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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
the Securities Exchange Act of 1934 (Amendment No.           )

Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:

Preliminary Proxy Statement

Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Under §240.14a-12
[MISSING IMAGE: lg_ethanallen1line-bw.jpg]
Ethan Allen Interiors Inc.
Filed by the Registrantý

Filed by a Party other than the Registranto

Check the appropriate box:

o


Preliminary Proxy Statement

o


Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

ý


Definitive Proxy Statement

o


Definitive Additional Materials

o


Soliciting Material under §240.14a-12
(Name of Registrant as Specified in Its Charter)


ETHAN ALLEN INTERIORS INC.

(Name of Registrant as Specified In Its Charter)


(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

ý


No fee required.

o


Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)Title of each class of securities to which transaction applies:
(2)Aggregate number of securities to which transaction applies:
(3)Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4)Proposed maximum aggregate value of transaction:
(5)Total fee paid:

o


Fee paid previously with preliminary materials.

o


Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.



(1)


Amount Previously Paid:
(2)Form, Schedule or Registration Statement No.:
(3)Filing Party:
(4)Date Filed:
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the Appropriate Box):

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)
Title of each class of securities to which transaction applies:
(2)
Aggregate number of securities to which transaction applies:
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4)
Proposed maximum aggregate value of transaction:
(5)
Total fee paid:

Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
(1)
Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date Filed:


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[MISSING IMAGE: lg_ethanallen1line-bw.jpg]
25 Lake Avenue Ext.
Danbury, CT 06811-5286
NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS
Tuesday, November 30, 2021
10:00 A.M. Eastern Time
Online at Table of Contentswww.virtualshareholdermeeting.com/ETH2021

ETHAN ALLEN INTERIORS INC.To our Stockholders:

October 2, 2017

Dear Fellow Stockholders:

You are cordially invited to attend the Ethan Allen Interiors Inc. 2017 Annual Meeting of Stockholders. This meeting will be held at 10:00 a.m. on Wednesday, November 15, 2017, at the Ethan Allen International Corporate Headquarters, 25 Lake Avenue Extension, Danbury, Connecticut 06811.

In preparation for the 20172021 Annual Meeting of Stockholders we have prepared a Notice of the 2017 Annual Meeting of Stockholders, Proxy Statement, and 2017 Annual Report to Stockholders, which provides detailed information relating to our activities and operating performance for the year ended June 30, 2017.

This year, we are once again using the Internet as our primary means of furnishing proxy materials to stockholders. Accordingly, most stockholders will not receive paper copies of our proxy materials. We instead will mail to our stockholders a Notice Regarding the Availability of Proxy Materials. This notice will contain instructions on how to access proxy materials and vote via the Internet. The Notice Regarding the Availability of Proxy Materials also provides information on how stockholders may obtain paper copies of our proxy materials if they so choose. Electronic delivery will expedite the receipt of materials while lowering costs and reducing the environmental impact of our 2017 Annual Meeting of Stockholders by reducing printing and mailing costs.

You will find information about the matters to be voted on at the 2017 Annual Meeting of Stockholders in the formal Notice Regarding the Availability of Proxy Materials and the Proxy Statement.

You may vote via the Internet, by telephone or, if you receive a paper proxy card in the mail, by mailing the completed proxy card. Your vote is very important to us, and we hope you will be able to attend the 2017 Annual Meeting of Stockholders. To ensure your representation at the 2017 Annual Meeting of Stockholders, even if you anticipate attending in person, we urge you to vote by proxy. If you attend, you will, of course, be entitled to vote in person.

              Whether or not you plan to attend the 2017 Annual Meeting of Stockholders, we encourage you to vote your shares.

Sincerely,

SIGNATURE

M. Farooq Kathwari
Chairman of the Board,
President and Chief Executive Officer


Table of Contents

ETHAN ALLEN INTERIORS INC.

NOTICE OF 2017 ANNUAL MEETING OF STOCKHOLDERS

Wednesday, November 15, 2017
10:00 AM EST
Ethan Allen International Corporate Headquarters
25 Lake Avenue Extension
Danbury, Connecticut 06811-5286

To our Stockholders:

                The 2017 Annual Meeting of Stockholders(the “Annual Meeting”) of Ethan Allen Interiors Inc. (the “Company”) at 10:00 A.M. Eastern Time on Tuesday, November 30, 2021. The Annual Meeting will be held forconducted as a virtual meeting via live webcast at www.virtualshareholdermeeting.com/ETH2021.

You may attend the meeting virtually and submit questions electronically during the meeting by visiting the virtual meeting platform at www.virtualshareholdermeeting.com/ETH2021. You will need the 16-digit control number included in the Notice of Internet Availability of Proxy Materials, on the proxy card, or in the instructions that accompanied the proxy materials to enter the Annual Meeting. If you encounter any difficulties accessing the virtual meeting at check-in or during the meeting, please call the technical support number that will be posted on the virtual meeting platform log-in page. You may log into the virtual meeting platform beginning at 9:45 A.M. Eastern Time on November 30, 2021.
The purpose of considering and actingthe Annual Meeting is to act upon the following matters:

Proposal 1.to elect seven director nominees identified in the following proxy statementsix directors to serve until the 20182022 Annual Meeting of Stockholders;



Proposal 2.


to approve, by a non-binding advisory vote, our Named Executive Officer compensation;



Proposal 3.


to approve, by a non-binding advisory vote, the frequency of future advisory votes to approve Named Executive Officer compensation;



Proposal 4.


to ratify the appointment of KPMG LLP as our independent registered public accounting firm for the 20182022 fiscal year; and

to transact such other business as may properly come before the meeting.

                In

Stockholders of record at the close of business on October 11, 2021 will be entitled to vote at the Annual Meeting and any adjournments thereof. Your vote is important, and we urge you to read the proxy statement carefully and to vote as promptly as possible in accordance with New York Stock Exchange ("NYSE") rules,the Board of Directors’ recommendations. You should vote by the deadlines specified in the proxy statement, and may do so via the Internet, by telephone or by signing, dating, and returning the enclosed proxy card in the postage-paid envelope provided. If you vote in advance, you may still decide to attend the virtual annual meeting of stockholders and vote your broker will not be ableshares during the meeting. Further information about how to register for and attend the virtual Annual Meeting online, vote your shares online during the meeting and submit questions online during the meeting is included in the accompanying Proxy Statement. For instructions on how to vote your shares, with respectplease refer to any non-routine matters if you have not given your broker specific instructions to do so. The only routine matter to be voted on at the 2017 Annual Meeting of Stockholders is the ratification of the appointment of our independent registered public accounting firm for the current year (Proposal 4). All other matters to be voted upon are considered non-routine matters under applicable rules. A broker or other nominee cannot vote without instructions on non-routine matters, and therefore broker non-votes may exist in connection with such proposals.

                The Board of Directors has fixed September 18, 2017 as the record date for determining stockholders entitled to notice of, and to vote at, the 2017 Annual Meeting of Stockholders. It is important that your shares be represented and voted at the 2017 Annual Meeting of Stockholders. If you received the proxy materials by mail, you can vote your shares by completing, signing, dating, and returning your completed proxy card, or you may vote by telephone or over the Internet. If you received the proxy materials over the Internet, a proxy card was not sent to you, and you may vote your shares by telephone or over the Internet. To vote by telephone or Internet, follow the instructions included in the Notice Regarding the Availability of Proxy Materials, theattached Proxy Statement or on the Internet. You can revoke a proxy at any time prior to its exercise at the 2017 Annual Meeting of Stockholders by following the instructions in the Proxy Statement.

card. These proxy materials are first being made available on the Internet on or around October 2, 2017.

20, 2021.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on November 15, 2017. The Notice of the 2017 Annual Meeting of Stockholders,the proxy statement and the 2017 Annual Report to Stockholdersare available athttp://materials.proxyvote.com/297602

By OrderOn behalf of the Board of Directors,

the officers, and employees of the Company, I would like to take this opportunity to thank our stockholders for their continued support of Ethan Allen. We hope you can attend the virtual Annual Meeting.

GRAPHICBY ORDER OF THE BOARD OF DIRECTORS

[MISSING IMAGE: sg_erickoster-bw.jpg]
Eric D. Koster
Corporate Secretary
October 2, 2017


LOGO

ETHAN ALLEN INTERIORS INC.
25 Lake Avenue Ext., Danbury, Connecticut 06811October 20, 2021

Proxy Voting
PROXY STATEMENT
for Annual MeetingPlease vote as soon as possible using one of Stockholders 2017
the following methods:

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Internet
www.proxyvote.com
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By Phone
1-800-690-6903
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By Mail
Completing, dating, signing, and returning your proxy card

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on November 30, 2021:
TABLE OF CONTENTSThe 2021 Annual Report and Notice & Proxy Statement are available at

www.proxyvote.com



TABLE OF CONTENTS
1

PROXY STATEMENT

SUMMARY
12

ABOUT THE ANNUAL MEETING

BOARD OF DIRECTORS – EXPERIENCE AND SKILLS


63

BOARD INDEPENDENCE


63

BOARD LEADERSHIP STRUCTURE


74
4

Independent Lead Director

7
4


75
6

6
7
8

8
9

NOMINATIONS/CORPORATE GOVERNANCE COMMITTEE


9
9

10

1012
13


1013
17

CORPORATE GOVERNANCE


14
18

STOCKHOLDER OUTREACH & COMMUNICATION WITH DIRECTORS


16
18

COMMITTEE CHARTERS, BUSINESS CODE AND CORPORATE GOVERNANCE GUIDELINES


16
19

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE


16
19

DIRECTOR COMPENSATION


17
19

Policies And Procedures With Respect To Transactions With Related Persons

17

Related Party Transactions

Compensation Committee Interlocks and Insider Participation

18

SECURITY OWNERSHIP OF COMMON STOCK OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


19

PROPOSAL 2: TO APPROVE, ON AN ADVISORY BASIS, NAMED EXECUTIVE OFFICER COMPENSATION


20

PROPOSAL 3: TO APPROVE, ON AN ADVISORY BASIS, THE FREQUENCY OF FUTURE ADVISORY VOTES TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION

i


COMPENSATION DISCUSSION AND ANALYSIS

2221
21

Executive Summary

22
23

Alignment Of Pay With Performance

22

Stock Incentive Plan

2326

i


Chief Executive Officer's Compensation

Compensation For Named Executive Officers Other Than The Chief Executive Officer

27

COMPENSATION COMMITTEE REPORT


3234
35

EXECUTIVE COMPENSATION


33

2017 Summary Compensation Table

3335

2017 Grants of Plan BasedPlan-Based Awards

3436

Outstanding Equity Awards at 2017 Fiscal Year-End

3537

Option Exercises and Stock Vested in 2017

3638

2017 Nonqualified Deferred Compensation

3638

Potential Payments upon Termination or Change in Control

3739
41


4042

AUDIT COMMITTEE REPORT


4043

Audit Fees

Audit and Non-Audit Engagement Pre-Approval Policy

4243
43

OTHER MATTERS

45
45
52

ii


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PROXY STATEMENT

ii



[MISSING IMAGE: lg_ethanallen1line-bw.jpg]
25 Lake Avenue Ext. Danbury, CT 06811-5286
PROXY STATEMENT
FOR 2021 ANNUAL MEETING OF STOCKHOLDERS
Tuesday, November 30, 2021
10:00 A.M. Eastern Time
Online at www.virtualshareholdermeeting.com/ETH2021
October 20, 2021
PROXY STATEMENT
ABOUT THE ANNUAL MEETING

This proxy statement (this "Proxy Statement"(the “Proxy Statement”) and the accompanying proxy or voting instruction card relate toare furnished in connection with the 2017 Annual Meetingsolicitation of Stockholdersproxies by the Board of Directors (the "Annual Meeting"“Board”) of Ethan Allen Interiors Inc., a Delaware corporation ("for use at the 2021 Annual Meeting of Stockholders (the “Annual Meeting”). When used in this Proxy Statement, “we,” “us,” “our,” “Ethan Allen” or the “Company” refers to Ethan Allen") toAllen Interiors Inc. and its subsidiaries collectively or, if the context so requires, Ethan Allen Interiors Inc. individually.

The Annual Meeting will be held at 10:00 A.M. Eastern Time on Tuesday, November 30, 2021. The meeting will be conducted as a virtual meeting over the Ethan Allen Corporate Headquarters, 25 Lake Avenue Extension, Danbury, Connecticut 06811Internet. Stockholders may attend the meeting virtually and submit questions electronically during the meeting via live webcast by visiting the virtual meeting platform at www.virtualshareholdermeeting.com/ETH2021. Stockholders will need the 16-digit control number included in the Notice of Internet Availability of Proxy Materials (the “Notice”), on the proxy card, or in the instructions that accompanied the proxy materials to enter the Annual Meeting. We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting at check-in or during the meeting, please call the technical support number that will be posted on the virtual meeting platform log-in page. Stockholders may log into the virtual meeting platform beginning at 9:45 A.M. Eastern Time on November 30, 2021. The meeting will begin promptly at 10:00 a.m.,A.M. Eastern Time on Wednesday, November 15, 2017. 30, 2021. If we determine to make any change to the date, time, or procedures of our Annual Meeting, we will announce such changes in advance on our website at https://ir.ethanallen.com.
The Board of Directors of the Company (the "Board of Directors" or the "Board") is soliciting proxies from stockholders in order to provide every stockholder an opportunity to vote on all matters submitted to a vote of stockholders at the Annual Meeting, whether or not such stockholder attends in person.Meeting. A proxy authorizes a person other than a stockholder, called the "proxyholder," who will be present at the Annual Meeting,“proxyholder,” to cast the votes that the stockholder would be entitled to cast at the Annual Meeting. Stockholders of record at the close of business on October 11, 2021 (the “Record Date”) will be entitled to vote at the Annual Meeting if the stockholder were present in person.and any adjournments thereof. It is expected that this Proxy Statement and the accompanying proxy or voting instruction card will be first mailed or delivered to our stockholders beginning on or about October 2, 2017. When used in this Proxy Statement, "we," "us," "our," "Ethan Allen" or the "Company" refers to Ethan Allen20, 2021.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on November 30, 2021:
The 2021 Annual Report and Notice & Proxy Statement are available at www.proxyvote.com

1


PROXY SUMMARY
Proposals and its subsidiaries collectively or, if the context so requires, Ethan Allen individually.

Voting Recommendations
Q:
What is the purpose of Annual Meeting?

A:
We will hold the Annual Meeting to enable stockholdersStockholders are being asked to vote on the following matters:
matters at the Annual Meeting:
Our Board’s Recommendation
Proposal
ITEM 1. Election of Directors
to elect seven
The Board and the Corporate Governance, Nominations and Sustainability Committee believe that the director nominees identified inpossess the following proxy statementnecessary qualifications and experiences to serve untilprovide quality advice and counsel to the 2018 Annual MeetingCompany’s management and effectively oversee the business and the long-term interests of Stockholders;stockholders.FOR each Director
Nominee


ProposalITEM 2. Advisory Vote to Approve Executive Compensation


to approve, by
The Company seeks a non-binding advisory vote to approve the compensation of its Named Executive Officer compensation;Officers as described in the Compensation Discussion and Analysis and the Compensation Tables in this Proxy Statement. Although the vote is non-binding, the Board values stockholders’ opinions, and the Compensation Committee will take into account the outcome of the advisory vote when making future executive compensation decisions. This advisory vote will serve as an additional tool to guide the Board and the Compensation Committee in continuing to improve the alignment of the Company’s executive compensation program with the interests of Ethan Allen and its stockholders and is consistent with our commitment to high standards of corporate governance and stockholder engagement.FOR


ProposalITEM 3.


to approve, by a non-binding advisory vote, Ratification of the frequency of future advisory votes to approve Named Executive Officer compensation;


Proposal 4.


to ratify the appointmentAppointment of KPMG LLP as our Independent Registered Public Accounting Firm
The Audit Committee and the Board believe that the retention of KPMG LLP to serve as the independent registered public accounting firm for the 20182022 fiscal year;year is in the best interests of the Company and its stockholders. As a matter of good corporate governance, stockholders are being asked to ratify the Audit Committee’s appointment of KPMG LLP as its independent registered public accounting firm.FOR

      to transact such other business as may properly come before the Annual Meeting.

      Stockholders will be asked to vote for nominees for all director seats on the Board of Directors as of the Annual Meeting. The term of office for directors elected at the Annual Meeting will continue until the 2018 Annual Meeting of Stockholders and until their respective successors are duly elected and qualified or until their earlier removal, resignation or death.

      The Board of Directors' nominees for election are: M. Farooq Kathwari, James B. Carlson, John J. Dooner, Jr., Domenick J. Esposito, Mary Garrett, James W. Schmotter and Tara I. Stacom.

      As of the date of this Proxy Statement, we have not received notice of any other businessbelieves that may be properly proposed at the Annual Meeting, but if any other businessgood corporate governance is properly proposed, the proxyholders named in the proxy or voting instruction card will have authority to vote as recommended by the Board of Directors.

Q:
What is a proxy?

A:
A proxy is a document by which you authorize someone else to vote for you at a stockholders meeting in the way that you want to vote. That document is called a "proxy" or, if your shares are held in street name and you give instructions to the record holder of your shares, is called a "voting instruction card." You also may choose to abstain from voting.

This Proxy Statement and the accompanying proxy or voting instruction card is furnished in connection with the solicitation by the Board of Directors, of proxies for use at the Annual Meeting to be held on Wednesday, November 15, 2017 at the Ethan Allen International Corporate Headquarters, 25 Lake Avenue Ext., Danbury, Connecticut 06811 at 10:00 A.M., Eastern Time, or any adjournment thereof. The Notice Regarding the Availability of Proxy Materials, this Proxy Statement and our 2017 annual report to Stockholders ("Annual Report") are first being made available to stockholders on or about October 2, 2017.

Q:
Who is entitled to vote?

A:
Only record holders of shares of our Common Stock, par value $.01 per share ("Common Stock"), at the close of business on the record date for the Annual Meeting are entitled to vote at the Annual Meeting. The Board of Directors has fixed the close of business on September 18, 2017 as the record date (the "Record Date") for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting. As of the Record Date, the Company had 27,470,712 shares of Common Stock outstanding. The holders of Common Stock as of the Record Date are entitled to notice of, and to vote at, the Annual Meeting. Each share of Common Stock is entitled to one vote for each director nominee and one vote for each other matter to be voted on.

Table of Contents

Q:
How can I access the proxy materials on the Internet?

A:
In accordance with the rules of the U.S. Securities and Exchange Commission (the "SEC"), we are using the Internet as the primary means of furnishing proxy materials to stockholders. Accordingly, most stockholders will not receive paper copies of our proxy materials. We instead sent stockholders a Notice Regarding the Availability of Proxy Materials (the "Notice") with instructions for accessing the proxy materials via the Internet and voting via the Internet or by telephone. The Notice was mailed on or about October 2, 2017. The Notice also provides information on how stockholders may obtain paper copies of our proxy materials if they so choose.

The Notice provides you with instructions regarding how to:

view the proxy materials for the Annual Meeting on the Internet and execute a proxy; and

instruct us to send future proxy materials to you in printed form or electronically by e-mail.

Choosing to receive future proxy materials by e-mail will save us the cost of printing and mailing documents to you and will reduce the impact of our annual meetings on the environment. If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting website. Your election to receive proxy materials by e-mail will remain in effect until you terminate it.

Q:
How do I vote?

A:
You can vote either in person at the Annual Meeting or by proxy, whether or not you attend the Annual Meeting. You can vote by proxy in three ways:

By mail—If you are a stockholder of record, you can submit a proxy by completing, dating, signing and returning your proxy in the postage-paid envelope provided. You should sign your name exactly as it appears on the proxy. If you are signing in a representative capacity (for example, as a guardian, executor, trustee, custodian, attorney or officer of a corporation), please indicate your name and title or capacity. If you are a beneficial owner, you have the right to direct your brokerage firm, bank or other similar organization on how to vote your shares, and the brokerage firm, bank or other similar organization is required to vote your shares in accordance with your instructions. To provide instructions to your brokerage firm, bank or other similar organization by mail, please complete, date, sign and return your voting instruction card in the postage-paid envelope provided by your brokerage firm, bank or other similar organization.

By telephone—If you are a stockholder of record, you can submit a proxy by telephone by calling the toll-free number listed on the proxy, entering your control number located on the proxy or voting instruction card and following the prompts. If you are a beneficial owner and if the brokerage firm, bank or other similar organization that holds your shares offers telephone voting, you will receive instructions from the brokerage firm, bank or other similar organization that you must follow in order to submit a proxy by telephone.

By Internet—If you are a stockholder of record, you can submit a proxy over the Internet by logging on to the website listed on the proxy, entering your control number located on the proxy or voting instruction card and submitting a proxy by following the on-screen prompts. If you are a beneficial owner, and if the brokerage firm, bank or other similar nominee that holds your shares offers Internet voting, you will receive instructions from the brokerage firm, bank or other similar organization that you must follow in order to submit your proxy over the Internet.

If you vote by proxy, your shares will be voted at the Annual Meeting in the manner you indicate. If your shares are held in your name (i.e., not in "street name" through a broker) and if you sign your proxy card, but do not specify how you want your shares to be voted, they will be voted as the Board of Directors recommends.

Your vote is important. The Board urges you to submit a proxy for your shares as soon as possible by following the instructions provided on the enclosed proxy or voting instruction card you receive from your brokerage firm, bank or other similar organization. Internet and telephone submission of proxies is available 24 hours a day, and, if you use one of those methods, you do not need to return a proxy or voting instruction card. Unless you are planning to vote at the Annual Meeting in person, your proxy must be received by 11:59 p.m., Eastern Time, on Tuesday, November 14, 2017. Even if you submit your proxy or voting instructions by one of the methods listed above, you still may vote at the Annual Meeting in person if you are the record holder of your shares. If you are a beneficial owner, you must obtain a "legal proxy" from the record holder in order to vote your shares at the Annual Meeting. Your vote at the Annual Meeting will constitute a revocation of your earlier proxy or voting instructions.


Table of Contents

Q:
How can I vote my shares of Common Stock that I own through the Ethan Allen 401(k) plan for employees?

A:
If you own Common Stock through the Ethan Allen 401(k) plan for employees, you can direct the trustee to vote the shares held in your account in accordance with your instructions by returning the voting instruction card for your account or by registering your instructions over the Internet or by telephone as directed on the voting instruction card for your account. If you wish to instruct the trustee on the voting of shares held in your account, you should submit those instructions no later than 11:59 p.m., Eastern Time, on Friday, November 10, 2017. The trustee will vote shares for which no voting instructions were received on or before that date as directed by the plan fiduciary.

Q:
Can I change my vote after I have voted?

A:
Prior to the Annual Meeting, a later vote by any means will cancel any earlier vote. For example, if you vote by telephone and later vote differently on the Internet, the Internet vote will count, and the telephone vote will be canceled. If you wish to change your vote by mail, you should contact our Corporate Secretary or proxy solicitor at the addresses set forth below and request a new proxy or voting instruction card. The last vote received before the Annual Meeting will be the one counted. You also may change your vote by voting in person at the Annual Meeting.


Corporate Secretary
Eric D. Koster
PO BOX 1966
Danbury, CT 06813
(203) 743-8508
Proxy Solicitor
Georgeson LLC
1290 Avenue of the Americans, 9th Floor
New York, NY 10104
(866) 277-0928
Q:
What does it mean if I get more than one proxy or voting instruction card?

A:
It means that your shares are registered in more than one way. Sign and returnall proxy or voting instruction cards or voteeach group of shares by mail, telephone or over the Internetimportant to ensure that all your shares are voted.

Q:
Who are the proxyholders named by the BoardCompany is managed for the Annual Meeting?

A:
Eric D. Kosterlong-term benefit of its stockholders and Corey Whitely were selected byto enhance the creation of long-term stockholder value. The Board of Directors to serve as proxyholders for the Annual Meeting of stockholders voting on proxy or voting instruction cards. Each properly executedhas adopted Corporate Governance Guidelines that support and returned proxy or voting instruction card will be voted by the proxyholders in accordancereflect this belief, strengthen Board and management accountability, and comply with the directions indicated thereon or, if no directions are indicated, in accordance with the recommendations of the Board of Directors. In voting by proxy with regard to the election of directors, stockholders may vote in favor of all nominees, vote in favor of one or more specific nominee(s), withhold their vote as to all nominees or withhold their vote as to one or more specific nominee(s). Each stockholder giving a proxy has the power to revoke it at any time before the shares it represents are voted. Revocation of a proxy is effective upon receipt of a later vote by telephone, Internet, receipt by the Corporate Secretary or inspectors of election of either an instrument revoking the proxy or a duly executed proxy card bearing a later date. Additionally, a stockholder may change or revoke a previously executed proxy by voting in person at the Annual Meeting.

Q:
Will my shares be voted if I do not provide my proxy?

A:
If you hold your shares directly in your own name, your shares will not be voted if you do not vote them or provide a proxy. If your shares are held in the name of a brokerage firm or other nominee, under rulesrequirements of the New York Stock Exchange ("NYSE"(the “NYSE”), your broker may vote your shares on "routine" matters even if you do not provide a proxy. The only routine matter to be voted on at the Annual Meeting is the ratification of the appointment of our independent registered public accounting firm for 2018. If a brokerage firm votes your shares on these matters in accordance with these rules, your shares will count as present at the Annual Meeting for purposes of establishing a quorum and will count as "FOR" votes or "AGAINST" votes, as the case may be, depending on how the broker votes. If a brokerage firm signs and returns a proxy on your behalf that does not contain voting instructions, your shares will count as present at the Annual Meeting for quorum purposes and will be voted in connection with the selection of KPMG LLP as our independent public accounting firm for the 2018 fiscal year, but will not count as a "FOR" vote for any other matter.

Table of Contents

Q:
What is a broker non-vote?

A:
A "broker non-vote" means that a broker cannot exercise discretion to vote shares held by it in "street name" for the beneficial owner and has not received voting instructions from the beneficial owner and the matter to be voted on is not "routine" under the NYSE rules.

Q:
How many shares must be present to hold the Annual Meeting?

A:
In order for the Annual Meeting to be duly convened, one-third of the outstanding shares of Common Stock as of the Record Date must be present in person or represented by proxy at the Annual Meeting. This is referred to as a quorum. Abstentions, withheld votes and shares held of record by a brokerage firm, bank or similar organization, or its nominee, pursuant to a signed proxy or voting instruction card that are voted on any matter are included in determining the number of shares present. If a brokerage firm signs and returns a proxy on your behalf that does not contain voting instructions, your shares will count as present at the Annual Meeting for quorum purposes.

Q:
What vote is needed to elect directors?

A:
At the Annual Meeting, directors will be elected by a majority of the votes cast. This means that the number of votes cast "FOR" a director nominee's election must exceed 50 percent of the number of votes cast with respect to the election of that nominee in order for the nominee to be elected. Our bylaws provide that the Board of Directors shall not nominate for election as director any nominee who has not agreed to offer, promptly following the annual meeting at which he or she is elected as director, an irrevocable resignation that will be effective upon (a) the failure to receive the required number of votes for reelection at the next annual meeting of stockholders at which he or she faces reelection, and (b) acceptance of such offer to resign by the Board of Directors. If a nominee fails to receive the required number of votes for reelection, the Board of Directors (excluding the director in question) shall, within ninety (90) days after certification of the election results, decide whether to accept such incumbent director's offer to resign through a process overseen by the Corporate Governance/Nominations Committee (and excluding the director in question from all Board of Directors and committee deliberations). The Board of Directors in making its determination may consider any factor it deems relevant.

If you do not instruct your broker how to vote with respect to this item, your broker may not vote with respect to this proposal. For your vote to be counted, you must submit your voting instructions to your broker or custodian. Abstentions and broker non-votes will not be counted as votes cast and therefore will have no effect in determining whether the required majority vote has been attained.

Q:
What vote is needed to approve the other Proposals?

A:
At the Annual Meeting, the affirmative vote of a majority of the shares present, in person or by proxy, and entitled to vote thereon is required to approve Proposal 2: the approval, by non-binding advisory vote, of executive compensation of the Company's Named Executive Officers (collectively, the "NEOs"); Proposal 3: the approval, by a non-binding advisory vote, of the frequency of the future advisory vote to approve NEO compensation, and; Proposal 4: the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the 2018 fiscal year.

If you do not instruct your broker how to vote with respect to Proposals 2 and 3, your broker may not vote with respect to these proposals. For your vote to be counted, you must submit your voting instructions to your broker or custodian. Abstentions will be counted as present for the purposes of the vote on Proposals 2 and 3, and therefore will have the same effect as a vote against such proposals. Broker non-votes will not be counted as present and are not entitled to vote on Proposals 2 and 3. Abstentions and broker non-votes will be counted as present and entitled to vote for the purposes of the vote on Proposal 4, and therefore will have the same effect as a vote against the proposal.

Approval of the Proposals 2 and 3 regarding compensation of our NEOs and the frequency of future votes to approve NEO compensation are advisory and will not be binding on the Board of Directors or the Company. However, the Board of Directors will review the voting results of these proposals and take them into consideration when making future decisions regarding executive compensation.

Q:
How will the votes be tabulated?

A:
The inspectors of election appointed for the Annual Meeting will tabulate the votes cast, in person or by proxy, at the Annual Meeting and will determine whether a quorum is present.

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Q:
How do I revoke a proxy?

A:
If you hold your shares registered in your name, you may revoke your proxy by submitting a revised one at any time before the vote to which the proxy relates. You may also revoke it by submitting a ballot at the Annual Meeting.

If your shares are held in street name, there are special procedures that you must follow to revoke a proxy submitted via the Internet or by telephone or by marking, signing and returning a vote instruction card.

Revoking your vote and submitting a new vote before the deadline of 11:59 p.m., Eastern Time, on November 14, 2017. If you submit a proxy via the Internet, by telephone or by marking, signing and returning a vote instruction card, you may revoke your proxy at any time and by any method before the deadline.

Revoking your vote and submitting a new vote after the deadline of 11:59 p.m., Eastern Time, on November 14, 2017. If you submit a proxy via the Internet, by telephone or by marking, signing and returning a vote instruction card and wish to revoke it and submit a new proxy after the deadline has passed, you must contact your brokerage firm, bank or other similar organization and follow its requirements. We cannot assure you that you will be able to revoke your proxy and vote your shares by any of the methods described above.

Revoking your vote and submitting a new vote by ballot at the Annual Meeting. If you submit a proxy via the Internet, by telephone or by marking, signing and returning a vote instruction card and wish to revoke it and vote at the Annual Meeting, you must contact your brokerage firm, bank or other similar organization and follow its requirements. We cannot assure you that you will be able to revoke your proxy or attend and vote at the Annual Meeting.

If you receive more than one proxy or voting instruction card on or about the same time, it generally means you hold shares registered in more than one account. In order to vote all of your shares, please sign and return each proxy or voting instruction card or, if you vote via the internet or telephone, vote once for each proxy or voting instruction card you receive.

Q:
Where can I find the results of the Annual Meeting?

A:
We intend to announce preliminary voting results at the Annual Meeting and announce final results in a Current Report on Form 8-K that we will file with the SEC within four business days of the Annual Meeting.

Annual Meeting Admission

                Only stockholders and certain other permitted attendees may attend the Annual Meeting. Please note that space limitations make it necessary to limit attendance to stockholders and one guest. Admission to the Annual Meeting will be on a first-come, first-served basis. Proof of Ethan Allen stock ownership as of the record date, along with photo identification, will be required for admission. Stockholders holding stock in an account at a brokerage firm, bank, broker-dealer or other similar organization ("street name" holders) will need to bring a copy of a brokerage statement reflecting their stock ownership as of the record date. No cameras, recording equipment, electronic devices, use of cell phones or other mobile devices, large bags or packages will be permitted at the Annual Meeting.

Householding

                To reduce the expense of delivering duplicate proxy materials to our stockholders, we are relying on the SEC rules that permit us to deliver only one set of proxy materials to multiple stockholders who share an address unless we receive contrary instructions from any stockholder at that address. This practice, known as "householding," reduces duplicate mailings, thus saving printing and postage costs as well as natural resources. Each stockholder retains a separate right to vote on all matters presented at the Annual Meeting. Once you have received notice from your broker or us that they or we will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you wish to receive a separate copy of the Annual Report or other proxy materials, free of charge, or if you wish to receive separate copies of future annual reports or proxy materials, please mail your request to Ethan Allen Interiors Inc., PO BOX 1966, Danbury CT 06813-1966, attention: Corporate Secretary, or call us at (203) 743-8000.


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BOARD OF DIRECTORS
BOARD OF DIRECTORS

Ethan Allen Interiors Inc. is a vertically integrated interior design and home furnishings company, serving consumersclients around the world. To effectively manageThe effective management of our enterprise requires a strong governance foundation, as well as leadership with an understanding of the diverse needs of our consumersclients and associates. TheWe believe the composition of the Board reflects an appropriate mix of skill sets, experience, and qualifications that are relevant to the business and governance of the Company. Each individual Directordirector epitomizes the Company'sCompany’s Leadership Principles, possesses the highest ethics and integrity, and demonstrates ongoing commitment to representing the long-term interests of the Company'sCompany’s stockholders. Each Director also hasdirector possesses individual experiences that provide practical wisdom and foster mature judgment in the boardroom. Collectively, the Directorsdirectors bring business, international, government, technology, marketing, retail operations, and other experiences that are relevant to the Company'sCompany’s vertical operations. The Board of Directors has general oversight responsibility for the Company'sCompany’s affairs pursuant to the Company's Amended and Restated Articles of Incorporation and By-Laws, and the committee charters, corporate governance guidelines and other policies under which the Company operates. The Board is deeply involved in the Company'sCompany’s strategic planning process, leadership development, succession planning, and oversight of risk management. In exercising its fiduciary duties, the Board represents and acts on behalf of the Company'sCompany’s stockholders and is committed to strong corporate governance, as reflected through its policies and practices.

BOARD OF DIRECTORS – EXPERIENCE AND SKILLS

BOARD INDEPENDENCE
Ethan Allen Board NomineesCEO or Senior
Executive
Level
Experience




Risk
Management


International
Experience


Operating
Experience


Retail and
Ecommerce
Experience



Finance
Experience


Real
Estate
Experience



Marketing and
Brand Building
Expertise



M. Farooq Kathwariüüüüüüüü
​  James B Carlsonüüüüü
John J. Dooner, Jr.,üüüüüü
​  Domenick J. Espositoüüüüü
Mary Garrettüüüüü
​  James W. Schmotterüüüüüü
Tara I. Stacomüüüüü

BOARD INDEPENDENCE

The Board of Directors has determined that nominees James B. Carlson,Dr. John Clark, John J. Dooner, Jr., Domenick J. Esposito, Mary Garrett, James W. SchmotterCynthia Ekberg Tsai, David M. Sable and Tara I. Stacom (six(our five independent 2021 nominees for the Board of Directors)Board) are independent directors within the meaning of the listing standards of the NYSE. In order for aNYSE (the “NYSE rules”). The Board determined that these director nominees not only met all “bright-line” criteria under the NYSE rules, but also that, based on all known relevant facts and circumstances applicable to be considered "independent" by the Board of Directors, he or she must (i) be free ofeach individual director, there did not exist any relationship that applyingwould compromise the independence of these directors. Under the NYSE rules, in order to qualify as “independent” for general service on the Board, a director must not be disqualified under any of the per se disqualifiers in the NYSE would preclude a finding of independencerules, and (ii)the Board must have otherwise affirmatively determined that the director does not have any material relationship, (eithereither directly or indirectly (e.g. as a partner, stockholder or officer of an organization) with us or any of our affiliates ofor any of our executive officers or any of our affiliates'affiliates’ executive officers. In evaluating the materiality of any such relationship, the Board of Directors takes into consideration whether disclosure


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Snapshot of the relationship would be required by the disclosure rules under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the "Exchange Act"). If disclosure of the relationship is required, the Board of Directors must make a determination that the relationship is not material as a prerequisite to finding that the director is independent.


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Independent Director Nominees for our Annual Meeting

Snapshot of 2017 Independent Director Nominees

GRAPHIC

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BOARD LEADERSHIP STRUCTURE

BOARD LEADERSHIP STRUCTURE

The Board of Directors recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide independent oversight of management. The Board believes that, given the dynamic and competitive environment in which we operate, the optimal Board leadership structure may vary as circumstances warrant.

At present, the Board of Directors has chosen to continue combining the two roles of Chairman of the Board and Chief Executive Officer. The Board believes that the best interests of the Company are served by Mr.M. Farooq Kathwari serving in both roles taking account of his unique long-standing tenure with, and investment in, the Company and also the Board's utilizationBoard’s use of a strong Lead Independent Director. The Board of Directors believes that this governance structure provides the basis for clear, efficient executive authority in the Company, especially taking into accountconsidering the Company'sCompany’s flat management structure, while balancing appropriate oversight by the Board of Directors.

Board.

Lead Independent Director

Independent Lead Director

Our Corporate Governance Guidelines provide that if the Chairman is not an independent director, the Board shall select a Lead Independent Director from among the members of the Board who are determined by the Board to be independent. The selection of the Lead Independent Director occurs at the annual planning meeting of the Board. Upon selection by the Board, the Director will serve as the Lead Independent Director for a period of Directors.three years. The Lead Independent Director has suchthe clearly delineated duties and responsibilities asthat are set forth in our Corporate Governance Guidelines. While the Board has chosenIn choosing to continue combining the two roles of Chairman and Chief Executive Officer, itthe Board believes that a suitably empowered Lead independent director who isIndependent Director further promotes the Board’s independence from management because they are expressly authorized to exert de facto control of the Company by asserting independent leadership of the Board, further promotes the Board's independence from management. The Board formally designated JohnBoard. Domenick J. Dooner Jr.,Esposito, an independent, non-executive director, served as itsthe Board’s Lead Independent Director throughsince the 2020 Annual Meeting. HeThe Lead Director organizes and chairs meetings of the independent directors and organizes, facilitates, and communicates observations of the independent directors to the Chief Executive Officer, although each director is free to communicate directly with the Chief Executive Officer.

