DEF 14A of Ethan Allen Interiors Inc, Sep 29, 2023

DEF 14A of Ethan Allen Interiors Inc

Filed Sep 29, 2023 · FY20230001104659-23-105321

Open on EDGAR

  1. Your Vote Is Important

    | COMPENSATION COMMITTEE REPORT | 31 | | COMPENSATION TABLES | 32 | | Summary Compensation Table | 32 | | Grants of Plan-Based Awards | 33 | | Outstanding Equity Awards at Fiscal Year-End | 34 | | Option Exercises and Stock Vested | 35 | | Nonqualified Deferred Compensation | 35 | | Potential Payments upon Termination or Change in Control | 36 | | PAY RATIO DISCLOSURE | 37 | | PAY VERSUS PERFORMANCE | 39 | | Pay Versus Performance Table | 39 | | Adjustments to Compensation Actually Paid | 40 | | Pay Versus Performance Table Discussion and Analysis | 41 | | Performance Measures | 42 | | PROPOSAL 3: TO APPROVE, ON AN ADVISORY BASIS, THE FREQUENCY OF FUTURE ADVISORY VOTES TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION | 43 | | PROPOSAL 4: RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 44 | | Audit Fees | 45 | | Audit and Non-Audit Engagement Pre-Approval Policy | 45 | | AUDIT COMMITTEE REPORT | 45 | | INSTRUCTIONS FOR VIRTUAL MEETING PARTICIPATION | 47 | | QUESTIONS AND ANSWERS ABOUT OUR ANNUAL MEETING AND VOTING | 47 | | APPENDIX A – Reconciliation of GAAP and Non-GAAP Financial Measures | 54 |

  2. BOARD OF DIRECTORS

    BOARD OF DIRECTORS Ethan Allen Interiors Inc. is a global luxury home fashion brand that is vertically integrated from product design through home delivery, which offers its customers stylish product offerings, artisanal quality and personalized service. The effective management of our enterprise requires a strong governance foundation. We believe the composition of the Board reflects an appropriate mix of skill sets, experience, and qualifications that are relevant to the business and governance of the Company. Our directors possess individual experiences that provide practical wisdom and foster mature judgment in the boardroom. Collectively, the directors bring international, retail, digital, real estate, technology, cybersecurity, ESG and marketing experiences that are relevant to the Company’s vertically integrated enterprise. The Board has general oversight responsibility for the Company’s affairs and is deeply involved in the Company’s strategic planning process, leadership development, succession planning, and oversight of risk management. The Board believes that good corporate governance is important to ensure that the Company is managed for the long-term benefit of its stockholders and to enhance the creation of long-term stockholder value. The Board is committed to strong corporate governance and has adopted Corporate Governance Guidelines that support and reflect this belief, strengthen Board and management accountability, and comply with the requirements of the New York Stock Exchange (the “NYSE”).

  3. PROPOSAL 1: ELECTION OF DIRECTORS

    PROPOSAL 1: ELECTION OF DIRECTORS At the recommendation of the Corporate Governance, Nominations and Sustainability Committee, the Board has nominated the following six directors for election at the Annual Meeting. If elected, each director will serve for a one-year term expiring at the 2024 Annual Meeting of Stockholders or until their respective successor has been duly elected and qualified or until their earlier death, resignation, disqualification, or removal. All of the director nominees are current directors who were each elected by Ethan Allen’s stockholders at our 2022 Annual Meeting of Stockholders. The six director nominees are as follows:

  4. PROPOSAL 1: ELECTION OF DIRECTORS

    | • M. Farooq Kathwari | • John J. Dooner, Jr. | • Tara I. Stacom | | • Gina Casar | • David M. Sable | • Cynthia Ekberg Tsai |

  5. PROPOSAL 1: ELECTION OF DIRECTORS

    Each of the director nominees included in this Proxy Statement has consented to being named as a nominee and has accepted the nomination and agreed to serve as a director if elected by our stockholders. The Board believes that each nominee will be able and willing to serve if elected as a director. However, if any nominee becomes unable or unwilling to serve between the date of this Proxy Statement and the Annual Meeting, the Board may designate a new nominee, and the persons named as proxy holders may vote for the substitute nominee. Alternatively, the Board may reduce the size of the Board. The information set forth below includes, with respect to each nominee for election as director, their age, present principal occupation, specific expertise, qualifications, and skills along with other business experience, directorships in other publicly held companies, membership on committees of the Board and period of service as a director of the Company. Also set forth below is a brief discussion of the specific experience, qualifications, attributes, or skills that led to each nominee’s nomination as a director, in light of the Company’s business. The Board unanimously recommends that you vote FOR each of the six nominees.

  6. BOARD OF DIRECTORS MATRIX

    BOARD OF DIRECTORS MATRIX The following matrix provides information regarding the members of our Board, including certain types of knowledge, skills, experiences, and attributes possessed by one or more of our directors, which our Board believes are relevant to our business and industry. The matrix does not encompass all of the knowledge, skills, experiences or attributes of our directors, and the fact that a particular knowledge, skill, experience, or attribute is not listed does not mean that a director does not possess it or that the Corporate Governance, Nominations and Sustainability Committee and the Board did not evaluate it. In addition, the absence of a particular knowledge, skill, experience or attribute with respect to any of our directors does not mean the director in question is unable to contribute to the decision-making process in that area. The type and degree of knowledge, skill and experience listed below may vary among the members of the Board. With the exception of M. Farooq Kathwari, all other directors are independent directors.

  7. BOARD OF DIRECTORS MATRIX

    | | M. Farooq Kathwari | Gina Casar | John J. Dooner, Jr. | David M. Sable | Tara I. Stacom | Cynthia Ekberg Tsai | | Knowledge, Skills and Experience | | | | | | | | CEO or Senior Executive Level Experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Risk Management | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | International Experience | ✓ | ✓ | ✓ | ✓ | | ✓ | | Operating Experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Retail and Digital Experience | ✓ | | | ✓ | | ✓ | | Finance Experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Real Estate Experience | ✓ | | | | ✓ | | | Marketing and Brand Building Expertise | ✓ | | ✓ | ✓ | ✓ | ✓ | | Cybersecurity Experience | ✓ | | | ✓ | | ✓ | | ESG Experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Demographics | | | | | | | | Race/Ethnicity | | | | | | | | Caucasian / White | | | ✓ | ✓ | ✓ | ✓ | | Hispanic / Latin American | | ✓ | | | | | | South Asian | ✓ | | | | | | | Gender | | | | | | | | Male | ✓ | | ✓ | ✓ | | | | Female | | ✓ | | | ✓ | ✓ | | Board Tenure | | | | | | | | Years | 35 | 1.5 | 12 | 2 | 8 | 2 |

  8. DIRECTOR NOMINEES FOR ELECTION

    DIRECTOR NOMINEES FOR ELECTION

  9. DIRECTOR NOMINEES FOR ELECTION

    | M. Farooq KathwariENTREPRENURIAL AND DISCIPLINED LEADER | | | | | Mr. Kathwari is the Chairman, President and Chief Executive Officer of Ethan Allen Interiors Inc. He has been President since 1985 and Chairman and Chief Executive Officer since 1988. He holds a Bachelor of Arts in both English Literature and Political Science from Kashmir University and an MBA in International Marketing from New York University. He is also the recipient of three honorary doctorate degrees. | Director since: 1985 Age: 79 Board Committees: • Chairperson of the Board | | Specific Qualifications, Attributes, Skills and Experience: | | | | Mr. Kathwari serves in numerous capacities at several nonprofit organizations. He is an advisory member of the New York Stock Exchange; a director and former chairman of the National Retail Federation; a former chairman of the American Home Furnishings Alliance; a member of the Board of Overseers of the International Rescue Committee; Chairman Emeritus of Refugees International; a member of the International Advisory Council of the United States Institute of Peace; an Honorary Trustee on the Hebrew Home Board; and a member of the advisory board of the Center for Strategic and International Studies. | | | | Among his recognitions, Mr. Kathwari is a recipient of the 2018 Ellis Island Medal of Honor, has been inducted into the American Furniture Hall of Fame and recipient of the National Retail Federation Gold Medal. He has been recognized as an Outstanding American by Choice by the U.S. government. He has received the Yale School of Management’s Chief Executive Leadership Institute Lifetime of Leadership Award. He has also been recognized by Worth magazine as one of the 50 Best CEOs in the United States. He is the author of Trailblazer: from the Mountains of Kashmir to the Summit of Global Business and Beyond. | | | | Mr. Kathwari has extensive knowledge of the history of both the Company and the furniture industry as well as extensive experience in growing and managing a business. Mr. Kathwari possesses insight into retailing, marketing, manufacturing, finance, and strategic planning. In addition, his work with both for-profit and not-for-profit organizations has given him perspectives from other industries, which have proven valuable throughout his service to the Company. | | |

  10. DIRECTOR NOMINEES FOR ELECTION

    | Gina CasarRISK MANAGEMENT, ESG AND HUMAN RESOURCES LEADER | | | | | Ms. Casar currently serves on the Board of Save the Children Mexico, the Advisory Board of Sigma Alimentos and is a member of “Global Women Leaders: Voices for change and inclusion.” She previously served as a member of the Global Future Council of International Governance and Sustainable Development from 2015 until 2018. | Independent Director since: 2022 Age: 64 Board Committees: • Audit • Corporate Governance, Nominations and Sustainability | | Specific Qualifications, Attributes, Skills and Experience: | | | | Ms. Casar has held various high level executive positions within the United Nations (“UN”), the government of Mexico and other financial institutions. During her career at the UN, she served as Under-Secretary-General from 2014 to 2016 and as CFO and Controller between 2011 and 2014. Additional roles within the UN included the post of Associate Administrator of the UN Development Programme and Deputy Executive Director of the World Food Programme. Between 2006 and 2009, Ms. Casar worked for the government of Mexico, including senior leadership positions of National Treasurer and Executive Director for the Mexican Agency for International Cooperation. Prior to that, she held leadership roles in prominent organizations, including Banco Nacional de Servicios Financieros (BANSEFI). Ms. Casar is proficient in Spanish, English, French and Italian and holds an MBA and a degree in public accounting, with honors, from the Instituto Tecnológico Autónomo de México (ITAM). Ms. Casar brings to the Board her strategic financial and risk management, key ESG perspective, sound human resources leadership expertise and in-depth knowledge of managing business transformation initiatives. | | |

