during a period of heightened industry and labor market challenges. The table below sets forth the values of the LTI awards for fiscal 2023 that were granted to our named executive officers at that time.


	Grant Date Target Value of Annual LTI Awards For Fiscal 2023 (accelerated 2023 awards granted in 2022)
	Restricted Stock Awards(1) ($)	Performance Stock Awards(1) ($)	Total ($)
Current Employees:
Michelle M. McCarthy(2)	215,000	—	215,000
James M. Stevison	398,000	398,000	796,000
Charles R. Wells, IV	415,000	415,000	830,000
Former Employees:
Mark Aslett(3)	2,150,000	2,150,000	4,300,000
Michael D. Ruppert(3)	715,000	715,000	1,430,000

(1)Grant date target values were converted into the number of shares underlying each award based on the average closing price of Mercury's common stock during the 30 calendar days prior to the grant date.

(2)Ms. McCarthy was not eligible to receive PSAs because PSAs are granted only to recipients who serve as an executive officer at the time of grant, and in a permanent capacity.

(3)Messrs. Aslett and Ruppert forfeited all their outstanding and unvested LTI awards, including those set forth in this table, by virtue of their resignations effective June 24, 2023 and February 17, 2023, respectively. For a further discussion, see "—Resignations of Named Executive Officers During Fiscal 2023" on page 63.

Ms. McCarthy later received additional LTI awards in connection with her subsequent promotion to Senior Vice President and in recognition of her additional responsibilities as Interim Chief Financial Officer and Treasurer between February and July of 2023. Ms. Harbison was not employed by Mercury at the time the LTI awards for fiscal 2023 were granted, and therefore does not appear in the table above. However, Ms. Harbison received "new-hire" LTI awards in connection with her commencement of employment on March 6, 2023. For a further discussion of these awards, see "—Recognition Awards for Michelle McCarthy" on page 63 and "— Offer Letter with Christine Harbison" on page 63.

Restricted Stock Awards

RSAs are awarded to named executive officers under our LTI program to facilitate executive ownership of Company stock, to align the interests of our executives with those of our shareholders, and to support retention. RSAs vest in equal annual increments over a three-year period (or in the case of recipients who do not serve as executive officers in a permanent capacity, a four-year period), and the ultimate value of these awards to recipients is dependent on our stock price at the time of vesting.

Performance Stock Awards

PSAs are awarded to named executive officers under our LTI program primarily to motivate multi-year financial achievements that are aligned with shareholder value creation. The performance requirements of the PSAs awarded by the Committee for fiscal 2023 are substantially identical to those awarded by the Committee in prior years. The requirements are equally weighted between goals for revenue growth and Adjusted EBITDA Margin performance for the three-year fiscal period commencing with the fiscal year in which the awards were granted, relative to the achievements over this period of our primary peer group. For the list of companies that comprise our primary peer group, see "Use of Market Data and Competitive Compensation Positioning — Compensation Peer Groups" beginning on page 55. The number of shares ultimately earned under the PSAs will range from 0% to 300% of the target number of shares awarded at the time of grant, based on our actual performance achievements over the three-year performance period, as further described in the table below.

PSA Performance

Goal

Performance Achievement
Relative to Peer Group

Payout

Percentage(1)

Maximum

At or above 90th percentile

300%

75th percentile

200%

Target

50th percentile

100%

Threshold

At or below 25th percentile

—

(1)Payout percentages for achievements between Threshold and Maximum are calculated using linear interpolation.

For PSA awards granted for fiscal 2023, "Adjusted EBITDA Margin" means adjusted EBITDA divided by revenue. Adjusted EBITDA is a non-GAAP measure that excludes the effects of pre-established categories of items that the Committee believes are not reflective of operating performance. These categories are identical to the adjustments that we use for the external reporting of our adjusted EBITDA results in our periodic earnings releases. For a further discussion of these adjustments, see "Appendix B: Reconciliation of Non-GAAP Measures to GAAP Measures."