The duties and responsibilities of our Lead Independent Director are set forth in our Corporate Governance Guidelines and include, among others:


presiding at all meetings of the Board at which the Chairman is not present, including executive sessions of the non-management or independent directors;

serving as liaison between the Chairman and the independent directors, as needed;

having the authority to call meetings of the independent directors;

if requested by a major stockholder, ensuring that he or she is available for consultation and direct communication; and

performing such other duties as the Board may from time-to-time delegate to assist the Board in the fulfillment of its duties.
STOCKHOLDER OUTREACH & COMMUNICATION WITH DIRECTORS
During fiscal 2021, the Company engaged in investor relations outreach efforts whereby members of senior management routinely met with investors to review Company strategies, financial and operating performance, capital


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allocation priorities, and near-term outlook. We regularly hold one-on-one meetings with stockholders and potential investors throughout the United States as well as overseas. In addition, we have telephonic meetings with stockholders and analysts and review correspondence submitted by stockholders to management and/or the Board. During these interactions, stockholders most frequently raised topics are concerning the impact of, and trends relating to, the COVID-19 pandemic, supply chain conditions, raw material pricing and availability, the ability to service existing backlog, and revenue growth opportunities.
Stockholders and interested parties may communicate with the Chairman, the Lead Independent Director, the full Board, any Board committee, individual committee members or individual directors by sending communications to the Office of the Secretary, Ethan Allen Interiors Inc., 25 Lake Avenue Ext., Danbury, Connecticut 06811-5286 for forwarding to the appropriate director(s). Please specify to whom your correspondence should be directed and the nature of your interest in the Company. Concerns relating to accounting, internal controls or auditing matters are immediately brought to the attention of the Company’s internal audit department and handled in accordance with procedures established by the Audit Committee with respect to such matters.
The Secretary shall review any such correspondence and forward to the Board or any individual director or group of directors, as appropriate, a summary and copies of all correspondence that, in the opinion of the Secretary, deals with the functions of the Board or committees thereof or that the Secretary otherwise determines requires the attention of the Board or such director(s). Directors may at any time review a log of all correspondence received by the Company that is addressed to members of the Board and request copies of any such correspondence. Typically, the Secretary would not forward to the Board or any director communications of a personal nature or not related to the duties and responsibilities of the Board, including junk mail, mass mailings, advertisements, magazines, solicitations, job inquiries, opinion surveys or polls.
Additional investor information is available at https://ir.ethanallen.com. Stockholders may also electronically submit their communications to the following e-mail address: ETHBoard@ethanallen.com.
BOARD OF DIRECTORS ROLE IN RISK OVERSIGHT
BOARD OF DIRECTORS ROLE IN RISK OVERSIGHT

While risk management is primarily the responsibility of our management, the Board of Directors provides overall risk oversight by focusing on the most significant enterprise risks. The Board of Directors oversees an enterprise-wide approach to risk management, designed to identify risk areas and provide oversight of the Company'sCompany’s risk management, to support the achievement of organizational objectives, including strategic objectives,objectives; and to improve long-term organizational performance and to enhance stockholder value. A fundamental part of the Board'sBoard’s risk management is to understand the risks the Company faces and what steps management is taking to mitigate those risks. The Board of Directors participates in discussions with management concerning the Company'sCompany’s overall level of, and tolerance for, risk, the Company'sCompany’s business strategy and organizational objectives which are all integral components of its assessment of management'smanagement’s tolerance for risk.

The Company has implemented a Company-wide enterprise risk management process to identify and assess the major risks and develop strategies for controlling, mitigating, and monitoring risk.such risks. As part of this process, information is gathered throughout the Company to identify and prioritize these major risks. While our Board is ultimately responsible for risk oversight, its committees critically assist the Board in fulfilling its monitoring responsibilities in certain areas of risk in the following ways:

Audit Committee.The Audit Committee reviews our risk management programs and regularly reports on these items to the full Board. As part of the Company’s process to identify and assess major risks, any such identified risks and risk mitigation strategies are validated with management and discussed with the Audit Committee on an ongoing basis.


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                The Audit Committee reviews Additionally, our risk management programs and reports on these items to the full Board. Our Internal Audit group is responsible for monitoring the enterprise risk management process and in that role reports directly to the Audit Committee. Other members of senior management who have responsibility for designing and implementing various aspects of our risk management process also regularly meet with the Audit Committee. The Audit Committee discusses our identified financial and operational risks with our Chief Executive Officer and Chief Financial Officer and receives reports from other members of senior management with regard to ourregarding identified risks.


Compensation Committee.   The Compensation Committee is responsible for overseeing any risks relating to our compensation policies and practices. Specifically, the Compensation Committee oversees the design of incentive compensation arrangements of our executive officers to implement our pay-for-performance philosophy without encouraging or rewarding excessive or inappropriate risk-taking by our executive officers.


Corporate Governance, Nominations and Sustainability Committee.   The Corporate Governance, Nominations and Sustainability Committee is responsible for overseeing risks with respect to environmental, social and governance matters. In particular, the Corporate Governance, Nominations and Sustainability Committee reviews the Company’s impacts, risks, and opportunities from an ESG perspective so as to address any potential risks that the Company’s operations pose to the environment or to society.

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Finally, cybersecurity is a critical part of risk management for the Company. The Board appreciates the rapidly evolving nature of threats presented by cybersecurity incidents and is committed to the prevention, timely detection, and mitigation of the effects of any such incidents on the Company. With respect to cybersecurity, the Board receives regular reports from management, including updates on the internal and external cybersecurity threat landscape, incident response, assessment and training activities, and relevant legislative, regulatory, and technical developments.
Our management regularly conducts additional reviews of risks, as needed, or as requested by the Board or the Audit Committee.

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

CORPORATE RESPONSIBILITY

                During fiscal year 2017, there were four regularly scheduled meetings

Sustainability practices are a fundamental part of our Company’s operations. We define sustainability as being inclusive of both corporate social responsibility (“CSR”) and ESG practices, and believe that our sustainability, environmental and social values are intrinsic to our long-standing authentic American name and brand. Our Board, along with our clients, investors, employees, and other stakeholders, understand that a modern approach to running our Company must be aligned with a commitment to sustainability. We believe that integrating our social and environmental values into our business generates long-term value for our business, our stockholders, and the global community at large. In addition to our overall dedication to ethical and accountable business practices, our corporate social responsibility commitments include the areas of environmental sustainability and community connections. We believe that these commitments create value for our stockholders and help position us to continuously improve business performance. Our strategy focuses our efforts on those areas most significant to our business, including health and safety, environmental stewardship, community and stakeholder engagement, human rights, and transparency. As part of our commitment, the Board of Directors includingand its committees are actively engaged in overseeing our sustainability practices and to ensure focus on these topics starts from the 2016 Annual Meeting of Stockholders. Independent directors also met four times in executive session without management present. The Lead Independent Director, currently John J. Dooner Jr., chaired the executive sessions.

                All directors are expected to attend all regularly scheduled and special Board of Directors meetings, independent director meetings and committee meetings, as appropriate.top. The Board of Directors realizes that scheduling conflicts may arise from time to time which prevent a director from attending a particular meeting. However, itoversees policies, positions and systems for environment, health, safety and social responsibility, compliance, and risk management. The Company’s Corporate Responsibility Report is the Board's explicit policy that each director shall give priority to his or her obligations to the Company. All directors who then held office attended the 2016 Annual Meeting of Stockholders. In fiscal year 2017, there was 100% attendance by each directoravailable at each of the four regularly scheduled Board of Directors meetings, four regularly scheduled Audit Committee meetings, two regularly scheduled Compensation Committee meetings, and two regularly scheduled Nominations Committee meetings. As set forth in our Corporate Governance Guidelines, the Company's policy is to expect the resignation of any director who is absent from more than twenty-five percent of regularly scheduled Board meetings or committee meetings in a fiscal year.

https://ir.ethanallen.com/corporate-governance/responsibility. The Board of Directors has established three standing committees: the Audit Committee; the Compensation Committee; and the Nominations/Corporate Governance Committee. Committee memberships of each nominee and continuing or current director are set forth below:

NameAudit
Committee


Nominations
Committee


Compensation
Committee


Lead
Independent
Director



James B. CarlsonMemberChairperson
​  John J. Dooner, JrMemberMemberü
Domenick J. EspositoChairpersonMember
​  Mary GarrettMember
James W. SchmotterMemberChairperson
​  Tara I. StacomMember
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 

                Additionally, the Board of Directors determined that each of the members of the standing committees is (i) independent within the meaning of the listings standards of the NYSE, including (for the Audit Committee and the Compensation Committee members), the additional requirements applicable to members of the audit and compensation committees, as applicable, (ii) non-employee directors (within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 (the "Exchange Act")) and (iii) outside directors (within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code")). See "Corporate Governance".


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NOMINATIONS/CORPORATE GOVERNANCE COMMITTEE

                The duties of the Nominations/Corporate Governance Committee include, but are not limited to, the duty to: (i) develop qualification criteria for the members of the Board of Directors and nominate or recommend to the Board of Directors individuals to serveinformation provided on the Board of Directors; (ii) review, annually, the qualifications of each member of the Board of Directors; (iii) review and monitor the Company's corporate governance policies and guidelines, including the Company's trading policy for its directors and executive officers; and (iv) make an annual assessment of the Board of Directors' performance and report to the Board of Directors. The Nominations/Corporate Governance Committee follows the procedure concerning nominations or consideration of director candidates recommended by stockholders set forth in the By-Laws. The By-Laws of the Company permit stockholders, as of the Record Date, to nominate director candidates at the Annual Meeting, subject to certain notification requirements. (See "Stockholder Proposals and Nomination of Directors" under "Other Matters" for information on how to submit a proposal or nominate a director.) Each member of the CommitteeCompany’s website is independent within the meaning of the listing standards of the NYSE. The Committee held two meetings and individual Committee members communicated, when necessary, by telephone or other means during fiscal year 2017.

                The Nominations/Corporate Governance Committee seeks candidates who demonstrate a willingness and ability to prepare for, attend and participate in all Board of Directors and committee meetings and whose experience and skill would complement the then existing mix of directors. While the Board has no specific policy on diversity, the Committee considers the diversity of a candidate's background and experience when evaluating a nominee, as well as the diversity of a candidate's perspectives, which may result from diversity in age, gender, ethnicity or national origin. The Committee gathers suggestions as to individuals who may be available to meet the Board of Directors' future needs from a variety of sources, such as past and present directors, stockholders, colleagues and other parties with which a member of the Nominations/Corporate Governance Committee or the Board of Directors has had business dealings, and undertakes a preliminary review of the individuals suggested. Candidates recommended by stockholders will be considered in the same manner as other candidates. At such times as the Committee determines that a relatively near-term need exists and the Committee believes that an individual's qualities and skills would complement the then existing mix of directors, the Committee or its Chair will contact the individual. The Chair will, after such contact, discuss the individual with the Committee. Based on the Committee's evaluation of potential nominees and the Company's needs, the Committee determines whether to nominate the individual for election as a director. While the Nominations/Corporate Governance Committee has not, in the past, engaged any third-party firm or consultant to identify or evaluate nominees, in accordance with its charter, may do so in the future. The Nominations/Corporate Governance Committee unanimously recommended the nominees namedreferenced in this Proxy Statement asfor information purposes only. Neither the individuals withinformation on the experience, industry knowledge, integrity, abilityCompany’s website, nor the information in the Company’s Corporate Responsibility Report, shall be deemed to devote time and energy, and commitment to the interestsbe a part of all stockholders best qualified to execute our strategic plan and create value for all our stockholders.


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PROPOSAL 1:    ELECTION OF DIRECTORS

                At the Annual Meeting, each of the seven nominees described below will stand for election to serve as directors until the 2018 Annual Meeting of Stockholders and until their respective successors are duly elected and qualified. The seven nominees were nominatedor incorporated by the Board of Directors in accordance with recommendations by our Nominations/Corporate Governance Committee. Each nominee has consented to being named inreference into this Proxy Statement or any other filings we make with the Securities and Exchange Commission (“SEC”).

During fiscal 2021, the Corporate Governance, Nominations and Sustainability Committee charter was amended to rename the Committee and to assist the Board to pursue and report sustainability initiatives inclusive of CSR and ESG practices. Expanded responsibilities include (i) review of the Company’s impacts, risks, and opportunities from an environmental, social and governance perspective to effectively address the potential risks posed by the Company’s operational impact on the environment and society, (ii) oversight of the Company’s CSR and ESG initiatives and practices on a regular and continuing basis and (iii) review of the Company’s sustainability reports setting forth how the Company manages and addresses sustainability matters. The Corporate Governance, Nominations and Sustainability Committee shall consider the Company’s business decisions in terms of sound environmental, social and governance practices and their impacts to long-term stockholder returns. The Corporate Governance, Nominations and Sustainability Committee shall also assist the Board and the Company to evaluate decisions based upon factors such as energy consumption; reduction of waste and emissions; effect of the Company’s operations on climate change; equality, equity and inclusion in the workforce; employee safety and security in the workplace; compliance with national and international legal standards for the conduct of business; and enforcing the most rigorous social standards in every jurisdiction in which it conducts business.
Environmental Impact and Community
We are pleased with what we have accomplished in the first 10 years of our sustainability initiatives, including significant decreases in our carbon footprint, electrical usage, water usage, and landfill waste. We are currently setting our new 10-year goals through 2030. As part of those goals we have established a commitment to achieving net zero emissions by 2050 and are developing methods, plans, and resources to meet this commitment.
The Carbon Footprint Calculator is the core tool that Ethan Allen uses across every location, from Design Centers to manufacturing plants to our corporate headquarters, to record and analyze environmental data. It is based on the United States Environmental Protection Agency’s Waste Reduction Model (WARM), which was designed to help businesses quantify how smarter materials use, recycling, and other activities affect greenhouse gas emissions, create energy savings, and impact economic activities.
We have updated the calculator several times over the past decade to reflect a better understanding of our environmental profile: how our company’s unique mix of air emissions and waste products add carbon and other greenhouse gases to our atmosphere. For example, to measure CO2e (carbon dioxide equivalent), we multiply the emissions of six greenhouse gases, plus other fuel emissions (such as emissions from the type of fuel our local electrical supplier uses to generate power) by each compound’s global warming potential (GWP), or carbon factor.

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The Company has taken several environmental measures, including the expanded use of responsibly harvested Appalachian hardwoods, water-based finishes, organic cotton textiles, and recycled materials. In addition, the Company uses only CertiPUR-US® certified foams in its mattresses and custom upholstery.
Every facility at Ethan Allen has its own environmental goals, targets, and responsibilities related to emissions, waste disposal, and electricity and water usage. A designee at each location records the data in the Carbon Footprint Calculator and submits it quarterly. The data is then reviewed annually by the members of Ethan Allen’s corporate Environmental, Health and Safety (EH&S) team, who compare it to data from the appropriate baseline year to measure each facility’s progress toward achieving the Company’s set environmental goals.
Electricity
To reduce the amount of electricity we use to heat our workspaces and dry our lumber, the wood-fired boilers in our plants use scrap wood to make steam. At some locations, we also use that same steam to cogenerate the electricity, heat, and air pressure needed to run our production equipment. We also use energy-efficient lighting, and we have implemented coordinated startups of our heavy equipment to reduce peak electrical demand.
Water
To control and reduce water use, we have installed low-flow restroom fixtures in our facilities. We also use flow restrictors to limit water use in certain operations. Logs for example, must be kept moist until milled to prevent cracks or splits; flow restrictors ensure logs are sprinkled with just the right amount of water. Additionally, steam leak surveys have helped us reduce the escape of steam into the air, further reducing water waste.
Greenhouse Gas (GHG) Emissions
To meet our carbon footprint reduction goals, we continually review and investigate ways to reduce our carbon dioxide emissions in our operations. We set annual carbon footprint reduction goals for our domestic manufacturing division, based on data compiled from each manufacturing facility.
Recycling
Recycling is embraced by our management and employees alike and implemented through corporate initiatives and grassroots efforts. All locations work to minimize landfill waste, and our operations focus on recycling paper, glass, cardboard, plastics, and metals. Our goal is to reuse and recycle materials, including glass, paper, metal, plastic, foams, and textiles, as much as we can.
Social Responsibility
Ethan Allen’s Manufacturing Code of Conduct is the standard against which Ethan Allen, in partnership with independent auditors, measures vendor compliance related to ethical business practices and the fair treatment of workers. We are committed to working with and educating our supplier network as a nomineeway of improving labor conditions worldwide. Our business partners are also subject to our Manufacturing Code of Conduct.
To assess vendor compliance at individual production facilities, Ethan Allen partners with industry-recognized third-party auditing companies known for election astheir professionalism, consistency, and credibility. These vendors, including Bureau Veritas and Elevate Limited, have conducted over 100 labor compliance audits in eleven countries on our behalf in the past five years.
Independent auditors also offer continuing education opportunities, in the vendor’s country and in the vendor’s own language. These include the following:

yearly seminars, conducted by training staff from the third-party company in the vendor’s own language; and

additional compliance training for factory managers that explains the need for transparency, capacity building, and improvement in their labor compliance systems.
The Company’s goal is to obtain 100% compliance. As it works to meet that goal, the Company consistently addresses the root causes of noncompliance within each facility. Our teams also attend labor compliance seminars and meetings, where they collaborate across international and industry lines to address labor compliance topics throughout the global supply chain.
The Company also offers a directorwide variety of career opportunities and agreedpaths to serve if elected. All of the seven nominees described belowadvancement through on-the-job coaching, training, and education. We are currently members of the Board of Directors. The information set forth below includes, with respect to each nominee for election as director, his or her age, present principal occupation, specific expertise, qualifications and skills along with other business experience, directorships in other publicly held companies, membership on committees of the Board of Directors and period of service as a director of the Company. Also set forth below is a brief discussion of the specific experience, qualifications, attributes or skills that led to his or her nomination as a director, in light of the Company's business.

                Each director is elected annually by a majority of the votes cast. This means that the number of votes cast "FOR" a director nominee's election must exceed 50 percent of the number of votes cast with respect to the election of that nominee in order for the nomineeproud to be elected. It is the intentiona company where an associate can start in an entry-level position and turn it into a successful career.


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COMMITTEE CHARTERS, CODE OF CONDUCT AND CORPORATE GOVERNANCE GUIDELINES
The Company’s Code of the persons named as proxies in the accompanying proxies submitted by stockholders to vote for the seven nominees described below unless authority to vote for the nominees or any individual nominee is withheld by a stockholder in such stockholder's proxy. If for any reason any nominee becomes unable or unwilling to serve at the timeBusiness Conduct and Ethics (the “Code of the Annual Meeting, the persons named as proxies will have discretionary authority to vote for a substitute nominee(s). Alternatively, the Board of Directors may choose to reduce the size of the Board, as permitted by our Amended and Restated By-Laws (the "By-Laws"). It is not anticipated that any nominee will be unavailable or will decline to serve as a director.

The Board of Directors unanimously recommends that you voteFOR each of the seven nominees.

DIRECTOR NOMINEES FOR ELECTION

​  Farooq Kathwari        HOME FURNISHINGS INDUSTRY LEADER

GRAPHIC

Mr. Kathwari is the Chairman, President and Principal Executive Officer of Ethan Allen Interiors Inc. He has been President of the Company since 1985 and Chairman and Principal Executive Officer since 1988. He received his B.A. degree from Kashmir University in English Literature and Political Science and an M.B.A. in International Marketing from New York University. He is also the recipient of three honorary doctorate degrees.


Director since
1985
Age: 73
Board Committees:

Chairman of the Board

​  
Specific Qualifications, Attributes, Skills and Experience:
​  
Mr. Kathwari serves in numerous capacities at several nonprofit organizations including as an advisory member of the New York Stock Exchange; a director and former chairman of the National Retail Federation; Director Emeritus and former chairman and president of the American Home Furnishings Alliance; a member of the Board of Overseers of the International Rescue Committee; Chairman Emeritus of Refugees International and he served as a member of the President's Advisory Commission on Asian Americans and Pacific Islanders from 2010 to 2014. He is also a member of the Council on Foreign Relations; a member of the International Advisory Council of the United States Institute of Peace; a member of the advisory board of the Center for Strategic and International Studies; a director of the Institute for the Study of Diplomacy at Georgetown University and serves on the board of the Western Connecticut State University Foundation.

Among his recognitions, Mr. Kathwari has been inducted into the American Furniture Hall of Fame. He has been recognized as an Outstanding American by Choice by the U.S. government. He has received the Eleanor Roosevelt Val-Kill Medal; the National Human Relations Award from the American Jewish Committee; the National Retail Federation Gold Medal; the International First Freedom Award from the Council for America's First Freedom; Ernst & Young's Entrepreneur of the Year Award; the Anti-Defamation League's Humanitarian Award; City of Hope's International Home Furnishings Industry Spirit of Life® Award; and the Entrepreneurial Excellence Award from the National Association of Asian MBAs. He has also been recognized by Worth magazine as one of the 50 Best CEOs in the United States.

Mr. Kathwari has extensive experience and knowledge of the history of the Company and the furniture industry as well as extensive experience in growing and managing a business. Mr. Kathwari possesses insight into retailing, marketing, manufacturing, finance and strategic planning from experience with the Company as well as his broad experience with both for-profit and not-for-profit organizations which has given him perspectives from other industries valuable to his service to the Company.

​  

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​  James B. Carlson        LEADER IN THE LEGAL AND FINANCIAL INDUSTRIES

GRAPHIC

Mr. Carlson serves as an Adjunct Professor at the New York University School of Law, teaching Securities and Capital Markets Regulation since 1996. From 2009 through 2011, he also taught Derivatives and Changing Regulation at the School of Law, and from 2010 through 2012, he taught Microfinance and Access to Finance for the Global Poor as an Adjunct Professor at the NYU Stern School of Business.


Director since
2013
Age: 62
Board Committees:

Compensation - Chair

Audit

​  
Specific Qualifications, Attributes, Skills and Experience:
​  
Mr. Carlson, who has been practicing law since 1981, currently is a member of the law firm Mayer Brown, LLP, where he has been a partner since 1998. From 1997 through 2004, he was the Partner-in-Charge of the firm's New York Office, and also served as the firm's Global Practice Leader from 2004 through 2008. Mr. Carlson brings extensive knowledge in corporate and financial strategies, and is a highly regarded member of both the legal and business communities.
​  


​  John J. Dooner, Jr.        LEADER IN MARKETING AND STRATEGIC COMMUNICATIONS

GRAPHIC

Mr. Dooner recently established The Dooner Group, a marketing communication consultancy, and serves as Chairman Emeritus of McCann Worldgroup ("McCann"Conduct”), a company he formed in 1997 and of which he had been Chief Executive Officer from its founding until 2011.


Director since
2011
Age: 69
Board Committees:

Lead Independent Director

Nominations

Compensation

​  
Specific Qualifications, Attributes, Skills and Experience:
​  
Under Mr. Dooner's leadership, McCann grew to be one of the world's largest marketing communications organizations, with operations in over 125 countries with a client roster that includes preeminent global marketers and many of the world's most famous brands. Prior to assuming that position, Mr. Dooner was Chief Executive Officer of McCann Erickson Worldwide, a post he assumed in 1992. Mr. Dooner also serves on several not-for-profit organizations; including Chairman of St. Thomas University based in Miami Florida, Past Chairman of Board of Trustees United Way Worldwide, and remains Trustee and Chairman Brand Platform United Way Worldwide based in Washington, DC. Mr. Dooner brings extensive advertising and branding expertise to the Company.
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​  Domenick J. Esposito        LEADER IN THE FINANCIAL SERVICES INDUSTRY

GRAPHIC

Mr. Esposito has been a practicing CPA since 1974, currently is the Chief Executive Officer of ESPOSITO CEO2CEO and a Board member at two privately held valuation services firms. From 2002 to 2016, Mr. Esposito was a senior partner and member of the Executive Board at CohnReznick LLP. From 2001 through 2002, he was Vice Chairman of BDO, and from 1979 through 2001 he served as a member of Grant Thornton, where he became partner in 1981, and the firm's Chief Executive Officer in 1999.


Director since
2015
Age: 70
Board Committees:

Audit - Chair

Compensation

​  
Specific Qualifications, Attributes, Skills and Experience:
​  
Prior to 1979, Mr. Esposito served as a member of Price Waterhouse. He has been a member of the NASDAQ Listing and Qualifications Committee and recently served on the NASDAQ Listing and Qualifications Panel. He formerly served as the leader of the New York State Society of CPA's Committee for Large and Medium Sized Firms Practice Management, and was also an Adjunct Professor at C.W. Post / Long Island University. Mr. Esposito's extensive public accounting background strengthens the oversight of our financial controls and reporting.
​  


​  Mary Garrett        LEADER IN TECHNOLOGY AND MARKETING

GRAPHIC

Ms. Garrett retired from IBM in December 2015 after a distinguished 34-year career with positions in marketing, sales and engineering. In her most recent position at IBM, as VP of Marketing and Communications for Sales and Distribution, she led the development and execution of unique marketing and communication strategies encompassing cloud computing, cognitive/data analytics and cybersecurity in 170 countries around the world.


Director since
2016
Age: 58
Board Committees:

Audit

​  
Specific Qualifications, Attributes, Skills and Experience:
​  
Previously, Ms. Garrett led global marketing for IBM Global Technology Services and also held P&L responsibility for the $6B enterprise segment for that business. She has earned a patent for her work in speech recognition as an engineer in IBM's research division. Ms. Garrett also serves on the Board at Hill-Rom Corporation (NYSE:HRC), a global medical technology company where she is also a member of the audit committee. Ms. Garrett is the Chairperson of the Board for the American Marketing Association and an active mentor in W.O.M.E.N. in America, a professional development group aimed at advancing promising professional women. Recently, she joined the strategic planning committee and the technology committee of the Western Connecticut Health Network. Ms. Garrett's significant technology and marketing experience is a valuable addition to our Board.
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​  Dr. James W. Schmotter        LEADER IN HIGHER EDUCATION ADMINISTRATION

GRAPHIC

Dr. Schmotter is President Emeritus of Western Connecticut State University from which he retired on June 30, 2015. He previously served as Western Michigan University's Dean of the Haworth College of Business, the Dean of the College of Business and Economics at Lehigh University in Pennsylvania, as well as Associate Dean and Director of International Studies at the Johnson Graduate School of Management at Cornell University.


Director since
2010
Age: 70
Board Committees:

Nominations - Chair

Audit

​  
Specific Qualifications, Attributes, Skills and Experience:
​  
Dr. Schmotter has served as a managing director of the Southwest Michigan Innovation Center, as chair of the board of directors of the United Way of Western Connecticut, as a corporator of the Savings Bank of Danbury, as a director of Fairfield County's Community Foundation and as a director of the Greater Danbury Chamber of Commerce and the Latino Scholarship Fund (Connecticut). He is currently a consultant with CBT University Consulting, as well as a member of the board of directors of the Dunes of Naples II Condominium Association and the Schools Outreach Committee of the Naples Council on World Affairs (Florida). A recipient of the Walter F. Brady, Jr. Award for the Advancement of Higher Education in Connecticut, he has since 2011 chaired accreditation review teams for three New England universities. Dr. Schmotter's strong leadership, educational and governmental background provides key insight and experience in strategic planning, international/global issues as well as communicating with younger customers which is valuable in his service to the Company.
​  


​  Tara I. Stacom        LEADER IN REAL ESTATE AND FINANCIAL INDUSTRIES

GRAPHIC

Ms. Stacom is an Executive Vice Chairman of Cushman & Wakefield, a worldwide commercial real estate firm with 43,000 employees. During her 35-year career, Ms. Stacom has been responsible for executing in excess of 40 million square feet and some of the largest and most complex leasing, sales, and corporate finance real estate transactions—including, most recently, acting as exclusive leasing agent for One World Trade Center.


Director since
2015
Age: 59
Board Committees:

Nominations

​  
Specific Qualifications, Attributes, Skills and Experience:
​  
Ms. Stacom has been serving on the Board of Trustees at Lehigh University since 2003 where she earned her Bachelor of Science degree in Finance. She is a founder of ire@l, a real estate minor in the business college at Lehigh University. In recognition of her commitment and many years of service to Lehigh University, as well as Greenwich Academy, Ms. Stacom has received prestigious Alumni Awards from both organizations. Ms. Stacom serves as a Director of the Realty Foundation of New York, and is a Member of the Real Estate Board of New York serving on its Ethics Committee. Ms. Stacom is a "Director's Circle Member" of Girls, Inc. and a Board Member of Right to Dream. She is the recipient of Crain's New York Business 100 Most Influential Women in New York City Business, and is a Realty Foundation of New York honoree. She was awarded "Woman of the Year" of the New York Executives in Real Estate (WX), and Real Estate New York and Real Estate Forum's Women of Influence. She received Northwood University's Distinguished Women's Award in recognition of the enormous contribution she has made to communities, businesses, volunteer agencies, and public and private sector services worldwide. She has also been honored by the Visiting Nurse Service of New York and the New York Police Athletic League. Ms. Stacom was honored with the Real Estate Board of New York's highest achievement, the 2011 Most Ingenious Deal of the Year (First Place Henry Hart Rice Award) for the leasing of One World Trade Center. Ms. Stacom brings extensive knowledge of commercial real estate and finance to the Board.
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CORPORATE GOVERNANCE

                The Board of Directors believes that good corporate governance is important to ensure that the Company is managed for the long-term benefit of its stockholders and to enhance the creation of long-term stockholder value. The Board has adopted Corporate Governance Guidelines, that support this belief and comply with the corporate governance requirements imposed by the SEC and the NYSE. At the 2016 Annual Meeting of Stockholders, stockholders approved the Company's proposals to implement a number of enhancements to our governance policies as follows:

              Enhanced by-laws.    Enhanced the advance notice by-law provisions which enable our stockholders to nominate directors or propose other matters for consideration at stockholder meetings.

              Proxy Access.    Updated the Company's by-laws to establish provisions that give our eligible stockholders the ability to include their director nominees in our proxy materials for our annual meetings of stockholders.

              Majority Voting in Uncontested Director Elections.    Implemented majority voting provision in uncontested director elections with a plurality voting provision for contested elections.

              Stockholder Removal of Directors.    Updated the Certificate of Incorporation to clarify that directors may be removed from office by a requisite stockholder vote with or without cause.

                Furthermore, Over the past several years, the Company has updated and clarified its corporate governance policies and procedures to conform to emerging trends and best practices. Some of our key policies and practices include the following:

    Clawback Provisions.  It is the policy of the Company that, to the extent permitted by governing law, it will seek to recoup any incentive compensation (cash or equity) paid or payable by the Company to any executive officer of the Company where the payment is predicated upon the achievement of specified financial results that are the subject of a subsequent financial restatement required to correct one or more errors that are material to those financial statements to the extent such executive officer's misconduct contributed to such financial restatement of the Company's financial statements. The Compensation Committee also may, if permitted by law, make retroactive adjustments to any cash- or equity-based incentive compensation paid to any other executive officers where a payment is predicated upon the achievement of specified financial results that are the subject of a subsequent financial restatement required to correct one or more errors that are material to those financial statements. The Board shall regularly review best practices in governance and executive compensation, and when necessary, shall revise the Company's practices and plans to effect to this.

    Stock Ownership Requirements.  It is the Company's intention that its directors and executive officers acquire and hold Company stock. The value of the intended holdings is equal to a multiple of the base compensation (three times annual cash compensation for directors, five times salary for the Chief Executive Officer, and two times the annual salary for the other executive officers) to be accumulated over five years. The standards are reviewed and modified periodically or as necessary after a significant increase or decrease in share price.

    Holding Requirement.  Our directors and executive officers are required to hold any Company stock acquired upon the exercise of stock options or restricted stock issued to them for one year following their exercise or vesting, as applicable, except to the extent necessary to pay income and other taxes assessed upon exercise of the options or vesting of that stock or to fund or pay for the exercise of options.

    No Hedging / Pledging Policy.  Our directors and executive officers are prohibited from hedging and/or pledging the Company's stock.

    Insider Trading Policies.  Directors and executive officers will comply in all respects with the Company's insider trading policies.

    No Repricing or Buyouts.  The Company's Stock Incentive Plan prohibits repricing, extensions or cash buyouts for options.

    Change in Control Agreements.  The Company has generally restricted, and intends to continue to restrict, any change in control agreements that do not contain a "double trigger" condition for severance payments or that contain excise tax gross-ups and the Company intends to restrict amendments to existing change in control agreements without conforming to these provisions.

    Employment Agreements with Executives.  The Company will generally restrict entering into employment agreements with executive officers except for the employment agreement with the CEO (as defined below), stock option and other incentive award agreements and severance and protective covenant agreements. The Company does not have employment agreements with any of our NEOs, other than the 2015 Employment Agreement, effective as of July 1, 2015, between the Company and Mr. Kathwari (the "2015 Employment Agreement"), see "Compensation Committee Report", and the

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      Company's Change of Control Severance Plan, see "Compensation Committee Report", which agreements and plan include "double trigger" conditions upon change in control and do not contain excise tax gross-ups.

    Qualified Performance-Based Compensation.  The Company attempts, whenever possible, to preserve the federal income tax deductibility of compensation paid to executives, and to permit, but not require, the Compensation Committee to award compensation that meets the requirements for deductibility of "qualified performance-based compensation." However, the Compensation Committee reserves the right to authorize the payment of nondeductible compensation when appropriate.

    Lead Independent Director.  The Company defined the role of the Lead Independent Director, a position which rotates annually. John J. Dooner Jr., an independent, non-executive director, currently serves as Lead Independent Director.

    Director Attendance.  Directors are required to attend at least 75% of director and committee meetings. In 2017 there was 100% attendance by each director at all regular and special meetings of the Board of Directors and its committees.

    Director Tenure.  The Board shall not nominate a director at any time after his 77th birthday (subject to waiver or extension), and mandates resignation of a director upon failure to meet the Company's requirements or failing to attend the requisite number of meetings of the Board of Directors and its committees.

    Term Limits.  The service of a director will continue until: in the case of a director who is also an executive of the Company, his effective termination of employment and services to the Company, and in the case of any director, until either the end of his elected term, unless duly nominated and reelected as a director for a subsequent term, or upon the conclusion of the Nominations Committee that a director no longer satisfies the requirements and standards for service as a director. At the end of their term, a director will resign as a director.

    Limitation on Service on Other Boards.  A director will not serve on a board of directors of more than three publicly traded companies (including the Company).

    Limitation on Service to Competitors.  A director will not serve as a director, executive, employee or consultant to any company that is a competitor to the Company, taking account of companies that operate under the same NAICS codes as the Company or are specifically identified as competitors of the Company in the Company's public reports.

    No Director Loans.  The Company prohibits personal loans or credit advances by the Company to directors except for ordinary travel and expense advances, advance director fee payments, and as required by director indemnification.

    Published Corporate Governance Guidelines.  A copy of the Corporate Governance Guidelines as well as our Code of Ethics, Charters for our Audit Committee, Compensation Committee, and Nominations/Corporate Governance Committee ("Nominations Committee"), and Directors and Executive Officer Policies, and our Securities Trading and Conflict of interest policy can be found under "Corporate Governance Charters and Policies" on our website atwww.ethanallen.com/governance.

    Independent Board.  All members of our Board are independent directors, with exception of the Chairman of our Board who is also our Chief Executive Officer.

    Independent Board Committees.  All members of our Audit Committee, Compensation Committee, and Nominations Committee are independent directors, and none of such members receives compensation from the Company other than for service on its Board of Directors or its committees.

    Independent Executive Sessions.  The Board of Directors is required to have executive sessions where independent directors meet without the Chairman and management at the time of each Board of Directors meeting. In addition, periodically throughout the year, the full Board of Directors, including or excluding the Chairman, may meet without management participation.

    Committee Authority to Retain Independent Advisors.  The Audit Committee, Compensation Committee and Nominations Committee each have the authority to retain independent advisors, with all fees and expenses to be paid by the Company.

    Audit Committee Policies and Procedures.  Under its charter, the Audit Committee's prior approval is required for all audit services and permitted non-audit services (other than de minimis permitted non-audit services as defined and permitted by the Sarbanes-OxleyForeign Corrupt Practices Act of 2002) to be provided by our independent registered public accounting firm.

    Audit Committee Financial Expert.  The Board of Directors has determined that all members of the Audit Committee are audit committee financial experts within the meaning of the SEC rules and are independent directors within the meaning of the listing standards of the NYSE.

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    No Stockholder Rights Plan (poison pill).  Our previous stockholder rights plan was allowed to expire May 31, 2012.

    No Cumulative Voting.  We do not provide for cumulative voting of directors by our stockholders.

    No Classified Board.  At the 2013 Annual Meeting of Stockholders, the Company amended its Amended and Restated Certificate of Incorporation to eliminate the classified structure of our Board of Directors. As such, the directors are elected annually for one-year terms.

    Annual Advisory Vote on Executive Compensation.  Since 2011, our stockholders have cast an annual non-binding advisory vote on our executive compensation programs.

STOCKHOLDER OUTREACH & COMMUNICATION WITH DIRECTORS

                During the past year, the Board and management held two investor conferences to allow direct interaction and communication between the Company and its stockholders and the investment community. Stockholders or interested parties may communicate with the Chairman, the Lead Independent Director, the full Board of Directors, a full committee, individual committee members or individual directors by sending communications to the Office of the Secretary, Ethan Allen Interiors Inc., PO BOX 1966, Danbury, Connecticut 06813-1966 for forwarding to the appropriate director(s). Please specify to whom your correspondence should be directed and the nature of your interest in the Company. Concerns relating to accounting, internal controls or auditing matters are immediately brought to the attention of the Company's internal audit department and handled in accordance with procedures established by the Audit Committee with respect to such matters.

                The Secretary shall review any such correspondence and forward to the Board a summary of all such correspondence and copies of all correspondence that, in the opinion of the Secretary, deals with the functions of the Board or committees thereof or that the Secretary otherwise determines requires their attention. Directors may at any time review a log of all correspondence received by the Company that is addressed to members of the Board and request copies of any such correspondence. Typically, the Secretary would not forward to the Board communications of a personal nature or not related to the duties and responsibilities of the Board, including junk mail, mass mailings, advertisements, magazines, solicitations, job inquiries, opinion surveys or polls.

