Document

DEF 14A 1 a2021proxystatement.htm DEF 14A Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

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Mercury Systems, Inc.

(Name of Registrant as Specified In Its Charter)

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September 9, 2021

Dear Shareholder:

We will hold our Annual Meeting of Shareholders on October 27, 2021, beginning at 10:00 a.m Eastern Time at the Company's headquarters at 50 Minuteman Road, Andover, Massachusetts 01810. We look forward to your attending the meeting either in person or by proxy. The enclosed notice of meeting, proxy statement, and proxy card describe the proposals to be acted upon at the meeting.

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

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


			Sincerely yours,

			Mark Aslett, President, Chief Executive Officer, and Director

MERCURY SYSTEMS, INC.

50 MINUTEMAN ROAD

ANDOVER, MA 01810

(978) 256-1300

Notice of Annual Meeting of Shareholders

To Be Held on October 27, 2021

The Annual Meeting of Shareholders of MERCURY SYSTEMS, INC. will be held on October 27, 2021, at 10:00 a.m. Eastern Time at the Company's headquarters at 50 Minuteman Road, Andover, Massachusetts 01810. The meeting is being held for the following purposes:

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

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

3. To ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal 2022.

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

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

The Board of Directors has fixed the close of business on August 25, 2021 as the record date for the meeting. All shareholders of record on that date are entitled to notice of and to vote at the meeting.

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

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders To Be Held on October 27, 2021: This proxy statement and Annual Report and Form 10-K for our fiscal year ended July 2, 2021 are available at www.edocumentview.com/MRCY.


			By Order of the Board of Directors

			Christopher C. Cambria Secretary

Andover, Massachusetts

September 9, 2021

EXECUTIVE SUMMARY

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

Proposals and Board Recommendations

No.

Proposal Summary

Board's Voting Recommendations

Election of Three Class III Directors

FOR each nominee

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

FOR

Ratification of Appointment of Our Independent Registered Public Accounting Firm for Fiscal 2022

FOR

Cautionary Note on Forward-Looking Statements: This proxy statement contains certain forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including those relating to the acquisitions described herein and to fiscal 2022 business performance and beyond and the Company's plans for growth, cost savings and improvement in profitability and cash flow. You can identify these statements by the use of the words "may," "will," "could," "should," "would," "plans," "expects," "anticipates," "continue," "estimate," "project," "intend," "likely," "forecast," "probable," "potential," and similar expressions. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include, but are not limited to, continued funding of defense programs, the timing and amounts of such funding, general economic and business conditions, including unforeseen weakness in the Company's markets, effects of epidemics and pandemics such as COVID, effects of any U.S. Federal government shutdown or extended continuing resolution, effects of continued geopolitical unrest and regional conflicts, competition, changes in technology and methods of marketing, delays in completing engineering and manufacturing programs, changes in customer order patterns, changes in product mix, continued success in technological advances and delivering technological innovations, changes in, or in the U.S. Government's interpretation of, federal export control or procurement rules and regulations, changes in, or in the interpretation or enforcement of environmental rules and regulations, market acceptance of the Company's products, shortages in or delays in receiving components, production delays or unanticipated expenses due to performance quality issues with outsourced components, inability to fully realize the expected benefits from acquisitions, restructurings and value creation initiatives such as 1MPACT, or delays in realizing such benefits, challenges in integrating acquired businesses and achieving anticipated synergies, increases in interest rates, changes to industrial security and cyber-security regulations and requirements, changes in tax rates or tax regulations, changes to interest rate swaps or other cash flow hedging arrangements, changes to generally accepted accounting principles, difficulties in retaining key employees and customers, unanticipated costs under fixed-price service and system integration engagements, and various other factors beyond our control. These risks and uncertainties also include such additional risk factors as are discussed in the Company's filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended July 2, 2021. The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.

To Our Shareholders,

At Mercury Systems, we deliver Innovation That Matters®. We make trusted, secure mission-critical technologies profoundly more accessible for aerospace and defense.

Mercury's fiscal 2021 results were strong, led by double-digit growth in revenue, record adjusted EBITDA, and design wins totaling more than $1.5 billion in estimated lifetime value. We made record investments in the business. These included internal R&D to drive innovation, capital investments to consolidate and build out our facilities, and sustained efforts to keep our people safe amid the COVID pandemic.

We acquired Physical Optics Corporation and Pentek in fiscal 2021, strengthening our C4I and sensor and effector mission systems capabilities. And we concluded the year by launching a company wide effort called "1MPACT" to lay the foundation for our next phase of value creation at scale. Our goal for 1MPACT is to achieve Mercury's full growth, margin expansion, and adjusted EBITDA potential over the next five years.

Positive Growth Outlook

Fiscal 2021 was successful yet more challenging than we anticipated, and we believe the year ahead could be similar. That said, the Mercury team is doing an outstanding job managing, de-risking and growing the business, and we are beginning fiscal 2022 with more than $900 million of backlog.

Mercury's total company revenue continues to grow faster than overall defense spending. The secular growth trends benefiting the company remain favorable, and we are well-aligned with the U.S. National Defense Strategy. The government continues to push for modernization, speed, and affordability in both sensor and effector mission systems and C4I.

Focusing on large and faster-growing parts of the defense market, we have diversified Mercury's business to the point where we now participate in more than 300 different programs, which continue to serve us well. We are designed-in on our top programs, with the majority being sole source positions. Our largest revenue programs in fiscal 2021 were a classified radar program, LTAMDS, F-35, SEWIP, and E-2D Hawkeye.

Although total company revenue increased 16% from fiscal 2020, Mercury's organic revenue growth was challenged by COVID-related modernization delays on SEWIP and other naval surface programs. We also encountered customer execution issues on the F-35 TR3 and a delay in a large foreign military sale. As a result, our fiscal 2021 organic growth rate slowed to 5%, year-over-year.

Looking toward fiscal 2022, we are expecting a significant rebound in bookings versus fiscal 2021, with a positive book-to-bill for the year and substantial growth in our backlog. We have recently seen an improvement in customer activity levels. In addition, we expect our design wins to again total more than $1 billion in estimated lifetime value. We expect these programs, as well as prior design wins, to convert into increased bookings and backlog as they transition into production over time.

From a revenue perspective, our outlook for fiscal 2022 reflects the past year's program slowdowns mentioned above, as well as a more recent delay in the LTAMDS program. Given this backdrop, we are now expecting Mercury to deliver flat organic revenue growth in fiscal 2022. We are expecting approximately 10% total company revenue growth prior to future M&A, eclipsing $1 billion for the first time, as well as record adjusted EBITDA.

Looking farther ahead, for fiscal 2023 we currently expect Mercury's organic growth to accelerate back to more normal, high single-digit to low double-digit levels. This growth is expected to be driven by: 1) the improving environment; 2) the anticipated growth in bookings in fiscal 2022; and 3) the substantial expected revenue growth on the F-35, LTAMDS, Filthy Buzzard, and other programs.

Value Creation at Scale

Since fiscal 2014 we have completed 13 acquisitions deploying $1.2 billion of capital, dramatically scaling and transforming the business as a result. We have grown the estimated lifetime value of Mercury's top-30 programs and pursuits from $4.6 billion to more than $11 billion. This opportunity pipeline is greater than 10X the size of our backlog and represents the foundation for our future growth.

We have expanded the scope of our offerings and capabilities at the same time, leading to a nearly 8-fold increase in subsystems revenue. We have insourced manufacturing. Our headcount has increased 3.5X. Our footprint has grown from 10 to 27 locations, and our external supply chain spend has increased nearly 3X.

Over this period, we have successfully grown our total revenue 4.4X and adjusted EBITDA more than 9X. As demonstrated by the more rapid growth in adjusted EBITDA, we have extracted substantial cost and revenue synergies from our acquisitions over time. This has significantly reduced our gross purchase price multiple to net for the deals that Mercury has completed.