While the Committee has elected to use adjusted EBITDA as a factor in determining performance under both our annual incentive awards and our PSAs, the performance requirements under these awards are designed so that resulting payouts reflect different and important aspects of Company performance that are not duplicative. Payouts under the AIP are based on performance for a single fiscal year, while payouts under the PSAs require sustained performance achievements, relative to the primary peer group, over a three-year fiscal period. The Committee believes it is appropriate to separately reward annual and long-term adjusted EBITDA performance achievements because of the importance of earnings in creating long-term shareholder value.

RECOGNITION AWARDS FOR MICHELLE McCARTHY

On December 15, 2022, Ms. McCarthy received a grant of RSAs, having an aggregate grant date target value of $135,000, in connection with her promotion to Senior Vice President. She was subsequently appointed as our Interim Chief Financial Officer and Treasurer effective February 18, 2023 and served in this capacity through July 16, 2023. She also retained her prior title and responsibilities as our Chief Accounting Officer during and after this period. On July 17, 2023, we appointed David E. Farnsworth as our new Chief Financial Officer and Treasurer, who will appear as a named executive officer in our proxy statement for our 2024 Annual Meeting.

In recognition of Ms. McCarthy's additional responsibilities as our Interim Chief Financial Officer and Treasurer between February 18, 2023 and July 16, 2023, the Committee awarded her:

•grants of LTI awards on February 15, 2023 and July 17, 2023 in the form of RSAs, in each case having a grant date target value of $200,000; and

•a supplemental cash bonus payment of $215,000 effective July 6, 2023.

The number of shares underlying each of Ms. McCarthy's RSA grants was calculated based on the average closing price of Mercury's common stock during the 30 calendar days prior to the grant date. For a further discussion of the terms of these awards, see "— Elements of Fiscal 2023 Target Pay — Long-Term Incentives — Restricted Stock Awards" beginning on page 62.

OFFER LETTER WITH CHRISTINE HARBISON

During fiscal 2023, the Committee approved the execution of an offer letter with Ms. Harbison that provided for the following initial terms of her employment as our Chief Growth Officer:

•her initial base salary at the annual rate set forth in "— Elements of Fiscal 2023 Target Pay — Base Salary" beginning on page 58;

•participation in our AIP with a target bonus of 100% of her prorated base salary for fiscal 2023; and

•grants of "new-hire" LTI awards, composed equally of RSAs and PSAs having an aggregate grant date target value of $1.6 million, which were intended to restore compensation forfeited with a prior employer, to motivate multi-year financial achievements that are aligned with shareholder value creation, and to further align her interests with those of our shareholders.

Ms. Harbison's new-hire LTI awards were granted on March 15, 2023, with the number of shares underlying each award based on the average closing price of Mercury's common stock during the 30 calendar days prior to the grant date. For a further discussion of the terms of these awards, see "— Elements of Fiscal 2023 Target Pay — Long-Term Incentives" beginning on page 61.

EXECUTIVE PERQUISITES

We provide our named executive officers with limited personal perquisites consistent with competitive practices. For fiscal 2023, we provided our continuing executive officers from 2022 (including Messrs. Stevison, Wells, Aslett, and Ruppert) with a $12,000 annual allowance for personal tax and financial planning. We also maintain an employee relocation policy, offering different tiers of benefits based on job level, for employees who are requested to relocate their primary residence in connection with their employment. In fiscal 2023, Mr. Wells relocated his primary residence at our request, and his relocation expenses were paid and/or reimbursed under this policy based on a tier of benefits generally available to our employees at or above the job level of Vice President. For a further discussion, see Note 5 to the “Summary Compensation Table” beginning on page 68.