                Additional investor information is available atwww.ethanallen.com/investors.

                Stockholders may also electronically submit their communications to the following e-mail address: ETHBoard@ethanallen.com.

COMMITTEE CHARTERS, BUSINESS CODE AND CORPORATE GOVERNANCE GUIDELINES

                The Company's Business Code, Corporate Governance GuidelinesPolicy and the charters of its Audit Committee, Compensation Committee and Corporate Governance, Nominations and Sustainability Committee are available on the Company'sCompany’s website atwww.ethanallen.com/governancehttps://ir.ethanallen.com/corporate-governance/governance-documents. You may also request printed copies of the charter(s)these documents, free of charge, by sending a written request to our Corporate Secretary at Ethan Allen Interiors Inc., PO BOX 1966,25 Lake Avenue Ext., Danbury, CT 06813-1966.06811-5286.

The Board has approved a set of Corporate Governance Guidelines in accordance with the NYSE rules. These Corporate Governance Guidelines set forth the key policies relating to corporate governance, including director qualification standards, director responsibilities and director compensation. The Corporate Governance Guidelines cover, among other things, the duties, and responsibilities of and independence standards applicable to our directors. The Corporate Governance Guidelines also cover the Board'sBoard’s role in overseeing executive compensation, compensation and expenses of non-management directors, communications between stockholders and directors, and Board committee structures and assignments.

Our Business Code requiresof Conduct was adopted to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest; promotion of full, fair, accurate, timely and understandable disclosure in reports and documents that each individual deal fairly, honestlythe Company files with, or submits to, the SEC and constructivelyin other public communications made by the Company; compliance with applicable governmental laws, rules and regulatory bodies, customers, suppliersregulations; protection of Company assets, including corporate opportunities and competitors. Itconfidential information; promotion of fair dealing practices; deterring wrongdoing and ensuring accountability for adherence to the provisions of the Code of Conduct. The Code of Conduct prohibits any individual'semployee, officer and director taking unfair advantage of any clients, suppliers, competitors or other officers and employees through manipulation, concealment, abuse of privileged information or misrepresentation of material facts. It imposes an express duty to act in the best interests of the Company and to avoid influences, interests or relationships that could give rise to an actual or apparent conflict of interest. Further, it alsothe Code of Conduct prohibits directors, officers, and employees from competing with us,taking for themselves (i.e. personally) opportunities that properly belong to the Company or are discovered through using Companycorporate property, or information, or such employee'sone’s position; using corporate property, information, or position for personal gain,gain; and taking corporate opportunities for personal gain.competing directly or indirectly with the Company. This Code of Conduct may be amended, modified, or waived by the Board of Directors. Waivers of our Businessthe Code of Conduct must be explicit. Any waiver of the Business Code of Conduct for directors or executive officers may only be made by the Board or the Corporate Governance, Nominations Committee, and Sustainability Committee. We will disclose any future amendments to, or waivers from, provisions of the Code of Conduct affecting our executive officers or amendments will be publicly communicated, as appropriate, including by a postingdirectors on our website within four business days.days, as may be required under applicable SEC and NYSE rules. We granted no waivers under our Code of Business Conduct and Ethics in fiscal 2017. Stockholders2021. With respect to any person other than any executive officer or director, waivers may requestbe granted by the General Counsel.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During fiscal 2021, the Board met in person or by telephone conference four times, including the meeting in connection with the 2020 Annual Meeting of Stockholders. Independent directors also met four times in executive session without management present. The Lead Independent Director chaired the executive sessions.
All directors are expected to attend all regularly scheduled and special Board meetings, including the annual meeting of stockholders, independent director meetings and committee meetings, as appropriate. The Board realizes that scheduling conflicts may arise from time to time which prevent a copydirector from attending a particular meeting. However, it is the Board’s explicit policy that each director shall give priority to his or her obligations to the Company. All directors who then held office attended the 2020 Annual Meeting of Stockholders. In fiscal 2021, there was 100% attendance by each director at each of the four Board meetings, and for directors serving on such committees, there was 100% attendance at the six regularly scheduled Audit Committee meetings, four regularly scheduled Compensation Committee meetings, and four regularly scheduled Corporate Governance, Nominations and Sustainability Committee meetings. As set forth in our Corporate Governance Guidelines, the Company’s policy is to expect the resignation of any director who is absent from more than 25% of these documents by writing to: Ethan Allen Interiors Inc., PO Box 1966, Danbury, CT 06813-1966, Attention: Officeregularly scheduled Board meetings or committee meetings in a fiscal year.

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Board Committee Memberships
The Board has established three standing committees: the Audit Committee; the Compensation Committee; and the Corporate Governance, Nominations and Sustainability Committee. Committee memberships as of June 30, 2021, are set forth below:
NameAudit
Committee
Compensation
Committee
Corporate
Governance,
Nominations and
Sustainability
Committee
Lead
Independent
Director
James B. Carlson (1)MemberChairperson
Dr. John Clark (2)
John J. Dooner, Jr.MemberChairperson
Cynthia Ekberg Tsai (2)
Domenick J. Esposito (3)ChairpersonMember
Mary Garrett (1)Member
David M. Sable (2)
Dr. James W. Schmotter (1)MemberMember
Tara I. StacomMember
(1)
Tenure ends as of the Secretary.

Annual Meeting

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

                Section 16(a)

(2)
New director nominee who has not yet been assigned to any standing committees of the Board
(3)
Mr. Esposito’s tenure ended upon his death on September 22, 2021; subsequently, John J. Dooner, Jr. was named Lead Independent Director and Dr. James W. Schmotter was named Chairperson of the Audit Committee
The Board determined that each member of the standing committees is (i) independent within the meaning of the NYSE rules, including the additional requirements applicable to members of the audit and compensation committees, as applicable, (ii) non-employee directors (within the meaning of Rule 16b-3 under the Securities Exchange Act requires our executive officers,of 1934, as amended (the “Exchange Act”)) and (iii) outside directors (within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”)).
Audit Committee
The Audit Committee operates under a written charter, which was adopted by the Board. Pursuant to its charter, on behalf of the Board, the Audit Committee oversees the Company’s consolidated financial statements, independent auditors, financial statement audits, financial reporting process, system of internal accounting and ownersfinancial controls, and internal audit function. In so doing, the Audit Committee seeks to maintain free and open communication between the Audit Committee and the Company’s independent registered public accounting firm, the internal auditors and management. The Audit Committee is also responsible for reviewing and approving of over 10%any related party transactions required to be disclosed pursuant to Item 404(a) of our Common Stock to file reportsRegulation S-K. The responsibilities and activities of ownershipthe Audit Committee are discussed more fully under “Audit Committee Report” in this Proxy Statement, and changes in ownership withthe Audit Committee charter.
Each member of the Audit Committee, James B. Carlson, Domenick J. Esposito (Chairperson), Mary Garrett and Dr. James W. Schmotter, is an independent director within the meaning of the applicable rules and regulations of the SEC and the NYSE rules, including the additional independence requirements applicable to members of audit committees. The Board has determined that each member of the Audit Committee is financially literate within the meaning of the NYSE rules and furnish usthat each qualifies as an “audit committee financial expert” as defined under Item 407(d)(5)(ii) of SEC Regulation S‐K. The Audit Committee is required to meet a minimum of four times each fiscal year and may hold such additional meetings as it deems necessary to perform its functions. The Audit Committee met in person or by telephone conference six times during fiscal 2021.
The Audit Committee charter is located on the Company’s Investor Relations website, at https://ir.ethanallen.com/corporate-governance/governance-documents.
Compensation Committee
The Compensation Committee operates under a written charter, which was adopted by the Board. Pursuant to its charter, on behalf of the Board, the Compensation Committee determines our compensation policies and the level and forms

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of compensation provided to our Board members and executive officers, as discussed more fully under “Compensation Discussion and Analysis” in this Proxy Statement. In addition, the Compensation Committee reviews and approves stock-based compensation for our directors, officers, and employees, and oversees the administration of our Stock Incentive Plan. The Compensation Committee also approves the “Compensation Discussion and Analysis” with respect to compensation of the Company’s Named Executive Officers as defined therein (“Named Executive Officers” or “NEOs”) in accordance with applicable rules of the SEC. The Compensation Committee is authorized to retain and terminate compensation consultants, legal counsel, or other advisors to the Committee and to approve the engagement of any such consultant, counsel, or advisor, to the extent it deems necessary or appropriate after specifically analyzing the independence of any such consultant retained by the Committee.
Each member of the Compensation Committee, James B. Carlson (Chairperson), John J. Dooner, Jr. and Domenick J. Esposito, is an independent director within the meaning of the applicable NYSE rules, including the additional independence requirements applicable to members of compensation committees. The Compensation Committee meets a copyminimum of two times a year and holds such additional meetings as it deems necessary to perform its responsibilities. The Compensation Committee held four meetings and individual Compensation Committee members communicated, when necessary, by telephone or video conference during fiscal 2021.
Corporate Governance, Nominations and Sustainability Committee
The Corporate Governance, Nominations and Sustainability Committee operates under a written charter, which was adopted by the Board. Pursuant to its charter, on behalf of the Board, the Corporate Governance, Nominations and Sustainability Committee’s duties include, but are not limited to, (i) developing qualification criteria for the members of the Board and recommending to the Board individuals to serve on the Board; (ii) reviewing, on an annual basis, the qualifications of each member of the Board; (iii) reviewing and monitoring the Company’s corporate governance policies and guidelines, including the Company’s insider trading policy for its directors and executive officers; (iv) annually assessing of the Board’s performance and reporting such assessment to the Board; and (v) assisting the Board to pursue and report filed. Based solelysustainability initiatives, which, as noted above under “Corporate Responsibility,” comprises both CSR and ESG matters.
Each member of the Corporate Governance, Nominations and Sustainability Committee, James J. Dooner, Jr. (Chairperson), Dr. James W. Schmotter and Tara I. Stacom, is an independent director within the meaning of the NYSE rules. The Corporate Governance, Nominations and Sustainability Committee meets a minimum of two times a year and holds such additional meetings as it deems necessary to perform its responsibilities. The Corporate Governance, Nominations and Sustainability Committee held four meetings and individual Corporate Governance, Nominations and Sustainability Committee members communicated, when necessary, by telephone or video conference during fiscal 2021.
Proxy Access and Director Nominations.   The Corporate Governance, Nominations and Sustainability Committee follows the procedure concerning nominations or consideration of director candidates recommended by stockholders set forth in our Amended and Restated By-Laws (the “By-Laws”). The By-Laws of the Company permit stockholders, as of the Record Date, to nominate director candidates at the Annual Meeting, subject to certain notification requirements. Our By-Laws permit a stockholder, or a group of up to 20 stockholders, owning at least 3% of our outstanding common stock continuously for at least three years to nominate and include in our proxy materials up to the greater of two directors or 20% of our Board. Stockholders and nominees must satisfy the requirements set forth in the By-Laws in connection with such nominations. We believe that this By-law provision provides meaningful, effective, and accessible proxy access rights to our stockholders, and balances those benefits against the risk of misuse or abuse by stockholders with special interests that are not shared by all or a significant percentage of our stockholders. Our By-Laws also allow for nominations of directors outside of this proxy access framework who will not be included in our proxy materials. Refer to “How do I submit a proposal or nominate a director candidate for the 2022 Annual Meeting of stockholders?” under “Questions and Answers about our Annual Meeting and Voting” further below for information on

how to submit a proposal or nominate a director.
Board Qualifications and Diversity.   The Corporate Governance, Nominations and Sustainability Committee seeks director candidates who demonstrate a willingness and ability to prepare for, attend and participate in all Board and committee meetings and whose experience and skill would complement the then-existing mix of directors. The Board believes that a Board comprised of members with diverse qualities provide varied perspectives which will help to promote active and constructive dialogue among Board members and between the Board and management, resulting in more effective oversight. Therefore, diversity is among the criteria that the Corporate Governance, Nominations and Sustainability uses to evaluate nominees and includes, but is not limited to, consideration of viewpoints, background, and experience, including diversity of race, self-identified gender, ethnicity, age, and cultural background. In the Board’s executive sessions and in annual performance evaluations conducted by the Board and its committees, the Board will periodically consider whether the members of the Board reflect such diversity and whether such diversity contributes to a constructive and collegial environment. We believe that the current and proposed members of our Board amply demonstrate diversity due to their varied backgrounds,



experience, qualifications, and skills. In particular, we are proud that 40% of Contentsour independent director nominees are women and that our Board includes ethnic diversity, namely through Mr. Kathwari, our Chairman of the Board and Chief Executive Officer, who is South Asian.

our

In recommending director candidates, the Corporate Governance, Nominations and Sustainability Committee gathers suggestions as to individuals who may be available to meet the Board’s future needs from a variety of sources, such as past and present directors, stockholders, colleagues, and other parties with which a member of the Corporate Governance, Nominations and Sustainability Committee or the Board has had business dealings. The Corporate Governance, Nominations and Sustainability Committee then undertakes a preliminary review of copiesthe individuals suggested. Candidates recommended by stockholders will be considered in the same manner as other candidates. At such times as the Corporate Governance, Nominations and Sustainability Committee determines that a relatively near-term need exists and the Corporate Governance, Nominations and Sustainability Committee believes that an individual’s qualities and skills would complement the then-existing mix of directors, the Corporate Governance, Nominations and Sustainability Committee or its Chair will contact the individual. After such reports furnishedcontact, the members of the Corporate Governance, Nominations and Sustainability Committee will discuss (or, where the Chair makes contact, the Chair will discuss with the other members) the individual and all relevant qualifications. Based on the Corporate Governance, Nominations and Sustainability Committee’s evaluation of potential nominees and the Company’s needs, the Corporate Governance, Nominations and Sustainability Committee determines whether to nominate the individual for election as a director. While the Corporate Governance, Nominations and Sustainability Committee has not, in the past, engaged any third-party firm or consultant to identify or evaluate nominees, in accordance with its charter, may do so in the future.
The Corporate Governance, Nominations and Sustainability Committee unanimously recommended to the Board for approval the nominees named in this Proxy Statement and believe that these individuals are best qualified with the experience, industry knowledge, integrity, ability to devote time and energy, and commitment to the interests of all stockholders to execute our strategic plan and create value for all of our stockholders. In considering each director nominee, the Corporate Governance, Nominations and Sustainability Committee and the Board evaluated such person’s key qualifications, skills, experience, and perspectives that he or she could bring to the Board, including in light of the particular areas summarized in the matrix under “Proposal 1: Election of Directors.”
The Corporate Governance, Nominations and Sustainability Committee charter is located on the Company’s Investor Relations website, at https://ir.ethanallen.com/corporate-governance/governance-documents.

11


PROPOSAL 1:   ELECTION OF DIRECTORS
At the recommendation of the Corporate Governance, Nominations and Sustainability Committee, the Board has nominated the following six directors for election at the Annual Meeting. If elected, each director will serve for a one-year term expiring at the 2022 Annual Meeting of Stockholders or until their respective successor has been duly elected and qualified or until their earlier death, resignation, disqualification, or removal. Three of the director nominees are current directors, each elected by Ethan Allen’s stockholders at our 2020 Annual Meeting of Stockholders. The Board is also nominating three new director nominees for election at the Annual Meeting: Dr. John Clark, Cynthia Ekberg Tsai, and David M. Sable. Dr. James W. Schmotter notified the Board on August 3, 2021 of his intent to retire at the end of his current term, and James B. Carlson and Mary Garrett will be rotating off the Board at the end of their current terms, which expire on the date of the Annual Meeting. We appreciate each of their contributions during their years of service to the Company. Additionally, Domenick J. Esposito, Lead Independent Director and Chairperson of the Audit Committee, unexpectedly passed away on September 22, 2021. The Company will miss the leadership and written representationscontributions Mr. Esposito made to the Board throughout his years of service and our thoughts and prayers are with his family.
Each of the director nominees included in this Proxy Statement has consented to being named as a nominee and has accepted the nomination and agreed to serve as a director if elected by our stockholders. The Board believes that all reports were filedeach nominee will be able and willing to serve if elected as a director. However, if any nominee becomes unable or unwilling to serve between the date of this Proxy Statement and the Annual Meeting, the Board may designate a new nominee, and the persons named as proxy holders may vote for the substitute nominee. Alternatively, the Board may reduce the size of the Board.
The information set forth below includes, with respect to each nominee for election as director, his or her age, present principal occupation, specific expertise, qualifications, and skills along with other business experience, directorships in other publicly held companies, membership on committees of the Board and period of service as a director of the Company. Also set forth below is a brief discussion of the specific experience, qualifications, attributes, or skills that led to each nominee’s nomination as a director, in light of the Company’s business.
The Board unanimously recommends that you vote FOR each
of the six nominees.

12


BOARD OF DIRECTORS—EXPERIENCE AND SKILLS
Ethan Allen Director Nominees (1)
CEO or
Senior
Executive
Level
Experience
Risk
Management
International
Experience
Operating
Experience
Retail and
Digital
Experience
Finance
Experience
Real
Estate
Experience
Marketing
and
Brand
Building
Expertise
M. Farooq Kathwari
Dr. John Clark *(2)
John J. Dooner, Jr. *
Cynthia Ekberg Tsai *(2)
David M. Sable *(2)
Tara I. Stacom *
(1)
The fact that a particular qualification, skill, experience, or perspective is not listed in this matrix does not mean that the nominee does not possess it or that no reports were required, we arethe Corporate Governance, Nominations and Sustainability Committee and the Board did not awareevaluate it.
(2)
New director nominee who has not yet been assigned to any subcommittees of any instances of noncompliance with the Section 16(a) filing requirements by any executive officer, director or owner of over 10% of our Common Stock during fiscal year 2017.

Board
*
Independent Director
DIRECTOR NOMINEES FOR ELECTION
M. Farooq KathwariENTREPRENURIAL AND DISCIPLINED LEADER
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Mr. Kathwari is the Chairman, President and Chief Executive Officer of Ethan Allen Interiors Inc. He has been President since 1985 and Chairman and Chief Executive Officer since 1988. He holds a Bachelor of Arts in both English Literature and Political Science from Kashmir University and an MBA in International Marketing from New York University. He is also the recipient of three honorary doctorate degrees.
Director since 1985
Age: 77
Board Committees:

Chairperson of the
Board
Specific Qualifications, Attributes, Skills and Experience:
Mr. Kathwari serves in numerous capacities at several nonprofit organizations. He is an advisory member of the New York Stock Exchange; former chairman of the National Retail Federation; a member of the Board of Overseers of the International Rescue Committee; Chairman Emeritus of Refugees International; a member of the International Advisory Council of the United States Institute of Peace; and a member of the advisory board of the Center for Strategic and International Studies.
Among his recognitions, Mr. Kathwari is a recipient of the 2018 Ellis Island Medal of Honor, has been inducted into the American Furniture Hall of Fame and recipient of the National Retail Federation Gold Medal. He has been recognized as an Outstanding American by Choice by the U.S. government. He has received the Yale School of Management’s Chief Executive Leadership Institute Lifetime of Leadership Award. He has also been recognized by Worth magazine as one of the 50 Best CEOs in the United States. He is the author of Trailblazer: from the Mountains of Kashmir to the Summit of Global Business and Beyond.
Mr. Kathwari has extensive knowledge of the history of both the Company and the furniture industry as well as extensive experience in growing and managing a business. Mr. Kathwari possesses insight into retailing, marketing, manufacturing, finance, and strategic planning. In addition, his work with both for-profit and not-for-profit organizations has given him perspectives from other industries, which have proven valuable throughout his service to the Company.

13


Dr. John ClarkDIRECTOR COMPENSATION EDUCATOR AND ADMINISTRATION LEADER

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Dr. John Clark is the President of Western Connecticut State University since 2015. He previously was the Acting University Executive Director of the City University of New York’s (CUNY) Office of Business and Industry Relations. Before joining CUNY, he was a visiting professor at Stony Brook University. Prior to that, he was Interim Chancellor of the State University of New York (SUNY). During his career at SUNY, Dr. Clark was the interim president of four of its colleges; Plattsburgh, Brockport, Alfred State and Optometry. He also served as Interim Vice Chancellor for Enrollment Management and University Life at SUNY System Administration.
Independent
Director since
Newly Nominated
Age: 70
Board Committees:

N/A - New nominee
Specific Qualifications, Attributes, Skills and Experience:
Before joining SUNY, Dr. Clark had an 18-year Wall Street career as an analyst and investment banker specializing in health and higher education. Dr. Clark held various positions in New York City and state government and is a Vietnam-era veteran. He also has wide-ranging experiences as a board member with various not-for-profit organizations providing educational, healthcare, and housing services. Dr. Clark holds five degrees, including a Bachelor of Arts degree in history cum laude from Providence College, a Master of public administration degree from the John Jay College of Criminal Justice (CUNY), a Master of Arts degree in economics from Fordham University, a Master of Arts degree in philosophy from New York University, and a Doctorate in education from Teachers College, Columbia University. Dr. Clark brings to the Board his strategic thinking, people development skills and unique hands-on experience in investment banking and administration management.
John J. Dooner, Jr.MARKETING AND STRATEGIC COMMUNICATIONS LEADER
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Mr. Dooner founded The Dooner Group, a marketing communication consultancy in 2012, and serves as Chairman Emeritus of McCann Worldgroup, a company he formed in 1997, and of which he had been Chief Executive Officer from its founding until 2011.
Lead Independent
Director
Director since 2011
Age: 73
Board Committees:
•   Nominations - Chair
•   Compensation
Specific Qualifications, Attributes, Skills and Experience:
Under Mr. Dooner’s leadership, McCann grew to be one of the world’s largest marketing communications organizations, with operations in over 125 countries with a client roster that includes preeminent global marketers and many of the world’s most famous brands. Prior to assuming that position, Mr. Dooner was Chief Executive Officer of McCann Erickson Worldwide, a post he assumed in 1992. Mr. Dooner serves on several not-for-profit organizations including as Chairman of St. Thomas University based in Miami, Florida. He is Past Chairman Board of Trustees and Past Brand Platform Chairman of United Way Worldwide based in Washington, DC. In April 2019, Mr. Dooner was inducted into the American Advertising Federation Hall of Fame. In May 2019 he received an honorary doctorate from St. Thomas University. Mr. Dooner brings extensive advertising and branding expertise to the Board.

14


Cynthia Ekberg Tsai FINANCE AND MANAGEMENT DEVELOPMENT LEADER
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Ms. Ekberg Tsai is the CEO of Tana Systems, a global software and IT company based in the U.S. and India. She is also CEO of Healthquest, a global biotechnology and medical technologies advisory firm, where she specializes in providing strategic introductions and advice to rising executives.
Independent
Director since
Newly Nominated
Age: 65
Board Committees:
N/A - New nominee
Specific Qualifications, Attributes, Skills and Experience:
Ms. Tsai spent 16 years on Wall Street as a Vice President with Merrill Lynch and Kidder Peabody. She is the former Founder and CEO of HealthExpo, the largest consumer healthcare event in the U.S., where she grew the enterprise from concept to execution, attracting more than 50 million consumers to HealthExpo. Previously, Ms. Tsai was a General Partner in MassTech Ventures, a multi-million-dollar equity fund focused on technology development at Massachusetts Institute of Technology. Ms. Tsai currently serves on the Board of Selectors for the Jefferson Foundation Awards and is on the board of the Prix Galien Foundation. In 1999, the Harvard Business School Alumni Chapter in New York recognized Ms. Tsai with an Early-Stage Honor Roll Award for Entrepreneurship. In 2004, she also received a “Leading Woman Entrepreneur of the World” Award from the Star Foundation in Overland Park, Kansas. She earned a Bachelor of Arts in Psychology from the University of Missouri. Ms. Tsai brings to the Board her strategic thinking and unique hands-on experience in investment banking and brand building.
David M. Sable MARKETING AND DIGITAL LEADER
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Mr. Sable is Co-Founder and Partner of DoAble, a Marketing Consultancy focused on branding, positioning, and big ideas. As Senior Advisor to WPP plc (“WPP”), a multinational communications, advertising, public relations, technology, and commerce holding company, he mentored and consulted across the company. Previously he was Chairman of VMLY&R. He propelled Y&R to a top-five global creative firm at Cannes, developed new resources and practices, expanded the global footprint of subsidiary company VML, and ultimately helped unify Y&R and VML into VMLY&R, one of the most successful agencies in the industry today.
Independent
Director since
Newly Nominated
Age: 68
Board Committees:
N/A - New nominee
Specific Qualifications, Attributes, Skills and Experience:
Mr. Sable serves as a board member and member of the Audit, Compensation and Nominating Committees of American Eagle Outfitters (NYSE: AEO). Prior to his time at Y&R, Mr. Sable served at Wunderman, Inc., a leading customer relationship manager and digital unit of WPP, as Vice Chairman and Chief Operating Officer, from August 2000 to February 2011. Mr. Sable was a Founding Partner and served as Executive Vice President and Chief Marketing Officer of Genesis Direct, Inc., a pioneer digital omni-channel retailer, from June 1996 to September 2000. Mr. Sable attended New York University and Hunter College in New York. In 2013, Fast Company named Mr. Sable one of the 10 Most Generous Marketing Geniuses. He currently serves on the Board of Directors of both UNICEF/USA and the International Special Olympics, as well as on the Executive Board of UNCF and he was Executive Producer on MTV’s highly acclaimed REBEL MUSIC series. Mr. Sable brings to the Board more than 30 years of experience and strategic insight in digital leadership and marketing communications. The Board also benefits from his extensive involvement with community programs.

15


Tara I. Stacom REAL ESTATE AND FINANCIAL INDUSTRIES LEADER
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Ms. Stacom is an Executive Vice Chairman of Cushman & Wakefield since 2013, a worldwide commercial real estate firm with 50,000 employees. During her 40-year career, Ms. Stacom has been responsible for executing in excess of 60 million square feet and some of the largest and most complex leasing, sales, and corporate finance real estate transactions.
Independent
Director since 2015
Age: 63
Board Committees:

Nominations
Specific Qualifications, Attributes, Skills and Experience:
Ms. Stacom earned her Bachelor of Science degree in Finance at Lehigh University where she later served on the Board of Trustees. She is a director of the Realty Foundation of New York and a member of the Real Estate Board of New York having served on numerous committees including Ethics and the Commercial Brokerage Division. Ms. Stacom is a “Director’s Circle Member” of Girls, Inc., a board member of Right to Dream and recipient of Crain’s New York Business 100 Most Influential Women in New York City. She was awarded “Woman of the Year” of the New York Executives in Real Estate (WX), and Real Estate New York and Real Estate Forum’s Women of Influence. She received Northwood University’s Distinguished Women’s Award in recognition of the enormous contribution she has made to communities, businesses, volunteer agencies, and public and private sector services worldwide. Ms. Stacom was honored with the Real Estate Board of New York’s highest achievement, the 2011 Most Ingenious Deal of the Year (First Place Henry Hart Rice Award) for the leasing of One World Trade Center. Ms. Stacom brings extensive knowledge of commercial real estate and finance to the Board.


16


DIRECTOR COMPENSATION
Only our non-employee (independent) directors receive compensation for service on the Board. Employee directors do not receive additional compensation for serving on the Board. Non-employee director compensation is approved by the Board, after considering a recommendation from the Compensation Committee. Mr. Kathwari, as Chief Executive Officer of the Company, is not compensated separately for his service as a director on the Board. For information on Mr. Kathwari’s compensation as our Chief Executive Officer, refer to the Summary Compensation Table. For fiscal year 2017,2021, the Board approved as compensation for our non-employee directors a combination of cash and option awards, as shown in the table below.
Annual Cash Retainer.   For fiscal 2021, each independentnon-employee director received $60,000 per annum and an annual stock option award. The number of stock options awarded was determined by dividing the market price of the Company's stock at the grant date into $100,000.annum. Additional quarterly fees are paid quarterly to the chairpersonchair of each of the committees as follows: Audit Committee $4,000; Compensation Committee $2,000; and Corporate Governance, Nominations and Sustainability Committee $2,000. The Lead Independent Director of the Board is paid an additional cash fee of $2,000 per quarter.
Equity Compensation.   Non-employee directors are eligible to receive equity compensation in amounts determined by the Compensation Committee, which generally would be paid in the form of stock options. As part of the Company’s action plan in response to the COVID-19 pandemic, in April 2020, based on the recommendation of the Compensation Committee, the Board approved a reduction in the non-employee director annual equity compensation to reduce the fiscal 2021 stock option grant by 20%. As such, in fiscal 2021, each director was awarded a stock option award with the number of options equal in value to $80,000 (as compared to $100,000 during fiscal 2020) based on the market price of the Company’s stock as of the date of grant. These stock options vest in three equal annual installments commencing on the first anniversary of the date of grant so long as the director continues to serve on our Board. All options granted to directors have an exercise price equal to the fair market value of our common stock on the date of grant and remain exercisable for a period of up to 10 years, subject to continuous service on our Board.
Meeting Fees.If a standing committee of the Board holds more than four meetings (either in person or telephonically) on days when the full Board does not meet, members of that committee members will be paid an additional $1,000 for each additional meeting beginning with the fifth such meeting. Employee directors do not receive additional compensation for serving on the Board of Directors. Directors serving on committees for part of a year receive a pro-ratapro rata share of fees.

There were no additional meeting fees paid to directors during fiscal 2021.
Name
Fees Earned or
Paid in Cash (1)
Option
Awards (2)(3)
Total
James B. Carlson (4)$    68,000$    19,707$    87,707
John J. Dooner, Jr. (5)$    68,000$    19,707$    87,707
Domenick J. Esposito (6)$    82,000$    19,707$   101,707
Mary Garrett (7)$    60,000$    19,707$    79,707
Dr. James W. Schmotter (8)$    62,000$    19,707$    81,707
Tara I. Stacom (9)$    60,000$    19,707$    79,707
(1)
  Name

 Fees Earned or
Paid in Cash


 Option
Awards (1)


 Total

  James B. Carlson (2)   $        68,000   $        27,076   $        95,076  
​   Clinton A. Clark (3)  28,707  $        54,134  82,841 
  John J. Dooner, Jr. (4)   60,000   $        27,076   87,076  
​   Domenick J. Esposito (5)  70,000  $        27,076  97,076 
  Mary Garrett (6)   60,000   $        27,076   87,076  
​   James W. Schmotter (7)  68,000  $        27,076  95,076 
  Tara I. Stacom (8)   60,000   $        27,076   87,076  
Fees earned or paid in cash during fiscal 2021 include the annual cash retainer of  $60,000 plus additional compensation for a director’s role as a Committee Chair and/or as the Lead Independent Director, as noted below.
    (1)
    a.
    Mr. Carlson: $8,000 as Chairperson of the Compensation Committee
    b.
    Mr. Dooner: $8,000 as Chairperson of the Corporate Governance, Nominations and Sustainability Committee
    c.
    Mr. Esposito: $16,000 as Chairperson of the Audit Committee and $6,000 as Lead Independent Director for the last three quarters of fiscal 2021
    d.
    Dr. Schmotter: $2,000 as Lead Independent Director during the first quarter of fiscal 2021
    (2)
    Each director was awarded 6,168 stock options on August 12, 2020 vesting in three equal annual installments commencing on the first anniversary of the date of grant.
    (3)
    The amounts shown for stock option and restricted stock awards represent the aggregate grant date fair values, as of each grant date, computed in accordance with Accounting Standards Codification Topic 718. For financial statement reporting purposes these fair values are charged to expense over the vesting period of three years. The actual values realized, if any, will not be known until the vesting date and could differ significantly. See footnote 10significantly from the amounts disclosed in the table. Refer to note 17 to the Company'sconsolidated financial statements contained in the Company’s Annual Report on Form 10-K for fiscal year ended June 30, 2017 forvaluation assumptions in the valuation. Thewith respect to stock option award reflects a grant of 2,879 options for each director who was serving on the grant date.
    (2)
    grants.
(4)
Mr. Carlson was awarded 2,879held 29,397 stock options on July 29, 2016 vesting in three equal annual installments commencing on the first anniversaryoutstanding, of the date of grant. Aswhich 23,385 were vested or exercisable within 60 days of June 30, 2017, 2021.
(5)
Mr. CarlsonDooner held 10,01938,328 stock options outstanding, of which 3,35732,316 were vested.
(3)
Mr. Clark was awarded 2,879 stock options on July 29, 2016 with a fair value of $27,076, vesting in three equal annual installments commencing on the first anniversary of the date of grant. Mr. Clark retired from the board immediately prior to the annual meeting on November 16, 2016. Upon his retirement the Board of Directors extended the vesting of 6,662 shares of unvested stock options for 90 days. The incremental fair value of this modification was $27,058.
(4)
Mr. Dooner was awarded 2,879 stock options on July 29, 2016 vesting in three equal annual installments commencing on the first anniversary of the date of grant. Asvested or exercisable within 60 days of June 30, 2017, 2021.
(6)
Mr. DoonerEsposito held 18,95025,738 stock options outstanding, of which 12,28819,726 were vested.
(5)
Mr. Esposito was awarded 2,879 stock options on July 29, 2016 vesting in three equal annual installments commencing on the first anniversary of the date of grant. Asvested or exercisable within 60 days of June 30, 2017, Mr. Esposito2021.
(7)
Ms. Garrett held an aggregate of 6,36022,257 stock options outstanding, of which 1,16016,245 were vested.
(6)
Ms. Garrett was awarded 2,879 stock options on July 29, 2016 vesting in three equal annual installments commencing on the first anniversary of the date of grant. Asvested or exercisable within 60 days of June 30, 2017, Ms. Garrett2021.
(8)
Dr. Schmotter held an aggregate of 2,87938,328 stock options outstanding, of which none32,316 were vested.
(7)
Mr. Schmotter was awarded 2,879 stock options on July 29, 2016 vesting in three equal annual installments commencing on the first anniversary of the date of grant. Asvested or exercisable within 60 days of June 30, 2017, Mr. Schmotter2021.
(9)
Ms. Stacom held 18,95022,257 stock options outstanding, of which 12,28816,245 were vested.
(8)
Ms. Stacom was awarded 2,879 stock options on July 29, 2016 vesting in three equal annual installments commencing on the first anniversary of the date of grant. Asvested or exercisable within 60 days of June 30, 2017, Ms. Stacom held an aggregate2021.

17


SECURITY OWNERSHIP
The following tables set forth, as of 2,879 stock options of which none were vested.

Policies And Procedures With Respect To Transactions With Related Persons

                The Company recognizes that transactions betweenOctober 11, 2021, the Company and related persons present a potentialrecord date for actual or perceived conflicts of interest. The Company's general policiesthe Annual Meeting, information known to Ethan Allen with respect to such transactions are includedbeneficial ownership as defined by SEC rules of the Company’s common stock for (i) directors and executives officers, (a) each director and director nominee, (b) the Company’s Named Executive Officers as defined in its Code of Business Conductthe “Compensation Discussion and Ethics ("Business Code"),Analysis” and named in the administration of which is overseen by the Nominations Committee. The Company defines "related party" transactiontable entitled “Summary Compensation Table,” and (c) all directors and executive officers as any transaction or series of related transactions in excess of $120,000 in which the Company is a partygroup and in which a "related person" had, has or will have direct or indirect material interest. Related persons include (i) any person who is, or at any time since the beginning of our last fiscal year, was, a director or executive officer of us or a nominee to become a director, (ii) any person who is known to be the beneficial ownereach principal stockholder of more than 5% of any class of our voting securities, (iii) any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of the director, executive officer, nominee or more than 5% beneficial owner and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee or more than 5% beneficial owner and (iv) any firm, corporation or other entity in which any of the foregoing persons is employed or is a general partner or principal or in a similar position or in which such person has a 10% or greater beneficial ownership interest.


Table of Contents

                The Company collects information about potential related party transactions in its annual questionnaires completed by directors and officers as well as throughout the year at its quarterly disclosure control committee meetings, comprised of key management responsible for significant business units, departments or divisions. Potential related party transactions are first reviewed and assessed by our General Counsel to consider the materiality of the transactions and then reported to the Audit Committee. The Audit Committee reviews and considers all relevant information available to it about each related party transaction and upon its approval presents the facts to the members of the Board of Directors not associated with the potential related party transaction. A related party transaction is approved or ratified only if such members of the Board of Directors determine that it is not inconsistent with the best interests of the Company and its stockholders. The Audit Committee then oversees any transaction between the Company and any related person (as defined in Item 404 of Regulation S-K) and any other potential conflict of interest situations on an ongoing basis in accordance with Company policies and procedures.

Related Party Transactions

                The Board, acting through the Nominations and the Compensation Committees, believes that the following related person transactions are reasonable and fair to the Company.

                Robin van Puyenbroeck, the son-in-law of Mr. Kathwari, the Company's Chairman, President and Chief Executive Officer, is employed by the Company as Vice President, Business Development. Mr. van Puyenbroeck reports to the Senior Vice President, Business Development. During fiscal year 2017, the Company paid approximately $270,000 in aggregate compensation to Mr. van Puyenbroeck. The compensation was consistent with compensation paid to other employees holding similar positions and was composed of salary and annual bonus. The Compensation Committee and the Board expects periodically and at each fiscal year end to provide an ongoing review of Mr. van Puyenbroeck's employment with the Company, including in relation to his compensation.

                The Company is party to indemnification agreements with each of the members of the Board of Directors pursuant to which the Company has agreed to indemnify and hold harmless each member of the Board of Directors from liabilities incurred as a result of such director's status as a director of the Company, subject to certain limitations.

Compensation Committee Interlocks and Insider Participation

                No member of the Compensation Committee is, or has ever been, an officer or employee of the Company or any of its subsidiaries. In addition, during the last fiscal year, no executive officer of the Company served as a director or member of the compensation or similar committee of another entity whose executive officer(s) serve as a member of the Board or the Compensation Committee.