We see the opportunity to create substantial additional value beyond the synergies already achieved. Our 1MPACT efforts are aimed at capturing this value with future scaling of the business in mind. Led by our new Chief Transformation Officer who reports to me, over the next two to three years, in addition to growth, 1MPACT will focus on six areas: 1) organizational efficiency and scalability; 2) procurement and supply chain; 3) facilities optimization; 4) R&D investment efficiency; 5) capital and asset efficiency; and 6) scalable common processes and systems.

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Overall, 1MPACT is about enabling Mercury's future – doing what we have done since fiscal 2014, but doing it efficiently and effectively at greater scale. We expect that 1MPACT will also accelerate value creation as we apply the new processes and methodologies to future M&A activity, which remains an integral part of our strategy. We believe that we are well-positioned to continue supplementing Mercury's organic growth with accretive acquisitions going forward.

Momentum for Fiscal 2022 and Beyond

In summary, we believe the current business environment is transitory and the secular growth trends that benefit Mercury remain in place. In light of the signs of improvement we are currently seeing, we expect to deliver substantial growth in bookings and backlog in fiscal 2022. Given this positive momentum, fiscal 2023 is shaping up to be a strong year for Mercury as organic growth returns to normal levels, and margins expand as a result of recent 1MPACT actions taken.

Our longer-term outlook remains intact, and our strategy remains the same. That is, to deliver high single-digit to low double-digit organic revenue growth averaging 10% over time, coupled with M&A and margin expansion. This strategy has worked extremely well for us for nearly a decade. In launching 1MPACT as we cross the $1 billion revenue threshold, we look forward to replicating this performance and achieving Mercury's full growth and adjusted EBITDA potential over the course of the next five years.

Board of Directors

Vincent Vitto, our Chairman of the Board, informed the Board of Directors that he will retire from his service on the Board at the end of his current term effective at the 2021 Annual Meeting of Shareholders. We thank Mr. Vitto for his service on the Board and his guidance as Chairman as we have grown and developed over the past 15 years. The Board has selected William K. O'Brien, a current director, to serve as Chairman of the Board effective upon Mr. Vitto's retirement. We have also nominated Debora A. Plunkett, a retired Federal Senior Executive from the National Security Agency for election to the Board to fill the vacancy left from Mr. Vitto's retirement. Ms. Plunkett's extensive experience in cyber and national security as well as information assurance will be an excellent addition to the Board.

On behalf of everyone on the Mercury Systems team, I would like to extend our deep appreciation for your continuing support. We look forward to keeping you apprised of our progress.

Sincerely,

Mark Aslett

President and Chief Executive Officer

September 9, 2021

Executive Compensation Highlights and Alignment of Compensation with Business Strategy

Pay for Performance

Our executive compensation program is designed to attract, motivate, engage, and retain a talented leadership team and to appropriately reward them for their contributions to our business. Our performance framework consists of a combination of financial performance measures that provide a balance between short-term results and drivers of long-term value. We provide our executive officers with three primary elements of pay: base salary; a performance cash bonus opportunity; and long-term equity incentive compensation. By placing a substantial majority of our executives' compensation at risk through performance-based variable compensation, we align our compensation program with our business strategy. The following charts show the pay mix for our CEO and our other named executive officers for fiscal 2021.

Performance-based variable compensation accounted for 85% and 75% of total compensation for our CEO and other named executive officers, respectively, for fiscal 2021. The foregoing percentages were calculated using the salary, annual cash bonuses, and the grant date fair value of equity awards as reported for fiscal 2021 in the Summary Compensation and Grants of Plan-Based Awards Tables. All other compensation for our named executive officers for fiscal 2021, which consisted of a $12,000 allowance for tax and financial planning for executives, and a 401(k) match which is available to all employees, amounted to less than 1% of total compensation for named executive officers and is not reflected in the table above due to rounding.

Executive Bonus Program

For our fiscal 2021 executive bonus program, 100% of the total value was based on our achieving corporate financial performance objectives. Our fiscal 2021 executive bonus plan was split into two halves, with specific financial performance targets addressing the first half and the second half of the fiscal year. We used two semi-annual performance periods with two different performance targets in order to align our cash incentive program with our strategic operating plan ("SOP") review and mid-year SOP update. We determined the potential total size of the annual cash incentive bonuses at the beginning of the fiscal year as well as set the first half financial performance target, and then set the second half and full year performance target in connection with our mid-year SOP update. Potential over-achievement awards were based on exceeding the sum of the two half year corporate financial performance objectives. The target bonus was weighted 43% for the first half and 57% for the second half of the fiscal year, reflecting the fiscal 2021 adjusted EBITDA split between the first and second halves of the fiscal year in our SOP, with a catch-up feature for unearned first half cash incentives based on our full year performance.

Our executive officers received payouts at 100% of the first half target corporate financial performance bonus and 0% of the second half target corporate financial performance bonus. No over-achievement bonuses were received for fiscal 2021. Program delays, due largely to COVID and the change in administration, resulted in a $184 million fiscal 2021 bookings shortfall and reduced our organic revenue growth by approximately five percentage points for the year, causing us to lower our earnings guidance for the fourth quarter of fiscal 2021. While we revised our earnings guidance downward and met our revised expectations, we did not meet our original targets. As a result, we had to make some difficult decisions - one of which included fiscal 2021 second half bonus payments. The executive leadership team did not receive any bonus payout with respect to the second half of the fiscal year. The foregone executive bonus amounts were used to help maximize the pool for all other employees and the use of discretion to reduce bonus payouts increased the Company's overall adjusted EBITDA for second half and full fiscal year. Accordingly, the executive leadership team's payout was limited to 43% of target for the fiscal year, or the amount of bonus paid for the fiscal 2021 first half performance.

Executive Equity Awards

Each fiscal 2021 restricted stock award for our named executive officers was 50% performance-based vesting and 50% time-based vesting. For the time-based awards, one-third vests on each of the first three anniversaries of the grant date. For the performance-based awards, the awards vest based on relative performance to our peer group for the three-year period ending in fiscal 2023. For fiscal 2021, we used two relative performance metrics for the performance-based awards: (i) a ratio of adjusted EBITDA to revenue, percentile ranked relative to our peer group (50% weighting); and (ii) revenue growth percentage, percentile ranked relative to our peer group (50% weighting).

Our fiscal 2019 performance-based restricted stock awards vested at 250% based on our performance for the three-year period ended in fiscal 2021. Our fiscal 2019 performance awards used a mix of the ratio of adjusted EBITDA to revenue, percentile ranked relative to our peer group (75% weighting), and revenue growth percentage, percentile ranked relative to our peer group (25% weighting). Our financial results for the fiscal 2019 performance awards were at the 80th and 100th percentiles, respectively, of EBITDA margin and revenue growth compared to our peer group.

Compensation Governance and Best Practices

What We Do

Provide short-term and long-term incentive plans with performance targets aligned to business objectives

Conduct an annual advisory vote for shareholders to approve executive compensation

Maintain a Human Capital and Compensation Committee composed entirely of independent directors

Require stock ownership for all executives

Conduct regular shareholder outreach and engagement

Retain an independent executive compensation consultant to the Human Capital and Compensation Committee

Maintain an insider trading policy requiring executives and directors to trade only during established window periods after contacting our General Counsel prior to any sales or purchases of Mercury shares

Use only double trigger change in control agreements for executives (change in control and termination of employment)

Maintain a clawback policy for actions that result in a financial restatement

What We Don't Do

Provide gross-up payments to cover personal income taxes or excise taxes pertaining to executive or severance benefits

Allow employees, executives, and directors to engage in hedging or pledging of Mercury shares

Reward excessive, inappropriate, or unnecessary risk-taking

Allow the repricing or backdating of equity awards

Provide pension plans, supplemental executive retirement plans, or deferred compensation plans

Pay dividends or dividend equivalents on unvested equity awards

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Our Board of Directors

The following table provides summary information about our Directors and Director Nominee.

