DEF 14A of Flexsteel Industries Inc, Oct 24, 2025

DEF 14A of Flexsteel Industries Inc

Filed Oct 24, 2025 · FY20250001140361-25-039303

Open on EDGAR

  1. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS Our Amended and Restated Articles of Incorporation permit the election of 13 directors. The Board currently consists of eight persons divided into three classes. At each annual meeting, the terms of one class of directors expire and persons are elected to that class for terms of three years and until their respective successors are duly qualified and elected or until their earlier director class reassignment, resignation, removal, retirement or termination. The Nominating and Governance Committee believes that as a group, the nominees below bring a diverse range of backgrounds, experiences and perspectives to the Board’s deliberations. Set forth below is information with respect to all Board members, including the nominees, their recent employment or principal occupation, a summary of their specific experience, qualifications, attributes or skills that led to the conclusion that they are qualified to serve as a director, the names of other public companies for which they currently serve as a director or have served as a director within the past five years, their period of service as a Flexsteel director and their age as of October 24, 2025. The Board believes that the directors listed below come from a wide variety of business backgrounds, possess highly ethical standards, uncompromising integrity, operate in the best interest of the shareholders, and the majority are independent as defined by the Nasdaq Stock Market listing standards. Effective May 21, 2025, the Board appointed Terence P. Calloway to the Board to serve as a Class I director. On October 8, 2025, Thomas M. Levine gave the Board notice that he would resign from the Board effective at the conclusion of the Board meeting to be held December 10, 2025. The Board has nominated, based on the recommendation of the Nominating and Governance Committee, William S. Creekmuir and M. Scott Culbreth, for election as Class III Directors of the Company at the 2025 annual meeting. The Board has determined that after the election of the nominees at the 2025 annual meeting and following Mr. Levine’s resignation, the Board will be reduced from eight to seven members. The Class III Directors’ next term expires at the 2028 annual meeting and upon their respective successors being elected and qualified or until their earlier director class reassignment, resignation, removal, retirement or termination. It is the intention of the proxies named herein to vote FOR these nominees unless otherwise directed in the proxy.

  2. DIRECTORS NOMINATED FOR ELECTION, CLASS III

    DIRECTORS NOMINATED FOR ELECTION, CLASS III

  3. DIRECTORS NOMINATED FOR ELECTION, CLASS III

    | William S. Creekmuir Age 70 Director since 2019 | Mr. Creekmuir has been a director since 2019. Mr. Creekmuir is the principal owner and President of Pinnacle Search Partners, LLC, a global executive search firm, and has served in that capacity since December 2015. Mr. Creekmuir served as Executive Vice President and Chief Financial Officer of private equity-owned Simmons Bedding Company from 2000 to 2011, and publicly traded LADD Furniture, Inc., a furniture manufacturer, from 1992 to 2000. His earlier years were spent with KPMG LLP, where he was a Partner and held responsibilities in both the United States and Ireland. From 2016 to 2023, he served as a director of Party City Holdco Inc., a global leader in the celebrations industry and the largest retailer of party goods in North America; he was also Chair of its Audit Committee and a member of its Restructuring Committee. Mr. Creekmuir has a Bachelor of Science degree in Business Administration from The University of North Carolina at Chapel Hill. Mr. Creekmuir brings experience in corporate finance, accounting, talent management, and the home furnishings industry to the Board. | | M. Scott Culbreth Age 55 Director since 2021 | Mr. Culbreth has been a director since 2021. Mr. Culbreth has served as the President and Chief Executive Officer and director of American Woodmark Corporation, a publicly held cabinet manufacturer, since 2020. From 2014 to 2020, he served as American Woodmark’s Senior Vice President and Chief Financial Officer. Prior to American Woodmark, Mr. Culbreth served as the Chief Financial Officer at Piedmont Hardware Brands, a provider of home improvement and hardware products, from 2013 to 2014, and held various finance-related roles at Newell Brands, Inc., a global consumer goods company, from 2007-2013. Mr. Culbreth holds a Bachelor of Science degree in Finance from Virginia Tech, and a Master of Business Administration from Washington University in St. Louis. Mr. Culbreth brings experience in corporate finance, accounting, and public company executive leadership to the Board. |

  4. DIRECTORS NOMINATED FOR ELECTION, CLASS III

    All nominees named above have consented to serve as directors if elected. In the event any of the nominees should fail to stand for election, the persons named as nominees in the enclosed form of proxy intend to vote for substitute nominees as may be selected by the Board. The proxies cannot be voted for a greater number of persons than the number of nominees named in this proxy statement. The Board recommends a vote FOR its director nominees named in this Proxy Statement.