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SECURITY OWNERSHIP OF COMMON STOCK OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                The following table sets forth, as of September 18, 2017, except as otherwise noted, information with respect to beneficial ownership of Common Stock in respect of: (i) each director, director nominee and NEO (as defined above) of the Company; (ii) all directors and executive officers of the Company as a group; (iii) based on information available to the Company and a review of statements filed with the SEC pursuant to Section 13(d) and/or 13(g) of the Exchange Act, each person or entity that beneficially owned (directly or together with affiliates) more than 5% of the Common Stock; and (iv) all of our executive officers and directors serving as of September 18, 2017, as a group.common stock. The Company believes that each individual or entity named has sole investment and voting power with respect to shares of Common Stock indicated as beneficially owned by them, except as otherwise noted. Unless otherwise noted below, theThe address for each listed director and NEONamed Executive Officers is Ethan Allen Interiors Inc., 25 Lake Avenue Ext., Danbury, CT 06811.

Security Ownership of Directors and Executive Officers
  Name and Address of Beneficial Owner
Directors and Executive Officers


       Shares
Beneficially
Owned 
(1)



 Common Stock
Percentage
Ownership 
(1)



  M. Farooq Kathwari   (2)   2,801,780   10.1%  
​   James B. Carlson  (3)  23,024  *     
  John J. Dooner, Jr.   (4)   26,971   *      
​   Domenick J. Esposito  (5)  6,121  *     
  Mary Garrett   (6)   1,160   *      
​   James W. Schmotter  (7)  18,571  *     
  Tara I. Stacom   (8)   4,260   *      
​   Corey Whitely  (9)  16,435  *     
  Daniel Grow   (10)   10,450   *      
​   Tracy Paccione  (11)  11,937  *     
  Clifford Thorn   (12)   9,283   *      
​  
​   All executive officers and directors as a group (11) persons     2,929,992  10.5% 
​  
  BlackRock, Inc.   (13)   3,227,320   11.6%  
​   Vanguard Group Inc.  (14)  2,376,673  8.6% 
  Royce & Associates, LLC   (15)   2,225,836   8.0%  
​   FMR LLC  (16)  1,932,514  7.0% 
  Dimensional Fund Advisors LP   (17)   1,523,925   5.5%  
The following table sets forth, as of October 11, 2021, the record date for the Annual Meeting, the beneficial ownership of the Company’s common stock reported to Ethan Allen by each of the Company’s directors, director nominees and NEOs, and by all directors and executive officers as a group.
Name
Amount and
Nature of
Beneficial
Ownership (1)
Common Stock
Percentage
Ownership (1)
M. Farooq Kathwari
(2)
2,644,97410.5%
John J. Dooner, Jr.
(3)
43,416*
James B. Carlson
(4)
41,469*
Dr. James W. Schmotter
(5)
35,016*
Domenick J. Esposito
(6)
23,406*
Tara I. Stacom
(7)
22,545*
Mary Garrett
(8)
16,445*
Corey Whitely
(9)
18,786*
Daniel E. Grow
(10)
10,973*
Eric D. Koster
(11)
6,828*
Rodney A. Hutton
(12)
1,515*
Clifford Thorn
(13)
1,374*
Dr. John Clark
(14)
*
Cynthia Ekberg Tsai
(14)
*
David M. Sable
(14)
*
All Directors and Executive Officers as a Group (16 persons)2,872,36911.3%
*

Indicates beneficial ownership of less than 1% of shares of Common Stock
Company common stock
(1)

Information presented herein for each director, director nominee and NEO reflects beneficial share ownership and includes stock-based compensation awardsshares that can be acquired upon the exercise of stock options or the vesting of restricted stock units and outstanding options (the "Stock Options") granted under the Stock Option Plan which, as of September 21, 2016, are currently exercisable or will become exercisableperformance stock units within 60 days by such director or NEO, as applicable.
of October 11, 2021.
(2)

Includes (a) 2,084,1692,009,269 shares owned directly by M. Farooq Kathwari, , (b) 333,046501,140 shares owned indirectly, (c) 8,565 shares held in the Ethan Allen Retirement Savings Plan (d)and 126,000 stock units as noted on page 26 under Employment Agreementissued in connection with Mr. Kathwari’s 1997 employment agreement and (e) options to purchase 250,000 sharesfor which payment has been deferred until termination of common stock.
employment.
(3)

Includes (a) 16,084 shares owned directly by James B. Carlson and (b) options to purchase 6,940 shares of common stock.
(4)
Includes (a) 11,100 shares owned directly by John J. Dooner, Jr. and (b)currently exercisable stock options to purchase 15,87132,316 shares of common stock.
(5)
(4)
Includes (a) 2,84018,084 shares owned directly by James B. Carlson and currently exercisable stock options to purchase 23,385 shares of common stock.
(5)
Includes 2,700 shares owned directly by Dr. James W. Schmotter and currently exercisable stock options to purchase 32,316 shares of common stock.
(6)
Includes 3,680 shares owned directly by Domenick J. Esposito(b)Esposito and currently exercisable stock options to purchase 3,28119,726 shares of common stock.
(7)

(6)
Includes (a) 200 shares owned directly by Mary Garrett(b) options to purchase 960 shares of common stock.
(7)
Includes (a) 2,700 shares owned directly by James W. Schmotter and (b) options to purchase 15,871 shares of common stock.
(8)
Includes (a) 3,3006,300 shares owned directly by Tara I. Stacom and (b)currently exercisable stock options to purchase 96016,245 shares of common stock.
(9)(8)

Includes (a) 10,874200 shares owned directly by Mary Garrett and currently exercisable stock options to purchase 16,245 shares of common stock.
(9)
Includes 18,786 shares owned directly by Corey Whitely, (b) 1,561 shares held in the Ethan Allen Retirement Savings Plan and (c) options to purchase 4,000 shares of common stock.Whitely.
(10)

Includes (a) 1,0002,472 shares owned directly by Daniel E. Grow (b) 2,284 shares held in the Ethan Allen Retirement Savings Plan and (c)currently exercisable stock options to purchase 7,1668,501 shares of common stock.
(11)

Includes (a) 668161 shares owned directly by Tracy Paccione, (b) 103 shares held in the Ethan Allen Retirement Savings PlanEric D. Koster and (c)currently exercisable stock options to purchase 11,1666,667 shares of common stock.
(12)

Includes (a) 1,1091,515 shares owned directly by Rodney A. Hutton.
(13)
Includes 1,374 shares owned directly by Clifford Thorn, (b) 1,183 shares held indetermined as of the Ethan Allen Retirement Savings Plan and (c) options to purchase 6,991date of termination of employment.
(14)
New director nominee for the Annual Meeting, such that no shares of common stock.stock are owned.

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Security Ownership of Principal Stockholders
(13)The following table provides information about persons that have reported that they beneficially own or have voting power and/or dispositive power over, more than 5% of the Company’s common stock, as of October 11, 2021, the record date for the Annual Meeting.
Name of Beneficial OwnerAmount and
Nature of
Beneficial
Ownership
Common Stock
Percentage
Ownership
BlackRock, Inc.
(1)
3,893,46915.4%
Dimensional Fund Advisors LP
(2)
2,056,4938.1%
The Vanguard Group
(3)
1,404,3865.6%
(1)
BlackRock, Inc. (“BlackRock”), a parent holding company, had sole voting power over 3,127,5753,829,761 shares of Common Stockcommon stock and sole dispositive power over 3,227,3203,893,469 shares of Common Stockcommon stock according to theirBlackRock’s Schedule 13G13G/A filed with the SEC on January 12, 2017. BlackRock's25, 2021. BlackRock’s address is 55 East 52nd52nd Street, New York, NY 10055.
(14)
The Vanguard Group ("Vanguard"
(2)
Dimensional Fund Advisors LP, (“Dimensional Funds”), an investment advisor, had sole voting power over 49,4221,966,494 shares of Common Stock, shared voting power over 5,703 shares of Common Stock,common stock and sole dispositive power over 2,322,9212,056,493 shares of Common Stock and shared dispositive power over 53,752 shares of Common Stockcommon stock according to theirDimensional Funds’ Schedule 13G13G/A filed with the SEC on February 9, 2017. Vanguard's12, 2021. Dimensional Funds’ address is 6300 Bee Cave Road, Building One, Austin, TX, 78746.
(3)
The Vanguard Group (“Vanguard”), an investment advisor, had shared voting power over 26,632 shares of common stock, sole dispositive power over 1,359,130 shares of common stock and shared dispositive power over 45,256 shares of common stock according to Vanguard’s Schedule 13G/A filed with the SEC on February 10, 2021. Vanguard’s address is 100 Vanguard Blvd., Malvern, PA 19355.
Delinquent Section 16(a) Reports
(15)
Royce & Associates, LLC ("Royce"), an investment advisor, had sole votingSection 16(a) of the Exchange Act requires the Company’s directors, executive officers and dispositive power over 2,225,836 sharespersons who beneficially own more than 10% of Common Stock accordinga registered class of the Company’s equity securities to their Schedule 13Gfile reports of beneficial ownership and changes in beneficial ownership with the SEC. Based solely on a review of reports filed with the SEC on January 9, 2017. Royce's address is 745 Fifth Avenue, New York, NY 10151.
(16)
FMR, LLC had sole voting power over 460,465and written representations from certain reporting persons that no other reports were required, the Company believes that, during fiscal 2021, its directors, officers and 10% stockholders complied with all applicable Section 16(a) filing requirements applicable to such individuals, other than one late Form 4 filing for Eric D. Koster with respect to his disposition of 89 shares of Common Stockcommon stock on March 11, 2021, withheld at vesting to cover required tax withholding, which was timely filed on a Form 5 on July 2, 2021.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Company’s Code of Conduct, which applies to all employees, executive officers, and sole dispositive power over 1,932,514 sharesdirectors, requires that any potential conflict of Common Stock, accordinginterest be either avoided or fully disclosed. The Company defines “related party” transaction as any transaction or series of related transactions in excess of $120,000 in which the Company is a party and in which a “related person” had, has, or will have direct or indirect material interest. Each year, the Company requires its directors and executive officers to disclose any transactions between them or their Schedule 13G filedimmediate family members and the Company. The Audit Committee reviews any reported transactions related to directors or executive officers and takes appropriate action. A related party transaction is approved or ratified only if the Audit Committee determines that it is not inconsistent with the SEC on February 14, 2017. FMR, LLC's address is 245 Summer Street, Boston, MA 02210.
(17)
Dimensional Fund Advisors LP, an investment advisor, had sole voting power over 1,432,015 sharesbest interests of Common Stockthe Company and sole dispositive power over 1,523,925 shares of Common Stock as per their Schedule 13G filed with the SEC on February 9, 2017. Dimensional Fund Advisors address is 6300 Bee Cave Road, Austin, Texas, 78746.

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its stockholders. There were no related person transactions requiring approval or ratification during fiscal 2021.


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PROPOSAL 2:   TO APPROVE, ON AN ADVISORY BASIS, NAMED EXECUTIVE OFFICER COMPENSATION
PROPOSAL 2:    TO APPROVE, ON AN ADVISORY BASIS, NAMED EXECUTIVE OFFICER COMPENSATION

Our executive compensation program is designed to facilitate long-term stockholder value creation. Our focus on pay-for-performance and on corporate governance promotes alignment with the interests of the Company'sCompany’s stockholders.

The Company seeks stockholder approval, on a non-binding basis, of the compensation of our Named Executive Officers, or "NEOs", as disclosed in this Proxy Statement in the Compensation Discussion and Analysis, the Compensation Tables and related narrative pursuant to Section 14A of the Exchange Act, commonly known as a "say-on-pay"“say-on-pay” vote. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOsNamed Executive Officers and the compensation policies and practices described in this Proxy Statement.

At the Company's 2016 Annual MeetingCompany’s 2020 annual meeting of Stockholders,stockholders, our stockholders were asked to approve the Company's fiscal 2016Company’s executive compensation programs.program. A substantial majority (95%(97%) of the votes cast on the "say-on-pay"“say-on-pay” proposal present and entitled to vote at the meeting were voted in favor of the proposal.proposal, which demonstrates stockholders’ strong support of our executive compensation practices and pay for performance alignment. The Compensation Committee believes that these results reaffirm our stockholders'stockholders’ support of the Company'sCompany’s approach to executive compensation.

                In deciding how to vote on this proposal, the Board encourages you to read the Compensation Discussion and Analysis and Compensation Table sections. The Compensation Committee hasstrives to continue to ensure that the design of the Company’s executive compensation program is focused on long-term stockholder value creation (with a meaningful and growing portion of the compensation paid to our Named Executive Officers being at risk, performance‐based, tied to performance metrics that include good stewardship of the Company’s resources, and not guaranteed), emphasizes pay for performance and does not encourage the taking of short-term risks at the expense of long-term results. The Compensation Committee intends to continue to use the “say-on-pay” vote as a guidepost for stockholder sentiment and to consider stockholder feedback in making compensation decisions. See “Compensation Discussion and Analysis” for additional discussion about the Company’s approach to executive compensation and the enhancements made numerous enhancements in recent years to strengthen the link between pay and performance, further link compensation to our business and talent strategies and clearly detail the rationale for pay decisions.

For the reasons outlined above, we believe that our executive compensation program is well designed, appropriately aligns executive pay with Company performance and incentivizes desirable behavior. Accordingly, we are asking our stockholders to endorse our executive compensation program by voting on the following resolution at the Annual Meeting:

      "

RESOLVED, that the shareownersstockholders approve, on an advisory basis, the compensation of the Company'sCompany’s Named Executive Officers, as disclosed in this proxy statement, including the Compensation Discussion and Analysis, the Compensation Tables and the related narrative."

This proposal allows our stockholders to express their opinions regarding the decisions of the Compensation Committee on the prior year's annual compensation program for the Named Executive Officers. In deciding how to vote on this proposal, the NEOs.Board encourages you to read the Compensation Discussion and Analysis and Compensation Table sections. Because your vote is advisory, it will not be binding upon the Board. However, the Board values shareowners'stockholders’ opinions and the Compensation Committee will take into accountconsider the outcome of the advisory vote when considering future executive compensation decisions. Further, this advisory vote will serve as an additional tool to guide the Board and the Compensation Committee in continuing to improve the alignment of the Company'sCompany’s executive compensation programsprogram with the interests of Ethan Allen and its stockholders and is consistent with our commitment to high standards of corporate governance.

governance and stockholder engagement.

The Board of Directors unanimously recommends athat you voteFOR the approval, on an
advisory basis, of the compensation of the Company'sCompany’s Named Executive Officers.


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PROPOSAL 3:    TO APPROVE, ON AN ADVISORY BASIS, THE FREQUENCY OF FUTURE ADVISORY VOTES TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION

                As required by Section 14A of the Securities Exchange Act, this proposal provides stockholders with the opportunity to vote on how frequently they would like to cast an advisory vote on the compensation of our named executive officers. The previous advisory vote on the frequency of shareholder votes on named executive compensation was conducted in connection with the 2011 Annual Meeting of Stockholders. The Board recommended, our stockholders agreed, and the Board subsequently determined that we will hold an advisory vote on executive compensation annually.

                After carefully considering the benefits and potential consequences of each option for the frequency of submitting the advisory vote on the compensation of our named executive officers to stockholders, the Board of Directors has determined that holding such advisory vote every "1 YEAR" continues to be the most appropriate policy for the Company at this time. In formulating this recommendation, the Board recognized that an annual advisory say-on-pay vote would provide the highest level of accountability and promote direct and immediate feedback by enabling the non-binding say-on-pay vote to correspond with the most recent named executive officer compensation information presented in our proxy statement. While the Company's executive compensation programs are designed to promote a long-term connection between pay and performance, executive compensation disclosures are made annually and the Board believes that an annual advisory vote on executive compensation is consistent with the Company's practice of seeking timely input and engaging in frequent dialogue with our stockholders on corporate governance matters (including our practice of having all directors elected annually and annually providing stockholders the opportunity to ratify the Audit Committee's selection of independent auditors) and our executive compensation philosophy, policies and practices. Stockholders should consider the value of having the opportunity every year to voice their opinion on the Company's executive compensation through an advisory vote, weighing that against the additional burden and expense to the Company and stockholders of preparing and responding to proposals annually, as well as the other means available to stockholders to provide input on executive compensation. We welcome stockholder input and anticipate that the value of an annual vote will likely outweigh the burden of preparing annual proposals.

                Stockholders may indicate whether they would prefer an advisory vote every one, two, or three years, or whether they wish to abstain. The option that receives the highest number of votes cast by our stockholders will be the frequency for the advisory vote on executive compensation that has been selected.

                Stockholders are not voting to approve or disapprove the Board's recommendation. Because this is an advisory vote, it will not be binding upon the Board of Directors. However, the Board will take into account the outcome of the vote when making future decisions on the frequency of say-on-pay votes and may decide, based on factors such as discussions with stockholders and the adoption of material changes to compensation programs, that it is in the best interest of our stockholders to hold a say-on-pay vote more or less frequently than the option approved by our stockholders.

The Board of Directors unanimously recommends that stockholders select1 YEAR with respect to how frequently a non-binding stockholder vote to approve the compensation of our Named Executive Officers should occur in the future.


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COMPENSATION DISCUSSION AND ANALYSIS

20



COMPENSATION DISCUSSION AND ANALYSIS
Overview
Overview

The purpose of this Compensation Discussion and Analysis (“CD&A”) is to provide material information about the Company'sCompany’s executive compensation objectives and policies for its NEOs and to put into perspective the tabular disclosures and related narratives. The non-binding advisory proposal regarding compensation of the NEOs submitted to stockholders at our 20162020 Annual Meeting was approved by over 95%97% of the votes cast. Thepresent and entitled to vote. We regularly engage in outreach efforts with our stockholders relating to a variety of topics and involve our Compensation Committee believes this favorable outcome conveyedChair or one or more independent directors in these conversations as appropriate. In 2018, our stockholders' supportCompensation Committee Chair, along with our Executive Vice President, Administration, discussed our approach to executive compensation practices with a number of our largest and leading institutional investors, and based on those discussions and insights from other advisors and experts, we revised our approach, including the components and metrics, relating to our short-term and long-term incentive compensation for our NEOs. We use the information gathered through these outreach efforts to help inform our compensation decisions and look forward to continued dialogue on compensation matters and other issues relevant to our business.

This CD&A describes the general objectives, principles, and philosophy of our executive compensation programsprogram, focused primarily on the compensation for our NEOs, who for fiscal 2021 are as follows:

M. Farooq Kathwari, Chairman of the Board, President and Chief Executive Officer (our Principal Executive Officer)

Corey Whitely, Executive Vice President, Administration and Chief Financial Officer (our Principal Financial Officer)

Rodney A. Hutton, Chief Marketing Officer

Daniel E. Grow, Senior Vice President, Business Development

Eric D. Koster, Vice President, General Counsel and Secretary
Our NEOs for fiscal 2021 also include Clifford Thorn, who previously served as our Vice President, Upholstery Manufacturing, and who entered into a separation of employment and general release agreement, pursuant to which he remained an employee until March 19, 2021. This CD&A focuses on the compensation earned by our NEOs listed above, but also describes the compensation earned by Mr. Thorn where appropriate.
Fiscal Year 2021 Performance at a Glance
[MISSING IMAGE: tm2128844d1-fc_fiscal4c.jpg]
Despite many challenges due to the COVID-19 pandemic, the Company performed well during fiscal 2021 as we were well positioned to capitalize on the increased consumer focus on the home, which created strong demand for our product offerings and interior design services. We recently passed the anniversary of the reopening of our design centers and manufacturing facilities and through the collective efforts of our associates the Company was able to report strong results. Many of the changes we implemented a year ago, such as the previously announced manufacturing and optimization initiatives, certain reductions in employee headcount, increased use and leverage of technology, streamlined certain workflows and the Compensation Committee's decisions. The Compensation Committee willelimination of non-essential spending, have allowed us to control expenses and improve our operating leverage. Our strong cash position provided us flexibility to pay down 100% of our outstanding debt as well as take advantage of opportunities and advance our strategic goals. Additionally, we strengthened our business by expanding production capacity, enhanced our use of technology and brought back many associates to further our talent. For the full fiscal 2021 year, we delivered consolidated net sales growth of 16.2%, gross margin of 57.4%, operating margin of 11.3%, diluted EPS of $2.37, return on equity of 17.7%, cash from operations of $129.9 million and returned $43.3 million to stockholders through cash dividends. Both our wholesale and retail segments experienced record demand, with written orders increasing 31.7% at wholesale and 47.7% at retail. This demand has led to record order backlog as of June 30, 2021 as written orders outpaced net sales. We expect to service and reduce our order backlog during fiscal 2022. Our merchandising and supply-chain teams effectively managed raw material shortages, price increases, manufacturing delays and shipping container cost increases as we were able to achieve a gross

21


margin of 57.4% for fiscal 2021 despite these challenges. As of June 30, 2021, our employee count was 4,188, up 24.3% in the past 12 months, as we ramped back up staffing to strengthen our manufacturing and retail teams further. Our Board reinstated our regular quarterly cash dividend in August 2020 and subsequently increased the regular quarterly cash dividend by 19% in November 2020. We also paid a special cash dividend of $0.75 per share in May 2021. Other notable events during fiscal 2021 included the opening of several new design centers including Oxnard, California; Towson, Maryland; Alpharetta, Georgia; and Portland, Oregon as well as holding our first-ever virtual celebration to congratulate associates for their exceptional interior design work.
Demand trends remain strong across the business with backlog at record levels. As we head into the fiscal 2022 year, we are focused on continuing to increase capacity and deliver product while making investments in technology solutions across the Company, all to enhance the customer experience, drive future growth and emerge stronger in a post-pandemic environment.
Selected Financial Data and Key Metrics
STATEMENT OF OPERATIONS DATA
Fiscal Year Ended June 30,202120202019
Net sales$   685,169$   589,837$   746,684
Adjusted gross margin (1)57.5%55.7%55.1%
Adjusted operating income (1)$    80,335$    17,072$    55,051
Adjusted net income (1)$    60,059$    13,512$    41,632
Adjusted diluted EPS (1)$      2.37$      0.52$      1.56
KEY METRICS
Adjusted return on equity (1)17.7%3.9%11.1%
Cash flows from operating activities$   129,912$    52,696$    55,247
Cash and cash equivalents $   104,596$    72,276$    20,824
Current ratio1.321.651.76
Long-term debt to equity ratio0.0%15.2%0.1%
Cash dividends paid$    43,290$    21,469$    46,990
Dividend yield3.6%7.1%3.6%
(1)
See Appendix A for the reconciliation of U.S. GAAP to adjusted key financial measures.
Impact of COVID-19
On March 11, 2020, the World Health Organization declared the COVID-19 outbreak to be a global pandemic. In response to this declaration and the rapid ongoing spread of COVID-19 within the United States and around the world, federal, state, and local governments imposed varying degrees of restrictions on social and commercial activity to promote social distancing in an effort to slow the spread of the virus. Such measures included quarantines, shelter-in-place orders and directives, restrictions on travel, and closures of non-essential businesses, which included many sectors within retail commerce.
In response to the COVID-19 pandemic and for the protection of our employees and customers, we implemented, and continue to considermonitor, certain business continuity plans to ensure the outcomeongoing availability of our products and services, while prioritizing health and safety measures, including enhanced cleaning and hygiene protocols as recommended by the Centers for Disease Control and Prevention (the “CDC”). Beginning in our third quarter of fiscal 2020, we took the following actions in response to the COVID-19 pandemic:
Fiscal 2020

Temporarily closed our Company-operated retail design centers and manufacturing facilities

Borrowed an aggregate principal amount of $100 million under our existing revolving credit facility to increase our cash position as a precautionary measure and to maximize financial flexibility

Announced our comprehensive action plan, which included both enhanced health and safety protocols with cost-saving initiatives; measures taken included, the furlough of 70% of our global workforce, the decision by our CEO to temporarily forego his salary, a temporary reduction in salaries of up to 40% for all senior management and up to 20% for other salaried employees, a temporary reduction of 50% in the cash compensation of the Company's say-on-pay votes when conducting itsCompany’s directors, the elimination of all non-essential operating expenses, a delay of

22


capital expenditures, negotiated alternative terms for lease payments, reduced inventory purchases, temporarily eliminated our regular evaluationsquarterly dividend and temporarily suspended purchases under our existing share repurchase program

In May 2020, we began reopening design centers in a number of U.S. states as well as resumed production in our North American manufacturing plants in a limited capacity

Repaid $50 million of our outstanding borrowings under our existing credit facility using available cash on hand in June 2020
Fiscal 2021

All of the programCompany’s key financial performance metrics such as consolidated net sales, gross margin, operating expenses, and making future compensation decisionscash on hand improved during fiscal 2021

All of our Company-operated retail design centers and manufacturing facilities fully reopened

Our Board of Directors reinstated the regular quarterly dividend in August 2020 and declared a regular quarterly cash dividend of $0.21 per share, paid in October 2020

Repaid the remaining $50 million of our outstanding borrowings leaving no remaining debt
While recognizing the strong and decisive performance of the executives in leading the Company through this period, and consistent with our pay for performance philosophy, there were no adjustments made, including as a result of the NEOs.

COVID-19 pandemic and its disruptive impact on our business results, our retail peers, and retailers generally, to the fiscal 2021 performance targets. There were also no adjustments to the fiscal 2019, 2020 or 2021 equity incentive grants for fiscal 2021 performance period.

Executive Summary

We continue to frequently monitor and re-evaluate our COVID-19 action plan based on guidance from the CDC, regulators and other health and safety organizations. We believe that we have a strong alignment between our executive compensationbalance sheet with $104.6 million of cash and no bank debt as of June 30, 2021, which we believe will provide sufficient liquidity to continue business operations in the long-term. Although we continue to actively manage the impact of COVID-19 and the interestsprospect of continuing or future outbreaks, we are unable to predict the impact that the COVID-19 pandemic will have on our stockholders. Fiscal 2017 wasfinancial operations in the near- and long-term. We also continue to actively manage our global supply chain and manufacturing operations, which may continue to be adversely impacted with respect to availability and pricing based on uncontrollable factors.

Compensation Practices
[MISSING IMAGE: tm2128844d1-tbl_comppms4c.jpg]

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Compensation Policies and Risk
Our Compensation Committee regularly conducts risk assessments to determine the extent, if any, to which our compensation practices and programs may create incentives for excessive risk taking. Based on these assessments, we concluded that our policies and practices do not create risks that are reasonably likely to have a year of action formaterial adverse effect on the Company. Despite challenging socioeconomic conditions many major initiatives were accomplished during
As part of the yearrisk assessments, the Compensation Committee reviewed the cash and equity incentive programs for senior executives and concluded that positioncertain aspects of the programs reduce the likelihood of excessive risk taking. These aspects include the use of long-term equity awards to create incentives for senior executives to work for long-term growth of the Company, in lineincluding claw-back provisions limiting the incentive to take excessive risk for short-term gains, imposing caps on cash bonuses, requiring compliance with its long-term growth strategies, includingour Code of Conduct and giving the completion ofCompensation Committee the major transformation ofpower to reduce payouts under our product programs,compensation plans. More specifically, this conclusion was based on the launch of our Disney collaboration, securing a blanket purchase agreement under the Department of State World-Wide Packaged Home Program, entering into a collaboration with Amazon and expanding our digital mediums.

Consolidated net sales of $763.4 million
Operating income of $58.0 million, or 7.6% of sales
EPS of $1.29 per diluted share
Enhanced stockholder value during fiscal 2017:following considerations:
o
paid $20.0 million in dividends
o
repurchased 357,400 shares
Pay MixCompensation mix of base salary and short-term and long-term incentives provides compensation opportunities measured by a variety of time horizons to balance our near-term and long-term strategic goals.
Performance MetricsA variety of distinct performance metrics are used in both the short-term and long-term incentive plans. This multiple-metric approach to performance metrics encourages focus on sustained and holistic overall Company performance.
Performance GoalsGoals are approved by our Compensation Committee and consider our historical performance, current strategic initiatives, and the expected macroeconomic environment. In addition, short-term and long-term incentive compensation programs are designed with payout ranges above and below target levels and within a range that support our pay for performance philosophy.
Equity IncentivesEquity incentive programs and stock ownership guidelines are designed to align management and stockholder interests by providing vehicles for executive officers to accumulate and maintain an ownership position in the Company.
Risk Mitigation PoliciesWe incorporate several risk mitigation policies into our officer compensation program, including:

The Compensation Committee’s ability to use “negative discretion” to determine appropriate payouts under formula-based plans.

A robust recoupment (or “claw-back”) policy covering each of our executive officers. The policy provides that if the Company is required to restate its financial results due to material noncompliance with financial reporting requirements under the securities laws, the Compensation Committee may seek reimbursement of any cash- or equity-based bonus/other incentive compensation (including vested and unvested equity) paid or awarded to the executive officer or effect cancellation of previously-granted equity awards to the extent the compensation was based on erroneous financial data and exceeded what would have been paid to the executive officer under the restatement

Stock ownership guidelines for executive officers and directors that are intended to align further the interest of our named executive officers with those of our stockholders.
Anti-Hedging and Anti-Pledging PoliciesUnder our insider trading policy, directors and executive officers are restricted from engaging in short sales, equity derivatives, and hedging their Company stock, whether or not involving trading on inside information. In addition, the Company prohibits employees and directors from purchasing Company securities on margin or holding Company securities in a margin account. We believe these policies further align insiders’ interests with those of our stockholders.
Process for $10.2 million
o
invested $18.3 million in capital expenditures and acquisitions

GRAPHIC

Determining Executive Compensation

Alignment Of Pay With Performance

The Compensation Committee is focused onresponsible for determining the alignmentcomposition and value of the interests of the NEOs with thosecompensation for all of our Company and stockholders and has taken the following steps to further promote this alignment:

    In collaboration with theNEOs. Our Chief Executive Officer (“CEO”) and our Executive Vice President, Administration, who is responsible for the

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Company’s Human Resources functions, provide input on program design and information on the Company’s and the Boardfurniture industry’s performance. The Compensation Committee also considers stockholder viewpoints on compensation.
The Compensation Committee may not delegate its primary responsibility of Directors,overseeing executive officer compensation, but it may delegate to management the administrative aspects of our compensation programs that do not involve the setting of compensation levels for executive officers.
All equity awards to executives, including stock options, PSUs, restricted stock, and restricted stock units, are approved by the Compensation Committee.
The Compensation Committee maintains sole authority to retain, terminate, approve fees and other terms of engagement of its compensation consultant and to obtain advice and assistance from internal or external legal, accounting, or other advisors.
The Compensation Committee Chair, together with the Executive Vice President, Administration, periodically engages in dialogue with a number of the Company’s larger institutional investors regarding the Company’s approach to executive compensation. The Compensation Committee also reviews executive compensation and incentive structures used by the peer companies. In fiscal 2021, the Compensation Committee has established the executive compensation policies for the Company's NEOs with a greater emphasisdecided to continue to use operating income, revenue growth, return on incentive-based compensation, including the linking of attainment of pre-establishedequity and total shareholder returns (“TSR”) as performance metrics used in assessing executive compensation.
Executive Compensation Program Changes for Fiscal 2021—Highlights
The COVID-19 pandemic has had and continues to have a significant impact on the amount of cash and equity incentive compensation earned byglobal economy, the NEOs.

In collaboration with the Chief Executive Officerindustry, and the BoardCompany. The following changes were made during fiscal 2021 in recognition of Directors,both the uncertain economic conditions and the negative impact COVID-19 has had on each NEO’s overall compensation, who the Compensation Committee reviewsbelieves executed strongly to preserve cash and approvesliquidity and position the performance-based incentive bonus paymentsCompany well upon global economic recovery.

The Compensation Committee restored the temporary salary reductions as of July 1, 2020 and maintained salaries for the Company's NEOs.NEOs at the same level for fiscal 2021 as in fiscal 2020. There was no recoupment of the temporary salary reductions.


In collaboration withrestoring the Board of Directors,temporary salary reductions, the Compensation Committee reviewssought to incentivize appropriately and approves performance targets for purposes of incentive bonus payments forretain the NEOs and performance targets for purposes of performance-based equity awards for the NEOs.

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Stock Incentive Plan

                As part of its ongoing review of the Company's compensation programs and consistent with its commitmentCompany’s leadership as they continue to reflect best practices in corporate governance standards and compensation practices, the Company's Stock Incentive Plan was amended and restated following the approval of our stockholders at the 2015 Annual Meeting of Stockholders. The Compensation Committee andmanage the Company improved, clarifiedduring an unprecedented period of economic challenge and updated the Stock Incentive Plan as follows:

    Clarify Performance Units.uncertainty.      The Stock Incentive Plan was clarified so as to expressly contemplate the issuance of performance restricted stock units.

    Restrict Option Re-Pricing.      The Stock Incentive Plan was modified so as to expressly restrict re-pricing of outstanding stock options at lower than their exercise price, either directly or indirectly.

    One-Year Service Vesting.      The Stock Incentive Plan was amended so as to generally require service vesting of at least one year from the grant date for stock options under the Stock Incentive Plan.

    Performance Vesting.      The Stock Incentive Plan provides for performance vesting, and all awards issued to executives reflect performance vesting.

    Recoupment and Clawback.      The Stock Incentive Plan was amended so as to expressly subject the awards under the Stock Incentive Plan to the Company policies in relation to recoupment or clawback of awards under the Stock Incentive Plan as required by law and Company policy.

    "Double Trigger" Upon Change of Control.      While existing awards under the Stock Incentive Plan will continue to be subject under their existing agreements as to a vesting acceleration upon a "single trigger" (i.e., a Change of Control), new or replacement grants under the Stock Incentive Plan (including under the 2015 Employment Agreement) will be subject to a vesting acceleration upon a "double trigger" (i.e., a Change of Control followed by a termination).

Peer Group

Chief Executive Officer's Compensation

The Compensation Committee, in 2015 initiated, negotiatedsetting individual NEO pay levels and on October 1, 2015, effective July 1, 2015, entered into the 2015 Employment Agreement, of which its incentive compensation components were subsequently approved by stockholders at our 2015 Annual Meeting of Stockholders.

                In evaluating and finalizing the provisions of the 2015 Employment Agreement, the Compensation Committee determined that the best interests of the Company and its stockholders would be served by establishing a long-term employment and performance incentive relationship with the Chief Executive Officer. The Compensation Committee concluded that the compensation and incentive structure of the 2015 Employment Agreement should focus on Company performance measured against targets approved by the Compensation Committee and the Board of Directors, appreciating the evolving views of executive compensation and the views of leading stockholder advisory services.

Base Compensation Under 2015 Employment Agreement. Pursuant to the 2015 Employment Agreement, Mr. Kathwari is entitled to base salary of $1,150,000 per annum, during the five-year term of the 2015 Employment Agreement commencing July 1, 2015, without increase or guaranteed adjustment.

Non-Equity Incentive Compensation Under 2015 Employment Agreement. Pursuant to the 2015 Employment Agreement, annual non-equity incentive payments are based on annual goals set annually by the Company, the Compensation Committee and the Board of Directors based on target earnings results consistent with market practices and the practices after all of the companies in the Company's peer group. More specifically, the annual incentive compensation payments under the 2015 Employment Agreement provide for a target level of $750,000 (approximately 65% of base salary), based upon an Annual Adjusted Operating Earnings target, set annually by the Compensation Committee or the Board of Directors within 90 days of the beginning of each fiscal year. If the Compensation Committee or the Board of Directors fails to establish a target for a fiscal year, the target will be 5% improvement over the Annual Adjusted Operating Earnings for the preceding fiscal year. Annual Adjusted Operating Income consists of consolidated operating income as set forth in the Company's consolidated statement of comprehensive income, adjusted by (1) nonrecurring, extraordinary or unusual events, (2) annual bonuses, (3) share-based compensation expense and (4) the effects of business combinations. For fiscal 2017 nonrecurring,


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extraordinary or unusual events consisted of gains and losses on sale on real estate, and restructuring charges. Incentive compensation payments will be earned according to performance on a directional payout schedule as follows:


Directional Non-Equity Incentive Compensation Payout Schedule

(Linear/Scaled)

 

 

Achievement Level


 Performance
(as Percentage of
Adjusted Operating
Earnings Target)




 
Payout Amount

 

 

Threshold

   80 - 85%    $375,000  

 

 

Target

   100%    $750,000  

 

 

Maximum

   120 - 130%    $1,700,000  

                The Compensation Committee or Board of Directors has the right to make a discretionary incentive compensation payment in the case of extraordinary economic circumstances, including circumstances when such performance metrics were not satisfied. In the view of the Compensation Committee, this incentive bonus compensation structure in the 2015 Employment Agreement aligns the incentive compensation incentives of the Chief Executive Officer with the earnings objectives of the Company, as confirmed by the Compensation Committee and Board of Directors, and is consistent with companies within its peer group.

Long-Term Stock Performance Unit Awards Under the 2015 Employment Agreement. Under the 2015 Employment Agreement, all future long-term incentive compensation would be delivered through performance-based restricted stock. After deliberating with its consultants, the Compensation Committee determined to utilize operating performance metrics because they focused on internal performance, not extrinsic factors that move stock and stock market prices, and because reviews of peer practices did not reflect a widespread focus on stock market returns to compensate their executives.

                The 2015 Employment Agreement provides as follows:

    Annual awards of 65,000 performance-vested restricted stock units ("Performance Units") granted within 90 days of the beginning of the fiscal year (325,000 Performance Units in total over the five-year term of the Employment Agreement, which may increase to 406,250 of Performance Units, based upon performance as described below).