Committee Memberships

Name

Director Since

Primary Occupation

Independent

NGC

GRC

M&A

Mark Aslett Class II Director Term Ending in 2023

2007

President and CEO Mercury Systems

James K. Bass Class I Director Term Ending in 2022

2010

Former President and CEO Piper Aircraft

Yes

M, F

Orlando P. Carvalho Class III Director Nominated for a Term Ending in 2024

2020

Former Executive Vice President Aeronautics, Lockheed Martin

Yes

Michael A. Daniels Class I Director Term Ending in 2022

2010

Former Chairman and CEO Mobile 365 and Network Solutions

Yes

Lisa S. Disbrow Class I Director Term Ending in 2022

2017

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

Yes

M, F

Mary Louise Krakauer Class II Director Term Ending in 2023

2017

Former Executive Dell and EMC

Yes

Barry R. Nearhos Class III Director Nominated for a Term Ending in 2024

2018

Former Managing Partner PricewaterhouseCoopers

Yes

C,F

William K. O'Brien Class II Director Term Ending in 2023

2008

Former Executive Chairman Enterasys Networks

Yes

M, F

Debora A. Plunkett Class III Director Nominee Nominated for a Term Ending in 2024

N/A

Federal Senior Executive (Retired) National Security Agency

Yes

Vincent Vitto Class III Director Term Ending in 2021 Chairman of the Board

2006

Former President and CEO Charles Stark Draper Laboratory

Yes

AC = Audit Committee

GRC = Government Relations Committee

M = Member

HC = Human Capital and Compensation Committee

M&A = M&A and Finance Committee

C = Committee Chair

NGC = Nominating and Governance Committee

F = Financial Expert

We are proposing that our two continuing Class III directors, Orlando P. Carvalho and Barry R. Nearhos, and our new director nominee, Debora A. Plunkett, 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. Mr. Vitto, a Class III director, informed the Board of Directors that he will retire from his service on the Board at the end of his current term effective at the 2021 Annual Meeting of Shareholders. We thank Mr. Vitto for his service on the Board and his guidance as Chairman as we have grown and developed over the past 15 years. The Board has selected Mr. O'Brien to serve as Chairman of the Board effective upon Mr. Vitto's retirement. We have also nominated Debora A. Plunkett, a retired Federal Senior Executive from the National Security Agency

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for election to the Board to fill the vacancy left from Mr. Vitto's retirement. Ms. Plunkett's extensive experience in cyber and national security as well as information assurance will be an excellent addition to the Board.

Environmental, Social, and Corporate Governance Highlights

Governance

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


Board and Governance Information (1)		Board and Governance Information (1)
Size of the Board of Directors	9	Board Meetings Held During Fiscal 2021 (3)	12
Number/ % of Independent Directors	8/ 89%	Poison Pill	No
Average Age of Independent Directors	66	Proxy Access	No
Average Independent Director Tenure	7 years	Code of Business Conduct and Ethics	Yes
Women Board Members	33%	Stock Ownership Guidelines: Directors & Executives	Yes
Board Committees Chaired by Women	40%	Board Refreshment: New Directors Over Past 5 Years	5
Classified Board of Directors	Yes	Anti-Hedging and Pledging Policies	Yes
Majority Voting in Director Elections	Yes	Compensation Clawback Policy	Yes
Plurality Voting in Contested Director Elections	Yes	Separate Chairman and CEO	Yes
Annual Board and Committee Self-Assessments	Yes	Ongoing Shareholder Outreach and Engagement	Yes
Annual Director Peer Assessments	Yes	Capital Structure with One Vote per Common Share	Yes
Limited Membership on Other Public Co Boards	Yes	Succession Planning Process for Senior Management	Yes
Board Committees are 100% Independent Directors	Yes (2)	Regular Executive Sessions without Management	Yes

(1) Reflects the retirement of Mr. Vincent Vitto from the Board as well as Chairman of the Board effective upon the 2021 Annual Meeting of Shareholders as well as the nomination of Debora A. Plunkett for election at the Annual Meeting.

(2) Each of the Audit Committee, Human Capital and Compensation Committee, Nominating and Governance Committee, and M&A and Finance Committee is comprised of 100% independent directors. Our CEO is a member of the Government Relations Committee as we believe his experience with our customers and markets adds value to the Committee.

(3) During fiscal 2021, we conducted our Board and Committee meetings virtually using video conference calls as part of our COVID safety protocols and found the meetings to be highly effective in a socially distanced environment.

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

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

Talent Management

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

We consistently receive high overall approval ratings from our employees. According to our Glassdoor reviews, we had a 4.5 rating out of 5 as of June 11, 2021, with 98% of reviewers saying that they approve of our CEO and 93% of reviewers saying that they would recommend Mercury to a friend. Our Phoenix, Arizona, facility, our largest manufacturing facility, was recognized as Medium Manufacturer of the Year in 2020 by the Arizona Manufacturers Council for its accomplishments in championing innovation, excellence, sustainability, and leadership in the manufacturing sector. The Boston Globe ranked Mercury for 2020 as one of the Top Places to Work in Massachusetts, where we are headquartered and employ over 300 people as of July 2, 2021.

Organizational efficiency and scalability are a major theme of 1MPACT, and we recently implemented an organizational redesign to reduce the number of layers of management in the company while increasing the span of the typical manager.

Diversity, Equity, and Inclusion

We are focused on advancing diversity, equity, and inclusion internally and externally through a variety of programs and initiatives, including the following examples:

•In 2021, we formally recognized the Juneteenth holiday, continued to support the LGBTQ+ community through a variety of initiatives, adapted our logo to support Pride month, and expressed our support for the Asian-American community.

•We sponsored a predominantly female Brigham Young University (BYU) capstone team to provide opportunities for senior-level engineering students in Computer, Electrical, Manufacturing, and Mechanical Engineering to participate in real-world engineering challenges. You can listen to representatives from BYU and Mercury share their thoughts on gender parity in the workplace and how we can all work together to advance the roles of women in technology on our YouTube channel.

•We were a gold sponsor at the Simmons Leadership Conference, which has inspiring keynote speakers offer candid stories about their experiences on the way to the top of their career paths. You can also listen to Mercury leaders discuss their experiences as women leaders with the Simmons Leadership Conference on our YouTube channel.

Our Response to COVID

With COVID impacting people and countries around the world, we focused on "leading from the front," communicating as frequently and openly as possible to help keep all of our stakeholders informed of the latest developments at Mercury.

We remain laser-focused on the four goals we established: to protect the health, safety, and livelihoods of our people; to mitigate or reduce operational and financial risks to the business; to continue to deliver on our commitments to customers and shareholders; and to continue the mission-critical work Mercury does every day to support the ongoing security of our nation, our brave men and women in uniform, and the communities in which we all live.

We implemented a number of preventive measures and other resources to protect the safety and well-being of our extended Mercury family while the pandemic was affecting our communities, including:

•creation of a $1 million employee COVID-19 relief fund;

•weekly onsite COVID-19 testing at Mercury sites;

•120 hours of COVID-19 sick leave for all team members;

•policies and procedures that ensure the safety of our onsite team members;

•caregiver resources (childcare and elder care), including a "Kid’s Corner";

•memberships to the health and wellness apps Aaptiv and Headspace;

•Dr. David Zieg, our chief medical advisor, hosting regular webinars for all team members in English, in addition to Spanish and Vietnamese webinars hosted by other medical advisors on the same topics;

•creation of a Mercury COVID-19 dashboard that is updated for all of our sites; and

•regular internal surveys to gather team member feedback and concerns.

We also implemented a multi-phase return to workplace initiative allowing us to return to work slowly, methodically and with extra vigilance, as well as created onsite, hybrid, and remote work job classifications based on the nature of the duties performed.