  11. DIRECTOR NOMINEES FOR ELECTION

    | John J. Dooner, Jr.MARKETING AND STRATEGIC COMMUNICATIONS LEADER | | | | | Mr. Dooner founded The Dooner Group, a marketing communication consultancy in 2012, and serves as Chairman Emeritus of McCann Worldgroup, a company he formed in 1997, and of which he had been Chief Executive Officer from its founding until 2011. | Lead Independent Director Independent Director since: 2011 Age: 75 Board Committees: • Compensation – Chair • Audit • Corporate Governance, Nominations and Sustainability | | Specific Qualifications, Attributes, Skills and Experience: | | | | Under Mr. Dooner’s leadership, McCann grew to be one of the world’s largest marketing communications organizations, with operations in over 125 countries with a client roster that includes preeminent global marketers and many of the world’s most famous brands. Prior to assuming that position, Mr. Dooner was Chief Executive Officer of McCann Erickson Worldwide, a post he assumed in 1992. Mr. Dooner serves on several not-for-profit organizations including as Chairman of St. Thomas University based in Miami, Florida. He is Past Chairman Board of Trustees and Past Brand Platform Chairman of United Way Worldwide based in Washington, DC. In April 2019, Mr. Dooner was inducted into the American Advertising Federation Hall of Fame. In May 2019 he received an honorary doctorate from St. Thomas University. Mr. Dooner brings extensive leadership, advertising and branding expertise to the Board. | | |

  12. DIRECTOR NOMINEES FOR ELECTION

    | David M. Sable MARKETING AND DIGITAL LEADER | | | | | Mr. Sable is Co-Founder and Partner of DoAble, a Marketing Consultancy focused on branding, positioning, and big ideas. As Senior Advisor to WPP plc (“WPP”), a multinational communications, advertising, public relations, technology, and commerce holding company, he mentored and consulted across the company. Previously he was Chairman of VMLY&R from 2011 to 2019 where he helped Y&R to a top-five global creative firm at Cannes, developed new resources and practices, expanded the global footprint, and created a successful agency that continues to be an industry leader today. | Independent Director since: 2021 Age: 70 Board Committees: • Corporate Governance, Nominations and Sustainability – Chair • Compensation | | Specific Qualifications, Attributes, Skills and Experience: | | | | Mr. Sable has served as a board member and member of the Audit, Compensation and Nominating Committees of the public company American Eagle Outfitters (NYSE: AEO) since 2013. Prior to his time at Y&R, Mr. Sable served at Wunderman, Inc., a leading customer relationship manager and digital unit of WPP, as Vice Chairman and Chief Operating Officer, from August 2000 to February 2011. Mr. Sable was a Founding Partner and served as Executive Vice President and Chief Marketing Officer of Genesis Direct, Inc., a pioneer digital omni-channel retailer, from June 1996 to September 2000. Mr. Sable attended New York University and Hunter College in New York. In 2013, Fast Company named Mr. Sable one of the 10 Most Generous Marketing Geniuses. He currently serves on the Board of Directors of both UNICEF/USA and the International Special Olympics, as well as on the Executive Board of UNCF and he was Executive Producer on MTV’s highly acclaimed REBEL MUSIC series. Mr. Sable brings to the Board more than 30 years of experience and strategic insight in digital leadership and marketing communications. The Board also benefits from his extensive involvement with community programs. | | |

  13. DIRECTOR NOMINEES FOR ELECTION

    | Tara I. Stacom REAL ESTATE AND FINANCIAL INDUSTRIES LEADER | | | | | Ms. Stacom is an Executive Vice Chairman of Cushman & Wakefield since 2013, a worldwide commercial real estate firm with 50,000 employees. During her 40-year career, Ms. Stacom has been responsible for executing in excess of 60 million square feet and some of the largest and most complex leasing, sales, and corporate finance real estate transactions. | Independent Director since: 2015 Age: 65 Board Committees: • Audit • Corporate Governance, Nominations and Sustainability | | Specific Qualifications, Attributes, Skills and Experience: | | | | Ms. Stacom earned her Bachelor of Science degree in Finance at Lehigh University where she later served on the Board of Trustees. She is a director of the Realty Foundation of New York and a member of the Real Estate Board of New York having served on numerous committees including Ethics and the Commercial Brokerage Division. In January 2022, she was appointed to the Board of Directors of Inveniam Capital Partners, a privately-held fintech company. Ms. Stacom is a “Director’s Circle Member” of Girls, Inc., a board member of Right to Dream and recipient of Crain’s New York Business 100 Most Influential Women in New York City. She was awarded “Woman of the Year” of the New York Executives in Real Estate (WX), and Real Estate New York and Real Estate Forum’s Women of Influence. She received Northwood University’s Distinguished Women’s Award in recognition of the enormous contribution she has made to communities, businesses, volunteer agencies, and public and private sector services worldwide. Ms. Stacom was honored with the Real Estate Board of New York’s highest achievement, the 2011 Most Ingenious Deal of the Year (First Place Henry Hart Rice Award) for the leasing of One World Trade Center. Ms. Stacom brings extensive knowledge of commercial real estate, risk management and financial analysis to the Board. | | |

  14. DIRECTOR NOMINEES FOR ELECTION

    | Cynthia Ekberg Tsai FINANCE AND MANAGEMENT DEVELOPMENT LEADER | | | | | Ms. Ekberg Tsai is the CEO of Tana Systems, a global software and IT company based in the U.S. and India. She is also CEO of Healthquest, a global biotechnology and medical technologies advisory firm, where she specializes in providing strategic introductions and advice to rising executives. | Independent Director since: 2021 Age: 67 Board Committees: • Audit – Chair • Compensation | | Specific Qualifications, Attributes, Skills and Experience: | | | | Ms. Tsai spent 16 years on Wall Street as a Vice President with Merrill Lynch and Kidder Peabody. She is the former Founder and CEO of HealthExpo, the largest consumer healthcare event in the U.S., where she grew the enterprise from concept to execution, attracting more than 50 million consumers to HealthExpo. Previously, Ms. Tsai was a General Partner in MassTech Ventures, a multi-million-dollar equity fund focused on technology development at Massachusetts Institute of Technology. Ms. Tsai currently serves on the Board of Selectors for the Jefferson Foundation Awards and is on the board of the Prix Galien Foundation. In 1999, the Harvard Business School Alumni Chapter in New York recognized Ms. Tsai with an Early-Stage Honor Roll Award for Entrepreneurship. In 2004, she also received a “Leading Woman Entrepreneur of the World” Award from the Star Foundation in Overland Park, Kansas. She earned a Bachelor of Arts in Psychology from the University of Missouri. Ms. Tsai brings to the Board her strategic financial thinking and unique hands-on experience in investment banking and brand building. | | |

  15. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION Only our non-employee (independent) directors receive compensation for service on the Board. Employee directors do not receive additional compensation for serving on the Board. Non-employee director compensation is approved by the Board, after considering a recommendation from the Compensation Committee. Mr. Kathwari, as Chief Executive Officer of the Company, is not compensated separately for his service as a director on the Board. For information on Mr. Kathwari’s compensation as our Chief Executive Officer, refer to the Summary Compensation Table. For fiscal 2023, the Board approved a combination of cash and option awards as compensation for our non-employee directors, as outlined and shown in the table below. Annual Cash Retainer. For fiscal 2023, each non-employee director received $60,000 per annum. Additional quarterly fees are paid to the chair of each of the committees as follows: Audit Committee $4,000; Compensation Committee $2,000; and Corporate Governance, Nominations and Sustainability Committee $2,000. The Lead Independent Director of the Board is paid an additional cash fee of $2,000 per quarter. Equity Compensation. Non-employee directors are eligible to receive equity compensation in amounts determined by the Compensation Committee, which generally would be paid in the form of stock options. In fiscal 2023, each director was awarded a stock option award with the number of options equal in value to $100,000 based on the closing market price of the Company’s stock on the date of grant. These stock options vest in three equal annual installments commencing on the first anniversary of the date of grant so long as the director continues to serve on our Board. All options granted to directors have an exercise price equal to the fair market value of our common stock on the date of grant and remain exercisable for a period of up to 10 years, subject to continuous service on our Board. Meeting Fees. If a standing committee of the Board holds more than four meetings (either in person or virtually) on days when the full Board does not meet, members of that committee will be paid an additional $1,000 for each additional meeting beginning with the fifth such meeting. Directors serving on committees for part of a year receive a pro rata share of fees. There were no additional meeting fees paid to directors during fiscal 2023.

  16. DIRECTOR COMPENSATION

    | Name | Fees Earned or Paid in Cash | Option Awards (1)(2) | All Other Compensation (3) | Total | | Gina Casar | $60,000 | $23,890 | $— | $83,890 | | Dr. John Clark(4) | $— | $23,890 | $68,000 | $91,890 | | John J. Dooner, Jr. | $76,000 | $23,890 | $— | $99,890 | | David M. Sable | $60,000 | $23,890 | $— | $83,890 | | Tara I. Stacom | $60,000 | $23,890 | $— | $83,890 | | Cynthia Eckberg Tsai | $76,000 | $23,890 | $— | $99,890 |

  17. DIRECTOR COMPENSATION

    (1) The amounts shown in the Option Awards column represent the aggregate grant date fair values, computed in accordance with Accounting Standards Codification Topic 718. For financial statement reporting purposes these fair values are charged to expense over the vesting period of three years. The actual values realized, if any, will not be known until the vesting date and could differ significantly from the amounts disclosed in the table. Refer to note 17 to the consolidated financial statements contained in the 2023 Annual Report for valuation assumptions with respect to stock option grants. As of June 30, 2023, the total number of stock options outstanding and stock options that were vested or exercisable within 60 days of June 30, 2023 for each non-employee director were as follows: • Ms. Casar held 3,995 stock options outstanding, of which 1,332 were vested or exercisable within 60 days. • Mr. Dooner held 41,711 stock options outstanding, of which 37,637 were vested or exercisable within 60 days. • Mr. Sable held 3,995 stock options outstanding, of which 1,332 were vested or exercisable within 60 days. • Ms. Stacom held 30,487 stock options outstanding, of which 26,413 were vested or exercisable within 60 days. • Ms. Tsai held 3,995 stock options outstanding, of which 1,332 were vested or exercisable within 60 days. (2) Each director who was a member of the Board as of the grant date of August 9, 2022, was awarded 3,995 stock options, which will vest in three equal annual installments commencing on the first anniversary of the date of grant. (3) In lieu of an annual cash retainer, Dr. John Clark requested his compensation be paid by the Company in the form of a donation to a charitable institution. The total dollar amount the Company donated during fiscal 2023 on behalf of Dr. Clark was $68,000 and is reported within the All Other Compensation column. Dr. John Clark resigned as a director of Ethan Allen Interiors Inc. during fiscal 2023. His tenure as a Director ended upon his resignation, effective June 30, 2023, therefore all outstanding unvested stock options were forfeited as of June 30, 2023.

  18. Compensation Policies and Risk

    | Compensation Risk Considerations | | | Pay Mix | Compensation mix of base salary and short-term and long-term incentives provides compensation opportunities measured by a variety of time horizons to balance our short-term and long-term strategic goals. | | Performance Metrics | A variety of distinct performance metrics are used in both the short-term and long-term incentive plans. This multiple-metric approach to performance metrics encourages focus on sustained and holistic overall Company performance. |

  19. Compensation Policies and Risk

    | Compensation Risk Considerations | | | Performance Goals | Goals are approved by our Compensation Committee and consider historical performance, current strategic initiatives, and the macroeconomic environment. In addition, short-term and long-term incentive compensation programs are designed with payout ranges above and below target levels and within a range that support our pay for performance philosophy. | | Equity Incentives | Equity incentive programs and stock ownership guidelines are designed to align management and stockholder interests by providing vehicles for executive officers to accumulate and maintain an ownership position in the Company. | | Risk Mitigation Policies | We incorporate several risk mitigation policies into our officer compensation program, including: • The Compensation Committee’s ability to use “negative discretion” to determine appropriate payouts under formula-based plans. • Stock ownership guidelines for executive officers and directors, including a one-year security holding period requirement, that are intended to align further the interest of our named executive officers with those of our stockholders. | | Anti-Hedging and Anti-Pledging Policies | Directors and executive officers are restricted from engaging in short sales, equity derivatives, and hedging their Company stock, whether or not involving trading on inside information. In addition, the Company prohibits employees and directors from purchasing Company securities on margin or holding Company securities in a margin account. | | Insider Trading Policy | We have an Insider Trading Policy that requires our Directors, NEOs and other senior associates to pre-clear transactions in our common stock with the Company’s finance department. Trading is permitted only during specified quarterly Company open trading periods. An executive bears the full responsibility if he or she violates the Company policy by permitting shares to be bought or sold without pre-clearance or when trading is restricted. We believe these policies further align insiders’ interests with those of our stockholders. | | Policy Governing the Recovery of Erroneously Awarded Compensation | We have a robust recoupment (or “claw-back”) policy covering each of our executive officers. We adopted this policy that governs the recovery of erroneously awarded compensation, as required by NYSE rules, which will become effective on October 2, 2023. The adopted policy provides that if the Company is required to restate its financial results due to material noncompliance with financial reporting requirements under the securities laws, including the corrections of errors, the Compensation Committee may seek reimbursement of any cash- or equity-based bonus/other incentive compensation (including vested and unvested equity) paid or awarded to the executive officer or effect cancellation of previously-granted equity awards to the extent the compensation was based on erroneous financial data and exceeded what would have been paid to the executive officer under the restatement. |

  20. Process for Determining Executive Compensation

    Process for Determining Executive Compensation The Compensation Committee is responsible for determining the composition and value of the compensation for all of our NEOs. Our Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and Vice President of Human Resources provide input on program design and information on the Company’s and the furniture industry’s performance. The Compensation Committee may not delegate its primary responsibility of overseeing executive officer compensation, but it may delegate to management the administrative aspects of our compensation programs that do not involve the setting of compensation levels for executive officers. All equity awards to executives, including stock options, performance stock units (“PSUs”), and restricted stock units (“RSUs”), are approved by the Compensation Committee. The Compensation Committee maintains sole authority to retain, terminate, approve fees and other terms of engagement of a compensation consultant and to obtain advice and assistance from external legal, accounting, or other advisors. The Compensation Committee also reviews executive compensation and incentive structures used by its peer companies. In fiscal 2023, the Compensation Committee decided to continue to use net sales, adjusted operating income, adjusted return on equity and total shareholder return (“TSR”) as the performance metrics used in assessing executive compensation.

  21. Peer Group

    Peer Group The Compensation Committee, in setting individual NEO pay levels and opportunities, utilizes a peer group of companies that in its judgment best represents the Company’s vertical business model, which integrates manufacturing, merchandising, logistics and retail. We believe that it is appropriate to offer industry-competitive cash and equity compensation packages to all of our NEOs in order to attract and retain top talent. The peer group allows us to monitor the compensation practices of our primary competitors and similarly situated companies for executive talent. However, we do not target any specific pay percentile of the peer group for our executive officers. Instead, we use this information to provide a general overview of market practices and to ensure that we make informed decisions regarding our executive pay programs. In developing the peer group, the population of U.S. based, publicly traded companies that were considered by the Compensation Committee included: • furniture manufacturers and/or home furnishing retailers; • competitors and peers identified as the Company’s direct U.S. furniture competitors; • vertically integrated companies in our industry; • companies that might be considered competitors for Company executives and equivalent talent. In addition to those considerations, the Compensation Committee filtered companies by revenues, number of employees and market capitalization. Companies with higher or lower revenues or market capitalization were included in the peer group since the Company competes for executives with such other companies that are in the home furnishings industry. The Compensation Committee evaluates each peer company annually to determine whether its inclusion remains appropriate. During fiscal 2023, the Compensation Committee removed Apogee Enterprises and Acco Brands and added Arhaus, Inc., Conn’s, Inc., The Aaron’s Company, Inc., and The Lovesac Co., as it concluded the business characteristics of those companies are more aligned for comparability purposes. In addition, the Compensation Committee also removed Kimball International during fiscal 2023 due to its acquisition by HNI Corporation. The Compensation Committee believes the updated fiscal 2023 peer group, as summarized below, is reflective of the Company’s current operating characteristics, consumer innovation, and use of technology.

  22. Peer Group

    | Fiscal 2023 Peer Group | | | | | Arhaus, Inc. | Green Brick Partners, Inc. | Kirkland’s, Inc. | The Aaron’s Company, Inc. | | Bassett Furniture Industries, Inc. | Haverty Furniture Companies, Inc. | La-Z-Boy Incorporated | The Lovesac Co. | | Cavco Industries, Inc. | HNI Corporation | MillerKnoll, Inc. | | | Conn’s, Inc. | Hooker Furniture Corporation | Sleep Number Corporation | | | Flexsteel Industries, Inc. | Interface, Inc. | Steelcase Inc. | |

  23. Elements of Fiscal 2023 Executive Compensation

    | Fixed | Base Salary | Fixed compensation component payable in cash. Reviewed annually and adjusted when appropriate. | A means to attract and retain talented executives capable of driving superior performance. | Consider individual contributions to business outcomes, the scope and complexity of each role, future potential, market data, and internal pay equity. | There were no changes to base salaries during fiscal 2023 as the Compensation Committee believes each NEO’s current base salary reflects market competitive rates. | | | Service-Based Restricted Stock Unit Awards | Fixed compensation component payable in stock. Reviewed annually and granted when appropriate. | A means to retain talented executives capable of driving strong performance. | Consider individual contributions to business outcomes, the scope and complexity of each role, future potential, market data, and internal pay equity. | The Compensation Committee awarded service-based restricted stock units that vest ratably over three years to NEO’s during fiscal 2023. |

  24. Elements of Fiscal 2023 Executive Compensation

    | Performance- Based | Annual Incentive Program | Variable compensation component payable in cash based on performance against annually established financial goals. | Incentive targets are tied to achievement of key annual financial measures. | Incentive award levels are based on the achievement of financial metrics established by the Compensation Committee. The dollar amount of each award level target was based on each NEO’s responsibilities, historical incentive amounts, retention considerations and market data. Net sales and adjusted operating income were used to determine the payout of the fiscal 2023 awards. | For fiscal 2023, the Compensation Committee evaluated two performance metrics, focusing on net sales (weighted 60% of target) and adjusted operating income (weighted 40% of target). The NEOs had the opportunity to earn between 60% (threshold) and 140% (maximum) based on the achievement of such targets. The total incentive awards for fiscal 2023 were earned at 125% of target. | | | Performance-Based Unit Awards (PSUs) | PSUs cliff vest after a three-year performance period and payouts are based on Company performance against pre-established financial goals and other performance metrics. | PSUs recognize our executive officers for achieving superior long-term relative performance. Financial metrics for the fiscal 2023 award were based on Sales growth and Return on Equity. An additional TSR performance metric was also included. | Grant award levels based on individual contributions to business outcomes, potential future contributions, historical grant amounts, retention considerations and market data. Actual award payout is based on performance against pre-established goals over a three-year performance period. | The Compensation Committee approved PSU grants to NEOs during fiscal 2023 with three performance metrics that were based on Revenue Growth, Return on Equity and a TSR performance metric. 100% of the PSUs granted in fiscal 2021 were earned during fiscal 2023. |

  25. Annual Non-Equity Incentive Compensation

    Annual Non-Equity Incentive Compensation NEOs are eligible to earn cash awards under our annual incentive compensation program, which is designed to motivate and reward executives for performance on key annual measures. The annual incentive compensation program is based exclusively on attainment of financial metrics, measured on the Company’s overall consolidated financial performance, that align our annual incentives with our strategy of driving growth, with an emphasis on profitability. For fiscal 2023, the Compensation Committee evaluated two performance metrics in its annual incentive plan performance review for certain NEOs, which aligns performance metrics used to assess non-equity incentive compensation payout eligibility with our fiscal 2023 growth strategy, focusing on net sales (weighted 60% of target incentive) and adjusted operating income (weighted 40% of target incentive). Target, maximum and threshold awards, specified as a percentage of base salary, vary among each NEO. The NEOs have the opportunity to earn awards between 60% of their target awards if minimum threshold performance requirements are met and a maximum of 140% of their target incentive opportunity, based on Company performance. Refer to the section “Grants of Plan-Based Awards” for additional disclosure of the actual amounts for target, maximum and threshold for each NEO. The Compensation Committee established targets for Net Sales and Adjusted Operating Income for fiscal 2023, and established threshold and maximum performance levels as follows:

  26. Fiscal 2023 Annual Incentive Goals and Results

    Fiscal 2023 Annual Incentive Goals and Results

  27. Fiscal 2023 Annual Incentive Goals and Results

    | ($ in millions) Performance Level | Net Sales $ | Adjusted Operating Income $(1) | | Maximum | $817.8 | $134.2 | | Target | $775.0 | $80.0 | | Threshold | $746.7 | $55.1 | | Actual | $791.4 | $133.5 | | Individual Metric Payout Achieved | 115% | 139% | | Individual Metric Weight | 60% | 40% | | Overall Payout (as percent of Target) | | 125% |

  28. Fiscal 2023 Annual Incentive Goals and Results

    (1) See Appendix A for a non-GAAP reconciliation showing how adjusted operating income is calculated from our consolidated financial statements.