    Performance vesting of the Performance Units by reference to performance goals set for each award (within 90 days of grant date) based on Adjusted Operating Earnings Per Share target for each of the upcoming two fiscal years and cumulatively for the upcoming three fiscal years, set annually by the Compensation Committee and the Board of Directors within 90 days of the beginning of each fiscal year. If either the two-year or cumulative three-year target is accomplished, then the percentage of Performance Units vested would be determined by reference to the higher performance accomplishment percentage. Goals for each annual grant are set by the Compensation Committee or the Board within 90 days of the beginning of each fiscal year. The Performance Units would be earned according to performance on a directional payout schedule as follows:


Directional Performance Unit Schedule

(Linear/Scaled)

  Achievement Level

 Performance
(as Percentage of
2 or 3 Year
Performance
Equity Target)





 Percentage of Performance
Units Earned


 Amount of
Performance
Units Earned
(Per Annual Grant)




  Threshold   80 - 85%   50%   32,500  
​   Target  100%  100%  65,000 
  Maximum   115 - 120%   125%   81,250  

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              Total Compensation Level and Mix.    The portion of total compensation delivered in the form of base salary and benefits is intended to provide a competitive foundation and fixed rate of pay for the work being performed by each named executive officer and the associated level of responsibility and contributions to the Company. The compensation opportunity beyond those pay elements is at risk and must be earned through achievement of annual goals, which represent performance expectations of the Board and management and long-term value creation for stockholder. The Compensation Committee believes that the proportion of compensation designed to be delivered in base salary versus variable pay depends on the executive's position and the ability of that position to influence overall Company performance. The more senior the level of the executive, the greater is the percentage of total pay opportunity that is variable. The Compensation Committee recognizes that the targeted total compensation opportunity level places our Chief Executive Officer below the median total compensation level of executives within the Company's peer group, but above the median level of a narrower peer group suggested by the stockholder advisory services. The Compensation Committee believes that this positioning is appropriate given that the median revenue of our peer group is higher than the Company's and the median revenue of the stockholder advisory services' peer group is lower than ours. Also, the Compensation Committee believes that the compensation incentives under the 2015 Employment Agreement are performance-based, so they provide and ensure strong Chief Executive Officer alignment with long-term stockholder interests.


CEO Compensation Components of the
2015 Employment Agreement
based on Target Values

GRAPHIC

                Overall, the Compensation Committee believes that the performance-based structure of the 2015 Employment Agreement provides a strong alignment with the long-term interests of our Company and its stockholders and a strong statement of confidence by the Chief Executive Officer in our Company's future performance. The Compensation Committee believes that the structure of the 2015 Employment Agreement (especially given the fact that all incentives are performance-based) does not create risks for the Company and is in the best long-term interest of the Company and its stockholders.

              Targets and Payouts Under Fiscal 2017 Non-Equity Incentive Compensation Arrangements and Long-Term Incentive Compensation Arrangements.    At the beginning of fiscal 2017, in connection with the 2015 Employment Agreement, the Compensation Committee reviewed with the Board of Directors and the Chief Executive Officer, and established targets, as provided in the 2015 Employment Agreement for fiscal 2017 incentive opportunities.

                An Adjusted Operating Earnings fiscal 2017 target for the annual incentive bonus was set at a target of 5% growth over the prior fiscal year Adjusted Operating Earnings.

                An Adjusted Operating Earnings Per Share target for the Performance Units equity award to be made in fiscal 2017 were set for fiscal years 2017, 2018, and 2019 at a target of 5%, 5% and 5%, respectively, growth over the prior year in Adjusted Operating Earnings Per Share. See the section "Long-Term Stock Performance Unit Awards Under the 2015 Employment Agreement" for threshold and maximum levels.

                For fiscal 2017, each of the Company's Adjusted Operating Earnings and Adjusted Operating Earnings Per Share did not meet the threshold performance levels. Accordingly, there was no Incentive Award earned by Mr. Kathwari for fiscal 2017 as set forth in the "Summary Compensation Table" in the "Executive Compensation" section. This compares to an Incentive Award of $1,700,000 in the prior fiscal year. The Compensation Committee recognized that the Company accomplished many initiatives in fiscal 2017 that positioned the Company for its long-term strategic objectives, as detailed above. The Compensation Committee has the discretion to award discretionary Incentive Awards and discussed this with Mr. Kathwari. However, as a matter of leadership of the Company, Mr. Kathwari felt he should not accept a discretionary award. Respecting that leadership by Mr. Kathwari, the Committee did not grant Mr. Kathwari a discretionary Incentive Award for fiscal 2017. In contrast, the Compensation Committee did determine to award discretionary Incentive Awards to other NEOs, as described below, taking into account the accomplishment of these initiatives and the individual executives.


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                Actual amounts of long-term incentive awards granted in fiscal 2017 are disclosed in the "Summary Compensation Table" and the "Grants of Plan-Based Awards" table. The fiscal 2017 Performance Units granted to Mr. Kathwari under the 2015 Employment Agreement, which will not vest until the actual results for the second or third fiscal year period in the three-year performance cycle are known, were estimated to be earned at the target payout level for purposes of the "Summary Compensation Table" and at the maximum payout level for purposes of the "Outstanding Equity Awards at 2017 Fiscal year End" table in the "Executive Compensation" section.

              Peer Companies.    In connection with the 2015 Employment Agreement, the Compensation Committee discussed the appropriate peer companies for comparison with its executive compensation consultant, Sibson Consulting. The Compensation Committee, in conjunction with Sibson Consulting, establishedopportunities, utilizes a peer group in considering the 2015 Employment Agreement which,of companies that in its judgment best representedrepresents the unique nature of the Company'sCompany’s vertical business model, which integrates manufacturing, merchandising, and retailing, while eliminating some of the companies with substantially higher revenues.retailing.

In developing the peer group, the population of U.S.-based, publicly-tradedU.S. based, publicly traded companies that were considered for evaluatingby the terms of the 2015 Employment AgreementCompensation Committee included:


furniture manufacturers and/or home furnishing retailers;


competitors and peers identified as the Company'sCompany’s direct U.S. furniture competitors;


highly integrated companies in non-furniture industries (e.g. apparel, etc.);


companies with iconic consumer brand recognition (beyond the furniture and home furnishing industries); and



companies that might be considered competitors for Company executives and equivalent talent.

                In considering this peer group, the Compensation Committee reviewed the peer group used in connection with the 2011 Employment Agreement, as well as the peer group included in various industry indices and considered by stockholders advisory services, resulting in changes for the peer group considered for purposes of the 2015 Employment Agreement as compared to the peer group used for the 2011 Employment Agreement. In doing so, the Compensation Committee recognized the difficulty of establishing direct peer comparables for the Company and the Chief Executive Officer due to the differences between the Company and its peers (especially the Company's management and operation of a vertically integrated business) and between our Chief Executive Officer and other peer executives, in view of our Chief Executive Officer's unique, long-standing association with our Company and his active engagement at the center of our Company's executive leadership.

In addition to industry, branding and supply chain considerations, the Compensation Committee filtered companies by revenues, number of employees and market capitalization. The Compensation Committee wanted a large enough group, consisting of 15-20 companies, to enable full comparisons to the Company. After this consideration, the Compensation Committee established a peer group for the 2015 Employment Agreement that reflects 17 companies, with 7 additions and 6 deletions to the peer group utilized in connection with the 2011 Employment Agreement, as follows (by revenue):

  Company

 GICS Sub-Industry

 Revenue
($M)


 Revenue
Multiple


 Market
Cap ($M)


  Bassett Furniture   Home Furnishings   $341   0.5   $267  
​   Dixie Group Inc.  Home Furnishings  $407  0.5  $140 
  Flexsteel Industries   Home Furnishings   $439   0.6   $228  
​   Kirkland's Inc.  Home Furnishing Retail  $461  0.6  $417 
  Tumi Holdings   Apparel, Accessories & Luxury Goods   $467   0.6   $1,520  
​   Ethan Allen  Home Furnishings  $747  1.0  $792 
  Haverty Furniture   Home Furnishing Retail   $768   1.0   $576  
​   Knoll Inc.  Office Services & Supplies  $1,050  1.4  $1,017 
  Select Comfort   Home Furnishing Retail   $1,157   1.6   $1,679  
​   Kate Spade & Co  Apparel, Accessories & Luxury Goods  $1,265  1.7  $4,302 
  Kimball International   Office Services & Supplies   $1,285   1.7   $361  
​   La-Z-Boy Inc.  Home Furnishings  $1,357  1.8  $1,298 
  Restoration Hardware   Home Furnishing Retail   $1,551   2.1   $3,389  
​   Pier 1 Imports  Home Furnishing Retail  $1,772  2.4  $1,068 
  Herman Miller   Office Services & Supplies   $1,882   2.5   $1,868  
​   HNI Corp  Office Services & Supplies  $2,223  3.0  $2,287 
  Steelcase Inc.   Office Services & Supplies   $2,989   4.0   $2,261  
​   Tempur Sealy International  Home Furnishings  $2,990  4.0  $3,453 

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                In reviewing and finalizing the changes to the peer group for the 2015 Employment Agreement, the Compensation Committee noted the following:

    In connections with the peer group for the 2015 Employment Agreement, peers are within a 0.5x-4x revenue size range. The median revenue of the peer group in connection with the 2015 Employment Agreement is $1.27 billion.

    The peer group for the 2015 Employment Agreement was increased to 17 companies, from 16 companies in 2011. The larger peer group provided the Compensation Committee with greater confidence in its understanding of the broad range of pay practices in place at other companies.

    Other companiesCompanies with higher revenues are included are included in the peer group for the 2015 Employment Agreement since the Company competes for executives with such other companies that are in the home furnishings industry.

Based on its annual review of the peer group, the Compensation Committee removed four peers, two of which filed for bankruptcy, and added five peers for fiscal 2021 to ensure the peer group represents a similar range of the characteristics of the business, consumer innovation, use of technology, good corporate governance practices and comparability in size to the Company.

The peer group used to evaluate fiscal 2021 NEO compensation is composed of the following 16 companies:
Acco Brands CorporationFlexsteel Industries, Inc.HNI CorporationKirkland’s, Inc.
Apogee Enterprises, Inc.Green Brick Partners, Inc.Hooker Furniture CorporationLa-Z-Boy Incorporated
Bassett Furniture Industries, Inc.Haverty Furniture Companies, Inc.Interface, Inc.Sleep Number Corporation
Cavco Industries, Inc.Herman Miller, Inc.Kimball International, Inc.Steelcase Inc.

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We believe that it is appropriate to offer industry-competitive cash and equity compensation packages to all of our NEOs including our Chief Executive Officer, in order to attract and retain top executive talent. The peer group allows us to monitor the compensation practices of our primary competitors and similarly situated companies for executive talent. However, we do not rely on market information to target any specific pay percentile of the peer group for our executive officers. Instead, we use this information to provide a general overview of market practices and to ensure that we make informed decisions regarding our executive pay programs. The
Elements of Fiscal 2021 Executive Compensation Committee made no changes
Our compensation programs are structured to align the peer group for fiscal 2017.

Compensation For Named Executive Officers Other Than The Chief Executive Officer

                During fiscal 2017, the Compensation Committee, togetherinterests of our executive officers with the Chief Executive Officer, reviewed the compensation program for the Company's key management personnel including the NEOs, other than the Chief Executive Officer. The Company's compensation approach for the NEOs is designed to encourage and reward performance that leads to strong financial results and creation of long-term stockholder value. Its balance of short-term and long-term compensation opportunities is intended to retain and motivate the highly talented business leaders we require to successfully execute the Company's business strategy and create value for the Company's stockholders. The following compensation principles guided the design of our compensation program for these NEOs during fiscal 2017, and continue to guide the program in fiscal 2018:

    Reward Operational and Financial Efficiencies.  The Company believes in efficiency of overhead and operations and very careful expenditures of cash and its cash resources. It is intended that the Company's compensation approach for NEOs will emphasize the achievement of these efficiencies within the scope of authority and management of these NEOs.

    Pay for Performance.  The Company believes that pay earned by its executives should reflect the performance achieved for our stockholders. Thus, we structured the compensation program for the NEOs to ensure that a meaningful portion of the compensation paid is linked to the performance of our business. The Company's compensation program emphasizes variable incentive award opportunities, which are payable only if specified financial, operational and individual goals are achieved. In practice, these goals are identified by the Chief Executive Officer and approved by the Compensation Committee.

    Pay Conservatively.  When setting the compensation target payout opportunity levels with the Chief Executive Officer, the Compensation Committee and the Chief Executive Officer consider the range of opportunities available to similarly situated executives from various relevant market reference sources.

    Emphasize Variable Pay Components.  The Company provides variable compensation elements (annual non-equity incentive compensation and long-term equity compensation) primarily to encourage and reward performance that leads to strong financial results and creation of long-term value for our stockholders.

    Require Stock Ownership.  The Company expects its executives to own a meaningful amount of Company stock. Thus, within five years of appointment NEOs are expected to acquire and maintain ownership of certain minimum equity ownership level in Company stock. These minimum level ranges from two times annual base salary for our NEOs to five times annual base salary for the Chief Executive Officer. This is intended, in part, to align senior management of the Company with long-term stockholder interests and avoid short-term incentive risk. To further promote long-term alignment with our stockholders' interest, the Company will grant to our NEOs, equity with vesting periods of generally three to five years and a post-exercise hold period to avoid incentivizing short-term risk. The design of the NEOs' compensation approach will be consistent with the Company's risk aversion and the steady performance expected by the Company and our stockholders. Thus, we have structured our executive compensation program to ensure that it is not significantly weighted toward annual cash incentive compensation and does not otherwise have the potential to threaten long-term stockholder value by promoting inappropriate or excessive risk-taking by our NEOs.

    Maintain Flexibility to Address Extraordinary Circumstances.  The compensation program for the NEOs provides flexibility for the Chief Executive Officer and the Compensation Committee with authority to exercise discretion in determining compensation actions for the NEOs when necessary due to unusual, non-recurring, extraordinary or

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      unexpected circumstances or developments, either in relation to the Company or the NEOs, including in relation to unusual, non-recurring or extraordinary items in the determination of adjusted operating income that in their discretion do not relate to the future income or values of the Company. Such actions are expected to take into account the current and long-term interests of our stockholders and include the Company, notwithstandingfollowing elements for fiscal 2021:

ElementKey CharacteristicsLink to Shareholder
Value
How we Determine AmountKey Decisions
FixedBase SalaryFixed compensation component payable in cash. Reviewed annually and adjusted when appropriate.A means to attract and retain talented executives capable of driving superior performance.Consider individual contributions to business outcomes, the scope and complexity of each role, future potential, market data, and internal pay equity.There were no changes to base salaries during fiscal 2021 as the Compensation Committee believes each NEO’s current base salary reflects market competitive rates.
Service-Based Restricted Stock Unit AwardsFixed compensation component payable in stock. Reviewed annually and granted when appropriate.A means to retain talented executives capable of driving superior performance.Consider individual contributions to business outcomes, the scope and complexity of each role, future potential, market data, and internal pay equity.The Compensation Committee awarded service-based restricted stock that vests ratably over two years to each NEO during fiscal 2021. Mr. Koster was previously awarded restricted stock in fiscal 2020, thus did not receive another grant.

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Performance-
Based
Annual Incentive ProgramVariable compensation component payable in cash based on performance against annually established financial goals.Incentive targets are tied to achievement of key annual financial measures. The financial metrics used to determine the payout of the fiscal 2021 awards were Adjusted Operating Income and Revenue growth.Incentive award levels based on individual contributions to business outcomes, potential future contributions, historical incentive amounts, retention considerations and market data.Total incentive awards for fiscal 2021 were earned at 109% of target. Mr. Koster did not participate in the annual non-equity incentive program, but rather received a discretionary bonus based on his individual performance results.
Performance-Based Unit Awards (PSUs)PSUs cliff vest after a three-year performance period and payouts are based on Company performance against pre-established financial goals and other performance metrics.PSUs recognize our executive officers for achieving superior long-term relative performance. Financial metrics for the fiscal 2021 award were based on Sales growth and Return on Equity. An additional TSR performance metric was also included.Grant award levels based on individual contributions to business outcomes, potential future contributions, historical grant amounts, retention considerations and market data. Actual award payout is based on performance against pre-established goals over a three-year performance period.The Compensation Committee approved PSU grants to select NEOs during fiscal 2021 with three performance metrics that were based on Sales Growth, Return on Equity and a TSR performance metric. Approximately 46% of the fiscal 2019 PSUs granted were earned during fiscal 2021.
Fiscal 2021 Target Total Compensation Mix
The total target compensation mix for NEOs, as established at the extentstart of fiscal 2021, was based upon base salary, achievement of target for the annual incentive program, long-term service-based stock awards and achievement of target for the long-term performance-based stock unit incentive awards. The CEO’s total compensation mix was primarily performance-based to which earlier specified goals are achieved.

Follow Executive Compensationdrive pay-for-performance and Pay Governance Best Practices.  The Compensation Committee will continually evaluate best practices in executive compensation and governance and consider modifications to our program that NEOs support the Company's business strategies, provide an appropriate balancealign stockholder interests with those of risk and rewardexecutives.
[MISSING IMAGE: tm2128844d1-pc_ceo4c.jpg]
[MISSING IMAGE: tm2128844d1-pc_neo4c.jpg]

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Base Salary
We set base salaries for our NEOs based on individual contributions to business outcomes, the scope and align their compensation with the long-term interestscomplexity of our stockholders.

Compensation Consultant.  The Compensation Committee has authority to retain compensation consulting firms to assist it in the evaluation of executive officereach role, competencies, experience, leadership, performance, future potential, market data, and employee compensation and benefit programs. The Compensation Committee periodically has retained Sibson Consulting, a national compensation consulting firm, as its independent compensation advisor.internal pay equity.

Compensation Committee Approval of Named Executive Officer Compensation for 2017

                For fiscal 2017,In July 2020, the Compensation Committee discussed withcompleted the Chief Executive Officer approaches to incentive compensation, annual cash bonuses, non-equity incentive compensation and long-term equity grants. We believe that it is appropriate to offer industry-competitive cash and equity compensation packages to our NEOs in order to attract and retain top executive talent. However, we do not rely on market information to target any specific pay percentilereview of the salary levels for our executive officers. Instead, we use this information to provide a general overvieweach of market practices and to ensure that we make informed decisions regarding our executive pay programs.

the NEOs. As ispart of the case with our Chief Executive Officer, in evaluating compensation packages for our NEOs,salary review process, the Compensation Committee focuses on the total compensation opportunity for the executive. Executive compensation packages are structured such that a portion of total compensation delivered in the form of base salaryreviewed and benefits is intended to provide a competitive foundation and fixed rate of pay for the work being performed by each named executive officer and the associated level of responsibility and contributions to the Company. The compensation opportunity beyond those pay elements is at risk and must be earned through achievement of annual goals, which represent performance expectations of the Board and management and long-term value creation for stockholders. The proportion of compensation designed to be delivered in base salary versus variable pay depends on the executive's position and the ability of that position to influence overall Company performance. The more senior the level of the executive, the greater is the percentage of total pay opportunity that is variable.

                The following are the components of the compensation for the NEOs other than the Chief Executive Officer, and the Company's overall approach to each compensation component for fiscal 2017:

    Base Salary.  Base salary is expected to be within the industry standards for similarly responsible, situated and performing executives, depending on the area in which the executive operates and on varying levels of responsibility. The Compensation Committee considered the range of opportunities available to similarly situated executives from various relevant market reference sources and concurred with the Chief Executive Officer's views as to the adequacy of the base compensation for the NEOs for fiscal 2017.

    Incentive Awards—Annual Cash Bonus and Annual Non-Equity Incentive Plan Compensation.  For fiscal year 2017, the Company maintained an Annual Cash Bonus Incentive Program under which the NEOs of the Company other than the Chief Executive Officer are eligible for an Incentive Award with a performance-based Non-Equity Incentive Plan Compensation component and a discretionary-based Bonus component. Our annual incentive program is designed to promote the achievement of annual corporate goals including key financial, operating and strategic goals that, in turn, drive value for stockholders.

      For purposes of the Annual Cash Bonus Incentive Program, overall performance of the Company is assessed based upon the achievement of the Company's financial, strategic and operational budget and objectives, including revenue and income earned by the Company, operating results of each individual division, expansion of market share, minimization of overhead, inventory management, cost savings, cash conservation, customer service improvement and the performance of each NEO, relevant market data, the Company relative to peerscomparison of compensation among various levels of management, and the market. TheCompany’s overall performance. As a result of this review, the Compensation Committee in conjunction withdetermined no changes were needed to existing base salaries during fiscal 2021 as they represent market competitive rates.

Name
Fiscal 2020
Salary ($) (1)
Fiscal 2021
Salary ($) (2)
% Chg
M. Farooq Kathwari$1,150,000$1,150,0000%
Corey Whitely$  500,000$  500,0000%
Rodney A. Hutton$  375,000$  375,0000%
Daniel M. Grow$  350,000$  350,0000%
Eric D. Koster$  320,000$  320,0000%
(1)
Due to the Chief Executive Officer, establishes criteria for each NEO annually which is shared withCOVID-19 pandemic, the NEO and their performance is annually reviewed.

The Company established for each NEO a target Incentive Award opportunity expressed as a percentage of the NEO's annualCompensation Committee approved temporary base salary rate at the beginning of fiscal 2017, and a maximum Incentive Award expressed as a percentage of that base salary. Target and maximum Incentive Awards are based upon the recommendation of the Chief Executive Officer and the approval of the Compensation Committee. For fiscal 2017, the target Incentive Awardreductions for each of the NEOs, was set at 40% of their respectiveeffective March 29, 2020. These temporary base salary reductions remained in effect until June 30, 2020 and are reflected in the maximum Incentive Award for each of the NEOs was set at 60% of their respectivefiscal 2020 base salary subjectamounts shown in the Summary Compensation Table. As a result, the amounts shown above for fiscal 2020 are higher than those shown in the Summary Compensation Table for that period. All salary reductions were lifted effective July 1, 2020.

(2)
Mr. Thorn’s base salary at the time of his termination on March 19, 2021 was $310,000.
Annual Non-Equity Incentive Compensation
NEOs are eligible to revisionearn cash awards under our annual incentive compensation program, which is designed to motivate and reward executives for performance on key annual measures. The annual incentive compensation program is based exclusively on attainment of financial metrics, measured on the target and the maximum Incentive Award by the Chief Executive Officer andCompany’s overall consolidated financial performance, that align our annual incentives with our strategy of driving growth, with an emphasis on profitability.
For fiscal 2021, the Compensation Committee duringevaluated two performance metrics in its annual incentive plan performance review for all NEOs, which aligns performance metrics used to assess non-equity incentive compensation payout eligibility with our fiscal 2017.


Table2021 growth strategy, focusing on consolidated net sales (weighted 60% of Contents

      Incentive Awards,target incentive) and Adjusted Operating Income (weighted 40% of target incentive). Target, maximum and threshold awards, specified as a percentage of base salary, vary among various levels of management. The NEOs have the opportunity to earn awards between 50% of their target awards if any, arewe meet minimum threshold performance requirements and a maximum of 133% to 227% of their target incentive opportunity, based both upon theon performance.

The Compensation Committee established targets of 4% Consolidated Net Sales growth and 9% Adjusted Operating Income growth for fiscal 2021 compared to fiscal 2020, and established threshold and maximum performance of the NEO as determined by the Company in view of the circumstances and considerations and also upon the Company's achievement of the performance goal target for the relevant fiscal year, such that 70% of the target Incentive Award will be initially determined by reference to the Company's achievement of the performance goal target (the Non-Equity Incentive Plan Compensation component) and 30% of the Incentive Award will be discretionary (the Bonus component), based upon the Company's and the Compensation Committee's evaluation of the NEO's performance against its expectations and principles.

The Performance Component payout will be linearly interpolated between 80% and 120% of the Performance Goal Targetlevels as follows:


Directional Non-Equity

Fiscal 2021 Annual Incentive Compensation Payout Schedule

(Linear/Scaled)

Goals and Results
($ in millions)
Performance Level
Consolidated
Net Sales $
Percent of
Target
Adjusted
Operating
Income $ (1)
Percent of
Target
Maximum$631.1103%$22.0118%
Target$613.4100%$18.6100%
Threshold$589.896%$17.192%
Actual$685.2112%$80.3432%
Individual Metric Payout103%118%
Individual Metric Weight60%40%
Overall Payout (as percent of Target)109%
(1)
    Performance

 Payout

​ ​ ​ ​ ​ ​ 
​   Adjusted Operating
Income Achievement
Level





 (as Percentage of
Annual
Performance
Goal Target)




 (as Percentage of
target Non-Equity
Incentive Plan
Compensation
Component)





  Threshold   80%   50%  
  Target   100%   100%  
  Maximum   120%   115%  

              For fiscal 2017, the performance goal target establishedSee Appendix A for the Non-Equity Incentive Plan Compensation component of the Incentive Award was the Company's accomplishment ofa non-GAAP reconciliation showing how adjusted operating income as reflectedis calculated from our financial statements.


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Fiscal 2021 Annual Incentive Target, Achievement and Actual Payout
Name (1)
Fiscal 2021
Target Incentive
($)
Fiscal 2021
Target Incentive
(% of base
salary)
Overall
Performance
Level Achieved
(% of target
performance)
Actual
Fiscal 2021
Incentive Payout
($)
Actual Fiscal
2021
Incentive Payout
(% of base
salary)
M. Farooq Kathwari$750,00065%109%$1,700,000148%
Corey Whitely$125,00025%109%$  166,26033%
Rodney A. Hutton$  75,00020%109%$   99,75027%
Daniel M. Grow (2)$  52,50015%109%$   20,0006%
(1)
Messrs. Koster and Thorn did not participate in the fiscal 2021 non-equity incentive compensation plan disclosed above.
(2)
The Compensation Committee applied its discretion in determining Mr. Grow’s fiscal 2021 annual financial statementsnon-equity incentive compensation payout, adjusting from the formula-based $52,500 to $20,000 due to a change in the scope of Mr. Grow’s responsibilities.
Historical Annual Incentive Payout
Fiscal YearAnnual
Incentive
Payout (as
Percent
of Target)
201941%
20200%
2021109%
Average Payout50%
Discretionary Annual Bonus
The Company maintains a discretionary bonus program for fiscal 2017 reflecting a growth rate of 5% over the adjusted operating income for fiscal 2016.

        The discretionary Bonus component of the Incentive Award, if any, is intended to reward key employees based upon both the Company's overall performance and the individual's performance measured against a broad range of performance indicators.

executives who are not included in our annual incentive compensation program. For purposes of the discretionary Bonus component,bonus, individual performance is assessed based upon the level of attainment of establishedexecutive’s performance relative to his or her responsibilities, goals, and objectives for each NEO.executive, which may or may not include financial metrics. Each NEOexecutive develops annual business objectives and budgets for their respective areas, which are approved by the Chief Executive OfficerCEO and are used for this assessment. Individual performance is alsoadditionally measured by how the executive'sexecutive’s actions conform with and exemplify the Company'sCompany’s ten "Leadership Principles" as follows:

    Leadership Principles:    Good governance is good for profitability—and good for our talented and committed team. As a group we embrace ten key Leadership Principles, which define our commitment to excellence. Living by these principles is paramount. They are the compass that guides us to achieve our full potential, both as individuals within the company and as a major player in the industry.

    Leadership:    Provide leadership by example.

    Change:    Understand that change means opportunity and do not be afraid of it.

    Accessibility:    Be accessible and supportive, and recognize the contributions of others.

    Speed:    Maintain a competitive advantage by reacting quickly to new opportunities.

    Client Focus:    Our first responsibility is to our clients. Client service is our highest priority.

    Hard Work:    Establish a standard of hard work and practice it consistently.

    Excellence + Innovation:    Have a passion for excellence and innovation.

    Priorities:    Establish priorities by clearly differentiating between the big issues and the small ones.

    Confidence:    Have the confidence to empower others to do their best.

    Justice:    Always make decisions fairly. Justice builds confidence and trust, which in turn encourages motivation and teamwork.


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      “Leadership Principles”. For each NEO,executive, the NEO'sexecutive’s impact upon initiatives of their division, department function or organization is also considered, as well as theirhis impact on the moraledevelopment of these groups. Additionally, each executive, whether reporting directly totheir associates.

For fiscal 2021, the Chief Executive Officer or not, completes a self-assessment that is also used as a basis by the Chief Executive OfficerCEO recommended and the Compensation Committee approved a discretionary bonus to Mr. Koster of $50,000, equivalent to 16% of his base salary, as he did not participate in the annual non-equity incentive compensation plan. No discretionary bonus was provided to Mr. Thorn during fiscal 2021.
Long-term Incentive Compensation
To align our executive officers’ pay outcomes with long-term performance and encourage long-term strategic thinking, our annual long-term incentive grants typically feature financial-based performance metrics. The long-term incentive award provisions of our Stock Incentive Plan provide for the determinationequity-based compensation including restricted stock, restricted stock units, stock options, or other forms of any Incentive Award. For executives reporting directly to the Chief Executive Officer, theirequity-based compensation, which may vest based on service or performance is reviewed by the Chief Executive Officer together with the Executive Vice President, Administration, who is responsibleor a combination thereof.
The Compensation Committee establishes for the Company's Human Resources functions. For the NEOs, other than the Chief Executive Officer, their performance is also reviewed byCEO, the Chief Executive Officer with the Compensation Committee.

        Historically, the actual Incentive Awards have ranged from 20% to 40%target, maximum and threshold performance-based awards as a percentage of base salary on the grant date, which percentages may vary among the various levels of management. The target, maximum and threshold awards are specified as a fixed number of shares for eligible executives.the CEO. Our CEO has limited discretion during the year to approve additional equity-based grants to employees other than the NEOs.

For fiscal 2021, our NEO long-term incentive compensation program reflected the grant of performance-based stock unit awards containing three performance metrics that closely align with our growth strategy, focusing on consolidated net sales, return on equity and the three-year TSR relative to the performance of the other constituents of the S&P Retail Select

29


Industry Index. The Compensation Committee selected consolidated net sales as a broad indicator of attaining strategic objectives, return on equity as a fundamental measure of the Company’s effectiveness at turning the net profits and cash put into the business into greater gains and growth for the Company retainsand investors, and TSR to add a relative measure of performance in comparison to market peers. The vesting period for performance-based equity compensation awards was kept at a three-year cliff vesting period, similar to the discretionprior year. The weighting of the three performance metrics was established as follows:
Fiscal 2021 Long-term Incentive Performance Metrics
Payout Metric (Total Weight)Fiscal 2021
Weight
(50%)
Fiscal 2022
Weight
(30%)
Fiscal 2023
Weight
(20%)
Sales Growth (40%)20%12%8%
Return on Equity (40%)20%12%8%
Three-year Total Shareholder Return (20%)20%
The Compensation Committee awarded the fiscal 2021 performance-based stock unit grants to grant noselected NEOs as follows:
Name (1)
ThresholdTargetMaximum
M. Farooq Kathwari32,50065,00081,250
Corey Whitely7,14614,29217,865
Rodney A. Hutton4,2888,57610,720
Daniel M. Grow3,0016,0027,503
(1)
Messrs. Koster and Thorn did not participate in the fiscal 2021 long-term incentive compensation plan disclosed above.
Results of 2019-2021, 2020-2022 and 2021-2023 Long-term Incentive Awards or to grant Incentive Awards that exceedGranted
Fiscal Year 2019-2021 Performance Period
Target GoalsResultsPayout as % of Target
SalesReturn on
Equity
SalesReturn on
Equity
SalesReturn on
Equity
(in millions)(in millions)
FY 2019$797.510.3%$746.711.1%0%125%
FY 2020$829.411.1%$589.83.9%0%0%
FY 2021$862.512.0%$685.217.7%0%125%
Following the end of the third performance year, approximately 46% of the target in each case as the situation warrants, such as unusual, non-recurring, extraordinary or unexpected circumstances or developments, either in relation to the Company or the NEO, including in relation to unusual, non-recurring or extraordinary items in the determinationnumber of adjusted operating income that in their discretion do not relate to the future income or values of the Company. As the Incentive Awards look at broad performance indicators, the Company believes that there is no single metric that would lend itself to the risk of manipulation of resultsfiscal 2019 performance-based stock units were earned by the NEOs to influence any Incentive Award outcome.

        For fiscal 2017, the Company's Adjusted Operating Earningsas noted below.

Name (1)
Target
Actual Vested (2)
% Vested
M. Farooq Kathwari65,00029,79846%
Corey Whitely6,7223,08246%
Daniel M. Grow4,8942,24446%
(1)
Messrs. Hutton, Koster and Thorn did not meetparticipate in the thresholdlong-term incentive compensation plan during fiscal 2019, thus were excluded from the table above.
(2)
The vested amounts noted above include fiscal 2019 market-based awards that were earned. Based upon the Company’s relative TSR performance, levelwhich was measured over the three-year period (July 1, 2018 through June 30, 2021), it was determined that the Company’s TSR percentile ranking was in the 36th percentile, resulting in a payout of 80%54% of the performance target. Accordingly, fortarget number of market-based awards granted in fiscal 2017, after its review and discussion, the Compensation Committee did not approve any payments under2019.

30


Fiscal Year 2020-2022 Performance Period
Target GoalsResultsPayout as % of Target
SalesReturn on
Equity
SalesReturn on
Equity
SalesReturn on
Equity
(in millions)(in millions)
FY 2020$776.611.7%$589.83.9%0%0%
FY 2021$807.612.3%$685.217.7%0%125%
FY 2022$839.912.9%n/a
There has been no payout with respect to the performance-based Non-Equity Incentive Plan Compensation componentstock unit awards granted in fiscal 2020 as the third-year performance measurement period has not yet lapsed. The results for the relative TSR performance metric, which is measured over the entire three-year period, will be determined following the conclusion of the Incentivethird year of the 2020-2022 performance cycle.
Fiscal Year 2021-2023 Performance Period
Target GoalsResultsPayout as % of Target
SalesReturn on
Equity
SalesReturn on
Equity
SalesReturn on
Equity
(in millions)(in millions)
FY 2021$613.44.1%$685.217.7%125%125%
FY 2022$638.04.3%n/a
FY 2023$663.54.5%n/a
There has been no payout with respect to the performance-based stock unit awards granted in fiscal 2021 as the second- and third-year performance measurement periods have not yet lapsed. The results for the relative TSR performance metric, which is measured over the entire three-year period, will be determined following the conclusion of the third year of the 2021-2023 performance cycle.
Restricted Stock Unit Awards for the NEOs. The Compensation Committee reviewed and discussed multiple major initiatives that were accomplished during the fiscal year that positioned the Company for its long-term strategic objectives. The Compensation Committee also discussed the extraordinary increase in the Company's Adjusted Operating Earnings achieved in the prior fiscal year that was used as the base for the targeted increase this fiscal year. Based on these considerations and the Company's strong relative performance, the Compensation Committee approved payments under the discretionary Bonus component of the Incentive Awards totaling $250,000 to be distributed to the NEOs other than the Chief Executive Officer, in amounts recommended by the Chief Executive Officer as set forth in the "Summary Compensation Table". These discretionary bonuses were appropriate, in the view of the Compensation Committee, in light of the Company's many initiatives and the NEO's leadership with those initiatives that position the Company for its long-term strategic objectives.

        For fiscal year 2018, the Company will continue to maintain this Incentive Award compensation plan, with its performance-based component (Non-Equity Incentive Plan Compensation) and a discretionary-based component (Bonus), for the NEOs of the Company other than the Chief Executive Officer with the same approach as fiscal 2017.

Fiscal 2021 (service-based)
Long-Term Equity Awards.  Historically the Compensation Committee has allocated a block of equity awards to be granted throughout the year based on similar criteria and process as the annual non-equity incentive awards, with special focus on retention and consistent long-term performance. The Compensation Committee approves the specific grants for the NEOs in the same manner as described above for the annual non-equity incentive awards. The Company believes that share ownership among its executives is important for alignment of executive interests.

    Stock Options - The NEOs and other executives are eligible to receive grants of service-based restricted stock unit awards. These restricted stock units vest according to time-based criteria only. Any restricted stock units not fully vested on the date the employee separates are subject to forfeiture. For fiscal 2021, the Compensation Committee awarded selected NEOs service-based restricted stock grants that vest ratably over two years. The Compensation Committee believes having a greater portion of total compensation tied to long-term equity-based compensation better aligns the executive’s compensation with meeting the long-term goals of the Company and its stockholders.

Name (1)
$ Value# of Units
M. Farooq Kathwari$239,50025,000
Corey Whitely$ 57,4806,000
Rodney A. Hutton$ 28,7403,000
Daniel M. Grow$ 19,1602,000
(1)
Messrs. Koster and Thorn did not receive a grant of service-based restricted stock during fiscal 2021.
The restricted stock units were granted on August 12, 2020 and vest 50% annually on the anniversary date of the grant and become fully vested after two years.
Stock Option Awards for Fiscal 2021
The NEOs and other executives are eligible to receive annual grants of stock options. The options have an exercise price of the closing price of our stock on the date of grant, vesting according to both the performance-basedperformance based and time-based criteria, and a ten-year term. Any stock options not fully vested on the date the employee separates are subject to forfeiture. These grants are designed for retention of the executive and to align the executive's compensation with the long-term success of the Company. The Compensation Committee did not approve Companyany grants of stock options to the NEOs in fiscal 2017.2021.

Performance Stock Units - The NEOs and other executives are eligible to receive grants of performance stock units. The performance stock units have both service vesting and performance vesting criteria by reference to performance goals set for each award based on the Adjusted Operating Earnings Per Share target for each of the upcoming two fiscal years and cumulatively for the upcoming three fiscal years and to the extent performance condition is satisfied, service conditions vest over a period of three years. These grants are designed to promote retention and to align executive compensation with the long-term success of the Company.


Table of Contents

      The Compensation Committee approved Company grants of performance stock units to NEOs in fiscal 2017 employing the same methodology as used with the CEO. The grants were subject to a target performance metric of Adjusted Operating Income Per Share increase for fiscal year 2018 over fiscal 2017 and for each of the two immediately following fiscal years (for a total of three fiscal years) with 5% increase for fiscal 2018 and 5% increase for each of fiscal 2019 and 2020. The Performance Units would be earned according to performance on a directional payout schedule as follows:


Directional Performance Unit Schedule
(Linear/Scaled)

  
Adjusted Operating
Income Per Share
Achievement Level



 
 Performance as
Percentage of Cumulative
PSU Annual Target for
Applicable Two or Three
Year Period





 Percentage of Units
Earned (Per Grant)

 
  Threshold   80%   50%  
  Target   100%   100%  

      If either the two-year or the cumulative three-year target is met, then the percentage of Performance Units vested would be determined by reference to the higher performance accomplishment percentage. Goals for each annual grant are set by the Compensation Committee or the Board within 90 days of the beginning of each fiscal year.

      Actual amounts of awards granted in fiscal 2017 are disclosed in the "Summary Compensation Table" and the "Grants of Plan-Based Awards" table. The fiscal 2017 Performance Units granted to our NEOs, which will not vest until the actual results for the second or third fiscal year period in the three-year performance cycle are known, were estimated to be earned at the maximum payout level for purposes of the "Summary Compensation Table" and the "Outstanding Equity Awards at 2017 Fiscal Year End" table in the "Executive Compensation" section.