Cyber and Industrial Security

The layers of cyber security we have built into our business systems and incorporated into our processes help ensure the critical data that drives the development of customer solutions is secure and protects our employees' personal information. Our good work has been recognized and we remain focused on modeling industry best practices. We were not impacted by the recent cybersecurity incidents in the news such as the intrusion into customers of SolarWinds.

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

Responsible Sourcing

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

Our 1MPACT initiatives include a focus on supply chain efficiency and procurement savings, which we believe will further enhance our competitiveness and value in the coming years.

Environmental Stewardship

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

Facilities optimization and capital and asset efficiency are also significant themes in 1MPACT, and we believe we will create further value for all of our stakeholders as we use our resources more efficiently.

Further Information

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

TABLE OF CONTENTS


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QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING			1
PROPOSAL 1: ELECTION OF THREE CLASS III DIRECTORS			4
CORPORATE GOVERNANCE			17
DIRECTOR COMPENSATION			26
EQUITY COMPENSATION PLANS			28
PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION ("SAY-ON-PAY")			29
PROPOSAL 3 : RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			30
VOTING SECURITIES			31
EXECUTIVE OFFICERS			33
COMPENSATION DISCUSSION AND ANALYSIS			35
REPORT OF THE HUMAN CAPITAL AND COMPENSATION COMMITTEE			63
REPORT OF THE AUDIT COMMITTEE			64
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			66
HUMAN CAPITAL AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION			67
DELINQUENT SECTION 16(a) REPORTS			67
SHAREHOLDER PROPOSALS FOR THE 2022 ANNUAL MEETING			67
OTHER MATTERS			67
ANNUAL REPORT ON FORM 10-K			68
Appendix A — Reconciliation between adjusted EBITDA and GAAP			69

xii

MERCURY SYSTEMS, INC.

50 MINUTEMAN ROAD

ANDOVER, MA 01810

(978) 256-1300

QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING

Why am I receiving these materials?

We are mailing this proxy statement, with the accompanying proxy card, to you on or about September 9, 2021 in connection with the solicitation of proxies by the Board of Directors of Mercury Systems, Inc. ("Mercury") for the annual meeting of shareholders to be held on October 27, 2021, and any adjournment or postponement of that meeting. The meeting will be held on October 27, 2021, beginning at 10:00 a.m. Eastern Time at our headquarters at 50 Minuteman Road, Andover, Massachusetts 01810. You are invited to attend the meeting, and we request that you vote on the proposals described in this proxy statement. You do not need to attend the meeting to vote your shares. You may vote by internet, telephone, or mail in order to have your shares voted at the meeting on your behalf.

What am I voting on?

There are three matters scheduled for a vote:

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

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

•ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal 2022.

Who can attend and vote at the meeting?

Shareholders of record at the close of business on August 25, 2021 are entitled to attend and vote at the meeting. Each share of our common stock is entitled to one vote on all matters to be voted on at the meeting, and can be voted only if the record owner is present to vote or is represented by proxy. The proxy card provided with this proxy statement indicates the number of shares of common stock that you own and are entitled to vote at the meeting.

What is the Admission Policy for the Annual Meeting?

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

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

•Admission Procedures. In order to be admitted to the meeting, you must present both an admission ticket and valid government-issued photo identification, such as a driver’s license or passport. You must register on or prior to October 15, 2021 in order to obtain an admission ticket.

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

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

What constitutes a quorum at the meeting?

The presence at the meeting, in person or represented by proxy, of the holders of a majority of our common stock outstanding on August 25, 2021, the record date, will constitute a quorum for purposes of the meeting. On the record date, 56,910,323 shares of our common stock were outstanding. For purposes of determining whether a quorum exists, proxies received but marked "abstain" and so-called "broker non-votes" (described below) will be counted as present.

How do I vote my shares?

•Beneficial Shareholders. If you own shares through a broker, bank, or other holder of record (that is, your shares are held in "street name"), you must instruct the holder of record how to vote your shares. In order to provide voting instructions to the holder of record of your shares, please refer to the materials forwarded by your broker, bank, or other holder of record. If your shares are held in "street name" and you wish to vote them online at the meeting, you must obtain from your broker a properly executed legal proxy identifying you as a Mercury shareholder, authorizing you to act on behalf of the broker at the meeting, and specifying the number of shares with respect to which the authorization is granted. Proxies submitted by internet or telephone must be received by 11:59 p.m., Eastern Time, on October 26, 2021.

•Registered Shareholders. If you own shares that are registered in your name, you may vote by proxy before the annual meeting by internet at www.envisionreports.com/MRCY, by calling 1-800-652-VOTE (8683), or by signing and returning your proxy card. To vote by internet or telephone, you will need your voting control number, which can be found on your proxy card. Proxies submitted by internet or telephone must be received by 11:59 p.m., Eastern Time, on October 26, 2021. If you return a signed proxy card but do not provide voting instructions for some or all of the matters to be voted on, your shares will be voted on all uninstructed matters in accordance with the recommendations of the Board.

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

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

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

•FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal 2022; and

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

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

A broker holding your shares in "street name" must vote those shares according to any specific instructions it receives from you. If specific instructions are not received, your broker may vote your shares in its discretion, depending on the type of proposal involved. Under applicable rules, there are certain matters on which brokers may not vote without specific instructions from you, such as the election of directors and the advisory vote on say-on-pay. If such matters come before the meeting and you have not specifically instructed your broker how to vote your shares, your shares will not be voted on those matters, giving rise to what is called a "broker non-vote." Shares represented by broker non-votes will be counted for purposes of determining the existence of a quorum for the transaction of business, but for purposes of determining the number of shares voting on a particular proposal, broker non-votes will not be counted as votes cast or shares voting.

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

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

•Registered Shareholders. Registered shareholders may revoke their proxies or change their voting instructions at any time before 11:59 p.m., Eastern Time, on October 26, 2021, by submitting a proxy via internet, telephone, or mail that is dated later than the original proxy or by delivering written notice of revocation to our Corporate Secretary. Registered shareholders may also revoke their proxies or change their vote by attending the annual meeting and voting by ballot.

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

How are votes counted?

•Election of directors. A director nominee receiving a majority of the votes properly cast at the meeting for the nominee's election (meaning he or she receives more votes cast "FOR" than cast "WITHHOLD") will be elected

director. Abstentions and broker non-votes, which are described above, will have no effect on the outcome of voting on these matters.

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

How is Mercury soliciting proxies?

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

PROPOSAL 1: ELECTION OF THREE CLASS III DIRECTORS

The following table provides summary information about our Directors and Director Nominee.

Committee Memberships

Name

Director Since

Primary Occupation

Independent

NGC

GRC

M&A

Mark Aslett Class II Director Term Ending in 2023

2007

President and CEO Mercury Systems

James K. Bass Class I Director Term Ending in 2022

2010

Former President and CEO Piper Aircraft

Yes

M, F

Orlando P. Carvalho Class III Director Nominated for a Term Ending in 2024

2020

Former Executive Vice President Aeronautics, Lockheed Martin

Yes

Michael A. Daniels Class I Director Term Ending in 2022

2010

Former Chairman and CEO Mobile 365 and Network Solutions

Yes

Lisa S. Disbrow Class I Director Term Ending in 2022

2017

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

Yes

M, F

Mary Louise Krakauer Class II Director Term Ending in 2023

2017

Former Executive Dell and EMC

Yes

Barry R. Nearhos Class III Director Nominated for a Term Ending in 2024

2018

Former Managing Partner PricewaterhouseCoopers

Yes

C,F

William K. O'Brien Class II Director Term Ending in 2023

2008

Former Executive Chairman Enterasys Networks

Yes

M, F

Debora A. Plunkett Class III Director Nominee Nominated for a Term Ending in 2024

N/A

Federal Senior Executive (Retired) National Security Agency

Yes

Vincent Vitto Class III Director Term Ending in 2021 Chairman of the Board

2006

Former President and CEO Charles Stark Draper Laboratory

Yes

AC = Audit Committee

GRC = Government Relations Committee

M = Member

HC = Human Capital and Compensation Committee

M&A = M&A and Finance Committee

C = Committee Chair

NGC = Nominating and Governance Committee

F = Financial Expert

Who sits on the Board of Directors?