  5. DIRECTORS CONTINUING TO SERVE WHOSE TERMS EXPIRE AT THE

    DIRECTORS CONTINUING TO SERVE WHOSE TERMS EXPIRE AT THE

  6. 2027 ANNUAL MEETING, CLASS II

    | F. Brooks Bertsch Age 35 Director since 2024 | Mr. Bertsch has served as a partner of Intersect Wealth Advisors, LLC, a boutique multi-family office providing customized wealth planning for ultra-high-net-worth individuals and families since co-founding the firm in 2022. From April 2024 to December 2024, Mr. Bertsch served as an observer to the Board and each of its committees. Mr. Bertsch served in hockey operations for the Los Angeles Kings from 2016 to 2021, holding roles in analytics, coaching, and management. Mr. Bertsch holds a Bachelor of Science in Finance from St. Cloud State University. Mr. Bertsch brings significant experience in small- and micro-cap equity investment management and analysis to the Board. As a fifth-generation heir to one of Flexsteel's founders, he also brings in-depth understanding in the home furnishings industry to the Board. | | Kathryn P. Dickson Age 60 Director since 2021 | Ms. Dickson served as President of Manitoba Harvest, a global company that manufactures and markets plant-based-protein foods and beverages, from 2019 to 2020. Prior to Manitoba Harvest, Ms. Dickson served as Senior Vice President for Mattel, Inc., a global learning, development, and play company, and President of its American Girl subsidiary from 2016 through 2018. Prior to Mattel, Ms. Dickson served as Chief Marketing Officer for News America Marketing, a consumer-focused marketing business, from 2015 to 2016. Prior to News America Marketing, Ms. Dickson served in increasingly responsible roles over more than 23 years at General Mills, Inc., a global manufacturer and marketer of branded consumer foods. Her leadership there included Vice President, Marketing Excellence, and Vice President, Business Unit Director for global brands including Betty Crocker, Pillsbury, and Old El Paso. Ms. Dickson is currently a member of the Board of Directors of Black Rifle Coffee Company, where she serves as Chair for the Compensation Committee and as a member of the Nominating & Governance Committee. She was a member of the Cooper Tire & Rubber Board of Directors from 2018 to 2021. Ms. Dickson has a Bachelor of Science degree from the United States Air Force Academy, and a Master of Business Administration from UCLA. She served as an officer in the U.S. Air Force, where she achieved the rank of Captain. Ms. Dickson brings expertise in driving growth through omnichannel and digital strategies, global expansion, brand revitalization, and innovation to the Board. | | Derek P. Schmidt Age 52 Director since 2024 | Mr. Schmidt was appointed President effective January 2024 and Chief Executive Officer effective July 2024. Mr. Schmidt joined the Company as Chief Financial Officer and Chief Operating Officer in April 2020. In June 2022, Mr. Schmidt relinquished the role of Chief Financial Officer as his role of Chief Operating Officer expanded to take on additional responsibilities and strategic ownership of the operations and product groups, including manufacturing, sourcing and procurement, logistics and distribution, product design, and engineering. In May 2023, Mr. Schmidt was appointed as Chief Financial Officer on an interim basis, in addition to his responsibilities as Chief Operating Officer. He relinquished the Chief Financial Officer position in January 2024 and the Chief Operating Officer position in June 2024. Mr. Schmidt has almost 30 years of broad financial leadership and general management experience driving profitable growth across multiple industries, including over 12 years in the furniture industry. Prior to Flexsteel, Mr. Schmidt was the Chief Financial Officer of Crescent Electric Supply Co., one of the nation’s largest electrical distributors. From 2011 to 2018, Mr. Schmidt held multiple |

  7. DIRECTORS CONTINUING TO SERVE WHOSE TERMS EXPIRE AT THE

    DIRECTORS CONTINUING TO SERVE WHOSE TERMS EXPIRE AT THE

  8. 2026 ANNUAL MEETING, CLASS I

    | Thomas M. Levine Age 76 Director since 2010 | Mr. Levine has been an Independent Management Advisor from 1995 to present. Previously at Fostin Capital Corp., a venture capital investment management company, he held the position of Executive Vice President from 1982 to 1999. Prior experience includes Vice President of Foster Industries, Inc., a private investment company, from 1982 to 1994, and the corporate law firm of Berkman Ruslander Pohl Lieber & Engel from 1974 to 1982, where he was a Partner of the firm from 1980 to 1982. Mr. Levine has a Bachelor of Arts degree from Colgate University and a Juris Doctor degree from the University of Chicago Law School. Mr. Levine brings experience in general management, business, and legal matters to the Board. On October 8, 2025, Thomas M. Levine gave the Board notice that he would resign from the Board effective at the conclusion of the Board meeting to be held December 10, 2025. | | Jeanne McGovern Age 66 Director since 2022 | Ms. McGovern is a retired partner of Deloitte & Touche LLP, an international firm that provides audit, consulting, financial advisory, risk management, and tax services. During her tenure from 1980 to 2020, she had leadership responsibilities over audits of global companies in a wide range of industries and demonstrated expertise in financial reporting and internal controls. She also has significant experience with strategic acquisitions and divestitures, initial public offerings, and debt financing and refinancing transactions. Ms. McGovern is a director and chair of the audit committee and member of the nominating and corporate governance committee of Huntsman Corporation, a differentiated chemical manufacturer headquartered in Houston, Texas. Ms. McGovern has also served on several not-for-profit boards. She is a member of the American Institute of Certified Public Accountants and the Washington Society of Certified Public Accountants and is a Certified Public Accountant in Massachusetts and Washington. Ms. McGovern has a Bachelor of Arts degree in Accounting from Syracuse University. Ms. McGovern brings 40 years of audit and advisory experience to the board, as well as corporate governance experience through her work with corporate boards, including audit committees. | | Terence P. Calloway Age 61 Director since 2025 | Mr. Calloway served as Executive Vice President, Global Product Supply for Energizer Holdings, Inc., one of the largest manufacturers of batteries, autocare, and lighting products in the marketplace from 2020 until his retirement in 2025. From 2015 to 2020, he served Energizer as Vice President, Global Research and Development. Prior to Energizer, Mr. Calloway served as Director, Global Design and Package Development for Colgate-Palmolive Company from 2014 to 2015. Prior to Colgate-Palmolive, Mr. Calloway served as Research and Development Director for The Procter & Gamble Company, a manufacturer of products that sells consumer home and personal care packaged goods from 1987 to 2013. Mr. Calloway has a Bachelor of Science degree in Chemical Engineering from the University of Alabama. Mr. Calloway brings expertise in product innovation, supply chain, organizational leadership, and strategic planning. |