    Change of Control Severance Plan for Executives.Executives
The change in control plan for NEO's,NEOs, other than the CEO, was adopted to mitigate the concern that, in the event the Company is considering a change in control transaction, the employees involved in considering the transaction might otherwise

31


be motivated to act in their own interests rather than the interests of the stockholders. Thus, the change in control provisions are designed so that employees are neither harmed nor given a windfall in the event of a change in control.

The Company'sCompany’s plans generally provide that a change in control may occur upon (i) any liquidation or the sale of substantially all of the assets of the Company and Ethan Allen Global, Inc. taken as a whole, or (ii) any merger, or (iii) any person becoming a beneficial owner of more than 50% of the then-outstandingthen outstanding voting stock of the Company or Ethan Allen Global, Inc.; or (iv) the Company'sCompany’s incumbent directors cease to constitute at least a majority of the Board of directors of the Company, except in connection with the election or nomination of directors approved by a vote of at least a majority of the directors then comprising the incumbent board of directors of the Company.

For any benefits to be earned, a change in control must occur and the executive'sexecutive’s employment must be terminated within two years following the change in control, either by the Company without cause or the executive for good reason (often called a "double trigger"“double trigger”). The plan does not provide tax gross-ups.gross ups. Payments and benefits to the executive will be reduced to the extent necessary to result in the executive'sexecutive’s retaining a larger after-tax amount, taking into accountconsidering the income, excise and other taxes imposed on the payments and benefits. For additional information, see "Potential Payments Upon Termination or Change in Control". Benefits provided under the program include (i) a lump sum cash payment equal to one times the sum of the executive'sexecutive’s base salary and the average of the prior three years'years’ annual Incentive Bonus and (ii) a lump sum cash payment equal to the pro-rated portion of the executive'sexecutive’s average of the prior three years'years’ annual Incentive Bonus for the year of termination. The Change in Control Severance Plan includes non-solicitation, non-disparagement and confidentiality provisions and waivers of customary claims.

Ethan Allen Retirement Savings Plan

The Company maintains the Ethan Allen Retirement Savings Plan (the “Retirement Plan”). The Retirement Plan covers all employees, including the NEOs, who have completed at least three months of service. There is no enhanced benefit for executives. The 401(k) portion of the Retirement Plan allows participants to defer up to 100% of their compensation, subject to certain statutory limitations. In fiscal 2021, the Company made matching contributions with a maximum contribution of $1,300 per participant. Matching contributions were made dollar for dollar on the first $500 of a participant’s before tax contribution and $0.50 on the next $1,600 of a participant’s before tax contributions. Participant contributions and employer matching contributions are immediately and fully vested. The Retirement Plan also allows for a discretionary profit-sharing contribution made by the Company to be distributed to eligible participants. The Company made a $495,000 profit sharing contribution to the Retirement Plan during fiscal 2021.
Executive Perquisites and Other Personal Benefits
Executive Perquisites/Other Personal Benefits

We offer a very limited amountnumber of perquisites and other personal benefits to our named executive officers.NEOs. The Compensation Committee believes that these perquisites are reasonable and consistent with prevailing market practice and the Company'sCompany’s overall compensation program. Perquisites are not a material part of our compensation program. The Compensation Committee periodically reviews the levels of perquisites and other personal benefits provided to our NEOs. In fiscal 2017,2021, with the exception of Mr. Kathwari, the NEOs did not receive any perquisites. Mr. Kathwari received: (1) access to andreceived the use of a Company carscar (including driver, gas, registration, title, insurance, and maintenance) and a club membership; (2) reimbursement of life insurance premiums up to $50,000; (3)$50,000.

Employment Agreements
The Company generally does not enter into employment agreements and has no employment agreements in place with the exception of the employment agreement with Mr. Kathwari, the Chief Executive Officer. The Compensation Committee in 2015 initiated, negotiated and, on October 1, 2015, effective July 1, 2015, entered into the 2015 Employment Agreement, of which its incentive compensation components were subsequently approved by stockholders at our 2015 Annual Meeting of Stockholders.
Pursuant to the 2015 Employment Agreement, Mr. Kathwari is entitled to a retirement


Tablebase salary of Contents

contract (described below); (4) dividends$1,150,000 per annum, without increase or guaranteed adjustment. He is eligible for an annual non-equity incentive compensation based on annual performance targets set annually by the Company, the Compensation Committee, and interestthe Board. The annual incentive compensation payments provide for a target level of $750,000, a threshold level of $375,000 and a maximum level of $1,700,000. The agreement provides for an annual long-term incentive compensation award grant based on performance targets set annually by the Compensation Committee and the Board with a target level of 65,000 shares, a threshold level of 32,500 shares and a maximum of 81,250 shares. The agreement, among other provisions, provides for benefits that may be earned in the event of a change of control or in the event of termination of employment. The 2015 Employment Agreement commenced July 1, 2015 for an initial five-year term, with automatic renewal provisions on a long-standing restricted stock book account established pursuant to his previous employment agreements; and (5) dividend equivalent payments on stock units awarded pursuant to a prior employment agreement. Mr. Kathwari's useyear-to-year basis through June 30, 2022. The agreement is filed as Exhibit 10.3 of the Company car and club membership are as a convenience to the Company and are for business purposes. See footnote 7 to the "Summary Compensation Table".

Company’s fiscal 2021 Annual Report on Form 10-K.

Deductibility Cap on Executive Compensation


32


Deductibility Cap on Executive Compensation
Section 162(m) of the Internal Revenue Code places a limit of $1 million per year on the amount of compensation paid to certain of our executive officers that the company may deduct from our federal income tax return for any single taxable year. Prior to the enactment of 2017 Tax Cuts and Jobs Act, signed into law on December 22, 2017 (the "Code"“Tax Act”) limits deductibility, there was an exception to the $1 million limitation for performance-based compensation meeting certain requirements. The material terms of annualour incentive plans that were previously approved by stockholders allowed us to grant certain cash incentive compensation and long-term incentive awards that were designed to meet the definition of performance-based compensation which qualified for the exception to the $1 million deduction limit. The Tax Act repealed the performance-based compensation exception described in this paragraph. Following enactment of the Tax Act, we generally expect that compensation paid to our CEO will be in excess of $1 million, paidand thus not deductible, subject to a transition rule for compensation provided pursuant to a binding written contract in effect as of November 2, 2017 that is not materially modified after such date. To the extent applicable to our existing plans and previously granted awards, the Company may avail itself of this transition rule. However, because of uncertainties as to the Company's Principal Executive Officerapplication and to eachinterpretation of its next three most highly compensated executive officers (other than the Principal Financial Officer) (for these purposes,transition rule, no assurances can be given at this time that our existing plans and previously granted awards, even if in place on November 2, 2017, will meet the "Named Executives"). However, compensation is exempt from this limit if it qualifies as "performance-based compensation." As partrequirements of its role, the Compensation Committee considers the anticipated tax treatment to us and the executive officers in its review and establishment of compensation programs and payments. In general, the Compensation Committee believes that it is in our best interest to receive maximum tax deductions for compensation paid to the Named Executives. In general, we intend to pay performance-based compensation, including equity compensation, in a manner that preserves our ability to deduct the amounts paid to executive officers, although totransition rule. To maintain flexibility in compensating Named Executivesexecutive officers in a manner designed to promote varying corporate goals the Compensation Committee may award compensation that is not fully deductible when it deems such award to be in the best interest of the Company.

                The 2015 Employment Agreement is intended to permit the Company, to pay incentive compensation which qualifies as "performance-based compensation", thereby permitting the Company to receive a federal income tax deduction for the payment of such incentive compensation. If the Compensation Committee or Board of Directors makes a discretionary incentivedoes not limit its actions with respect to executive compensation payment in the case of extraordinary economic circumstances under the 2015 Employment Agreement, such discretionary incentive compensation payment will not be tax-deductibleto preserve deductibility under Section 162(m) if the Compensation Committee determines that doing so is in the best interests of the Code.

Company and its stockholders.

Certain Conclusions as to Compensation

                The Compensation Committee believes that long-term stockholder value is enhanced by corporate and individual performance achievements. Through the plans and practices described above, a meaningful portion of the Company's executive compensation is based on competitive pay practices, as well as corporate and individual performance. The Compensation Committee believes equity compensation, in the form of stock options, restricted stock and stock units is vital to the long-term success of the Company. The Compensation Committee remains committed to this policy, recognizing that the competitive market for talented executives and the cyclical nature of the Company's business may result in highly variable compensation for a particular time period.


33


COMPENSATION COMMITTEE REPORT
COMPENSATION COMMITTEE REPORT

The Compensation Committee oversees our compensation program for our Named Executive Officers ("NEOs")NEOs on behalf of the Board of Directors.Board. In fulfilling its oversight responsibilities, the Compensation Committee has reviewed and discussed with management thethis Compensation Discussion and Analysis and recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statementProxy Statement and the Company'sCompany’s Annual Report.

JAMES B. CARLSON (CHAIR)
JOHN J. DOONER, JR.
DOMENICK J. ESPOSITO
This Compensation Committee Report is not deemed “soliciting material”
and is not deemed filed with the SEC or subject to Regulation 14A
or the liabilities under Section 18 of the Exchange Act.

JAMES B. CARLSON, CHAIR
JOHN J. DOONER, JR.
DOMENICK J. ESPOSITO
34



COMPENSATION TABLES
EXECUTIVE COMPENSATION

The following table“Summary Compensation Table” sets forth information concerning the compensation for services rendered to usthe Company during the years indicated by our Principal Executive Officer, Principal Financial OfficerNEOs. Salary, bonus, and non-equity incentive plan compensation amounts reflect the three next most highly compensated executive officers (the "Named Executive Officers") servingcompensation earned during each fiscal year. Stock awards reflect awards with a grant date during each fiscal year.

Summary Compensation Table
The following table summarizes the year endedcompensation earned by or awarded to each NEO for fiscal years 2021, 2020 and 2019.
Name and
Principal Position
Year
Salary (1)
Bonus (2)
Stock
Awards (3)
Non-Equity
Incentive Plan
Compensation (4)
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings (5)
All Other
Compensation (6)
Total
M. Farooq Kathwari
Chairman of the Board,
President and Principal
Executive Officer
2021$ 1,150,050$       —$  809,290 (a)$ 1,700,000$       —$  121,474$ 3,780,814
2020862,500826,670 (b)126,9371,816,107
20191,150,0501,186,380 (c)314,889121,6712,772,990
Corey Whitely
Executive Vice President,
Administration, Principal
Financial Officer
2021$500,000$$182,480 (d)$166,250$$2,651$851,381
2020450,000124,999 (e)2,302577,301
2019500,000122,672 (f)50,6462,190675,508
Rodney A. Hutton (7)
Chief Marketing Officer
2021$375,000$$113,327 (g)$99,750$$2,530$590,608
2020249,375—   249,375
Daniel M. Grow
Senior Vice President
Business Development
2021$350,000$$81,234 (h)$20,000$$2,651$453,885
2020323,75059,502 (i)2,302385,554
2019350,00089,306 (j)36,8712,190478,367
Eric D. Koster
Vice President, General
Counsel & Secretary
2021$320,000$50,000$—   $$$2,651$372,651
2020296,0009,150 (k)2,302307,452
2019317,69225,000—   2,190344,882
Clifford Thorn (8)
Former Vice President
Upholstery Manufacturing
2021$265,765$$—   $$$302,651$568,416
(1)
Due to the COVID-19 pandemic, effective March 29, 2020, the Compensation Committee approved temporary base salary reductions for each of the NEOs, which remained in effect until June 30, 2017.

20172020 and are reflected in the 2020 base salary amounts shown in the Summary Compensation Table

  Name and Principal Position  
Year

 
Salary

 
Bonus (1)
 

Stock
awards
 (2)


 

Option
awards
 (3)


 


Non-Equity
Incentive Plan
Compensation
 (4)



 





Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
 (5)






 

All other
compensation
 (6)


 
Total

  M. Farooq Kathwari,    2017   $1,150,050   $   $1,944,800   $   $   $4,756   $53,854 (7)  $3,153,460  
  Chairman of the Board,   2016  1,150,050    1,557,400    1,700,000    53,880 (7) 4,461,330 
  President and Principal    2015    1,150,050                1,800,000    5,014    53,716 (7)   3,008,780  
  Executive Officer                                               

 

 


 


 



 


 



 


 



 


 



 


 



 


 



 


 



 


 



 


 



 

  Corey Whitely,    2017   $482,981   $100,000   $88,981   $   $        $2,115   $674,077  
  Executive Vice President,   2016  472,917  30,000  92,167    152,950    2,141  750,175 
  Administration, Principal    2015    426,923    150,000        114,191             1,977    693,091  
  Financial Officer                                               

 

 


 


 



 


 



 


 



 


 



 


 



 


 



 


 



 


 



 


 



 

  Daniel M. Grow    2017   $315,962   $55,000   $49,434   $   $        $2,115   $422,511  
  Senior Vice President,   2016  291,667    73,658    93,380    2,141  460,846 
  Business Development    2015    263,269    70,000        68,515             1,977    403,761  

 

 


 


 



 


 



 


 



 


 



 


 



 


 



 


 



 


 



 


 



 

  Tracy Paccione,    2017   $329,788   $55,000   $49,434   $   $        $2,115   $436,337  
  Vice President,   2016  322,917    73,658    104,650    2,141  503,366 
  Merchandising    2015    300,000    85,000        114,191             1,977    501,168  

 

 


 


 



 


 



 


 



 


 



 


 



 


 



 


 



 


 



 


 



 

  Clifford Thorn    2017   $275,000   $40,000   $24,717   $   $        $2,115   $341,832  
  Vice President,    2016    276,667        53,827        88,550         2,141    421,185  
  Uphostery Manufacturing                                               
    (1)
    For Named Executive Officers other than above. The temporary base salary reductions during fiscal 2020 were as follows: Mr. Kathwari 100%; Mr. Whitely 40%; Mr. Grow 30%; Mr. Hutton 30%; and Mr. Koster 30%. These temporary base salary reductions were lifted effective July 1, 2020.
(2)
Bonus amounts represent discretionary bonus awards under the discretionary bonus program only for NEOs who did not participate in the non-equity incentive plan.
(3)
The amounts shown represent discretionary Annual Cash Bonus under the 2017 Incentive Award program described in the "Incentive Awards-Annual Cash Bonus and Annual Non-Equity Incentive Plan Compensation" section.
(2)
Stockfor stock awards represent the aggregate grant date fair values, of performance stock units as of each grant date, computed in accordance with Accounting Standards Codification Topic 718. For financial statement reporting purposes these fair values are charged to expense over the vesting period, which is generally two to three years for stock unit awards.period. The actual values that employees may realizerealized, if any, will not be known until the vesting date and could differ significantly from the amounts disclosed herein. See footnote 10in the table. Refer to note 17 to the Company'sconsolidated financial statements contained in the Company’s Annual Report on Form 10-K for valuation assumptions with respect to stock awards granted.
a)
Amount reflects the fair value of all stock awards granted during fiscal year ended2021, which include a performance stock unit grant and a non-recurring service-based restricted stock award. As the performance awards are subject to performance conditions, the amount reported in the table above is equal to the value at the grant date based upon the probable outcome of such conditions as of the grant date. No payout has been earned in respect to the grant and the final performance measurement date is June 30, 2017 for assumptions in the valuation.2023. Assuming the maximum performance levels werelevel was probable on the grant date, for the performance stock units, the grant date fair valuesvalue for the performance awards would have been $712,238. The service-based restricted stock award vests ratably over two years and had a grant date fair value of  $239,500.
b)
Amount reflects the grant date fair value of the fiscal 2020 annual performance stock units awardedunit grant. No payout has been earned in fiscal 2017 for M. Farooq Kathwari would be $2,431,000. Forrespect to the other NEOs,grant and the amounts disclosed arefinal performance measurement date is June 30, 2022. Assuming the maximum values.
(3)
No optionperformance level was probable on the grant date, the grant date fair value would have been $1,033,338.
c)
The final performance measurement date for awards were granted in fiscal 2017. The amounts shown for option2019 was June 30, 2021. Based on the achievement of certain performance conditions, the NEO received a stock unit payout equal to $822,425 in fair value based on the Company’s closing stock price on June 30, 2021.

35


d)
Amount reflects the fair value of all stock awards represent aggregate fair valuesgranted during fiscal 2021, which include a performance stock unit grant and a non-recurring service-based restricted stock award. As the performance awards are subject to performance conditions, the amount reported in the table above is equal to the value at the grant date based upon the probable outcome of such conditions as of eachthe grant date. No payout has been earned in respect to the grant and the final performance measurement date is June 30, 2023. Assuming the maximum performance level was probable on the grant date, computedthe grant date fair value for the performance awards would have been $156,250. The service-based restricted stock award vests ratably over two years and had a grant date fair value of  $57,480.
e)
Amount reflects the fair value of the fiscal 2020 annual performance stock unit grant. No payout has been earned in accordance with Accounting Standards Codification Topic 718. For financial statement reporting purposes, these fair values are charged to expense over the vesting period, which is generally three to five years for option grants. The actual values that employees may realize if any, will not be known until the vesting date and could differ significantly from the amounts disclosed herein. See footnote 10respect to the Company's Form 10-K for fiscal year endedgrant and the final performance measurement date is June 30, 20172022. Assuming the maximum performance level was probable on the grant date, the grant date fair value would have been $156,248.
f)
The final performance measurement date for assumptionsawards granted in fiscal 2019 was June 30, 2021. Based on the achievement of certain performance conditions, the NEO received a stock unit payout equal to $85,063 in fair value based on the Company’s closing stock price on June 30, 2021.
g)
Amount reflects the fair value of all stock awards granted during fiscal 2021, which include a performance stock unit grant and a non-recurring service-based restricted stock award. As the performance awards are subject to performance conditions, the amount reported in the valuation.
(4)
Includes incentive compensationtable above is equal to the value at the grant date based upon the probable outcome of such conditions as of the grant date. No payout has been earned in respect to the grant and the final performance measurement date is June 30, 2023. Assuming the maximum performance level was probable on the grant date, the grant date fair value for the performance awards would have been $93,760. The service-based restricted stock award vests ratably over two years and had a grant date fair value of  $28,740.
h)
Amount reflects the fair value of all stock awards granted during fiscal 2021, which include a performance stock unit grant and a non-recurring service-based restricted stock award. As the performance awards are subject to performance conditions, the amount reported in the table above is equal to the value at the grant date based upon the probable outcome of such conditions as of the grant date. No payout has been earned in respect to the grant and the final performance measurement date is June 30, 2023. Assuming the maximum performance level was probable on the grant date, the grant date fair value for the performance awards would have been $65,623. The service-based restricted stock award vests ratably over two years 2017, 2016 and 2015, respectively, determinedhad a grant date fair value of  $19,160.
i)
Amount reflects the fair value of the fiscal 2020 annual performance stock unit grant. No payout has been earned in accordance withrespect to the bonus formulagrant and the final performance measurement date is June 30, 2021. Assuming the maximum performance level was probable on the grant date, the grant date fair value would have been $74,377.
j)
The final performance measurement date for awards granted in fiscal 2019 was June 30, 2021. Based on the achievement of goals as describedcertain performance conditions, the NEO received a stock unit payout equal to $61,934 in fair value based on the "Compensation Discussion and Analysis" section forCompany’s closing stock price on June 30, 2021.
k)
Amounts reflects the fair value of 1,000 non-performance based restricted stock units granted to Mr. Kathwari. ForKoster during fiscal 2020. These restricted stock units vest ratably over four years, whereby 25% of the total number of shares issuable under the grant vest each NEO other than Mr. Kathwari, includesyear on the anniversary of the grant date, commencing on March 11, 2021.
(4)
The Non-Equity Incentive Plan Compensation amount shows actual payouts paid under the 2017 Incentive Award programannual incentive plan for fiscal 2021 further described in the "Incentive Awards-Annual Cash Bonus and Annual Non-Equity Incentive Plan Compensation" section.
(5)
IncludesCompensation section of the change in value of Mr. Kathwari's retirement contract. CD&A.
(5)
There was a decreaseno change in the value of theMr. Kathwari’s retirement contract of $14,654 for fiscal 2016,during 2019, 2020 or 2021 and this decrease is not included in the sum of total compensation for fiscal 2016.
no above-market interest has been earned on any non-qualified deferred compensation.
(6)

Amounts shown represent contributions by the Company pursuant to the Ethan Allen Retirement Savings Plan for each Named Executive OfficerNEO other than Mr. Kathwari. The amount for Mr. Kathwari forduring fiscal years 2017, 2016 and 2015.
(7)
The following is a detailed table outlining the components of Mr. Kathwari's "All Other Compensation" for fiscal years ended June 30, 2017, 2016 and 2015. Amounts reflected represent actual amounts charged to the Company's operations during each fiscal year.


2017


2016


2015

Life insurance premiums$46,739$46,739$46,739
​  Ethan Allen Retirement Savings Plan$2,115$2,141$1,977
Personal service of Company staff$5,000$5,000$5,000
​  Total$53,854$53,880$53,716

    In addition, there were other incremental2021 includes costs incurred by the Company during fiscal 2017 for: (i) contributions by the Company pursuant to the Ethan Allen Retirement Savings Plan of  $2,651; (ii) life insurance premiums of  $46,739; and (iii) use of a Company car ($79,729);$72,083.
(7)
Mr. Hutton joined the Company as its Chief Marketing Officer on January 1, 2020. Prior to his hire, Mr. Hutton was working as the Company’s third-party consultant, in the capacity as the Chief Marketing Officer and (ii)as such, was paid consulting fees from October 1, 2019 through December 31, 2019. This period provided the Company an opportunity to work closely with Mr. Hutton as well as enable him to learn more about the business operations. Total consulting fees received by Mr. Hutton during this period were $90,000 and are reported within the Salary column during fiscal 2020.
(8)
In March 2021, the Company entered into a club membership ($6,543);separation of employment and (iii) accessgeneral release agreement with Mr. Thorn, whereby he received a lump sum separation payment of  $300,000. No modifications were made to charter air services ($5,589Mr. Thorn’s equity in connection with his departure. The amount reported within the salary column for Mr. Thorn of  $265,765 represented the pro-rated amount of base salary paid to him during fiscal 2021 while an employee of the Company. Mr. Thorn did not participate in the non-equity or equity incentive compensation plans during fiscal 2021.
Grants of Plan-Based Awards
The following table provides information on all plan-based awards granted during fiscal 2021 to each NEO. There can be no assurance that the grant date fair value of the equity awards, as listed in this table, will ever be realized. The grant date fair value of the equity awards is included in the “Stock Awards” column of the Summary Compensation Table.
NameGrant Date
Estimated future payouts
under non-equity
incentive plan awards (1)
Estimated future payouts
under
equity incentive plan awards (2)
All Other
Stock Awards
Number of
Stock Units (3)
Grant Date
Fair Value of
Stock and
Option Awards (4)
Threshhold
($)
Target
($)
��
Maximum
($)
Threshhold
(#)
Target
(#)
Maximum
(#)
M. Farooq Kathwari7/1/2020$   375,000$   750,000$   1,700,000
M. Farooq Kathwari8/12/202032,50065,00081,25025,000$   809,290
Corey Whitely7/1/2020$62,500$125,000$166,250
Corey Whitely8/12/20207,14614,29217,8656,000$182,480
Rodney A. Hutton7/1/2020$37,500$75,000$99,750
Rodney A. Hutton8/12/20204,2888,57610,7204,000$113,327
Daniel M. Grow7/1/2020$26,250$52,500$69,825
Daniel M. Grow8/12/20203,0016,0027,5033,000$81,234
Eric D. Koster (5)
Clifford Thorn (5)

36


(1)
Awards represent potential payments under the fiscal 2021 annual incentive program. Payments are based on specified target levels of Consolidated Net Sales and Adjusted Operating Income, as described in the CD&A. NEOs must be employed on the date the payments are made (typically in August of each year with respect to the preceding fiscal year) to be eligible.
(2)
Awards represent potential payments under performance-based stock units granted under the Company’s Stock Incentive Plan during fiscal 2021. See the CD&A for a more detailed description of the performance measures associated with these awards.
(3)
In addition to the performance-based stock units granted in fiscal 2017) all of which were used solely for business purposes. It is Mr. Kathwari's practice2021 under non-equity incentive plan awards, the Compensation Committee awarded a service-based restricted stock grant to reimburse the Company for any incremental costs relating to his personal useMessrs. Kathwari, Whitely, Hutton and Grow. These restricted stock units vest ratably over two years, whereby 50% of the club membership. In connection with Mr. Kathwari's nonqualified deferred compensation plans he also received dividendstotal number of shares issuable under the grant vest each year on the anniversary of the grant date, commencing on August 12, 2020. Grant date fair value for these restricted stock units and dividend equivalent payments and interest on a dividend book account whichwere determined in accordance with Accounting Standards Codification Topic 718.
(4)
Grant date fair values for performance-based stock units granted during fiscal 2020 were determined in accordance with Accounting Standards Codification Topic 718. As these awards are not includedsubject to performance conditions, the amount reported in this table. (See also "Nonqualified Deferred Compensation" and "Executive Perquisites/Other Personal Benefits" below.)

Table of Contents

    Equity Incentives

                  Stock Units and Restricted Stock.    We award stock units and restricted stock to align the interests of our NEOs with those of our stockholders and to provide competitive pay packages that serve to attract and retain qualified executives.

                    In fiscal 2017, the Company awarded 9,030 stock units with performance-based and time-based criteria to NEOs, other than Mr. Kathwari, pursuantcolumn is equal to the Stock Incentive Plan. See Note 10value at the grant date based upon the probable outcome of such conditions as of the grant date. Refer to "Notesnote 17 to Consolidated Financial Statements"the consolidated financial statements contained in the Company'sCompany’s Annual Report on Form 10-K for the year ended June 30, 2017 for additional information about share-based compensation. The actual number of performance stock units grantedvaluation assumptions with respect to each NEOthese awards granted.

    (5)
    Messrs. Koster and Thorn did not participate in the year ended June 30, 2017 is disclosednon-equity incentive compensation plan or in the "Grants of Plan-Based Awards" table below. See also "Outstanding Equity Award at Fiscal Year-End" table and the footnotes thereto.

                    The accounting cost of restricted stock and performance stock unit awards, for which the exercise price is zero, is calculated based on the closing price of a single share of Common Stock on the date of the award for awards with no performance or market conditions. See Note 10 to "Notes to Consolidated Financial Statements" in the Company's Annual Report on Form 10-K for the year ended June 30, 2017 for additional information about share-based compensation. The Company has registered the issuance of the previously granted shares. Dividends are not payable on previously granted shares of unvested restricted stock; however Mr. Kathwari receives dividend-equivalent payments.

    2017 Grants of Plan Based Awards

          


    Estimated future payouts
    under non-equity
    incentive plan awards



     


    Estimated future payouts
    under equity incentive
    plan awards



     

    Grant Date
    Fair Value of


    ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 
      Name  Grant Date

     

    Threshhold
    ($)


     

    Target
    ($)


     

    Maximum
    ($)


     

    Threshhold
    (#)


     

    Target
    (#)


     

    Maximum
    (#)


     

    Stock and
    Option Awards


      M. Farooq Kathwari   7/1/2016   $375,000   $750,000   $1,700,000                      
    ​   M. Farooq Kathwari  7/1/2016        32,500  65,000  81,250  $1,944,800 
      Corey Whitely,   7/1/2015   $70,000   $140,000   $210,000                      
    ​   Corey Whitely,  4/27/2017        1,890  3,780  3,780  $88,981 
      Daniel M. Grow   7/1/2015   $49,000   $98,000   $147,000                      
    ​   Daniel M. Grow  4/27/2017        1,050  2,100  2,100  $49,434 
      Tracy Paccione,   7/1/2015   $47,600   $95,200   $142,800                      
    ​   Tracy Paccione,  4/27/2017        1,050  2,100  2,100  $49,434 
      Clifford Thorn   7/1/2015   $38,500   $77,000   $115,500                      
    ​   Clifford Thorn  4/27/2017        525  1,050  1,050  $24,717 

                    The Non-Equity Incentive Plan award payable to Mr. Kathwari is thelong-term incentive compensation described in the 2015 Employment Agreement, which is described more fully in the "Compensation Discussionplan for fiscal 2021 and Analysis" above. Mr. Kathwari is entitled to anas such, did not receive any non-equity or equity incentive bonus based on the Company's adjusted operating income. The goals and objectives applicable to the Incentive Planplan awards for NEOs other than Mr. Kathwari are described in detail under "Compensation Committee Approval of Named Executive Officer Compensation for 2017" in the "Compensation Discussion and Analysis".

                    See "Compensation Discussion and Analysis" for an explanation of the base salary and bonus in proportion to total compensation payable to the NEOs, and "Outstandingduring fiscal 2021.

    Outstanding Equity Awards at Fiscal Year-End"Year-End
    The following table sets forth information regarding the number of shares and the footnotes thereto for additional information regarding expiration dates and vesting schedulesvalue of equity grants listed above.

    awards held by the NEOs at June 30, 2021.
    Option AwardsStock Awards
    NameNotesGrant Date
    Number of
    Securities
    Underlying
    Unexercised
    Options:
    Exercisable
    Number of
    Securities
    Underlying
    Unexercised
    Options:
    Unexercisable
    Option
    Exercise
    Price
    Option
    Expiration
    Date
    Number of
    Shares or
    Units of Stock
    That Have Not
    Vested
    Market Value
    of Shares or
    Units of Stock
    That Have Not
    Vested
    Equity
    Incentive
    Plan Awards:
    Number of
    Unearned
    Shares, Units
    or Other
    Rights That
    Have Not
    Vested
    Equity
    Incentives Plan
    Awards: Market
    or Payout Value
    of Unearned
    Shares, Units or
    Other Rights
    That Have Not
    Vested
    M. Farooq Kathwari
    (1)
    7/25/201829,798$  822,42551,452$  1,420,075
    (2)
    8/5/201932,500$897,000
    (3)
    8/12/202081,250$2,242,500
    (4)
    8/12/202025,000$690,000
    (5)
    1997-2002126,000$3,477,600
    Corey Whitely
    (1)
    7/25/20183,082$85,0635,320$146,832
    (2)
    8/5/20194,920$135,792
    (3)
    8/12/202017,865$493,074
    (4)
    8/12/20206,000$165,600
    Rodney A. Hutton
    (3)
    8/12/202010,720$295,872
    (4)
    8/12/20204,000$110,400
    Daniel M. Grow
    (1)
    7/25/20182,244$61,9343,873$106,895
    (2)
    8/5/20192,342$64,639
    (3)
    8/12/20207,503$207,083
    (4)
    8/12/20203,000$82,800
    2/8/20131,500$28.672/8/2023
    1/31/20145,000$  25.241/31/2024
    6/15/20152,001$26.196/15/2025
    Eric D. Koster3/11/2020750$20,700
    1/31/20145,000$25.241/31/2024
    6/15/20151,667$26.196/15/2025
    Clifford Thorn
    (6)
    (1)

    Table of Contents

    Outstanding Equity Awards at 2017 Fiscal Year-End

     

     

     

         
    Option Awards

     
    Stock Awards

    ​  ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 

     

     

     

         
    Number of securities

                 
    Equity Incentive Plan

     

     

     

         
    underlying

           
    Shares or Units of Stock That

     
    Awards: Unearned Shares,

     

     

     

         
    unexercised options

           
    Have Not Vested

     
    Units or Other Rights That

    ​  ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 

     

     

     

                           
    Have Not Vested

    ​  ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 

     

     

      Notes

     

    (#)
    Exerciseable


     

    (#)
    Unexerciseable


     



    Option
    exercise
    price
    ($)




     


    Option
    expiration
    date



     
    Number (#)

     

    Market
    value ($)


     
    Number (#)

     

    Market or
    Payout Value ($)


     

     

    M. Farooq Kathwari

       (1)                    59,211    1,912,515    22,039    711,860  
    ​  

     

         (2)                            32,500    1,049,750  
    ​  

     

         (3)                    126,000    4,069,800          
    ​  

     

              150,000        34.03    10/10/2017                  
    ​  

     

              90,000        24.62    7/1/2018                  
    ​  

     

              40,000        15.93    11/11/2018                  
    ​  

     

              120,000        13.61    10/1/2021                  
    ​  

    ​  

     

    Corey Whitely

      (4)          3,453  111,532  247  7,978 
    ​  ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 

    ​  

     

      (5)              1,890  61,047 
    ​  ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 

    ​  

     

      (6)    12,000  25.24  1/31/2024         
    ​  ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 

    ​  

     

      (7)    3,333  26.19  6/15/2025         
    ​  

     

     

    Daniel M. Grow

       (4)                    2,427    78,392    173    5,588  
    ​  

     

         (5)                            1,050    33,915  
    ​  

     

              1,500        11.74    11/12/2019                  
    ​  

     

              1,500        19.07    7/26/2021                  
    ​  

     

              1,000        20.63    7/31/2022                  
    ​  

     

              1,500        28.67    2/8/2023                  
    ​  

     

         (6)        5,000    25.24    1/31/2024                  
    ​  

     

         (7)        2,000    26.19    6/15/2025                    
    ​  

    ​  

     

    Tracy Paccione

      (4)          2,427  78,392  173  5,588 
    ​  ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 

    ​  

     

      (5)              1,050  33,915 
    ​  ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 

    ​  

     

        500    25.71  6/20/2018         
    ​  ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 

    ​  

     

        500    17.60  11/5/2018         
    ​  ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 

    ​  

     

        2,500    11.74  11/12/2019         
    ​  ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 

    ​  

     

        3,000    19.07  7/26/2021         
    ​  ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 

    ​  

     

        3,000    20.63  7/31/2022         
    ​  ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 

    ​  

     

      (6)    5,000  25.24  1/31/2024         
    ​  ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 

    ​  

     

      (7)    3,333  26.19  6/15/2025         
    ​  

     

     

    Clifford Thorn

       (4)                    1,774    57,300    126    4,070  
    ​  

     

         (5)                            525    16,958  
    ​  

     

              700        25.71    6/20/2018                  
    ​  

     

              625        11.74    11/12/2019                  
    ​  

     

              2,500        19.07    7/26/2021                  
    ​  

     

              1,500        20.63    7/31/2022                  
    ​  

     

         (6)        5,000    25.24    1/31/2024                  
    ​  

     

         (7)        1,333    26.19    6/15/2025                  
    (1)
    The vesting of performance stock units granted effectiveon July 1, 2015 depends upon attainment of performance requirements where the Adjusted Operating Income cumulatively reflects either a two or three year growth rate objective when compared to the immediately prior fiscal years. The Shares or Units of Stock That Have Not Vested have met the two-year June 30, 2017 performance objective, and25, 2018 were awarded and transferred on JulyAugust 26, 2017,2021, after the determination of the shares awarded was finalized by the Compensation Committee of the Board of Directors. The remaining portion, as reported in the last column in the table above, are unearned units which maydid not meet the three-year performance objective onended June 30, 2018 and time vest on2021. The market or payout value was calculated at the closing market price at June 30, 2018.2021 of  $27.60.
    (2)
    The vesting of performance stock units granted on August 5, 2019 depends upon attainment of performance metrics over a three-year measurement period. The number of sharesUnearned Shares included in unearned units that have not vestedthe table above is based on the actual performance results for the truncated performance period ended June 30, 2021 and assumes payout at the next highest payout level, which is the maximum level. The market or payout value for all Stock Awards was calculated at the closing market price at June 30, 2017 of $32.30.
    (2)
    The vesting of performance stock units granted effective July 1, 2016 depends upon attainment of performance requirements where the Adjusted Operating Income cumulatively reflects either a two or three year growth rate objective when compared to the immediately prior fiscal years. Any stock units that have performance vested by June 30, 2018 will time vest on June 30, 2018. Any stock units which did not meet the two-year performance objective by June 30, 2018, may meet the three-year performance objective on June 30, 2019 and time vest on June 30, 2019. The number of Unearned Shares included for purposes of the Outstanding Equity Awards at 2017 Fiscal Year-End table is based on the actual performance results for the truncated performance period and assumes payout at the next highest payout level, which is the threshold level (50% of target), and the market or payout value was calculated at the closing market price at June 30, 20172021 of  $32.30.
    $27.60.
    (3)
    The shares of stock units granted between 1997 and 2002 have vested and the deferral period will end upon Mr. Kathwari's termination of employment for any reason.
    (4)

    The vesting of performance stock units granted on April 19, 2016August 12, 2020 depends upon attainment of performance requirements where the Adjusted Operating Income cumulatively reflects eithermetrics over a two or three year growth rate objective when compared to the immediately prior fiscal years. The Shares or Units of Stock That Have Not Vested have met the two-year June 30, 2017 performance objective, and were awarded and transferred on July 26, 2017, after the determination of the shares awarded was finalized by the Board of Directors. The Unearned Units represent the remaining portion of stock units granted on April 19, 2016 which did not meet the two-year performance objective by June 30, 2017, and may meet the three-year performance objective on June 30, 2018. All shares meeting the two or three-year performance objectives will time vest on April 19, 2019.measurement period. The number of Unearned Shares included for purposes ofin the Outstanding Equity Awards at 2017 Fiscal Year-End table above is based on the actual performance results for the truncated performance period ended June 30,

    37


    2021 and assumes payout at the next highest threshold,performance level, which is the maximum level and the market value was calculated at the closing market price at June 30, 2017(125% of $32.30.

