United States
Securities and Exchange Commission
Washington, D.C. 20549

SCHEDULE 14A
Proxy Statement Pursuant To Section 14(a) of the
Securities Exchange Act of 1934


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NAUTILUS, INC.
(Name of Registrant as Specified in Its Charter)



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

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NAUTILUS, INC.
 
  
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
 
 
 
To the Shareholders of Nautilus, Inc.:
 
The annual meeting of shareholders of Nautilus, Inc. will be held on Wednesday, May 4, 2016,Tuesday, April 30, 2019, at our headquarters building, 17750 S.E. 6th Way, Vancouver, Washington 98683, beginning at 1:00 p.m. Pacific Daylight Time, for the following purposes:
 
1.To elect a Board of Directors, consisting of six (6)five (5) members, to serve until the next annual meeting of shareholders or until their successors are duly elected and qualified;
2.To approve the compensation of the named executive officers for the year ended December 31, 20152018 in a non-binding, advisory vote, as reported in this Proxy Statement;
3.To ratify the Audit Committee's appointment of Deloitte & ToucheKPMG LLP as our independent registered public accounting firm for the year ending December 31, 2016;2019; and
4.
To approve, on an advisory basis, a resolution relating to the frequency of voting on the Company's executive compensation; and

5.To consider and act upon any other matter which may properly come before the annual meeting or any adjournment thereof.
 
Only shareholders who held their shares at the close of business on March 14, 2016,2019, the record date, are entitled to receive notice of and to vote at the annual meeting or any adjournment or postponement thereof.
 
All shareholders are cordially invited to attend the annual meeting. Whether or not you plan to attend the annual meeting, please sign and promptly return the enclosed proxy card, which you may revoke at any time prior to its use. A prepaid, self-addressed envelope is enclosed for your convenience. Your shares will be voted at the annual meeting in accordance with your proxy.
  
 By Order of the Board of Directors
  
 /s/ Wayne M. Bolio
 
WAYNE M. BOLIO
Secretary
 
Vancouver, Washington
April 4, 2016March 29, 2019
 
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Shareholders to Be Held On May 4, 2016:April 30, 2019:
 
Pursuant to rules promulgated by the Securities and Exchange Commission (the "SEC"), we have elected to provide access to our proxy materials both by sending you this full set of proxy materials, including a Notice of Annual Meeting and a 20152018 Annual Report to Shareholders, and by notifying you of the availability of our proxy materials on the Internet. The Notice of Annual Meeting, Proxy Statement and 20152018 Annual Report to Shareholders are available at http://www.nautilusinc.com/investors. In accordance with the SEC rules, the materials on the website are searchable, readable and printable, and the website does not have “cookies” or other tracking devices which identify visitors. Directions to our annual meeting are also available at http://www.nautilusinc.com/investors.





20162019 ANNUAL MEETING OF SHAREHOLDERS
 
PROXY STATEMENT
 
TABLE OF CONTENTS
 
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
 
 
 
 
   
 
   
 
   
 
   
 
PROPOSAL 4: ADVISORY VOTE REGARDING FREQUENCY OF VOTE ON EXECUTIVE COMPENSATION
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NAUTILUS, INC.
17750 S.E. 6th Way
Vancouver, Washington 98683
 
PROXY STATEMENT
 
  
General Information
 
Our Board of Directors (the “Board”) is furnishing this Proxy Statement and the accompanying Annual Report to Shareholders, Notice of Annual Meeting and proxy card in connection with its solicitation of proxies for use at our 20162019 annual meeting of shareholders (the “Annual Meeting”) or any adjournment thereof. The Annual Meeting will be held on Wednesday, May 4, 2016,Tuesday, April 30, 2019, beginning at 1:00 p.m., Pacific Daylight Time at the following location:
 
17750 S.E. 6th Way
Vancouver, Washington 98683
 
Our Board has designated the two persons named on the enclosed proxy card, BruceSidharth Nayar and Wayne M. Cazenave and Sidharth Nayar,Bolio, to serve as proxies in connection with the Annual Meeting. These proxy materials and the accompanying Annual Report to Shareholders are being mailed on or about April 4, 2016March 29, 2019 to our shareholders of record as of March 14, 2016.2019.
 
Revocability of Proxies
 
You may revoke any proxy you execute at any time prior to its use at the Annual Meeting by:
delivering written notice of revocation to our Secretary;
delivering an executed proxy bearing a later date to our Secretary; or
attending the Annual Meeting and voting in person.
 
Record Date
 
Our Board has fixed the close of business on March 14, 20162019 as the record date for determining which of our shareholders are entitled to notice of and to vote at the Annual Meeting. At the close of business on the record date, 31,031,09629,590,022 shares of our common stock were outstanding.
 
Voting; Quorum
 
Each share of common stock outstanding on the record date is entitled to one vote per share at the Annual Meeting. Shareholders are not entitled to cumulate their votes. The presence, in person or by proxy, of the holders of a majority of our outstanding shares of common stock is necessary to constitute a quorum at the Annual Meeting.

Votes Required to Approve Each Proposal

If a quorum is present at the annual meeting:

(i) the six (6)five (5) nominees for the election of directors who receive the greatest number of votes cast by the shares present and voting in person or by proxy will be elected as directors; and

(ii) Thethe proposals regarding the advisory vote on named executive officer compensation will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against it; and

(iii) the ratification of the selection of the independent registered public accounting firm will be approved if the number of votes cast in favor of the proposal exceeds the number of votes cast against it.it; and

(iv) the proposal to select ONE YEAR as the frequency for future advisory votes on executive compensation will be approved if the number of votes cast in favor of the proposal exceeds the number of votes in favor of the other proposed frequencies.

Counting of Votes; Abstentions

You may vote “FOR” or “WITHHOLD” authority to vote for the nominee for election as a director. If you vote your shares without providing specific instructions, your shares will be voted FOR the nominee for election to the Board of Directors. If you vote to “WITHHOLD” authority to vote for the nominee for election as a director, the shares represented will be counted as present for the purpose of determining a quorum, but they will not be counted as a vote cast on the proposal and will have no effect in determining whether the nominee is elected.


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You may vote “FOR” or “AGAINST” or “ABSTAIN” from voting when voting on the proposals regarding the advisory vote on named executive officer compensation, and the ratification of the selection of the independent registered public accounting firm.firm, and the advisory vote on the frequency of the vote on executive compensation.  If you choose “ABSTAIN” from voting on a proposal, your shares represented will be counted as present for the purpose of determining a quorum, but will not be counted as votes cast on the proposal and will have no effect in determining whether the proposal is approved.

Broker Discretionary Voting

If you hold your shares in street name, your broker, bank or other similar institution may be able to vote your shares without your instructions depending on whether the matter being voted on is “discretionary” or “non-discretionary.” In the case of a discretionary matter (for example, the ratification of the independent registered public accounting firm), your broker is permitted to vote your shares of common stock if you have not given voting instructions. In the case of a non-discretionary matter (for example, the election of directors, and the advisory vote to approve executive compensation and the advisory vote on the frequency of the vote on executive compensation), your broker cannot vote your shares if you have not given voting instructions.

A “broker non-vote” occurs when your broker submits a proxy for the Annual Meeting with respect to discretionary matters, but does not vote on non-discretionary matters because you did not provide voting instructions on these matters. Broker non-votes are counted for the purpose of determining the presence or absence of a quorum, but are not counted as votes cast for a proposal and will have no effect on the outcome of any proposal. Therefore, it is important that you provide specific voting instructions to your broker, bank or similar institution.

Proxy Procedure

When a proxy card is properly dated, executed and returned, the shares it represents will be voted at the Annual Meeting in accordance with the instructions specified in the proxy. If no specific instructions are given, the shares will be voted FOR the election of the director nominees described below, FOR the proposal to approve, on a non-binding, advisory basis, the compensation of our named executive officers as set forth in the proxy statement, and FOR the ratification of Deloitte & ToucheKPMG LLP as our independent registered public accounting firm for the year ending December 31, 2016.2019, and to select ONE YEAR as the frequency for future advisory votes on executive compensation. If other matters come before the Annual Meeting, the persons named in the accompanying proxy will vote in accordance with their best judgment with respect to such matters.

In the case of the proposal to choose (on an advisory basis) the frequency of future advisory votes on executive compensation, if none of the three frequency options receives the vote of the holders of a majority of the shares of the common stock present or represented and voting, we will consider the frequency option (one year, two years or three years) receiving the highest number of votes to be the frequency that has been recommended by stockholders. Abstentions and broker non-votes will not be considered to have been voted.
Cost of Proxy Solicitation
 
We will bear all costs associated with the solicitation of proxies in connection with the annual meeting. We do not plan to hire a proxy solicitor, but, to the extent we choose to use proxy solicitor services, we will pay the related fees and expenses.
 
Procedures for Shareholder Proposals and Nominations
 
Under our amended and restated bylaws, as amended ("Bylaws"), nominations for directors at an annual meeting may be made only by (1) the Board or a committee of the Board, or (2) a shareholder entitled to vote who has delivered notice to us within 120 to 180 days before the first anniversary of the date of the mailing of the notice for the preceding year's annual meeting.
 

Our Bylaws also provide that business may not be brought before an annual meeting unless it is: (1) specified in the notice of meeting (which includes shareholder proposals that we are required to include in our proxy statement under SEC Rule 14a-8); (2) brought before the meeting by or at the direction of the Board; or (3) brought by a shareholder entitled to vote who has delivered notice to us (containing certain information specified in the Bylaws) within 120 to 180 days before the first anniversary of the date of the mailing of the notice for the preceding year's annual meeting. In addition, you must comply with SEC Rule 14a-8 to have your proposal included in our proxy statement. A copy of the full text of our Bylaws may be obtained upon written request to our Secretary at the address provided on page 1 of this Proxy Statement.

Where You Can Find More Information

We file our proxy statements and other information with the SEC under the Securities Exchange Act of 1934, as amended (“Exchange Act”). You can inspect and obtain a copy of our proxy statement and other information filed with the SEC at the offices of the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, on official business days during the hours of 10 a.m. to 3 p.m. EST. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. The SEC maintains an Internet site at http://www.sec.gov/ where you can obtain most of our SEC filings. We also make available, free of charge, on our website at www.nautilusinc.com, our proxy statements filed with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after they are filed electronically with the SEC.

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PROPOSAL NO. 1:
 
ELECTION OF DIRECTORS
 
According to our Bylaws, our Board shall be comprised of no more than seven (7)fifteen (15) directors, provided, however that the number may be decreasedotherwise set by resolution of our Board. The Board has fixed the authorized number of our directors at six (6)five (5).

At this Annual Meeting, our shareholders will elect a board consisting of six (6)five (5) directors to serve until our 20172019 annual meeting or until their respective successors are elected and qualified. Our Board has nominated the individuals listed below to serve on our Board. All of the nominees are currently members of our Board. If any nominee is unable or unwilling to serve as a director at the time of the Annual Meeting, our Board may provide for a lesser number of directors or designate a substitute. If our Board designates a substitute, the proxy holders will have the discretionary authority to vote for the substitute. Proxies may not be voted for more than six (6)five (5) nominees.
 
OUR BOARD UNANIMOUSLY RECOMMENDS YOU VOTE "FOR" EACH OF THE FOLLOWING NOMINEES FOR ELECTION AS DIRECTOR:
 
M. Carl Johnson, III, 67,70, became interim Chief Executive Officer of Nautilus on March 2, 2019. Mr. Johnson joined our Board in July 2010. Mr. Johnson is2010 and has been Chairman of our Board since 2011. He joined the Board and a member of the Compensation Committee.Directors of Vespa Parent LLC (owner of Nonni’s Food Group) in October 2018. In October 2015, Mr. Johnson retired as Executive Vice President, Marketing and Chief Growth Officer of Big Heart Pet Brands, a division of J.M. Smucker Company. In this role he had line and operating responsibility for the company’s widely distributed brands, and the innovation, marketing and creative services, consumer and customer insights, communications and government relations groups, and the company’s Canadian subsidiary. He joined Del Monte Foods, a privately ownedprivately-owned manufacturer and marketer of processed foods, and the predecessor of Big Heart Pet Brands, in November 2011 as Executive Vice President, Brands. From 2001 until April 2011, Mr. Johnson served as Senior Vice President and Chief Strategy Officer of the Campbell Soup Company, a producer of canned soups and related products, where he had direct responsibility for corporate strategy, research and development, quality, corporate marketing services, licensing, and e-business. Mr. Johnson joined Campbell from Kraft Foods, where he ran three successively larger business divisions. Earlier in his career, he held management positions at Colgate-Palmolive and Polaroid Corporation and served as head of the Consumer Goods consulting practice at Marketing Corporation of America. Mr. Johnson earned his B.A. degree in Governmentcompleted a 2016 Fellowship at Harvard University’s Advanced Leadership Initiative and Economics from Wesleyan University, and his M.B.A. degree from the University of Chicago.a 2017 Fellowship at Stanford University’s Distinguished Careers Institute. Mr. Johnson serves as an executive committee member of the Agricultural Sustainability Institute, University of California, Davis. Mr. Johnson is a trustee of the Adelphic Educational Fund, Wesleyan University, which grants scholarships and supports educational, literary and artistic programs. He is also a member of the Steering Committee of the Kilts Center for Marketing at the University of Chicago Graduate School of Business, which provides scholarships to top marketing students and helps the school steer its marketing curriculum. Mr. Johnson is also a member of the Nutrition Round Table, Harvard T.H. Chan School of Public Health, Harvard University. Mr. Johnson earned his B.A. degree in Government and Economics from Wesleyan University, and his M.B.A. degree from the University of Chicago. Our Board has determined that Mr. Johnson has the requisite experience and expertise to be a director of Nautilus based on his consumer marketing expertise and strong background in corporate expansion strategy.