Our by-laws provide for a Board of Directors of not fewer than three nor more than fifteen directors. As permitted by Massachusetts law, the Board of Directors is divided into three classes, with each class consisting, as nearly as may be possible, of one-third of the whole number of the Board of Directors. The Board of Directors currently consists of nine members, with James K. Bass, Michael A. Daniels, and Lisa S. Disbrow serving as Class I directors, Mark Aslett, Mary Louise Krakauer, and

William K. O'Brien serving as Class II directors, and Orlando P. Carvalho, Barry R. Nearhos, and Vincent Vitto serving as Class III directors.

The terms of the Class I, Class II, and Class III directors expire in 2022, 2023, and 2021, respectively. With the expiration of its respective term, each class is nominated for election for a subsequent three-year term. We are proposing that the Class III nominees, which consist of two incumbent directors, Orlando P. Carvalho and Barry R. Nearhos, and one new director nominee, Debora A. Plunkett, 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. Mr. Vitto, a Class III director, informed the Board of Directors that he will retire from his service on the Board at the end of his current term effective at the 2021 Annual Meeting of Shareholders. We thank Mr. Vitto for his service on the Board and his guidance as Chairman as we have grown and developed over the past 15 years. The Board has selected Mr. O'Brien to serve as Chairman of the Board effective upon Mr. Vitto's retirement.

Directors' Qualifications and Diversity

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

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

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

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

Experience/ Qualification

Relevance to Mercury

Public Co. CEO

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

Senior Leadership

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

Defense Industry

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

Technology Industry

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

Corporate Governance

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

Risk Management

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

Finance and Accounting

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

Business Operations and Strategic Planning

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

Regulatory

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

Talent Management

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

Mergers & Acquisitions (M&A)

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

Debt and Equity Capital Markets

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

Diversity

The Board recognizes the benefits that diversity brings and has a stated goal to reflect gender, ethnic, and racial diversity in its membership.

Board Matrix for Non-Employee Directors and Director Nominee

Skill/ Qualification

James K. Bass

Orlando P. Carvalho

Michael A. Daniels

Lisa S. Disbrow

Mary Louise Krakauer

Barry R. Nearhos

William K. O'Brien

Debora A. Plunkett

Public Co. CEO

•

Senior Leadership

•

Defense Industry

•

Technology Industry

•

Corporate Governance

•

Risk Management

•

Finance and Accounting

•

Business Operations & Strategic Planning

•

Regulatory

•

Talent Management

•

Mergers & Acquisitions

•

Debt & Equity Capital Markets

•

Diversity

•

Mercury Board Tenure (years)

—

Other Public Company Boards

Recommendation

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

Information about the Directors

The persons named as proxies in the accompanying proxy card will vote, unless authority is withheld, for the election of the three Class III 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 as well as by our director nominee.

Class III Directors - Nominated for a Term Ending in 2024:

Orlando P. Carvalho

Age: 63

Committee Memberships:

Director Since: 2020

Human Capital & Compensation Government Relations

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 Mergers & Acquisitions Talent Management

Other Public Company Directorships Held in the Last Five Years:

None

Barry R. Nearhos

Age: 63

Committee Memberships:

Director Since: 2018

Audit (Chair)

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 June 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." 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 Debt & Equity Capital Markets

Other Public Company Directorships Held in the Last Five Years:

Virtusa Corporation (2016 - 2021)

Debora A. Plunkett

Age: 61

Committee Memberships:

Director Since: N/A Nominee for Director

N/A

Primary Occupation:

Federal Senior Executive (Retired), National Security Agency

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 Business Operations & Strategy Regulatory Talent Management Diversity

Other Public Company Directorships Held in the Last Five Years:

CACI International Inc. (2018 - present)

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

Class II Directors - Serving a Term Ending in 2023:

Mark Aslett

Age: 53

Committee Memberships:

Director Since: 2007

Government Relations

Primary Occupation:

President and CEO, Mercury Systems

Description of Business Experience:

Skills and Qualifications:

Mr. Aslett has served as our President and Chief Executive Officer since November 2007. Prior to that, he was Chief Operating Officer and Chief Executive Officer of Enterasys Networks, a public technology company, from 2003 to 2006, and held various positions with Marconi plc and its affiliated companies, including Executive Vice President of Marketing, Vice President of Portfolio Management, and President of Marconi Communications—North America, from 1998 to 2002. Mr. Aslett served on the Board of Directors of Enterasys Networks from 2004 to 2006. He has also held positions at GEC Plessey Telecommunications, as well as other telecommunications-related technology firms. Mr. Aslett provides an insider's perspective in Board discussions about the business and strategic direction of the Company with his detailed knowledge of the Company’s employees, customers, suppliers, business prospects, and markets.

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

Mary Louise Krakauer

Age: 64

Committee Memberships:

Director Since: 2017

Human Capital & Compensation (Chair)

Primary Occupation:

Former Executive, Dell and EMC

Description of Business Experience:

Skills and Qualifications:

Ms. Krakauer retired as the Executive Vice President, Chief Information Officer of Dell Corporation in 2017, where she was responsible for global IT. She served as the Executive Vice President, Chief Information Officer of EMC Corporation in 2016. Prior to that she served as EVP, Business Development, Global Enterprise Services for EMC Corporation during 2015. From 2012 to 2015 she was Executive Vice President, Global Human Resources for EMC Corporation, responsible for developing and executing a talent strategy in support of the business strategy, including executive and employee recruitment and development, compensation and benefits, acquisition integration and succession planning. Previously, she led large businesses as COO, Technology Services & Solutions and Managed Services at EMC Corporation, and VP/General Manager of multiple services businesses at Hewlett-Packard Corporation, Compaq Computer Corporation, and Digital Equipment Corporation. She has been a director of Xilinx Inc., a publicly-traded adaptive and intelligent computing company, since 2017 and DXC Technology Co., a publicly-traded IT services company, since 2018. Ms. Krakauer's qualifications to serve on our Board of Directors include her extensive executive experience in the technology industry, including leading large businesses, as well as the IT and Human Resources functions of a public company.

Senior Leadership Technology Industry Corporate Governance Risk Management Business Operations & Strategy Talent Management Mergers & Acquisitions Diversity

Other Public Company Directorships Held in the Last Five Years:

DXC Technology Co. (2018 - present)

Xilinx Inc. (2017 - present)

William K. O'Brien

Age: 77

Committee Memberships:

Director Since: 2008

Audit M&A and Finance Nominating & Governance

Primary Occupation:

Former Executive Chairman, Enterasys Networks

Description of Business Experience:

Skills and Qualifications:

Mr. O'Brien served as Executive Chairman at Enterasys Networks, a public technology company, from 2003 until his retirement in 2006. He served as Chief Executive Officer of Enterasys from 2002 to 2004, and as a member of the Board of Directors of Enterasys from 2002 to 2006. Prior to working at Enterasys, he worked for PricewaterhouseCoopers where he held several different senior management positions. Mr. O'Brien had over 33 years of experience in auditing and professional services while at PricewaterhouseCoopers. He was a director of Virtusa Corporation, a publicly-traded IT services and outsourcing company, from 2008 to 2020. Mr. O'Brien is one of our "audit committee financial experts." Mr. O'Brien's qualifications to serve on our Board of Directors include his executive experience in the technology industry, including being the Chairman and Chief Executive Officer of a public technology company, and his strong accounting and financial expertise.

