SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Securities Exchange Act of 1934 (Amendment No. )
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Danbury, CT 06811-5286
Thursday,
| | Proposal 1. | | | to elect seven directors to serve until the | | |
| Proposal 2. | | | to approve, by a non-binding advisory vote, the compensation of our named executive | | |
| Proposal 3. | | | to ratify the appointment of | |
September 28, 2022.
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Corporate Secretary
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 |  | By Phone 1-800-690-6903 | |  | ![[MISSING IMAGE: tm2226503d1-icon_mailpn.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-103721/tm2226503d1-icon_mailpn.jpg){kind=icon} | | | 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 9, 2022: | | |
| | | The 2022 Annual Report and Notice & Proxy Statement are available at www.proxyvote.com | | |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on November 12, 2020:
The 2020 Annual Report and Notice & Proxy Statement are available at www.proxyvote.com
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Online at www.virtualshareholdermeeting.com/ETH2020
October 2, 2020
Virtual Meeting Site: www.virtualshareholdermeeting.com/ETH2022 September 28, 2022 PROXY STATEMENT |
This proxy statement (the "Proxy Statement"“Proxy Statement”) and the accompanying proxy or voting instruction card are furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Ethan Allen Interiors Inc., a Delaware corporation for use at the 20202022 Annual Meeting of Stockholders (the "Annual Meeting"“Annual Meeting”).
When used in this Proxy Statement, “we,” “us,” “our,” “Ethan Allen” or the “Company” refers to Ethan Allen Interiors Inc. and its subsidiaries collectively or, if the context so requires, Ethan Allen Interiors Inc. individually.
When used in this Proxy Statement, "we," "us," "our," "Ethan Allen" or the "Company" refers to Ethan Allen and its subsidiaries collectively or, if the context so requires, Ethan Allen individually.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on November 12, 2020:
The 2020 Annual Report and Notice & Proxy Statement are available at www.proxyvote.comSeptember 28, 2022.
| | Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on November 9, 2022: | | |
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1 PROXY SUMMARY Proposals and Voting Recommendations |
Stockholders are being asked to vote on the following matters at the 2020 Annual Meeting:
| | | Our Board’s Recommendation | | | ||||||||
| | | ITEM 1. Election of Directors | | | ||||||||
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| | The Board and the Corporate Governance, | | | | FOR each Director Nominee | | ||||||
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| | | ITEM 2. Advisory Vote to Approve Compensation of our Named Executive | | | ||||||||
| | | The Company seeks a non-binding advisory vote to approve the compensation of its Named Executive 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 | | | | FOR | | |||||
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| | | ITEM 3. | | | ||||||||
| | | The Audit Committee and the Board believe that the retention of | ||||||||||
| | | | FOR | | | |||||||
üLead Independent Director, elected by independent directorsüAnnual election of all directors with majority voting standardüDirector term and tenure limitsüStrategy and risk oversight by full Board and committeesüIndependent executive sessions at every Board meetingüRegular Board, committee and director evaluationsüIndependent Audit, Compensation and Governance & Nominations CommitteesüRefreshed Board; independent director average tenure 6 yearsüRobust director nominee selection process
üLong-standing active stockholder engagementüAnnual advisory vote on executive compensationüStockholder proxy accessüStockholder right to call special meetingsüNo poison pill in placeüRobust stockholder outreach
üLong-standing commitment to environmental stewardshipüLong-standing commitment to social responsibilityüPublished Corporate Governance GuidelinesüStock Ownership Guidelines for directors and executivesüProhibit our directors and executive officers from hedging or pledging the Company's stock
![[MISSING IMAGE: tm2226503d1-tbl_goverpn.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-103721/tm2226503d1-tbl_goverpn.jpg) BOARD OF DIRECTORS |
Ethan Allen Interiors Inc. is a global luxury home fashion brand that is vertically integrated interiorfrom product design through home delivery, which offers its customers stylish product offerings, artisanal quality and home furnishings company, serving consumers around the world. To effectively managepersonalized service. The 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 director epitomizes the Company's Leadership Principles, possesses the highest ethics and integrity, and demonstrates ongoing commitment to representing the long-term interests of the Company's stockholders. Each director possesses individual experiences that provide practical wisdom and foster mature judgment in the boardroom. Collectively, the directors bring business, international, government, technology, marketing, retail operations, and other experiences that are relevant to the Company's vertical operations.Company’s vertically integrated enterprise. The Board has general oversight responsibility for the Company'sCompany’s affairs and 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, theThe Board represents and acts on behalf of the Company's stockholders and is committed to strong corporate governance, as reflected through its policies and practices.
On January 25, 2022, the Board increased its size to seven directors upon the appointment of María Eugenia (Gina) Casar to serve as an independent director of the Company for a term that will expire at the 2023 Annual Meeting of Stockholders. Prior to this appointment, the Board was previously comprised of six directors, including five independent directors. BOARD INDEPENDENCE |
The Board determined that James B. Carlson,Gina Casar, Dr. John Clark, John J. Dooner, Jr., Domenick J. Esposito, Mary Garrett, James W. Schmotter andDavid M. Sable, Tara I. Stacom (sixand Cynthia Ekberg Tsai, (our six independent nominees for the Board) are independent directors within the meaning of the listing standards of the NYSE. The Board determinedNYSE (the “NYSE rules”). Additionally, during the time that these director nominees not only met all "bright-line" criteria underthey served in fiscal 2022, our former directors James B. Carlson, Domenick J. Esposito, Mary Garrett and Dr. James W. Schmotter were independent directors within the meaning of the NYSE rules. Under the NYSE rules, but also that, based on all known relevant facts and circumstances applicable to each individual director, there did not exist any relationship that would compromise the independence of these directors. Inin order to be considered independent,qualify as “independent” for general service on the Board, a director must not be free ofdisqualified under any relationship that, applying the rules of the per se disqualifiers in the NYSE would preclude a finding of independencerules, and 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 anyus.
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BOARD LEADERSHIP STRUCTURE |
The Board recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure 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.
Lead Independent 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 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 whofurther promotes the Board’s independence from management because he or she is 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 Dr. James W. Schmotter,Board. John J. Dooner, Jr., an independent non-executive director, has served as itsthe Board’s Lead Independent Director throughsince the 2021 Annual Meeting. HeMeeting of Stockholders. The Lead Independent 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:
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BOARD OF DIRECTORS ROLE IN RISK OVERSIGHT |
While risk management is primarily the responsibility of our management, the Board provides overall risk oversight by focusing on the most significant enterprise risks. The Board 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 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 Audit Committee reviews Additionally, our risk management programs and regularly 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 financial and operational risks with our Chief Executive Officer and Chief Financial Officer and receives reports from other members of senior management regarding identified risks.
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 environmental, social and corporate governance (“ESG”) perspective to address any potential risks that the Company’s operations pose to the environment or to society.
CORPORATE RESPONSIBILITY |
Sustainability practices are a fundamental part of our Company'sCompany’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 and its committees are actively engaged in overseeing our sustainability practices and to ensure focus on these topics starts from the top. The Board oversees policies, positions and systems for environment, health, safety and social responsibility, compliance, and risk management. The Company'sCompany’s Corporate Responsibility Report is available at https://ir.ethanallen.com/corporate-governance/responsibilityesg/esg-responsibility. The information provided on the Company'sCompany’s website is referenced in this Proxy Statement for information purposes only. Neither the information on the Company'sCompany’s website, nor the information in the Company'sCompany’s Corporate Responsibility Report, shall be deemed to be a part of or incorporated by reference into this Proxy Statement or any other filings we make with the SEC.Securities and Exchange Commission (“SEC”).
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Environmental measures the
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. We reduced electrical usage by 7% or 2.6 million kilowatt-hours compared to our 2010 baseline year.
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. We decreased our water usage by 33% or 11.9 million gallons compared to our 2010 baseline year.
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. We increased recycling by almost 60,000 pounds of materials and reduced our landfill waste disposal by over 1 million pounds compared to our 2010 baseline year.
Social Responsibility |
Ethan Allen'sAllen’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 way of improving labor conditions worldwide. Our business partners are also subject to our Manufacturing Code of Conduct.
COMMITTEE CHARTERS, CODE OF CONDUCT AND CORPORATE GOVERNANCE GUIDELINES |
The Company'sCompany’s Code of Business Conduct and Ethics (the "Code“Code of Conduct"Conduct”), Corporate Governance Guidelines, Foreign Corrupt Practices Act Policy and the charters of its Audit Committee, Compensation Committee and Corporate Governance, & Nominations and Sustainability Committee are available on the Company'sCompany’s website at https://ir.ethanallen.com/corporate-governance/governance-documents. You may also request printed copies of these documents, free of charge, by sending a written request to our Corporate Secretary at Ethan Allen Interiors Inc., 25 Lake Avenue Ext., Danbury, CT 06811-5286.
promote fair dealing practices; deter wrongdoing;deterring wrongdoing and ensureensuring accountability for adherence to the provisions of the Code. ItCode of Conduct. The Code of Conduct prohibits any employee, 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 taking for themselves personally,(i.e. personally) opportunities that properly belong to the Company or are discovered through the use ofusing corporate property, information, or one'sone’s position; using corporate property, information, or position for personal gain; and competing directly or indirectly with the Company. This Code of Conduct may be amended, modified, or waived by the Board of Directors. Waivers of the Code of Conduct must be explicit. Any waiver of the Code of Conduct for directors or executive officers may only be made by the Board or the Corporate Governance, & Nominations and Sustainability Committee. We will disclose any future amendments to, or waivers from, provisions of the Code of Conduct affecting our executive officers or directors on our website within four business days, as may be required under applicable SEC and NYSE rules. We granted no waivers under our Code inof Conduct during fiscal 2020.2022. With respect to any person other than any executive officer or director, waivers may be granted by the General Counsel.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS |
During fiscal 2020,2022, the Board of Directors met in person or by telephone conference fivesix times, including the meeting in connection with the 20192021 Annual Meeting of Stockholders. Independent directors also met fivesix times in executive session without management present. The Lead Independent Director currently Dr. James W. Schmotter, chaired the executive sessions.
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Governance, Nominations and Sustainability Committee | | | | Independent Director | | ||||||||||||||||||||||||
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| | | Dr. John Clark | | | | | | | | | | | Chairperson | | | | | | | ||||||||||
| | | John J. Dooner, Jr. | | | | | | | | Chairperson | | | | Member | | | | ✓ | | | |||||||||
| | | David M. Sable | | | | | | | | Member | | | | Member | | | | | | | |||||||||
| | | Tara I. Stacom | | | | Member | | | | | | | | Member | | | | | | | |||||||||
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Additionally, the
Additionally, during the time that they served in fiscal 2022, our former directors James B. Carlson, Domenick J. Esposito, Mary Garrett and Dr. James W. Schmotter were independent directors and/or “non-employee directors” under the above-referenced rules applicable to the committees on which they served.
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'sCompany’s consolidated financial statements, independent auditors, financial statement audits, financial reporting process, system of internal accounting and financial 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'sCompany’s independent registered public accounting firm, the internal auditors and management. The Audit Committee is also responsible for reviewreviewing and approvalapproving of any related party
transactions required to be disclosed pursuant to Item 404(a) of Regulation S-K. The responsibilities and activities of the Audit Committee are further describeddiscussed more fully under “Audit Committee Report” in "Audit Committee Report"this Proxy Statement, and in the Audit Committee charter.
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TheBoard, the Compensation Committee determines our compensation policies and the level and forms of compensation provided to our Board members and executive officers, as discussed more fully under "Compensation“Compensation Discussion and Analysis".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. Additionally, theThe Compensation Committee also approves the "Compensation“Compensation Discussion and Analysis"Analysis” with respect to compensation of the Company'sCompany’s Named Executive Officers as defined therein (“Named Executive Officers” or “NEOs”) in accordance with applicable
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The duties ofBoard, the Corporate Governance, & Nominations Committeeand Sustainability Committee’s duties include, but are not limited to, the duty to: (i) developdeveloping qualification criteria for the members of the Board and nominate or recommendrecommending to the Board individuals to serve on the Board; (ii) review, annually,reviewing, on an annual basis, the qualifications of each member of the Board; (iii) reviewreviewing and monitormonitoring the Company'sCompany’s corporate governance policies and guidelines, including the Company'sCompany’s insider trading policy for its directors and executive officers; and (iv) make an annual assessmentannually assessing of the Board'sBoard’s performance and reportreporting such assessment to the Board.
Board; and (v) assisting the Board to pursue and report sustainability initiatives, which, as noted above under “Corporate Responsibility,” comprises both CSR and ESG matters.
Each of the current members of the Corporate Governance & Nominations Committee is an independent director within the meaning of the listing standards of the NYSE.