    Table of Contents

    (5)
    The vesting of performance stock units granted on April 27, 2017 depends upon attainment of performance requirements where the Adjusted Operating Income cumulatively reflects either a two or three year growth rate objective when compared to the immediately prior fiscal years. Any stock units that have performance vested by June 30, 2019 will time vest on April 27, 2020. Any shares that have performance vested by June 30, 2020 will time vest on June 30, 2020. The number of shares included for purposes of the Outstanding Equity Awards at 2017 Fiscal Year-End table is based on the actual performance results for the truncated performance period and assumes payout at the threshold level,target), and the market or payout value was calculated at the closing market price at June 30, 20172021 of  $32.30.
    (6)
    The performance options$27.60.
    (4)
    Service-based restricted stock units granted on January 31, 2014 metAugust 12, 2020. These restricted stock units vest ratably over two years, whereby 50% of the performance conditionstotal number of shares issuable under the grant vest each year on the anniversary of the grant date, commencing on August 12, 2021.
    (5)
    Mr. Kathwari was granted 126,000 shares of stock units between 1997 and 2002, for which payment has been deferred until termination of his employment for any reason.
    (6)
    Mr. Thorn terminated employment on March 19, 2021, thus had no outstanding equity awards as of June 30, 2016,2021.
    Option Exercises and will time vest ratably in two equal tranches over fiscal years ended June 30, 2018 and 2019.
    Stock Vested
    (7)
    One third of the performance options granted on June 15, 2015 attained the performance requirements where the Adjusted Operating Income cumulatively reflected either a two or three year growth rate objective when compared to the immediately prior fiscal years. These awards will time vest ratably in three equal tranches over fiscal years ended June 30, 2018, 2019 and 2020.

    The following table sets forth certain information regarding vestedthe number and value of stock options exercised and stock awards vested for each NEO during fiscal year 20172021.

    Option AwardsStock Awards
    Number of
    shares
    acquired
    on
    exercise (#)
    Value
    realized on
    exercise ($)
    Number of
    shares
    acquired
    on
    vesting (#)
    Value
    realized on
    vesting ($)
    M. Farooq Kathwari (1)120,000$380,400$
    Corey Whitely15,333$78,729$   —
    Rodney A. Hutton$$
    Daniel M. Grow2,500$  30,015$
    Eric D. Koster$250$6,993
    Clifford Thorn10,333$51,168250$6,993
    (1)
    SEC rules require the Company to show the value realized upon vesting of awards as if the underlying shares were sold on the vesting date. Mr. Kathwari did not subsequently sell the shares issued to him upon the exercise of the 120,000 options in fiscal 2021, and in alignment with stockholders’ interests, he continues to be at risk for NEOs.

    Option Exercises and Stock Vested in 2017

     

     

     

      
    Option Awards

     
    Stock Awards

    ​  ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 

     

     

      




    Number of
    shares
    acquired
    on
    exercise (#)





     


    Value
    realized on
    exercise ($)



     




    Number of
    shares
    acquired
    on
    vesting (#)





     


    Value
    realized on
    vesting ($)



     

     

    M. Farooq Kathwari

                      

    ​  

     

    Corey Whitely

      28,000  470,230     

     

     

    Daniel M. Grow

                      

    ​  

     

    Tracy Paccione

             

     

     

    Clifford Thorn

                      

                    The NEOs are eligible to participatesubsequent changes in the same retirement benefit program we offer to all employees at the corporate level. Our current program is a 401(k) plan with a Company-provided match and profit sharing contribution. In addition, Mr. Kathwari is entitled to retirement benefits under an agreement dated September 26, 1983. Pursuant to the termsvalue of the agreement, the Company is required to make monthly retirement payments of a maximum of $1,875 per month, commencing on the month in which his employment with the Company terminates, and shall be paid until the earlier to occur of (i) 120 monthly payments or (ii) the death of Mr. Kathwari. Such retirement payment is subject to cost of living adjustments. In the event Mr. Kathwari shall die before receiving all retirement payments Mr. Kathwari's widow shall be entitled to reduced retirement payments equal to one-half of the retirement payment amount until the earlier to occur of (a) her death or (b) the cumulative payment of 120 monthly payments to Mr. Kathwari and/or his widow.

    these shares.

    Nonqualified Deferred Compensation
    2017 Nonqualified Deferred Compensation

    The Company maintains the following three nonqualified deferred compensation plans for Mr. Kathwari. (1) The dividend book account holdsKathwari:

    Dividend Book account.   Holds dividends and accrued interest payable from a restricted stock book account established pursuant to his previous employment agreements. As of each dividend record date for the Common Stock occurring on or after the date of any grant made pursuant to his previous employment agreements, of shares of restricted stock, but prior to the date such shares became vested or forfeited, an account established by the Company for the benefit of Mr. Kathwari was credited with an amount equal to the dividends which would have otherwise been paid with respect to the shares. Amounts credited to the account are credited with interest at the rate of 5% per year until distribution. Mr. Kathwari is fully vested in all amounts credited to the account, which will be distributed to him in cash as soon as practicable after the termination of his employment. (2) The Stock Unit account holds 126,000 stock units issued in connection with Mr. Kathwari's 1997 employment agreement and for which payment has been deferred until termination of employment. Dividends are paid in cash to Mr. Kathwari on these stock units. (3) The retirement contract account entitles
    Retirement Contract account.   Entitles Mr. Kathwari to benefitsa maximum payment of $225,000 under an agreement dated September 26, 1983 pursuant to which, the Company is required to make monthly retirement payments of a maximum of $1,875 per month, commencing on1983. Such payment has been deferred until the month in which his employment with the Company terminates and shall be paid until the earlier to occur of (i)in 120 monthly payments or (ii) the death of Mr. Kathwari. Such retirement payment is subject to cost of living adjustments.installments. In the event Mr. Kathwari shall die before receiving all retirement payments Mr. Kathwari'sKathwari’s widow shall be entitled to reduced retirement payments equal to one-half of the retirement payment amount until the earlier to occur of (a) her death or (b) the cumulative payment of 120 monthly payments to Mr. Kathwari and/or his widow.


    Stock Unit account.

    Table   Holds 126,000 stock units issued in connection with Mr. Kathwari’s 1997 employment agreement and for which payment has been deferred until termination of Contentsemployment. Dividends are paid in cash to Mr. Kathwari on these stock units.


     

     

    Name


     



    Executive
    Contributions
    in Last FY
    ($)




     



    Registrant
    Contributions
    in Last FY(1)
    ($)




     



    Aggregate
    Earnings
    in Last FY(1),(2)
    ($)




     



    Aggregate
    Withdrawals/
    Distributions
    ($)




     



    Aggregate
    Balance
    at Last FYE(3)
    ($)




     

     

    M. Farooq Kathwari

                               

    ​  

     

            Dividend book account

      $  $  $29,070  $  $562,643 

     

     

            Retirement Contract

                4,756        182,476  

    ​  

     

            Stock Units

          90,720  (90,720) 4,069,800 
    38


    Name
    Employee
    Contributions
    In FY 2021
    Registrant
    Contributions
    In FY 2021 (1)
    Aggregate
    Earnings
    In FY 2021 (1)(2)
    Aggregate
    Withdrawals/
    Distributions
    ($)
    Aggregate
    Balance
    at 6/30/2021
    (FYE) (3)
    M. Farooq Kathwari
    Dividend Book account$     —$     —$35,564$$723,906
    Retirement Contract$$$$$225,000
    Stock Units$$$  215,460$  (215,460)$  3,477,600
    (1)
    Registrant
    None of the registrant contributions and aggregate earnings during fiscal 2017 of $4,7562021 are included in the executive compensation table. Summary Compensation Table.
    (2)
    The dividend book account earned dividends on unvested restricted stock, and 5% interest. The retirement contract Aggregate Earnings is the change in value using a 2.6% discount rate.interest during fiscal 2021. The Stock Unit account paid quarterly cash dividends on the stock units held in the account.
    (3)
    (2)

    The aggregate amount previously reported as compensation“Aggregate Balance” with respect to the Retirement Contract is the total of payments due upon Mr. Kathwari in the Summary Compensation Table for all previous years was $1,520,245.
    (3)
    Kathwari’s separation from service. The deferred account balances are distributed in full upon separation of employment, except for retirement contract payments, which would be paid over 120 months.

    The Ethan Allen Retirement Savings Plan

                    The Company maintains the Ethan Allen Retirement Savings Plan, which is effective as of July 1, 1994 (the "Retirement Plan"). The Retirement Plan covers all employees, including the NEOs, who have completed at least three months of service.

                    The 401(k) portion of the Retirement Plan allows participants to defer up to 100% of their compensation, subject to certain statutory limitations. In fiscal 2017, the Company made matching contributions with a maximum contribution of $1,300 per participant. Matching contributions were made dollar for dollar on the first $500 of a participant's before tax contribution and $0.50 on the next $1,600 of a participant's before tax contributions. Participant contributions and employer matching contributions are immediately and fully vested. The Retirement Plan also allows for a profit sharing contribution made by the Company to be distributed to participants. The Company made a $495,000 profit sharing contribution to the Retirement Plan

    Potential Payments upon Termination or Change in fiscal 2017.

                    Investment options currently offered under the Retirement Plan include the Company's Common Stock. Participants direct the investment of their accounts under the Retirement Plan and may choose from some or all of the investment options designated by the Retirement Committee from time to time.

    Control

    Change in Control

    As of the end of fiscal year 20172021 we maintained a change in control provision with the Chief Executive OfficerCEO as set forth in the 2015 Employment Agreement. We also have change in control provisions with all our NEOs as set forth in the Change in Control Severance Plan and in restricted stock and stock option agreements.

    The specific rightsCompany’s plans generally provide that a change in control may occur upon (i) any liquidation or the sale of Mr. Kathwari if his employment is terminated bysubstantially all of the assets of the Company and Ethan Allen Global, Inc. taken as a whole, or (ii) any merger, or (iii) any person becoming a beneficial owner of more than 50% of the then outstanding voting stock of the Company or Ethan Allen Global, Inc.; or (iv) the Company’s incumbent directors cease to constitute at least a majority of the Board of the Company, except in connection with the election or nomination of directors approved by a vote of at least a majority of the directors then comprising the incumbent board of directors of the Company.
    For any benefits to be earned, a change in control must occur and the executive’s employment must be terminated within two years following certain changesthe change in control, are described under "2015 Employment Agreement" above. Other officers, as determinedeither by the Compensation Committee, includingCompany without cause or the NEOs other than Mr. Kathwari, participateexecutive for good reason (often called a “double trigger”). The plan does not provide tax gross ups. Payments and benefits to the executive will be reduced to the extent necessary to result in the Change in Control Severance Plan.

    executive’s retaining a larger after-tax amount, considering the income, excise and other taxes imposed on the payments and benefits. The plans or agreements include non-solicitation, non-disparagement and confidentiality provisions and waivers of customary claims. Potential payments under the plans and agreements are reflected in the table that follows under Potential Payments upon Termination or Change in Control. The treatment of benefits under each plan or agreement on termination or change in control is detailed in the footnotes to the table.

    Potential Payments upon Termination or Change in Control

                    The amount of compensation which would have been payable to the NEOs upon termination of employment, assuming a June 30, 2017 termination date, and for purposes of the last column, a change in control as of the same date, is listed in the following table. A termination of employment is a requirement for the acceleration of stock option grants and restricted stock awards upon a change in control. Under the 2015 Stock Incentive Plan, the Compensation Committee, may, in its discretion, notwithstanding the grant or award agreement, upon termination without cause, fully vest any and all Ethan Allen common stock awarded pursuant to arestricted or performance restricted stock awardor stock unit awards or stock option grant, unless the award was granted to a "covered employee" (as defined in the applicable Treasury Regulations) and the award was designed to meet the exception for performance-based compensation under Section 162(m) of the Code. The chief financial officer,grants. Mr. Whitely, is not included as a "covered employee" under the applicable Treasury Regulations. Mr. Kathwari'sKathwari’s restricted stock awards are governed by his employment agreement and no assumption is made regarding Compensation Committee action fully vesting those awards. The amountamounts shown assumesbelow assume the Compensation Committee fully vested any and all time-based restricted or performance restricted stock or stock unit awards and stock option grants and Mr. Whitely's performance-based restricted stock grants under the 2015 Stock Incentive Plan.


    Table of Contents

    If Mr. Kathwari'sKathwari’s employment is terminated for any reason, including death, disability or change in control, the value of nonqualified deferred compensation plan accounts would be become immediately payable in accordance with the term of those agreements. See "Nonqualified“Nonqualified Deferred Compensation"Compensation” table for more information on those plans.


    2017 Potential Payments upon Termination or Change in Control

         For Cause

     Voluntary
    Termination/
    Non-renewal/
    Retirement




     Without
    Cause/
    Good Reason/
    Termination




     Death or
    Disability


     Change in
    Control 
    (10)


      M. Farooq Kathwari                      
      Salary continuation (1)   $            — �� $                  —   $      2,300,100   $      1,150,050   $      2,300,100  
      Bonus (2)      2,000,000   2,000,000   2,000,000   2,000,000  
      Life & disability payments (3)         100,000   50,000   50,000  
      Stock options (4)                 
      Performance unit awards (5)      3,336,235      3,336,235   2,286,485  
      Health and welfare payments (6)      31,210   31,210      31,210  
    ​   Corey Whitely                
    ​   Salary (7)          500,000 
    ​   Bonus (8)          144,317 
    ​   Stock options and stock units (9)      105,085  105,085  105,085 
      Daniel M. Grow                      
      Salary (7)               350,000  
      Bonus (8)               72,793  
      Stock options and stock units (9)         47,520   47,520   47,520  
    ​   Tracy Paccione                
    ​   Salary (7)          340,000 
    ​   Bonus (8)          81,550 
    ​   Stock options and stock units (9)      55,665  55,665  55,665 
      Clifford Thorn                      
      Salary (7)               275,000  
      Bonus (8)               66,183  
      Stock options and stock units (9)         43,445   43,445   43,445  
    (1)
    Under the 2015 Employment Agreement, if his employment is terminated other than for cause, Mr. Kathwari is entitled to salary continuation through June 30, 2019, or in the event of death or disability, through June 30, 2018. The amount disclosed is the total undiscounted amount of future payments.
    (2)
    Under the 2015 Employment Agreement, if his employment is terminated other than for cause, Mr. Kathwari would receive a prorated bonus entitlement from the beginning of the fiscal year through the termination date. Mr. Kathwari received no bonus payment for fiscal 2017. However, if Mr. Kathwari's employment is terminated by the Company without cause or by Mr. Kathwari for good reason (as defined in the 2015 Employment Agreement), Mr. Kathwari would be entitled to a lump sum payment, within 75 days following termination of employment, equal to the lesser of (i) the sum of his two (2) largest bonuses or (ii) $2.0 million.
    (3)
    Under the 2015 Employment Agreement, if his employment is terminated without cause, the Company would continue to pay life and disability insurance payments for two years post-termination, i.e., through June 30, 2019, or in the event of death, disability, or change in control, through June 30, 2018. The amount disclosed is the total undiscounted amount of future payments.
    (4)
    Equity awards that were fully vested by their terms as of June 30, 2017 are not included in the table above. For information on any outstanding stock option awards, including those that are fully vested and unexercised as of June 30, 2017, see the "Outstanding Equity Awards at Fiscal Year-End" table. At June 30, 2017, all of Mr. Kathwari's options were fully vested.
    (5)
    For information on any outstanding performance unit awards, see the "Outstanding Equity Awards at Fiscal Year-End" table. If terminated due to retirement, death or disability, 103,289 shares would remain outstanding and be subject to vesting and earning in accordance with the 2015 Employment Agreement. In the event of a change in control, 70,789 shares would vest immediately. The closing market price at June 30, 2017 was used to value the shares.
    (6)
    If Mr. Kathwari's employment is terminated other than for cause, Mr. Kathwari is entitled to health and welfare benefits for a period of 24 months following the termination of his employment. The Company's estimated cost for medical and dental insurance was used to value the benefit.
    (7)
    The Change in Control Severance Plan for officers of the Company other than Mr. Kathwari provides for a lump sum payment equivalent to 12 months' salary in the event of a change in control.
    (8)
    The Change in Control Severance Plan for officers of the Company other than Mr. Kathwari provides for a lump sum payment equivalent to the average of the last three fiscal years bonus in the event of a change in control.
    (9)
    Equity awards that were fully vested by their terms as of June 30, 2017 are not included in the table above. For information on any outstanding stock option and stock unit awards, including those that are fully vested and unexercised as of June 30, 2017, see the "Outstanding Equity Awards at Fiscal Year-End" table. Amounts reflect the excess of the exercise price of the option and the closing market price of $32.30 as of June 30, 2017, over the exercise price, which reflects the value that would have been recognized upon immediate vesting upon termination without cause or for good reason, death or disability, or due to a change in control.
    (10)
    Amounts reflect termination by Company without cause, or resignation by executive with good reason, in connection with a Change in Control.

    Table of Contents

    For purposes of better understanding the foregoing, certain terms are summarized below:


    Generally, a "change“change in control"control” means (i) any liquidation or the sale of substantially all of the assets of the Company and Ethan Allen Global, Inc. taken as a whole, or (ii) any merger, or (iii) any person becoming a beneficial owner of more than 50% of the then-outstanding voting stock of the Company or Ethan Allen Global, Inc.; or (iv) the Company'sCompany’s incumbent directors cease to constitute at least a majority of the Board of directors of the Company, except in connection with the election or nomination of directors approved by a vote of at least a majority of the directors then comprising the incumbent board of directors of the Company.


    Generally with respect to Mr. Kathwari, "Good Reason"“Good Reason” means and shall be deemed to exist if, without Mr. Kathwari'sKathwari’s consent: (a) he is assigned any duties or responsibilities materially inconsistent with his titles or positions; (b) his duties, responsibilities or effective authority is reduced; (c) he is not appointed to, or is removed from, his offices or positions (including as a director and Chairman of the Board of Directors and of Ethan Allen Global, Inc.; (d) the Company breaches any material term or provision of the 2015 Employment Agreement or fails to have the agreement assumed by a successor; (e) his compensation is decreased; (f) his office location is changed

    39


    more than 50 miles from its location in Danbury, Connecticut; (g) the Company attempts to terminate his employment for cause when cause does not exist; or (h) a change in control occurs (under certain conditions).


    Generally, "cause"“cause” means (a) the conviction of a felony or (b) gross neglect or gross misconduct resulting, in either case, in material economic harm to the Company, a subsidiary and/or affiliate in carrying out his duties that remains uncured.

    Equity Compensation Plan Information

    The amount of compensation which would have been payable to the NEOs upon termination of employment, assuming a June 30, 2021 termination date, and for purposes of the last column, a change in control as of the same date, is listed in the following table sets forth certain information regarding our equity compensation planstable.

    Termination
    With Cause
    Voluntary
    Termination/
    Retirement
    Termination
    Without Cause
    Death or
    Disability
    Change in
    Control (12)
    M. Farooq Kathwari
    Salary (1)$     —$$ 2,300,000$ 1,150,000$ 2,300,000
    Bonus (2)2,000,0002,000,0002,000,000
    Life and disability payments (3)
    93,47846,73946,739
    Restricted stock units (4)
    690,000
    Performance stock units (5)
    3,782,5253,782,5253,782,5254,410,425
    Health and welfare payments (6)
    36,56636,56636,566
    Corey Whitely
    Salary (7)
    $$$$$500,000
    Bonus (8)
    72,299
    Stock options (9)
    Restricted stock units (4)
    165,600
    Performance stock units (10)(11)
    685,064751,106
    Rodney A. Hutton
    Salary (7)
    $$$$$375,000
    Bonus (8)
    49,875
    Stock options (9)
    Restricted stock units (4)
    110,400
    Performance stock units (10)(11)
    285,108236,698
    Daniel M. Grow
    Salary (7)
    $$$$$350,000
    Bonus (8)
    18,957
    Stock options (9)
    Restricted stock units (4)
    82,800
    Performance stock units (10)(11)
    320,902430,019
    Eric D. Koster
    Salary (7)
    $$$$$320,000
    Bonus (8)
    25,000
    Stock options (9)
    Restricted stock units (4)
    20,700
    Performance stock units (10)(11)
    (1)
    Under the 2015 Employment Agreement, if Mr. Kathwari’s employment is terminated other than for cause, voluntary termination, or retirement, he is entitled to salary continuation for a period of 24 months from and after the date of termination, or in the event of death or disability, a period of 12 months. The amount disclosed is the total undiscounted amount of future salary payments.
    (2)
    Under the 2015 Employment Agreement, if Mr. Kathwari’s employment is terminated other than for cause, voluntary termination, or retirement, he would receive a prorated bonus entitlement from the beginning of the fiscal year through the termination date. If Mr. Kathwari’s employment is terminated by the Company without cause or by Mr. Kathwari for good reason (as defined in the 2015 Employment Agreement), he would be entitled to a lump sum payment, within 75 days following termination of employment, equal to the lesser of  (i) the sum of his two (2) largest annual bonuses or (ii) $2.0 million.
    (3)
    Under the 2015 Employment Agreement, if Mr. Kathwari’s employment is terminated without cause, the Company would continue to pay life and disability insurance payments for 24 months from and after the date of termination, or in the event of disability, or change in control, for 12 months. The amount disclosed is the total undiscounted amount of future life and disability insurance payments.
    (4)
    Amounts calculated by multiplying the number of unvested restricted stock outstanding by the closing market price of  $27.60 as of June 30, 2017

    2021. This value reflects what would have been recognized upon immediate vesting upon termination without cause or for good reason, death, or disability, or due to a

      Plan Category

     Number of securities to
    be issued upon exercise
    of outstanding options,
    warrant and rights




     Weighted Average
    exercise price of
    outstanding options,
    warrants and rights




     Number of securities
    remaining available for future
    issuance under equity
    compensation plans
    (excluding securities
    reflected in the first column)






      Equity compensation plans approved by security holders (1)   1,144,350   $17.90   1,263,530  
      Equity compensation plans not approved by security holders (2)   -   -   -  
      Total   1,144,350   $17.90   1,263,530  
    40

    (1)
    Amount includes stock options

    change in control. For additional information on all outstanding under our Option Plan as well as unvested shares of restricted stock and vested stock units which have been provided for under the provisions of the Option Plan. See Note 10 to our Consolidated Financial Statements included under Item 8 of the Annual Report on Form 10-K for the year ended June 30, 2017 for a discussion of share-based compensation.
    (2)
    Asawards, including those that are unvested as of June 30, 2017,2021, see the “Outstanding Equity Awards at Fiscal Year-End” table.
    (5)
    If Mr. Kathwari is terminated due to retirement, death, disability, or without cause, all performance shares would remain outstanding and be subject to vesting and earning in accordance with the 2015 Employment Agreement. If Mr. Kathwari’s employment is terminated due to the event of a change in control, all performance stock unit grants outstanding on the date of termination shall fully vest at the target level. The closing market price on June 30, 2021 of $27.60 was used to value the shares.
    (6)
    If Mr. Kathwari’s employment is terminated due to retirement, without cause, or change in control, he is entitled to health and welfare benefits for a period of 24 months following the termination of his employment. The Company’s estimated cost for medical and dental insurance was used to value the benefit.
    (7)
    The Change in Control Severance Plan for officers of the Company other than Mr. Kathwari provides for a lump sum payment equivalent to 12 months’ salary in the event of a change in control.
    (8)
    The Change in Control Severance Plan for officers of the Company other than Mr. Kathwari provides for a lump sum payment equivalent to the average bonus earned during the past three fiscal years in the event of a change in control.
    (9)
    Amounts calculated by multiplying the number of unvested outstanding stock options by the excess of the exercise price of the option over the closing market price of  $27.60 as of June 30, 2021. This value reflects what would have been recognized upon immediate vesting upon termination without cause or for good reason, death, or disability, or due to a change in control. For additional information on all outstanding stock option awards, including those that are fully vested and unexercised as of June 30, 2021, see the “Outstanding Equity Awards at Fiscal Year-End” table.
    (10)
    If the NEO’s employment is terminated due to death or disability, all performance stock unit grants outstanding on the date of termination shall remain outstanding and be subject to vesting and earning in accordance with the applicable performance stock unit agreement. The closing market price at June 30, 2021 of  $27.60 was used to value the shares.
    (11)
    If the NEO’s employment is terminated due to change in control, all performance stock unit grants outstanding on the date of termination shall fully vest at the target level as of the date of termination. The closing market price at June 30, 2021 of  $27.60 was used to value the shares.
    (12)
    Amounts reflect termination by Company without cause, or resignation by executive with good reason, in connection with a Change in Control.
    PAY RATIO DISCLOSURE
    Pursuant to the requirements of the Dodd-Frank Act, we are required to disclose the ratio of our Chief Executive Officer’s compensation to that of our median employee.
    For fiscal 2021:

    The annual total compensation of our Chief Executive Officer was $3,780,814; and

    The estimated median of the annual total compensation of all employees of our Company, other than our Chief Executive Officer, was $31,253.
    Based on this information, for 2021 the ratio of the annual total compensation of our Chief Executive Officer to the median of the annual compensation of all employees, excluding our Chief Executive Officer, was 121 to 1.
    Since June 20, 2020, the date as of which we last identified our median employee, our Company experienced changes in our employee population, and more specifically, significant headcount growth. Accordingly, we recalculated the median employee for fiscal 2021, pursuant to SEC executive compensation disclosure rules. The SEC rules for identifying the median employee and calculating the pay ratio permit companies to use various methodologies and assumptions, to apply certain exclusions and to make reasonable estimates that reflect their employee population and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio that we have reported. To identify, and to determine the annual total compensation of, the median employee, we used the following methodology and assumptions:

    We used total compensation, which includes base pay, bonus, commission, overtime, 401(k) company match, profit sharing, equity awards, and other compensation, as applicable, for all of our U.S. employees, excluding our CEO, and all of our employees located in Canada, Mexico and Honduras who were employed by us as of June 19, 2021, as our consistently applied compensation measure (“CACM”).

    We annualized compensation for newly hired employees who were hired between June 20, 2020 and June 19, 2021. However, we did not maintainannualize compensation for employees who were rehired or furloughed during such period and did not make full-time equivalent adjustments for any equitypart-time employees.

    We applied the U.S. dollar exchange rate as of June 19, 2021 to the compensation plans that haveelements paid in Canadian, Mexican, and Honduran currency.

    We did not been approved by our stockholders.utilize the de minimis exception for employees in other countries, statistical sampling or other similar methods, or any cost-of-living adjustment in calculating the pay ratio.

    Compensation and Risk

                    Our Compensation Committee regularly conducts risk assessments to determine

    Applying the extent, if any, to which ourCACM, we identified one employee as the median employee. After identifying the median employee, we calculated annual total compensation practices and programs may create incentives for excessive risk taking. Based on these reviews, we believe that for the substantial majority ofmedian employee using the same methodology we used for determining total compensation for our employeesNEOs as disclosed earlier in the incentive for risk taking is low, because their compensation consists largely of fixed cash salary and a cash bonus that has a capped payout. Furthermore, the majority of these employees do not have the authority to take action on our behalf that could expose us to significant business risks.

                    In 2017, theSummary Compensation Committee reviewed the cash and equity incentive programs for senior executives and concluded that certain aspects of the programs reduce the likelihood of excessive risk taking. These aspects include the use of long-term equity awards to create incentives for senior executives to work for long-term growth of the Company, including limited claw-back provisions limiting the incentive to take excessive risk for short-term gains, imposing caps on cash bonuses, requiring compliance with our Code of Business Conduct and Ethics and giving the Compensation Committee the power to reduce discretionary bonuses.

                    For these reasons, we do not believe that our compensation policies and practices create risks that are reasonably likely to have a material adverse effect on us.


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    Table.


    41


    PROPOSAL 3:   RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    PROPOSAL 4:    RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

    The Audit Committee selects and hires our independent registered public accounting firm and has appointedreappointed KPMG LLP, (“KPMG”), as the independent registered public accounting firm of the Company for the fiscal year ending June 30, 2018.2022. In executing its responsibilities, the Audit Committee engages in an annual evaluation of KPMG'sreviews the qualifications, performance, and independence and considers whether continued retention of KPMG as the Company's independentits registered public accounting firm is inannually. In conducting its review, the best interestAudit Committee considered, among other things: information relating to audit effectiveness; the depth and expertise of the Company.audit team, including their demonstrated understanding of the Company’s businesses, significant accounting practices, and system of internal control over financial reporting; the quality and candor of KPMG’s communications with the Audit Committee and management; the accessibility, responsiveness, technical competence, and professionalism of the lead audit partner and other members of the audit team assigned to our account; KPMG’s tenure, institutional knowledge and deep expertise as our independent auditor; the impact to the Company of changing auditors; the appropriateness of KPMG’s fees; and KPMG’s ability to employ professional skepticism, objectivity, integrity, and trustworthiness. The Audit Committee is also involved inreceived from KPMG a formal written statement describing all relationships between the selection of KPMG's lead engagement partner.

                    While KPMG was the independent registered public accounting firm forand the Company forthat might bear on the fiscal year ended June 30, 2017firm’s independence, consistent with the applicable requirements of the Public Company Accounting Oversight Board (United States) (the “PCAOB”). The Audit Committee discussed with KPMG any relationships that may impact the firm’s objectivity and independence and satisfied itself as to the firm’s independence.

    KPMG has been retained as the Company'sCompany’s independent registered public accounting firm continuously since 1989, in1989. In accordance with SEC rules and KPMG policies, the firm'sfirm’s lead engagement partner rotates every five years. In assessing independence, the Audit Committee reviews the fees paid, including those related to non-audit services. The Audit Committee conducted a comprehensive process to evaluate the professional qualifications of KPMG and the primary engagement team that would serve the Company, the quality of the firm’s audit process, and the Company’s ability to achieve a long-term competitive fee structure. As a result of its evaluation of KPMG'sKPMG’s qualifications, performance and independence, the Audit Committee and the Board of Directors believe that the continued retention of KPMG to serve as the Company'sCompany’s independent registered public accounting firm for the year ending June 30, 20182022 is in the best interests of the Company and its stockholders. Representatives of KPMG will be present at the Annual Meeting and will be given the opportunity to make a statement if they so desire. They will also be available to respond to appropriate questions. We are asking you to ratify the Audit Committee'sCommittee’s appointment of KPMG as our independent registered public accounting firm.

    Although ratification is not required by our By-Laws, the Board of Directors is submitting the appointment of KPMG to you for ratification as a matter of good corporate practice, upon the selection and recommendation of the Audit Committee. If the Audit Committee'sCommittee’s appointment is not ratified, itthe Audit Committee will reconsider the appointment, if appropriate. Even if the appointment is ratified, the Audit Committee may, in its discretion, may appoint a different independent registered public accounting firm at any time during the fiscal year if it determines that such a change would be in the best interests of the Company and our stockholders.

    Unless contrary instructions are given, shares represented by proxies solicited by the Board will be voted for the ratification of the selection of KPMG as our independent registered public accounting firm for the year ending June 30, 2018.2022. The affirmative vote of the holders of the majority of the votes present in person or represented by proxy at the Annual Meeting and entitled to vote thereon is required to ratify the appointment of KPMG as the Company'sCompany’s independent registered public accounting firm for the fiscal year ending June 30, 2018.

    2022.

    We expect that representatives of KPMG will attend the Annual Meeting. They will have an opportunity to make a statement, if they wish, and will be available to respond to appropriate questions from stockholders who attend the Annual Meeting.
    The Board Of Directors unanimously recommends a voteFOR the ratification of the
    appointment of KPMG as the Company'sCompany’s independent registered public
    accounting firm for the fiscal year ending June 30, 2018.

    2022.


    42


    Audit Fees
    The following table represents professional fees paid to KPMG for services rendered for the following categories of service.
    20212020
    Audit fees (1)$1,050,000$1,172,792 
    Audit-related fees (2)43,028 
    Tax fees (3)32,0006,583 
    Total fees$1,082,000$1,222,403 
    (1)
    Represents the aggregate fees for professional services rendered for the integrated audit of the Company’s consolidated financial statements and of its internal control over financial reporting, for review of the interim consolidated financial statements included in quarterly reports on Form 10-Q and for statutory audits.
    (2)
    Represents the aggregate fees for assurance and related services other than those included in audit fees above. In fiscal year 2020, these services were for accounting consultations related to the adoption of the new lease accounting standard (Accounting Standards Update 2016-02, Leases).
    (3)
    Represents the aggregate fees incurred in connection with tax compliance, tax advice and tax planning services.
    The Audit Committee has determined that the provision of non-audit services by KPMG is compatible with maintaining KPMG’s independence under SEC and PCAOB rules.
    Audit and Non-Audit Engagement Pre-Approval Policy
    The Audit Committee has established a policy whereby all audit and non-audit engagements proposed to be performed by the independent registered public accounting firm must be specifically approved in advance by the Chairperson of the Audit Committee or, in the Chair’s discretion or in the case that any such engagement is more than $10,000, by the full Audit Committee. All of the services provided by KPMG were pre-approved by the Audit Committee in accordance with this policy.
    AUDIT COMMITTEE REPORT
    AUDIT COMMITTEE REPORT

    The Audit Committee assists the Board of Directors in fulfilling its oversight responsibility relating to the Company'sCompany’s financial statements and the financial reporting process, the system of internal accounting and financial controls, the internal audit function, and the annual independent audit of the Company'sCompany’s financial statements. However, management has the primary responsibility for the financial statements and the reporting process, including the system of internal control.controls. The Company'sCompany’s independent registered public accounting firm, KPMG, has the primary responsibility to independently audit the Company'sCompany’s financial statements and its internal controls in accordance with the auditing standards of the Public Company Accounting Oversight Board.PCAOB. The duties of the Audit Committee include, but are not limited to:


    appointing, replacing, compensating, overseeing, and reviewing the performance of the Company'sCompany’s independent registered public accounting firm;


    assessing the scope and structure of the Company'sCompany’s internal audit function;


    reviewing the scope of audits to be conducted by the independent registered public accounting firm, as well as the results thereof;


    pre-approving audit and permitted non-auditnon-audit- services provided to the Company by the independent registered public accounting firm; and


    reviewing with management and the independent registered public accountantsaccounting firm the Company'sCompany’s quarterly financial filings prior to the filing of its Quarterly Reports on Form 10-Q and the Company'sannual audited financial statements prior to the filing of its Annual Report on Form 10-K.

    In accordance with SEC regulations, the Audit Committee has approved an Audit Committee Chartercharter describing the responsibilities of the Audit Committee. The Board of Directors has concluded that each member of the Audit Committee is independent within the meaning of the listing standards of theSEC and NYSE rules and the SEC,regulations, including the additional independence requirements applicable to audit committee members. See "Corporate Governance". The Board of Directors has determined that all Audit Committee members, as


    Table of Contents

    required by the SEC regulations and NYSE rules and regulations, are financially literate with accounting or related finance management expertise, as interpreted by the Board of Directors.expertise. The Board of Directors has determined that threeeach of the current members of the Audit Committee arequalifies as an "audit“audit committee financial expert"expert” as defined under Item 407(d)(5)(ii) of SEC Regulation S-K and independent as contemplated by Rule 10A-3 of the Exchange Act.

    S-K.

    In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed, with management and KPMG, the audited financial statements contained within the Annual Report on Form 10-K, including a discussion of the quality, not

    43


    just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures contained in those financial statements. In addition, in compliance with the Sarbanes-Oxley Act of 2002, the Audit Committee reviewed with management and KPMG, the Company'sCompany’s independent registered public accounting firm, the results of management'smanagement’s assessment of the effectiveness of the Company'sCompany’s system of internal control over financial reporting as of June 30, 20172021 and KPMG'sKPMG’s audit of internal control over financial reporting as of June 30, 2017.

                    The Audit Committee reviewed with KPMG, who is responsible for expressing an opinion on the conformity of those audited financial statements with U.S. generally accepted accounting principles, their judgment(s) as to the quality, not just the acceptability, of the Company's accounting principles. 2021.

    The Audit Committee also reviewed with KPMG such other matters as are required to be discussed under applicable auditing standards of the Public Company Accounting Oversight Board (United States) (the "PCAOB").PCAOB. The Audit Committee has received and reviewed with KPMG the written disclosures and letter regarding their independence required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm'sfirm’s communications with the Audit Committee concerning independence. The Audit Committee also discussed with KPMG theirits independence from management and the Company and considered whether the non-audit services provided by KPMG to the Company are compatible with maintaining KPMG'sKPMG’s independence.

                    The Company also has an internal audit department that reports to the Audit Committee. The Audit Committee reviews and approves the internal audit plan once a year and receives updates of internal audit results throughout the year. The Audit Committee discussed with the Company's internal auditors and KPMG the overall scope and plans for their respective audits. The Audit Committee met with the internal auditors and KPMG to discuss the results of their examinations, their evaluations of the Company's internal controls, and the overall quality of the Company's financial reporting.

                    The Audit Committee discussed with the Company's internal auditors and KPMG the overall scope and plans for their respective audits. The Audit Committee met independently with the internal auditors and KPMG, with and without management present, to discuss the results of their examinations, their evaluations of the Company's system of internal control and the overall quality of the Company's financial reporting practices, which included, but were not limited to, the review of the quarterly Form 10-Q filings and annual Form 10-K filing.

    In reliance on the reviews and discussions referred to above, the Audit Committee approved the audited financial statements for the year ended June 30, 20172021 be included in the Company'sCompany’s Annual Report on Form 10-K for the fiscal year then ended. The Audit Committee has selected KPMG LLP as ourthe Company’s independent registered public accounting firm for the fiscal year ending June 30, 2022 and has asked the stockholders to ratify the selection.

    DOMENICK J. ESPOSITO (CHAIR)
    JAMES B. CARLSON
    MARY GARRETT
    DR. JAMES W. SCHMOTTER
    DOMENICK J. ESPOSITO, CHAIR
    JAMES B. CARLSON
    MARY GARRETT
    JAMES W. SCHMOTTER

    The Report of the Audit Committee does not constitute soliciting material and shall not be deemed to be filed or incorporated by reference into any other Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates the Report of the Audit Committee by reference therein.


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    Audit Fees


    44


    INSTRUCTIONS FOR VIRTUAL MEETING PARTICIPATION
    For the health and safety of our officers, directors and stockholders, our Annual Meeting will be conducted as a virtual-only meeting.
    To participate in the Annual Meeting, visit www.virtualshareholdermeeting.com/ETH2021 and enter the 16-digit control number included on your Notice, on your proxy card, or on the instructions that accompanied your proxy materials. If you enter the meeting as a guest, you will not be able to vote your shares or submit questions during the Annual Meeting. You may log into the Annual Meeting platform beginning at 9:45 A.M. Eastern Time on November 30, 2021. The following table representsAnnual Meeting will begin promptly at 10:00 A.M. Eastern Time on November 30, 2021.
    The virtual meeting platform is fully supported across browsers and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a summarystrong Internet connection wherever they intend to participate in the Annual Meeting. Participants should also give themselves plenty of professional fees paidtime to KPMG for services renderedlog in connection with: (i)and ensure that they can hear streaming audio prior to the audit for the Company's annual financial statements for the fiscal years ended June 30, 2017 and 2016 and (ii) other matters.