  29. Fiscal 2023 Annual Incentive Target, Achievement and Actual Payout

    Fiscal 2023 Annual Incentive Target, Achievement and Actual Payout

  30. Fiscal 2023 Annual Incentive Target, Achievement and Actual Payout

    | Name | Target Annual Incentive ($) | Target Incentive (% of base salary) | Level Achieved (% of target performance) | Actual Annual Incentive Payout ($) | Incentive Payout (% of base salary) | | M. Farooq Kathwari | $1,150,050 | 100% | 125% | $1,437,272 | 125% | | Matthew J. McNulty | $75,000 | 20% | 125% | $93,735 | 25% | | Amy Franks | $131,232 | 32% | 125% | $164,014 | 40% | | Ashley Fothergill(1) | $77,500 | 25% | N/A | $0 | N/A | | Eric D. Koster(2) | $25,000 | 8% | N/A | $0 | N/A |

  31. Fiscal 2023 Annual Incentive Target, Achievement and Actual Payout

    (1) Mr. Fothergill departed from the Company effective February 1, 2023, which was prior to the final measurement date; as a result he was not eligible to receive a payout. (2) Mr. Koster retired from his position effective April 28, 2023, which was prior to the final measurement date; as a result he was not eligible to receive a payout.

  32. Discretionary Annual Bonus

    Discretionary Annual Bonus The Company maintains a discretionary bonus program for executives who do not participate in our annual non-equity incentive compensation program. For purposes of the discretionary bonus, individual performance is assessed based upon the executive’s performance relative to his or her responsibilities, goals, and objectives for each executive, which may or may not include financial metrics. Each executive develops annual business objectives for their respective areas, which are approved by the CEO and are used for this assessment. Individual performance is additionally measured by how the executive’s actions conform with and exemplify the Company’s ten “Leadership Principles”. For each executive, the executive’s impact upon initiatives of their division, department function or organization is also considered, as well as their impact on the development of their associates. For fiscal 2023, no discretionary bonuses were paid to NEOs as each NEO participated in the annual non-equity incentive compensation plan.

  33. Long-term Incentive Compensation

    Long-term Incentive Compensation To align executive officer pay outcomes with long-term performance and encourage long-term strategic thinking, our annual long-term incentive grants typically feature financial-based performance metrics. The long-term incentive award provisions of our Stock Incentive Plan provide for equity-based compensation including performance-based stock units, restricted stock units, and stock options, which may vest based on service or performance or a combination thereof. The Compensation Committee establishes for the NEOs, including the CEO, the target, maximum and threshold performance-based awards as a percentage of base salary on the grant date, with percentages of base salary varying among management. The Compensation Committee is responsible to approve all equity-based compensation, but may provide our CEO limited discretion during the year to allocate such equity-based grants to various employees other than the NEOs. For fiscal 2023, our NEO long-term incentive compensation program reflected the grant of performance-based stock unit awards containing three performance metrics that closely align with our growth strategy, focusing on net sales, return on equity and the three-year TSR relative to the performance of the Company’s peers listed in the 2022 Proxy Statement. The Compensation Committee selected net sales as a broad indicator of attaining strategic objectives, return on equity as a fundamental measure of the Company’s effectiveness at turning the net profits and cash put into the business into greater gains and growth for the Company and investors, and TSR to add a relative measure of performance in comparison to its peers. The vesting period for performance-based equity compensation awards was kept at a three-year cliff vesting period, similar to the prior year. The weighting of the performance metrics was established as follows:

  34. Fiscal 2023 Long-term Incentive Performance Metrics

    Fiscal 2023 Long-term Incentive Performance Metrics

  35. Fiscal 2023 Long-term Incentive Performance Metrics

    | Payout Metric (Total Weight) | Fiscal 2023 Weight (50%) | Fiscal 2024 Weight (30%) | Fiscal 2025 Weight (20%) | | Sales Growth (40%) | 20% | 12% | 8% | | Return on Equity (40%) | 20% | 12% | 8% | | Three-year Total Shareholder Return (20%) | | | 20% |

  36. Fiscal 2023 Long-term Incentive Performance Metrics

    The Compensation Committee awarded the fiscal 2023 performance-based stock units to the NEOs as follows:

  37. Fiscal 2023 Long-term Incentive Performance Metrics

    | | Grant $ Value | | | Units Granted | | | Grant $ Value as a % of Base Salary | | | | Name | Threshold | Target | Maximum | Threshold | Target | Maximum | Threshold | Target | Maximum | | M. Farooq Kathwari | $747,489 | $1,207,513 | $1,667,498 | 39,862 | 64,394 | 88,924 | 65% | 105% | 145% | | Matthew J. McNulty | $34,878 | $56,256 | $77,633 | 1,860 | 3,000 | 4,140 | 9% | 15% | 21% | | Amy Franks | $45,754 | $73,827 | $101,861 | 2,440 | 3,937 | 5,432 | 11% | 18% | 25% | | Ashley Fothergill | $28,841 | $46,485 | $64,169 | 1,538 | 2,479 | 3,422 | 9% | 15% | 21% | | Eric D. Koster | $9,919 | $15,996 | $22,091 | 529 | 853 | 1,178 | 3% | 5% | 7% |

  38. Results of 2021-2023, 2022-2024 and 2023-2025 Long-term Incentive Awards Granted

    Results of 2021-2023, 2022-2024 and 2023-2025 Long-term Incentive Awards Granted

  39. Results of 2021-2023, 2022-2024 and 2023-2025 Long-term Incentive Awards Granted

    | Fiscal Year 2021-2023 Performance Period | | | | | | | | | Target Goals | | Results | | Payout as % of Target | | | ($ in millions) | Net Sales | Return on Equity | Net Sales | Return on Equity | Net Sales | Return on Equity | | FY 2021 | $613.4 | 4.1% | $685.2 | 17.7% | 125% | 125% | | FY 2022 | $638.0 | 4.3% | $817.8 | 26.4% | 125% | 125% | | FY 2023 | $663.5 | 4.5% | $791.4 | 23.5% | 125% | 125% |

  40. Results of 2021-2023, 2022-2024 and 2023-2025 Long-term Incentive Awards Granted

    Following the end of the third performance year, 125% of the target number of fiscal 2021 performance-based stock units were earned as noted below.

  41. Results of 2021-2023, 2022-2024 and 2023-2025 Long-term Incentive Awards Granted

    | Name | Target | Actual Vested(1) | % Vested | | M. Farooq Kathwari | 65,000 | 81,250 | 125% |

  42. Results of 2021-2023, 2022-2024 and 2023-2025 Long-term Incentive Awards Granted

    The vested amounts noted above include fiscal 2021 market-based awards that were earned. Based upon the Company’s relative TSR performance, which was measured over the three-year period (July 1, 2020 through June 30, 2023), it was determined that the Company’s TSR percentile ranking was in the 81st percentile, resulting in a payout of 125% of the target number of market-based awards granted in fiscal 2021.

  43. Results of 2021-2023, 2022-2024 and 2023-2025 Long-term Incentive Awards Granted

    | Fiscal Year 2022-2024 Performance Period | | | | | | | | | Target Goals | | Results | | Payout as % of Target | | | ($ in millions) | Net Sales | Return on Equity | Net Sales | Return on Equity | Net Sales | Return on Equity | | FY 2022 | $712.6 | 18.6% | $817.8 | 26.4% | 125% | 125% | | FY 2023 | $741.1 | 19.5% | $791.4 | 23.5% | 125% | 125% | | FY 2024 | n/a | | | | | |

  44. Results of 2021-2023, 2022-2024 and 2023-2025 Long-term Incentive Awards Granted

    There has been no payout with respect to the performance-based stock unit awards granted in fiscal 2022 as the third-year performance measurement period has not yet lapsed. The results for the relative TSR performance metric, which is measured over the entire three-year period, will be determined following the conclusion of the third year of the 2022-2024 performance cycle.

  45. Results of 2021-2023, 2022-2024 and 2023-2025 Long-term Incentive Awards Granted

    | Fiscal Year 2023-2025 Performance Period | | | | | | | | | Target Goals | | Results | | Payout as % of Target | | | ($ in millions) | Net Sales | Return on Equity | Net Sales | Return on Equity | Net Sales | Return on Equity | | FY 2023 | $775.0 | 14.4% | $791.4 | 23.5% | 115% | 129% | | FY 2024 | n/a | | | | | | | FY 2025 | n/a | | | | | |

  46. Results of 2021-2023, 2022-2024 and 2023-2025 Long-term Incentive Awards Granted

    There has been no payout with respect to the performance-based stock unit awards granted in fiscal 2023 as the second- and third-year performance measurement periods have not yet lapsed. The results for the relative TSR performance metric, which is measured over the entire three-year period, will be determined following the conclusion of the third year of the 2023-2025 performance cycle.

  47. Restricted Stock Unit Awards for Fiscal 2023 (service-based)

    Restricted Stock Unit Awards for Fiscal 2023 (service-based) NEOs are eligible to receive grants of service-based restricted stock unit awards. These restricted stock units vest according to service-based criteria only. Any restricted stock units not fully vested on the date the employee separates are subject to forfeiture. For fiscal 2023, the Compensation Committee awarded each NEO service-based restricted stock grants that vest ratably over three years. The Compensation Committee believes having a greater portion of total compensation tied to long-term equity-based compensation better aligns the executive’s compensation with meeting the long-term goals of the Company and its stockholders. The Compensation Committee awarded restricted stock unit grants to the NEOs during fiscal 2023 as follows:

  48. Restricted Stock Unit Awards for Fiscal 2023 (service-based)

    | Name(1) | $ Value | # of Units | | M. Farooq Kathwari | $310,492 | 15,939 | | Matthew J. McNulty | $29,999 | 1,540 | | Amy Franks | $32,804 | 1,684 | | Ashley Fothergill(2) | $24,798 | 1,273 | | Eric D. Koster(3) | $15,993 | 821 |

  49. Restricted Stock Unit Awards for Fiscal 2023 (service-based)

    (1) The restricted stock units were granted on August 9, 2022 and vest ratably over three years on the anniversary date of the grant. (2) Mr. Fothergill departed from the Company effective February 1, 2023, which was prior to the initial vesting date, therefore 100% of the units granted were forfeited. (3) Mr. Koster retired from his position effective April 28, 2023, which was prior to the initial vesting date, therefore 100% of the units granted were forfeited.

  50. Stock Option Awards for Fiscal 2023

    Stock Option Awards for Fiscal 2023 NEOs are eligible to receive annual grants of stock options. These options have an exercise price equal to the closing price of our stock on the date of grant, vest according to service-based criteria, and have a ten-year expiration term. Any stock option not fully vested on the date the employee separates is subject to forfeiture. The Compensation Committee did not approve any grants of stock options to the NEOs in fiscal 2023.

  51. Change of Control Severance Plan for Executives

    Change of Control Severance Plan for Executives The change in control plan for NEOs, other than the CEO, was adopted to mitigate the concern that, in the event the Company is considering a change in control transaction, the employees involved in considering the transaction might otherwise be motivated to act in their own interests rather than the interests of the stockholders. Thus, the change in control provisions are designed so that employees are neither harmed nor given a windfall in the event of a change in control. The Company’s plans generally provide that a change in control may occur upon (i) any liquidation or the sale of substantially all of the assets of the Company and Ethan Allen Global, Inc. taken as a whole, or (ii) any merger, or (iii) any person becoming a beneficial owner of more than 50% of the then outstanding voting stock of the Company or Ethan Allen Global, Inc.; or (iv) the Company’s incumbent directors ceasing to constitute at least a majority of the Board of the Company, except in connection with the election or nomination of directors approved by a vote of at least a majority of the directors then comprising the incumbent board of directors of the Company. For any benefits to be earned, a change in control must occur and the executive’s employment must be terminated within two years following the change in control, either by the Company without cause or the executive for good reason (often called a “double trigger”). The plan does not provide tax gross ups. Payments and benefits to the executive will be reduced to the extent necessary to result in the executive’s retaining a larger after-tax amount, considering the income, excise and other taxes imposed on the payments and benefits. Benefits provided under the program include (i) a lump sum cash payment equal to one times the sum of the executive’s base salary and the average of the prior three years’ annual incentive bonus, (ii) a lump sum cash payment equal to the pro-rated portion of the executive’s average of the prior three years’ annual incentive bonus for the year of termination, (iii) immediate vesting of all unvested service-based restricted stock units outstanding on the date of termination and (iv) all performance-based restricted stock unit grants outstanding on the date of termination shall fully vest at the target level as of the date of termination. The Change in Control Severance Plan includes non-solicitation, non-disparagement and confidentiality provisions and waivers of customary claims.

  52. Employment Agreements

    Employment Agreements The Company generally does not enter into employment agreements and has no employment agreements in place with the exception of the employment agreement with Mr. Kathwari, the Chief Executive Officer. Effective July 1, 2015, the Company entered into an employment agreement with Mr. Kathwari, which expired on June 30, 2022. In advance of the expiration date, the Company entered into a new 2022 employment agreement (the “2022 Employment Agreement”) on February 3, 2022 with Mr. Kathwari. The 2022 Employment Agreement commenced on July 1, 2022 and is for a three-year term ending June 30, 2025. Pursuant to the 2022 Employment Agreement, Mr. Kathwari is entitled to the following: • Base salary of $1,150,000 per annum, without increase or guaranteed adjustment. Annual non-equity incentive compensation based on annual performance targets set annually by the Compensation Committee and ratified by the Board. The annual incentive compensation payments provide for a target level of $1,150,000, a threshold level of $690,000 and a maximum level of $1,610,000. Annual grant of performance-based stock units, providing a contingent right to receive shares of the Company’s common stock, par value $0.01 per share, conditioned upon the Company’s achievement of certain performance metrics set annually by the Compensation Committee and ratified by the Board. The value of the PSUs granted provide for a target level $1,207,500, a threshold level of $747,500 and a maximum of $1,667,500. The number of PSUs granted shall be determined by dividing the performance unit grant value at each of the target, threshold and maximum performance achievement levels by the fair market value of the PSUs on the date of the grant. • Annual grant of restricted stock units, providing a contingent right to receive shares of common stock conditioned upon a service based three-year ratable vesting schedule. The grant value of each annual grant of RSUs will be equal to 27% of Mr. Kathwari’s annual base salary, or $310,500. The number of RSUs granted shall be determined by dividing the grant value of the RSUs grant by the fair market value of a RSUs on the date of the grant. The right to receive, or retain, any Annual Incentive Bonus, PSUs, RSUs or benefits of the Stock Units will be subject to “claw-back” or similar obligations set forth in Company’s policy governing the recovery of erroneously awarded compensation, as approved by the Board. Each grant agreement, among other provisions, provides for benefits that may be earned in the event of a change of control or in the event of termination of employment. Refer to the section “Potential payments upon Termination or Change in Control” further below for additional information in the event of a change in control or termination of employment. The 2022 Employment Agreement is filed as Exhibit 10.11 in our 2023 Annual Report.

  53. Summary Compensation Table

    Summary Compensation Table The following table summarizes the compensation earned by or awarded to each NEO for fiscal years 2023, 2022 and 2021.

  54. Summary Compensation Table

    | Name and Principal Position | Year | Salary (1) | Bonus (2) | Stock Awards (3) | Non-Equity Incentive Plan Compensation (4) | Change in Pension Value and Nonqualified Deferred Compensation Earnings (5) | All Other Compensation (6) | Total | | M. Farooq Kathwari Chairman of the Board, President and Chief Executive Officer | 2023 | $1,150,050 | $— | $1,518,005 (a) | $1,437,272 | $— | $103,971 | $4,209,298 | | | 2022 | 1,150,050 | — | 1,115,010 (b) | 1,700,000 | — | 110,539 | 4,075,599 | | | 2021 | 1,150,050 | — | 809,290 (c) | 1,700,000 | — | 121,474 | 3,780,814 | | Matthew J. McNulty Senior Vice President, Chief Financial Officer and Treasurer | 2023 | $375,000 | — | $86,255 (a) | $93,735 | $— | $2,379 | $557,369 | | | 2022 | 340,685 | $80,000 | 56,430 (e) | — | — | 2,203 | 479,318 | | Amy Franks Executive Vice President, Retail Network and Business Development | 2023 | $410,100 | — | $106,631 (a) | $164,014 | $— | $2,379 | $683,124 | | | 2022 | 355,196 | $130,000 | 75,240 (e) | — | — | 2,290 | 562,726 | | Ashley Fothergill Former Senior Vice President, Merchandising | 2023 | $182,602 | — | $71,283 (d) | $— | $— | $102,379 | $356,264 | | | 2022 | 243,230 | $75,000 | 32,475(e) | — | — | 2,055 | 352,760 | | Eric D. Koster Former Vice President, General Counsel and Secretary | 2023 | $263,890 | — | $31,989 (d) | $— | $— | $2,379 | $298,258 | | | 2022 | 320,000 | $60,000 | — | — | — | 2,290 | 382,290 | | | 2021 | 320,000 | 50,000 | — | — | — | 2,651 | 372,651 |

  55. Summary Compensation Table

    (1) The amount reported within the salary column for Messrs. Fothergill and Koster represent the pro-rated amount of base salary paid during fiscal 2023 while employees of the Company. Mr. Fothergill departed from the Company effective February 1, 2023 and Mr. Koster retired effective April 28, 2023. (2) Bonus amounts represent discretionary bonus awards under the discretionary bonus program only for NEOs who did not participate in the non-equity annual incentive plan. (3) The amounts shown for stock awards represent the aggregate grant date fair values, computed in accordance with Accounting Standards Codification Topic 718. For financial statement reporting purposes these fair values are charged to expense over the vesting period. The actual values realized, if any, will not be known until the vesting date and could differ significantly from the amounts disclosed in the table. Refer to note 17 to the consolidated financial statements contained in the 2023 Annual Report for valuation assumptions with respect to stock awards granted. a) Amounts reflect the fair value of all stock awards granted during fiscal 2023, which included a performance stock unit grant, at target, and a service-based restricted stock unit award. No payout has been earned in respect to the performance stock unit grant and the final performance measurement date is June 30, 2025. The service-based restricted stock unit award vests ratably over three years. The grant date fair value for the restricted stock unit awards and the performance awards, assuming the maximum performance level was probable on the grant date, would have been as follows: • Mr. Kathwari - $310,492 restricted stock unit award and $1,667,498 performance award • Mr. McNulty - $29,999 restricted stock unit award and $77,633 performance award • Ms. Franks - $32,804 restricted stock unit award and $101,861 performance award • Mr. Fothergill - $24,798 restricted stock unit award and $64,169 performance award • Mr. Koster - $15,993 restricted stock unit award and $22,091 performance award b) Amount reflects the fair value of the fiscal 2022 performance stock unit grant at target. As the performance awards are subject to performance conditions, the amount reported in the table above is equal to the value at the grant date based upon the probable outcome of such conditions as of the grant date. No payout has been earned in respect to the grant and the final performance measurement date is June 30, 2024. Assuming the maximum performance level was probable on the grant date, the grant date fair value for the performance awards would have been $1,393,763. c) The final performance measurement date for awards granted in fiscal 2021 was June 30, 2023. Based on the achievement of certain performance conditions, the NEO received a stock unit payout equal to $2,297,750 in fair value based on the Company’s closing stock price on June 30, 2023. d) Amount reflects the fair value of all stock awards granted during fiscal 2023, which included a performance stock unit grant and a service-based restricted stock unit award. However, since Messrs. Fothergill and Mr. Koster departed the Company prior to the final measurement date, neither was eligible to receive a payout. e) Amount reflects the grant date fair value of service-based restricted stock units granted during fiscal 2022. These restricted stock units vest ratably over four years on the anniversary of the grant date, commencing on August 10, 2022. Mr. Fothergill departed from the Company effective February 1, 2023, therefore he is not eligible to receive a stock unit payout on the remaining unvested shares. (4) The Non-Equity Incentive Plan Compensation amounts show actual payouts paid under the annual incentive plan for each fiscal year as further described in the Annual Incentive Compensation section of the CD&A. As Messrs. Fothergill and Koster departed the Company during fiscal 2023, they were not eligible to receive a payout under the Company’s non-equity incentive compensation plan. (5) There was no change in the value of Mr. Kathwari’s retirement contract during the fiscal years 2023, 2022 or 2021, respectively, and no above-market interest has been earned on any non-qualified deferred compensation. (6) Amounts shown represent contributions by the Company pursuant to The Ethan Allen Retirement Savings Plan for each NEO other than Messrs. Kathwari and Fothergill. The amount for Mr. Kathwari during fiscal 2023 includes costs incurred by the Company for: (i) contributions by the Company pursuant to The Ethan Allen Retirement Savings Plan of $2,379; (ii) life insurance premiums of $15,744; and (iii) use of a Company car of $85,848. The amount for Mr. Fothergill includes contributions by the Company pursuant to The Ethan Allen Retirement Savings Plan of $2,379 and a severance payment of $100,000.

  56. Grants of Plan-Based Awards

    Grants of Plan-Based Awards The following table provides information on all plan-based awards granted during fiscal 2023 to each NEO. There can be no assurance that the grant date fair value of the awards, as listed in this table, will ever be realized. The grant date fair value of the performance stock unit awards and restricted stock unit awards are included in the “Stock Awards” column of the Summary Compensation Table.

  57. Grants of Plan-Based Awards

    | Name | Grant Date | Estimated future payouts under non-equity incentive plan awards ($) (1) | | | Estimated future stock award units under equity incentive plan awards (#) (2) | | | All Other Stock Awards: Number of Stock Units (#) (3) | Grant Date Fair Value of Stock Awards ($) (4) | | | | Threshhold | Target | Maximum | Threshhold | Target | Maximum | | | | M. Farooq Kathwari | 7/1/2022 | $690,000 | $1,150,000 | $1,610,000 | — | — | — | — | — | | M. Farooq Kathwari | 8/9/2022 | — | — | — | 39,862 | 64,394 | 88,924 | 15,939 | $1,518,005 | | Matthew J. McNulty | 7/1/2022 | $45,000 | $75,000 | $105,000 | | | | | | | Matthew J. McNulty | 8/9/2022 | — | — | — | 1,860 | 3,000 | 4,140 | 1,540 | $86,255 | | Amy Franks | 7/1/2022 | $78,739 | $131,232 | $183,725 | | | | | | | Amy Franks | 8/9/2022 | — | — | — | 2,440 | 3,937 | 5,432 | 1,684 | $106,631 | | Ashley Fothergill (5) | 7/1/2022 | $46,500 | $77,500 | $108,500 | | | | | | | Ashley Fothergill (5) | 8/9/2022 | — | — | — | 1,538 | 2,479 | 3,422 | 1,273 | $71,283 | | Eric D. Koster (6) | 7/1/2022 | $15,000 | $25,000 | $35,000 | | | | | | | Eric D. Koster (6) | 8/9/2022 | — | — | — | 529 | 853 | 1,178 | 821 | $31,989 |

  58. Grants of Plan-Based Awards

    (1) Awards represent potential payments under the fiscal 2023 annual non-equity incentive program. Payments are based on specified target levels of Net Sales and Adjusted Operating Income, as described in the CD&A. NEOs must be employed on the date the payments are made (typically in August of each year with respect to the preceding fiscal year) to be eligible. As Messrs. Fothergill and Koster departed during fiscal 2023, they were not eligible to receive a payout under the fiscal 2023 non-equity incentive plan program. (2) Awards represent potential payments under performance-based stock units granted under the Company’s Stock Incentive Plan during fiscal 2023. Refer to the CD&A for a more detailed description of the performance measures associated with these awards. NEOs must be employed throughout the performance measurement period. As Messrs. Fothergill and Koster departed during fiscal 2023, which is prior to the final measurement date, they were not eligible to vest shares granted in fiscal 2023. (3) The Company awarded service-based restricted stock units to each NEO during fiscal 2023. These restricted stock units vest ratably over three years on the anniversary of the grant date, commencing on August 9, 2023. As Messrs. Fothergill and Koster departed during fiscal 2023, which is prior to the first anniversary vesting date, they were not eligible to vest any service-based restricted shares. (4) Reflects the total grant date fair value of the stock awards granted during fiscal 2023, with the performance-based shares based on the probable level of achievement. Grant date fair values were determined in accordance with Accounting Standards Codification Topic 718. Refer to note 17 to the consolidated financial statements contained in the 2023 Annual Report for valuation assumptions with respect to these awards granted. (5) Effective February 1, 2023, Mr. Fothergill departed from the Company; therefore the amounts reported above were forfeited prior to June 30, 2023. Effective April 28, 2023, Mr. Koster retired from the Company; therefore the amounts reported above were forfeited prior to June 30, 2023.

  59. Outstanding Equity Awards at Fiscal Year-End

    Outstanding Equity Awards at Fiscal Year-End The following table sets forth information regarding the number and value of equity awards held by the NEOs at June 30, 2023.

  60. Outstanding Equity Awards at Fiscal Year-End

    | | | Option Awards | | | | | Stock Awards (1) | | | | | Name | Notes | Grant Date | Number of Securities Underlying Unexercised Options: Exercisable | Number of Securities Underlying Unexercised Options: Unexercisable | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentives Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | | M. Farooq Kathwari | (2) | 8/12/2020 | — | — | — | — | 81,250 | $2,297,750 | — | — | | | (3) | 8/3/2021 | — | — | — | — | — | — | 81,250 | $2,297,750 | | | (5) | 8/9/2022 | — | — | — | — | — | — | 15,939 | $450,755 | | | (6) | 8/9/2022 | — | — | — | — | — | — | 88,924 | $2,514,771 | | | (7) | 1997-2002 | — | — | — | — | 126,000 | $3,563,280 | — | — | | Matthew J. McNulty | (4) | 8/10/2021 | — | — | — | — | 2,250 | $63,630 | — | — | | | (5) | 8/9/2022 | — | — | — | — | — | — | 1,540 | $43,551 | | | (6) | 8/9/2022 | — | — | — | — | — | — | 4,140 | 117,079 | | Amy Franks | (4) | 8/10/2021 | — | — | — | — | 3,000 | $84,840 | — | — | | | (5) | 8/9/2022 | — | — | — | — | — | — | 1,684 | $47,624 | | | (6) | 8/9/2022 | — | — | — | — | — | — | 5,432 | $153,617 | | Ashley Fothergill | (8) | — | — | — | — | — | — | — | — | — | | Eric D. Koster | (9) | — | — | — | — | — | — | — | — | — |

  61. Outstanding Equity Awards at Fiscal Year-End

    (1) The market value of unvested shares and the market or payout value on unearned shares was calculated at the closing market price at June 30, 2023 of $28.28. (2) The vesting of 81,250 performance stock units granted on August 5, 2020 were completed on August 31, 2023, after the determination of the shares awarded was finalized by the Compensation Committee of the Board of Directors. The market or payout value was calculated at the closing market price at June 30, 2023 of $28.28. Upon vesting of the 81,250 units on August 31, 2023, there is no remaining portion of this grant to report as being unearned or unvested. (3) The vesting of performance stock units granted on August 3, 2021 depends upon attainment of performance metrics over a three-year measurement period. The number of Unearned Shares included in the table above is based on the actual performance results for the truncated performance period ended June 30, 2023 and assumes payout at the next highest performance level, which is the maximum level (125% of target). (4) Service-based restricted stock units granted on August 10, 2021 vest ratably over four years on the anniversary of the grant date, commencing on August 10, 2022. (5) Service-based restricted stock units granted on August 9, 2022 vest ratably over three years on the anniversary of the grant date, commencing on August 9, 2023. (6) The vesting of performance stock units granted on August 9, 2022 depends upon attainment of performance metrics over a three-year measurement period. The number of Unearned Shares included in the table above is based on the actual performance results for the truncated performance period ended June 30, 2023 and assumes payout at the next highest performance level, which is the maximum level (125% of target). (7) Mr. Kathwari was granted 126,000 shares of stock units between 1997 and 2002, for which payment has been deferred until termination of his employment for any reason. (8) Effective February 1, 2023, Mr. Fothergill departed from the Company therefore any previously granted equity awards have been forfeited as of June 30, 2023. Effective April 28, 2023, Mr. Koster resigned from the Company therefore any previously granted equity awards have been forfeited as of June 30, 2023.

  62. Option Exercises and Stock Vested

    Option Exercises and Stock Vested The following table sets forth information regarding the number and value of stock options exercised and stock awards vested for each NEO during fiscal 2023. None of our NEOs exercised stock options during fiscal 2023.

  63. Option Exercises and Stock Vested

    | | Option Awards | | Stock Awards | | | | Number of shares acquired on exercise (#) | Value realized on exercise ($) | Number of shares acquired on vesting (#) | Value realized on vesting ($) | | M. Farooq Kathwari | — | — | 12,500 | $338,000 | | Matthew J. McNulty | — | — | 750 | $19,485 | | Amy Franks | — | — | 1,000 | $25,980 | | Ashley Fothergill | — | — | 375 | $9,743 | | Eric D. Koster | — | — | 250 | $6,808 |

  64. Nonqualified Deferred Compensation

    Nonqualified Deferred Compensation The Company maintains the following nonqualified deferred compensation plans for Mr. Kathwari: Dividend Book account. Holds dividends and accrued interest payable from a restricted stock book account established pursuant to his previous employment agreements. As of each dividend record date for the common stock occurring on or after the date of any grant made pursuant to his previous employment agreements, of shares of restricted stock, but prior to the date such shares became vested or forfeited, an account established by the Company for the benefit of Mr. Kathwari was credited with an amount equal to the dividends which would have otherwise been paid with respect to the shares. Previous amounts credited to the account earn interest at the rate of 5% per year until distribution. Mr. Kathwari is fully vested in all amounts credited to the account, which will be distributed to him in cash as soon as practicable after the termination of his employment. Retirement Contract account. Entitles Mr. Kathwari to a maximum payment of $225,000 under an agreement dated September 26, 1983. Such payment has been deferred until the month in which his employment with the Company terminates and shall be paid in 120 monthly installments. In the event Mr. Kathwari dies before receiving all retirement payments, Mr. Kathwari’s widow shall be entitled to reduced retirement payments equal to one-half of the retirement payment amount until the earlier to occur of (a) their death or (b) the cumulative payment of 120 monthly payments to Mr. Kathwari and/or his widow. Stock Unit account. Holds 126,000 stock units issued in connection with Mr. Kathwari’s 1997 employment agreement and for which payment has been deferred until termination of employment. Dividends are paid in cash to Mr. Kathwari on these stock units.

  65. Nonqualified Deferred Compensation

    | Name | Executive Contributions In FY 2023 | Company Contributions In FY 2023 (1) | Aggregate Earnings In FY 2023 (1)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at 6/30/2023 (FYE) (3) | | M. Farooq Kathwari | | | | | | | Dividend Book | $— | $— | $39,334 | $— | $800,642 | | Retirement Contract | $— | $— | $— | $— | $225,000 | | Stock Unit | $— | $— | $229,320 | $(229,320) | $3,563,280 |

  66. Nonqualified Deferred Compensation

    (1) None of the Company contributions and aggregate earnings during fiscal 2023 are included in the Summary Compensation Table. (2) The Dividend Book account earned 5% interest during fiscal 2023. The Stock Unit account paid regular quarterly and special cash dividends on the stock units held in the account. The Aggregate Balance of $225,000 with respect to the Retirement Contract account reflects the total payments due upon Mr. Kathwari’s separation from service. The deferred account balances are distributed in full upon separation of employment, except for retirement contract amount, which is to be paid over 120 months. The Aggregate Balance of $3,563,280 with respect to the Stock Unit account is based on the closing price of Company common stock as of June 30, 2023 of $28.28.

  67. Potential Payments upon Termination or Change in Control

    Potential Payments upon Termination or Change in Control We maintained a change in control provision with the CEO as set forth in his employment agreement. We also have change in control provisions with each NEO as set forth in the Company’s Change in Control Severance Plan and within their respective equity agreements. The Company’s plans generally provide that a change in control may occur upon (i) any liquidation or the sale of substantially all of the assets of the Company and Ethan Allen Global, Inc. taken as a whole, or (ii) any merger, or (iii) any person becoming a beneficial owner of more than 50% of the then outstanding voting stock of the Company or Ethan Allen Global, Inc., or (iv) the Company’s incumbent directors cease to constitute at least a majority of the Board of the Company, except in connection with the election or nomination of directors approved by a vote of at least a majority of the directors then comprising the incumbent board of directors of the Company. For any benefits to be earned, a change in control must occur and the executive’s employment must be terminated within two years following the change in control, either by the Company without cause or the executive for good reason (often called a “double trigger”). The plan does not provide tax gross ups. Payments and benefits to the executive will be reduced to the extent necessary to result in the executive’s retaining a larger after-tax amount, considering the income, excise and other taxes imposed on the payments and benefits. The plans or agreements include non-solicitation, non-disparagement and confidentiality provisions and waivers of customary claims. Potential payments under the plans and agreements are reflected in the table that follows under Potential Payments upon Termination or Change in Control. The treatment of benefits under each plan or agreement on termination or change in control is detailed in the footnotes to the table. A termination of employment is a requirement for the acceleration of stock option grants, performance-based stock units and service-based restricted stock unit awards upon a change in control. Under the Company’s Stock Incentive Plan, the Compensation Committee, may, in its discretion, notwithstanding the grant or award agreement, upon termination without cause, fully vest any and all performance-based or service-based restricted stock unit awards or stock option grants. Mr. Kathwari’s performance-based and restricted stock unit awards are governed by his employment agreement and no assumption is made regarding Compensation Committee action fully vesting those awards. The amounts shown below assume the Compensation Committee fully vested any and all performance-based and restricted stock unit awards and stock option grants under the Stock Incentive Plan. If Mr. Kathwari’s employment is terminated for any reason, including death, disability or change in control, the value of nonqualified deferred compensation plan accounts would become immediately payable in accordance with the term of those agreements. See “Nonqualified Deferred Compensation” table for more information on those plans. For purposes of better understanding the foregoing, certain terms are summarized below: • Generally, a “change in control” means (i) any liquidation or the sale of substantially all of the assets of the Company and Ethan Allen Global, Inc. taken as a whole, or (ii) any merger, or (iii) any person becoming a beneficial owner of more than 50% of the then-outstanding voting stock of the Company or Ethan Allen Global, Inc.; or (iv) the Company’s incumbent directors cease to constitute at least a majority of the Board of the Company, except in connection with the election or nomination of directors approved by a vote of at least a majority of the directors then comprising the incumbent board of directors of the Company. • Generally, and with respect to Mr. Kathwari, “Good Reason” means and shall be deemed to exist if, without Mr. Kathwari’s consent: (a) he is assigned any duties or responsibilities materially inconsistent with his titles or positions; (b) his duties, responsibilities or effective authority is reduced; (c) he is not appointed to, or is removed from, his offices or positions (including as a director and Chairman of the Board and of Ethan Allen Global, Inc.; (d) the Company breaches any material term or provision of Mr. Kathwari’s Employment Agreement or fails to have the agreement assumed by a successor; (e) his compensation is decreased; (f) his office location is changed more than 50 miles from its location in Danbury, Connecticut; (g) the Company attempts to terminate his employment for cause when cause does not exist; or (h) a change in control occurs (under certain conditions). • Generally, “cause” means (a) the conviction of a felony or (b) gross neglect or gross misconduct resulting, in either case, in material economic harm to the Company, a subsidiary and/or affiliate in carrying out his duties that remains uncured. The amount of compensation which would have been payable to the NEOs upon termination of employment, assuming a June 30, 2023 termination date, and for purposes of the last column, a change in control as of the same date, is listed in the following table.

  68. Potential Payments upon Termination or Change in Control

    | | Termination With Cause | Voluntary Termination/ Retirement | Termination Without Cause | Death or Disability | Change in Control (11) | | M. Farooq Kathwari | | | | | | | Salary (1) | $— | $— | $2,300,000 | $1,150,000 | $2,300,000 | | Bonus (2) | — | — | 2,000,000 | — | 2,000,000 | | Life and disability payments (3) | — | — | 31,488 | 15,744 | 15,744 | | Restricted stock units (4) | — | — | — | — | 450,755 | | Performance stock units (5) | — | 6,894,890 | 6,894,890 | 6,894,890 | 5,957,012 | | Health and welfare payments (6) | — | 29,859 | 29,859 | — | 29,859 | | Matthew J. McNulty | | | | | | | Salary (7) | $— | $— | $— | $— | $375,000 | | Bonus (8) | — | — | — | — | 67,912 | | Restricted stock units (4) | — | — | — | — | 107,181 | | Performance stock units (9)(10) | — | — | — | 111,338 | 84,840 | | Amy Franks | | | | | | | Salary (7) | $— | $— | $— | $— | $410,100 | | Bonus (8) | — | — | — | — | 111,338 | | Restricted stock units (4) | — | — | — | — | 132,464 | | Performance stock units (9)(10) | — | — | — | 146,094 | 111,338 |

  69. Potential Payments upon Termination or Change in Control

    Under the Employment Agreement, if Mr. Kathwari’s employment is terminated other than for cause, voluntary termination, or retirement, he is entitled to salary continuation for a period of 24 months from and after the date of termination, or in the event of death or disability, a period of 12 months. The amount disclosed is the total undiscounted amount of future salary payments. (2) Under the Employment Agreement, if Mr. Kathwari’s employment is terminated other than for cause, voluntary termination, or retirement, he would receive a prorated bonus entitlement from the beginning of the fiscal year through the termination date. If Mr. Kathwari’s employment is terminated by the Company without cause or by Mr. Kathwari for good reason (as defined in the Employment Agreement), he would be entitled to a lump sum payment, within 75 days following termination of employment, equal to the lesser of (i) the sum of his two (2) largest annual bonuses or (ii) $2.0 million. (3) Under the Employment Agreement, if Mr. Kathwari’s employment is terminated without cause, the Company would continue to pay life and disability insurance payments for 24 months from and after the date of termination, or in the event of disability, or change in control, for 12 months. The amount disclosed is the total undiscounted amount of future life and disability insurance payments. (4) Amounts calculated by multiplying the number of unvested restricted stock outstanding by the closing market price of $28.28 as of June 30, 2023. This value reflects what would have been recognized upon immediate vesting due to a change in control. For additional information on all outstanding restricted stock unit awards, including those that are unvested as of June 30, 2023, see the “Outstanding Equity Awards at Fiscal Year-End” table. (5) If Mr. Kathwari is terminated due to retirement, death, disability, or without cause, all performance shares would remain outstanding and be subject to vesting and earning in accordance with the Employment Agreement. If Mr. Kathwari’s employment is terminated due to the event of a change in control, all performance stock unit grants outstanding on the date of termination shall fully vest at the target level. The closing market price as of June 30, 2023 of $28.28 was used to value the shares. (6) If Mr. Kathwari’s employment is terminated due to retirement, without cause, or change in control, he is entitled to health and welfare benefits for a period of 24 months following the termination of his employment. The Company’s estimated cost for medical and dental insurance was used to value the benefit. (7) The Change in Control Severance Plan for officers of the Company other than Mr. Kathwari provides for a lump sum payment equivalent to 12 months’ salary in the event of a change in control. (8) The Change in Control Severance Plan for officers of the Company other than Mr. Kathwari provides for a lump sum payment equivalent to the average bonus earned during the past three fiscal years in the event of a change in control. (9) If the NEO’s employment is terminated due to death or disability, all performance stock unit grants outstanding on the date of termination shall remain outstanding and be subject to vesting and earning in accordance with the applicable performance stock unit agreement. (10) If the NEO’s employment is terminated due to change in control, all performance stock unit grants outstanding on the date of termination shall fully vest at the target level as of the date of termination. The closing market price as of June 30, 2023 of $28.28 was used to value the shares. (11) Amounts reflect termination by the Company without cause, or resignation by executive with good reason, in connection with a Change in Control.

  70. PAY RATIO DISCLOSURE

    PAY RATIO DISCLOSURE For fiscal 2023, our last completed fiscal year, the annual total compensation of our CEO was $4,209,298 and the median annual total compensation of all employees of our Company, other than our CEO, was $37,513. Based on this information, for 2023, the ratio of the annual total compensation of our CEO to the median of the annual compensation of all employees, excluding our CEO, was 112 to 1. For purposes of the above disclosure, we identified our median employee as of June 17, 2023, pursuant to SEC executive compensation disclosure rules. The SEC rules for identifying the median employee and calculating the pay ratio permit companies to use various methodologies and assumptions, to apply certain exclusions and to make reasonable estimates that reflect their employee population and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio that we have reported. To identify, and to determine the annual total compensation of, the median employee, we used the following methodology and assumptions for fiscal 2023: We used total compensation, which includes base pay, bonus, commission, overtime, 401(k) company match, profit sharing, equity awards, and other compensation, as applicable, for all of our U.S. employees, excluding our CEO, and all of our employees located in Canada, Mexico and Honduras who were employed by us as of June 17, 2023, as our consistently applied compensation measure (“CACM”). • We annualized compensation for newly hired employees who were hired between July 1, 2022 and June 17, 2023. However, we did not annualize compensation for employees who were rehired or furloughed during such period and did not make full-time equivalent adjustments for any part-time employees. • We applied the U.S. dollar exchange rate as of June 17, 2023 to the compensation elements paid in Canadian, Mexican, and Honduran currency. • We did not utilize the de minimis exception for employees in other countries, statistical sampling or other similar methods, or any cost-of-living adjustment in calculating the pay ratio. Applying the CACM, we identified one employee as the median employee. After identifying the median employee, we calculated annual total compensation for the median employee using the same methodology we used for determining total compensation for our NEOs as disclosed earlier in the Summary Compensation Table.

  71. PAY VERSUS PERFORMANCE

    PAY VERSUS PERFORMANCE Pursuant to Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, the Pay Versus Performance Table (as set forth below) is required to include “Compensation Actually Paid,” as calculated per SEC disclosure rules, to the Company’s CEO and non-CEO NEOs, as noted below. “Compensation Actually Paid” represents a new required calculation of compensation that differs significantly from the Summary Compensation Table calculation of compensation, the NEO’s realized or earned compensation, as well as from the way in which the Compensation Committee views annual compensation decisions, as discussed in the Compensation Discussion and Analysis. The amounts in the table below are calculated in accordance with SEC rules and do not represent amounts actually earned or realized by NEOs, including with respect to performance-based and service-based restricted unit awards and stock options, which remain subject to forfeiture if the vesting conditions are not satisfied.

  72. Pay Versus Performance Table

    Pay Versus Performance Table The pay versus performance table includes information for fiscal 2023, 2022 and 2021.

  73. Pay Versus Performance Table

    | Year | Summary Compensation Table Total for CEO (1)(2) | Compensation Actually Paid to CEO (1) | Average Summary Compensation Table Total for Non-CEO NEOs (1)(2) | Average Compensation Actually Paid to Non-CEO NEOs (1) | Value of Initial Fixed $100 Investment Based On: | | | | | | | | | | Ethan Allen Total Shareholder Return (3) | Peer Group Total Shareholder Return (4) | Net Income ($000) (5) | Net Sales ($000) (6) | | 2023 | $4,209,298 | $6,434,816 | $473,754 | $474,252 | $294 | $133 | $105,807 | $791,382 | | 2022 | 4,075,599 | 3,616,585 | 435,671 | 300,184 | $197 | $119 | 103,280 | 817,762 | | 2021 | 3,780,814 | 5,866,473 | 567,388 | 723,881 | $249 | $189 | 60,005 | 685,169 |

  74. Pay Versus Performance Table

    (1) The CEO and all other NEOs for the applicable fiscal years were as follows: • FY 2023: M. Farooq Kathwari served as the Company’s CEO for the entirety of FY 2023 and the Company’s other NEOs were: Matthew J. McNulty, Amy Franks, Ashley Fothergill, and Eric D. Koster. • FY 2022: M. Farooq Kathwari served as the Company’s CEO for the entirety of FY 2022 and the Company’s other NEOs were: Matthew J. McNulty, Amy Franks, Ashley Fothergill, Eric D. Koster and Corey Whitely. • FY 2021: M. Farooq Kathwari served as the Company’s CEO for the entirety of FY 2021 and the Company’s other NEOs were: Corey Whitely, Rodney Hutton, Daniel Grow, Eric D. Koster and Clifford Thorn. (2) Amounts reflect the total compensation for our NEOs, as reported in the Summary Compensation Table. With respect to the Non-CEO NEOs, amounts shown represent averages. (3) The amounts in this column assume the investment of $100 on June 30, 2020, in Ethan Allen’s common shares traded on the NYSE and the reinvestment of all dividends since that date. (4) The amounts in this column assume the investment of $100 on June 30, 2020, in the Dow Jones U.S. Furnishings Index and the reinvestment of all dividends since that date. (5) Amounts reflect Ethan Allen’s net income as reported in the Company’s audited consolidated financial statements for each applicable year. While we use numerous financial and non-financial performance measures to evaluate performance under our compensation programs, Net Sales is the financial performance measure that, in Ethan Allen’s assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used to link compensation actually paid to the CEO and NEOs, for the most recently completed fiscal year, to company performance.

  75. Adjustments to Compensation Actually Paid

    Adjustments to Compensation Actually Paid The following tables detail the adjustment to the Summary Compensation Table to determine “Compensation Actually Paid” for the CEO and the average “Compensation Actually Paid” for Non-CEO NEOs. The amounts do not reflect actual compensation earned or paid to our CEO and non-CEO NEOs during the applicable year.

  76. Adjustments to Compensation Actually Paid

    | CEO Summary Compensation Table Total to Compensation Actually Paid: | | | | | | | | | | | Adjustments Related to Equity Awards | | | | | | | | | Deductions | Additions | | | | | | Year | Summary Compensation Table Total for CEO (1) | Grant Date Fair Value of Stock Option and Stock Awards Granted in Fiscal Year (2) | Fair Value at Fiscal Year-End of Outstanding and Unvested Stock Option and Stock Awards Granted in Fiscal Year (3) | Increase/ (Decrease) in Fair Value of Outstanding and Unvested Stock Option and Stock Awards Granted in Prior Fiscal Years (3) | Increase/ (Decrease) in Fair Value as of Vesting Date of Stock Option and Stock Awards Granted in Prior Fiscal Years for which Applicable Vesting Conditions Were Satisfied During Fiscal Year (3) | Increase/ (Decrease) in Fair Value as of Prior Fiscal Year-End of Stock Option and Stock Awards Granted in Prior Fiscal Years that Failed to Meet Applicable Vesting Conditions During Fiscal Year (3) | Equals Compensation Actually Paid to CEO | | 2023 | $4,209,298 | $(1,518,005) | $2,055,387 | $806,373 | $881,763 | $ — | $6,434,816 | | 2022 | 4,075,599 | (1,115,010) | 1,125,985 | (342,454) | (127,535) | — | 3,616,585 | | 2021 | 3,780,814 | (809,290) | 2,164,188 | 344,575 | 386,186 | — | 5,866,473 |

  77. Adjustments to Compensation Actually Paid

    | Average Non-CEO NEOs Compensation Table Total to Compensation Actually Paid: | | | | | | | | | | | Adjustments Related to Equity Awards | | | | | | | | | Deductions | Additions | | | | | | Year | Average Summary Compensation Table Total for Non-CEO NEOs (1) | Average Grant Date Fair Value of Stock Option and Stock Awards Granted in Fiscal Year (2) | Average Fair Value at Fiscal Year-End of Outstanding and Unvested Stock Option and Stock Awards Granted in Fiscal Year (3) | Average Increase/ (Decrease) in Fair Value of Outstanding and Unvested Stock Option and Stock Awards Granted in Prior Fiscal Years (3) | Average Increase/ (Decrease) in Fair Value as of Vesting Date of Stock Option and Stock Awards Granted in Prior Fiscal Years for which Applicable Vesting Conditions Were Satisfied During Fiscal Year (3) | Average Increase/ (Decrease) in Fair Value as of Prior Fiscal Year-End of Stock Option and Stock Awards Granted in Prior Fiscal Years that Failed to Meet Applicable Vesting Conditions During Fiscal Year (3) | Equals Average Compensation Actually Paid to Non-CEO NEOs | | 2023 | $473,754 | $(74,040) | $64,602 | $12,309 | $2,861 | $(5,234) | $474,252 | | 2022 | 435,671 | (57,829) | 26,976 | (498) | (359) | (103,777) | 300,184 | | 2021 | 567,388 | (75,408) | 200,794 | 17,481 | 15,089 | (1,463) | 723,881 |

  78. Adjustments to Compensation Actually Paid

    (1) Amounts reflect the total compensation for our NEOs, as reported in the Summary Compensation Table. With respect to the Non-CEO NEOs, amounts shown represent averages. (2) Amounts reflect the aggregate grant-date fair value reported in the “Stock Awards” column in the Summary Compensation Table for the applicable year. With respect to the Non-CEO NEOs, amounts shown represent averages. In accordance with Item 402(v) requirements, the fair values of unvested and outstanding equity awards were re-measured as of the end of each fiscal year, and as of each vesting date, during the years displayed in the tables above. For PSUs with a TSR metric, the fair values as of each measurement date (prior to the end of the performance period) were determined using a Monte Carlo simulation pricing model, with assumptions and methodologies that are consistent with those used to estimate fair value at grant date under U.S. GAAP. For PSUs with net sales and return on equity metrics, the fair values reflect the probable outcome of the performance vesting conditions as of each measurement date.

  79. Pay Versus Performance Table Discussion and Analysis

    Pay Versus Performance Table Discussion and Analysis The following charts show the relationship between Compensation Actually Paid (“CAP”) to our CEO and Average Compensation Actually Paid to our Non-CEO NEOs, and Ethan Allen’s TSR, Net Sales, and Net Income, as well as the relationship between Ethan Allen’s TSR and the TSR of our peer group. TSR: Company versus Peer Group and Compensation Actually Paid. Our three-year cumulative TSR for fiscal 2021 through 2023 has outperformed the three-year cumulative TSR for companies included in our peer group. Our NEO long-term incentive compensation program includes TSR as a performance metric. The Compensation Committee selected TSR to add a measure of performance of the Company in comparison to its peer group. CAP for our CEO and NEOs were aligned with our TSR during the applicable period. Compensation Actually Paid versus Net Sales. Net Sales was chosen as the Company Selected Measure because it is important in measuring the overall financial health of the Company and is also a prominent metric in our annual non-equity incentive and long-term equity incentive compensation programs. The Compensation Committee selected net sales as a broad indicator of attaining strategic objectives and a core driver of the Company’s performance. The variation in CAP compared to Net Sales is being driven by the vesting levels of our performance-based equity awards which are measured over a three-year period. Net Sales is measured on a GAAP basis and does not reflect any adjustments. Refer to the section titled “Compensation Discussion and Analysis” for further information on the Company’s executive compensation programs. Compensation Actually Paid versus Net Income. Net Income is not a direct component of our annual non-equity and long-term equity incentive compensation programs, however it is correlated with other components of our annual non-equity incentive and long-term equity incentive compensation programs, such as our adjusted operating income and return on equity metric. The variation in CAP compared to Net Income is being driven by the vesting levels of our performance-based equity awards which are measured over a three-year period. Net Income is measured on a GAAP basis and does not reflect any adjustments. Refer to the section titled “Compensation Discussion and Analysis” for further information on the Company’s executive compensation programs.