The Corporate Governance & NominationsSustainability 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 existingthen-existing mix of directors. Among the criteria used to evaluate nominees for the Board is diversity of viewpoints, background and experience, including diversity of race, gender, ethnicity, age and cultural background. The Board believes that such diversity providesa 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. The Board believes thisTherefore, diversity is amply demonstrated inamong the varied backgrounds,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, qualificationsincluding diversity of race, self-identified gender, ethnicity, age, and skills ofcultural background. In the current and proposed members of the Board. We are proud that one-third of our independent director nominees are women. In the
Board'sBoard’s executive sessions and in annual performance evaluations conducted by the Board and its committees, the Board from time to time considerswill periodically consider whether the members of the Board reflect such diversity and whether such diversity contributes to a constructive and collegial environment.
The We believe that the current and proposed members of our Board amply demonstrate diversity due to their varied backgrounds, experience, qualifications, and skills. We are proud that 50% of our independent director nominees are women and that our Board includes ethnic diversity. Refer to the sections “Board of Directors—Experience and Skills” and “Board Diversity Matrix” further below for additional information regarding the skills and diversity of the Company’s Board current members.
Table 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 Contentsthe particular areas summarized in the matrix under “Proposal 1: Election of Directors.”
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At the recommendation of the Corporate Governance, Nominations and Sustainability Committee, the Board has nominated the following seven directors for election at the Annual Meeting. If elected, each director will serve for a one-year term expiring at the 2023 Annual Meeting of Stockholders or until their respective successor has been duly elected and qualified or until their earlier death, resignation, disqualification, or removal. All the director nominees are current directors who were each of the seven nominees described below will stand for re-election to serve as directors until theelected by Ethan Allen’s stockholders at our 2021 Annual Meeting of Stockholders, and until their respective successors are duly elected and qualified. The seven nominees were nominated bywith the exception of Gina Casar who was appointed to the Board effective January 25, 2022.
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% of the number of votes cast with respect to the election of that nominee in order for the nominee to be elected. Abstentions and broker non-votes are not counted as votes cast. It is the intention of the persons named as proxies in the accompanying proxies submitted by stockholders to vote for each of 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 time of the Annual Meeting, or for good cause will not serve as a director, the persons named as proxies will have discretionary authority to vote for the remaining nominees and for a substitute nominee(s) to fill the vacancy unless the Board reduces the number of directors to be elected at the Annual Meeting. It is not anticipated that any nominee will be unavailable or will decline to serve as a director.
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Ethan Allen Director Nominees (1) | | | | CEO or Senior Executive Level Experience | | | | Risk Management | | | | International Experience | | | | Operating Experience | | | ||||||||||||||||||||||||||||
| | Retail and Experience | | | | Finance Experience | | | | Real Experience | | | | Marketing | Building Expertise | | | ||||||||||||||||||||||||||||||
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| | | Dr. John Clark * | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | | | | | | | | | | | | ✓ | | | |||||||||||
| | | John J. Dooner, Jr. * | | | | ✓ | | | | ✓ | | | | ✓ | | | | ✓ | | | | | | | | | | | |
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| | | Tara I. Stacom * | | | | ✓ | | | | ✓ | | | | | | | | ✓ | | | | | | | | ✓ | | | | ✓ | | | | ✓ | | |
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| | | Board Diversity Matrix (as of June 30, 2022) | | | ||||||||||||||||
| | | Total Number of Directors | | | | 7 | | | ||||||||||||
| | | | | | | Female | | | | Male | | | | Non-Binary | | | | Did Not Disclose Gender | | |
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| | | Directors | | | | 3 | | | | 4 | | | | — | | | | — | | |
| | | Demographic Background | | | | | | | | | | | | | | | | | | |
| | | Asian (excludes Indian / South Asian) | | | | — | | | | — | | | | — | | | | — | | |
| | | Black / African American | | | | — | | | | — | | | | — | | | | — | | |
| | | Caucasian / White | | | | 2 | | | | 3 | | | | — | | | | — | | |
| | | Hispanic / Latin American | | | | 1 | | | | — | | | | — | | | | — | | |
| | | South Asian | | | | — | | | | 1 | | | | — | | | | — | | |
| | | Middle-Eastern / North African | | | | — | | | | — | | | | — | | | | — | | |
| | | Native American / Alaskan Native | | | | — | | | | — | | | | — | | | | — | | |
| | | Native Hawaiian / Pacific Islander | | | | — | | | | — | | | | — | | | | — | | |
| | | Two or More Races or Ethnicities | | | | — | | | | — | | | | — | | | | — | | |
| | | Did Not Disclose Demographic Background | | | | — | | | | — | | | | — | | | | — | | |
| | | M. Farooq KathwariENTREPRENURIAL AND DISCIPLINED LEADER | | | |||||||
| | | ![[MISSING IMAGE: ph_farooqkathwari-bw.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-103721/ph_farooqkathwari-bw.jpg) | | | Mr. Kathwari is the |
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| | | | Director since: 1985 Age: 78 Board Committees: • Chairperson of the Board | | | ||||||
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| | | 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 | | | |||||||
| | | 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. | | | |||||||
| | | Gina CasarRISK MANAGEMENT, ESG AND HUMAN RESOURCES LEADER | | | |||||||||||
| | | ![[MISSING IMAGE: ph_ginacasar-bwlr.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-103721/ph_ginacasar-bwlr.jpg) | | | Ms. Casar currently serves on the Board of Save the Children Mexico, the Advisory Board of Sigma Alimentos and is a member of “Global Women Leaders: Voices for change and inclusion.” She previously served as a member of the Global Future Council of International Governance and Sustainable Development from 2015 until 2018. | | | | Independent Director since: 2022 Age: 63 Board Committees: • Audit • Corporate Governance, Nominations and Sustainability | | | ||||
| | | Specific Qualifications, Attributes, Skills and Experience: | | | |||||||
| | | Ms. Casar has held various high level executive positions within the United Nations (“UN”), the government of Mexico and other financial institutions. During her career at the UN, she served as Under-Secretary-General from 2014 to 2016 and as CFO and Controller between 2011 and 2014. Additional roles within the UN included the post of Associate Administrator of the UN Development Programme and Deputy Executive Director of the World Food Programme. Between 2006 and 2009, Ms. Casar worked for the government of Mexico, including senior leadership positions of National Treasurer and Executive Director for the Mexican Agency for International Cooperation. Prior to that, she held leadership roles in prominent organizations, including Banco Nacional de Servicios Financieros (BANSEFI). Ms. Casar is proficient in Spanish, English, French and Italian and holds an MBA and a degree in public accounting, with honors, from the Instituto Tecnológico Autónomo de México (ITAM). Ms. Casar brings to the Board her strategic financial and risk management, key ESG perspective, sound human resources leadership expertise and in-depth knowledge of managing business transformation initiatives. | | | |||||||
| | | Dr. John Clark EDUCATOR AND ADMINISTRATION LEADER | | | |||||||||||||
| | | ![[MISSING IMAGE: ph_drjohnclark-bw.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-103721/ph_drjohnclark-bw.jpg) | | | Dr. John Clark is a special advisor to the System President of the Connecticut State Colleges and Universities (CSCU). He previously served as President of Western Connecticut State University (WCSU) from 2015 until 2022. Prior to that, Dr. Clark was the Acting University Executive Director of the City University of New York’s (CUNY) Office of Business and Industry Relations. | | | | Independent Director since: 2021 Age: 71 Board Committees: • Audit | • Corporate Governance, Nominations and Sustainability - Chair | |||||||
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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, |
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| | | | Lead Independent Director Independent Director since: 2011 Age: 74 Board Committees: • Compensation - Chair • Corporate Governance, Nominations and Sustainability | | | ||||||||||
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| | | David M. Sable MARKETING AND DIGITAL LEADER | | | |||||||||||
| | | ![[MISSING IMAGE: ph_davidmsable-bw.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-103721/ph_davidmsable-bw.jpg) | | | 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 from 2011 to 2019 where he helped Y&R to a top-five global creative firm at Cannes, developed new resources and practices, expanded the global footprint, and created a successful agency that continues to be an industry leader today. | | | | Independent Director since: 2021 Age: 69 Board Committees: • Compensation • Corporate Governance, Nominations and Sustainability | | | ||||
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| Tara I. Stacom REAL ESTATE AND FINANCIAL INDUSTRIES LEADER | | ||||||||||
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| | | ![[MISSING IMAGE: ph_tarastacom-bw.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-103721/ph_tarastacom-bw.jpg) | | | |||||||
 | Ms. Stacom is an Executive Vice Chairman of Cushman & Wakefield since 2013, a worldwide commercial real estate firm with |
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| | | | Independent Director since: 2015 Age: 64 Board Committees: • Audit • Corporate Governance, Nominations and Sustainability | | | ||||||
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| | | 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. In January 2022, she was appointed to the Board of Directors of Inveniam Capital Partners, a privately-held fintech company. Ms. Stacom is a | | | |||||||
| | | Cynthia Ekberg TsaiFINANCE AND MANAGEMENT DEVELOPMENT LEADER | | | |||||||
| | | ![[MISSING IMAGE: ph_tsaicynthia-bw.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-103721/ph_tsaicynthia-bw.jpg) | | | 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: 2021 Age: 66 Board Committees: • Audit - Chair • Compensation | | |
| | | 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 financial thinking and unique hands-on experience in investment banking and brand building. | | | |||||||
17 |
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 determinedapproved by the Board, after considering thea recommendation offrom the Compensation Committee. Mr. Kathwari, as an executiveChief 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 2020,2022, 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 2020,2022, each independentnon-employee director received $52,500 per annum, reflecting the Company's $60,000 per annum director fee less the 50% quarterly fee reduction as described above. This amount compared to the $54,000 cash retainer per annum paid to each director in fiscal 2019, which reflected the Company's $60,000 per annum director fee less a 10% annual fee reduction in consideration of the Company not attaining performance targets for fiscal 2018.annum. Additional quarterly fees are paid to the chair 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.
Additional COVID-19 Response. For fiscal 2021, as part of
| | | Name | | | | Fees Earned or Paid in Cash (1) | | | | Option Awards (2)(3) | | | | All Other Compensation (4) | | | | Total | | | ||||||||||||
| | | James B. Carlson (5) | | | | | $ | 28,272 | | | | | | $ | 21,344 | | | | | | $ | — | | | | | | $ | 49,616 | | | |
| | | Gina Casar | | | | | $ | 26,000 | | | | | | $ | — | | | | | | $ | — | | | | | | $ | 26,000 | | | |
| | | Dr. John Clark | | | | | $ | — | | | | | | $ | — | | | | | | $ | 45,087 | | | | | | $ | 45,087 | | | |
| | | John J. Dooner, Jr. | | | | | $ | 74,000 | | | | | | $ | 21,344 | | | | | | $ | — | | | | | | $ | 95,344 | | | |
| | | Domenick J. Esposito (6) | | | | | $ | 21,000 | | | | | | $ | 21,344 | | | | | | $ | — | | | | | | $ | 42,344 | | | |
| | | Mary Garrett (5) | | | | | $ | 24,946 | | | | | | $ | 21,344 | | | | | | $ | — | | | | | | $ | 46,290 | | | |
| | | David M. Sable | | | | | $ | 35,217 | | | | | | $ | — | | | | | | $ | — | | | | | | $ | 35,217 | | | |
| | | Dr. James W. Schmotter (5) | | | | | $ | 27,598 | | | | | | $ | 21,344 | | | | | | $ | — | | | | | | $ | 48,942 | | | |
| | | Tara I. Stacom | | | | | $ | 60,000 | | | | | | $ | 21,344 | | | | | | $ | — | | | | | | $ | 81,344 | | | |
| | | Cynthia Eckberg Tsai | | | | | $ | 44,609 | | | | | | $ | — | | | | | | $ | — | | | | | | $ | 44,609 | | | |
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| Name | | Fees Earned or Paid in Cash (1) | | Option Awards (2) | | Total | | |||||||||
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| James B. Carlson (3) | $ 59,500 | $ 18,803 | $ 78,303 | |||||||||||||
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| | John J. Dooner, Jr. (4) | | $ 59,500 | | $ 18,803 | | $ 78,303 | | ||||||||
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| Domenick J. Esposito (5) | $ 66,500 | $ 18,803 | $ 85,303 | |||||||||||||
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| | Mary Garrett (6) | | $ 52,500 | | $ 18,803 | | $ 71,303 | | ||||||||
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| James W. Schmotter (7) | $ 59,500 | $ 18,803 | $ 78,303 | |||||||||||||
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| | Tara I. Stacom (8) | | $ 52,500 | | $ 18,803 | | $ 71,303 | | ||||||||
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(1)The fess earned reflect that, as part of our COVID-19 pandemic action plan, the non-employee directors reduced their quarterly cash compensation (comprisedpro rata portion of the annual retainer based on the length of service for each Director during fiscal 2022. Fees earned or paid in cashretainerto Dr. Clark, Mr. Sable andif applicable, committee chair cash retainer or lead director cash retainer) by 50% beginning on AprilMs. Tsai represent seven months (December 1,20202021 through June 30,2020.- 2022) of their annual retainer fee, while Ms. Casar’s represents approximately five months (as she was appointed to the Board on January 25, 2022).
18 |
The following tables setsset forth, as of September 16, 2020,14, 2022, the record date for the Annual Meeting, information known to Ethan Allen with respect to beneficial ownership as defined by SEC rules of the Company'sCompany’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 the “Compensation Discussion and Analysis” and named in the table entitled “Summary Compensation Table,” and (c) all directors and executive officers as a group and (ii) each holderprincipal stockholder of more than 5% of Company common stock, (iii) the Company's Principal Executive Officer, Principal Financial Officer and the three most highly compensated executive officers (other than the Principal Executive Officer and Principal Financial Officer) named in the table entitled "Summary Compensation Table" and (iv) all executive officers and directors as a group.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. The 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 |
The following table sets forth, as of September 16, 2020,14, 2022, the record date for the Annual Meeting, the beneficial ownership of the Company'sCompany’s common stock reported to Ethan Allen by (i) each of the Company'sCompany’s current directors, director nominees (ii) each NEO, and (iii)NEOs, and by all director nomineescurrent directors and executive officers as a group.
| | | Name | | | | | | | | | | | Amount and Nature of Beneficial Ownership (1) | | | | Common Stock Percentage Ownership (1) | | | ||||||
| | | M. Farooq Kathwari | | | | | | (2) | | | | | | | 2,676,452 | | | | | | | 10.6% | | | |
| | | John J. Dooner, Jr. | | | | | | (3) | | | | | | | 43,937 | | | | | | | * | | | |
| | | Tara I. Stacom | | | | | | (4) | | | | | | | 27,913 | | | | | | | * | | | |
| | | Corey Whitely | | | | | | (5) | | | | | | | 18,786 | | | | | | | * | | | |
| | | Eric D. Koster | | | | | | (6) | | | | | | | 6,989 | | | | | | | * | | | |
| | | Amy Franks | | | | | | (7) | | | | | | | 649 | | | | | | | * | | | |
| | | Matthew J. McNulty | | | | | | (8) | | | | | | | 567 | | | | | | | * | | | |
| | | Ashley Fothergill | | | | | | (9) | | | | | | | 280 | | | | | | | * | | | |
| | | Gina Casar | | | | | | (10) | | | | | | | — | | | | | | | * | | | |
| | | Dr. John Clark | | | | | | (10) | | | | | | | — | | | | | | | * | | | |
| | | David M. Sable | | | | | | (10) | | | | | | | — | | | | | | | * | | | |
| | | Cynthia Ekberg Tsai | | | | | | (10) | | | | | | | — | | | | | | | * | | | |
| | | All Current Directors and Executive Officers as a Group (11 persons) | | | | | | | | | | | | | 2,756,787 | | | | | | | 10.8% | | | |
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| Name | | | Amount and Nature of Beneficial Ownership (1) | | Common Stock Percentage Ownership (1) | | ||||||||||
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| M. Farooq Kathwari | (2) | 2,630,082 | 10.4% | |||||||||||||
| | James B. Carlson | | (3) | | 36,092 | | * | | ||||||||
| John J. Dooner, Jr. | (4) | 38,039 | * | |||||||||||||
| | Domenick J. Esposito | | (5) | | 18,029 | | * | | ||||||||
| Mary Garrett | (6) | 11,068 | * | |||||||||||||
| | James W. Schmotter | | (7) | | 29,639 | | * | | ||||||||
| Tara I. Stacom | (8) | 17,168 | * | |||||||||||||
| | Corey Whitely | | (9) | | 31,938 | | * | | ||||||||
| Daniel M. Grow | (10) | 15,999 | * | |||||||||||||
| | Eric D. Koster | | (11) | | 6,667 | | * | | ||||||||
| Rodney A. Hutton | — | * | ||||||||||||||
| | All Directors and Executive Officers as a Group (14 persons) | | | 2,853,041 | | 11.3% | | |||||||||
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*- Indicates beneficial ownership of less than 1% of shares of Company common stock
Tableare owned and no outstanding stock options exercisable within 60 days of Contents
19 Security Ownership of Principal Stockholders |
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'sCompany’s common stock, as of September 16, 2020,14, 2022, the record date for the Annual Meeting.
| | | Name of Beneficial Owner | | | | | | | | | | | Amount and Nature of Beneficial Ownership | | | | Common Stock Percentage Ownership | | | ||||||
| | | BlackRock, Inc. | | | | | | (1) | | | | | | | 4,193,865 | | | | | | | 16.5% | | | |
| | | Dimensional Fund Advisors LP | | | | | | (2) | | | | | | | 1,822,060 | | | | | | | 7.2% | | | |
| | | The Vanguard Group | | | | | | (3) | | | | | | | 1,624,734 | | | | | | | 6.4% | | | |
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| Name of Beneficial Owner | | | Amount and Nature of Beneficial Ownership | | Common Stock Percentage Ownership | | ||||||||||
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| BlackRock, Inc. | (1) | 3,927,476 | 15.7% | |||||||||||||
| | The Vanguard Group | | (2) | | 2,709,608 | | 10.8% | | ||||||||
| Dimensional Fund Advisors LP | (3) | 2,180,551 | 8.7% | |||||||||||||
| | LSV Asset Management | | (4) | | 1,329,516 | | 5.3% | | ||||||||
| Patricia Wadors | (5) | 1,272,846 | 5.1% | |||||||||||||
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(1)- BlackRock, Inc.
("BlackRock"(“BlackRock”), a parent holding company, had sole voting power over3,862,3064,114,697 shares of common stock and sole dispositive power over3,927,4764,193,865 shares of common stock according toBlackRock'sBlackRock’s Schedule 13G/A filed with the SEC onFebruary 4, 2020. BlackRock'sJanuary 27, 2022. BlackRock’s address is 55 East 52nd Street, New York, NY 10055.
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The Company's general policiesAshley Fothergill with respect to certain relationships and related party transactions are included in itshis promotion to Senior Vice President, Merchandising (an executive officer) on March 15, 2022, which was subsequently filed on July 20, 2022.
Directors and officers are required to provide the Company information about potential related party transactions. 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 any reported transactions related to directors or executive officers 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 not associated with the potential related party transaction.takes appropriate action. A related party transaction is approved or ratified only if such members of the Board determineAudit Committee determines 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 anyThere were no 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 believes that the following related person arrangement is 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, was employed by the Company as Vice President, Business Developmenttransactions requiring approval or ratification during fiscal 2020 until his resignation, effective June 12, 2020. Mr. van Puyenbroeck reported to the Senior Vice President, Business Development. During fiscal year 2020, the Company paid approximately $225,000 in aggregate compensation to Mr. van Puyenbroeck. The compensation was consistent with compensation paid to other employees holding similar positions.
20 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.
"
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advisory basis, of the compensation of the
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21 |
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 20192021 Annual Meeting was approved by over 96%97.6% of the votes cast.present and entitled to vote. We regularly engage in outreach efforts with our stockholders relating to a variety of topics and involve our Compensation Committee Chair or one or more independent directors in these conversations as appropriate. In 2018,Our fiscal 2022 NEO compensation decisions continue to illustrate the application of our Compensation Committee Chair, alongpay-for-performance philosophy, with NEO pay being driven by another year of solid financial performance, as well as continued positive developments in other significant areas of our operations including our response to the COVID-19 pandemic and our efforts to ensure employee safety.
![[MISSING IMAGE: tm2226503d1-fc_fiscalpn.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-103721/tm2226503d1-fc_fiscalpn.jpg)
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Fiscal 2020 was an unprecedented year for the Company. During thevolatile fiscal year there wasmarked by rising costs and global supply chain challenges, we delivered strong sales growth and record earnings for fiscal 2022. We continue to develop relevant product offerings, of which about 75% are made in our North American manufacturing workshops.
The impact of the COVID-19 crisis, which accelerated during the second half of fiscal 2020 and caused the temporary closing of all of our North American design centers and most of our manufacturing in March 2020 and through most of our fourth quarter, had a significant negative impact on our fiscal 2020 financial results. Consolidated net sales were 21.0% lower in fiscal 2020reduced headcount (when compared to the prior year. Our adjustedpre-COVID-19 pandemic levels) helped us expand consolidated gross margin, expanded 60 basis points to 55.7% due to improved retail price optimizationoperating margin and increased wholesale contract business partially offset by plant shutdowns due todiluted earnings per share. We ended the COVID-19 pandemic. Adjusted operating income, which excludes pre-tax charges from restructuring initiatives, asset impairments and other corporate actions in both periods presented, decreased 69.0% in fiscal 2020 compared2022 year with a year ago. Adjusted diluted EPS was $0.52 compared with $1.56 in the prior year primarily from net sales being negatively impacted as a result of the COVID-19 pandemic partially offset by expense management measures implemented.
The Company initiated an enterprise-wide focus on liquidity and expense reduction as part of its COVID-19 action plan, which included expense reductions, salary reductions and the furloughing of about 70% of our global workforce. As of June 30, 2020, having recalled about 56% of our furloughed workers, we operated with 30% less workers and ourstrong balance sheet, was strong withincluding cash and cash equivalentsinvestments of $72.3$121.1 million and inventory of $126.1 million. During fiscal 2020, we generated $52.7 million of cash from operating activities, including $14.0 million generated during our most challenging fiscal fourth quarter, which provided us the ability to pay $21.5 million in regular quarterly cash dividends and repurchase $24.3 million in shares during fiscal 2020. Furthermore, we elected to draw down $100.0 million on our credit facility during fiscal 2020 to increase our cash position as a precautionary measure and to preserve financial flexibility in consideration of the disruption and uncertainty surrounding the ongoing COVID-19 pandemic. We subsequently repaid $50.0 million in June using available cash on hand, which leaves $50.0 million of outstanding borrowings on our balance sheet as of June 30, 2020.
While certain key financial performance metrics such2022 compared to $104.6 million as adjusted gross margin, operating expenses and cash on hand improved, the majority of our key performance metrics declined primarily due to the disruptions in the market caused by the ongoing COVID-19 pandemic. While recognizing the strong and decisive performanceJune 30, 2021. Our ending inventory balance of our executives in leading the Company through this unprecedented period, in consideration of the continuing economic challenges facing the Company and consistent with our pay for performance
philosophy, there were no adjustments made, including as a result of the COVID-19 pandemic and its disruptive impact on our business results, our retail peers and American retailers generally, to the fiscal 2020 performance targets resulting in no payouts under the annual incentive compensation plan. There were also no adjustments to or vesting of the fiscal 2018, 2019 or 2020 equity incentive grants for fiscal 2020, which performance awards vest$176.5 million was up 22.6% over a three-year time frame.
As part of our action plan in response to the COVID-19 pandemic, each of our NEOs reduced their compensationlast year in order to show leadershipfurther support higher levels of production and quicker shipping to our customers. Our Board increased our regular quarterly cash dividend twice during these unprecedented times, with our Chief Executive Officer reducing his compensation by 100%the fiscal year and our other NEOs reducing their compensation by 30%paid a special cash dividend, bringing the total amount of dividends paid to 40% for the period March 29, 2020 through June 30, 2020, without that reduced compensation being made up or recouped later. When our revenues and business began to rebound later$48.3 million in the fourth quarter of 2020, the compensation levels were restored on June 30, 2020.
| | | STATEMENT OF OPERATIONS DATA | | | ||||||||||||
| | | Fiscal Year Ended June 30, | | | | 2022 | | | | 2021 | | | | 2020 | | |
| | | Net sales | | | | $ 817,762 | | | | $ 685,169 | | | | $ 589,837 | | |
| | | Adjusted gross margin (1) | | | | 59.3% | | | | 57.5% | | | | 55.7% | | |
| | | Adjusted operating income (1) | | | | $ 134,240 | | | | $ 80,335 | | | | $ 17,072 | | |
| | | Adjusted net income (1) | | | | $ 100,277 | | | | $ 60,059 | | | | $ 13,512 | | |
| | | Adjusted diluted EPS (1) | | | | $ 3.93 | | | | $ 2.37 | | | | $ 0.52 | | |
| | | KEY METRICS | | | | | | | | | | | | | | |
| | | Adjusted return on equity (1) | | | | 26.4% | | | | 17.7% | | | | 3.9% | | |
| | | Cash flows from operating activities | | | | $ 69,356 | | | | $ 129,912 | | | | $ 52,696 | | |
| | | Cash and cash equivalents | | | | $ 109,919 | | | | $ 104,596 | | | | $ 72,276 | | |
| | | Current ratio | | | | 1.61 | | | | 1.32 | | | | 1.65 | | |
| | | Long-term debt to equity ratio | | | | 0.0% | | | | 0.0% | | | | 15.2% | | |
| | | Cash dividends paid | | | | $ 48,257 | | | | $ 43,290 | | | | $ 21,469 | | |
| | | Dividend yield | | | | 6.3% | | | | 3.6% | | | | 7.1% | | |
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| STATEMENT OF OPERATIONS DATA | | |||||||||||||||
| | | | | | | | | | | | | | | | | |
| Fiscal Year Ended June 30, | 2020 | 2019 | 2018 | |||||||||||||
| | | | | | | | | | | | | | | | | |
| Net Sales | $ 589,837 | $ 746,684 | $ 766,784 | |||||||||||||
| | | | | | | | | | | | | | | | | |
| | Adjusted Gross Margin (1) | | 55.7% | | 55.1% | | 54.2% | | ||||||||
| | | | | | | | | | | | | | | | | |
| Adjusted Operating Income (1) | $ 17,072 | $ 55,051 | $ 50,145 | |||||||||||||
| | | | | | | | | | | | | | | | | |
| | Adjusted Net Income (1) | | $ 13,512 | | $ 41,632 | | $ 37,306 | | ||||||||
| | | | | | | | | | | | | | | | | |
| Adjusted diluted EPS (1) | $ 0.52 | $ 1.56 | $ 1.35 | |||||||||||||
| | | | | | | | | | | | | | | | | |
| | KEY METRICS | | ||||||||||||||
| | | | | | | | | | | | | | | | | |
| Adjusted Return on Equity (1) | 3.9% | 11.1% | 9.5% | |||||||||||||
| | | | | | | | | | | | | | | | | |
| | Cash flows from operating activities | | $ 52,696 | | $ 55,247 | | $ 42,497 | | ||||||||
| | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | $ 72,276 | $ 20,824 | $ 22,363 | |||||||||||||
| | | | | | | | | | | | | | | | | |
| | Current ratio | | 1.65 | | 1.76 | | 1.77 | | ||||||||
| | | | | | | | | | | | | | | | | |
| Long-term debt to equity ratio | 15.2% | 0.1% | 0.3% | |||||||||||||
| | | | | | | | | | | | | | | | | |
| | Cash Dividends Paid | | $ 21,469 | | $ 46,990 | | $ 29,509 | | ||||||||
| | | | | | | | | | | | | | | | | |
| Dividend Yield | 7.1% | 3.6% | 3.1% | |||||||||||||
| | | | | | | | | | | | | | | | | |
(1)- See Appendix A for the reconciliation of U.S. GAAP to adjusted key financial measures.
![[MISSING IMAGE: tm2226503d1-tbl_whatwedopn.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-103721/tm2226503d1-tbl_whatwedopn.jpg)
| Pay Mix | | | Compensation | |
| | Performance Metrics | | | A 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 Goals | | | Goals 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 Incentives | | | Equity 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 Policies | | | We 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, including a one-year security holding period requirement, that are intended to align further the interest of our named executive officers with those of our stockholders. | |
| | Anti-Hedging and Anti-Pledging Policies | | | 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. | |
| | Insider Trading Policy | | | We have an Insider Trading Policy that requires our Directors, NEOs and other senior associates to pre-clear transactions in our common stock with the Company’s finance and legal departments. Trading is permitted only during specified quarterly Company open trading periods. An executive bears the full responsibility if he or she violates the Company policy by permitting shares to be bought or sold without pre-clearance or when trading is restricted. We believe these policies further align insiders’ interests with those of our stockholders. | |
|
The Compensation Committee is responsible for determining the composition and value of the compensation for all of our NEOs. Our Chief Executive Officer ("CEO"(“CEO”), Chief Financial Officer (“CFO”) and our Executive Vice President Administration, who is responsible for the Company'sof Human Resources, functions, provide input on program design and information on the Company'sCompany’s and the furniture industry'sindustry’s performance. The Compensation Committee also considers stockholder viewpoints on compensation.
|
Based on its annual review and in response to the COVID-19 pandemic, the Compensation Committee approved the following for the fiscal 2020 executive compensation program:
•Base salaries for each NEO to remain at the same level as the prior fiscal year.•Approved temporary reductions to base salaries for each NEO, ranging from 30% to 100%, which were effective from March 29, 2020 to June 30, 2020 as part of the Company's COVID-19 pandemic action plan.•Concluded that no annual incentive compensation or discretionary bonus was to be awarded to the NEOs during fiscal 2020, in light of the COVID-19 pandemic and its effect on the financial results of the Company.
|
The COVID-19 pandemic has had and continues to have a significant impact on the global economy, the industry and the Company. The following changes were made in recognition of both the uncertain economic conditions and the negative impact COVID-19 has had on each NEOs overall compensation, who the Compensation Committee believes executed strongly to preserve cash and liquidity and position the Company well upon global economic recovery.
•The Compensation Committee restored the temporary salary reductions as of June 30, 2020 and maintained salaries for the NEOs at the same level for fiscal 2021 as in fiscal 2020. There was no recoupment of the temporary salary reductions.•In addition to the performance-based restricted stock units that performance vest after three years, the Compensation Committee awarded a service-based restricted stock grant that vests 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.
In implementing these changes, the Compensation Committee sought to balance the drive to reduce expenses and preserve liquidity, with its desire to appropriately incentivize and retain the Company's leadership as they continue to manage the Company during an unprecedented period of economic challenge and uncertainty. The Compensation Committee recognizes that our CEO and NEOs had decisively and dramatically responded to the COVID-19 pandemic and crisis; they rapidly began downsizing and preserving cash, and so persevering through the crisis with a strong balance sheet; our business rebounded as the fourth quarter progressed even though our executives were under the pressure of managing the restart of business with a substantially lower overall headcount; and our Chief Executive Officer and NEOs had shown leadership through reducing their compensation substantially during the fourth quarter.
As the Compensation Committee did not make any adjustments to the executive compensation performance targets or metrics as a result of the business disruption from the COVID-19 pandemic, which resulted in our Chief Executive Officer and NEOs not receiving any annual incentive or performance vesting of long-term incentive awards for fiscal 2020, and due to the uncertainties related to the on-going economic impact from the COVID-19 pandemic, the Compensation Committee will continue to assess the impact to the short-term and long-term components of the compensation program and may make further modifications to the program design or performance measures as appropriate.
|
The Compensation Committee, in setting individual NEO pay levels and opportunities, utilizes a peer group of companies that in its judgment best represents the unique nature of the Company'sCompany’s vertical business model, which integrates manufacturing, merchandising, and retailing.
Tablechange in name for Herman Miller, Inc. to MillerKnoll, Inc. due to its acquisition of Contents
|
| Knoll, Inc. The | ||||||||||||
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 forbelieves the fiscal 2021 to ensure the2022 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.
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| Hooker Furniture Corporation | | | | La-Z-Boy Incorporated | | | |||||||||||||||||
| | | | | | Green Brick Partners, Inc. | | | | Interface, Inc. | | | | MillerKnoll, Inc. | | | ||||||||
| | | Bassett Furniture Industries, Inc. | | | | ||||||||||||||||||
| | | | |||||||||||||||||||||
| Kimball International, Inc. | |||||||||||||||||||||||
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| | |||||||||||||||||||||||
| | | | | | HNI Corporation | | | | Kirkland’s, Inc. | | | | Steelcase Inc. | | |
|
The total base compensation mix for the NEOs based upon target levels
 |  |
|
Our compensation programs are structured to align the interests of our executive officers with the interests of our stockholders and include the following elements for fiscal 2020:
| | | | | Element | | | Key Characteristics | | | Link to Shareholder Value | | | How we Determine Amount | | | Key Decisions | |
| | | Fixed | | | Base Salary | | | ||||||||||||
| Fixed 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 | | | ||||||||
| | Service-Based Restricted Stock Unit Awards | | | Fixed 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 four years to select NEO’s during fiscal 2022. Mr. Koster was awarded restricted stock in fiscal 2020, thus did not receive a fiscal 2022 grant. | | |
| | | Based | | | | |
| Variable 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 | | | 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 2022 were earned at 105% of target. The newly promoted NEO’s who took on new responsibilities during the fiscal | |||||||||||
| | | ||||||||||||||||||
| | 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 | | | 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 | ||||||||||
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| | ![[MISSING IMAGE: tm2226503d1-pc_ceopn.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-103721/tm2226503d1-pc_ceopn.jpg) | | | ![[MISSING IMAGE: tm2226503d1-pc_neopn.jpg]](https://files.docoh.com/DEF 14A/0001104659-22-103721/tm2226503d1-pc_neopn.jpg) | |
|
We set base salaries for our NEOs based on individual contributions to business outcomes, the scope and complexity of each role, competencies, experience, leadership, performance, future potential, market data, and internal pay equity.
In July 2019, the
Due to the COVID-19 pandemic, effective March 29, 2020, the Compensation Committee approved temporary reductions to each of the NEO's base salaries through June 30, 2020. Mr. Kathwari elected to fully forgo his salary and reduced it by 100%, Mr. Whitely reduced his salary by 40% and the other NEOs reduced their salaries by 30% for the period. These temporary base salary reductions are reflected in the base salary amounts shown in the Summary Compensation Table for fiscal 2020.
The Compensation Committee also approved for the Board of Directors to forgo 50% of their director fees effective March 29, 2020 through June 30, 2020, which is reflected in the Director Compensation section.
| | | | | | | | | | | | | | | | | | |||||
| | Name | | | | Fiscal 2019 Salary ($) | | | Fiscal 2020 Salary ($) (1) | | | % Chg | | |||||||||
| | | | | | | | | | | | | | | | | | |||||
| | M. Farooq Kathwari | | | | $ | 1,150,000 | | | | | $ | 1,150,000 | | | 0% | | |||||
| | | | | | | | | | | | | | | | | | |||||
| | | Corey Whitely | | | | | $ | 500,000 | | | | | | $ | 500,000 | | | | 0% | | |
| | | | | | | | | | | | | | | | | | |||||
| | Daniel M. Grow | | | | $ | 350,000 | | | | | $ | 350,000 | | | 0% | | |||||
| | | | | | | | | | | | | | | | | | |||||
| | | Rodney A. Hutton (2) | | | | | $ | — | | | | | | $ | 375,000 | | | | n/a | | |
| | | | | | | | | | | | | | | | | | |||||
| | Eric D. Koster (3) | | | | $ | 320,000 | | | | | $ | 320,000 | | | 0% | | |||||
| | | | | | | | | | | | | | | | | | |||||
(1)Due to the COVID-19 pandemic, effective March 29, 2020, the Compensation Committee approved temporary base salary reductions for each of the NEOs. These temporary base salary reductions remained in effect until the end of fiscal 2020 and are reflected in the base salary amounts shown in the Summary Compensation Table. As a result, the amounts shown here for Fiscal 2020 are higher than those shown in the Summary Compensation Table.(2)Mr. Hutton was not a NEO in fiscal 2019, thus salary information was not provided in the table above.(3)Mr. Koster's salary increased to $320,000, effective August 1, 2018, one month after the start of fiscal 2019. As a result, the annual salary amount of $320,000 reported in the table above is higher than the amount disclosed in the Summary Compensation table.
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NEOs are eligible to earn cash awards under our annual incentive compensation program, which is designed to motivate and reward executives for performance on key annual measures. The annual incentive compensation program is based exclusively on attainment of financial metrics, measured on the Company'sCompany’s overall consolidated financial performance, that align our annual incentives with our strategy of driving growth, with an emphasis on profitability.
Refer to the section “Grants of Plan-Based Awards” further below for additional disclosure of the actual amounts for threshold, target and maximum for each NEO.
|
| | | ($ in millions) Performance Level | | | | Consolidated Net Sales $ | | | | Percent of Target | | | | Adjusted Operating Income $ (1) | | | | Percent of Target | | |
| | | Maximum | | | | $733.1 | | | | 103% | | | | $95.6 | | | | 109% | | |
| | | Target | | | | $712.6 | | | | 100% | | | | $87.6 | | | | 100% | | |
| | | Threshold | | | | $685.2 | | | | 96% | | | | $80.3 | | | | 92% | | |
| | | Actual | | | | $817.8 | | | | | | | | $134.2 | | | | | | |
| | | Individual Metric Payout Achieved | | | | | | | | 103% | | | | | | | | 109% | | |
| | | Individual Metric Weight | | | | | | | | 60% | | | | | | | | 40% | | |
| | | Overall Payout (as percent of Target) | | | | | | | | | | | | | | | | 105% | | |
| | | | | | | | | | | | | | | | | | | | | |
| ($ in millions) Performance Level | | Consolidated Net Sales $ | | Percent of Target | | Adjusted Operating Income $ (1) | | Percent of Target | | |||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Maximum | $799.0 | 103% | $71.0 | 118% | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| | Target | | $776.6 | | 100% | | $60.0 | | 100% | | ||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Threshold | $746.7 | 96% | $55.1 | 92% | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| | Actual | | $589.8 | | 76% | | $17.1 | | 28% | | ||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Individual Metric Payout | 0% | 0% | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| | Individual Metric Weight | | | | 60% | | | | 40% | | ||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Overall Payout (as percent of Target) | 0% | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
(1)- See Appendix A for a non-GAAP reconciliation showing how adjusted operating income is calculated from our financial statements.
| | | Name (1) | | | | Fiscal 2022 Target Incentive ($) | | | | Fiscal 2022 Target Incentive (% of base salary) | | | | Overall Performance Level Achieved (% of target performance) | | | | Actual Fiscal 2022 Incentive Payout ($) | | | | Actual Fiscal 2022 Incentive Payout (% of base salary) | | |
| | | M. Farooq Kathwari | | | | $750,000 | | | | 65% | | | | 105% | | | | $1,700,000 | | | | 148% | | |
| | | Corey Whitely (2) | | | | $125,000 | | | | 23% | | | | N/A | | | | $ 0 | | | | N/A | | |
|
| | | | | | | | | | | | | | | | | |
| Name (1) | | Fiscal 2020 Target Incentive (% of base salary) | | Overall Performance Level Achieved (% of target performance) | | Actual Fiscal 2020 Incentive Payout (% of base salary) | | |||||||||
| | | | | | | | | | | | | | | | | |
| M. Farooq Kathwari | 65% | 0% | 0% | |||||||||||||
| | | | | | | | | | | | | | | | | |
| | Corey Whitely | | 25% | | 0% | | 0% | | ||||||||
| | | | | | | | | | | | | | | | | |
| Daniel M. Grow | 26% | 0% | 0% | |||||||||||||
| | | | | | | | | | | | | | | | | |
(1)Mr. HuttonMs. Franks andMr.Messrs. McNulty, Fothergill and Koster did not participate in the fiscal20202022 non-equity incentive compensation plan disclosed above.
|
| | | | | | | | | |
| Fiscal Year | | Annual Incentive Payout (as Percent of Target) | | |||||
| | | | | | | | | |
| 2018 | 0% | |||||||
| | | | | | | | | |
| | 2019 | | 41% | | ||||
| | | | | | | | | |
| 2020 | 0% | |||||||
| | | | | | | | | |
| | Average Payout | | 14% | | ||||
| | | | | | | | | |
Historical Annual Incentive Payout Discretionary Annual Bonus |
The Company maintains a discretionary bonus program for executives who aredo not includedparticipate in our annual non-equity incentive compensation program. For purposes of the discretionary bonus, individual performance is assessed based upon the executive'sexecutive’s performance relative to his or her responsibilities, goals, and objectives for each executive, which may or may not include financial metrics. Each executive develops annual business objectives for their respective areas, which are approved by the CEO and are used for this assessment. Individual performance is additionally measured by how the executive'sexecutive’s actions conform with and exemplify the Company'sCompany’s ten "Leadership Principles"“Leadership Principles”. For each executive, the executive'sexecutive’s impact upon initiatives of their division, department function or organization is also considered, as well as their impact on the development of their associates. In light of the economic impact to the Company from the COVID-19 pandemic,
| | | Name | | | | Fiscal 2022 Discretionary Bonus ($) | | | | Fiscal 2022 Discretionary Bonus (% of base salary) | | |
| | | Matthew J. McNulty | | | | $ 80,000 | | | | 23% | | |
| | | Amy Franks | | | | $130,000 | | | | 37% | | |
| | | Ashley Fothergill | | | | $ 75,000 | | | | 31% | | |
| | | Eric D. Koster | | | | $ 60,000 | | | | 19% | | |
2022 due to recent promotions into new executive roles. However, each will participate in the fiscal 2023 non-equity incentive compensation program, along with Mr. Koster, and thus will not participate in the fiscal 2023 discretionary annual bonus program.
Long-term Incentive Compensation |
To align our executive officers'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 equity-based compensation including restricted stock, restricted stock units, stock options, or other forms of equity-based compensation.
compensation, which may vest based on service or performance or a combination thereof.
performance-based equity compensation awards was kept at a three-year cliff vesting period, similar to the prior year. The weighting of the three performance metrics was established as follows:
Fiscal 2022 Long-term Incentive Performance Metrics |
| | | | | | | | | | | | | | | | | |
| Payout Metric (Total Weight) | | Fiscal 2020 Weight (50%) | | Fiscal 2021 Weight (30%) | | Fiscal 2022 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 20202022 performance-based stock unit grants to selected NEOs as follows:
| | | Name | | | | Threshold | | | | Target | | | | Maximum | | |
| | | M. Farooq Kathwari | | | | 32,500 | | | | 65,000 | | | | 81,250 | | |
| | | Corey Whitely | | | | 3,647 | | | | 7,294 | | | | 9,117 | | |
| | | | | | | | | | | | | | | | | |
| Name | | Threshold | | Target | | Maximum | | |||||||||
| | | | | | | | | | | | | | | | | |
| M. Farooq Kathwari | 32,500 | 65,000 | 81,250 | |||||||||||||
| | | | | | | | | | | | | | | | | |
| | Corey Whitely | | 4,920 | | 9,840 | | 12,300 | | ||||||||
| | | | | | | | | | | | | | | | | |
| Daniel M. Grow | 2,342 | 4,684 | 5,855 | |||||||||||||
| | | | | | | | | | | | | | | | | |
| | Rodney A. Hutton (1) | | — | | — | | — | | ||||||||
| | | | | | | | | | | | | | | | | |
| Eric D. Koster (1) | — | — | — | |||||||||||||
| | | | | | | | | | | | | | | | | |
(1)Mr. Hutton
2022-2024 Long-term Incentive Awards Granted
| | | Fiscal Year 2020-2022 Performance Period | | | ||||||||||||||||||||||||
| | | | | | | Target Goals | | | | Results | | | | Payout as % of Target | | | ||||||||||||
| | | ($ in millions) | | | | Sales | | | | Return on Equity | | | | Sales | | | | Return on Equity | | | | Sales | | | | Return on Equity | | |
| | | FY 2020 | | | | $776.6 | | | | 11.7% | | | | $589.8 | | | | 3.9% | | | | 0% | | | | 0% | | |
| | | FY 2021 | | | | $807.6 | | | | 12.3% | | | | $685.2 | | | | 17.7% | | | | 0% | | | | 125% | | |
| | | FY 2022 | | | | $839.9 | | | | 12.9% | | | | $817.8 | | | | 26.4% | | | | 66% | | | | 125% | | |
|
| | | | | | | | | | | | | | | | | |
| Fiscal Year 2018-2020 Performance Period | ||||||||||||||||
| | | | | | | | | | | | | | | | | |
| Results | Target Goal | | Results | | Payout as % of Target | |||||||||||
| | | | | | | | | | | | | | | | | |
| Operating Margin per Share | ||||||||||||||||
| | | | | | | | | | | | | | | | | |
| FY 2018 | $2.52 | $1.83 | 0% | |||||||||||||
| | | | | | | | | | | | | | | | | |
| | FY 2019 | | $2.60 | | $2.00 | | 0% | | ||||||||
| | | | | | | | | | | | | | | | | |
| FY 2020 | $2.68 | $0.62 | 0% | |||||||||||||
| | | | | | | | | | | | | | | | | |
Following the end of the third performance year, there were no49% of the target number of fiscal 2020 performance-based stock units were earned or paid outby the NEOs as noted below.
| | | Name (1) | | | | Target | | | | Actual Vested (2) | | | | % Vested | | |
| | | M. Farooq Kathwari | | | | 65,000 | | | | 31,635 | | | | 49% | | |
| | | Fiscal Year 2021-2023 Performance Period | | | ||||||||||||||||||||||||
| | | | | | | Target Goals | | | | Results | | | | Payout as % of Target | | | ||||||||||||
| | | ($ in millions) | | | | Sales | | | | Return on Equity | | | | Sales | | | | Return on Equity | | | | Sales | | | | Return on Equity | | |
| | | FY 2021 | | | | $613.4 | | | | 4.1% | | | | $685.2 | | | | 17.7% | | | | 125% | | | | 125% | | |
| | | FY 2022 | | | | $638.0 | | | | 4.3% | | | | $817.8 | | | | 26.4% | | | | 125% | | | | 125% | | |
| | | FY 2023 | | | | n/a | | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fiscal Year 2019-2021 Performance Period | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Target Goals | | Results | | Payout as % of Target | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sales | Return on Equity | Sales | Return on Equity | Sales | Return on Equity | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | (in millions) | (in millions) | ||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FY 2019 | $797.5 | 10.3% | $746.7 | 11.1% | 0% | 125% | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | FY 2020 | | $829.4 | | 11.1% | | $589.8 | | 3.9% | | 0% | | 0% | | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FY 2021 | n/a | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
There has been no payout with respect to the performance-based stock unit awards granted in fiscal 20192021 as the third-year performance measurement period has not yet lapsed. The results for the relative TSR performance metric, which is measured over the entire three-year period, will be determined following the conclusion of the third year of the 2019-20212021-2023 performance cycle.
| | | Fiscal Year 2022-2024 Performance Period | | | ||||||||||||||||||||||||
| | | | | | | Target Goals | | | | Results | | | | Payout as % of Target | | | ||||||||||||
| | | ($ in millions) | | | | Sales | | | | Return on Equity | | | | Sales | | | | Return on Equity | | | | Sales | | | | Return on Equity | | |
| | | FY 2022 | | | | $712.6 | | | | 18.6% | | | | $817.8 | | | | 26.4% | | | | 125% | | | | 125% | | |
| | | FY 2023 | | | | n/a | | | ||||||||||||||||||||
| | | FY 2024 | | | | n/a | | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fiscal Year 2020-2022 Performance Period | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Target Goals | | Results | | Payout as % of Target | | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sales | Return on Equity | Sales | Return on Equity | Sales | Return on Equity | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | (in millions) | (in millions) | ||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FY 2020 | $776.6 | 11.7% | $589.8 | 3.9% | 0% | 0% | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | FY 2021 | | | | | | n/a | | | | | | | | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FY 2022 | n/a | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
There has been no payout with respect to the performance-based stock unit awards granted in fiscal 20202022 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 2020-20222022-2024 performance cycle.
Restricted Stock Unit Awards for Fiscal 2022 (service-based) |
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-basedservice-based criteria only. Any restricted stock units not fully vested on the date the employee separates are subject to forfeiture. For fiscal 2022, the Compensation Committee awarded certain NEOs service-based restricted stock grants that vest ratably over four years. The Compensation Committee approvedbelieves 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)(2) | | | | $ Value | | | | # of Units | | |
| | | Matthew J. McNulty | | | | $56,430 | | | | 3,000 | | |
| | | Amy Franks | | | | $75,240 | | | | 4,000 | | |
| | | Ashley Fothergill | | | | $32,475 | | | | 1,500 | | |
Stock Option Awards for Fiscal 2022 |
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 based and time-basedservice-based criteria, and a ten-year term. Any stock options not fully vested on the date the employee separates are subject to forfeiture. The Compensation Committee did not approve any grants of stock options to the NEOs in fiscal 2020.
Change of Control Severance Plan for Executives |
The change in control plan for 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 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.
Ethan Allen Retirement Savings Plan |
The Company maintains the Ethan Allen Retirement Savings Plan (the "Retirement Plan"“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 2020,2022, 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'sparticipant’s before tax contribution and $0.50 on the next $1,600 of a participant'sparticipant’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 2020.
Executive Perquisites and Other Personal Benefits |
We offer a very limited number of perquisites and other personal benefits to our 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 2020,2022, with the exception of Mr. Kathwari, the NEOs did not receive any perquisites. Mr. Kathwari received: (1)received the use of a Company car (including driver, gas, registration, title, insurance, and maintenance); (2) and reimbursement of life insurance premiums up to $50,000; and (3) contributions made by the Company pursuant to the Ethan Allen Retirement Savings Plan.
33 |
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, effectiveEffective July 1, 2015, the Company entered into an employment agreement with Mr. Kathwari, which expired on June 30, 2022. In advance of the 2015expiration date, the Company entered into a new 2022 employment agreement (the “2022 Employment Agreement”) on February 3, 2022 with Mr. Kathwari. The 2022 Employment Agreement of which its incentive compensation components were subsequently approved by stockholders at our 2015 Annual Meeting of Stockholders.
commenced on July 1, 2022 and is for a three-year term ending June 30, 2025. Pursuant to the 20152022 Employment Agreement, Mr. Kathwari is entitled to a basethe following:
The former 2015 employment agreement, dated October 1, 2015, is filed as Exhibit 10.2 in our fiscal 2022 Annual Report on Form 10-K.
Deductibility Cap on Executive 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, performance-based stock units and restricted 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.
34 |
The Compensation Committee oversees our compensation program for our NEOs on behalf of the Board. In fulfilling its oversight responsibilities, the Compensation Committee has reviewed and discussed with management this Compensation Discussion and Analysis and recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement and the Company'sCompany’s Annual Report.
DAVID M. SABLE
CYNTHIA EKBERG TSAI
This Compensation Committee Report is not deemed "soliciting material"“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.
35 |
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" or "NEOs") servingcompensation earned during the year ended June 30, 2020.
each fiscal year. Stock awards reflect awards with a grant date during each fiscal year.
| | | 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 | | | | | | 2022 | | | | | | $ | 1,150,050 | | | | | | $ | — | | | | | | $ | 1,115,010 (a) | | | | | | $ | 1,700,000 | | | | | | $ | — | | | | | | $ | 110,539 | | | | | | $ | 4,075,599 | | | |
| | | | 2021 | | | | | | | 1,150,050 | | | | | | | — | | | | | | | 809,290 (b) | | | | | | | 1,700,000 | | | | | | | — | | | | | | | 121,474 | | | | | | | 3,780,814 | | | | |||||
| | | | 2020 | | | | | | | 862,500 | | | | | | | — | | | | | | | 826,670 (c) | | | | | | | — | | | | | | | — | | | | | | | 126,937 | | | | | | | 1,816,107 | | | | |||||
| | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Matthew J. McNulty Senior Vice President, Treasurer & Principal Financial Officer | | | | | | 2022 | | | | | | $ | 340,685 | | | | | | $ | 80,000 | | | | | | $ | 56,430 (d) | | | | | | $ | — | | | | | | $ | — | | | | | | $ | 2,203 | | | | | | $ | 479,318 | | | |
| | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Amy Franks Executive Vice President, Retail Network & Business Development | | | | | | 2022 | | | | | | $ | 355,196 | | | | | | $ | 130,000 | | | | | | $ | 75,240 (d) | | | | | | $ | — | | | | | | $ | — | | | | | | $ | 2,290 | | | | | | $ | 562,726 | | | |
| | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Ashley Fothergill Senior Vice President, Merchandising | | | | | | 2022 | | | | | | $ | 243,230 | | | | | | $ | 75,000 | | | | | | $ | 32,475 (d) | | | | | | $ | — | | | | | | $ | — | | | | | | $ | 2,055 | | | | | | $ | 352,760 | | | |
| | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Eric D. Koster Vice President, General Counsel & Secretary | | | | | | 2022 | | | | | | $ | 320,000 | | | | | | $ | 60,000 | | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | 2,290 | | | | | | $ | 382,290 | | | |
| | | | 2021 | | | | | | | 320,000 | | | | | | | 50,000 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 2,651 | | | | | | | 372,651 | | | | |||||
| | | | 2020 | | | | | | | 296,000 | | | | | | | — | | | | | | | 9,150 (e) | | | | | | | — | | | | | | | — | | | | | | | 2,302 | | | | | | | 307,452 | | | | |||||
| | | | | | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| | | Corey Whitely (7) Former Executive Vice President, Administration and Chief Financial Officer | | | | | | 2022 | | | | | | $ | 273,973 | | | | | | $ | — | | | | | | $ | 125,000 (f) | | | | | | $ | — | | | | | | $ | — | | | | | | $ | 2,290 | | | | | | $ | 401,262 | | | |
| | | | 2021 | | | | | | | 500,000 | | | | | | | — | | | | | | | 182,480 (g) | | | | | | | 166,250 | | | | | | | — | | | | | | | 2,651 | | | | | | | 851,381 | | | | |||||
| | | | 2020 | | | | | | | 450,000 | | | | | | | — | | | | | | | 124,999 (h) | | | | | | | — | | | | | | | — | | | | | | | 2,302 | | | | | | | 577,301 | | | | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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 | 2020 | $ | 862,500 | $ | — | $ | 826,670 | (a) | $ | — | $ | — | $ | 126,937 | $ | 1,816,107 | ||||||||||||||||||||||||||||
| Chairman of the Board, | | 2019 | | | 1,150,050 | | | — | | | 1,186,380 | (b) | | | 314,889 | | | — | | | 121,671 | | | 2,772,990 | | |||||||||||||||||||
| President and Principal | 2018 | 1,150,050 | — | 1,652,300 | (c) | — | — | 126,649 | 2,928,999 | |||||||||||||||||||||||||||||||||||
| Executive Officer | ||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Corey Whitely | 2020 | $ | 450,000 | $ | — | $ | 124,999 | (d) | $ | — | $ | — | $ | 2,302 | $ | 577,301 | ||||||||||||||||||||||||||||
| Executive Vice President, | | 2019 | | | 500,000 | | | — | | | 122,672 | (e) | | | 50,646 | | | — | | | 2,190 | | | 675,508 | | |||||||||||||||||||
| Administration, Principal | 2018 | 500,000 | — | — | (f) | — | — | 2,161 | 502,161 | |||||||||||||||||||||||||||||||||||
| Financial Officer | ||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Daniel M. Grow | 2020 | $ | 323,750 | $ | — | $ | 59,502 | (g) | $ | — | $ | — | $ | 2,302 | $ | 385,554 | ||||||||||||||||||||||||||||
| Senior Vice President | | 2019 | | | 350,000 | | | — | | | 89,306 | (h) | | | 36,871 | | | — | | | 2,190 | | | 478,367 | | |||||||||||||||||||
| Business Development | 2018 | 350,000 | — | — | (f) | — | — | 2,161 | 352,161 | |||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Rodney A. Hutton (7) | 2020 | $ | 249,375 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 249,375 | |||||||||||||||||||||||||||||
| Chief Marketing Officer | ||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Eric D. Koster | 2020 | $ | 296,000 | $ | — | $ | 9,150 | (i) | $ | — | $ | — | $ | 2,302 | $ | 307,452 | ||||||||||||||||||||||||||||
| Vice President, General | | 2019 | | | 317,692 | | | 25,000 | | | — | | | — | | | — | | | 2,190 | | | 344,882 | | ||||||||||||||||||||
| Counsel & Secretary | ||||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(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
the end of fiscalJune 30, 2020 and are reflected in the 2020 base salary amounts shown in the Summary Compensation Table 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.
(4)- The Non-Equity Incentive Plan Compensation amount shows actual payouts paid under the annual incentive plan for fiscal 2022 further described in the Annual Incentive Compensation section of the CD&A.
20202022 to each NEO. There can be no assurance that the grant date fair value of the equity awards, as listed in this table, of the equity awards will ever be realized. The grant date fair value of the equity awards is included in the "Stock Awards"“Stock Awards” column of the Summary Compensation Table. Name Grant Date
under non-equity
incentive plan awards (1)
under
equity incentive plan awards (2)
Stock Awards:
Number of
Stock Units (#) (3)
Fair Value of
Stock Awards ($) (4)
($)
($)
($)
(#)
(#)
(#) M. Farooq Kathwari 7/1/2021 $ 375,000 $ 750,000 $ 1,700,000 — — — — — M. Farooq Kathwari 8/3/2021 — — — 32,500 65,000 81,250 — $ 1,115,010 Matthew J. McNulty 8/10/2021 — — — — — — 3,000 $ 56,430 Amy Franks 8/10/2021 — — — — — — 4,000 $ 75,240 Ashley Fothergill 8/10/2021 — — — — — — 1,500 $ 32,475 Eric D. Koster (5) — — — — — — — — $ — Corey Whitely (6) 7/1/2021 $ 62,500 $ 125,000 $ 166,250 — — — — — Corey Whitely (6) 8/3/2021 — — — 3,647 7,294 9,117 — $ 125,000 Estimated future payouts
under non-equity
incentive plan awards (1) Estimated future payouts
under equity incentive
plan awards (2) All Other
Stock Awards Grant Date
Fair Value of Name Grant Date Threshhold
($) Target
($) Maximum
($) Threshhold
(#) Target
(#) Maximum
(#) Number of
Stock Units (3) Stock and
Option Awards (4) M. Farooq Kathwari 7/1/2019 $ 375,000 $ 750,000 $ 1,700,000 — — — — — M. Farooq Kathwari 8/5/2019 — — — 32,500 65,000 81,250 — $ 826,670 Corey Whitely 7/1/2019 $ 62,500 $ 125,000 $ 166,250 — — — — — Corey Whitely 8/5/2019 — — — 4,920 9,840 12,300 — $ 124,999 Daniel M. Grow 7/1/2019 $ 29,750 $ 59,500 $ 79,135 — — — — — Daniel M. Grow 8/5/2019 — — — 2,342 4,684 5,855 — $ 59,502 Rodney A. Hutton (5) — — — — — — — — — Eric D. Koster (5) — — — — — — — 1,000 $ 9,150 (1)20202022 annual non-equity 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 July or August of each year with respect to the preceding fiscal year) to be eligible.
| | | | | | | | | | | | | | Option Awards | | | | Stock Awards (1) | | | |||||||||||||||||||||||||||||||||||||||||||||||||
| | | Name | | | | Notes | | | | Grant 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 | | | | | | (2) | | | | | 8/5/2019 | | | | | | — | | | | | — | | | | | | — | | | | | | | — | | | | | | | 31,635 | | | | | | $ | 639,343 | | | | | | | 49,615 | | | | | | $ | 1,002,719 | | | |
| | | | | | | | | (3) | | | | | 8/12/2020 | | | | | | — | | | | | — | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 81,250 | | | | | | $ | 1,642,063 | | | |
| | | | | | | | | (4) | | | | | 8/12/2020 | | | | | | — | | | | | — | | | | | | — | | | | | | | — | | | | | | | 12,500 | | | | | | $ | 252,625 | | | | | | | — | | | | | | | — | | | |
| | | | | | | | | (5) | | | | | 8/3/2021 | | | | | | — | | | | | — | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 81,250 | | | | | | $ | 1,642,063 | | | |
| | | | | | | | | (6) | | | | | 1997-2002 | | | | | | — | | | | | — | | | | | | — | | | | | | | — | | | | | | | 126,000 | | | | | | $ | 2,546,460 | | | | | | | — | | | | | | | — | | | |
| | | Matthew J. McNulty | | | | | | (7) | | | | | 8/10/2021 | | | | | | — | | | | | — | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 3,000 | | | | | | $ | 60,630 | | | |
| | | Amy Franks | | | | | | (7) | | | | | 8/10/2021 | | | | | | — | | | | | — | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 4,000 | | | | | | $ | 80,840 | | | |
| | | Ashley Fothergill | | | | | | (7) | | | | | 8/10/2021 | | | | | | — | | | | | — | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 1,500 | | | | | | $ | 30,315 | | | |
| | | Eric D. Koster | | | | | | (8) | | | | | 3/11/2020 | | | | | | — | | | | | — | | | | | | — | | | | | | | — | | | | | | | 500 | | | | | | $ | 10,105 | | | | | | | — | | | | | | | — | | | |
| | | | | | | | | | | | | | 1/31/2014 | | | | | | 5,000 | | | | | — | | | | | $ | 25.24 | | | | | | | 1/31/2024 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | |
| | | | | | | | | | | | | | 6/15/2015 | | | | | | 1,667 | | | | | — | | | | | $ | 26.19 | | | | | | | 6/15/2025 | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | |
| | | Corey Whitely | | | | | | (9) | | | | | — | | | | | | — | | | | | — | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Option Awards | | | | Stock Awards | | ||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Notes | | Grant 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) | 7/25/2018 | — | — | — | — | — | — | 32,500 | $ | 384,475 | ||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (2) | 8/5/2019 | — | — | — | — | — | — | 32,500 | $ | 384,475 | |||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (3) | 1997-2002 | — | — | — | — | 126,000 | $ | 1,490,580 | — | — | |||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 10/1/2011 | 120,000 | — | $ | 13.61 | 10/1/2021 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Corey Whitely | | (4) | | 7/25/2018 | | | — | | | — | | | — | | | — | | | — | | | — | | | 3,361 | | $ | 39,755 | | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | (5) | | 8/5/2019 | | | — | | | — | | | — | | | — | | | — | | | — | | | 4,920 | | $ | 58,204 | | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | (6) | | 1/31/2014 | | | 12,000 | | | — | | $ | 25.24 | | | 1/31/2024 | | | — | | | — | | | — | | | — | | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | (7) | | 6/15/2015 | | | 3,333 | | | — | | $ | 26.19 | | | 6/15/2025 | | | — | | | — | | | | | | | | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Daniel M. Grow | (4) | 7/25/2018 | — | — | — | — | — | — | 2,447 | $ | 28,948 | ||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (5) | 8/5/2019 | — | — | — | — | — | — | 2,342 | $ | 27,706 | |||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 7/26/2011 | 1,500 | — | $ | 19.07 | 7/26/2021 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 7/31/2012 | 1,000 | — | $ | 20.63 | 7/31/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2/8/2013 | 1,500 | — | $ | 28.67 | 2/8/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (6) | 1/31/2014 | 5,000 | — | $ | 25.24 | 1/31/2024 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (7) | 6/15/2015 | 2,001 | — | $ | 26.19 | 6/15/2025 | — | — | |||||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Rodney A. Hutton | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Eric D. Koster | (8) | 3/11/2020 | — | — | — | — | 1,000 | $ | 11,830 | — | — | ||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (6) | 1/31/2014 | 5,000 | — | $ | 25.24 | 1/31/2024 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (7) | 6/15/2015 | 1,667 | — | $ | 26.19 | 6/15/2025 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1)-
| | | Name | | | | Executive Contributions In FY 2022 | | | | Registrant Contributions In FY 2022 (1) | | | | Aggregate Earnings In FY 2022 (1)(2) | | | | Aggregate Withdrawals/ Distributions ($) | | | | Aggregate Balance at 6/30/2022 (FYE) (3) | | | |||||||||||||||
| | | M. Farooq Kathwari | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Dividend Book account | | | | | $ | — | | | | | | $ | — | | | | | | $ | 37,402 | | | | | | $ | — | | | | | | $ | 761,308 | | | |
| | | Retirement Contract | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | 225,000 | | | |
| | | Stock Units | | | | | $ | — | | | | | | $ | — | | | | | | $ | 239,400 | | | | | | $ | (239,400) | | | | | | $ | 2,546,460 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | | Employee Contributions In FY 2020 | | | Registrant Contributions In FY 2020 (1) | | | Aggregate Earnings In FY 2020 (1)(2) | | | Aggregate Withdrawals/ Distributions ($) | | | Aggregate Balance at 6/30/2020 (FYE) (3) | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| M. Farooq Kathwari | ||||||||||||||||||||||||||||
| Dividend Book account | | $ | — | | $ | — | | $ | 33,907 | | $ | — | | $ | 688,342 | | ||||||||||||
| Retirement Contract | $ | — | $ | — | $ | — | $ | — | $ | 225,000 | ||||||||||||||||||
| Stock Units | | $ | — | | $ | — | | $ | 103,320 | | $ | (103,320 | ) | | $ | 1,490,580 | | |||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1)- None of the registrant contributions and aggregate earnings during fiscal
20202022 are included in the Summary Compensation Table.
As of the end of fiscal year 2020 wethe 2015 Employment Agreement.his employment agreement. We also have change in control provisions with all our NEOseach NEO as set forth in the Change in Control Severance Plan and in restricted stock and stock optiontheir respective equity agreements.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 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 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.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. 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. 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.
The amount of compensation which would have been payable to the NEOs upon termination of employment, assuming a June 30, 20202022 termination date, and for purposes of the last column, a change in control as of the same date, is listed in the following table.
| | | | | | | Termination With Cause | | | | Voluntary Termination/ Retirement | | | | Termination Without Cause | | | | Death or Disability | | | | Change in Control (9) | | | |||||||||||||||
| | | M. Farooq Kathwari | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Salary (1) | | | | | $ | — | | | | | | $ | — | | | | | | $ | 2,300,000 | | | | | | $ | 1,150,000 | | | | | | $ | 2,300,000 | | | |
| | | Bonus (2) | | | | | | — | | | | | | | — | | | | | | | 2,000,000 | | | | | | | — | | | | | | | 2,000,000 | | | |
| | | Life and disability payments (3) | | | | | | — | | | | | | | — | | | | | | | 31,488 | | | | | | | 15,744 | | | | | | | 15,744 | | | |
| | | Restricted stock units (4) | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 252,625 | | | |
| | | Performance stock units (5) | | | | | | — | | | | | | | 3,792,103 | | | | | | | 3,792,103 | | | | | | | 3,792,103 | | | | | | | 3,266,643 | | | |
| | | Health and welfare payments (6) | | | | | | — | | | | | | | 29,919 | | | | | | | 29,919 | | | | | | | — | | | | | | | 29,919 | | | |
| | | Matthew J. McNulty | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Salary (7) | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | 375,000 | | | |
| | | Bonus (8) | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 36,667 | | | |
| | | Restricted stock units (4) | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 60,630 | | | |
| | | Amy Franks | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Salary (7) | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | 410,100 | | | |
| | | Bonus (8) | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 56,667 | | | |
| | | Restricted stock units (4) | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 80,840 | | | |
| | | Ashley Fothergill | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Salary (7) | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | 310,000 | | | |
| | | Bonus (8) | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 31,667 | | | |
| | | Restricted stock units (4) | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 30,315 | | | |
| | | Eric D. Koster | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Salary (7) | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | — | | | | | | $ | 320,000 | | | |
| | | Bonus (8) | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 36,667 | | | |
| | | Restricted stock units (4) | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | — | | | | | | | 10,105 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | 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) | — | — | 2,000,000 | 2,000,000 | 2,000,000 | |||||||||||||||||||
| Life and disability payments (3) | — | — | 100,000 | 50,000 | 50,000 | |||||||||||||||||||
| Stock options (4) | — | — | — | — | — | |||||||||||||||||||
| Performance stock units (5) | — | 499,818 | 499,818 | 499,818 | 1,537,900 | |||||||||||||||||||
| Health and welfare payments (6) | — | 37,501 | 37,501 | — | 37,501 | |||||||||||||||||||
| | Corey Whitely | | | | | | | |||||||||||||||||
| | Salary (7) | | $ — | | $ — | | $ — | | $ — | | $ 500,000 | | ||||||||||||
| | Bonus (8) | | — | | — | | — | | — | | 16,882 | | ||||||||||||
| | Stock options (9) | | — | | — | | — | | — | | — | | ||||||||||||
| | Performance stock units (10)(11) | | — | | — | | — | | 57,519 | | 195,928 | | ||||||||||||
| Daniel M. Grow | ||||||||||||||||||||||||
| Salary (7) | $ — | $ — | $ — | $ — | $ 350,000 | |||||||||||||||||||
| Bonus (8) | — | — | — | — | 12,290 | |||||||||||||||||||
| Stock options (9) | — | — | — | — | — | |||||||||||||||||||
| Performance stock units (10)(11) | — | — | — | 37,907 | 113,308 | |||||||||||||||||||
| | Rodney A. Hutton | | | | | | | |||||||||||||||||
| | Salary (7) | | $ — | | $ — | | $ — | | $ — | | $ 375,000 | | ||||||||||||
| | Bonus (8) | | — | | — | | — | | — | | — | | ||||||||||||
| | Stock options (9) | | — | | — | | — | | — | | — | | ||||||||||||
| | Performance stock units (10)(11) | | — | | — | | — | | — | | — | | ||||||||||||
| Eric D. Koster | ||||||||||||||||||||||||
| Salary (7) | $ — | $ — | $ — | $ — | $ 320,000 | |||||||||||||||||||
| Bonus (8) | — | — | — | — | 8,333 | |||||||||||||||||||
| Stock options (9) | — | — | — | — | — | |||||||||||||||||||
| Performance stock units (10)(11) | — | — | — | — | — | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
(1)- Under the
2015Employment Agreement, if Mr.Kathwari'sKathwari’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.
41 |
Pursuant to the requirements of the Dodd-Frank Act, we are required to disclose the ratio of our Chief Executive Officer'sOfficer’s compensation to that of our median employee.
- 2022:
$34,212.
To identify, and to determine the annual total compensation of, the median employee, we used the following methodology and assumptions for fiscal 2022:
|
Our Compensation
As part of the risk assessments, the 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 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 Conduct and giving the Compensation Committee the power to reduce payouts under our compensation plans. More specifically, this conclusion was based on the following considerations:
|
year ended June 30, 2022. The Audit Committee selectsinvited several independent registered public accounting firms to participate in this process, including KPMG LLP (“KPMG”), which audited the Company’s consolidated financial statements for the years ended June 30, 2021 and hires our2020. As a result of this process and following careful deliberation, on February 7, 2022, the Audit Committee dismissed KPMG as the Company’s independent registered public accounting firm, effective as of that same date.
KPMG
2023.
appointment of
accounting firm for the fiscal year ending June 30,
44 |
The following table represents a summary ofthe aggregate professional fees paid to CohnReznick and KPMG for services rendered during fiscal 2022 and 2021 for the following categories of service.
| | | | | | | 2022 (3) | | | | 2021 | | |
| | | Audit fees (1) | | | | $1,009,124 | | | | $1,050,000 | | |
| | | Tax fees (2) | | | | 7,500 | | | | 32,000 | | |
| | | Total fees | | | | $1,016,624 | | | | $1,082,000 | | |
| | | | | | | | | | | | | | | |
| | | 2020 | | | 2019 | | ||||||||
| | | | | | | | | | | | | | | |
| Audit fees (1) | $ | 1,172,792 | $ | 1,342,105 | ||||||||||
| | | | | | | | | | | | | | | |
| | Audit-related fees (2) | | | 43,028 | | | — | | ||||||
| | | | | | | | | | | | | | | |
| Tax fees (3) | 6,583 | 38,619 | ||||||||||||
| | | | | | | | | | | | | | | |
| | Total fees | | $ | 1,222,403 | | $ | 1,380,724 | | ||||||
| | | | | | | | | | | | | | | |
(1)- Represents the aggregate fees for professional services rendered for the integrated audit of the
Company'sCompany’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.
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 ChairChairperson of the Audit Committee or, in the Chair'sChair’s discretion or in the case that any such engagement is more than $10,000, by the entirefull Audit Committee. All of the services provided by KPMG were pre-approved by the Audit Committee in accordance with this policy.
AUDIT COMMITTEE REPORT |
The Audit Committee assists the Board 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,CohnReznick, 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:
S-K.
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, 20202022 and KPMG'sCohnReznicks’ audit of internal control over financial reporting as of June 30, 2020.
2022.
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.
GINA CASAR
DR. JOHN CLARK
TARA l. STACOM
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.
|
In light of the public health and safety concerns related to the novel coronavirus ("COVID-19"), we determined that a virtual-only meeting is advisable for
| Q: | | | What is the purpose of Annual Meeting? | |
| | A: | | | This Proxy Statement and |
Q:What is the purpose of Annual Meeting?A:We will hold the Annual Meeting to enable stockholders to vote on the following matters:
| We will hold the Annual Meeting to enable stockholders to vote on the following matters: Proposal 1. | to elect seven director nominees identified in this Proxy Statement to serve until the | |||
Proposal 2. | to approve, by a non-binding advisory vote, Named Executive Officer compensation as further described in | |||
Statement; Proposal 3. | to ratify the appointment of 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 2023 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, Gina Casar, Dr. John Clark, John J. Dooner, Jr., David M. Sable, Tara I. Stacom and Cynthia Ekberg Tsai. | |
and to transact such other business as may properly come before the Annual Meeting.47
| | 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 submit questions during the meeting by visiting www.virtualshareholdermeeting.com/ETH2022. 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 10:45 A.M. Eastern Time on November 9, 2022. The Annual Meeting will begin promptly at 11:00 A.M. Eastern Time on November 9, 2022. 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 not engaged a professional proxy solicitation firm. | |
| | 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 September 14, 2022 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 25,347,420 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 September 28, 2022. 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: | | | 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/ETH2022 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 8, 2022. 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. | |
| | 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 7, 2022. 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. | |
Eric D. Koster
25 Lake Avenue Ext.
Danbury,
the 2020 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:You can vote your shares in any of the following ways:•By Internet—If you are a stockholder of record, you can submit a proxy over the Internet by logging on towww.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 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.•By telephone—If you are a stockholder of record, 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—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.•Virtually—Over the Internet during the 2020 Annual Meeting atwww.virtualshareholdermeeting.com/ETH2020and using your 16-digit control number (included on the Notice of Internet Availability of Proxy Materials, 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 Wednesday, November 11, 2020. 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 broker) 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.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 your shares 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 7:00 A.M., Eastern Time, on Tuesday, November 10, 2020. 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.
| | 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 Matthew J. McNulty 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 the fiscal 2023 year. 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. | |
| | 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: | | | Is there a list of stockholders entitled to vote at the Annual Meeting? | |
| | A: | | | The complete list of stockholders of record entitled to vote will be available for 10 days prior to the Annual Meeting, between the hours of 9:00 A.M. and 4:30 P.M. Eastern Time, at our principal executive offices at 25 Lake Avenue Ext., Danbury, Connecticut 06811-5286, by contacting the Corporate Secretary, telephone (203) 743-8000. | |
| | 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 CohnReznick LLP as our independent registered public accounting firm for the 2023 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 8, 2022. 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 8, 2022. 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. 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 2023 Annual Meeting of Stockholders? | |
| | A: | | | 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 2023 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 12, 2023 (120 days prior to November 9, | |
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). 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.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 rules of 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 fiscal 2021. 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.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 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 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 NEOs, and; Proposal 3: the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the 2021 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. Abstentions will be counted as present for the purposes of the vote on Proposal 2, 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 Proposal 2. Abstentions and broker non-votes will be counted as present and entitled to vote for the purposes of the vote on Proposal 3, and therefore will have the same effect as a vote against the proposal.Approval of the Proposal 2 regarding compensation of our NEOs 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: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 11, 2020.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 11, 2020.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.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" is a program, approved by the SEC, which allows companies and intermediaries (e.g. banks and brokers or other nominees) to satisfy the delivery requirements for proxy statements and annual reports by delivering only one package of stockholder proxy material to any household at which two or more stockholders reside. We rely on this SEC program to 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 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 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 you receive a single set of proxy materials as a result of househoulding 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 2021 annual meeting of stockholders?A:Stockholder ProposalsStockholder proposals intended to be included in our proxy statement and voted on at our 2021 Annual Meeting of Stockholders must be received at our corporate headquarters at 25 Lake Avenue Ext., Danbury, CT 06811-5286, Attention: Corporate Secretary, on or before June 4, 2021. Applicable SEC rules and regulations govern the submission of stockholder proposals and our consideration of them for inclusion in the 2021 notice of Annual Meeting of Stockholders and the 2021 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 2021 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 15, 2021 (120 days prior to November 12, 2021, the one year anniversary of the Annual Meeting), nor later than August 14, 2021 (90 days prior to November 12, 2021); 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 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., 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.Nomination of director candidates—Under our By-Laws, if a stockholder plans to directly nominate a person as a director at an annual meeting of stockholders, the stockholder is required to place the proposed director's name in nomination by written request received by our Corporate Secretary not earlier than July 15, 2021 (120 days prior to November 12, 2021, the one year anniversary of the Annual Meeting), nor later than August 14, 2021 (90 days prior to November 12, 2021); 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 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 comply with all applicable statutes and regulations, as well as certain other provisions contained in our By-Laws, which generally require the stockholder to provide certain information about the proposed director, the stockholder and the Ethan Allen Interiors Inc. securities held by the stockholder.In addition, our By-Laws 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 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 of seven directors, 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 thirty (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 tenth (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 2021 Annual Meeting, notice must
be received by not earlier than June 15, 2021, and not later than July 15, 2021. 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.
| | | | | of the Annual Meeting), nor later than August 11, 2023 (90 days prior to November 9, 2023); 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 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 2023 Annual Meeting of Stockholders, notice must be received by not earlier than June 12, 2023, and not later than July 12, 2023. 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. | |
Corporate Secretary
53 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, and margin, 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 GAAP are shown in tables below. These non-GAAP measures are derived from the consolidated financial statements but are not presented in accordance with generally 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 others in its industry and its prior year results. Investors should consider these non-GAAP financial measures in addition to, and not as a substitute for, financial performance measures prepared in accordance with 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.
| | | | Fiscal years ended June 30, | | | | | |||||||||||||||||||||
| | | | 2022 | | | 2021 | | | 2020 | | | | | |||||||||||||||
| Adjusted Gross Profit / Gross Margin | | | | | | | | | | | | | | | | | | | | | | | ||||||
| GAAP Gross profit | | | | $ | 484.7 | | | | | $ | 393.1 | | | | | $ | 323.1 | | | | | | ||||||
Adjustments (pre-tax) (1) | | | | | — | | | | | | 0.6 | | | | | | 5.4 | | | | | | ||||||
| Adjusted Gross profit | | | | $ | 484.7 | | | | | $ | 393.7 | | | | | $ | 328.6 | | | | | | ||||||
| Adjusted Gross margin | | | | | 59.3% | | | | | | 57.5% | | | | | | 55.7% | | | | | | ||||||
| Adjusted Operating Income / Operating Margin | | | | | | | | | | | | | | | | | | | | | | | ||||||
| GAAP Operating income | | | | $ | 138.3 | | | | | $ | 77.3 | | | | | $ | 14.6 | | | | | | ||||||
Adjustments (pre-tax) (1) | | | | | (4.0) | | | | | | 3.1 | | | | | | 2.4 | | | | | | ||||||
| Adjusted Operating income | | | | $ | 134.2 | | | | | $ | 80.3 | | | | | $ | 17.1 | | | | | | ||||||
| Adjusted Operating margin | | | | | 16.4% | | | | | | 11.7% | | | | | | 2.9% | | | | | | ||||||
| Adjusted Return on Equity | | | | | | | | | | | | | | | | | | | | | | | ||||||
| GAAP Net income | | | | $ | 103.3 | | | | | $ | 60.0 | | | | | $ | 8.9 | | | | | | ||||||
Adjustments, net of tax (1) | | | | | (3.0) | | | | | | 0.1 | | | | | | 4.6 | | | | | | ||||||
| Adjusted Net income | | | | $ | 100.3 | | | | | $ | 60.1 | | | | | $ | 13.5 | | | | | | ||||||
| Adjusted Diluted EPS | | | | $ | 3.93 | | | | | $ | 2.37 | | | | | $ | 0.52 | | | | | | ||||||
| Total Shareholders’ Equity beginning of fiscal year | | | | $ | 351.4 | | | | | $ | 328.1 | | | | | $ | 363.9 | | | | | | ||||||
| Total Shareholders’ Equity end of fiscal year | | | | $ | 407.3 | | | | | $ | 351.4 | | | | | $ | 328.1 | | | | | | ||||||
| Average Shareholders’ Equity | | | | $ | 379.4 | | | | | $ | 339.7 | | | | | $ | 346.0 | | | | | | ||||||
| Adjusted Return on equity | | | | | 26.4% | | | | | | 17.7% | | | | | | 3.9% | | | | | | ||||||
| (1) Adjustments to reported U.S. GAAP financial measures are as follows: | | | | | | | | | | | ||||||||||||||||||
| Inventory reserves and write-downs | | | | $ | — | | | | | $ | 0.6 | | | | | $ | 4.1 | | | | | | ||||||
| Optimization of manufacturing and logistics | | | | | — | | | | | | 0.1 | | | | | | 1.3 | | | | | | ||||||
| Adjustments to gross profit | | | | $ | — | | | | | $ | 0.6 | | | | | $ | 5.4 | | | | | | ||||||
| Inventory reserves and write-downs | | | | $ | — | | | | | $ | 0.6 | | | | | $ | 4.1 | | | | | | ||||||
| Optimization of manufacturing and logistics | | | | | — | | | | | | 0.4 | | | | | | 2.1 | | | | | | ||||||
| Gain on sale of property, plant and equipment | | | | | (5.4) | | | | | | (0.5) | | | | | | (11.5) | | | | | | ||||||
| Employee retention credit | | | | | — | | | | | | — | | | | | | (1.2) | | | | | | ||||||
| Severance and other charges | | | | | 1.0 | | | | | | 0.4 | | | | | | 1.2 | | | | | | ||||||
| Impairment of long-lived assets and lease exit costs | | | | | 0.5 | | | | | | 2.2 | | | | | | 7.7 | | | | | | ||||||
| Adjustments to operating income | | | | $ | (4.0) | | | | | $ | 3.1 | | | | | $ | 2.4 | | | | | | ||||||
| Adjustments to income before income taxes | | | | $ | (4.0) | | | | | $ | 3.1 | | | | | $ | 2.8 | | | | | | ||||||
Related income tax effects on non-recurring items (2) | | | | | 1.0 | | | | | | (0.7) | | | | | | (0.7) | | | | | | ||||||
| Income tax expense from valuation allowance change | | | | | — | | | | | | (2.2) | | | | | | 2.5 | | | | | | ||||||
| Adjustments to net income | | | | $ | (3.0) | | | | | $ | 0.1 | | | | | $ | 4.6 | | | | | | ||||||
| | Fiscal years ended June 30, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| | 2020 | 2019 | 2018 | |||||||
Adjusted Gross Profit / Gross Margin | ||||||||||
GAAP Gross profit | $ | 323.1 | $ | 409.5 | $ | 416.0 | ||||
Adjustments (pre-tax) (1) | 5.4 | 2.0 | — | |||||||
| | | | | | | | | | | |
Adjusted Gross profit | $ | 328.6 | $ | 411.5 | $ | 416.0 | ||||
Adjusted Gross margin | 55.7 | % | 55.1 | % | 54.2 | % | ||||
Adjusted Operating Income / Operating Margin | ||||||||||
GAAP Operating income | $ | 14.6 | $ | 33.9 | $ | 48.9 | ||||
Adjustments (pre-tax) (1) | 2.4 | 21.1 | 1.3 | |||||||
| | | | | | | | | | | |
Adjusted Operating income | $ | 17.1 | $ | 55.1 | $ | 50.1 | ||||
Adjusted Operating margin | 2.9 | % | 7.4 | % | 6.5 | % | ||||
Adjusted Return on Equity | ||||||||||
GAAP Net income | $ | 8.9 | $ | 25.7 | $ | 36.4 | ||||
Adjustments, net of tax (1) | 4.6 | 15.9 | 0.9 | |||||||
| | | | | | | | | | | |
Adjusted Net income | $ | 13.5 | $ | 41.6 | $ | 37.3 | ||||
Adjusted Diluted EPS | $ | 0.52 | $ | 1.56 | $ | 1.35 | ||||
Total Shareholders' Equity beginning of fiscal year | $ | 363.9 | $ | 383.9 | $ | 400.9 | ||||
Total Shareholders' Equity end of fiscal year | $ | 328.1 | $ | 363.9 | $ | 383.9 | ||||
Average Shareholders' Equity | $ | 346.0 | $ | 373.9 | $ | 392.4 | ||||
Adjusted Return on equity | 3.9 | % | 11.1 | % | 9.5 | % | ||||
(1) Adjustments to reported U.S. GAAP financial measures are as follows: | ||||||||||
Inventory write-downs and additional reserves | $ | 4.1 | $ | — | $ | — | ||||
Manufacturing overhead costs and other | 1.3 | 2.0 | — | |||||||
| | | | | | | | | | | |
Adjustments to gross profit | $ | 5.4 | $ | 2.0 | $ | — | ||||
Inventory write-downs and additional reserves | $ | 4.1 | $ | — | $ | — | ||||
Optimization of manufacturing and logistics | 2.1 | 8.3 | — | |||||||
Gain on sale of Passaic, New Jersey property | (11.5 | ) | — | — | ||||||
Employee retention credit | (1.2 | ) | — | — | ||||||
Severance and other professional fees | 0.6 | 0.2 | 0.5 | |||||||
Retail acquisition costs, severance and and other charges | 0.6 | 0.6 | 0.2 | |||||||
Impairment of long-lived assets and lease exit costs | 7.7 | 12.1 | — | |||||||
Contingent legal claim | — | — | 0.5 | |||||||
| | | | | | | | | | | |
Adjustments to operating income | $ | 2.4 | $ | 21.1 | $ | 1.3 | ||||
Adjustments to income before income taxes | $ | 2.8 | $ | 21.1 | $ | 1.3 | ||||
Related income tax effects on non-recurring items (2) | (0.7 | ) | (5.2 | ) | (0.4 | ) | ||||
Income tax expense from valuation allowance | 2.5 | — | — | |||||||
| | | | | | | | | | | |
Adjustments to net income | $ | 4.6 | $ | 15.9 | $ | 0.9 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
(2)- Calculated using a tax rate of 24.5% in all periods presented.
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VOTEfull corporateor partnership name by authorized officer.NOTE: To transact such other business as may properly comebefore the meeting.VOTE BY INTERNET BeforeINTERNETBefore The Meeting - Go to www.proxyvote.com Useor scan the QR Barcode aboveUse the Internet to transmit your voting instructions and for electronic delivery of information. Voteinformation.Vote by 11:59 p.m. Eastern Time on November 11, 20208, 2022 for shares held directly and by 7:00 a.m. Easterna.m.Eastern Time on November 10, 20207, 2022 for shares held in a Plan. Havethe Ethan Allen Retirement Savings Plan.Have your proxy card in hand when you access the web site and follow the instructions to obtaintoobtain 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 Duringform.During The Meeting - Go to www.virtualshareholdermeeting.com/ETH2020 YouETH2022You may attend the meeting via the Internet and vote during the meeting. Have the information thatinformationthat is printed in the box marked by the arrow available and follow the instructions. VOTEinstructions.VOTE BY PHONE - 1-800-690-6903 Use1-800-690-6903Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Easternp.m.Eastern Time on November 11, 20208, 2022 for shares held directly and by 7:00 a.m. Eastern Time onTimeon November 10, 20207, 2022 for shares held in athe Ethan Allen Retirement Savings Plan. Have your proxyyourproxy 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 havewehave provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way,Edgewood, NY 11717. TO11717.SCAN TOVIEW MATERIALS & VOTE MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D23965-P44600 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 of the following Director Nominees: 1. To elect seven directors to serve until the 2021 Annual Meeting of Stockholders; The Board of Directors recommends you vote FOR proposals 2 and 3. For Against Abstain Nominees: For Against Abstain ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 2. To approve by a non-binding advisory vote, executive compensation of the Company’s Named Executive Officers; To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the 2021 fiscal year; and ! ! ! ! ! ! 1a. M. Farooq Kathwari 3. 1b. James B. Carlson 1c. John J. Dooner, Jr. NOTE: To transact such other business as may properly come before the meeting. 1d. Domenick J. Esposito 1e. Mary Garrett 1f. James W. Schmotter 1g. Tara I. Stacom 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) Datew
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