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

Other Public Company Directorships Held in the Last Five Years:

Virtusa Corporation (2008 - 2020)

Class I Directors - Serving a Term Ending in 2022:

James K. Bass

Age: 64

Committee Memberships:

Director Since: 2010

Audit M&A and Finance

Primary Occupation:

Former President and CEO, Piper Aircraft

Description of Business Experience:

Skills and Qualifications:

Mr. Bass served as a director of TTM Technologies, Inc., a publicly-traded global printed circuit board manufacturer, from 2000 to 2018, as a director of Tigrent, Inc., a publicly-traded provider of information for real estate and financial investing, from 2010 to 2015, and as a director of Legacy Education Alliance, Inc., a successor to Tigrent and a publicly-traded provider of educational training from 2014 to 2019, including serving as Chairman of the Board of Legacy from 2015 to 2019. From September 2005 to June 2009, Mr. Bass served as the Chief Executive Officer and a director of Piper Aircraft, Inc., a general aviation manufacturing company. He served as the Chief Executive Officer and a director of Suntron Corporation, a provider of high mix electronic manufacturing services, from its incorporation in May 2001 until May 2005, and as Chief Executive Officer of EFTC Corporation, a subsidiary of Suntron Corporation, from July 2000 until April 2001. From 1992 to July 2000, Mr. Bass was a Senior Vice President of Sony Corporation. Prior to that, Mr. Bass spent 15 years in various manufacturing management positions at the aerospace group of the General Electric Company. Mr. Bass is one of our "audit committee financial experts." Mr. Bass' qualifications to serve on our Board of Directors include his extensive experience in the technology marketplace, his executive and operational experience as the Chief Executive Officer of a public company, and his broad experience with accounting and audit matters for publicly-traded companies.

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

Other Public Company Directorships Held in the Last Five Years:

TTM Technologies, Inc. (2000 - 2018)

Legacy Education Alliance, Inc. (2014 - 2019)

Michael A. Daniels

Age: 75

Committee Memberships:

Director Since: 2010

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

Primary Occupation:

Former Chairman and CEO, Mobile 365 and Network Solutions

Description of Business Experience:

Skills and Qualifications:

Mr. Daniels served as Chairman of the Board of Mobile 365, Inc. from May 2005 to November 2006 and served as its Chief Executive Officer from December 2005 to August 2006. Sybase acquired Mobile 365, Inc. in November 2006 and renamed it Sybase 365, Inc. Mr. Daniels was a director of Sybase, a publicly-traded global enterprise software and services company, from 2007 until its acquisition by SAP in 2010. From December 1986 to May 2004, Mr. Daniels served in a number of senior executive positions at Science Applications International Corporation (SAIC), a publicly-traded scientific, technical, and professional services firm, including Sector Vice President from February 1994 to May 2004. Mr. Daniels served as Chairman and Chief Executive Officer of Network Solutions, Inc., an internet company, from March 1995 to June 2000 when Verisign purchased Network Solutions. From June 2007 to July 2009, Mr. Daniels served on the Board of Directors of Luna Innovations, a high technology manufacturer. From 2007 to 2013 Mr. Daniels served as Chairman of GlobalLogic. Apax Partners purchased GlobalLogic in 2013. In addition to his role at Mercury, he currently serves on the Board of Directors of Blackberry, as Chairman of the Board of CACI International as well as a Board member of Two Six Technologies. He served as the Chairman of the Logistics Management Institute from 2010 to 2019. Mr. Daniels' qualifications to serve on our Board of Directors include his extensive executive experience in the defense and technology industries and experience serving as a director of public companies, including software and technology companies.

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

Other Public Company Directorships Held in the Last Five Years:

Blackberry Limited (2014 - present)

CACI International Inc. (2013 - present)

Lisa S. Disbrow

Age: 58

Committee Memberships:

Director Since: 2017

Audit Government Relations (Chair) Nominating & Governance

Primary Occupation:

Under Secretary of the Air Force (Retired)

Description of Business Experience:

Skills and Qualifications:

Ms. Disbrow retired as the U.S. Senate-confirmed Under Secretary of the Air Force in 2017, responsible for the affairs of the Air Force, including organizing, training, equipping, and providing for the welfare of approximately 660,000 active duty, Guard, Reserve and civilian Airmen, worldwide. She oversaw the Air Force’s annual budget of over $132 billion dollars and directed strategy and policy development, risk management, weapons requirements and acquisition, technology investments, and human resource management across a global enterprise. Ms. Disbrow served as the Acting Secretary of the Air Force from January through May 2017. In 2014, Ms. Disbrow was confirmed by the Senate as the Assistant Secretary of the Air Force for Financial Management and Comptroller, the principal senior official on all financial matters with a financial workforce of 10,000 personnel world-wide. She served in multiple senior positions on the Joint Staff and on the National Security Council at the White House. Ms. Disbrow was commissioned into the U.S. Air Force in 1985 and retired in 2008 as a Colonel with over 23 years of total active and reserve service. Ms. Disbrow is one of our "audit committee financial experts." 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 Risk Management Finance and Accounting Business Operations & Strategy Regulatory Talent Management Diversity

Other Public Company Directorships Held in the Last Five Years:

Perspecta, Inc. (2018 - 2021)

Blackberry Limited (2019 - present)

CORPORATE GOVERNANCE

Corporate Governance Highlights

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


Board and Governance Information (1)		Board and Governance Information (1)
Size of the Board of Directors	9	Board Meetings Held During Fiscal 2021 (3)	12
Number/ % of Independent Directors	8/ 89%	Poison Pill	No
Average Age of Independent Directors	66	Proxy Access	No
Average Independent Director Tenure	7 years	Code of Business Conduct and Ethics	Yes
Women Board Members	33%	Stock Ownership Guidelines: Directors & Executives	Yes
Board Committees Chaired by Women	40%	Board Refreshment: New Directors Over Past 5 Years	5
Classified Board of Directors	Yes	Anti-Hedging and Pledging Policies	Yes
Majority Voting in Director Elections	Yes	Compensation Clawback Policy	Yes
Plurality Voting in Contested Director Elections	Yes	Separate Chairman and CEO	Yes
Annual Board and Committee Self-Assessments	Yes	Ongoing Shareholder Outreach and Engagement	Yes
Annual Director Peer Assessments	Yes	Capital Structure with One Vote per Common Share	Yes
Limited Membership on Other Public Co Boards	Yes	Succession Planning Process for Senior Management	Yes
Board Committees are 100% Independent Directors	Yes (2)	Regular Executive Sessions without Management	Yes

Independence

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

Consistent with these considerations, the Board has determined that all of the members of the Board are independent directors, except Mr. Aslett, who is Mercury's President and Chief Executive Officer.

How are nominees for the Board selected?

Our Nominating and Governance Committee is responsible for identifying and recommending nominees for election to the Board. The Committee will consider nominees recommended by a shareholder if the shareholder submits the nomination in compliance with applicable requirements. The Committee did not receive any shareholder nominations for election of directors at this year's meeting. With respect to the nominees for Class III director standing for election at the meeting, Mr. Carvalho was most recently elected as a Class III director at the 2020 Annual Meeting of Shareholders, Mr. Nearhos was most recently elected as a Class III director at the 2019 Annual Meeting of Shareholders, and Ms. Plunkett is a new nominee for initial election at the 2021 Annual Meeting.

When considering a potential candidate for membership on the Board, the Nominating and Governance Committee will consider any criteria it deems appropriate, including, among other things, the experience and qualifications of any particular candidate as well as such candidate's past or anticipated contributions to the Board and its committees. At a minimum, each nominee is expected to have high personal and professional integrity and demonstrated ability and judgment, and to be effective, with the other directors, in collectively serving the long-term interests of our shareholders. In addition to these minimum qualifications, when considering potential candidates for the Board, the Committee seeks to ensure that the Board is comprised of a majority of independent directors and that the committees of the Board, other than the Government Relations Committee, are comprised entirely of independent directors. The Nominating and Governance Committee may also consider any other standards that it deems appropriate, including whether a potential candidate has direct experience in our industry and whether such candidate, if elected, would assist in achieving a mix of directors that represents a diversity of backgrounds and experiences. Our Board Policy recognizes the benefits that diversity brings to the Board and states that the Board has a goal to reflect gender, ethnic, and racial diversity in its membership. The Committee generally will evaluate and consider all candidates recommended by our directors, officers, and shareholders. The Committee intends to consider shareholder recommendations for directors using the same criteria that would be used with potential nominees recommended by members of the Committee or others.

