Benefit Plans

401(k) Savings Plan: The Company’s 401(k) Retirement Plan covers all eligible U.S. employees. The Company matches employee contributions up to 4.0 percent of eligible earnings. The Company’s contributions for fiscal 2014, 2013 and 2012 totaled $7.2 million, $6.6 million and $6.9 million, respectively.

Stock-based Compensation Plans: The Plexus Corp. 2008 Long-Term Incentive Plan (the “2008 Plan”), which was last approved by shareholders in February 2011, is a stock-based incentive plan for officers, key employees and directors; the 2008 Plan includes provisions by which the Company may grant stock-based awards, including stock options, SARs, restricted stock, restricted stock units (“RSUs”), unrestricted stock awards (“SAs”) and performance stock awards (including awards that may be designated as performance stock units ("PSUs")), in addition to cash incentive awards, to directors, executive officers and other officers and key employees. The maximum number of shares of Plexus common stock which may be issued pursuant to the 2008 Plan is 5,500,000 shares; in addition, cash incentive awards of up to $4.0 million may be granted annually. The exercise price of each stock option and SAR granted must not be less than the fair market value on the date of grant. The Compensation and Leadership Development Committee (the “Committee”) of the Board of Directors may establish a term and vesting period for awards under the 2008 Plan as well as accelerate the vesting of such awards. Generally, stock options vest in two annual installments and have a term of ten years, SARs vest in two annual installments and have a term of seven years, RSUs granted to executive officers, other officers and key employees fully vest on the third anniversary of the grant date (assuming continued employment), which is also the date as of which the underlying shares will be issued, and the vesting of PSUs is dependent on the relative performance of the Company's stock price as compared to the companies in the Russell 3000 Index in the three-year performance period. The Committee also grants RSUs to non-employee directors; these RSUs generally fully vest on the first anniversary of the grant date, which is also the date the underlying shares will be issued (unless further deferred). Options issued to the members of the Board of Directors in fiscal 2013 and 2012 vested immediately on the date of grant. SAs issued to members of the Board in fiscal 2012 also vested immediately on the date of grant.

The 2008 Plan replaced the shareholder-approved 2005 Equity Incentive Plan (the “2005 Plan”). Outstanding awards under the 2005 Plan continue until exercise, expiration or forfeiture.

Individual stock option and SARs grants are determined annually, but granted on a quarterly basis. Grants of RSUs and PSUs are generally made only on an annual basis.

In fiscal 2014, the Company granted options to purchase 0.2 million shares of the Company’s common stock and 0.1 million stock-settled SARs. Additionally, the Committee made awards of RSUs for 0.2 million shares of common stock and awards of PSUs for 0.1 million shares (at target).

In fiscal 2013, the Company granted options to purchase 0.4 million shares of the Company’s common stock and 0.1 million stock-settled SARs. Additionally, the Committee made awards of RSUs for 0.3 million shares of common stock.

In fiscal 2012, the Company granted options to purchase 0.3 million shares of the Company’s common stock and 0.2 million stock-settled SARs. Additionally, the Committee made awards of RSUs for 0.3 million shares of common stock, and the Committee granted SAs for 6.0 thousand shares of common stock.

The Company recognized $13.0 million, $11.8 million and $12.5 million of compensation expense associated with equity awards in fiscal 2014, 2013 and 2012, respectively. No deferred tax benefits related to equity awards were recognized in fiscal 2014, 2013 or 2012.

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



	Number of Options/SARs (in thousands)		Weighted Average Exercise Price		Aggregate Intrinsic Value (in thousands)
Outstanding as of October 1, 2011	3,219		$	27.69

Granted	518		30.24
Cancelled	(105	)	34.44
Exercised	(561	)	22.36
Outstanding as of September 29, 2012	3,071		$	28.86

Granted	515		27.66
Cancelled	(141	)	25.48
Exercised	(380	)	22.00
Outstanding as of September 28, 2013	3,065		$	29.27

Granted	318		41.39
Cancelled	(105	)	32.44
Exercised	(1,008	)	27.41
Outstanding as of September 27, 2014	2,270		$	31.65	$	16,359



	Number of Options/SARs (in thousands)	Weighted Average Exercise Price		Aggregate Intrinsic Value(in thousands)
Exercisable as of:
September 29, 2012	2,327	$	28.32
September 28, 2013	2,375	$	29.49
September 27, 2014	1,772	$	30.45	$	19,212

Included in the stock option and SAR activity table above are 0.1 million, 0.1 million and 0.2 million SARs, which were granted in fiscal 2014, 2013 and 2012, respectively.