RESIGNATIONS OF NAMED EXECUTIVE OFFICERS DURING FISCAL 2023

On January 25, 2023, our Board of Directors received notice of the resignation of Michael D. Ruppert from his positions as our Executive Vice President, Chief Financial Officer and Treasurer effective February 17, 2023. By virtue of his resignation, Mr. Ruppert forfeited his fiscal 2023 payout under the AIP and all of his LTI awards that were not vested at the effective time of his resignation, including those granted under the equity retention plan.

On June 19, 2023, our Board of Directors received notice of the resignation of Mark Aslett from his positions as our President and Chief Executive Officer. The Board accepted his resignation effective June 24, 2023. In his notice, Mr.

Aslett claimed he was entitled to certain benefits, including equity vesting, severance and other benefits, under his change in control severance agreement because he had resigned with good reason during a potential change in control period. We dispute these claims and maintain that he resigned without good reason, resulting in the forfeiture of his fiscal 2023 payout under the AIP and of all of his LTI awards that were not vested at the effective time of his resignation, including those granted under the equity retention plan. The parties must submit any dispute under the change in control severance agreement to binding arbitration. If an arbitration is commenced and the arbitrator rules in our favor, we may still need to pay Mr. Aslett's reasonable legal fees and interim compensation during the dispute. If instead the arbitrator rules for Mr. Aslett, we could be liable for up to approximately $12.9 million, based on the closing price of our common stock on June 26, 2023, plus legal fees and expenses, for accelerated equity vesting, severance and other benefits under his change in control severance agreement. We believe we have strong arguments that Mr. Aslett's claims lack merit, and intend to vigorously contest any assertions to the contrary.

SUMMARY OF COMPENSATION ACTIONS FOR FISCAL 2024

On August 15, 2023, we entered into an employment agreement with Mr. Ballhaus that sets forth his initial target pay, retroactive to July 1, 2023, and onboarding awards in connection with his appointment as our President and Chief Executive Officer. Also in August 2023, we approved annual adjustments to the target pay of the other named executive officers who continued as employees in fiscal 2024. After giving effect to these actions, fiscal 2024 target pay for our continuing, non-interim named executive officers (that is, our named executive officers other than Ms. McCarthy) fell, on average, within a competitive range of 80% to 120% of peer median target pay levels (consistent with our competitive pay positioning for fiscal 2023 as described in "— Use of Market Data and Competitive Compensation Positioning" beginning on page 55).

With respect to our AIP for fiscal 2024, the Committee made adjustments to the relative weightings of the performance measures under the plan, which are tailored to reflect our strategic priorities for the fiscal year, and in particular our near-term emphasis on stronger free cash flow generation. After giving effect to these changes, 50%, 35%, and 15% of each executive officer's annual incentive opportunity for fiscal 2024 will be based on our full-year adjusted EBITDA, adjusted free cash flow, and revenue performance, respectively.

The Committee also approved the following changes with respect to the design of our LTI plan, beginning with the annual LTI awards granted for fiscal 2024:

•the composition of our annual LTI awards granted in the form of performance-based PSAs was increased from 50% to 60% for our CEO and to 55% for all other executive officers;

•the PSAs use absolute financial performance measures instead of relative financial performance measures for greater alignment with internal forecasts and better line-of-sight for recipients;

•the PSAs use Organic Revenue instead of Total Revenue to more effectively drive intended value-creation behaviors;

•the PSAs are subject to a modifier based on relative TSR to align payouts with shareholder outcomes;

•our relative TSR performance will be assessed against the Spade Defense Index components instead of our compensation peer group, for better correlation with Mercury's long-term value creation and enhanced objectivity in selecting benchmark components; and

•the maximum payout opportunity under our PSAs was reduced to 200% of target shares, subject to a modifier based on relative TSR of up to ±25% of target shares.

EMPLOYMENT, SEVERANCE, AND CHANGE IN CONTROL ARRANGEMENTS

As of June 30, 2023, we have entered into severance agreements with each of our named executive officers who are current employees other than with Mr. Ballhaus, with whom we later entered into an employment agreement on August 15, 2023 as described above in "Summary of Compensation Actions for Fiscal 2024." Our severance agreements provide specified benefits in connection with certain terminations of employment that are designed to be market competitive and do not include tax gross-ups. Consistent with market practice, these arrangements provide enhanced benefits in the event of a termination in connection with a change in control, which are intended to ensure that our executives entertain proposals that are in the best interests of our shareholders even when it may not be in their own personal best interests, thereby aligning the interests of the executives with those of our shareholders. For a further description, see "Tabular Executive Compensation Disclosure — Potential Payments Upon Change in Control or Termination of Employment" beginning on page 76.

In addition, we previously entered into a severance agreement with Mr. Aslett under which he has asserted claims for benefits in connection with his resignation that are in dispute. For a further discussion, see "— Resignations of Named Executive Officers During Fiscal 2023."

STOCK OWNERSHIP GUIDELINES

Our stock ownership guidelines reflect the Committee's belief that executives should accumulate a meaningful level of ownership in Company stock to align their interests with those of our shareholders. The Committee recently amended our stock ownership guidelines, among other things, to increase the ownership requirements of both our Chief Executive Officer and Chief Financial Officer and to eliminate ownership credit under the policy for unvested PSAs granted on or after September 15, 2023 (the effective date of the revised policy).

Under our revised guidelines, the ownership guidelines for our Chief Executive Officer and Chief Financial Officer were increased in value from five times (5x) to six times (6x) base salary, and from three times (3x) to four times (4x) base salary, respectively. The ownership guidelines for other executives who report directly to our CEO is equivalent in value to three times (3x) base salary for our division presidents, and one and one-half times (1.5x) base salary for all other executives. The Committee reviews progress toward guideline achievement annually. Each covered executive is required to retain 50% of net shares (after payment of fees, taxes, and exercise prices, if applicable) acquired upon the vesting of stock awards or the exercise of stock options until the guideline multiple of base salary is met. Each covered executive is expected to meet the applicable ownership guideline within five years of the effective date of the policy. For purposes of the revised guidelines, stock ownership includes shares of Company stock held outright, share equivalents held in benefit plans, unvested RSAs, and (if granted prior to September 15, 2023) unvested PSAs assuming target performance.

COMPENSATION CLAWBACK POLICY

At the beginning of fiscal 2024, the Committee adopted a revised clawback policy that complies with new standards applicable to Nasdaq-listed companies, which were approved by the U.S. Securities and Exchange Commission in June of 2023. The revised policy applies to our current and former executive officers together with our Chief Accounting Officer.

Under our clawback policy, the Committee will, in all appropriate circumstances, require reimbursement of any compensation that, during or after the three most recently completed fiscal years, was granted, earned, or vested (1) based upon the attainment of a financial reporting measure in whole or in part, or (2) in connection with a time-based equity award, in each case to the extent that:

•we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under applicable securities laws; and

•a smaller payment would have been made to or realized by the executive based upon the restated financial results.

ANTI-HEDGING AND ANTI-PLEDGING POLICIES

Our policies prohibit all executives, employees, and non-employee directors from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds) or otherwise engaging in transactions that hedge, offset, or are designed to hedge or offset, any decrease in the market value of Company stock. Our policies further prohibit all executives, employees, and non-employee directors from pledging Company stock as collateral for any obligation.

COMPENSATION RISK ASSESSMENT

The Committee periodically reviews and discusses with management, management's assessment of whether risks arising from Mercury's compensation policies and practices for all employees, including executive officers, are reasonably likely to have a material adverse effect on the Company. As part of the most recent assessment, the following were determined on a collective basis for Mercury and its subsidiaries:

•Our compensation programs consist of both fixed and variable components, as well as short and long-term performance measures. Fixed compensation is in the form of base salary, which provides a steady income stream to our employees regardless of the performance of our business or stock price. Variable compensation (in the form of annual and long-term incentives) fluctuates based upon our performance against short- and long-

term objectives or our stock price. This balanced mix of compensation is designed to motivate our employees, including our executive officers, to produce superior short- and long-term corporate performance without taking unnecessary or excessive risks.

•Our incentive compensation designs emphasize Company profit, revenue, and cash flow as key performance measures. We believe that our focus on these measures encourages a comprehensive approach to our overall performance and emphasizes consistent behavior across the organization.

•Payouts under our AIP and our PSAs are subject to maximum limits as a percentage of target awards. We believe this mitigates excessive risk taking by limiting potential windfalls for dramatically exceeding performance expectations.

•We prohibit all of our employees from engaging in short sales or pledges of Company stock, or buying or selling puts, calls, or other derivative securities related to Company stock. These restrictions are intended to minimize the likelihood that our employees will become subject to personal incentives that are contrary to the long-term interests of Mercury and our shareholders.

•Our stock ownership guidelines policy is intended to align our executives' long-term interests with those of our shareholders and to encourage a long-term focus in managing the Company.

TAX CONSIDERATIONS

Section 162(m) of the Internal Revenue Code ("IRC") generally disallows a tax deduction to publicly-held companies (such as Mercury) for compensation paid to certain "covered employees" in excess of $1 million per covered employee in any year. Neither the Committee nor the full Board has adopted a formal policy regarding tax deductibility of compensation paid to the Company's executive officers. While the Committee carefully considers the net cost and value to the Company of maintaining the deductibility of all compensation, it also desires the flexibility to reward the Company's executive officers in a manner that enhances the Company's ability to attract and retain individuals as well as to create longer term value for our stockholders. Thus, income tax deductibility is only one of several factors the Committee considers in making decisions regarding the Company's executive compensation program. The Committee may authorize compensation that might not be deductible, if the Committee determines that such compensation decision is in the best interest of the Company.

EQUITY GRANT TIMING

We do not time the grant of equity awards to precede the release of non-public information. Grants of annual LTI awards to executives and employees are typically made on or about the 15th day of each August. Grants of other equity awards (in connection with new hires, promotions, and recognition awards), if any, are typically made on or about the 15th day of each month. Under the terms of the Company's LTI plans, the exercise price of stock options awarded under such plans may not be less than the fair market value of the underlying Company stock on the date of grant. The Committee does not grant discounted stock options, and our long-term equity incentive plans do not permit stock option repricing without shareholder approval.

REPORT OF THE HUMAN CAPITAL AND COMPENSATION COMMITTEE

No portion of this Human Capital and Compensation Committee report shall be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), through any general statement incorporating by reference in its entirety the proxy statement in which this report appears, except to the extent that the Company specifically incorporates this report or a portion of it by reference. In addition, this report shall not be deemed to be "soliciting material" or filed under either the Securities Act or the Exchange Act.

The Human Capital and Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this proxy statement, and based on such review and discussion, the Committee recommended to Mercury's Board that the Compensation Discussion and Analysis be included in this proxy statement and be incorporated by reference into Mercury's annual report on Form 10-K for the fiscal year ended June 30, 2023.

During fiscal 2023, Mary Louise (ML) Krakauer, Howard L. Lance, Orlando P. Carvalho, Lisa S. Disbrow and Debora A. Plunkett served as members of the Committee. Scott Ostfeld has served as a member of the Committee since July 10, 2023.

By the Human Capital and Compensation Committee of

the Board of Directors of Mercury Systems, Inc.

Mary Louise (ML) Krakauer, Committee Chair

Howard L. Lance, Committee Chair-Elect

Orlando P. Carvalho

Lisa S. Disbrow

Scott Ostfeld

Debora A. Plunkett

TABULAR EXECUTIVE COMPENSATION DISCLOSURE

Summary Compensation Table

The following table provides summary information concerning compensation paid or accrued by us to or on behalf of all individuals serving as our principal executive officer or principal financial officer at any time during fiscal 2023, and each