Shareholders who wish to submit director candidates for consideration should send such recommendations to our Secretary at our executive offices not less than, unless a lesser time period is required by applicable law, 120 days nor more than 150 days prior to the anniversary date of the immediately preceding annual meeting of stockholders or special meeting in lieu of an annual meeting. Such recommendations must include the following information as to each person whom the shareholder proposes to nominate for election or reelection as a director:

•the name and address of the shareholder and each of his or her nominees;

•a description of all arrangements or understandings between the shareholder and each such nominee;

•such other information as would be required to be included in a proxy statement soliciting proxies for the election of the nominees of such shareholder; and

•the consent of each nominee to serve as a Director if so elected.

In addition, such recommendations must include the following information as to each shareholder giving the notice:

•the number of all shares of Mercury stock held of record, owned beneficially (directly or indirectly) and represented by proxy by such shareholder as of the date of such notice and as of one year prior to the date of such notice;

•a description of all arrangements or understandings between such shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by such shareholder;

•a description of any derivative position held or beneficially held (directly or indirectly) by such shareholder with respect to Mercury stock;

•a description of any proxy, contract, arrangement, understanding, or relationship between such shareholder and any other person or persons (including their names and addresses) in connection with the nomination or nominations to be made by such shareholder or pursuant to which such shareholder has a right to vote any Mercury stock; and

•a description of any proportionate interest in Mercury stock or derivative positions with respect to Mercury held, directly or indirectly, by a general or limited partnership in which such shareholder is a general partner or, directly or indirectly, beneficially owns an interest in such a general partner.

We may require any proposed nominee to furnish such other information as may reasonably be required by us to determine the eligibility of such proposed nominee to serve as a director. Shareholders must also submit any other information regarding the proposed director candidate that is required to be included in a proxy statement filed pursuant to SEC rules. See also the

information contained elsewhere in this proxy statement under the heading "Shareholder Proposals for the 2022 Annual Meeting."

Can I communicate with Mercury’s directors?

Yes. Shareholders who wish to communicate with the Board or with a particular director may send a letter to Mercury Systems, Inc., 50 Minuteman Road, Andover, Massachusetts 01810, attention: Secretary. The mailing envelope should contain a clear notation that the enclosed letter is a "Shareholder-Board Communication" or "Shareholder-Director Communication." All such letters should clearly state whether the intended recipients are all members of the Board or certain specified individual directors. Our Secretary will make copies of all such letters and circulate them to the appropriate director or directors.

What committees has the Board established?

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

Audit Committee

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

Human Capital and Compensation Committee

The Human Capital and Compensation Committee is responsible for:

•setting the compensation of our executive officers;

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

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

•exercising any fiduciary, administrative, or other function assigned to the committee under any of our health, benefit, or welfare plans, including our 401(k) retirement savings plan;

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

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

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

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

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

The Human Capital and Compensation Committee is authorized to obtain advice and assistance from independent compensation consultants, outside legal counsel, and other advisors as it deems appropriate, at our expense. The Committee has engaged an outside compensation consultant, which has been Mercer since 2018, to assist the Committee in applying our compensation philosophy for our executive officers and non-employee directors, analyzing current compensation conditions in the marketplace generally and among our peers specifically, and assessing the competitiveness and appropriateness of compensation levels for our executive officers. Representatives of Mercer periodically attend Committee meetings, both with and without members of management present, and interact with members of our human resources department with respect to its assessment of the compensation for our executive officers. In addition, at the direction of the Committee, Mercer may assist management in analyzing the compensation of our non-executive employees. Mercer's services also include providing a chief medical advisor for COVID related planning and due diligence services for M&A pursuits.

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

Information regarding fees paid to Mercer can be found in the Compensation Discussion & Analysis section of this proxy statement under "How We Determine Executive Compensation".

Nominating and Governance Committee

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

M&A and Finance Committee

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

Government Relations Committee

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

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

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

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

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

How often did the Board and Committees meet during fiscal 2021?

The Board of Directors met 12 times during fiscal 2021. The table below reports information about the committees during fiscal 2021:

Name

Audit
Committee(1)

Human Capital & Compensation
Committee

Nominating
& Governance
Committee

M&A and Finance
Committee

Government Relations Committee

Mark Aslett

James K. Bass

Orlando P. Carvalho

Michael A. Daniels

Chair

Lisa S. Disbrow

Chair

Mary Louise Krakauer

Chair

Barry R. Nearhos

Chair

William K. O'Brien

Vincent Vitto

Chair

Number of Meetings During Fiscal 2021

(1) The Board has determined that each of Messrs. Bass, Nearhos, and O'Brien and Ms. Disbrow qualified as an "audit committee financial expert" under SEC rules.

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

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

How Does Mercury Approach Board Refreshment?

To garner new ideas and perspectives, and to respond to the ever-changing needs of our stakeholders, the Board actively seeks candidates representing a range of tenures, areas of expertise, industry experience, and backgrounds. In 2017, the Board added Lisa S. Disbrow and Mary Louise Krakauer, in 2018 the Board added Barry R. Nearhos, in 2020 the Board added Orlando P. Carvalho, and in 2021 the Board nominated Debora A. Plunkett for election at the annual meeting. Mr. Vitto, a Class III director, informed the Board of Directors that he will retire from his service on the Board at the end of his current term effective at the 2021 Annual Meeting of Shareholders.

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

Directors are encouraged to attend the annual meeting of shareholders, or special meeting in lieu thereof; however, we do not have a formal policy with respect to attendance at shareholder meetings. All of the directors then in office attended the 2020 annual meeting of shareholders.

Does Mercury have stock ownership guidelines for directors?

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

Does Mercury have stock ownership guidelines and holding requirements for its Chief Executive Officer?

The CEO is expected to own or control, directly or indirectly, shares of Mercury common stock with a value of at least five times the CEO's base salary. The CEO is expected to meet this guideline within five years of first becoming CEO and is expected to retain such investment in the Company as long as he or she is the CEO. Prior to meeting the five times holding

requirement per this guideline, after applicable tax withholding on the vesting of an equity award, the CEO is required to retain 50% of the net, after tax award until he or she is in compliance with the stock ownership guideline. Exceptions to this stock ownership guideline may be approved from time to time by the Board as it deems necessary to address individual circumstances. Mr. Aslett's holdings of our common stock satisfy the stock ownership guidelines.

Does Mercury have stock ownership guidelines and holding requirements for its executives who report to the Chief Executive Officer?

Each of the executives who report directly to the CEO is expected to own or control, directly or indirectly, shares of Mercury common stock with a value of at least three times the individual's base salary. Each such executive is expected to meet this guideline within five years of first becoming a direct report to the CEO, or within five years of January 22, 2019, whichever is later. Each such executive is expected to retain such investment in the Company as long as he or she is a direct report to the CEO. Prior to meeting the three times holding requirement per this guideline, after applicable tax withholding on the vesting of an equity award, the executive is required to retain 50% of the net, after tax award until he or she is in compliance with the stock ownership guideline. Exceptions to this stock ownership guideline may be approved from time to time by the Board as it deems necessary to address individual circumstances. Each of our executive's holdings of our common stock satisfy the stock ownership guidelines.

Does Mercury have a Code of Business Conduct and Ethics?

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

Does Mercury have a Human Rights Policy?

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

Does Mercury have a Supplier Code of Conduct?

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

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

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

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

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

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

Yes. We have adopted a written policy which provides for the review and approval by the Audit Committee of transactions involving Mercury in which a related person is known to have a direct or indirect interest and that are required to be reported under Item 404(a) of Regulation S-K promulgated by the SEC. For purposes of this policy, a related person includes: (1) any of our directors, director nominees, or executive officers; (2) any known beneficial owner of more than 5% of any class of our voting securities; or (3) any immediate family member of any of the foregoing. In situations where it is impractical to wait until the next regularly scheduled meeting of the Audit Committee or to convene a special meeting of the Committee, the Chair of the Committee has been delegated authority to review and approve related-person transactions.

Transactions subject to this policy may be pursued only if the Audit Committee (or the Chair of the Committee acting pursuant to delegated authority) determines in good faith that, based on all the facts and circumstances available, the transactions are in, or are not inconsistent with, the best interests of Mercury and our shareholders.

Does Mercury make corporate political contributions?

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

Does Mercury have a clawback policy?

Yes. We have adopted a clawback policy applicable to our executive officers. This policy is posted on our website at www.mrcy.com on the "Investor Relations" page under "Corporate Governance." Pursuant to our policy, the Board of Directors shall, in all appropriate circumstances, require reimbursement of any annual incentive payment or long-term incentive payment to an executive officer where: (1) the payment was predicated upon achieving certain financial results that were subsequently the subject of a substantial restatement of Company financial statements filed with the SEC; (2) the Board determines the executive engaged in intentional misconduct that caused or substantially caused the need for the substantial restatement; and (3) a lower payment would have been made to the executive based upon the restated financial results.

Does Mercury have a short sale, hedging and pledging policy?

Yes. Pursuant to our insider trading policy, no employee, executive officer, or director may at any time sell any securities of Mercury that are not owned by such person at the time of the sale. Also, no such employee, executive officer, or director may buy or sell puts, calls, or other derivative securities of Mercury at any time. In addition, no such employee, executive officer, or director may hold Mercury securities in a brokerage margin account or pledge Mercury securities as collateral.

Does Mercury have a shareholder rights agreement?

No, Mercury does not have a shareholder rights agreement or other "poison pill."

Does Mercury regularly engage with its shareholders?

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

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

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

In addition to discussions at regular Board meetings, the Audit Committee focuses on risks related to accounting, internal controls, financial and tax reporting, and related-party transactions; the Human Capital and Compensation Committee focuses on risks associated with our executive compensation policies and practices, executive succession planning, and human capital management practices and metrics; the Nominating and Governance Committee focuses on risks associated with non-compliance with SEC and Nasdaq requirements for director independence, the implementation of our corporate governance policies, and environmental sustainability policies and strategies; the M&A and Finance Committee focuses on risks related to our acquisition activities; and the Government Relations Committee focuses on risks to our business from governmental actions, including the defense budget and continuing budget resolutions.

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

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

The Board has determined that having a separate Chairman and Chief Executive Officer is the most appropriate leadership structure for the Board of Directors at this time. However, the roles of Chairman and CEO may be filled by the same or different individuals. This allows the Board of Directors flexibility to determine whether the two roles should be combined in the future based upon the Company's needs and the Board of Directors' assessment of the Company’s leadership from time to time.

As discussed above, our Chief Executive Officer and senior management are principally responsible for risk identification, management, and mitigation through our ERM process. Our Chairman of the Board is responsible for providing leadership for the Board, including the Board's evaluation of management’s ERM process.

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

Do Our Compensation Programs Create a Reasonable Likelihood of Material Adverse Effects for the Company?

Our general employee compensation programs are substantially less weighted toward incentive compensation and equity awards than those for our executive officers. While managers below the executive officers do have incentive compensation tied to Company performance, and may receive equity awards in the form of restricted stock, the relative weight of their fixed salary compensation is much greater than for the executive officers. While some sales personnel are heavily dependent on sales-based commissions, the terms on which they may make sales are controlled by business unit managers and corporate-level bookings and revenue recognition procedures overseen and administered by non-sales executives.

Although any compensation program can create incentives that may include an element of risk and prove to be inappropriate to future circumstances, or that may encourage behavior that proves to be risky for the organization, the Human Capital and Compensation Committee believes that our programs, for both executives and other employees, do not create a reasonable likelihood of material adverse effects for the Company. In reaching this conclusion, the Committee considered the following:

•Our compensation program consists of both fixed and variable components, as well as short and long-term performance measures. The fixed portion (i.e., base salary) provides a steady income to our employees regardless of the performance of our business or stock price. The variable portion (i.e., bonus and equity awards) is based upon our financial performance against short- and long-term objectives and multi-year time-based vesting criteria. This mix of compensation is designed to motivate our employees, including our executive officers, to produce superior short- and long-term corporate performance without taking unnecessary or excessive risks to the detriment of important business metrics.

•For the variable portion of compensation, the executive bonus program is focused on profitability while the executive equity program awards have a mix of time-based and multi-year performance-based vesting. We believe that these programs provide a check on excessive risk taking because to inappropriately benefit one would be a detriment to the other. In addition, we prohibit all our executive officers from short selling Mercury stock or from buying or selling puts, calls, or other derivative securities related to Mercury stock. By prohibiting such hedging transactions our executives cannot insulate themselves from the effects of poor stock performance.

•In order for any employee, including our executive officers, to be eligible for the corporate financial performance element of our bonus program, we must first achieve a certain level of profitability that is established by the Human Capital and Compensation Committee (we refer to this metric as “adjusted EBITDA”). We believe that focusing on profitability rather than other measures encourages a balanced approach to our performance and emphasizes consistent behavior across the organization.

•Our executive bonus program payout is capped, as are our performance equity awards. We believe this mitigates excessive risk taking by limiting payouts even if we dramatically exceed our financial targets and other performance metrics.

•Our bonus program has been structured around attaining a certain level of profitability for several years and we have seen no evidence that it encourages unnecessary or excessive risk taking.

•We have a clawback policy and stock ownership requirements for our executive officers which we believe limit excessive risk taking.

The calculation of our adjusted EBITDA for the executive bonus program is reviewed and defined annually by our Human Capital and Compensation Committee and is designed to keep it from being susceptible to manipulation by any employee, including our named executive officers.

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

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

Does Mercury have a commitment to culture and values?

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

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

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

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

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

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

DIRECTOR COMPENSATION

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

Fiscal 2021

During fiscal 2021, our non-employee directors received an annual cash retainer of $60,000 and the following positions received additional cash retainers:


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

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

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

Non-employee directors also receive annual restricted stock awards for the number of shares of common stock equal to $150,000 divided by the average closing price of our common stock during the 30 calendar days prior to the date of grant. These awards vest on the first anniversary of the date of grant.

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

The compensation paid to the non-employee members of the Board of Directors with respect to fiscal 2021 was as follows:

Non-Employee Director Compensation—Fiscal 2021


Name	Fees Earned		Restricted Stock Awards ($)(1)		Total
James K. Bass	$	60,000	$	128,700	$	188,700
Orlando P. Carvalho	60,000		128,700		188,700
Michael A. Daniels	82,000		128,700		210,700
Lisa S. Disbrow	72,000		128,700		200,700
Mary Louise Krakauer	75,000		128,700		203,700
Barry R. Nearhos	78,750		128,700		207,450
William K. O'Brien	72,500		128,700		201,200
Vincent Vitto	117,000		128,700		245,700

(1)This column represents the grant date fair value of restricted stock awards for fiscal 2021 in accordance with FASB ASC Topic 718. The grant date fair value of the restricted stock awards granted to non-employee directors in fiscal 2021 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.

The aggregate number of unvested restricted stock awards outstanding for each non-employee director at July 2, 2021 was as follows:


Name			Aggregate Unvested Restricted Stock Awards (# of shares)
James K. Bass			1,950
Orlando P. Carvalho			3,514
Michael A. Daniels			1,950
Lisa S. Disbrow			1,950
Mary Louise Krakauer			1,950
Barry R. Nearhos			1,950
William K. O’Brien			1,950

SEC Form DEF 14A filed by Mercury Systems Inc