The following table summarizes outstanding stock option and SAR information as of September 27, 2014 (Options/SARs in thousands):



Range of Exercise Prices	Number of Options/SARs Outstanding	Weighted Average Exercise Price		Weighted Average Remaining Life	Number of Options/SARs Exercisable	Weighted Average Exercise Price
$12.94 - $19.41	85,942	$	15.53	3.2	85,942	$	15.53
$19.42 - $29.12	874,133	$	25.11	5.4	726,078	$	24.97
$29.13 - $44.48	1,310,461	$	37.06	5.4	959,526	$	35.94
$12.94 - $44.48	2,270,536	$	31.65	5.3	1,771,546	$	30.45

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

The weighted average fair value per share of options and SARs granted for fiscal 2014, 2013 and 2012 were $15.78, $11.88 and $13.13, respectively. The fair value of each option and SAR grant was estimated at the date of grant using the Black-Scholes option-pricing model based on the assumption ranges below:



	2014	2013	2012
Expected life (years)	4.50 - 5.00	4.40 - 5.00	4.40 - 5.00
Risk-free interest rate	1.24 - 1.86%	0.57 - 2.71%	0.57 - 1.09%
Expected volatility	38 - 47%	45 - 51%	50 - 51%
Dividend yield	—	—	—

The fair value of options and SARs vested for fiscal 2014, 2013 and 2012 were $2.8 million, $3.3 million and $4.3 million, respectively.

For fiscal 2014, 2013 and 2012, the total intrinsic value of options and SARs exercised was $13.5 million, $4.3 million and $7.6 million, respectively.

As of September 27, 2014, there was $4.2 million of unrecognized compensation cost related to non-vested options and SARs that is expected to be recognized over a weighted average period of 1.23 years.

A summary of the Company’s PSUs, RSUs, and SAs activity follows:



	Number of Shares (in thousands)		Weighted Average Fair Value at Date of Grant		Aggregate Intrinsic Value (in thousands)
Units outstanding as of October 1, 2011	424		$	26.02

Granted	268		36.68
Canceled	(26	)	33.12
Vested	(200	)	25.98
Units outstanding as of September 29, 2012	466		$	31.78

Granted	329		26.16
Canceled	(47	)	31.26
Vested	(94	)	26.59
Units outstanding as of September 28, 2013	654		$	29.73

Granted	302		40.76
Canceled	(92	)	31.89
Vested	(134	)	41.06
Units outstanding as of September 27, 2014	730		$	31.97	$	27,582

The Company uses the fair value at the date of grant to value RSUs and SAs. The fair values of RSUs and SAs that vested for fiscal 2014, 2013 and 2012 were $0.7 million, $0.5 million and $1.4 million, respectively. No SAs were granted or vested in fiscal 2014 or 2013. There were 134,215 RSUs that vested during the fiscal year ended September 27, 2014. There were 93,831 RSUs that vested during the fiscal year ended September 28, 2013. There were 193,684 RSUs and 6,000 SAs that vested during the fiscal year ended September 29, 2012.

As of September 27, 2014, there was $10.3 million of unrecognized compensation cost related to RSUs that is expected to be recognized over a weighted average period of 1.89 years.

The Company uses the Monte Carlo valuation model to determine the fair value of PSUs at the date of grant. The PSUs are payable in shares and vest based on the relative total shareholder return of the Company's common stock as compared to the Russell 3000 Index during a three year performance period. The number of shares that may be issued pursuant to PSUs ranges from zero to 0.1 million. The Company recognizes stock-based compensation expense over the PSUs’ vesting period. No PSUs vested during the fiscal year ended September 27, 2014, or were granted during the fiscal years ended September 28, 2013 or September 29, 2012.

As of September 27, 2014, there was $1.8 million of unrecognized compensation cost related to PSUs that is expected to be recognized over a weighted average period of 2.32 years.

Deferred Compensation Arrangements: The Company has agreements with certain of its former executive officers to provide nonqualified deferred compensation. Under those agreements, the Company agreed to pay these former executives, or their designated beneficiaries upon such executives’ deaths, certain amounts annually for the first 15 years subsequent to their retirements.

The Company has a supplemental executive retirement plan (the “SERP”) as an additional deferred compensation plan for executive officers and other key employees. Under the SERP, a covered executive may elect to defer some or all of the participant’s compensation into the plan, and the Company may credit the participant’s account with a discretionary employer contribution. Participants are entitled to payment of deferred amounts and any related earnings upon termination or retirement from Plexus.

The SERP operates under a rabbi trust arrangement (the “Trust”). The Trust allows investment of deferred compensation held on behalf of the participants into individual accounts and, within these accounts, into one or more designated investments. Investment choices do not include Plexus stock. In fiscal 2014, 2013 and 2012, the Company made contributions to the participants’ SERP accounts in the amount of $0.7 million, $0.4 million and $0.4 million, respectively.

As of September 27, 2014 and September 28, 2013, the SERP assets held in the Trust totaled $10.9 million and $9.1 million, respectively, and the related liability to the participants totaled approximately $6.6 million and $5.6 million as of September 27, 2014 and September 28, 2013, respectively. As of September 27, 2014 and September 28, 2013, the SERP assets held in the Trust were recorded at fair value on a recurring basis, and were classified as Level 2 in the fair value hierarchy discussed in Note 1, "Description of business and significant accounting policies."

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

Other: The Company currently does not, and is not obligated to, provide any postretirement medical or life insurance benefits to employees.