Ronald P. Badie, 73,76, joined our Board in August 2005. Mr. Badie is a member of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee. Mr. Badie spent over 35 years with Deutsche Bank and its predecessor, Bankers Trust Company, retiring in 2002 as Vice Chairman of Deutsche Bank Alex Brown (now Deutsche Bank Securities), the firm'sfirm’s investment banking subsidiary. Mr. Badie currently serves as a director of Amphenol Corporation. Mr. Badie was a director of Obagi Medical Products, Inc. from December 2006 to April 2013. He also served as the Chairman of the Compensation Committee and member of the Audit Committee for Obagi Medical Products. Mr. Badie was a director of Merisel, Inc. from October 2004 to March 2011 and Integrated Electrical Services, Inc. between October 2003 and May 2006. Mr. Badie is a graduate of Bucknell University and received an M.B.A. from New York University'sUniversity’s Stern School of Business. Our Board determined that Mr. Badie has the requisite experience and expertise to be a director of Nautilus based on his broad experience while serving as a director of several publicly-traded and privately-held companies. In addition, Mr. Badie spent many years as an investment banker and has extensive experience in structured finance and capital markets transactions.

Bruce M. Cazenave, 61, was appointed Chief Executive Officer and elected to The Board of Directors in May 2011. He also served as Acting Chief Financial Officer from July 3, 2013 until February 27, 2014. From January 2010 until his appointment as Chief Executive Officer, Mr. Cazenave served as Managing Director of Inflection Point Consulting, a business consulting firm, where he consulted with and served as an executive advisor to private equity firms in the U.S. and Europe. From 2006 to 2009, he worked for Central Garden & Pet Company, a marketer and producer of quality branded products for the lawn and garden and pet supplies markets, serving as President of its Garden Décor Group.  From January 2006 to August 2006, he served as a strategy consultant to Timex Corporation, a watch manufacturer, where he focused on supply chain, operational and organizational priorities. From 2002 to 2005, Mr. Cazenave served as President & CEO of Dorel Juvenile Group, a subsidiary of Dorel Industries, Inc. Dorel Juvenile Group is a marketer and manufacturer of juvenile products. He has also served in senior executive roles at Black & Decker U.S., Inc. and Timberland - both in the U.S and Europe. Mr. Cazenave is a graduate of John Hopkins University and received a Master's degree from George Washington University. The Board has concluded that Mr. Cazenave should continue

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serving as a director based on his over 20 years of senior executive leadership and extensive background running divisions of premier global consumer products companies focused on profitable growth.

Richard A. Horn, 68, was elected to71, joined our Board in December 2007. Mr. Horn is the Chairman of the Compensation Committee and is a member of the Audit Committee and the Nominating and Corporate Governance Committee. Mr. Horn has been a private investor since February 2002. Mr. Horn was general manager of the PetsHotel Division of PetSmart, Inc., a company that provides products, services and solutions for the lifetime needs of pets, from April 2001 through February 2002. From January 1999 through March 2001, he was Senior Vice President and General Merchandise Manager of PetSmart.com, Inc. and from July 1994 until December 1998, he was Vice President and General Merchandise Manager of PetSmart, Inc. From 1992 to 1994, Mr. Horn was Chief Financial Officer of Weisheimer Companies, Inc., a chain of retail pet supply stores. Mr. Horn was a partner at Coopers & Lybrand (now

PricewaterhouseCoopers), an international public accounting and business consulting firm, from 1980 to 1992. Mr. Horn serves onas Chairman of the Board of Trustees of Saint Joseph’s Hospital and Medical Center and Saint Joseph’s Westgate Hospital in Phoenix, Arizona. He is also on the Board of Directors of the Fiesta Bowl.Bowl and serves as its Treasurer. Mr. Horn graduated from Indiana University, Bloomington, with a B.S. in Accounting. Our Board has determined that Mr. Horn has the requisite experience and expertise to be a director of Nautilus. As a former retail merchandising and direct-marketing executive, former Chief Financial Officer and a former partner at Coopers & Lybrand, Mr. Horn brings particular expertise to our Board in the areas of direct marketing sales, consumer product merchandising and retail trade, service industries, investor relations, financial reporting, accounting and auditing for complex multinational operations.

Anne G. Saunders, 54, was elected to57, joined our Board in April 2012. Ms. Saunders is the Chairman of the Nominating and Corporate Governance Committee and a member of the Audit Committee and the Compensation Committee. Since November 2014,2017, Ms. Saunders has been a non-executive director of the Ten Peaks Coffee Company (TSX:TPK), a global leader in natural process green coffee decaffeination, where she is also a member of the Compensation Committee. From April 2016 to January 2017, Ms. Saunders was U.S. President Consumer Division,of NakedWines.com, a global wine company that uses crowdfunding to fund independent wine makers and direct ships wine to customers. From September 2014 to April 2016, Ms. Saunders was U.S. President of FTD, Companies, Inc. (NASDAQ: (NYSE:FTD), a global floral and gifting company. From August 2012 to January 2014, Ms. Saunders was President of Redbox, an entertainment company that is owned and operated by Coinstar, Inc. (NASDAQ:CSTR). From March 2009 until January 2012, Ms. Saunders was Executive Vice President and Chief Marketing Officer for Knowledge Universe, a privately-held early education company with over 1,600 schools nationwide. From February 2008 until March 2009, Ms. Saunders was Senior Vice President, Consumer Bank Executive and, from May 2007 until February 2008, she was Senior Vice President, Brand Executive, for Bank of America Corporation (NYSE:BAC). Between 2001 and 2007, Ms. Saunders held a variety of positions with Starbucks Coffee Co. (NASDAQ:SBUX), including Senior Vice President, Global Brand, during that company'scompany’s period of rapid domestic and international growth. Ms. Saunders has also held executive and senior management positions with eSociety, a B2B e-commerce company, AT&T Wireless and Young & Rubicam. Additionally, Ms. Saunders served, from 2006 until 2007, as a director for Blue Nile, Inc. (NASDAQ:NILE). She received a B.A. from Northwestern University and an M.B.A. from Fordham University. Our Board has determined that Ms. Saunders has the requisite experience to be a director of Nautilus. Ms. Saunders brings to our Board a strong background in marketing and building brands and provides Nautilus with additional expertise and understanding of the consumer marketplace.marketplace

Marvin G. Siegert, 67,70, joined our Board in August 2005. Mr. Siegert is Chairman of the Audit Committee and a member of the Compensation Committee and the Nominating and Corporate Governance Committee. Currently a private investor, Mr. Siegert was President and Chief Operating Officer of The Pyle Group LLC, a private equity investment group, from 1996 until July 2007. Prior to The Pyle Group, Mr. Siegert spent 26 years with Rayovac Corporation, a manufacturer of batteries and lighting products, where he held various positions, with his most recent position as Senior Vice President and Chief Financial Officer. Currently,From 2010 until February 2018, Mr. Siegert servesserved as Audit Committee Chairman on the Board of Directors of Great Lakes Educational Loan Services, Inc., a privately-held student loan servicing company, and Behrens Manufacturing, Inc., a manufacturer and distributor of high quality metal containers.company. He is also a member of the Board of Directors of Uniek, Inc., a manufacturer and distributor of picture frames and wall décor. From 2005 until December 2012, Mr. Siegert was a member of the Board of Directors of Hy Cite Corporation, a privately-held direct sales marketing company. In addition, from January 2014 until December 2016, Mr. Siegert served on the Board of Directors of Behrens Manufacturing, Inc., a manufacturer and distributor of high quality metal containers. Mr. Siegert graduated from the University of Wisconsin, Whitewater with a degree in accounting and holds a Master'sMaster’s degree in management from the University of Wisconsin, Madison. Our Board has determined that Mr. Siegert has the requisite experience and expertise to be a director of Nautilus. As a former President and Chief Operating Officer of a private equity investment group and former Chief Financial Officer of a privately-held global consumer products company, Mr. Siegert brings a particular expertise to our Board in the areas of consumer products, investor relations and financial strategies.

No family relationship exists among any of the directors or executive officers. No arrangement or understanding exists between any director or executive officer and any other person pursuant to which any director was selected as a director or executive officer of Nautilus.


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INFORMATION CONCERNING THE BOARD OF DIRECTORS
 
Our Board oversees our overall performance on behalf of our shareholders. Members of our Board stay informed of our business through discussions with our Chief Executive Officer ("CEO") and other members of our executive team, by reviewing materials provided to them, and by participating in regularly scheduled Board and committee meetings.

Corporate Governance
 
Our Board is elected by our shareholders to govern our business and affairs. Our Board selects our senior management team, which is charged with conducting our business. Having selected our senior management team, our Board acts as an advisor to senior management and monitors their performance. Our Board reviews strategies, financial objectives and operating plans. It also plans for management succession of our Chief Executive Officer,CEO, as well as other senior management positions, and oversees our compliance efforts.
 
Our Board has determined that each of Ronald P. Badie, Richard A. Horn, M. Carl Johnson, III, Anne G. Saunders and Marvin G. Siegert qualify as an “independent director” under our Corporate Governance Guidelines (available on our website at www.nautilusinc.com), Section 303A.02 of the Listed Company Manual (the "Listed Company Manual") of the New York Stock Exchange ("NYSE"), and applicable rules of the SEC, and that each such person is free of any relationship that would interfere with the individual exercise of independent judgment. Our Board has further determined that each member of the Board's three committees meets the independence requirements applicable to those committees prescribed by the Listed Company Manual and the SEC, including Rules 10A-3(b)(1) and 10C-1 under the Exchange Act related to independence of audit committee and compensation committee members, respectively.

Our Board met eighteleven times in 20152018 and all of our directors attended at least 75% of the meetings of our Board and of the meetings held by the committee(s) on which they served. Currently, we do not have a policy requiring our Board members' attendance at the annual meetings of our shareholders. Fourshareholders meeting. All of our directors attended our 20152018 annual shareholders meeting.

In order to promote open discussion among independent directors, our Board has a policy of conducting executive sessions of independent directors during each regularly scheduled board meeting and at such other times if requested by an independent director. These executive sessions are generally led by our Chairman.
 
Transactions with Related Persons
 
Our Board recognizes that “transactions” with a “related person” (as such terms are defined in Item 404 of Regulation S-K) present a heightened risk of conflict of interest and/or improper valuation (or the perception thereof) and, therefore, has adopted a policy which shall be followed in connection with all related person transactions. Specifically, this policy addresses our procedures for the review, approval and ratification of all related person transactions.
 
Our Board has determined that the Audit Committee is best suited to review and approve related person transactions. Accordingly, any related person transactions recommended by management shall be presented to the Audit Committee for approval at a regularly scheduled meeting of the Audit Committee. Any related person transaction shall be consummated or shall continue only if the Audit Committee approves the transaction, the disinterested members of our Board approve the transaction, or the transaction involves compensation approved by the Compensation Committee.
 
Committees of the Board
 
Our Board currently has three standing committees: an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. Each committee is governed by a written charter that may be amended by our Board at any time. The full text of each committee charter and our Corporate Governance Guidelines are available on our website located at www.nautilusinc.com or in print to any interested party who requests it. Requests should be sent to the Nautilus, Inc. Secretary at the address provided on page 1 of this Proxy Statement.
 
The Audit Committee
The Audit Committee is established in accordance with Section 3(a)(58)(A) of the Exchange Act and represents and assists our Board in fulfilling its oversight responsibility relating to (i) the integrity of our financial statements and other financial information furnished by Nautilus, (ii) our compliance with legal and regulatory requirements, (iii) our system of internal accounting and financial controls, (iv) our independent registered public accounting firm's qualifications, performance, compensation and independence, (v) the performance of our internal audit function, and (vi) compliance with our code of business conduct and ethics.
 

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In fulfilling the duties outlined in its charter, the Audit Committee, among other things, shall:
have the sole authority and responsibility to select, evaluate and, where appropriate, replace our independent registered public accounting firm;
review and discuss with management and our independent registered public accounting firm, prior to release to the general public and legal and regulatory agencies, our annual audited financial statements and quarterly financial statements, including disclosures contained in our Annual Report on Form 10-K under the section heading “Management's Discussion and Analysis of Financial Condition and Results of Operations,” and matters required to be reviewed under applicable legal, regulatory or public company exchange listing requirements;
discuss polices developed by management and our Board with respect to risk assessment and risk management and steps management has taken to monitor and control financial risk exposure, including anti-fraud programs and controls;
review the responsibilities, functions and performance of our internal audit function, including internal audit's charter, plans and budget and the scope and results of internal audits;
review management's report on internal control over financial reporting and discuss with management and the independent registered public accounting firm any significant deficiencies or material weaknesses in the design or operation of our internal controls; and
establish procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters, including procedures for the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters or violations of our code of conduct.

During 2015,2018, the Audit Committee consisted of four independent directors: Marvin G. Siegert (Chairman), Ronald P. Badie, Richard A. Horn and Anne G. Saunders. Each member of the Audit Committee meets the independence, financial literacy and experience requirements contained in the corporate governance listing standards of the NYSE relating to audit committees. In addition, our Board has determined that Messrs. Badie, Horn and Siegert each qualify as an “audit committee financial expert” under the regulations of the SEC. Although all members of the Audit Committee meet the current NYSE regulatory requirements for accounting or related financial management expertise, and our Board has determined that Messrs. Badie, Horn and Siegert each qualify as an “audit committee financial expert,” members of the Audit Committee are not professionally engaged in the practice of auditing or accounting and are not technical experts in auditing or accounting. The Audit Committee met four times during 2015.2018.
 
A copy of the full text of the Audit Committee Charter can be found on our website at www.nautilusinc.com.
 
The Compensation Committee
The Compensation Committee is responsible for overseeing the compensation of our employees, including equity-based plans, and employee benefit plans and practices, including the compensation and benefits of our executive officers. The Compensation Committee also administers our 2015 Long-Term Incentive Plan.
 
In fulfilling the duties outlined in its charter, the Compensation Committee, among other things, shall:
periodically review our executive compensation plans in light of our goals and objectives with respect to such plans and, if the committee deems appropriate, adopt, or recommend to our Board the adoption of new, or the amendment of existing, executive compensation plans;
annually evaluate the performance of our CEO and, with our CEO's participation and input, that of our other executive officers in light of the goals and objectives of our executive compensation plans. Based on this evaluation, the Compensation Committee shall determine and approve the CEO's compensation level and, with the CEO's participation and input, the compensation levels of our other executive officers;
approve any equity compensation awarded to any of our executive officers, subject to the requirements of the applicable compensation plans; and
with respect to SEC reporting requirements, review and discuss with management our compensation discussion and analysis, and oversee the preparation of, and approve, the Compensation Committee's report on executive compensation to be included in our proxy statement.

The Compensation Committee may not delegate any power or authority required by any law, regulation or listing standard to be exercised by the committee. The Compensation Committee met fourthree times during 2015.2018. Pursuant to its charter, the Compensation Committee has the authority, to the extent it deems necessary or appropriate, to retain compensation consultants, independent legal counsel or other advisors and has the sole authority to approve the fees and other retention terms with respect to such advisors. From time to time the Compensation Committee has engaged compensation consultants to advise it on certain matters. See "Compensation Discussion and Analysis."
 
A copy of the full text of the Compensation Committee Charter can be found on our website at www.nautilusinc.com.
 

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Compensation Committee Interlocks and Insider Participation
During 2015,2018, the Compensation Committee was comprised of five independent directors: Richard A. Horn (Chairman), Ronald P. Badie, M. Carl Johnson III, Anne G. Saunders and Marvin G. Siegert. Mr. Johnson resigned as a member of the Compensation Committee in connection with his appointment as interim Chief Executive Officer on March 2, 2019. None of the members of the Compensation Committee have a relationship with Nautilus, other than as directors and shareholders. No member of the Compensation Committee is, or was formerly, an officer or an employee of Nautilus. None of our executive officers served, during the year ended December 31, 2015,2018, as a member of the compensation committee or on the board of directors of any entity that has an executive officer serving as a member of our Compensation Committee or Board.
 
The Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is responsible for considering and making recommendations concerning the membership and function of the Board, and the development and review of corporate governance guidelines.
 
In fulfilling the duties outlined in its charter, the Nominating and Corporate Governance Committee, among other things, shall:
identify individuals qualified to become members of our Board and select director nominees to be presented for shareholder approval at our annual meeting of shareholders;
review our Board's committee structure and recommend to the Board for its approval directors to serve as members of each committee;
develop and recommend to our Board for its approval a set of corporate governance guidelines;
develop and recommend to our Board for its approval an annual self-evaluation process of the Board and its committees; and
review, on an annual basis, director compensation and benefits.

The Nominating and Corporate Governance Committee will consider recommendations for directorships submitted by shareholders. Shareholders who wish the Nominating and Corporate Governance Committee to consider their directorship recommendations should submit their recommendations in writing to Nautilus, Inc., 17750 S.E. 6th Way, Vancouver, WAWashington 98683, Attn: Chairman of Nominating and Corporate Governance Committee. Recommendations by shareholders that are made in accordance with these procedures will receive the same consideration given to nominations made by the committee.Nominating and Corporate Governance Committee.
 
Nominees may be suggested by directors, members of management, shareholders or, in some cases, by a third-party firm. In identifying and considering candidates for nomination to the Board, the Nominating and Corporate Governance Committee considers a candidate's quality of experience, our needs and the range of talent and experience represented on our Board. In evaluating particular candidates, the Nominating and Corporate Governance Committee will review the nominee's personal and professional integrity, judgment, experience, and ability to serve the long-term interest of the shareholders. The Nominating and Corporate Governance Committee will also take into account the ability of a director to devote the time and effort necessary to fulfill his or her responsibilities, as well as matters of diversity, including gender, race and national origin, education, professional experience and differences in viewpoints and skills. While the Nominating and Corporate Governance Committee does not have a formal policy with respect to diversity, both the Board and the Nominating and Corporate Governance Committee believe that it is essential that Board members represent a diverse range of experience, expertise and viewpoints.
 
During 2015,2018, the Nominating and Corporate Governance Committee was comprised of four independent directors: Anne G. Saunders (Chairman), Ronald P. Badie, Richard A. Horn, and Marvin G. Siegert. The Nominating and Corporate Governance Committee met onetwo time during 2015.2018.
 
A full copy of the Nominating and Corporate Governance Committee Charter can be found on our website at www.nautilusinc.com.
 
Communications with Directors
 
All interested parties may send correspondence to our Board or to any individual director at the following address: Nautilus, Inc., 17750 S.E. 6th Way, Vancouver, Washington 98683.
 
Your communications should indicate that you are a shareholder of Nautilus. Depending on the subject matter, we will either forward the communication to the director or directors to whom it is addressed, attempt to handle the inquiry directly, or not forward the communication if it is primarily commercial in nature or if it relates to an improper or irrelevant topic. Correspondence marked confidential will not be opened prior to forwarding to the Board or any individual director.
 

Board Leadership Structure
 
Our Board has a majority of independent directors; fivefour out of the sixfive director nominees are independent. The Audit, Compensation, and Nominating and Corporate Governance committees each are composed solely of independent directors.

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We separate the roles of Chairman of the Board and Chief Executive OfficerCEO in recognition of the differences between the two positions. Mr. Johnson, who acts as the Chairman, oversees our business broadly, leads the meetings of our Board, and provides guidance to our management. Mr. Cazenave serves on the Board, but, as our Chief Executive Officer, heOur CEO is alsogenerally charged with oversight of the day-to-day operations of the business. We believe that consistency between day-to-day operations and the overall management is reached through Mr. Cazenave'sthe service of our CEO as the Chief Executive Officer and a director, but the separation of the Chairman and Chief Executive OfficerCEO roles is important to achieve a balance of oversight that is favorable to us and our shareholders. Although Mr. Johnson is currently serving as our interim CEO, we anticipate reinstating this structure upon the engagement of a permanent CEO.

Board Role in Risk Oversight
 
While risk management is primarily the responsibility of our management team, our Board is responsible for overall supervision of risk management efforts as they relate to the key business risks we face. Management identifies, assesses, and manages the risks most critical to our operations and routinely advises our Board regarding those matters. Areas of material risk may include operational, financial, legal and regulatory, human capital, information technology and security, and strategic and reputational risks. Our Board's role in risk oversight is consistent with our leadership structure, with senior management having responsibility for assessing and managing risk exposure, and our Board and its committees providing oversight in connection with those efforts.


11



DIRECTOR COMPENSATION

Nautilus has a Director Compensation Program that provides for compensation of the non-employee members of our Board. Director compensation consists of annual retainers, meeting fees, fees for service as a committee chair, and awards of equity compensation. Directors who are employees receive no additional or special remuneration for serving as directors.
 
Annual Retainer, Committee Chair and Meeting Fees
Under the Director Compensation Program, each non-employee director receives an annual retainer of $35,000$42,500 and a fee of $1,500 for attendance at each Board meeting. Our Board's non-executive Chairman receives an additional annual fee of $30,000.$30,000, which will continue to be paid during Mr. Johnson's service as interim Chief Executive Officer. Each director serving on a committee of our Board receives an additional fee of $1,500 for attendance at each committee meeting. The Chair of the Audit Committee receives an additional annual retainer of $10,000, while the Chairs of the Compensation Committee and the Nominating and Corporate Governance Committee each receive an additional annual retainer of $5,000.

Initial Equity Grant
The Director Compensation Program provides that, upon initial election to our Board, each non-employee director may be granted an option to purchase up to 10,000 shares of Nautilus common stock.
 
Annual Equity Grant
Since 2014 ourOur Director Compensation Program has providedprovides that each non-employee director will receive an award of restricted stock with a grant date value of $51,000$58,500 upon their re-election to the Board at our annual meeting of shareholders. The shares subject to the restricted stock awards are subject to forfeiture until vesting on the first anniversary of the grant date, subject to continued service of the director through such date.
2015 Director Compensation
2018 Director Compensation2018 Director Compensation
 Fees Earned or Paid in Cash 
Stock Awards (1)
 Total Fees Earned or Paid in Cash 
Stock Awards (1)
 Total
Ronald P. Badie
 $62,000
 $51,016
 $113,016
 $69,504
 $58,512
 $128,016
Richard A. Horn 67,000
 51,016
 118,016
 74,504
 58,512
 133,016
M. Carl Johnson, III(2) 83,000
 51,016
 134,016
 90,504
 58,512
 149,016
Anne G. Saunders 67,000
 51,016
 118,016
 74,504
 58,512
 133,016
Marvin G. Siegert 72,000
 51,016
 123,016
 79,504
 58,512
 138,016
(1) Stock award amounts reflect the aggregate grant date fair value of awards granted during 2015.2018. See Notes 1 and 1517 of Notes to Consolidated Financial Statements included in our Form 10-K for the year ended December 31, 20152018 for information on determining the fair value of stock awards and other related information.
(2) Mr. Johnson will continue to be eligible for such fees and awards during his service as interim Chief Executive Officer.
Equity Awards Outstanding at December 31, 2015
Equity Awards Outstanding at December 31, 2018Equity Awards Outstanding at December 31, 2018
 Unvested Stock Awards (# of Shares) 
Option Awards
(# of Shares)
 Unvested Stock Awards (# of Shares) 
Option Awards
(# of Shares)
Ronald P. Badie 2,897
 30,000
 3,994
 
Richard A. Horn 2,897
 40,000
 3,994
 10,000
M. Carl Johnson, III 2,897
 30,000
 3,994
 10,000
Anne G. Saunders 2,897
 12,500
 3,994
 12,500
Marvin G. Siegert 2,897
 20,000
 3,994
 


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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
The following table summarizes certain information regarding the beneficial ownership of our outstanding common stock, as of March 1, 2016,2019, by: 1) each director and director nominee;director; 2) each of the named executive officers included in the Summary Compensation Table; 3) all persons that we know are beneficial owners of 5% or more than 5% of our common stock; and 4) all current directors and executive officers as a group. Except as otherwise indicated, and subject to applicable community property laws, each owner has sole voting and sole investment powers with respect to all shares beneficially owned. 

Name and Address of Beneficial Owner 
Total
Shares
Beneficially
Owned (2)
 
Percentage
Beneficially
Owned (3)
 
Total
Shares
Beneficially
Owned (2)
 
Percentage
Beneficially
Owned (3)
Copper Rock Capital Partners, LLC(4)
 2,211,017
 7.1%
200 Clarendon Street, 51st Floor    
Boston, MA 02116    
BlackRock, Inc.(5)
 1,956,979
 6.3%
BlackRock, Inc.(4)
 4,471,941
 15.1%
55 E. 52nd Street        
New York, NY 10055        
Dimensional Fund Advisors, LP(5)
 2,045,802
 6.9%
Building One    
6300 Bee Cave Road    
Austin, TX 78746    
Cooke & Bieler LP(6)
 1,922,540
 6.5%
1700 Market Street, Ste 3222    
Philadelphia, PA 19103    
The Vanguard Group(7)
 1,910,665
 6.5%
100 Vanguard Blvd.    
Malvern, PA 19355    
LSV Asset Management(8)
 1,487,986
 5.0%
155 N. Wacker Drive, Ste 4600    
Chicago, IL 60606    
Non-Employee Directors (1)
        
Richard A. Horn 70,454
 *
 60,620
 *
Marvin G. Siegert 62,454
 *
 65,620
 *
Ronald P. Badie 60,154
 *
 64,820
 *
M. Carl Johnson, III(6)
 50,454
 *
M. Carl Johnson, III(9)
 52,770
 *
Anne G. Saunders 27,954
 *
 23,620
 *
Employee Director (1)
        
Bruce M. Cazenave(7)
 509,009
 1.6%
Bruce M. Cazenave (10)
 437,791
 1.5%
Named Executive Officers (1)
        
William B. McMahon 148,192
 *
 155,030
 *
Wayne M. Bolio 115,994
 *
 74,136
 *
Robert O. Murdock 7,895
 *
Sidharth Nayar 3,107
 *
 28,464
 *
All Current Directors and Executive Officers as a Group (12 persons) 1,064,070
 3.4%
Christopher K. Quatrochi 
 *
All Directors and Executive Officers as a Group (13 persons) 965,412
 3.2%

* Less than 1%

(1) The address for each director and executive officer is c/o Nautilus, Inc., 17750 S.E. 6th Way, Vancouver, Washington 98683.
(2) Includes currently exercisable options, options that vest within 60 days of March 1, 2016, and performance stock units ("PSUs") and restricted stock units ("RSUs") that vest within 60 days of March 1, 20162019, as follows:

Name OptionsPerformance & Restricted Stock
Ronald P. Badie30,000
 
Richard A. Horn 40,000
10,000
M. Carl Johnson, III30,000

Marvin G. Siegert20,000
 
Anne G. Saunders 12,500
Marvin G. Siegert 
Bruce M. Cazenave 147,923
61,382
William B. McMahon 19,067
28,599
Wayne M. Bolio 13,452

Robert O. Murdock6,415
2,871
Sidharth Nayar 
Ryan M. Simat 
All current officersDirectors and directorsExecutive Officers as a Group (13 persons) 327,760
115,352


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(3) Percentages have been calculated based on 31,031,09629,590,022 shares of our common stock issued and outstanding as of March 1, 2016.2019. Shares which the person or group has the right to acquire within 60 days after March 1, 2016,2019 are deemed to be outstanding in calculating the percentage ownership of the person or group, but are not deemed to be outstanding as to any other person or group.
(4) Information is based on the Form 13F filed on January 6, 2016 by Copper Rock Capital Partners, LLC.
(5) Information is based on the Schedule 13G filed on January 27, 201631, 2019 by BlackRock, Inc. (“BlackRock”), a parent holding company. BlackRock has sole dispositive power with respect to all shares reported and sole voting power with respect to 1,897,2224,411,394 shares.
(5) Information is based on Schedule 13G filed on February 8, 2019 by Dimensional Fund Advisors, LP ("Dimensional Fund"), an investment adviser. Dimensional Fund has sole dispositive power with respect to all shares reported and sole voting power with respect to 1,933,097 shares.
(6) Information is based on Schedule 13G filed on February 11, 2019 by Cooke & Bieler, LP ("Cooke"), an investment adviser. Cooke has shared dispositive power and shared voting power with respect to all shares reported.
(7) Information is based on Schedule 13G filed on February 11, 2019 by The Vanguard Group ("Vanguard"), an investment adviser. Vanguard has sole dispositive power with respect to 1,851,990 shares and shared dispositive power with respect to 58,675 shares. Further, Vanguard has sole voting power with respect to 59,872 shares and shared voting power with respect to 2,300 shares.
(8) Information is based on the Schedule 13G filed on February 13, 2019 by LSV Asset Management (“LSV”), an investment adviser. LSV has sole dispositive power with respect to all shares reported and sole voting power with respect to 786,061 shares.
(9) Includes 5,000 shares held by The M. Carl Johnson III Trust Dated 2/6/96,February 6, 1996, of which Mr. Johnson is a trustee.
(7)(10) 17,870 shares held forMr. Cazenave resigned as Chief Executive Officer and a member of the account of Mr. Cazenave's children.Board effective March 1, 2019.


EXECUTIVE OFFICERS
 
The following table identifies our executive officers as of the date of this Proxy Statement, the positions they hold and the year in which they began serving as officers of Nautilus. Our Board electsappoints all of our executive officers, who hold office until their respective successors are elected and qualified.
Name Age Current Position(s) with Nautilus 
Officer
Since
 Age Current Position(s) with Nautilus 
Officer
Since
Bruce M. Cazenave 61 Chief Executive Officer, Director 2011
M. Carl Johnson III 70 Interim Chief Executive Officer 2019
Sidharth Nayar 55 Chief Financial Officer 2014 58 Chief Financial Officer 2014
William B. McMahon 51 Chief Operating Officer 2009
Wayne M. Bolio 59 Senior Vice President, Law and Human Resources, General Counsel 2003 62 Senior Vice President, Law and Human Resources, General Counsel 2003
Robert O. Murdock 44 Vice President, General Manager, Direct 2012
Christopher K. Quatrochi 50 Senior Vice President, Innovation 2018
Jeffery L. Collins 49 Vice President, General Manager, Retail Sales 2014 52 Vice President, General Manager, International 2014
Dennis H. Lee 52 Vice President, General Manager, Commercial and Specialty 2015
Ryan M. Simat 42 Vice President, General Manager, Commercial and Specialty 2017
Jay E. McGregor 62 Vice President, General Manager, North American Retail 2018
Carlos Navarro 53 Vice President, General Manager, Direct 2019
For information on Bruce M. Cazenave'sCarl Johnson III's business background, see “Nominees”nominees under “Election of Directors” above.



Sidharth (Sid) Nayar was named Chief Financial Officer in February 2014. In this role, he is responsible for overseeing financial, accounting, information technology, risk management and investor relations activities for all brands in the Nautilus portfolio. Prior to joining Nautilus, Mr. Nayar served as Senior Vice President, Finance and Chief Financial Officer of Congoleum Corporation, a manufacturer of residential and commercial flooring products, from 1999 to February 2014. Mr. Nayar held other senior accounting and finance positions at Congoleum Corporation beginning in 1986. Mr. Nayar earned a B.Sc. in Economics from the London School of Economics and an M.B.A. in Finance from Rutgers University.

William B. McMahon was appointed Chief Operating Officer in August 2011. In this role, Mr. McMahon has responsibility for oversight of our Retail and Direct businesses, as well as overall operations and the product development function. Mr. McMahon joined Nautilus in October 2005 and has held a number of leadership roles, including Senior Vice President, Consumer Business from November 2009 until August 2011 and, prior to that, Vice President and General Manager of our Direct business. Before joining Nautilus, Mr. McMahon held several executive positions with the Readers Digest Association from 1989 through 1995, including chief operating officer of gifts.com, an e-commerce portal; director of information technology; vice president, operations of Good Catalog, a luxury home products and electronics catalog; and director of U.S. Operations for QSP Inc., the largest school fundraising program in North America. He previously spent over a decade with the United States Navy nuclear submarine force, where he oversaw reactor plant operations. Mr. McMahon is a graduate of the U.S. Naval Nuclear Engineering program.

Wayne M. Bolio assumed the position of Senior Vice President, Law and Human Resources in August 2011. He was named General Counsel in April 2008. Mr. Bolio joined Nautilus in June 2003 as Vice President, Human Resources. He was appointed Senior Vice President, Human Resources in March 2004 and was promoted to Senior Vice President, Law in January 2006. From 1997 to 2002, he served as the chief human resources officerChief Human Resources Officer for Consolidated Freightways, a major transportation company. Prior to that, he was employed by Southern Pacific Transportation Company as assistant general counselAssistant General Counsel with responsibility for labor relations, human resources, and employment law matters. Mr. Bolio received a B.A. from the University of California at Berkeley and a J.D. from UCLA.

Robert O. MurdockChristopher K. Quatrochi joined Nautilus and was named Senior Vice President, Innovation in January 2018, and oversees all product development efforts across the Nautilus, Inc. family of brands in the Nautilus Innovation Center. Prior to joining Nautilus, Mr. Quatrochi was Group Vice President for Product Operations at Broan-Nutone, a manufacturer of residential use products, from 2015 to 2017, where he managed product development and marketing. Mr. Quatrochi has also held multiple positions with Whirlpool Corporation, a multinational manufacturer and marketer of home appliances, from 2007 to 2015, including roles as head of global product experience design and connectivity, global strategy and planning for refrigeration, global director for the kitchen category, and leadership over cost and quality management. Prior to Whirlpool, Mr. Quatrochi held the role of Chief Operating Officer for Access Communications in Chicago from 2002 to 2007, and Engagement Manager focusing on operational effectiveness at McKinsey and Company from 2000 to 2002. Mr. Quatrochi holds a B.A. in Electrical Engineering from Bradley University and an M.B.A. from Northwestern’s Kellogg School of Management.

Jeffery L. Collins was named Vice President, General Manager, DirectInternational in August 2011December 2017. In his current role, Mr. Collins oversees the development of our newest channel comprised of both consumer and was named an officer in 2012. In this role, he is responsiblecommercial product lines. Mr. Collins focus will be on strategic growth opportunities along with the channels global strategy for the direct-to-consumer business.international markets for all our brands. Mr. MurdockCollins originally joined Nautilus in December 2005August 2013 as Director, Go-To-Market where he was responsible for product definition, development and management of Nautilus branded
cardio and strength machines. Mr. Murdock has held multiple leadership roles in product development and marketing within the organization. In 2007, he was promoted to Senior Director, Go-To-Market, where he managed the product management team until January 2008, when he transferred to Director of Marketing, Consumer Insight and Brand. In November 2008, the Director of Marketing position held by Mr. Murdock shifted focus to the Direct channel, managing the product, placement, price and promotion of Schwinn, Nautilus, Bowflex and Universal brands. Most recently, Mr. Murdock was promoted to Vice President, General Manager Direct, which expanded the scope of his position to include responsibility for the entire Direct channel. Mr. Murdock

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has more than 15 years of experience in hard goods product development and marketing. Prior to joining Nautilus, Mr. Murdock held management positions at high technology firms including Intel and InFocus Corporation. Mr. Murdock earned a B.A. from Georgetown University and an M.B.A. from the University of Texas.

Jeffery L. Collins was named Vice President, General Manager Retail in November 2015Sales, and was named an officer in February 2014. In this role,From November 2015 until December 2017, Mr. Collins was Vice President, General Manager, Retail, where he iswas responsible for the Retail Channel’s globalchannel’s strategy and direction, along with managing both the domestic and international Retails SalesRetail sales teams. He joined Nautilus in August 2013.  Mr. Collins' prior experience includes more than 20 years of sales and marketing experience in the consumer goods business segment. Prior to joining Nautilus, heMr. Collins was the Senior Vice President, Large Retail Sales, for Oreck Corporation, a manufacturer of vacuum cleaners and air purifiers, from 2009 to 2013. Prior to Oreck, Mr. Collins held various senior sales and marketing positions within leading consumer goods companies, including Pepsico, Pepsi Bottling Group, Handleman Co., Dyson Ltd., Halo Technologies,and Techtronic Industries and Oreck Corporation.Industries. Mr. Collins attended both Grand Valley State University and Western Michigan University. Leveraging his prior experience and success in both the U.S. and international markets will support our strategic initiative to further grow the Retail Channel.

Dennis H. LeeRyan M. Simat was named Vice President, General Manager, Commercial and Specialty in December 2015. AsJanuary 2017. In this role Mr. Simat manages our North America sales and marketing for the co-founder of Octane Fitness whichbrand. Previously, Mr. Simat was acquired by Nautilus in 2015,the Vice President of Sales for Octane Fitness from 2010 to 2016, and National Sales Manager from 2007 to 2010. Mr. Lee oversees strategic direction and day-to-day operations of the brand. Mr. Lee launchedSimat started with Octane Fitness in September 20012003 as its first sales representative and built its business based onplayed a strategy that focused exclusively onkey role in opening dealership distribution and developing the core competenciescommercial sales channel brand. Mr. Simat began his fitness industry career as a Product Manager for Life Fitness from 2000 to 2003, where he led the development team for the international launch of product innovationthree premium treadmills. Mr. Simat earned a B.S. degree with a double major in Marketing and Biology from the University of Northwestern - St. Paul.

Jay E. McGregor was named Vice President, General Manager, North America Retail in May 2018. In his current role, Mr. McGregor is responsible for the management and development of Retail channel strategies and direction, along with management of the sales and service excellence.marketing teams. Prior to Octane,joining Nautilus, Mr. LeeMcGregor was the Senior Vice President, Global Sales from 2017 to 2018 for Ergobaby Inc., the global market leader in the baby carrier category. Prior to Ergobaby, Mr. McGregor was the Vice President of Sales - Americas for Reef Sandals from 2014 to 2016. Mr. McGregor has held various senior level sales and marketing positions in leading footwear and outdoor companies, including Adidas, Birkenstock USA, the Coleman Co., Gerber Legendary Blades, and Teva. Mr. McGregor holds a varietyB.S. degree from Cal State University - Long Beach, as well as a Ryan Lifetime Teaching Credential (K-12) in Physical Education, Mathematics & Science, and attended the INSEAD Excellence in Leadership program in Fountainebleau, France.

Carlos Navarro joined Nautilus as Vice President, General Manager, Direct in January 2019. In this role, Mr. Navarro is responsible for the management and development of seniorthe Direct channel, including sales, servicemarketing and logisticscustomer service. Prior to joining Nautilus, Mr. Navarro was the Vice President & General Manager, Retail Energy Division for SJI, a diversified clean energy company, from 2015 to 2018. Prior to SJI, Mr. Navarro was the Vice President of Marketing & Sales Administration for Jarden (now Newell Rubbermaid) from 2014 to 2015. Mr. Navarro has held several senior-level positions at Life Fitnesssuch as Global Vice President, Marketing & Strategy for Bausch + Lomb, and ParaBody.he has also held positions of increasing responsibility for Johnson & Johnson’s consumer products division. Mr. Lee earnedNavarro successfully founded Reneux Consumer Healthcare Strategies, a Bachelorconsultancy that provided chief marketing officer services to small and mid-size companies. Mr. Navarro holds an M.B.A. from Duke University’s Fuqua School of Science degreeBusiness and a B.S. in Business Administration from HamlineBloomsburg University in St. Paul, Minnesota.of Pennsylvania.


COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
 
April 4, 2016March 29, 2019
 
The Compensation Committee of the Board oversees Nautilus' compensation programs on the Board's behalf.
 
The Compensation Committee reviewed and discussed the Compensation Discussion and Analysis with management. Based on the review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement for the 20162019 Annual Meeting of Shareholders, which will be filed with the SEC.

Respectfully submitted,
 
Richard A. Horn, Chairman
Ronald P. Badie
M. Carl Johnson, III
Anne G. Saunders
Marvin G. Siegert

COMPENSATION DISCUSSION AND ANALYSIS
 
In this section of the proxy statement, we identify the material elements of our compensation programs for all of our executive officers, including an overview of our executive compensation philosophy and the processes and methodology we use in making executive pay decisions. We also provide detailed information regarding compensation paid to each Named Executive Officer (“NEO”). Our NEOs for 20152018 are our Chief Executive Officer, Chief Financial Officer, and theour three other most highly compensated executive officers other than the Chief Executive Officer and Chief Financial Officer, who were serving as executive officers as of December 31, 2018, as follows:
 
Name Position
Bruce M. Cazenave (1)
 Former Chief Executive Officer
Sidharth Nayar Chief Financial Officer
William B. McMahon(2)
 Former Chief Operating Officer
Wayne M. Bolio Senior Vice President, Law and Human Resources, General Counsel
Robert O. MurdockChristopher K. Quatrochi Senior Vice President, General Manager DirectInnovation


(1) On February 26, 2019, Mr. Cazenave resigned from his position effective on March 1, 2019.
15(2) On January 18, 2019, Mr. McMahon stepped down from his position, and assumed a non-executive role as Special Assistant xxto the Chief Executive Officer.



Executive Summary

Overview

The executive compensation program is comprised of three primary elements in support of these objectives:elements:

Aa base salary that is intended to provide a market competitivemarket-competitive base level of compensation;
Aa cash-based short-term incentive program that rewards the achievement of explicit, measurable, company financial objectives in the areas of operating income and net revenue growth, as well as individual and company achievement of short- and long-term business objectives; and
Anan equity-based long-term incentive program that rewards the achievement of sustained increases in shareholder value over the long term.

Our executive officers are eligible to participate in our other employee benefits programs on the same terms as our eligible non-executive employees. Nautilus does not provide any material executive perquisites. Unexercised stock options held by our executive officers expire 90 days following termination, which are the same terms that apply to our non-executive employees.
 
Governance of Our Executive Compensation Program
 
The Compensation Committee (herein referred to as the "Committee") has overall responsibility for the evaluation, approval and oversight of our compensation plans, policies and programs and the total direct compensation of our executive officers. The Committee has sole responsibility for determining our Chief Executive Officer’sCEO’s compensation and for reviewing it with our Board. Our Chief Executive OfficerCEO provides recommendations to the Committee on compensation matters for our other executive officers. From time to time, the Committee seeks input from an independent compensation consultant who advises the Committee regarding executive compensation matters.

During 2015, Farient Advisors,2017, Meridian Compensation Partners, LLC (“Farient”Meridian”) was engaged by the Committee to advise it on executive compensation matters. All of the services that FarientMeridian performs for Nautilus are performed at the request of the Committee, are related to executive and/or director compensation, and are in support of decision making by the Committee.

The Committee considered Farient’sMeridian’s independence in light of SEC rules and New York Stock Exchange listing standards. The Committee requested Farient to completereviewed a questionnaire completed by Meridian addressing factors pertaining to the independence of FarientMeridian and the senior advisor involved in the engagement, including the following factors: (1) other services provided to us by Farient;Meridian; (2) fees paid by us as a percentage of Farient’sMeridian’s total revenue; (3) policies orand procedures maintained by FarientMeridian that are designed to prevent a conflict of interest; (4) any business or personal relationships between the senior advisor and a member of the Committee; (5) any company stock owned by FarientMeridian or the senior advisor; and (6) any business or personal relationships between our executive officers and FarientMeridian or the senior advisor. The Committee discussed these considerations and concluded that the work performed by FarientMeridian and Farient’sMeridian’s senior advisor involved in the engagement did not raise any conflict of interest.
Farient Meridian reports directly to the Committee and supports the Committee by:

providing information on executive and/or director compensation best practices and current trends;
reviewing compensation guidingcompensation-guiding principles and recommending assessment methodologies;
conducting detailed executive and/or director compensation assessments, including development of appropriate peer group, and providing preliminary recommendations for executive and director compensation adjustments; and
providing conceptual guidance and design advice on short-term and long-term incentive programs.

Compensation Philosophy
 
Our executive compensation program is designed with two primary objectives in mind:

attracting, retaining and motivating executives critical to our financial stability and future success; and
rewarding executives for meeting ambitious financial, operational and individual performance goals and taking effective actions which are expected to increase shareholder value over time.

Consistent with these objectives, we offer our executive officers a mix of base salary, short-term incentive cash compensation, long-term equity-based incentives, health and welfare benefits and employment contracts. While we do not target a specific percentage allocation for base salary, short-term incentive compensation or long-term incentives (as a percent of total compensation), we operate under the general philosophy of targeting a total compensation opportunity that is competitive within our market for executive talent. Relative to our peer group, we believe that we generally target a greater percentage of the executives’

16



total compensation opportunity as variable compensation. We do not believe the elements of our compensation program are structured so as to encourage excessive risk taking by any of our executives, but are part of an overall compensation and management philosophy designed to increase shareholder value over time.
 
Peer group data isare used to compare our compensation program for executive officers with that of executives in comparable roles at peer group companies. Although aA comprehensive compensation review was not conducted in 2015, Farient Advisors conducted a benchmark equity compensation analysis2018 for the purpose of determining equity grantsproviding a competitive perspective for compensation decisions in April 2015.2018.

Based upon the selection criteria, which targeted high-end consumer products companies with annual revenues similar to Nautilus, the following companies were chosen for our peer group:
Acushnet Holdings Corp. (GOLF)Lifetime Brands, Inc. (LCUT)
Bassett Furniture Industry,Industries, Inc. (BSET)Johnson OutdoorsMalibu Boats, Inc. (JOUT)(MBUU)
Cobra Electronics Corp. (COBR)Callaway Golf Co. (ELY)Movado Group, Inc (MOV)Marine Products Corporation (MPX)
Escalade,Ethan Allen Interiors Inc. (ESCA)(ETH)Smith & Wesson Holding Corp. (SWHC)MCBC Holdings, Inc. (MCFT)
Flexsteel Industries, Inc. (FLXS)Sturm Ruger & Co.Movado Group, Inc. (RGR)(MOV)
Hooker Furniture Corporation (HOFT)Vera Bradley, Inc. (VRA)
iRobot Corp.Corporation (IRBT)ZAGG Inc. (ZAGG)
Johnson Outdoors Inc. (JOUT)  

Peer group data for the aforementioned companies is supplemented by data from published relevant compensation surveys, providing additional market-based analytical data for corporate executive pay at companies similar in industry, annual revenues or other relevant metrics.

The Committee has not established a desired competitive position for target total cash compensation levels in the 50th to 75thby any specific percentile range of our peer group. Individual levels within this rangeof compensation are also affected by the executive’s experience, performance and potential, as assessed by the Committee with input from the Chief Executive Officer.CEO. The Committee has considered the results of the advisory vote on executive compensation conducted during the 2018 annual meeting of shareholders, which indicated support for the Committee's current executive compensation policies.

Base Salaries
 
Base salaries of our executive officers are intended to attract and retain executives (as part of the total compensation package) by providing a competitive base level of compensation. Base salaries are typically considered by the Committee on an annual basis, as well as in connection with the hiring of a new executive, a promotion or other changes in an incumbent executive’s job responsibilities. Base salaries of executive officers are determined by evaluating the responsibilities of the position, the experience and performance of the individual, and by reference to the competitive marketplace median for corporate executives inexecutive positions of comparable positions (similarity in scope, duties and responsibilities). A base salary benchmark comparison analysis was notresponsibilities.

In early 2018, Meridian Compensation Partners LLC conducted in 2015.a benchmarking study of executive compensation indicating that the current range of values for all components of our executive compensation program were significantly below the market median values of our peer companies for comparable positions. The Committee did not make any changes to executive officerbelieved that base salaries have fallen below market median values due to lack of increases in 2015.two of the prior three years, as well as greater comparable market values due to the growth in the size of the Company. Based on these findings, the Committee reviewed and approved the proposed base compensation increases outlined below, which were effective February 26, 2018 for all NEOs. The 2018 base salaries are believed to be at or below market medians for each of the positions.
 2014 Base SalaryPercent Increase2015 Base SalaryPercent Increase2016 Base SalaryPercent Increase2017 Base SalaryPercent Increase2018 Base Salary
CAGR(1)
Bruce M. Cazenave$430,000
%$430,000
4.65%$450,000
%$450,000
11.11%$500,000
3.84%
Sidharth Nayar260,000
%260,000
5.77%275,000
%275,000
12.73%310,000
4.50%
William B. McMahon280,000
%280,000
7.14%300,000
%300,000
16.67%350,000
5.74%
Wayne M. Bolio250,000
%250,000
2.00%255,000
%255,000
3.92%265,000
1.47%
Christopher K. Quatrochi (2)

N/AN/AN/AN/AN/AN/AN/AN/A265,000
N/A

(1) Compound Annual Growth Rate ("CAGR") was computed based on 2014 and 2018 proposed base salary numbers.

(2) Chistopher K. Quatrochi was hired on January 1, 2018.


Short-Term Incentive Program

Our short-term incentive program for 20152018 remained similar to the plan implemented in 2012. The program focuses on achievement of certain annual company financial goals including operating income and net revenue growth (Corporate Financial Factor), as well as company-level key strategic initiatives (Key Initiative Factor) and individual performance goals that were established for the performance period. Under the short-term incentive program, individual plan participants are eligible to receive incentive compensation in the form of cash bonuses based on a target percentage of their annual base salary. Individual bonus target amounts under the short-term incentive program remained unchanged in 2015.2018.
 
The calculation for determining an individual executive’s incentive amount earned under the short-term incentive program is a product of: 1) the executive’s base salary; 2) the executive’s target bonus percentage; 3) the achievement against the Corporate Financial Factor; 4) the achievement against the Key Initiative Factor; and 5) the achievement against the executive's personal performance goals. We must achieve a minimum of 90%92% of our operating income or 57%100% of our net revenue growth goal for any payout to be available. For 2015,2018, the combined maximum payout allowed under the plan was 150% of target.


17



Individual Bonus Targets
Individual bonus targets established under our short-term incentive program for 20152018 for our NEOs ranged from 50% to 100% of annual eligible wages, consisting of base salaries, as follows: 
 
Individual
Bonus Target
(% of eligible wages)
Bruce M. Cazenave100%
Sidharth Nayar50%60%
William B. McMahon75%
Wayne M. Bolio50%
Robert O. MurdockChristopher K. Quatrochi50%

Corporate Financial Factor
The Corporate Financial Factor is calculated on a calendar year basis. Each company financial goal is assigned a weighting. The 20152018 performance criteria and specific weightings were as follows:

Corporate Financial Criteria Weighting
Continuing Operations Operating Income Net Revenue Growth Combined Corporate Financial Factor 
Net Revenue Growth
Percentage
 Combined Corporate Financial Factor
70% 30% 100% 30% 100%
 
Achievement against the combined corporate financial factor could range from 0% to 125%. However, a threshold of 90%92% achievement of target operating income must be met in order to earn a minimum payout of 30%. Alternatively, a threshold of 57%100% achievement of target net revenue growth percentage must be met in order to earn a payout of 50%30%.

Key Strategic Initiatives Factor
In addition to the corporate financial factor, we establish performance objectives to incentivize and measure successful execution of our strategic initiatives. These included, for example, goals related to new product development and introduction, market penetration, return on invested capital and cost savings/optimization. Achievement against the objectives could range from 50% to 125%.

Individual Performance Factor
In addition to the corporate financial factor and key strategic initiatives factor, individual performance objectives were established for each executive officer in the form of formal written goals. Performance was measured against individual goals related to, for example, revenue targets, cost optimization, market research, new business development, organizational excellence, return on invested capital and product development milestones. Achievement against the individual performance factor could range from 0% to 125%.

20152018 Short-Term Incentive Program Payments
For 20152018 performance, our NEOs earneddid not earn awards pursuant to the short-term incentive program based on achievingas targeted financial achievement metrics, including operating income and revenue growth, were not met. Further, the following companykey strategic initiatives achievement metric came in at 77% of target, and individual performance metrics:
Corporate Financial Achievement
Continuing Operations Operating Income Net Revenue Growth Combined Corporate Financial Factor
125% 125% 125%
goals achievement was as noted below:

Key Strategic Initiatives Achievement
Combined Key Strategic Initiatives Factor
106%


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Individual Performance Goals Achievement
Bruce M. Cazenave100%85%
Sidharth Nayar98%85%
William B. McMahon95%74%
Wayne M. Bolio81%105%
Robert O. Murdock
Christopher K. Quatrochi

121%90%

Based on the level of goals achieved, the NEOs earned the following short-term incentive compensation related to 2015:
Incentive Amounts Earned
Bruce M. Cazenave$569,750
Sidharth Nayar168,805
William B. McMahon264,337
Wayne M. Bolio134,570
Robert O. Murdock168,750

Long-Term Incentive Program
 
Long-term incentives are intended to focus executive behavior on making decisions that meaningfully contribute to our long-term success as reflected in our stock price. Under our long-term incentive plan, the Committee may grant equity awards in the form of stock options, stock appreciation rights, restricted stock, performance units or stock units ("PSUs") or time-vested restricted stock units ("RSUs") to executive officers and other employees. Stock options have exercise prices equal to the fair market value of our common stock on the date of grant as defined by the plan. In granting these awards, the Committee may establish vesting conditions or other restrictions it deems appropriate.

New Hire Equity Grants
 
Our executive officers generally are provided an equity grant upon commencement of their employment. The Committee reviews the equity position of executive officers on a periodic basis. Additionally, an executive officer’s overall equity position is reviewed at the time of promotion and an additional grant may be considered at that time. There were no newAn equity award was granted to Mr. Quatrochi in January 2018 upon his hire equity grants awarded to our NEOs in 2015.as Senior Vice President, Innovation, as follows:
Restricted Stock Units(1)
Christopher K. Quatrochi10,000
(1) RSUs vest in full on the third anniversary of the grant date.


Equity Incentives    

In April 2015, FarientFebruary 2018, Meridian conducted a benchmark equity compensation analysis to assist the Committee in determining equity grants. The Committee approved a grant of equity compensation, which included a mix of restricted stock unit awards (“RSUs”)RSUs and performance stock unit awards ("PSUs"),PSUs, both issued under our long-term incentive plan. The RSUs vest in full on the third anniversary of the grant date, subject to the grantee's continuous employment with the Company through such date. The PSUs vest based on achievement of goals established for operating income growth as a percentage of net revenue and return on invested capital metricmetrics over a three-year performance period. The actual number of shares issued under a PSU award is based on the level at which the financial goals are achieved and can range from a 60% minimum threshold to a maximum of 150%.

Equity awards granted to our NEOs in 20152018 were as follows:
 
Restricted Stock Units (1)
 
Performance Stock Units (2)
 
Restricted Stock Units (1)
 
Performance Stock Units (2)
Bruce M. Cazenave 12,209
 12,209
 31,513
 23,110
Sidharth Nayar 4,429
 4,429
 15,631
 10,421
William B. McMahon 6,360
 6,360
 19,118
 13,236
Wayne M. Bolio 4,259
 4,259
 13,362
 8,908
Robert O. Murdock 3,194
 3,194
Christopher K. Quatrochi 22,248
 7,795
(1) RSUs vest in full on the third anniversary of the grant date. Shares granted to Mr. Quatrochi include his award upon hire to the position of Senior Vice President, Innovation as described above under "New Hire Equity Grants."
(2) PSUs are subject to vesting based on achievement of specific financial targets for the three-year vesting term of the award. The actual number of PSUs vested can range from 0% to 150%, depending on the attainment of specific company performance goals.

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Early 20162019 Compensation Decisions

The Committee met in early 20162019 to approve revisions to the short-term incentive plan, make routine adjustments to base salaries, and grant equity and cash bonus compensation awards to our NEOs.

Short-Term Incentive Plan
The short-term incentive plan in place for 20162019 remains within the same general structure as in 20152018, with the program for 20162019 focusing on achievement of certain annual company financial goals, includingnamely operating income and net revenue growth percentage (Corporate Financial Factor), as well as company-level key strategic initiatives (Key Initiative Factor) and individual performance goals that have been established for the performance period. We must achieve a minimum of 90%100% of our targeted operating income or 85% of our targeted net revenue growth percentage goal for any payout to be earned with aearned. For 2019, the combined maximum combined payout ofallowed under the plan is 150% of target iftarget. Incentive targets for 2019, as a percentage of base salary, are unchanged from the goal is exceeded.2018 targets.

The Committee confirmed the following short-term incentive targets for 2016, which included an adjustment to Mr. Nayar’s target:2019:
 
Individual
Bonus Target
(% of eligible wages)
Bruce M. Cazenave100%
Sidharth Nayar60%
William B. McMahon75%
Wayne M. Bolio50%
Robert O. MurdockChristopher K. Qautrochi50%
Cash Bonus Compensation Award
In a meeting held on February 20, 2019, the Board of Directors approved, upon recommendation of the Committee, the following cash bonus compensation awards to certain of our executive officers, which will be payable in two equal installments in July 2019 and January 2020, subject to each officer’s continuous employment through such date:
OfficerTitleTotal Bonus Amount
Sidharth NayarChief Financial Officer$62,000
Wayne M. BolioSVP, Law & Human Resources, General Counsel$53,000
Christopher K. QuatrochiSVP, Innovation$53,000


Base Salaries
The Committee also reviewedchose to not make changes to the executive officer base salaries for our NEO’s in early 2016. Farient Advisors submitted2019. Mr. Johnson will receive an analysis and proposal for routineannual base salary increasesof $500,000 as compensation for his service as interim Chief Executive Officer and a restricted stock award of 10,000 shares, which was subsequently reviewed and approved by the Committee. Base salary increases were effective February 8, 2016 for all NEOs as outlined below:
 Previous Base SalaryPercent IncreaseNew Base Salary
Bruce M. Cazenave$430,0004.65%$450,000
Sidharth Nayar$260,0005.77%$275,000
William B. McMahon$280,0007.14%$300,000
Wayne M. Bolio$250,0002.00%$255,000
Robert O. Murdock$225,00011.20%$250,000
Additionally, the Committee approved equity compensation awards to all NEOs. The awards consist of RSU awards and PSU awards, both granted under our 2015 Long-Term Incentive Plan. The RSUswill vest in full on the thirdone year anniversary of his appointment, provided that he continues to serve as the grant date, subject to the grantee's continuous employment with the Companyinterim Chief Executive Officer or as a director through such date. The PSUs vest based on achievement of goals established for growth in operating income as a percentage of net revenue and return on invested capital over a three-year performance period. The number of shares vested under the performance unit awards following conclusion of the performance period will be determined based on the level at which the goals are achieved. The number of shares vesting under the performance unit awards can range from 60% of the shares subject to the award, if minimum thresholds are achieved, to a maximum of 150%.

Perquisites and Other Benefits
 
Our executive officers are eligible to participate in our medical, dental, vision, flexible spending, 401(k), life, disability, Employee Stock Purchase Plan, and wellness programs on substantially the same terms as eligible non-executive employees, subject to legal limits on the amounts that may be contributed or paid to executive officers under these plans. No significant perquisites are provided to our executive officers. 

Post-Employment Obligations
 
We believe that modest post-employment benefits are an important factor in maintaining the stability of our executive management team. We have separate severance arrangements with each of our executive officerscurrently-employed NEOs under their respective employment agreements. These documents outline the terms and conditions of the post employmentpost-employment benefits. The agreements provide that, in the event of an involuntary termination of employment for reasons other than cause, Nautilus will pay severance of twelve months (Mr. Cazenave), six months (Messrs. Bolio, McMahon and Nayar), or four months (Mr. Murdock)Quatrochi) of the employee's base salary. In general, the definition of “cause” includes: indictment or conviction of the employee for a crime that, in our judgment, makes the

20



employee unfit or unable to perform his or her duties, or adversely affects our reputation; employee dishonesty related to his or her employment; violation of key company policies; insubordination; serious conflicts of interest or self-dealing; intentional or grossly negligent conduct by the employee that is significantly injurious to us; certain serious performance failures by the employee; and, death or disability of the employee. In addition, if the employee leaves for “good reason” (as such terms are defined in the applicable employment agreement), we may be obligated to pay separation benefits to the employee.
 
The agreements with our executives also provide for continuation, during the severance period, of health benefits under COBRA for the employee and covered dependents, at active employee premium rates. Refer to the table entitled “Other Potential Post-Employment Payments” and related notes for information regarding severance and post-employment benefits that may be payable to our NEOs upon their termination.

Severance payments are made in accordance with our normal payroll cycle over the severance period. With the exception of Mr. Cazenave, severanceSeverance payments for our NEOs will cease in the event the employee obtains subsequent employment, within the salary continuation period, at a salary equal to the employee's salary at the time of termination. Severance payments will be reduced in the event the NEO with the exception of Mr. Cazenave, obtains subsequent employment, within the salary continuation period, at a salary less than the employee's salary at the time of termination. Distributions are subject to certain restrictions imposed by Internal Revenue Code Section 409A. We do not have any severance payment obligations to Mr. Cazenave in connection with his resignation, which was effective March 1, 2019.

Tax and Accounting Considerations

Section 162(m) of the Internal Revenue Code limitsgenerally places a $1 million limit on the amount weof compensation a company can deduct for compensation paid to our Chief Executive Officer and the three other most highly-compensated executive officers (excluding the Chief Financial Officer) in any one year to $1 million.
Thefor certain executive officers. While the Compensation Committee generally reviews and considers the deductibility of awards as one factor in determining executive compensation, under Section 162(m) when determining the compensation of executive officers however, the Committee also believes that it is important to preserve flexibility in administering compensation programs in a manner designed to promote varying corporate goals. Accordingly, we have not adopted a policy that all compensation must qualify as deductible under Section 162(m). Base salary is

The option awards exercised and stock awards vested during 2018 for our executive officers were not performance-based as described under Section 162(m), and our short-term incentive awards do not meet the performance-based compensation requirements of Section 162(m) because these awards are not granted under a shareholder-approved plan. Under our prior long-term incentive plan, performance-based stock unit awards do not meet the requirements of Section 162(m) because the applicable performance criteria have not been specifically approved by the shareholders. Compensation paidIn addition, base salary is not performance-based under Section 162(m), and therefore, would not be deductible to the extent the $1 million limit of Section 162(m) is exceeded. The compensation program under the 2015 Long-Term Incentive Plan, however, iswas generally designed in a manner intended to satisfy the requirements under Section 162(m) for qualified performance-based compensation. In 2015,2018, a portion of the compensation paid to Messrs.Mr. Cazenave and McMahon was not deductible.

The exemption from the Section 162(m) deduction limit for performance-based compensation has been repealed effective for tax years beginning after December 31, 2017. The compensation paid to our covered executive officers in excess of $1 million will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017. We are continuing to assess the impact of the change on our compensation programs however, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, including the

uncertain scope of the transition relief under the legislation, no assurance can be given that compensation intended to satisfy the requirements for exemption from Section 162(m) in fact will be deductible under the legislation’s grandfather rules.
21





EXECUTIVE COMPENSATION

Summary Compensation Table

The following table summarizes the compensation earned by, awarded to or paid to our NEOs for each of the three years ended December 31, 2015:2018:
 Year Salary 
Stock Awards(1)
 
Option Awards(1)
 
Non-Equity Incentive Plan Compensation(2)
 
All Other Compensation(3)
 Total Year Salary 
Stock Awards(1)
 
Non-Equity Incentive Plan Compensation(2)
 
All Other Compensation(3)
 Total
Bruce M. Cazenave(4)
 2015 $430,000
 $430,001
 $
 $569,750
 $9,275
 $1,439,026
 2018 $490,385
 $650,014
 $
 $9,625
 $1,150,024
Chief Executive Officer 2014 419,423
 213,958
 225,847
 555,736
 9,540
 1,424,504
Former Chief Executive Officer (5)
 2017 450,000
 496,462
 
 9,275
 955,737
 2013 375,000
 76,130
 80,471
 465,072
 24,922
 1,021,595
 2016 447,308
 494,986
 142,311
 9,275
 1,093,880
Sidharth Nayar(5)
 2015 260,000
 155,989
 
 168,805
 9,275
 594,069
 2018 303,269
 310,019
 
 9,625
 622,913
Chief Financial Officer 2014 225,000
 223,750
 
 141,609
 125,381
 715,740
 2017 275,000
 193,074
 
 9,275
 477,349
 2016 272,981
 188,993
 57,899
 9,275
 529,148
William B. McMahon 2015 280,000
 223,999
 
 264,337
 5,600
 773,936
 2018 340,385
 385,013
 
 6,808
 732,206
Chief Operating Officer 2014 274,231
 111,455
 117,650
 253,441
 6,192
 762,969
Former Chief Operating Officer 2017 300,000
 270,788
 
 5,308
 576,096
 2013 250,000
 29,459
 26,824
 209,282
 8,925
 524,490
 2016 297,308
 260,987
 77,247
 6,927
 642,469
Wayne M. Bolio 2015 250,000
 150,002
 
 134,570
 8,077
 542,649
 2018 263,077
 265,013
 
 9,208
 537,298
Senior Vice President, Law and 2014 235,325
 99,520
 105,047
 152,784
 6,952
 599,628
 2017 255,000
 179,025
 
 9,450
 443,475
Human Resources, General Counsel 2013 233,688
 15,888
 16,094
 136,215
 8,281
 410,166
 2016 254,327
 179,013
 47,200
 9,275
 489,815
Robert O. Murdock 2015 225,000
 112,493
 
 168,750
 9,275
 515,518
Vice President, General Manager, 2014 222,115
 67,174
 70,906
 166,587
 9,100
 535,882
Direct 2013 203,077
 12,247
 13,412
 133,483
 8,925
 371,144
Christopher K. Quatrochi(4)
 2018 254,808
 365,512
 
 59,344
 679,664
Senior Vice President, Innovation       

 

          
(1) The amounts reported in these columns reflect the aggregate grant date fair value of the stock option, RSU and PSU awards granted under our 2015 and prior long-term incentive plans.plan. For further information regarding our stock-based compensation, see Notes 1 and 1517 of Notes to our Consolidated Financial Statements, included in our Annual Report on Form 10-K for the year ended December 31, 2015.2018.
(2) BonusesNon-Equity Incentive Plan Compensation in 2015 consist2016 consists of amounts earned under our short-term incentive plan for the year ended December 31, 2015.2016.
(3) The amounts reported in this column reflect employer paid 401(k) match and/or relocationtaxable fringe benefits. Additionally, Mr. Nayar's 2014Quatrochi's 2018 amount includes $20,025 paid as a new hiresign-on bonus and a $35,000 relocation bonus.
(4)Mr. Cazenave served as Acting Chief Financial Officer until Mr. Nayar's appointment in February 2014.Quatrochi became an officer effective January 1, 2018.
(5) Mr. Nayar joined Nautilus in February 2014.Cazenave resigned from his position effective March 1, 2019.


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Grants of Plan-Based Awards

The following table sets forth certain information regarding grants of plan-based awards to our NEOs during 2015.2018.
   
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)
 
Estimated Future Payouts Under Equity Incentive Plan Awards(2)
 All Other Stock Awards: Number of Shares of Stock or Units (# Shares) All Other Option Awards: Number of Securities Underlying Options (# Shares) Exercise or Base Price of Option Awards ($/Share) 
Grant Date Fair Value of Stock and Option Awards ($)(3)
   
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)
 
Estimated Future Payouts Under Equity Incentive Plan Awards(2)
 
Grant Date Fair Value of Stock and Option Awards ($)(3)
 Grant Date 
Thresh-old ($)
 Target ($) Maxi-mum ($) Thresh- old (# Shares) Target (# Shares) Maxi-mum(# Shares)  Grant Date 
Threshold
($)
 Target ($) 
Maximum
($)
 
Threshold
(# Shares)
 
Target
(# Shares)
 
Maximum
(# Shares)
 
Bruce M. Cazenave   $1,720
 $430,000
 $645,000
 
 
 
 
 
 $
 $
   $1,103
 $490,385
 $735,578
 
 
 
 $
 4/28/2015 
 
 
 14,650
 24,418
 36,628
 
 
 
 430,001
 2/21/2018 
 
 
 45,379
 54,623
 66,178
 650,014
Sidharth Nayar   520
 130,000
 195,000
 
 
 
 
 
 
 
   409
 181,961
 272,942
 
 
 
 
 4/28/2015 
 
 
 5,314
 8,858
 13,288
   
 
 155,989
 2/21/2018 
 
 
 21,884
 26,052
 31,263
 310,019
William B. McMahon   840
 210,000
 315,000
 
 
 
 
 
 
 
   574
 255,289
 382,933
 
 
 
 
 4/28/2015 
 
 
 7,632
 12,720
 19,080
 
 
 
 223,999
 2/21/2018 
 
 
 27,060
 32,354
 38,972
 385,013
Wayne M. Bolio   500
 125,000
 187,500
 
 
 
 
 
 
 
   296
 131,539
 197,308
 
 
 
 
 4/28/2015 
 
 
 5,110
 8,518
 12,778
 
 
 
 150,002
 2/21/2018 
 
 
 18,707
 22,270
 26,724
 265,013
Robert O. Murdock   450
 112,500
 168,750
 
 
 
 
 
 
 
Christopher K Quatrochi

 349
 154,904
 232,356
 
 
 
 
 4/28/2015 
 
 
 3,832
 6,388
 9,582
 
 
 
 112,493
 1/10/2018         10,000
   127,000
 2/21/2018 
 
 
 16,925
 20,043
 23,941
 238,512
(1) Amounts reflect potential payments to our NEOs under our short-term incentive program for the year ended December 31, 2015.2018. For amounts actually earned by our NEOs in 2015,2018, see “Summary Compensation Table” located herein. Participation in the program is limited to those executives who are employed by us at the time the incentive payments are made. The threshold is calculated assuming the company financial factor and the key strategic initiatives are achieved at the minimum level, and the employee achieving an estimated lowest payout level at 5% for individual contribution. The target payout is calculated assuming the company financial factor and the key strategic initiatives factors are achieved at 100%, and the employee obtainingobtains 100% of the target payout level for individual contribution. The maximum payout is calculated assuming the company financial factor and key strategic initiatives factors are achieved at the maximum level, and the employee achievingachieves the highest payout level for individual contribution while taking into consideration the overall plan maximum of 150% payout. For further information regarding our short-term incentive program, see “Short-Term Incentive Program” located herein.

(2) Amounts reflect potential stock to be earned pursuant to RSU and PSU awards. The RSUs vest on the third anniversary of the grant date, subject to grantee's continuous employment with the Company through such date. The PSUs vest based on achievement of goals established for growth in operating income as a percentage of net revenue and return on invested capital metric for a three-year performance period. The number of shares vesting under the PSU awards following conclusion of the performance period will be determined based on the level at which the financial goals are achieved. The number of shares vesting can range from 60% of the PSU awards if minimum thresholds are achieved to a maximum of 150%. See Notes 1 and 1517 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 20152018 for additional information.
(3) See Notes 1 and 1517 of Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 20152018 for detailed information regarding determining the fair value of stock-based awards and other relevant information.


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Outstanding Equity Awards at Fiscal Year-End

The following tables set forth certain information regarding outstanding stock-based awards held by our NEOs as of December 31, 2015.2018.
 Option Awards Stock Awards Option Awards Stock Awards
 
Grant
Date
   
Number of
Securities
Under-lying
Unexer-cised
Options (#) Exercis-able
 
Number of
Securities
Underlying
Unearned
Unexer-cised
Options (#) Unexer-cisable
 
Option Exer-cise
Price
 
Option Expir-ation
Date (1)
 
Number of Shares or Units of Stock That Have Not Vested (#)
(6)
 Market Value of Shares or Units of Stock That Have Not Vested ($) 
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)
(4),(5)
 Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) 
Grant
Date
   
Number of
Securities
Underlying
Unexercised
Options (#) Exercisable
 
Option Exercise
Price
 
Option Expiration
Date (1)
 
Number of Shares or Units of Stock That Have Not Vested (#)(3)
 Market Value of Shares or Units of Stock That Have Not Vested ($) 
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4)(5)
 Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Bruce M. Cazenave(6) 5/30/2011 
(2) 
 50,000
 
 $2.53
 5/30/2018
 
 $
 
 $
 5/2/2013 
(2) 
 18,000
 $6.62
 5/2/2020
 
 $
 
 $
 2/16/2012 
(2) 
 57,000
 
 2.85
 2/16/2019
 
 
 
 
 2/12/2014 
(2) 
 43,382
 8.22
 2/12/2021
 
 
 
 
 5/2/2013 
(2) 
 12,001
 5,999
 6.62
 5/2/2020
 
 
 11,500
 192,280
 2/9/2016 
 
 
 13,242
 144,338
 13,242
 144,338
 2/12/2014 
(2) 
 14,461
 28,921
 8.22
 2/12/2021
 
 
 26,029
 435,205
 2/14/2017 
 
 
 14,559
 194,363
 14,559
 158,693
 4/28/2015 
 
 
 
 
 
 24,418
 408,269
 2/21/2018 
 
 
 31,513
 343,492
 23,110
 251,899
Sidharth Nayar 2/28/2014 
  
 
 
 
 
 3,817
 66,660
 15,000
 250,800
 2/9/2016 
 
 
 5,056
 55,110
 5,056
 55,110
 4/28/2015 
 
 
 
 
 
 8,858
 148,106
 2/14/2017 
 
 
 5,662
 61,716
 5,662
 61,716
 2/21/2018 
 
 
 15,631
 170,378
 10,421
 113,589
William B. McMahon 5/2/2013 
(2) 
 4,001
 1,999
 6.62
 5/2/2020
 
 
 4,450
 74,404
 5/2/2013 
(2) 
 6,000
 6.62
 5/2/2020
        
 2/12/2014 
(2) 
 22,599
 8.22
 2/12/2021
 
 
 
 
 2/9/2016 
 
 
 6,982
 76,104
 6,982
 76,104
 2/12/2014 
(2) 
 7,533
 15,066
 8.22
 2/12/2021
 
 
 13,559
 226,706
 2/14/2017 
 
 
 7,941
 86,557
 7,941
 86,557
 4/28/2015 
 
 
 
 
 
 12,720
 212,678
 2/21/2018 
 
 
 19,118
 208,386
 13,236
 144,272
Wayne M. Bolio 5/2/2013 
(2) 
 
 1,199
 6.62
 5/2/2020
 
 
 2,400
 40,128
 2/12/2014 
(2) 
 2,871
 8.22
 2/12/2021
 
 
 
 
 2/12/2014 
(2) 
 6,726
 13,452
 8.22
 2/12/2021
 
 
 12,107
 202,429
 2/9/2016 
 
 
 4,789
 52,200
 4,789
 52,200
 4/28/2015 
 
 
 
 
 
 8,518
 142,421
 2/14/2017 
 
 
 5,250
 57,225
 5,250
 57,225
Robert O. Murdock 8/5/2011 
(3) 
 1,875
 
 1.85
 8/5/2018
 
 
 
 
 5/2/2013 
(2) 
 
 999
 6.62
 5/2/2020
 
 
 1,850
 30,932
 2/21/2018 
 
 
 13,362
 145,646
 8,908
 97,097
Christopher K. Quatrochi 1/10/2018 
 
 
 10,000
 109,000
 
 
 2/12/2014 
(2) 
 
 9,080
 8.22
 2/12/2021
 
 
 8,172
 136,636
 2/21/2018 
 
 
 12,248
 133,503
 7,795
 84,966
 4/28/2015 
 
 
 
 
 
 6,388
 106,807
(1) Options granted under our 2015 and prior plans generally expire seven years from the date of grant.
(2) Option awards vest in three equal annual installments, beginning on the first anniversary of the grant date.
(3) Option awards vest in four equal annual installments, beginning on the first anniversary of the grant date.
(4)RSU awards vest in full as of the third anniversary of the grant date.
(5)(4) PSU awards will be earned and vest if the applicable performance goal(s) have been achieved at the end of the three-year performance period. The three-year performance goals for the May 2, 2013
(5) PSU awards were achieved at the 150% level and, accordingly, such awards were earned and vestedgranted on February 25,9, 2016 (vestingare included in the table above. At the February 2019 Board meeting, it was contingent on certification ofdetermined that achievement of the performance criteria by our Compensation Committeegoals for this award were not met and the filing of our Annual Report on Form 10-K for the year ended December 31, 2015) as follows: Mr. Cazenave - 17,250 shares; Mr. McMahon - 6,675 shares; Mr. Bolio - 3,600 shares; and Mr. Murdock - 2,775 shares.awards were canceled in February 2019.
(6) Represents a stock unit award issued to Mr. Nayar upon his hire. The award has a total value of $100,000 and vests in three equal installmentsCazenave's options expire on the first, second and thirdthree month anniversary of the grant date. The numbereffective date of shares issuablehis resignation, or June 1, 2019. All unvested awards were canceled on each vesting date is determined by dividing $33,333 by the average daily closing price of our common stock during the one year vesting period preceding the vesting date. On February 28, 2015, the first anniversary of the grant date, one-third ($33,333) of this award vested, resulting in the vesting of 2,790 shares based on an average daily market price of $11.95 per share. On February 28, 2016, the second anniversary of the grant date, one-third ($33,333) of this award vested, resulting in the vesting of 1,824 shares based on an average daily market price of $18.28 per share. The remaining value of $33,334 equates to an estimated 1,993 shares based on the closing price of our common stock on December 31, 2015 of $16.72 per share, for a total estimated 3,817 unvested shares as of December 31, 2015.March 1, 2019.


24



OptionOptions Exercises and Stock Vested

The following table provides information about options exercised and stock awards vested for the NEOs during the fiscal year ended December 31, 2015.2018.
 Option Awards Stock Awards Option Awards Stock Awards
 Number of Shares Acquired on Exercise Value Realized on Exercise 
Number of Shares
Acquired
on Vesting
 
Value
Realized
on Vesting (1)
 
Number of Shares Acquired
on Exercise
 
Value Realized on Exercise(1)
 
Number of Shares Acquired
on Vesting
 
Value Realized
on Vesting (1)
Bruce M. Cazenave 
 $
 84,129
 $1,323,807
 85,600
 $986,182
 25,809
 $345,531
Sidharth Nayar 
 
 2,790
 42,575
 
 
 9,362
 125,339
William B. McMahon 78,500
 1,393,721
 21,000
 320,670
 
 
 13,445
 180,002
Wayne M. Bolio 10,400
 184,203
 11,250
 171,788
 
 
 9,003
 120,532
Robert O. Murdock 27,966
 354,483
 9,750
 148,883
Christopher K. Quatrochi 
 
 
 
(1) The market value realized was determined based on the NYSE closing price of our common stock on the date of exercise or the vesting date.date, as applicable.

CEO Pay Ratio

As mandated by the Dodd-Frank Act, Item 402(u) of Regulation S-K requires us to disclose the ratio of the compensation of our Chief Executive Officer to the total compensation of our median employee. Mr. Cazenave, our former Chief Executive Officer, had 2018 annual total compensation of $1,150,024. Our median employee had 2018 annual total compensation of $70,049. As a result, the ratio of Mr. Cazenave's 2018 annual total compensation to our median employee’s 2018 annual total compensation was approximately 16 to 1.

Mr. Cazenave’s 2018 annual total compensation is reported in the Summary Compensation Table provided in this Proxy Statement and includes the dollar value of Mr. Cazenave’s base salary and bonus awards (cash and non-cash) under our short-term and long-term incentive plans. Consistent with the calculation of Mr. Cazenave’s 2018 annual total compensation, our median employee’s 2018 annual total compensation includes the dollar value of her or his wages plus overtime and bonus earned for the performance year 2018.

We chose December 31, 2018 as the date to identify our median employee. We identified our median employee using a cash compensation measure, consistently applied to all employees, that included each employee’s cash base salary or wages plus overtime and cash bonus paid under our short-term incentive plan. This measure consistently excluded non-cash compensation, such as equity awards, and also consistently excluded certain cash compensation, such as 401(k) matching contributions. In identifying our median employee, we included all employees worldwide, except those employees based in the Netherlands. Of our total global population of 478 employees, 9, or approximately 2%, are based in the Netherlands. In addition, wages and salaries were annualized for those employees that were not employed for the full year of 2018. For those commission-only employees hired during 2018, we chose to annualize these employees' compensation by assigning them the average annual compensation of our commission- only sales employees to avoid distortion caused by the seasonality of our business.


POTENTIAL POST-EMPLOYMENT PAYMENTS

Each of our NEOs is employed “at-will,” meaning employment may be terminated by either party with or without cause. Upon termination of employment by us without “cause” or if the NEO leaves for “good reason” (as such terms are defined in the NEO’s employment agreement), we may be obligated to pay separation benefits. For a description of such benefits, see "Compensation Discussion and Analysis - Post-Employment Obligations" above. The following table sets forth information regarding amounts that would have been payable to our NEOs had their employment been terminated without cause effective December 31, 2015:2018:
 
Salary
Continuation
or Severance(1)
 
Benefits or
Perquisites(2)
 
Salary
Continuation
or Severance(1)
 
Benefits or
Perquisites(2)
Bruce M. Cazenave(3)
 $430,000
 $12,392
 $500,000
 $10,093
Sidharth Nayar 130,000
 207
 155,000
 349
William B. McMahon 140,000
 2,429
 175,000
 2,781
Wayne M. Bolio 125,000
 4,389
 132,500
 5,046
Robert O. Murdock 75,000
 1,619
Christopher K. Quatrochi

 88,333
 4,745
(1) Amounts that may be paid under the applicable employment agreement, assuming termination occurred on December 31, 2015.2018.
(2) Per their individual employment agreements, all NEOs are entitled to continued health benefits for themselves and their covered dependents, at active-employee premium rates, during the period in which they are entitled to severance payments.
(3) In addition, Mr. Cazenave iswas also entitled to a pro-rated bonus payment for the portion of the fiscal year completed priorcompleted. We do not have severance payment obligations to the termination.Mr. Cazenave in connection with his resignation, which was effective March 1, 2019.


25



PROPOSAL NO. 2:

ADVISORY VOTE ON EXECUTIVE COMPENSATION

We are asking shareholders to approve, on a non-binding, advisory basis, a resolution approving our executive compensation as reported in this Proxy Statement.

We urge shareholders to read the “Compensation Discussion and Analysis” section of this Proxy Statement, which describes how our executive compensation program is designed and operates, as well as the Summary Compensation Table and other related compensation tables, which provide additional information on the compensation of our named executive officers. The Board and the Compensation Committee believe that our executive compensation program has supported and contributed to our recent and long-term success and the creation of long-term shareholder value; and that these programs are effective in helping us attract and retain the high caliber of executive talent necessary to drive our business forward and build sustainable value for our shareholders.
 
In accordance with regulations issued under Section 14A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we are asking shareholders to approve the following non-binding, advisory resolution at the Annual Meeting:
 
RESOLVED, that the compensation paid to Nautilus' Named Executive Officers, as disclosed in the Compensation Discussion and Analysis section, compensation tables and narrative discussion of the Proxy Statement for the 20162019 Annual Meeting of Shareholders, is hereby APPROVED.
 
While this advisory resolution, commonly referred to as a “say on pay” resolution, is non-binding, the Compensation Committee will carefully review and consider the voting results when making future decisions regarding our executive compensation program.
 
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RESOLUTION
APPROVING NAUTILUS' NAMED EXECUTIVE OFFICERS COMPENSATION.



26



AUDIT COMMITTEE REPORT TO SHAREHOLDERS *

Each current member of the Audit Committee meets the independence, financial literacy and experience requirements contained in the corporate governance listing standards of the New York Stock Exchange ("NYSE") relating to audit committees. In addition, our Board has determined that Messrs. Badie, Horn and Siegert each qualify as an “audit committee financial expert” under the regulations of the SEC. Although all members of our Audit Committee meet the current NYSE regulatory requirements for accounting or related financial management expertise, and the Board has determined that Messrs. Badie, Horn and Siegert each qualify as an “audit committee financial expert,” members of our Audit Committee are not professionally engaged in the practice of auditing or accounting and are not technical experts in auditing or accounting.
 
The Audit Committee oversees Nautilus' financial reporting process on behalf of the Board and operates under a written charter, approved by the Audit Committee and ratified by the Board. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in the Annual Report on Form 10-K for the year ended December 31, 20152018 with management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
 
Management has the primary responsibility for the preparation, presentation and integrity of Nautilus' financial statements and the reporting process, including internal control over financial reporting and disclosure controls and procedures. Management is responsible for maintaining and evaluating appropriate accounting and financial reporting principles and internal controls and procedures designed to ensure compliance with accounting standards and applicable laws and regulations.
 
The Audit Committee reviewed with the independent registered public accounting firm, which is responsible for expressing an opinion on the conformity of Nautilus' audited financial statements with accounting principles generally accepted in the United States, their judgments as to the quality, not just the acceptability, of Nautilus' accounting principles. The Audit Committee also has discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees. The Audit Committee has received the written disclosures and the letter from the independent accountant required by the Public Company Accounting Oversight Board regarding the independent accountant's communications with the Audit Committee concerning independence, and has discussed with the independent accountant the independent accountant's independence from Nautilus and its management, and has considered whether the independent registered public accounting firm's provision of any non-audit services to Nautilus is compatible with maintaining such firm's independence.
 
The Audit Committee discussed with Nautilus' independent registered public accounting firm the overall scope and plans for their audit. In addition, the Audit Committee met with the independent registered public accounting firm, with and without management present, to discuss the results of their examination, their evaluation of the Nautilus' internal control over financial reporting, and the overall quality of Nautilus' financial reporting for the year ended December 31, 2015.2018.
 
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board approved, that the audited financial statements and management's report on internal control over financial reporting be included in the Annual Report on Form 10-K for the year ended December 31, 2015.2018. The Audit Committee has determined that provision by Deloitte & ToucheKPMG LLP of other non-audit services is compatible with maintaining Deloitte & ToucheKPMG LLP's independence. independence for the year ended December 31, 2018.

The Audit Committee and the Board have also recommended, subject to shareholder ratification, the selection of Deloitte & ToucheKPMG LLP as Nautilus' independent registered public accounting firm for the year ending December 31, 2016.2019.
 
Respectfully Submitted,
 
Marvin G. Siegert, Chairman
Ronald P. Badie
Richard A. Horn
Anne G. Saunders
 
* The information contained in the Report of the Audit Committee shall not be deemed “soliciting material” or be incorporated by reference by any general statement incorporating this proxy statement into any filings under either the Securities Act of 1933, as amended, or the Exchange Act (together the “Acts”), except to the extent Nautilus specifically incorporates such report by reference, and further, such Report shall not otherwise be deemed filed under the Acts.


27



PROPOSAL NO. 3:
 
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR 20162019

The Audit Committee has appointed Deloitte & ToucheKPMG LLP the member firms of Deloitte Touche Tomatsu and their respective affiliates (collectively, “Deloitte & Touche”("KPMG") as our independent registered public accounting firm to audit our consolidated financial statements and internal controls over financial reporting for the year ending December 31, 2016.2019. Although we are not required to seek shareholder approval of this appointment, the Board has determined it to be sound corporate governance to do so. If the appointment is not ratified by shareholders, the Audit Committee will investigate the possible bases for the negative vote and will reconsider the appointment in light of the results of its investigation.
 
We employed Deloitte & ToucheKPMG has served as our independent registered public accounting firm during 2015. There have been no disagreements with Deloitte & Touche on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of Deloitte & Touche, would have caused Deloitte & Touche to make reference to the matter in their report.since March 6, 2017. A representative of Deloitte & ToucheKPMG is expected to be present at the Annual Meeting. The representative will be given the opportunity to make a statement on behalf of Deloitte & ToucheKPMG if the representative so desires, and the representative will be available to respond to appropriate shareholder questions.

We understand the need for Deloitte & ToucheKPMG to maintain objectivity and independence in its audit of our financial statements. To minimize relationships that could appear to impair the objectivity of Deloitte & Touche,KPMG, our Audit Committee has restricted the non-audit services that Deloitte & ToucheKPMG may provide. These determinations are among the key practices adopted by the Audit Committee in its “Policies and Procedures for the Approval of Audit and Non-audit Services Provided by the Independent Auditor.” Under these policies, with Audit Committee pre-approval, we may use Deloitte & ToucheKPMG for the following categories of non-audit services: merger and acquisition due diligence and audit services; tax services; internal control reviews; employee benefit plan audits; and reviews and procedures that we engage Deloitte & ToucheKPMG to undertake to provide assurances on matters not required by laws or regulations.

Prior to KPMG's appointment as our auditors, we employed Deloitte & Touche LLP ("Deloitte") as our independent registered public accounting firm until March 6, 2017. The following table presents fees for professional audit services rendered by KPMG and Deloitte & Touche for the auditaudits of our annual financial statements for the years ended December 31, 20152018 and 2014,2017, respectively, and fees billed for other services rendered by Deloitte & Touchethe firms during those periods.
Type of Fees 2015 2014 
2018(1)
 
2017(1)
Audit Fees(1)(2)
 $681,494
 $686,412
 $770,912
 $862,860
Audit-Related Fees(2)(3)
 264,892
 
 
 40,000
Tax Fees(3)(4)
 62,069
 47,750
 36,756
 84,592
All Other Fees(4)(5)
 25,000
 
 
 23,554
Total $1,033,455
 $734,162
 $807,668
 $1,011,006
(1)Fees shown for 2018 and 2017 are applicable to KPMG, unless otherwise noted.
(2) Fees for the audit of our consolidated financial statements included in Forms 10-K, review of our condensed consolidated financial statements included in Forms 10-Q and services that are normally provided by the accountant in connection with our statutory and regulatory filings or engagements, including the audit of internal control over financial reporting required by Section 404 of the Sarbanes-Oxley Act of 2002.
(2)(3) Fees for 2017 audit-related services consistingconsisted of due diligence and consulting assistance rendered by KPMG in connection with our acquisitionsupport of Octane Fitness in December 2015.new revenue recognition standards analysis.
(3)(4) Fees billed for tax compliance, tax advice and tax planning services rendered during the respective periods. The 2017 fees are comprised of $59,489 for KPMG and $25,103 for Deloitte.
(4)(5) Fees billed for royalty inspection2017 to KPMG for goodwill impairment testing prior to retention of a licensee.KPMG as independent auditors.

All of the services performed by KPMG and Deloitte & Touche LLP in 20152018 and 20142017, respectively, were pre-approved in accordance with the pre-approval policy and procedures adopted by the Audit Committee. This policy describes the permitted audit, audit-related, tax and other services that the independent auditors may perform. Generally, pre-approval is provided at regularly scheduled committee meetings; however, the authority to pre-approve services between meetings, as necessary, has been delegated to the Chairman of the Audit Committee, subject to formal approval by the full Audit Committee at the next regularly scheduled meeting.
 
The Audit Committee believes that the foregoing expenditures are compatible with maintaining the independence of our independent registered public accounting firm.

The audit reports of Deloitte on our consolidated financial statements as of and for the year ended December 31, 2016 did not contain any adverse opinions. Their opinion was modified to address a retrospective change in accounting principle, ASC Topic 606, Revenue from Contracts with Customers, as they were not engaged to audit, review, or apply any procedures to the adjustments. The adjustments were audited by our current auditors, KPMG.

During our two most recent fiscal years, neither the Company nor anyone on its behalf consulted KPMG regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements, and no written report or oral advice was provided by KPMG to us that KPMG concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue, or (ii) any matter that was either the subject of a disagreement (as described in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).

We previously provided Deloitte with a copy of the above disclosures as included in our Form 8-K filed with the Commission on March 10, 2017, and requested Deloitte to furnish us with a letter addressed to the Commission stating whether Deloitte agrees with the statements made by us in response to Item 304(a) of Regulation S-K and, if not, stating the respects in which it does not agree. A copy of Deloitte’s letter, dated March 10, 2017, is attached as Exhibit 16.1 to that Form 8-K, and is incorporated herein by reference.



OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THE RATIFICATION OF THE AUDIT COMMITTEE'S APPOINTMENT OF DELOITTE & TOUCHEKPMG LLP AS OUR
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.FIRM FOR 2019.

28


PROPOSAL NO. 4:

ADVISORY VOTE REGARDING FREQUENCY OF VOTE ON EXECUTIVE COMPENSATION

The regulations that require us to hold a “say on pay” advisory vote also require that shareholders be asked how often they wish to vote on a “say on pay” proposal. In accordance with these requirements, we are asking shareholders to vote on whether future “say on pay” votes should occur every year, every two years, or every three years. The vote on the frequency of “say on pay” votes is advisory in nature and must be held at least once every six years.
After careful consideration, the Board has determined that holding an advisory vote on executive compensation every one year is the most appropriate policy for the Company at this time, and recommends that shareholders vote for future advisory votes on executive compensation to occur every one year.
In accordance with regulations promulgated under Section 14A of the Exchange Act, shareholders will be able to specify one of four choices for this proposal on the proxy card: one year, two years, three years, or abstain. Although the advisory vote is non-binding on the Company, the Board has adopted a policy of adopting any recommendation of the shareholders regarding the frequency of advisory votes on executive compensation which receives the vote of a majority of the Company's shareholders voting on the proposal.If none of the three frequency options receives the vote of the holders of a majority of the shares of the common stock present or represented and voting, we will consider the frequency option (one year, two years or three years) receiving the highest number of votes to be the frequency that has been recommended by shareholders, and the Board and the Compensation Committee will give careful consideration to the voting results on this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO HOLD ADVISORY VOTES ON EXECUTIVE COMPENSATION EVERY ONE YEAR.


SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors and executive officers, as well as persons who own more than 10% of our outstanding common stock, to file with the SEC initial reports of beneficial ownership and reports of changes in beneficial ownership of shares of our common stock. Based solely on a review of copies of such forms furnished to us and written representations from our executive officers, directors and 10% shareholders, we believe that all Section 16(a) filing requirements applicableattributable to Nautilus were timely made with respect to the year ended December 31, 2015.2018.

CODE OF ETHICS
 
We have adopted the Nautilus, Inc. Code of Business Conduct and Ethics (the “Code of Ethics”), which applies to all of our directors, officers and employees. You can view the Code of Ethics on our website at www.nautilusinc.com. A copy of the Code of Ethics will be provided in print without charge to all interested parties who submit a request in writing to Nautilus, Inc., 17750 S.E. 6th Way, Vancouver, Washington 98683, Attn: Corporate Communications.

HOUSEHOLDING

In accordance with applicable regulations, we deliver a single Annual Report and Proxy Statement to certain persons who share an address, unless we have been notified that such persons prefer to receive individual copies of those documents. This practice is referred to as “householding.” If you reside at an address that received only one copy of proxy materials as a result of householding, we will deliver additional copies upon oral or written request. If you wish to receive separate copies in the future, please contact us at Nautilus, Inc., 17750 S.E. 6th Way, Vancouver, Washington 98683, or by phone at (360) 859-2900. If you and others living at your address received multiple copies of proxy materials and prefer to receive a single copy, you may request that a single copy be sent in the future by contacting us as described above.

OTHER MATTERS
 
As of the date of this proxy statement,Proxy Statement, the Board is not aware of any other matters that may come before the Annual Meeting. The persons named in the enclosed proxy card intend to vote the proxy in accordance with their best judgment if any other matters properly come before the Annual Meeting.
 
We will provide, without charge, on the written request of any beneficial owner of shares of our common stock entitled to vote at the Annual Meeting, a copy of our Annual Report on Form 10-K as filed with the SEC for our fiscal year ended December 31, 2015.2018. Written requests should be mailed to Nautilus, Inc., 17750 S.E. 6th Way, Vancouver, Washington 98683, Attn: Company Secretary.
 
Please return the enclosed proxy card as soon as possible. Unless a quorum consisting of a majority of the outstanding shares entitled to vote is represented at the Annual Meeting, no business can be transacted. Therefore, please be sure to date and sign your proxy card exactly as your name appears on your stock certificate and return it in the enclosed postage prepaid return envelope. Please act promptly to ensure that you will be represented at this important meeting. 
  
 By Order of the Board of Directors
  
 /s/ Wayne M. Bolio
 
WAYNE M. BOLIO
Secretary

Vancouver, Washington
April 4, 2016March 29, 2019


29



APPENDIX A

SAMPLE PROXY CARD

30



a03023enautiluscommon.jpg

a03023enautiluscommona01.jpg

31