         
    2017

     
    2016

      Audit fees (1)    1,420,568    1,350,000  
    ​   Audit-related fees (2)    9,500 
      Tax fees (3)    163,212    12,884  
    ​   All other fees (4)     
      Total fees    1,583,780    1,372,384  
    (1)
    In the above table, in accordance with the SEC's definitions and rules, "audit fees" are fees that the Company paid to KPMG for the auditstart of the Company's annual financial statements included inAnnual Meeting.
    If you wish to submit a question, you may do so during the Form 10-K and review of the Company's interim financial statements included in the Forms 10-Q; for the attestation of management's report on the effectiveness of the Company's internal control over financial reporting, as required by Section 404 of SOX; and for services that are normally provided by the auditors in connection with statutory and regulatory filings or engagements.Annual Meeting at
    (2)www.virtualshareholdermeeting.com/ETH2021
    "Audit-related fees" includes fees for services related. Questions pertinent to the performance of the annual audit of the Retirement Plan and for services related to other filings with the SEC.
    (3)
    "Tax fees" consist of fees incurred in connection with tax compliance, tax advice and tax planning services.
    (4)
    "All other fees" represents fees for products and services rendered other than the services included in notes (1)-(3) above.

                    The Audit Committee has determined that the provision of tax and other services by the independent registered public accounting firm is compatible with maintaining their independence.

    Audit and Non-Audit Engagement Pre-Approval Policy

                    To help assure the independence of the Company's independent registered public accounting firm, the Audit Committee has established a policy whereby all audit and non-audit engagements proposed to be performed by the independent registered public accounting firm must be approved in advance by the Chair of the Audit Committee or, in the Chair's discretion or in the case that any such engagement is more than $10,000, the entire Audit Committee. All of the service provided to us by KPMG for which we paid Audit Fees, Audit-Related Fees, Tax Fees and All Other Fees, as shown in the table above, were approved by the Audit Committee in accordance with this pre-approval policy.

    OTHER MATTERS

    Proxy Solicitation Expense

                    The expense of the proxy solicitationAnnual Meeting matters will be paid byrecognized and answered during the Company. In additionAnnual Meeting, subject to the solicitation of proxies by use of the mail, solicitation also maytime constraints. Questions will be made by telephone, telegraph or personal interview by directors, officers and regular employees of the Company, none of whom will receive additional compensation for any such solicitation. The Company has engaged Georgeson LLC ("Georgeson") located at 1290 Avenue of the Americas, New York, New York 10104, a professional proxy solicitation firm, to provide customary solicitation services for a fee of $7,000 plus out-of-pocket expenses. The Company does not anticipate that the costs and expenses incurred in connection with this proxy solicitation will exceed those normally expended for a proxy solicitation for those matters to be voted onread at the Annual Meeting by one of the Company’s representatives. Questions and answers may be grouped by topic and substantially similar questions may be answered once. To promote fairness and efficient use of resources, only one question may be asked per stockholder. Questions will be limited to topics relevant to Company’s business. For example, personal matters are not appropriate topics. In addition, statements of advocacy that are not questions or do not relate to the Company’s business will not be addressed. Further detailed guidelines regarding submitting written questions during the Annual Meeting will be made available at www.virtualshareholdermeeting.com/ETH2021. Appropriate questions pertinent to Annual Meeting matters that cannot be answered during the meeting due to time constraints will be posted and answered online at https://ir.ethanallen.com and be available as soon as practicable after the Annual Meeting.

    If you encounter any technical difficulties accessing the virtual meeting platform during the check-in process or during the Annual Meeting, please call the technical support number that will be posted on the virtual meeting platform log-in page.
    QUESTIONS AND ANSWERS ABOUT OUR ANNUAL MEETING AND VOTING

    Stockholder Proposals

    Q:What is the purpose of Annual Meeting?
    A:
    This Proxy Statement and the accompanying proxy or voting instruction card is furnished in connection with the solicitation by the Board, of proxies for 2018use at the Annual Meeting to be held on Tuesday, November 30, 2021 at 10:00 A.M. Eastern Time, or any adjournment thereof. The Notice, this Proxy Statement and our 2021 Annual Report are first being made available to stockholders on October 20, 2021.
    We will hold the Annual Meeting to enable stockholders to vote on the following matters:
    Proposal 1.
    to elect six director nominees identified in this Proxy Statement to serve until the 2022 Annual Meeting of Stockholders;
    Proposal 2.
    to approve, by a non-binding advisory vote, Named Executive Officer compensation as further described in this Proxy Statement;
    Proposal 3.
    to ratify the appointment of KPMG LLP as our independent registered public accounting firm for the 2022 fiscal year; and
    to transact such other business as may properly come before the Annual Meeting.
    Stockholders will be asked to vote for nominees for all director seats on the Board as of the Annual Meeting. The term of office for directors elected at the Annual Meeting will continue until the 2022 Annual Meeting of Stockholders

    and until their respective successors are duly elected and qualified or until their earlier removal, resignation, or death. The nominees for election are: M. Farooq Kathwari, Dr. John Clark, John J. Dooner, Jr., Cynthia Ekberg Tsai, David M. Sable and Tara I. Stacom.
    Q:How can I attend the Annual Meeting?
    A:The Annual Meeting will be conducted as a virtual-only meeting via the Internet. Only stockholders and certain other permitted attendees may attend the live webcast of our Annual Meeting. Stockholders may attend the virtual meeting and electronically

                    Stockholder proposals intended to be included in our proxy statement and voted on at our 2018 Annual Meeting of Stockholders must be received at our corporate headquarters at PO BOX 1966, Danbury, CT 06813-1966, Attention: Corporate Secretary, on or before June 4, 2018. Applicable SEC rules and regulations govern the submission of shareholder proposals and our consideration of them for inclusion in the 2018 notice of Annual Meeting of Stockholders and the 2018 proxy statement.

                    Pursuant to our by-laws and applicable SEC rules and regulations, in order for any business not included in the proxy statement for the 2018 Annual Meeting of Stockholders to be brought before the meeting by a stockholder entitled to vote at the meeting, the stockholder must give timely written notice of that business to our Corporate Secretary. To be timely, a stockholder's notice to the Corporate Secretary must be delivered to or mailed and received at the principal executive offices of the Company not earlier than July 18, 2018 (120 days prior to November 15, 2018, the one year anniversary of the Annual Meeting), nor later than August 17, 2018 (90 days prior to November 15, 2018); provided, however that in the event that less than one hundred (100) days' notice or prior Public Announcement of the date of the annual meeting is given or made to stockholders, the Notice must be received by the Company's Secretary by not later


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    than the close of business on the tenth (10th) day following the day on which such notice of the date the annual meeting was mailed. The notice must contain the information required by our by-laws. The foregoing by-law provisions do not affect a stockholder's ability to request inclusion of a proposal in our proxy statement within the procedures and deadlines set forth in Rule 14a-8 of the SEC's proxy rules and referred to in the paragraph above. A copy of our by-laws is available upon request to: Ethan Allen Interiors Inc., PO BOX 1966, Danbury, CT 06813,



    submit questions during the meeting by visiting www.virtualshareholdermeeting.com/ETH2021. Stockholders will need the 16-digit control number included in the Notice, on the proxy card, or in the instructions that accompanied the proxy materials to enter the Annual Meeting. If you enter the meeting as a guest, you will not be able to vote your shares or submit questions during the Annual Meeting. You may log into the virtual meeting platform beginning at 9:45 A.M. Eastern Time on November 30, 2021. The Annual Meeting will begin promptly at 10:00 A.M. Eastern Time on November 30, 2021. If you encounter any technical difficulties accessing the virtual meeting platform during the check-in process or during the meeting, please call the technical support number that will be posted on the virtual stockholder meeting site.
    Q:What is a proxy?
    A:
    A proxy is a document by which you authorize someone else to vote for you at a stockholder meeting in the way that you want to vote. That document is called a “proxy” or, if your shares are held in “street name” ​(i.e., through a bank, broker, or other nominee) and you give instructions to the record holder of your shares, is called a “voting instruction card.” You also may choose to abstain from voting.
    If your shares are held in street name, to be admitted to the Annual Meeting, you may be required to obtain a legal proxy reflecting the number of shares of our Common Stock, par value $0.01 per share (“Common Stock”) you held as of the Record Date, and you must follow the instructions you receive from your broker, bank, or nominee for further instructions as well as those you receive via email after your successful registration.
    Q:How are proxies being solicited and who pays the related expenses?
    A:
    Proxies are being solicited principally by mail, by telephone and through the Internet. In addition to sending you these materials, some of our directors and officers, as well as management employees, may contact you by telephone, mail, email or in person. You may also be solicited by means of news releases issued by the Company, postings on our website, www.ethanallen.com and print advertisements. None of our officers or employees will receive any extra compensation for soliciting you. We have retained Georgeson LLC (“Georgeson”) located at 1290 Avenue of the Americas, New York, New York 10104, a professional proxy solicitation firm, to provide customary solicitation services for a fee of approximately $8,000 plus out of pocket expenses. We will pay the expenses in connection with our solicitation of proxies.
    Q:Who is entitled to vote?
    A:Only record holders of shares of our Common Stock at the close of business on the Record Date for the Annual Meeting are entitled to vote at the Annual Meeting. The Board has fixed the close of business on October 11, 2021 as the Record Date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting. As of the Record Date, the Company had 25,260,036 shares of Common Stock outstanding. The holders of Common Stock as of the Record Date are entitled to notice of, and to vote at, the Annual Meeting. Each share of Common Stock is entitled to one vote for each director nominee and one vote for each other matter to be voted on.
    Q:What is the difference between being a “record holder” and holding shares in “street name”?
    A:A record holder holds shares in their or its name. Shares held in street name are shares that are held in the name of a bank, broker, or other nominee on behalf of the person or entity.
    Q:How can I access the proxy materials on the Internet?
    A:
    In accordance with the rules of the SEC, we are using the Internet as the primary means of furnishing proxy materials to stockholders. Accordingly, most stockholders will not receive paper copies of our proxy materials. We instead sent stockholders a Notice of Internet Availability of Proxy Materials with instructions for accessing the proxy materials via the Internet and voting via the Internet or by telephone. The Notice was mailed on October 20, 2021. The Notice also provides information on how stockholders may obtain paper copies of our proxy materials if they so choose.
    The Notice provides you with instructions regarding how to:

    view the proxy materials for the Annual Meeting on the Internet and execute a proxy; and

    instruct us to send future proxy materials to you in printed form or electronically by e-mail.
    Choosing to receive future proxy materials by e-mail will save us the cost of printing and mailing documents to you and will reduce the impact of our annual meetings on the environment. If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting website. Your election to receive proxy materials by e-mail will remain in effect until you terminate it.

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    Q:How do I receive a copy of the Annual Report?
    A:
    The 2021 Annual Report is being mailed with this Proxy Statement to those stockholders that received a copy of the proxy materials in the mail. For those stockholders that received the Notice, this Proxy Statement and our 2021 Annual Report are available at our website at https://ir.ethanallen.com. Additionally, and in accordance with SEC rules, you may access our proxy statement at www.proxyvote.com. Upon written request by any stockholder to the Office of the Corporate Secretary, Ethan Allen Interiors Inc., 25 Lake Avenue Ext., Danbury, Connecticut 06811-5286, we will furnish, without charge, a copy of the 2021 Annual Report, including the financial statements and the related footnotes. The Company’s copying costs will be charged if exhibits to the 2021 Annual Report on Form 10-K are requested. You can also obtain copies of our Form 10-K and any other reports we file with the SEC through the SEC’s website at www.sec.gov or on our website at https://ir.ethanallen.com.
    Q:How do I vote?
    A:
    If you are a stockholder, you can vote your shares in any of the following ways:

    By Internet—You can submit a proxy over the Internet by logging on to www.proxyvote.com, entering your control number located on the proxy or voting instruction card and submitting a proxy by following the on-screen prompts. If you are a beneficial owner, and if the brokerage firm, bank, or other nominee that holds your shares offers Internet voting, you will receive instructions from the brokerage firm, bank, or other similar organization that you must follow in order to submit your proxy over the Internet.

    By telephone—You can submit a proxy by telephone by calling the toll-free number 1-800-690-6903, entering your control number located on the proxy or voting instruction card and following the prompts. If you are a beneficial owner and if the brokerage firm, bank, or other similar organization that holds your shares offers telephone voting, you will receive instructions from the brokerage firm, bank, or other similar organization that you must follow in order to submit a proxy by telephone.

    By mail—You can submit a proxy by completing, dating, signing, and returning your proxy in the postage paid envelope provided. You should sign your name exactly as it appears on the proxy. If you are signing in a representative capacity (for example, as a guardian, executor, trustee, custodian, attorney, or officer of a corporation), please indicate your name and title or capacity. If you are a beneficial owner, you have the right to direct your brokerage firm, bank, or other similar organization on how to vote your shares, and the brokerage firm, bank or other similar organization is required to vote your shares in accordance with your instructions. To provide instructions to your brokerage firm, bank, or other similar organization by mail, please complete, date, sign and return your voting instruction card in the postage paid envelope provided by your brokerage firm, bank, or other similar organization.

    Virtually—You may vote over the Internet during the Annual Meeting at www.virtualshareholdermeeting.com/ETH2021 and using your 16-digit control number (included on the Notice, on your proxy card or in the instructions that accompanied your proxy materials).
    Your vote is important. The Board urges you to submit a proxy for your shares as soon as possible by following the instructions provided on the enclosed proxy or voting instruction card you receive from your brokerage firm, bank, or other similar organization. Internet and telephone submission of proxies is available 24 hours a day, and, if you use one of those methods, you do not need to return a proxy or voting instruction card. Unless you are planning to vote virtually at the Annual Meeting, your proxy must be received by 11:59 p.m., Eastern Time, on November 29, 2021. Even if you submit your proxy or voting instructions by one of the methods listed above, you still may vote virtually at the Annual Meeting if you are the record holder of your shares. If you are a beneficial owner, you must obtain a “legal proxy” from the record holder in order to vote your shares at the Annual Meeting. Your vote at the Annual Meeting will constitute a revocation of your earlier proxy or voting instructions.
    Q:What happens if I do not provide instructions on how to vote or if other matters are presented for determination at the Annual Meeting?
    A:
    If you vote by proxy, your shares will be voted at the Annual Meeting in the manner you indicate. If your shares are held in your name (i.e., not in street name through a bank, broker, or other nominee) and if you sign your proxy card, but do not specify how you want your shares to be voted, the persons named as proxy holders on the proxy card will vote as the Board recommends.
    As of the date of this Proxy Statement, we do not know of any other matters that may be presented for action at the meeting. Should any other business properly come before the meeting, the proxy holders will vote as the Board recommends or, if no recommendation is given, in accordance with their best judgment.

    47


    Q:How can I vote my shares of Common Stock that I own through the Ethan Allen Retirement Plan for employees?
    A:If you own your shares through the Ethan Allen Retirement Plan, you can direct the trustee to vote the shares held in your account in accordance with your instructions by returning the voting instruction card for your account or by registering your instructions over the Internet or by telephone as directed on the voting instruction card for your account. If you wish to instruct the trustee on the voting of shares held in your account, you should submit those instructions no later than 7:00 A.M., Eastern Time, on November 28, 2021. The trustee will vote shares for which no voting instructions were received on or before that date as directed by the plan fiduciary.
    Q:Can I change my vote after I have voted?
    A:Prior to the Annual Meeting, a later vote by any means will cancel any earlier vote. For example, if you vote by telephone and later vote differently on the Internet, the Internet vote will count, and the telephone vote will be canceled. If you wish to change your vote by mail, you should contact our Corporate Secretary or proxy solicitor at the addresses set forth below and request a new proxy or voting instruction card. The last vote received before the Annual Meeting will be the one counted. You also may change your vote by voting virtually over the internet at the Annual Meeting.
    Corporate Secretary
    Eric D. Koster
    25 Lake Avenue Ext.
    Danbury, CT 06811-5286
    Proxy Solicitor
    Georgeson LLC
    1290 Avenue of the Americans, 9th Floor
    New York, NY 10104
    Q:What does it mean if I get more than one proxy or voting instruction card?
    A:If you get more than one proxy or voting instruction card, it means that your shares are registered in more than one way. Sign and return all proxy or voting instruction cards or vote each group of shares by mail, telephone or over the Internet to ensure that all your shares are voted.
    Q:Who are the proxyholders named by the Board for the Annual Meeting?
    A:Eric D. Koster and Corey Whitely were selected by the Board to serve as proxyholders for the Annual Meeting of stockholders voting on proxy or voting instruction cards. Each properly executed and returned proxy or voting instruction card will be voted by the proxyholders in accordance with the directions indicated thereon or, if no directions are indicated, in accordance with the recommendations of the Board. In voting by proxy with regard to the election of directors, stockholders may vote in favor of all nominees, vote in favor of one or more specific nominee(s), withhold their vote as to all nominees or withhold their vote as to one or more specific nominee(s).
    Q:Will my shares be voted if I do not provide my proxy?
    A:
    If you hold your shares directly in your own name, your shares will not be voted if you do not vote them or provide a proxy.
    If your shares are held in the street name, under the NYSE rules, your broker may vote your shares on “routine” matters even if you do not provide a proxy. The only routine matter to be voted on at the Annual Meeting is the ratification of the appointment of our independent registered public accounting firm for fiscal 2022. If a brokerage firm votes your shares on a routine matter in accordance with these rules, your shares will count as present at the Annual Meeting for purposes of establishing a quorum and will count as “FOR” votes or “AGAINST” votes, as the case may be, depending on how the broker votes. Your broker does not have discretionary authority to vote on “non-routine” matters without instructions from you, in which case a “broker non-vote” will occur and your shares will not be voted on these matters.
    Q:How many shares must be present to hold the Annual Meeting?
    A:In order for the Annual Meeting to be duly convened, one-third of the outstanding shares of Common Stock as of the Record Date must be present in person or represented by proxy at the Annual Meeting. This is referred to as a quorum. Abstentions, withheld votes and shares held of record by a brokerage firm, bank or similar organization, or its nominee, pursuant to a signed proxy or voting instruction card that are voted on any matter are included in determining the number of shares present. If a brokerage firm signs and returns a proxy on your behalf that does not contain voting instructions, your shares will count as present at the Annual Meeting for quorum purposes.

    48


    Q:What vote is needed to elect directors?
    A:
    At the Annual Meeting, directors will be elected by a majority of the votes cast. This means that the number of votes cast “FOR” a director nominee’s election must exceed 50% of the number of votes cast with respect to the election of that nominee in order for the nominee to be elected. Our By-Laws provide that the Board shall not nominate for election as director any nominee who has not agreed to offer, promptly following the annual meeting at which he or she is elected as director, an irrevocable resignation that will be effective upon (a) the failure to receive the required number of votes for reelection at the next annual meeting of stockholders at which he or she faces reelection, and (b) acceptance of such offer to resign by the Board. If a nominee fails to receive the required number of votes for reelection, the Board (excluding the director in question) shall, within 90 days after certification of the election results, decide whether to accept such incumbent director’s offer to resign through a process overseen by the Corporate Governance, Nominations and Sustainability Committee (and excluding the director in question from all Board and committee deliberations). The Board, in making its determination, may consider any factor it deems relevant.
    If you do not instruct your broker how to vote with respect to this item, your broker may not vote with respect to this proposal. For your vote to be counted, you must submit your voting instructions to your broker or custodian. Abstentions and broker non-votes will not be counted as votes cast and therefore will have NO EFFECT in determining whether the required majority vote has been attained.
    Q:What vote is needed to approve the other proposals?
    A:
    At the Annual Meeting, the affirmative vote of a majority of the shares present and entitled to vote thereon is required to approve Proposal 2: the approval, by non-binding advisory vote, of executive compensation of the Company’s Named Executive Officers, and Proposal 3: the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the 2022 fiscal year.
    If you do not instruct your broker how to vote with respect to Proposals 2, your broker may not vote with respect to the proposal. For your vote to be counted, you must submit your voting instructions to your broker or custodian.

    Proposal 2—Abstentions will be counted as present for the purposes of a vote on Proposal 2, and therefore will count as a vote AGAINST Proposal 2. Broker non-votes will not be counted as present and will therefore have NO EFFECT on Proposal 2.

    Proposal 3—Abstentions will be counted as present for the purposes of a vote on Proposal 3, and therefore will count as a vote AGAINST Proposal 3. There will be no broker non-votes on Proposal 3, as any uninstructed shares may be voted in the broker’s discretion.
    Approval of Proposal 2 regarding compensation of our Named Executive Officers are advisory and will not be binding on the Board or the Company. However, the Board will review the voting results of the proposal and take them into consideration when making future decisions regarding executive compensation.
    Q:How will the votes be tabulated?
    A:The inspectors of election appointed for the Annual Meeting will tabulate the votes cast at the Annual Meeting and will determine whether a quorum is present.
    Q:How do I revoke a proxy?
    A:
    Each stockholder giving a proxy has the power to revoke it at any time before the shares it represents are voted. Revocation of a proxy is effective upon receipt of a later vote by telephone, Internet, receipt by the Corporate Secretary or inspectors of election of either an instrument revoking the proxy or a duly executed proxy card bearing a later date. Additionally, a stockholder may change or revoke a previously executed proxy by voting virtually over the Internet at the Annual Meeting.
    If you hold your shares registered in your name, you may revoke your proxy by submitting a revised one at any time before the vote to which the proxy relates. You may also revoke it by submitting a ballot at the Annual Meeting.
    If your shares are held in street name, there are special procedures that you must follow to revoke a proxy submitted via the Internet or by telephone or by marking, signing, and returning a vote instruction card.

    Revoking your vote and submitting a new vote before the deadline of 11:59 p.m., Eastern Time, on November 29, 2021. You may revoke your proxy at any time and by any method before the deadline.

    Revoking your vote and submitting a new vote after the deadline of 11:59 p.m., Eastern Time, on November 29, 2021. You must contact your brokerage firm, bank or other similar organization and follow its requirements. We

    49


    cannot assure you that you will be able to revoke your proxy and vote your shares by any of the methods described above.

    Revoking your vote and submitting a new vote by ballot at the Annual Meeting. You must contact your brokerage firm, bank or other similar organization and follow its requirements. We cannot assure you that you will be able to revoke your proxy or attend and vote at the Annual Meeting.
    If you receive more than one proxy or voting instruction card on or about the same time, it generally means you hold shares registered in more than one account. In order to vote all of your shares, please sign and return each proxy or voting instruction card or, if you vote via the Internet or telephone, vote once for each proxy or voting instruction card you receive.
    Q:Where can I find the results of the Annual Meeting?
    A:We intend to announce preliminary voting results at the Annual Meeting and announce final results in a Current Report on Form 8-K that we will file with the SEC within four business days of the Annual Meeting.
    Q:What is householding?
    A:“Householding” allows companies and intermediaries (e.g., banks, brokers, or other nominees) to satisfy the delivery requirements for proxy statements and annual reports by delivering only one package of stockholder proxy materials to any household at which two or more stockholders reside. We rely on “householding” to permit us to deliver only one set of proxy materials to multiple stockholders of record who share an address unless we receive contrary instructions from any stockholder at that address. This program eliminates duplicate mailings, reduces printing and postage costs, and uses fewer natural resources. Each stockholder retains a separate right to vote on all matters presented at the Annual Meeting. Once you have received notice from your bank, broker, or other nominee us that they or we will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If you receive a single set of proxy materials as a result of householding and, at any time, you wish to receive a separate set of proxy materials, free of charge, or if you wish to opt out of householding for future mailings, please mail your request to Ethan Allen Interiors Inc., 25 Lake Avenue Ext., Danbury CT 06811-5286, attention: Corporate Secretary, or call us at (203) 743-8000.
    Q:How do I submit a proposal or nominate a director candidate for the 2022 Annual Meeting of Stockholders?
    A:
    Proposals under SEC Rule 14a-8. Stockholder proposals intended to be included in our proxy statement and voted on at our 2022 Annual Meeting of Stockholders under SEC Rule 14a-8 must be received at our corporate headquarters at 25 Lake Avenue Ext., Danbury, CT 06811-5286, Attention: Corporate Secretary, on or before June 22, 2022 (120 days before the anniversary date of the first mailing of the Company’s proxy statement for the Annual Meeting). Applicable SEC rules and regulations govern the submission of stockholder proposals and our consideration of them for inclusion in the 2022 notice of Annual Meeting of Stockholders and the 2022 proxy statement.
    Proposals of business or director nominations not included in proxy statement. Pursuant to our By-Laws and applicable SEC rules and regulations, in order for any business or director nomination not included in the proxy statement for the 2022 Annual Meeting of Stockholders to be brought before the meeting by a stockholder entitled to vote at the meeting, the stockholder must give timely written notice of that business to our Corporate Secretary. To be timely, a stockholder’s notice to the Corporate Secretary must be delivered to or mailed and received at the principal executive offices of the Company not earlier than August 2, 2022 (120 days prior to November 30, 2022, the one-year anniversary of the Annual Meeting), nor later than September 1, 2022 (90 days prior to November 30, 2022); provided, however that in the event that less than 100 days’ notice or prior Public Announcement (as defined under Section 9.2 of the By-Laws) of the date of the annual meeting is given or made to stockholders, the notice of business must be received by the Company’s Secretary by not later than the close of business on the 10th day following the day on which such notice of the date the annual meeting was mailed or Public Announcement of the date of the annual meeting was made, whichever first occurs. The notice must contain the information required by our By-Laws. The foregoing By-law provisions do not affect a stockholder’s ability to request inclusion of a proposal in our proxy statement within the procedures and deadlines set forth in SEC Rule 14a-8 and referred to in the paragraph above. A copy of our By-Laws is available upon request to: Ethan Allen Interiors Inc., 25 Lake Avenue Ext., Danbury, CT 06811-5286, Attention: Corporate Secretary. The officer presiding at the meeting may exclude matters that are not properly presented in accordance with these requirements.
    Director nominations via proxy access. Our By-Laws also provide that under certain circumstances, a stockholder or group of stockholders may include director candidates that they have nominated in our proxy statement for an annual meeting of stockholders. These proxy access provisions of our By-Laws provide, among other things, that a stockholder or group of up to 20 stockholders seeking to include their director candidates in our proxy statement

    50


    must own 3% or more of the Company’s outstanding common stock continuously for at least the previous three years. The number of stockholder-nominated candidates appearing in any proxy statement cannot exceed 20% of the number of directors then serving on the Board but may be at least two directors. If 20% is not a whole number, the maximum number of stockholder-nominated candidates would be the closest whole number below 20%. Based on the current Board size, the maximum number of proxy access candidates that we would be required to include in our proxy statement is two. Nominees submitted under the proxy access procedures that are later withdrawn or are included in the proxy materials as Board-nominated candidates will be counted in determining whether the 20% maximum has been reached. If the number of stockholder-nominated candidates exceeds 20%, each nominating stockholder or group of stockholders may select one nominee for inclusion in the proxy materials until the maximum number is reached. The order of selection would be determined by the amount (largest to smallest) of shares of Ethan Allen Interiors Inc. Common Stock held by each nominating stockholder or group of stockholders. Requests to include stockholder-nominated candidates in our proxy materials for next year’s annual meeting of stockholders must be received by our Corporate Secretary not less than 120 days and not more than 150 days prior to the anniversary of the preceding year’s annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the annual meeting was mailed or such Public Announcement of the date of the annual meeting was made, whichever first occurs. For our 2022 Annual Meeting of Stockholders, notice must be received by not earlier than July 3, 2022, and not later than August 2, 2022. The nominating stockholder or group of stockholders also must deliver the information required by our By-Laws, and each nominee must meet the qualifications required by our By-Laws.
    BY ORDER OF THE BOARD OF DIRECTORS
    [MISSING IMAGE: sg_erickoster-bw.jpg]
    Eric D. Koster
    Corporate Secretary
    October 20, 2021

    51


    APPENDIX A—Reconciliation of GAAP and Non-GAAP Financial Measures
    To supplement the financial measures prepared in accordance with U.S. GAAP, the Company uses non-GAAP financial measures including adjusted gross profit and margin, adjusted operating income, adjusted net income, adjusted diluted EPS, and adjusted return on equity. The reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with these requirements.

    Availability of Annual Report

                    The 2017 Annual Report is being mailed with this proxy statement to those stockholders that received a copy ofGAAP are shown in tables below. These non-GAAP measures are derived from the proxy materials in the mail. For those stockholders that received the Notice of Internet Availability of Proxy Materials, this proxy statement and our 2017 Annual Reportconsolidated financial statements but are available at our website atethanallen.com/investors. Additionally, andnot presented in accordance with SEC rules, you may access our proxy statement atwww.proxyvote.com.Upon written request by any stockholdergenerally accepted accounting principles in the U.S., or U.S. GAAP. The Company believes these non-GAAP measures provide a meaningful comparison of its results to Office of the Corporate Secretary, Ethan Allen Interiors Inc., PO BOX 1966, Danbury, Connecticut 06813-1966, we will furnish, without charge,others in its industry and its prior year results. Investors should consider these non-GAAP financial measures in addition to, and not as a copy of the 2017 Annual Report, including thesubstitute for, financial statements and the related footnotes. The Company's copying costs will be charged if exhibits to the 2017 Annual Report on Form 10-K are requested. You can also obtain copies of our Form 10-K and any other reports we file with the SEC through the SEC's website atwww.sec.gov or on our website atwww.ethanallen.com/investors.

    Other Business

                    As of the date of this proxy statement, we do not know of any other matters that may be presented for action at the meeting. Should any other business properly come before the meeting, the persons named on the enclosed proxy will, as stated therein, have discretionary authority to vote the shares represented by such proxyperformance measures prepared in accordance with their best judgment.

    U.S. GAAP. Moreover, these non-GAAP financial measures have limitations in that they do not reflect all the items associated with the operations of the business as determined in accordance with U.S. GAAP. Other companies may calculate similarly titled non-GAAP financial measures differently than the Company does, limiting the usefulness of those measures for comparative purposes. Despite the limitations of these non-GAAP financial measures, the Company believes these adjusted financial measures and the information they provide are useful in viewing its performance using the same tools that management uses to assess progress in achieving its goals. Adjusted measures may also facilitate comparisons to historical performance.
    The following tables below show a reconciliation of non-GAAP financial measures used in this Proxy Statement to the most directly comparable GAAP financial measures (in millions, except per share data).
    Fiscal years ended June 30,
    202120202019
    Adjusted Gross Profit / Gross Margin
    GAAP Gross profit$393.1$323.1$409.5
    Adjustments (pre-tax) (1)
    0.65.42.0
    Adjusted Gross profit$393.7$328.6$411.5
    Adjusted Gross margin57.5%55.7%55.1%
    Adjusted Operating Income / Operating Margin
    GAAP Operating income$77.3$14.6$33.9
    Adjustments (pre-tax) (1)
    3.12.421.1
    Adjusted Operating income$80.3$17.1$55.1
    Adjusted Operating margin11.7%2.9%7.4%
    Adjusted Return on Equity
    GAAP Net income$60.0$8.9$25.7
    Adjustments, net of tax (1)
    0.14.615.9
    Adjusted Net income$60.1$13.5$41.6
    Adjusted Diluted EPS$2.37$0.52$1.56
    Total Shareholders’ Equity beginning of fiscal year$328.1$363.9$383.9
    Total Shareholders’ Equity end of fiscal year$351.4$328.1$363.9
    Average Shareholders’ Equity$339.7$346.0$373.9
    Adjusted Return on equity17.7%3.9%11.1%
    (1) Adjustments to reported U.S. GAAP financial measures are as follows:
    Inventory write-downs and additional reserves$0.6$4.1$
    Optimization of manufacturing and logistics0.11.32.0
    Adjustments to gross profit$0.6$5.4$2.0
    Inventory write-downs and additional reserves$0.6$4.1$
    Optimization of manufacturing and logistics0.42.18.3
    Gain on sale of property
    (0.5)
    (11.5)
    Employee retention credit
    (1.2)
    Severance and other charges0.41.20.7
    Impairment of long-lived assets and lease exit costs2.27.712.1
    Adjustments to operating income$3.1$2.4$21.1
    Adjustments to income before income taxes$3.1$2.8$21.1
    Related income tax effects on non-recurring items (2)
    (0.7)
    (0.7)
    (5.2)
    Income tax expense from valuation allowance
    (2.2)
    2.5
    Adjustments to net income$0.1$4.6$15.9
    (2)
    Calculated using a tax rate of 24.5% in all periods presented.

    Eric D. Koster
    Corporate Secretary
    October 2, 2017
    52


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    ETHAN ALLEN INTERIORS INC. 25 LAKE AVENUE EXT. DANBURY, CT 06811-5286 ATTN: ERIC D. KOSTER VOTE BY INTERNETINTERNETBefore The Meeting - www.proxyvote.com UseGo to www.proxyvote.comUse the Internet to transmit your voting instructions and for electronic delivery of information up untilinformation. Vote by 11:59 P.M.p.m. Eastern Time on November 14, 2017.29, 2021 for shares held directly and by 7:00 a.m. Eastern Time on November 28, 2021 for shares held in the Ethan Allen Retirement Savings Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ETHAN ALLEN INTERIORS INC. 25 LAKE AVENUE EXT. DANBURY, CT 06811-5286 ATTN: ERIC D. KOSTER ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would likeform.During The Meeting - Go to reducewww.virtualshareholdermeeting.com/ETH2021You may attend the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronicallymeeting via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and when prompted, indicatevote during the meeting. Have the information that you agree to receive or access proxy materials electronicallyis printed in future years. VOTEthe box marked by the arrow available and follow the instructions.VOTE BY PHONE - 1-800-690-6903 Use1-800-690-6903Use any touch-tone telephone to transmit your voting instructions up untilinstructions. Vote by 11:59 P.M.p.m. Eastern Time on November 14, 2017.29, 2021 for shares held directly and by 7:00 a.m. Eastern Time on November 28, 2021 for shares held in the Ethan Allen Retirement Savings Plan. Have your proxy card in hand when you call and then follow the instructions. VOTEinstructions.VOTE BY MAIL Mark,MAILMark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E33410-P97478D61047-P62930 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. ETHAN ALLEN INTERIORS INC. The Board of Directors recommends you vote FOR each listed nominee: 1. To elect seven director nominees identified in the proxy statement to serve until the 2018 Annual Meeting of Stockholders; Election of Directors The Board of Directors recommends you vote FOR the following proposal: Nominees: For Against Abstain For Against Abstain ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 2 Years ! 3 Years ! Abstain 1a. M.DETACH AND RETURN THIS PORTION ONLY 1a.M. Farooq Kathwari 2. To approve, by a non-binding advisory vote, executive compensation of the Company's Named Executive Officers. The Board of Directors recommends you vote 1 Year 1b. James B. Carlson 1 year on the following proposal: Kathwari!!! For 1b.Dr. John Clark!! Against ! Abstain 3. To approve, by a non-binding advisory vote, the frequency of holding the advisory vote to approve Named Executive Officer compensation. 1c. John1c.John J. Dooner, Jr. 1d. Domenick J. Esposito The Board of Directors recommends you vote FOR the following proposal: !!!1d.Cynthia Ekberg Tsai!!!1e.David M. Sable!!!1f.Tara I. Stacom!!! ! ! 1e. Mary Garrett 4. Proposal to ratify KPMG LLP as our independent registered public accounting firm for the 2018 fiscal year. 1f. James W. Schmotter NOTE: To transact such other business as may properly come before the meeting. 1g. Tara I. Stacom For address changes and/or comments, please check this box and write them on the back where indicated. ! Yes ! No Please indicate if you plan to attend this meeting. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date


    Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Annual Report and Notice and& Proxy Statement are available at www.proxyvote.com. E33411-P97478 www.proxyvote.com.D61048-P62930


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    ETHAN ALLEN INTERIORS INC. AnnualINC.Annual Meeting of Stockholders November 15, 2017,StockholdersNovember 30, 2021, 10:00 A.M. ThisA.M.This proxy is solicited by the Board of Directors TheDirectorsThe undersigned stockholder of Ethan Allen Interiors Inc., a Delaware corporation (the "Company") hereby appoints Eric D. Koster and Corey Whitely as proxies for the undersigned, and each of them, with full power of substitution in each of them to attend the Annual Meeting of Stockholders (the "2021 Annual Meeting") to be held virtually at the Ethan Allen Interiors Inc. International Corporate Headquarters at 25 Lake Avenue Ext., Danbury, CT 06811www.virtualshareholdermeeting.com/ETH2021 on Wednesday,Tuesday, November 15, 2017,30, 2021, at 10:00 A.M., local time,Eastern Time, or any adjournment or postponement thereof, to cast on behalf of the undersigned all votes that the undersigned is entitled to cast at such meetingthe 2021 Annual Meeting and otherwise to represent the undersigned at the meeting2021 Annual Meeting with all powers possessed by the undersigned if personally present at the meeting.2021 Annual Meeting. The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement and revokes any proxy heretofore given with respect to such meeting. THISthe 2021 Annual Meeting.THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF THIS PROXY IS EXECUTED BUT NO INSTRUCTION IS GIVEN, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST "FOR" THE ELECTION OF EACH NOMINEE LISTED IN PROPOSAL 1 "FOR" PROPOSAL 2, "1 YEAR" FOR PROPOSAL 3 AND "FOR" PROPOSAL 4,PROPOSALS 2 AND 3, AND IN THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE 2021 ANNUAL MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. PleaseTHEREOF.Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please add your title as such. When signing as joint tenants, all parties in the joint tenancy must sign. If a signer is corporation, please sign in full corporate name by a duly authorized officer. (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) Continuedofficer.Continued and to be signed on reverse side. Address Changes/Comments: