DEF 14A of Mercury Systems Inc, Sep 21, 2023

DEF 14A of Mercury Systems Inc

Filed Sep 21, 2023 · FY20230001049521-23-000034

Open on EDGAR

  1. Our Board of Directors

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

  2. Our Board of Directors

    | | | | | Committee Memberships | | | | | | Name | Director Since | Primary Occupation | Independent | AC | HC | NGC | GRC | M&A | | William L. Ballhaus Class I Director Term Ending in 2025 | 2022 | President and CEO, Mercury Systems | No | | | | | | | Orlando P. Carvalho Class III Director Term Ending in 2024 | 2020 | Former Executive Vice President Aeronautics, Lockheed Martin | Yes | | M | M | | C | | 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 | M | | C | | | Mary Louise Krakauer Class II Director Term Ending in 2023 | 2017 | Former Executive, Dell and EMC | Yes | | C | | M | | | Roger A. Krone Class II Director Nominated for a Term Ending in 2026 | 2023 | Former Chairman and CEO, Leidos | Yes | | | M | | M | | Howard L. Lance Class I Director Term Ending in 2025 | 2022 | Former President and CEO Maxar Technologies and Harris Corporation | Yes | | M | M | M | M | | Barry R. Nearhos Class III Director Term Ending in 2024 | 2018 | Former Managing Partner, PricewaterhouseCoopers | Yes | C,F | | M | | M | | William K. O'Brien Chairman of the Board Class II Director Term Ending in 2023 | 2008 | Former Executive Chairman, Enterasys Networks | Yes | M,F | | C | | M | | Scott Ostfeld Class II Director Nominated for a Term Ending in 2026 | 2023 | Managing Partner and Portfolio Manager, JANA Partners | Yes | | M | | | M | | Debora A. Plunkett Class III Director Term Ending in 2024 | 2021 | Federal Senior Executive National Security Agency (Retired) | Yes | M | M | | M | |

  3. Our Board of Directors

    | 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 |

  4. Our Board of Directors

    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.

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

    •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;

  6. PROPOSAL 1: ELECTION OF THREE CLASS II DIRECTORS

    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.

  7. PROPOSAL 1: ELECTION OF THREE CLASS II DIRECTORS

    | | | | | Committee Memberships | | | | | | Name | Director Since | Primary Occupation | Independent | AC | HC | NGC | GRC | M&A | | William L. Ballhaus Class I Director Term Ending in 2025 | 2022 | President and CEO, Mercury Systems | No | | | | | | | Orlando P. Carvalho Class III Director Term Ending in 2024 | 2020 | Former Executive Vice President Aeronautics, Lockheed Martin | Yes | | M | M | | C | | 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 | M | | C | | | Mary Louise Krakauer Class II Director Term Ending in 2023 | 2017 | Former Executive, Dell and EMC | Yes | | C | | M | | | Roger A. Krone Class II Director Nominated for a Term Ending in 2026 | 2023 | Former Chairman and CEO, Leidos | Yes | | | M | | M | | Howard L. Lance Class I Director Term Ending in 2025 | 2022 | Former President and CEO Maxar Technologies and Harris Corporation | Yes | | M | M | M | M | | Barry R. Nearhos Class III Director Term Ending in 2024 | 2018 | Former Managing Partner, PricewaterhouseCoopers | Yes | C,F | | M | | M | | William K. O'Brien Chairman of the Board Class II Director Term Ending in 2023 | 2008 | Former Executive Chairman, Enterasys Networks | Yes | M,F | | C | | M | | Scott Ostfeld Class II Director Nominated for a Term Ending in 2026 | 2023 | Managing Partner and Portfolio Manager, JANA Partners | Yes | | M | | | M | | Debora A. Plunkett Class III Director Term Ending in 2024 | 2021 | Federal Senior Executive National Security Agency (Retired) | Yes | M | M | | M | |

  8. PROPOSAL 1: ELECTION OF THREE CLASS II DIRECTORS

    | 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 |

  9. Information about the Directors

    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:

  10. Information about the Directors

    | | 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) | | |

  11. Information about the Directors

    | | 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. | | 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: | | | | Lear Corporation (Ticker: LEA) (2020 - present) | | | | Leidos Holdings, Inc. (Ticker: LDOS) (2014 - 2023) | | | | BorgWarner Inc. (Ticker: BWA) (2017 - 2019) | | |

  12. Information about the Directors

    | | 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) | | |

  13. Information about the Directors

    Class I Directors - Serving a Term Ending in 2025:

  14. Information about the Directors

    | | 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. | | 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: | | | | None | | |

  15. Information about the Directors

    | | 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) | | |

  16. Information about the Directors

    | | 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) | | |

  17. Information about the Directors

    Class III Directors - Serving a Term Ending in 2024:

  18. Information about the Directors

    | | 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 | | |

  19. Information about the Directors

    | | 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) | | |

  20. Information about the Directors

    | | 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) | | |

  21. DIRECTOR COMPENSATION

    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.

  22. Non-Employee Director Compensation

    Non-Employee Director Compensation

  23. 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 |

  24. Non-Employee Director Compensation

    (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:

  25. Non-Employee Director Compensation

    | 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 |

  26. Non-Employee Director Compensation

    (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.

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

    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.

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

    | | 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% |

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

    * 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.

  30. 2023 Compensation Program Highlights

    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. 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.

  31. 2023 Target Pay

    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.

  32. 2023 Target Pay

    | 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 |

  33. 2023 Target Pay

    (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. (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 "—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. (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 "—Offer Letter with Christine Harbison" 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.

  34. SOUND PAY PRACTICES

    | 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 |

  35. PROGRAM OVERVIEW

    | 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%) | | |

  36. Role of the Compensation Consultant

    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.

  37. USE OF MARKET DATA AND COMPETITIVE COMPENSATION POSITIONING

    USE OF MARKET DATA AND COMPETITIVE COMPENSATION POSITIONING

  38. Compensation Peer Groups

    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.

  39. Compensation Peer Groups

    | 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. | |

  40. Compensation Peer Groups

    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.

  41. Compensation Peer Groups

    | 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) | |

  42. Compensation Peer Groups

    (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.

  43. Compensation Peer Groups

    | 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. | |

  44. Use of Market Data

    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.

  45. Competitive Market Positioning

    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.

  46. Competitive Market Positioning

    | 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 |

  47. Competitive Market Positioning

    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.

  48. Annual Incentives

    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.

  49. Annual Incentives

    | 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 |

  50. Target Bonuses for Fiscal 2023

    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.

  51. Target Bonuses for Fiscal 2023

    | | 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 |

  52. Target Bonuses for Fiscal 2023

    (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.

  53. Performance Goals and Payout Ranges for Fiscal 2023

    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.

  54. Performance Goals and Payout Ranges 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 | 0% |

  55. Performance Goals and Payout Ranges for Fiscal 2023

    (1)All performance goals are expressed in millions. (2)Payouts for performance between the stated achievement levels are calculated using linear interpolation.

  56. Actual Results and AIP Payouts for Fiscal 2023

    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.

  57. Actual Results and AIP Payouts 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% |

  58. Actual Results and AIP Payouts for Fiscal 2023

    (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.

  59. Actual Results and AIP Payouts for Fiscal 2023

    | | 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 | — | — |

  60. Actual Results and AIP Payouts for Fiscal 2023

    (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.

  61. Long-Term Incentives

    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").

  62. Long-Term Incentives Awarded for Fiscal 2023

    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.

  63. Long-Term Incentives Awarded for Fiscal 2023

    | | 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 |

  64. Long-Term Incentives Awarded for Fiscal 2023

    (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.

  65. Restricted Stock Awards

    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.

  66. Performance Stock Awards

    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.

  67. Performance Stock Awards

    | 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 | — |

  68. Performance Stock Awards

    (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.

  69. RECOGNITION AWARDS FOR MICHELLE McCARTHY

    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.

  70. RESIGNATIONS OF NAMED EXECUTIVE OFFICERS DURING FISCAL 2023

    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.

  71. EMPLOYMENT, SEVERANCE, AND CHANGE IN CONTROL ARRANGEMENTS

    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."

  72. EQUITY GRANT TIMING

    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.

  73. Summary Compensation Table

    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 of our three other most highly compensated executive officers serving at our 2023 fiscal year end. These officers are collectively referred to as our "named executive officers."

  74. Summary Compensation Table

    | Name and Principal Position | Fiscal Year | Salary | Bonus(1) | Stock Awards(2)(3) | Non-Equity Incentive Plan Compensation(4) | All Other Compensation(5) | Total | | Current Employees: | | | | | | | | | William L. Ballhaus(6)(7) President and Chief Executive Officer | 2023 | $— | $— | $— | $255,967 | $— | $255,967 | | Michelle M. McCarthy(7)(8) SVP, Chief Accounting Officer and Former Interim Chief Financial Officer and Treasurer | 2023 | 324,500 | 215,000 | 341,140 | 31,960 | 18,365 | 930,965 | | Christine F. Harbison(7)(9) EVP and Chief Growth Officer | 2023 | 119,712 | — | 1,468,650 | 22,756 | 5,746 | $1,616,864 | | James M. Stevison(10)(11) EVP and President of Mission Systems Division | 2023 | 425,000 | — | — | 79,900 | 29,423 | 534,323 | | | 2022 | 302,404 | 300,000 | 3,572,049 | 380,741 | 11,152 | 4,566,346 | | Charles R. Wells, IV(10) EVP and President of Microelectronics Division | 2023 | 415,000 | — | — | 78,020 | 168,709 | $661,729 | | | 2022 | 263,365 | — | 3,600,657 | 371,783 | 9,498 | 4,245,303 | | Former Employees: | | | | | | | | | Mark Aslett(12) Former President and Chief Executive Officer | 2023 | 800,060 | — | — | — | 36,473 | 836,533 | | | 2022 | 782,275 | — | 16,981,781 | 1,075,115 | 20,700 | 18,859,871 | | | 2021 | 722,692 | — | 3,732,297 | 473,430 | 20,700 | 4,949,119 | | Michael D. Ruppert(12) Former EVP, Chief Financial Officer and Treasurer | 2023 | 300,428 | — | — | — | 23,978 | 324,406 | | | 2022 | 438,489 | — | 5,297,522 | 439,855 | 21,150 | 6,197,016 | | | 2021 | 413,879 | — | 1,144,542 | 197,312 | 20,700 | 1,776,433 |

  75. Summary Compensation Table

    (1)The amount reported in this column for Ms. McCarthy in fiscal 2023 represents a cash payment made on July 6, 2023 in recognition of her additional responsibilities as our Interim Chief Financial Officer and Treasurer during fiscal 2023. (2)Represents the aggregate grant date fair value of stock awards granted to our named executive officers. The amounts reported in this column do not reflect whether the named executive officer has actually realized a financial benefit from the awards. The grant date fair value of stock awards is computed in accordance with Accounting Standards Codification Topic 718 (ASC Topic 718). For a discussion of the assumptions and methodologies used to calculate the grant date fair value of stock awards in this proxy statement, please refer to Note B of the financial statements in our annual report on Form 10-K for the fiscal year ended June 30, 2023. Certain of our named executive officers received LTI awards on February 15, 2022 representing accelerated grants of their annual LTI compensation for fiscal 2023 under an equity retention plan intended to promote the continuity of our critical talent during a period of heightened industry and labor market challenges. The grant date fair values of these accelerated awards are: Ms. McCarthy – $207,099; Mr. Stevison – $843,516; Mr. Wells – $879,531; Mr. Aslett – $4,556,277; and Mr. Ruppert – $1,515,228. For those executives who were named executive officers in fiscal 2022, these amounts are reported in the stock awards column as part of the executive's fiscal 2022 compensation in accordance with SEC rules because they were granted during that fiscal year. For a further discussion, see "Compensation Discussion and Analysis — Long-Term Incentives — Long-Term Incentives Awarded for Fiscal 2023" on page 61. The grant date fair values of stock awards reported in this Summary Compensation Table and the other tables in the "Tabular Executive Compensation Disclosure" section of this proxy statement are different than the grant date target values for such awards that are reported in the Compensation Discussion and Analysis. The amounts that appear in the Compensation Discussion and Analysis reflect our practice of valuing LTI awards based on the average per share closing price of Mercury common stock over the 30 days prior to the date of grant, while the amounts that appear in the Tabular Executive Compensation Disclosure section are calculated using the closing price of Mercury common stock only on the grant date itself. (3)The amounts reported for PSAs in this column reflect the grant date fair value of such awards based upon the probable outcome of their performance conditions. Ms. Harbison is the only executive officer who was granted PSAs during the 2023 fiscal year, and the value of her PSAs included in this column for fiscal 2023 is $734,325. If these PSAs had been valued as of the grant date assuming that the highest level of performance would be achieved, the value of these awards that would have been included for her in this column would have been $2,202,975. (4)Represents amounts earned under our annual incentive plan (or AIP) based on performance for the applicable fiscal year. For a further discussion, see "Compensation Discussion and Analysis — Elements of Fiscal 2023 Target Pay — Annual Incentives" beginning on page 59. (5)The table below shows the components of this column for fiscal 2023

  76. Summary Compensation Table

    | | Director Compensation | | Employee Compensation | | | | | Name | Annual Cash Retainer(a) | Stock Awards(b) | Employer Contributions to 401(k) Plan(c) | Personal Tax and Financial Planning(d) | Other | Total All Other Compensation | | Current Employees: | | | | | | | | William L. Ballhaus | $65,000 | $190,967 | $— | $— | $— | $255,967 | | Michelle M. McCarthy | — | — | 18,365 | — | — | 18,365 | | Christine F. Harbison | — | — | 5,746 | — | — | 5,746 | | James M. Stevison | — | — | 17,423 | 12,000 | — | 29,423 | | Charles R. Wells, IV | — | — | 17,123 | 12,000 | 139,586(e) | 168,709 | | Former Employees: | | | | | | | | Mark Aslett | — | — | 24,473 | 12,000 | — | 36,473 | | Michael D. Ruppert | — | — | 8,478 | 12,000 | 3,500(f) | 23,978 |

  77. Summary Compensation Table

    (a)Represents the annual cash retainer received by Mr. Ballhaus for his service as a non-employee director in fiscal 2023. For a further discussion, see Note 6 below. (b)Represents the aggregate grant date fair value of stock awards granted to Mr. Ballhaus in his capacity as a non-employee director during fiscal 2023. For a further discussion, see Note 6 below. The grant date fair value of stock awards is computed in accordance with ASC Topic 718. For a discussion of the assumptions and methodologies used to calculate the grant date fair value of stock awards in this proxy statement, please refer to Note B of the financial statements in our annual report on Form 10-K for the fiscal year ended June 30, 2023. (c)Reflects Company contributions credited to accounts of our named executive officers under the Mercury Employees Retirement Investment Trust, which is a tax-qualified, 401(k) defined contribution plan. Employer contributions vest in equal annual increments over the two-year period following the participant's date of hire. (d)The amounts in this column represent an annual stipend paid in lump sum to secure personal tax and financial planning advisory services. (e)Represents payments or reimbursements of relocation expenses under our employee relocation policy at a tier of benefits generally available to employees serving at or above the job level of Vice President. Consistent with this policy, the amount for relocation expenses includes a gross-up payment of $19,875 related to the portion of the relocation expenses treated as taxable compensation, in order to make the relocation tax neutral to the employee. (f)Represents reimbursements of housing expenses incurred in lieu of lodging arrangements. (6)During fiscal 2023, Mr. Ballhaus served as a non-employee director until June 24, 2023, when he was appointed as our Interim President and Chief Executive Officer. We later named him as our President and Chief Executive Officer on August 15, 2023 in connection with an employment agreement entered into with him as of that date. The compensation set forth for Mr. Ballhaus for fiscal 2023 represents amounts earned in his capacity as a non-employee director. Mr. Ballhaus did not receive any incremental compensation for his service as our Interim President and Chief Executive Officer during the final days of fiscal 2023. For a further discussion of our non-employee director compensation program, see "Director Compensation" on page 26. (7)Mr. Ballhaus and Messes. McCarthy and Harbison were not named executive officers prior to our 2023 fiscal year. (8)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 Senior Vice President, Chief Accounting Officer during and after this period. In recognition of her additional service for her interim role, she received a cash payment of $215,000 on July 6, 2023, and RSAs on February 15, 2023 and July 17, 2023 with grant date fair values of $212,307 and $201,268, respectively. The cash payment and the RSAs granted on February 15, 2023 appear in the Bonus and Stock Award columns for fiscal 2023, respectively. The RSAs granted on July 17, 2023 will appear in the Stock Awards column as part of her fiscal 2024 compensation in accordance with SEC rules because they were granted during that fiscal year. For a further discussion of the awards described in this paragraph, see "Compensation Discussion and Analysis — Recognition Awards for Michelle McCarthy" on page 63. (9)Ms. Harbison joined Mercury on March 6, 2023. The amounts that appear in the Stock Awards column as part of her fiscal 2023 compensation represent new hire awards in connection with the commencement of her employment. For a further discussion of these awards, see "Compensation Discussion and Analysis — Offer Letter for Christine Harbison" on page 63. (10)Messrs. Stevison and Wells were not named executive officers prior to our 2022 fiscal year. (11)Mr. Stevison served as our Chief Growth Officer until October 31, 2022, when he was named as President of our Mission Systems division. (12)Messrs. Aslett and Ruppert resigned from their positions with Mercury effective June 24, 2023 and February 17, 2023, respectively. For a further discussion, see "Compensation Discussion and Analysis — Resignation of Named Executive Officers During Fiscal 2023" on page 63.

  78. Grants of Plan-Based Awards

    Grants of Plan-Based Awards The following table provides information regarding: (1) annual incentive plan awards and (2) PSAs and RSAs under the Mercury Systems, Inc. Amended and Restated 2018 Stock Incentive Plan. Except as set forth below, plan-based awards granted to the named executive officers in fiscal year 2023 were approved by the Human Capital and Compensation Committee (the "Committee"), or by the independent members of our Board of Directors (in the case of all awards granted to our current or former Chief Executive Officer), on the dates below.

  79. Grants of Plan-Based Awards

    | Name | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($) | | | Grant Type | Grant Date | Approval Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Current Employees: | | | | | | | | | | | | | William L. Ballhaus | Board RSAs(1) | 10/26/22 | 7/26/22 | | | | | | | 3,976 | 190,967 | | Michelle M. McCarthy | AIP(2) | — | — | 85,000 | 170,000 | 255,000 | | | | | | | | RSA(3)(4) | 12/15/22 | 12/1/22 | | | | | | | 2,714 | 128,834 | | | RSA(3)(4) | 2/15/23 | 1/25/23 | | | | | | | 3,882 | 212,307 | | Christine F. Harbison | AIP(2) | | — | 60,521 | 121,042 | 181,563 | | | | | | | | PSA(5)(6) | 3/15/23 | 2/27/23 | | | | — | 15,172 | 45,516 | | 734,325 | | | RSA(3)(6) | 3/15/23 | 2/27/23 | | | | | | | | | | James M. Stevison | AIP(2) | — | — | 212,500 | 425,000 | 637,500 | | | | | | | Charles R. Wells, IV | AIP(2) | — | — | 207,500 | 415,000 | 622,500 | | | | | | | Former Employees: | | | | | | | | | | | | | Mark Aslett(7) | AIP(2) | — | — | 600,045 | 1,200,090 | 1,800,135 | | | | | | | Michael D. Ruppert(7) | AIP(2) | — | — | 245,493 | 490,986 | 736,479 | | | | | | | | | | | | | \ | | | | | |

  80. Grants of Plan-Based Awards

    (1)During fiscal 2023, Mr. Ballhaus served as a non-employee director until June 24, 2023, when he was appointed as our Interim President and Chief Executive Officer. In connection with his earlier Board service, Mr. Ballhaus received an annual award of RSAs under our non-employee director compensation program. These RSAs vest in equal annual increments over a one-year period. The amount disclosed in the Grant Date Fair Value of Stock and Option Awards column represents the grant date fair value of the award, as calculated in accordance with FASB ASC Topic 718. For a further discussion, see "Director Compensation" on page 26. (2)Represents the cash payout opportunities under our annual incentive plan for fiscal 2023 that would be earned assuming achievement of the specific Threshold, Target, or Maximum levels of performance established by the Committee for the performance measures under the plan. For a further discussion of the performance measures and payout opportunities for 2023, see "Compensation Discussion and Analysis – Elements of 2023 Target Pay – Annual Incentives" beginning on page 59. For a discussion of additional changes made to the plan for fiscal 2024 to align with our strategic priorities for the year, see "Compensation Discussion and Analysis – Summary of Compensation Actions for Fiscal 2024." (3)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). The amount disclosed in the Grant Date Fair Value of Stock and Option Awards column represents the grant date fair value of each award, as calculated in accordance with FASB ASC Topic 718. For a further discussion of our RSAs, see "Compensation Discussion and Analysis – Elements of Fiscal 2023 Target Pay – Long-Term Incentives – Restricted Stock Awards" on page 62. For a discussion concerning the effect of a change in control or termination of employment on outstanding RSAs, see "– Potential Payments Upon Change in Control or Termination of Employment" beginning on page 76. (4)These RSAs were granted to Ms. McCarthy on December 15, 2022 in connection with her promotion to Senior Vice President, and on February 15, 2023 in recognition of her additional responsibilities as Interim Chief Financial Officer and Treasurer. The award of RSAs to her in December 2022 was granted prior to her becoming an executive officer, and was approved by Mr. Aslett pursuant to a delegation of authority from the Committee allowing for his approval of non-executive LTI awards subject to certain dollar limits. For a further discussion of the awards, see "Recognition Awards for Michelle McCarthy" on page 63. (5)PSAs vest on the third anniversary following their grant date. For awards granted during fiscal 2023, the final number of shares of our common stock earned in respect of each award will vary based upon Mercury's EBITDA Margin and revenue growth achievements, relative to Mercury's peers, over the three-year fiscal performance period ending with fiscal year 2025. The amounts disclosed in the Estimated Future Payouts Under Equity Incentive Plan Awards columns represent the number of shares of our common stock that would be earned assuming achievement of the specific Threshold, Target, or Maximum levels of performance established by the Committee in respect of each award. The amounts disclosed in the Grant Date Fair Value of Stock and Option Awards column represent the grant date fair value of each award assuming that the probable outcome of the performance conditions in respect of the award is achieved, as calculated in accordance with FASB ASC Topic 718. For a further discussion of the PSAs granted in fiscal 2023, see "Compensation Discussion and Analysis – Elements of Fiscal 2023 Target Pay – Long-Term Incentives – Performance Stock Awards" beginning on page 62. For a discussion of design improvements applicable to PSAs granted in fiscal 2024, see "Compensation Discussion and Analysis – Summary of Compensation Actions for Fiscal 2024" on page 64. See also "– Potential Payments Upon Change in Control or Termination of Employment" beginning on page 76 for a discussion concerning the effect of a change in control or termination of employment on outstanding PSAs. (6)Represents awards granted in connection with the hiring of the executive, including (a) to restore compensation forfeited with a prior employer as a result of the executive's commencement of employment with Mercury and (b) to further align the executive's interests with those of our shareholders. For a further discussion, see “Compensation Discussion and Analysis – Offer Letter with Christine Harbison” on page 63. (7)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 "Compensation Discussion and Analysis — Resignations of Named Executive Officers During Fiscal 2023" on page 63.

  81. Outstanding Equity Awards at 2023 Fiscal Year-End

    Outstanding Equity Awards at 2023 Fiscal Year-End The following table provides information with respect to holdings of unvested RSAs and PSAs held by the named executive officers at June 30, 2023.

  82. Outstanding Equity Awards at 2023 Fiscal Year-End

    | | | Stock Awards | | | | | | Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested(1) (#) | Market Value of Shares or Units of Stock That Have Not Vested(2) ($) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(3) (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(2) ($) | | Current Employees: | | | | | | | | William L. Ballhaus | 6/23/22(4) | 1,883 | 65,133 | | — | — | | | 10/26/22(5) | 3,976 | 137,530 | 34,993 | — | — | | Michelle M. McCarthy | 2/15/23(6) | 3,882 | 134,278 | 35,091 | — | — | | | 12/15/22(6) | 2,714 | 93,877 | | — | — | | | 2/15/22(6) | 5,863 | 202,801 | | — | — | | | 8/16/21(6) | 2,624 | 90,764 | | — | — | | | 8/17/20(6) | 1,757 | 60,775 | | — | — | | | 8/15/19(6) | 708 | 24,490 | | — | — | | Christine F. Harbison | 3/15/23(7) | 15,172 | 524,799 | | 45,516 | 1,574,398 | | James M. Stevison | 2/15/22(7) | 9,648 | 333,724 | | 14,473 | 500,621 | | | 11/15/21(7) | — | — | | 15,393 | 532,444 | | | 10/15/21(7) | 11,235 | 388,619 | | — | — | | Charles R. Wells, IV | 2/15/22(7) | 10,060 | 347,975 | | 15,091 | 521,998 | | | 11/15/21(7) | 10,262 | 354,963 | | 15,393 | 532,444 | | Former Employees: | | | | | | | | Mark Aslett(8) | — | — | — | | — | — | | Michael D. Ruppert(8) | — | — | — | | — | — |

  83. Outstanding Equity Awards at 2023 Fiscal Year-End

    (1)Represents RSAs, which vest in equal annual increments during the vesting period, commencing on the first anniversary following the grant date. For a further discussion of the vesting periods for each award, see Notes 4-7 below. For a discussion concerning the effect of a change in control or termination of employment on outstanding RSAs, see "– Potential Payments Upon Change in Control or Termination of Employment" beginning on page 76. (2)The market value of each award is based on the closing price of our common stock on June 30, 2023 of $34.59, multiplied by the number of shares reported for the award. (3)Reflects a number of shares of our common stock issuable under PSAs based on our level of performance to date through the end of fiscal 2023. In the case of Ms. Harbison, the shares and related value that appear in this table for her PSAs reflect the Maximum level of performance because our performance through the end of fiscal 2023 exceeded the Target level of performance under her awards (which are based on performance over the three fiscal years ending in 2025). In the case of Messrs. Stevison and Wells, the shares and related values that appear in this table for their PSAs reflect the Target level of performance because our actual performance through the end of fiscal 2023 was between the Threshold and Target levels of performance under their respective awards (which are based on performance over the three fiscal years ending in 2024). For a further discussion of our PSAs, see "Compensation Discussion and Analysis – Elements of Fiscal 2023 Target Pay – Long-Term Incentives – Performance Stock Awards" beginning on page 62. For a discussion concerning the effect of a change in control or termination of employment on outstanding PSAs, see "– Potential Payments Upon Change in Control or Termination of Employment" beginning on page 76. (4)Represents RSAs granted to Mr. Ballhaus in connection with the commencement of his service as a non-employee director, which vest over the two-year period following the grant date. (5)Represents annual RSA awards granted to non-employee directors, which vest over the one-year period following the grant date. (6)RSA awards issued to recipients who do not serve as executive officers in a permanent capacity vest over a four-year period following the grant date. (7)RSA awards issued to permanent executive officers vest over the three-year period following the grant date. (8)Messrs. Aslett and Ruppert forfeited all their outstanding and unvested LTI awards by virtue of 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.

  84. Options Exercised and Stock Vested

    Options Exercised and Stock Vested The following table provides information regarding the vesting of RSAs and PSAs held by our named executive officers during fiscal 2023. No stock options were held by any of the named executive officers during fiscal 2023.

  85. Options Exercised and Stock Vested

    | | Stock Awards | | | Name | Number of Shares Acquired on Vesting(1) (#) | Value Realized on Vesting(2) ($) | | Current Employees: | | | | William L. Ballhaus | 1,884 | 65,695 | | Michelle M. McCarthy | 5,927 | 312,764 | | Christine F. Harbison | — | — | | James M. Stevison | 10,443 | 498,599 | | Charles R. Wells, IV | 10,162 | 532,260 | | Former Employees: | | | | Mark Aslett | 111,603 | 5,879,031 | | Michael D. Ruppert | 35,693 | 1,878,760 |

  86. Options Exercised and Stock Vested

    (1)The amounts reported in this column represent the gross number of shares of our common stock acquired upon the vesting of RSAs and PSAs without taking into account shares sold on behalf of the recipient to satisfy applicable tax withholding obligations. (2)The amounts reported in this column are calculated based on the closing market price of our common stock on the date of vesting.

  87. Potential Payments upon Change in Control or Termination of Employment

    Potential Payments upon Change in Control or Termination of Employment

  88. CEO Pay Ratio

    CEO Pay Ratio We are providing the following information about the ratio for fiscal 2023 of our CEO's total compensation to the total compensation of our median compensated employee (our "CEO pay ratio") pursuant to the SEC's guidance under Item 402(u) of Regulation S-K. The CEO pay ratio disclosed below represents a reasonable good faith estimate, calculated in a manner consistent with SEC rules, based on our payroll and employment records and the methodology described below. We identified our median employee using our employee population as of April 3, 2023. As permitted by the SEC's pay ratio rules, we used the same median employee to calculate our fiscal 2023 pay ratio that we used to calculate our fiscal 2022 pay ratio, as we believe that there have been no changes in our employee population or employee compensation arrangements that would result in a significant change to our pay ratio disclosure. See our 2022 proxy statement for information regarding the process we utilized to identify our "median employee." As of the date we used to identify our median employee for fiscal 2023, our former CEO, Mark Aslett, was then serving as our principal executive officer. Accordingly, we are calculating the CEO Pay Ratio for fiscal 2023 by reference to our former CEO's compensation for fiscal 2023. –Our former CEO's total annual compensation for fiscal 2023, calculated pursuant to SEC rules, was $835,533. –Our median employee's total annual compensation for fiscal 2023, calculated pursuant to SEC rules, was $111,257. –The resulting CEO pay ratio for fiscal 2023 is approximately 7.5:1. The SEC rules for identifying the median compensated employee and calculating the CEO pay ratio based on that employee's annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the CEO pay ratio reported by other companies, including in our own industry, may not be comparable to the CEO pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own CEO pay ratios.

  89. Pay Versus Performance

    Pay Versus Performance As required by Item 402(v) of Regulation S-K (the "PVP Rules"), the following sets forth information regarding an amount referred to as "compensation actually paid" (or "CAP") to our current CEO, William L. Ballhaus, and to our former CEO, Mark Aslett, who collectively served as our principal executive officers (or "PEOs") during our three most recently completed fiscal years, and to our named executive officers other than the PEOs during this this period (our "Other NEOs") whose compensation is reported either in our Summary Compensation Table beginning on page 68, or in the Summary Compensation Tables that appear in our prior proxy statements that report on executive compensation during the covered period. Our Summary Compensation Tables disclose the total compensation paid to our PEOs and Other NEOs during the reported fiscal years in accordance with SEC rules, including the grant date fair value of stock-based awards granted during each fiscal year. As detailed further below, CAP for our PEOs and Other NEOs is calculated by replacing the value of stock-based awards that appear in our Summary Compensation Tables with amounts that reflect annual changes in the fair value of the stock awards granted to or held by the covered officers, including for each covered fiscal year: ◦Grants of LTI Awards: the year-end fair value of the awards granted in the covered fiscal year that remain outstanding and unvested as of the end of the year; •Vestings of LTI Awards: the change in fair value from the end of the prior fiscal year to the vesting date with respect to any awards granted in prior years that vested in the covered fiscal year; ◦Forfeitures of LTI Awards: the loss in fair value as of the end of the prior fiscal year with respect to any awards granted in prior years that were forfeited in the covered fiscal year; and •Prior LTI Awards that Remain Outstanding: the change in fair value from the end of the prior fiscal year to the end of the covered fiscal year with respect to any awards granted in prior years that are outstanding and unvested as of the end of the covered fiscal year. Accordingly, a substantial portion of the amounts reported as CAP for the fiscal years indicated relate to unvested awards that are contingent upon unsatisfied service and performance requirements and that remain subject to stock price fluctuation. For a discussion of the amounts actually realized by our named executive officers upon the vesting of stock awards during fiscal 2023, see "— Options Exercised and Stock Vested" beginning on page 75. The "Compensation Discussion and Analysis" section of this proxy statement beginning on page 45 sets forth the factors considered by Committee (and with respect to our current CEO and our former CEO, the Board) when reviewing and setting the compensation of our named executive officers for fiscal 2023. The amounts reported below as CAP were not considered as part of this process.

  90. Pay Versus Performance

    | Fiscal Year | | | | | | | | | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | Net Income(4) | | Adjusted EBITDA(5) | | | | Summary Compensation Table Total for Current PEO(1) | | CAP to Current PEO(1)(2) | | Summary Compensation Table Total for Former PEO(1) | | CAP to Former PEO(1)(2) | | Average Summary Compensation Table Total for Other NEOs(1) | | Average CAP to Other NEOs(1)(2) | | Company Total Shareholder Return(3) | | | Spade Defense Index Total Shareholder Return(3) | | | | | | | 2023 | | 255,967 | | 92,270 | | 836,533 | | (22,242,077) | | 813,657 | | (1,656,080) | | 43.06 | $152.99 | | 152.99 | | (28.30) | | 132.30 | | 2022 | — | | — | | 18,859,871 | | 22,797,417 | | 4,959,848 | | 7,195,351 | | 79.73 | | 128.13 | 128.13 | | | 11.30 | | 200.50 | | 2021 | — | | — | | 4,949,119 | | 1,559,821 | | 1,709,461 | | 597,369 | | 82.20 | | 136.60 | 136.60 | | | 62.00 | | 201.90 |

  91. Pay Versus Performance

    (1) The PEOs and Other NEOs whose compensation is reported in the table above include the current and former officers disclosed in the table below.

  92. Pay Versus Performance

    | Covered Officer or Group | Fiscal Year(s) | Name | Title | | Current PEO | 2023 | William L. Ballhaus(a) | President and Chief Executive Officer | | Former PEO | 2021-2023 | Mark Aslett(a) | Former President and Chief Executive Officer | | Other NEOs | 2023 | Michele M. McCarthy(a) | SVP, Chief Accounting Officer and Former Interim Chief Financial Officer and Treasurer | | | 2023 | Christine F. Harbison(a) | EVP, Chief Growth Officer | | | 2022-2023 | James M. Stevison | EVP, President of Mission Systems | | | 2022-2023 | Charles R. Wells | EVP, President of Microelectronics | | | 2021-2023 | Michael D. Ruppert(a) | Former EVP, Chief Financial Officer and Treasurer | | | 2022 | Thomas Huber | Former EVP, Chief Transformation Officer | | | 2021 | Christopher C. Cambria | EVP, General Counsel and Secretary | | | 2021 | Didier M.C. Thibaud | Former EVP, Chief Operating Officer |

  93. Pay Versus Performance

    (a) For a discussion of changes in employment, roles and responsibilities during fiscal 2023, see the Notes to the Summary Compensation Table beginning on page 68. (2) CAP reflects the total compensation reported in the Summary Compensation Table for the applicable fiscal year, as adjusted in accordance with the table below.

  94. Pay Versus Performance

    | Covered Officer or Group | Fiscal Year | Summary Compensation Table Total | Deduction of Stock Awards Included in Summary Compensation Table Total | Year End Fair Value of Outstanding and Unvested Equity Awards Granted in Covered Fiscal Year(a) | Year-Over-Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Fiscal Year | Fair Value at End of Prior Fiscal Year of Equity Awards Forfeited in Covered Fiscal Year(b) | Year-over-Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Covered Fiscal Year | Compensation Actually Paid | | Current PEO | 2023 | $255,967 | $(190,967)(c) | $137,530 | $(55,394) | $— | $(54,866) | $92,270 | | Former PEO | 2023 | 836,533 | — | — | — | (21,075,879) | (2,002,731) | (22,242,077) | | | 2022 | 18,859,871 | (16,981,781) | 21,054,950 | 671,932 | — | (807,555) | 22,797,417 | | | 2021 | 4,949,119 | (3,732,297) | 4,049,633 | (3,677,514) | — | (29,120) | 1,559,821 | | Other NEOs (group average) | 2023 | 813,657 | (361,958) | 277,383 | (875,095) | (1,313,428) | (196,639) | (1,656,080) | | | 2022 | 4,959,848 | (2,745,023) | 4,992,208 | 54,101 | — | (65,783) | 7,195,351 | | | 2021 | 1,709,461 | (1,078,205) | 665,928 | (693,131) | — | (6,684) | 597,369 |

  95. Pay Versus Performance

    (a) No LTI awards issued in any of the covered fiscal years vested within the same year. (b) Amounts reported in this column represent the fair value of unvested LTI awards forfeited by Messrs. Aslett and Ruppert by virtue of 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. No other LTI awards failed to meet applicable vesting conditions during any of the covered fiscal years reported. (c) Represents a deduction for the aggregate grant date fair value of stock awards granted to Mr. Ballhaus in his capacity as a non-employee director during fiscal 2023. For a further discussion, see Notes 5 and 6 to the Summary Compensation Table beginning on page 68. (3) Total shareholder returns ("TSRs") are based on an initial $100 investment, measured on a cumulative basis from the market closing price on July 2, 2020 through the market close on the last trading day of each covered fiscal year in each of Mercury common stock and the Spade Defense Index. We use the Spade Defense Index both as a performance modifier under our PSAs granted in fiscal 2024 and in the stock performance graph required by Item 201(e) of Regulation S-K included in our annual report to shareholders. (4) Amounts reported in millions. (5) We have designated adjusted EBITDA as our Company-Selected Measure under the PVP Rules, which is reported in this table in millions. Adjusted EBITDA is the principal financial measure used under our AIP to align annual payouts with performance. Adjusted EBITDA is a non-GAAP financial measure that excludes the effects of pre-established categories of items that the Human Capital and Compensation 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, see "Compensation Discussion and Analysis—Elements of Target Pay—Annual Incentives" beginning on page 59 and "Appendix B: Reconciliation of Non-GAAP Measures to GAAP Measures." The Committee does not consider the calculation of CAP as part of its executive compensation determinations; accordingly, the Committee does not actually use any financial performance measure specifically to link CAP to Company performance.