  9. APPROVAL OF AMENDMENT TO THE FLEXSTEEL INDUSTRIES, INC. 2022 EQUITY INCENTIVE PLAN

    APPROVAL OF AMENDMENT TO THE FLEXSTEEL INDUSTRIES, INC. 2022 EQUITY INCENTIVE PLAN Our shareholders are being asked to approve an amendment to the 2022 Equity Incentive Plan (the “2022 Plan”) to, among other things, increase the number of shares of our common stock (“Shares”) available for issuance by 150,000 shares (the “Amended 2022 Plan”). The 2022 Plan was also amended to make a number of other administrative, clarifying and conforming changes. We have included a summary of the material changes below. The Amended 2022 Plan was approved by the Board on October 16, 2025, subject to stockholder approval. If the Amended 2022 Plan is approved by our shareholders, it will become effective on the day immediately following the annual meeting (the “Effective Date”). If the Amended 2022 Plan is approved, the total number of Shares authorized for future grants under the Amended 2022 Plan will be 234,149 Shares. A copy of the Amended 2022 Plan is attached as Appendix A to this Proxy Statement and is incorporated herein by reference. The 150,000 Shares requested reflects the number of Shares we forecast to be necessary to support our equity compensation program for approximately 3-4 years based on our recent burn rate history and new hire and annual grant practices. Based on the closing price per Share of $43.11 on October 13, 2025, the aggregate market value of the 150,000 additional Shares available for equity awards under the Amended 2022 Plan if this proposal is approved would be approximately $6.5 million. As of October 13, 2025, we had 84,149 Shares remaining available for future grants under the 2022 Plan. The 2022 Plan is the Company’s only current plan for granting equity incentive compensation to our employees, directors and consultants. The Board has determined that it is in the best interests of the Company to adopt the amendment to the 2022 Plan and is asking our shareholders to approve the Amended 2022 Plan. The Company’s named executive officers and directors have an interest in this proposal as they are eligible to receive equity awards under the Amended 2022 Plan.

  10. Proposal

    Proposal The Board and management continue to believe that stock options, restricted stock units, performance share units and other types of equity awards are one of the primary ways to attract and retain key personnel responsible for the continued development and growth of our business, and to motivate all employees to increase shareholder value. In addition, stock options, restricted stock units, performance share units and other types of equity awards are considered a competitive necessity in the industry in which we compete. The Board believes that the Company must offer a competitive equity incentive program if it is to continue to successfully attract and retain the best possible candidates for positions of substantial responsibility within the Company. The Board expects that the Amended 2022 Plan will be an important factor in continuing to attract, retain and reward high caliber employees who are essential to our success and in providing incentive to these individuals to promote the success of the Company.

  11. Summary of Changes to the Flexsteel Industries, Inc. 2022 Equity Incentive Plan

    Summary of Changes to the Flexsteel Industries, Inc. 2022 Equity Incentive Plan If approved, the Amended 2022 Plan would make, among other things, the following changes to the 2022 Plan:

  12. Summary of Changes to the Flexsteel Industries, Inc. 2022 Equity Incentive Plan

    | • | Increase in Share Reserve. As of the Effective Date, a total of 234,149 Shares will be authorized for awards granted under the Amended 2022 Plan (which amount includes 150,000 additional Shares). |

  13. Summary of Changes to the Flexsteel Industries, Inc. 2022 Equity Incentive Plan

    | • | Expands the change in control period during which a service provider termination will result in accelerated vesting of awards. The Amended 2022 Plan expands the time period during which a service provider’s termination will result in accelerated vesting of awards from a 12-month period after a change in control in the 2022 Plan to a period beginning upon signing of the definitive agreement for a change in control and ending 24 months after a change in control. |

  14. Summary of Changes to the Flexsteel Industries, Inc. 2022 Equity Incentive Plan

    | • | Certain Administrative and Other Clarifying Changes. The Amended 2022 Plan includes an updated definition of “Disability” for administrative reasons, clarifies that the stated limit of awards to directors is per fiscal year, and contains certain other clarifying and conforming changes. |

  15. Our Plan Maintains Several Best Practices

    | • | Dividends on Restricted Stock, Restricted Stock Units, Performance Share Units and Performance Shares Not Paid Until Award Vests. Dividends or other distributions payable with respect to Shares subject to these awards will not be paid before and unless the underlying Shares vest. |

  16. Our Plan Maintains Several Best Practices

    | • | Limit on Non-Employee Director Compensation. In any fiscal year, non-employee directors may not be granted awards and be provided cash retainers or annual or meeting fees for service as a non-employee director in amounts that collectively exceed the limits contained in the Amended 2022 Plan. |

  17. Our Plan Maintains Several Best Practices

    | • | No Automatic Vesting of Awards in a Change in Control. The Amended 2022 Plan does not provide for the automatic vesting of awards in connection with a change in control where a successor corporation assumes the awards. Instead, the Amended 2022 Plan allows the administrator to determine the treatment of outstanding awards in connection with a change in control, including whether such awards shall be assumed or substituted by a successor corporation. If the successor corporation does not assume or substitute for an award, the award will fully vest. The Amended 2022 Plan is administered by a committee of independent directors. |

  18. Considerations of the Board in Making its Recommendation

    Considerations of the Board in Making its Recommendation After the consideration and input of our compensation committee, our Board approved the Amended 2022 Plan and the 150,000 Share increase in the number of Shares of our common stock reserved under the Amended 2022 Plan. The number of Shares reserved under the Amended 2022 Plan is proposed in order to give the Board and the compensation committee continued flexibility to grant stock options, restricted stock units, performance share units and other types of equity awards. The Board and management believe that granting equity awards motivates higher levels of performance, aligns the interests of employees and shareholders by giving employees the perspective of owners with equity stakes in the Company, and provides an effective means of recognizing employee contributions to our success. The Board and management also believe that equity awards are of great value in recruiting and retaining highly qualified technical and other key personnel who are in great demand, as well as rewarding and encouraging current employees and other service providers. Finally, the Board and management believe that the ability to grant equity awards will be important to our future success by helping us to accomplish key business objectives. If our shareholders approve the Amended 2022 Plan, based on our three-year average burn rate, we expect that the share reserve will cover awards for approximately 3-4 years. However, the actual duration will depend upon a variety of factors, including but not limited to: future stock prices, hiring, long-term incentive compensation mix, our forfeiture rate, and tax withholdings. In determining the number of Shares to be reserved for issuance under the Amended 2022 Plan, the compensation committee and the Board also considered the following:

  19. Considerations of the Board in Making its Recommendation

    | • | Expected Potential Dilution. The potential dilution under our former Long-Term Incentive Compensation Plan and the 2022 Plan was 8.9%. The Amended 2022 Plan will increase potential dilution by 2.3 percentage points. Therefore, as of the record date, the total potential dilution with the shares requested for the Amended 2022 Plan was approximately 11.2% in total. We define potential dilution as the sum of the total number of (i) outstanding full value share grants, (i.e., awards other than stock options and stock appreciation rights), (ii) outstanding stock options and (iii) shares of common stock available for future grants under the Amended 2022 Plan, expressed as a percentage of the fully diluted common shares outstanding as of October 13, 2025. We believe that the expected potential dilution that will result from the Amended 2022 Plan is reasonable for a Company of our size in our industry. |

  20. Updated Share Information as of October 13, 2025

    | Total number of stock options outstanding(1) | 141,858 | | Weighted-average exercise price of stock options outstanding | $13.08 | | Weighted-average remaining duration of stock options outstanding | 4.4 Years | | Total number of full value awards outstanding (includes restricted stock, restricted stock units (RSUs) and performance stock unit awards (PSUs)(2) | 292,343 | | Total number of shares remaining available for grant under the 2022 Plan(3) | 84,149 | | Total shares of common stock outstanding as of the Record Date | 5,340,446 |

  21. Updated Share Information as of October 13, 2025

    | (1) Includes 79,000 shares underlying stock options granted as inducement awards. No stock appreciation rights were outstanding as of October 13, 2025. |

  22. Updated Share Information as of October 13, 2025

    | (2) The number of shares of outstanding PSUs assumes performance at the target performance level. |

  23. Updated Share Information as of October 13, 2025

    | (3) Represents the number of shares remaining available for grant under the 2022 Plan counting PSUs at target payout. The 2022 Plan is our only active equity compensation plan as of October 13, 2025. |

  24. Purpose of the Amended 2022 Plan

    Purpose of the Amended 2022 Plan The purpose of the 2022 Plan is to attract, retain and motivate the best available personnel for positions of substantial responsibility, provide additional incentive to employees, directors, and consultants, and promote the success of our business. These incentives can be provided through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, and performance shares and other stock-based awards.

  25. Shares Available for Issuance

    Shares Available for Issuance Subject to the adjustment provisions in the Amended 2022 Plan, our shareholders are being asked to approve an increase of 150,000 Shares for issuance under the Amended 2022 Plan. If we substitute equity awards for equity awards of acquired entities in connection with mergers, reorganizations, separations, or other transactions as described in the Amended 2022 Plan, the grant of such substituted awards will not decrease the number of Shares available for issuance under the Amended 2022 Plan. Shares may be authorized, but unissued common stock or reacquired common stock. If an award granted under the Amended 2022 Plan expires or becomes unexercisable without having been exercised in full or is forfeited to or repurchased by us due to failure to vest, then the expired, unexercised, forfeited, or repurchased Shares subject to that award will become available for future grant or sale under the Amended 2022 Plan. If an award of stock appreciation rights is exercised, the gross number of Shares underlying the portion of a stock appreciation right that is exercised will cease to be available under the Amended 2022 Plan. Shares actually issued under the Amended 2022 Plan under any award will not be returned to the Amended 2022 Plan and will not become available for future grant or sale under the Amended 2022 Plan; provided, however, that if Shares issued under awards of restricted stock, restricted stock units, performance shares or performance share units are repurchased by us or are forfeited to us due to failure to vest or used to satisfy tax withholding obligations, such Shares will become available for future grant under the Amended 2022 Plan. Shares used to pay the exercise price of an award or to satisfy tax withholding obligations related to an option will not become available for future grant or sale under the Amended 2022 Plan. If an award is paid in cash rather than Shares, the Shares subject to such award will become available for grant or sale under the Amended 2022 Plan. In the event of certain dividends or other distributions (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities or other change in the corporate structure affecting our Shares, the Amended 2022 Plan administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Amended 2022 Plan, will adjust the number and class of Shares that may be delivered under the 2022 Plan, and/or the number, class and price of Shares of stock subject to outstanding awards, and the award grant limitations discussed above. During the term of this Plan, we will at all times reserve and keep available a number of Shares sufficient to satisfy the requirements of the Amended 2022 Plan.

  26. Limitations

    Limitations The Amended 2022 Plan also provides that no non-employee director may be paid compensation for service as a non-employee director that, in the aggregate, exceeds $750,000 for any fiscal year of ours. For these purposes, compensation includes equity awards (including any awards issued under the Amended 2022 Plan), with the value of such equity awards measured based on their grant date fair value (determined under U.S. generally accepted accounting principles), and any other compensation (such as cash retainers or fees) for director service. Any award granted to a participant while they were an employee, or a consultant (other than a non-employee director) will not count for this limitation.

  27. Eligibility

    Eligibility All types of awards, other than incentive stock options, may be granted to our non-employee directors and to employees and consultants of ours or any parent or subsidiary corporation of ours. Incentive stock options may be granted only to employees of ours or any parent or subsidiary corporation of ours. As of October 13, 2025, we had approximately 275 U.S. employees, 7 non-employee directors and 0 consultants eligible for awards.

  28. Stock Options

    Stock Options An option gives a participant the right to purchase a specified number of Shares for a fixed exercise price during a specified period. Each option granted under the Amended 2022 Plan will be evidenced by an award agreement specifying the number of Shares subject to the option and the other terms of the option, consistent with the Amended 2022 Plan. The exercise price per Share of each option may not be less than the fair market value of a Share on the date of grant (except, in the case of a nonstatutory stock option, as otherwise required by applicable laws). However, any incentive stock option granted to a person who at the time of grant owns stock representing more than 10% of the total combined voting power of all classes of our stock or any parent or subsidiary corporation of ours (a “ten percent shareholder”) must have an exercise price per Share equal to at least 110% of the fair market value of a Share on the date of grant. The aggregate fair market value of the Shares (determined on the grant date) covered by incentive stock options which first become exercisable by any participant during any calendar year also may not exceed $100,000. For this purpose, the fair market value of a Share is generally the closing sales price of our stock, as reported on the primary stock exchange on which it is traded. On October 13, 2025, the closing price of a Share on Nasdaq was $43.11. Options will be exercisable at such times or under such conditions as determined by the administrator and set forth in the award agreement. When a participant’s service ends, the unvested portion of the participant’s option generally expires. The vested portion of the option will remain exercisable for the period following the end of the participant’s service that was determined by the administrator and specified in the participant’s award agreement, and if no such period was specified in the award agreement, the vested portion of the option will remain exercisable for: (i) 3 months following the end of the participant’s service provider status for reasons other than death or disability or (ii) 12 months following the end of the participant’s service provider status due to death or disability. In addition, a participant’s award agreement may provide for an extension of the post-service exercise period if the participant’s service ends for reasons other than their death or disability and the exercise of the option following the termination of service would result in liability under Section 16(b) of the Exchange Act or would violate the registration requirements under the Securities Act of 1933, as amended (the “Securities Act”). The term of an option will be specified in the award agreement, but the term may not be more than ten years (or five years for an incentive stock option granted to a ten percent shareholder). The administrator will determine the acceptable form(s) of consideration for exercising an option. An option will be deemed exercised when we receive the notice of exercise and full payment for the Shares to be exercised, together with any amounts necessary to satisfy withholding obligations for tax-related items. At any time after the grant of an option, the administrator has the discretion to accelerate the time at which the option will vest or become exercisable.

  29. Stock Awards

    Stock Awards Awards of restricted stock are rights to acquire or purchase Shares that vest under the terms established by the administrator in its sole discretion. Unless the administrator provides otherwise, participants holding Shares of restricted stock will have voting rights with respect to such Shares without regard to vesting. After an award of restricted stock has been granted, the administrator has the discretion to reduce or waive any restrictions and to accelerate the time at which any restrictions will lapse or be removed. Awards of unrestricted stock are rights to acquire or purchase Shares that are not subject to vesting, but may be subject to other terms established by the administrator in its sole discretion.

  30. Restricted Stock Units

    Restricted Stock Units A restricted stock unit represents a right to receive cash or Shares if the performance goals or other vesting criteria set by the administrator are achieved or the restricted stock unit otherwise vests. Each award of restricted stock units granted under the Amended 2022 Plan will be evidenced by an award agreement specifying the number of Shares subject to the award and other terms of the award. The administrator may set vesting conditions based upon the achievement of Company-wide, divisional, business unit or individual goals (such as continued employment or service), applicable U.S. or non-U.S. federal or state securities laws, or any other basis determined by the administrator, in its discretion. After an award of restricted stock units has been granted, the administrator has the discretion to reduce or waive any restrictions or vesting criteria that must be met to receive a payout or to accelerate the time at which any restrictions will lapse or be removed. A participant will forfeit any unearned restricted stock units on the date specified in the participant’s award agreement. The administrator in its sole discretion may pay earned restricted stock units in cash, Shares, or a combination of both.

  31. Performance Units and Performance Shares

    Performance Units and Performance Shares Performance units and performance shares are awards that will result in a payment to a participant only if performance goals established by the administrator are achieved or the awards otherwise vest. Performance units will have an initial value established by the administrator on or before the date of grant. Each performance share will have an initial value equal to the fair market value of a Share on the grant date. Performance units and performance shares will result in a payment to a participant only if the performance goals or other vesting criteria set by the administrator are achieved or the awards otherwise vest. Each award of performance units or performance shares granted under the Amended 2022 Plan will be evidenced by an award agreement specifying the performance period and other terms of the award. The administrator may set vesting criteria based upon the achievement of Company-wide, divisional, business unit or individual goals, applicable U.S. or non-U.S. federal or state securities laws, or any other basis determined by the administrator, in its discretion. After an award of performance units or performance shares has been granted, the administrator has the discretion to accelerate, reduce or waive any performance objectives or other vesting provisions for such performance units or performance shares. The administrator has the discretion to pay earned performance units or performance shares in the form of cash, Shares (which will have an aggregate fair market value equal to the earned performance units or performance shares at the close of the performance period), or a combination of both. A participant will forfeit any performance units or performance shares not earned and not vested as of the date specified in the participant’s award agreement.

  32. Merger or Change in Control

    Merger or Change in Control The Amended 2022 Plan provides that, in the event of a merger or change in control, each award will be treated as the administrator determines without a participant’s consent. The administrator will not be required to treat all awards¸ all awards held by a participant, all awards of the same type, or all portions of awards the same in the transaction. If the successor corporation does not assume or substitute for the award (or portion thereof), the participant will vest in and may exercise all of the participant’s outstanding options and stock appreciation rights (or portion thereof) that are not assumed or substituted for, and all restricted stock and restricted stock units will vest. With respect to awards with performance-based vesting that are not assumed or substituted for, all performance goals or other vesting criteria will be deemed achieved at 100% of target levels, and all other terms met, in each case, unless specifically provided otherwise under the applicable award agreement. In addition, if an option or stock appreciation right (or its applicable portion) is not assumed or substituted for, the administrator will notify the participant in writing or electronically that the option or stock appreciation right will be exercisable for a period of time determined by the administrator, in its sole discretion, and the option or stock appreciation right (or its applicable portion) will terminate upon the expiration of such period. In the event of a merger or change in control and the successor corporation does assume or substitute the award and the participant is involuntarily terminated without cause during the period from the execution of the definitive merger or change in control agreement to 24 months following the merger or change in control, the awards will generally be treated in the same manner as if the awards had not been assumed or substituted. For awards granted to each of our non-employee directors, in the event of a change in control, (i) the non-employee director will fully vest in and have the right to exercise all of his or her outstanding options and stock appreciation rights, (ii) all restrictions on the non-employee director’s restricted stock and restricted stock units will lapse, and (iii) with respect to the non-employee director’s awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at a 100% of target levels and all other terms and conditions will be deemed met, unless specifically provided otherwise under the applicable award agreement.

  33. Termination or Amendment

    Termination or Amendment The administrator may amend, alter, suspend, or terminate the Amended 2022 Plan at any time, provided that no amendment may be made without shareholder approval to the extent approval is necessary to comply with any applicable laws. No amendment, alteration, suspension, or termination may materially impair the rights of any participant with respect to his or her outstanding awards unless mutually agreed otherwise between the participant and the administrator. The Amended 2022 Plan will continue until terminated by the administrator, but no incentive stock option may be granted after the tenth anniversary of the Amended 2022 Plan’s adoption by our shareholders. Notwithstanding the prior paragraph, the Administrator may amend the terms of any one or more awards without an affected participant’s consent even if it does materially impair the participant’s rights, subject to the limitations of applicable laws, if any, if such amendment is done (i) in a manner expressly permitted under the Amended 2022 Plan; (ii) to maintain the qualified status of the award as an incentive stock option under Section 422 of the Code; (iii) to change the terms of an incentive stock option, if such change results in impairment of the award only because it impairs the qualified status of the award as an incentive stock option under Section 422 of the Code; (iv) to clarify the manner of exemption from, or to bring the award into compliance with, Section 409A of the Code; or (v) to comply with other applicable laws.

  34. Incentive Stock Options

    Incentive Stock Options A participant recognizes no taxable income for regular income tax purposes because of the grant or exercise of an option that qualifies as incentive stock option under Section 422 of the Code. If a participant exercises the option and then later sells or otherwise disposes of the Shares acquired through the exercise of the option after both the two-year anniversary of the date the option was granted and the one-year anniversary of the exercise, the participant will recognize a capital gain or loss equal to the difference between the sale price of the Shares and the exercise price. However, if the participant disposes of such Shares either on or before the two-year anniversary of the date of grant or on or before the one-year anniversary of the date of exercise (a “Disqualifying Disposition”) , any gain up to the excess of the fair market value of the Shares on the date of exercise over the exercise price generally will be taxed as ordinary income, unless the Shares are disposed of in a transaction in which the participant would not recognize a loss (such as a gift). Any gain in excess of that amount will be a capital gain. If a loss is recognized, there will be no ordinary income, and such loss will be a capital loss. For purposes of the alternative minimum tax, the difference between the option exercise price and the fair market value of the Shares on the exercise date is treated as an adjustment item in computing the participant’s alternative minimum taxable income in the year of exercise. In addition, special alternative minimum tax rules may apply to a certain subsequent Disqualifying Disposition or provide certain basis adjustments or tax credits.

  35. Nonstatutory Stock Options

    Nonstatutory Stock Options A participant generally recognizes no taxable income as the result of the grant of a nonstatutory stock option. However, upon exercising the option with respect to any Shares, the participant normally recognizes ordinary income equal to the amount that the fair market value of such Shares on such date exceeds the exercise price for such Shares. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of the Shares acquired by exercising a nonstatutory stock option, any gain or loss (based on the difference between the sale price and the fair market value on the exercise date) will be taxed as capital gain or loss.

  36. Restricted Stock Awards

    Restricted Stock Awards A participant acquiring Shares of restricted stock generally will recognize ordinary income equal to the amount that the fair market value of the Shares on the vesting date exceeds the purchase price paid by the participant for such Shares (if any). If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. The participant may elect, under Section 83(b) of the Code, to accelerate the ordinary income tax event to the date of acquisition by filing an election with the Internal Revenue Service no later than thirty days after the date the Shares are acquired. Upon the sale of Shares acquired under a restricted stock award, any gain or loss, based on the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, will be taxed as capital gain or loss.

  37. Restricted Stock Unit Awards

    Restricted Stock Unit Awards There are no immediate tax consequences of receiving an award of restricted stock units. A participant who is awarded restricted stock units generally will have to recognize ordinary income equal to the fair market value of Shares issued to such participant at the end of the applicable vesting period or, if later, the settlement date elected by the administrator or a participant. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Any additional gain or loss recognized upon any later disposition of any Shares received would be capital gain or loss.

  38. Performance Shares and Performance Unit Awards

    Performance Shares and Performance Unit Awards A participant generally will recognize no income upon the grant of a performance share or a performance unit award. Upon the settlement of such awards, participants normally will recognize ordinary income in the year of receipt in an amount equal to the cash received and the fair market value of any cash or unrestricted Shares received. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of any Shares received, any gain or loss, based on the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, will be taxed as capital gain or loss.

  39. Tax Effect for Us

    Tax Effect for Us We generally will be entitled to a tax deduction in connection with an award under the Amended 2022 Plan equal to the ordinary income realized by a participant when the participant recognizes such income (for example, the exercise of a nonstatutory stock option or a Disqualifying Disposition acquired through the exercise of an incentive stock option) except to the extent such deduction is limited by applicable provisions of the Code. Special rules limit the deductibility of compensation paid to our chief executive officer and other “covered employees” as determined under Section 162(m) and applicable guidance. Under Section 162(m), the annual compensation paid to any of these specified executives will be deductible only to the extent that it does not exceed $1,000,000. THE SUMMARY ABOVE IS ONLY A SUMMARY OF THE EFFECT OF U.S. FEDERAL INCOME TAXATION ON PARTICIPANTS AND US WITH RESPECT TO AWARDS UNDER THE 2022 PLAN. IT IS NOT INTENDED TO BE COMPLETE AND MAY NOT DISCUSS THE IMPACT OF EMPLOYMENT OR OTHER TAX REQUIREMENTS, THE TAX CONSEQUENCES OF A PARTICIPANT’S DEATH, OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE, OR NON-U.S. COUNTRY IN WHICH THE PARTICIPANT MAY RESIDE.

  40. New Plan Benefits

    | (2) Under our current director compensation program, each of our non-employee directors is expected to receive annual stock grants with a grant date value of $100,000, delivered in quarterly installments. The amount shown represents the aggregate amount for the six directors continuing after the annual meeting. |

  41. New Plan Benefits

    | (3) The number of shares of stock to be granted to our non-employee directors under the director compensation program on the day after each quarterly meeting is determined by dividing the dollar amount of the award by the closing price of the stock on that date. Accordingly, the number of shares to be issued annually is not determinable. |

  42. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION Our non-executive directors received annual compensation as shown in the table below. There are no additional meeting fees. The Chair of the Board and members of our committees receive additional compensation due to the workload and broad responsibilities of these positions. All compensation is paid quarterly. The following table sets forth the cash and non-cash compensation for fiscal 2025 awarded to or earned by each of our directors who is not also a named executive officer.

  43. DIRECTOR COMPENSATION

    | Name | Fees earned or paid in cash ($)(1) | Stock awards ($)(2) | Total ($) | | Thomas M. Levine – Chair of the Board | 151,500 | 96,982 | 248,482 | | Jeanne McGovern | 80,250 | 96,982 | 177,232 | | William S. Creekmuir | 77,750 | 96,982 | 174,732 | | M. Scott Culbreth | 77,750 | 96,982 | 174,732 | | Kathryn P. Dickson | 76,500 | 96,982 | 173,482 | | F. Brooks Bertsch(3) | 34,500 | 48,491 | 82,991 | | Terence P. Calloway(4) | 17,250 | 24,229 | 41,479 | | Jerald K. Dittmer(5) | 100,000 | — | 100,000 |

  44. DIRECTOR COMPENSATION

    | (1) Each non-executive director, other than Mr. Dittmer, is paid a retainer at the rate of $61,500 per year. The amount increased to $70,000 beginning with fiscal year 2026. In addition, the Chair of the Board is paid an additional retainer of $90,000 per year. The Audit and Ethics Committee Chair is paid a retainer of $15,000 per year. The Compensation Committee Chair is paid a retainer of $10,000 per year. The Nominating and Governance Committee Chair is paid a retainer of $10,000 per year. The Audit and Ethics Committee Chair retainer increased to $20,000 beginning with fiscal year 2026. The Compensation Committee Chair and Nominating and Governance Committee Chair retainers each increased to $15,000 beginning with fiscal year 2026. Audit and Ethics Committee members receive an additional retainer of $7,500 per year. Compensation Committee members receive an additional retainer of $5,000 per year. Nominating and Governance Committee members receive an additional retainer of $5,000 per year. |

  45. DIRECTOR COMPENSATION

    | (2) Each director, other than Mr. Dittmer, receives an annual stock grant with a value of $97,000 delivered in quarterly installments and rounded to the nearest share, with no additional vesting requirements. This amount increased to $100,000 beginning with fiscal year 2026. Directors are expected to accumulate Flexsteel shares of common stock valued at five times the annual Director cash compensation. |

  46. DIRECTOR COMPENSATION

    | (3) Mr. Bertsch was appointed to the Board on December 11, 2024. |

  47. DIRECTOR COMPENSATION

    | (4) Mr. Calloway was appointed to the Board effective May 25, 2025. |

  48. DIRECTOR COMPENSATION

    | (5) Mr. Dittmer resigned as Chief Executive Officer on June 30, 2024, but continued to serve as a director until his resignation from the Board on December 31, 2024. Mr. Dittmer was paid $16,667 per month from July 1, 2024 to December 31, 2024 for his service as a strategic advisor to the Company. |

  49. Stock Option, Restricted Stock Unit, and Restricted Share Granting Policy

    Stock Option, Restricted Stock Unit, and Restricted Share Granting Policy The Compensation Committee has formalized its stock option, unit and share granting practices by adopting a policy for the grant of stock options, restricted units and restricted shares. The policy reflects the Compensation Committee’s long-standing approach to grants described in the Executive Compensation section under the 2022 Equity Incentive Plan. In addition, the policy provides, among other things, that all grants must be approved by the Compensation Committee or its designee; and the exercise price for any stock options granted will be equal to the last sale price per share of our common stock as reported on The Nasdaq Stock Market on the grant date. The policy also specifies procedures for granting stock options, restricted units or restricted shares to newly hired executive officers; and that any program, plan or practice to time or to select the grant dates of stock options, restricted units or restricted shares in coordination with the release by us of material non-public information is prohibited.

  50. Summary Compensation Table

    Summary Compensation Table During fiscal year 2025, the Company had three named executive officers. The following table sets forth the cash and non-cash compensation, for the fiscal years so indicated awarded to or earned by: (i) the individual serving as the Company’s principal executive officer (“PEO”); and (ii) the Company’s two most highly compensated executive officers other than the PEO who were serving as executive officers at the end of the last completed fiscal year.

  51. Summary Compensation Table

    | Name and Principal Position | Year | Salary $ | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Comp ($)(3) | All Other Comp ($)(4) | Total ($) | | Derek P. Schmidt President and Chief Executive Officer | 2025 | 570,000 | — | 902,990 | — | 908,010 | 78,195 | 2,459,195 | | | 2024 | 470,000 | — | 446,465 | — | 493,500 | 50,680 | 1,460,645 | | David E. Crimmins Vice President of Sales and Product Management | 2025 | 352,000 | — | 246,378 | — | 373,824 | 54,137 | 1,026,339 | | | 2024 | 335,000 | — | 234,484 | — | 281,400 | 30,463 | 881,347 | | Michael J. Ressler Chief Financial Officer | 2025 | 325,000 | — | 252,461 | — | 287,625 | 25,575 | 890,661 |

  52. Summary Compensation Table

    | (1) The amounts shown for fiscal year 2025 include the grant date fair value of three-year performance share awards at target and restricted stock units under the Company’s long-term incentive program. No performance shares will be issued unless the minimum specific performance goals set by the Compensation Committee are met. The 2025 three-year performance period is July 1, 2024 – June 30, 2027. The 2024 three-year performance period is July 1, 2023 – June 30, 2026. Shares earned, if any, will be issued following each respective three-year performance period. The amounts include the grant date fair value of the performance share awards assuming achievement of the target performance goals. The grant date fair value is determined by taking total units granted for the performance period at target multiplied by the closing market price on date of grant. The maximum share award value that could be issued for fiscal 2025 for Mr. Schmidt is $957,588, for Mr. Crimmins is $295,641, and for Mr. Ressler is $272,973. The amounts shown in the table for fiscal 2025 include the grant date fair value of restricted stock units for Mr. Schmidt – $424,196; for Mr. Crimmins – $98,558; and for Mr. Ressler – $115,974. The grant date fair value of restricted stock units is determined by taking total restricted stock units granted multiplied by the closing market price on date of grant. |

  53. Summary Compensation Table

    | (2) No option awards were granted in fiscal years 2025 and 2024. |

  54. Summary Compensation Table

    | (3) The amounts shown represent the cash earned under the Company’s Cash Incentive compensation plan for the fiscal year. |

  55. Summary Compensation Table

    | (4) The table below presents an itemized account of “All Other Compensation” provided in fiscal 2025 to the named executive officers: |

  56. Summary Compensation Table

    | Name | Year | Tax Preparation $ | Supplemental Medical ($) | Furniture Program ($) | 401K Match ($) | Total All Other Comp ($) | | D. P. Schmidt | 2025 | — | 25,499 | 32,946 | 19,750 | 78,195 | | | 2024 | — | 16,633 | 17,172 | 16,875 | 50,680 | | D. E. Crimmins | 2025 | — | 24,881 | 11,581 | 17,675 | 54,137 | | | 2024 | — | 12,445 | — | 16,875 | 30,463 | | M. J. Ressler | 2025 | 1,807 | 1,762 | 3,802 | 18,204 | 25,575 |

  57. Outstanding Equity Awards at Fiscal Year-End

    Outstanding Equity Awards at Fiscal Year-End The following table sets forth certain information relating to equity awards outstanding at June 30, 2025, for each of our named executive officers.

  58. Outstanding Equity Awards at Fiscal Year-End

    | | Option Award | | | | | Stock Award | | | | | Name | Option Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#)(1) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price | Option Expiration Date(2) | Number of Shares or Units of Stock That Have Not Vested (#)(3) | Market Value of Shares of Units or Stock That Have Not Vested ($)(4) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(5) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4) | | D. P. Schmidt | 7/1/2020 | 13,566 | | 12.77 | 7/1/2030 | 22,842 | 822,997 | 42,244 | 1,522,051 | | | 4/6/2020 | 108,884 | | 9.97 | 4/6/2030 | | | | | | D. E. Crimmins | | | | | | 8,073 | 290,870 | 17,726 | 638,668 | | M. J Ressler | 7/1/2015 | 464 | | 43.09 | 7/1/2025 | 7,719 | 278,116 | 7,046 | 253,867 | | | 9/1/2016 | 737 | | 47.45 | 9/1/2026 | | | | | | | 9/8/2017 | 774 | | 45.21 | 9/8/2027 | | | | | | | 9/13/2018 | 1,524 | | 32.80 | 9/13/2028 | | | | |

  59. Outstanding Equity Awards at Fiscal Year-End

    | (1) Options include both incentive stock options and non-statutory stock options. |

  60. Outstanding Equity Awards at Fiscal Year-End

    | (2) Options expire on the tenth anniversary of the grant date. |

  61. Outstanding Equity Awards at Fiscal Year-End

    | (3) Mr. Schmidt’s unvested restricted stock units vest as follows: 9,444 vest on June 30, 2026; and 13,398 vest on June 30, 2027. Mr. Crimmins’s unvested restricted stock units vest as follows: 4,960 vest on June 30, 2026; and 3,113 shares vest on June 30, 2027. Mr. Ressler’s unvested restricted stock units vest as follows: 2,597 on February 8, 2026, 1,459 on June 30, 2026, and 3,663 on June 30, 2027. |

  62. Outstanding Equity Awards at Fiscal Year-End

    | (4) The market value of unvested stock awards is based on the closing stock price on June 30, 2025, which was $36.03. |

  63. Outstanding Equity Awards at Fiscal Year-End

    | (5) The amounts shown represent the potential three-year performance share unit awards under the Long-Term Incentive Plan during the three, three-year performance periods in effect during fiscal year 2025. No shares will be issued unless the minimum specific performance goals set by the Compensation Committee are met. Shares earned, if any, will be issued following each respective three-year performance period. Mr. Schmidt, Mr. Crimmins and Mr. Ressler participated in the fiscal year 2025 – 2027, 2024 – 2026 and 2023 - 2025 performance plan periods. Unearned performance shares are shown below assuming target performance for grants made in fiscal years 2025, 2024, and 2023: |

  64. Outstanding Equity Awards at Fiscal Year-End

    | Name | Fiscal Year 2025(a) | Fiscal Year 2024(b) | Fiscal Year 2023(c) | Total | | D. P. Schmidt | 15,123 | 14,166 | 12,955 | 42,244 | | D. E. Crimmins | 4,669 | 7,440 | 5,617 | 17,726 | | M. J. Ressler | 4,311 | 2,189 | 546 | 7,046 |

  65. Outstanding Equity Awards at Fiscal Year-End

    | (a) Three-year performance period ends June 30, 2027 |

  66. Outstanding Equity Awards at Fiscal Year-End

    | (b) Three-year performance period ends June 30, 2026 |

  67. Outstanding Equity Awards at Fiscal Year-End

    | (c) Three-year performance period ended June 30, 2025. |

  68. Termination or Change in Control

    Termination or Change in Control Severance Plan for Management Employees. The Severance Plan for Management Employees (the “Severance Plan”) provides for the payment of severance to eligible employees in the event of an involuntary termination of an eligible employee’s employment initiated by the Company (a “Qualifying Termination”). A Qualifying Termination also includes a voluntary termination for good reason during the period beginning with the execution of an agreement resulting in a change in control and ending 24 months after the change in control. An eligible employee is an employee of the Company or its affiliates who is either (i) an executive that the Company designates as subject to Section 16 of the Securities and Exchange Act of 1934, or (ii) an individual designated as an eligible employee by the plan administrator or its delegate, within its sole discretion (an “Eligible Employee”). A Qualifying Termination does not include (i) termination for cause, (ii) an Eligible Employee’s voluntary resignation or retirement from the Company, (iii) an Eligible Employee’s termination as a result of the Eligible Employee’s death or disability, or (iv) an Eligible Employee’s failure to return to work within the time required following an approved leave of absence. Subject to the terms and conditions of the Severance Plan, an Eligible Employee will receive severance payments of:

  69. Termination or Change in Control

    | • | the Eligible Employee’s base salary continuation for 12 months; |

  70. Termination or Change in Control

    | • | a lump sum payment equal to the COBRA premiums necessary to continue the Eligible Employee’s and his or her dependents’ health insurance coverage in effect on the Eligible Employee’s termination date for a period of 12 months, without regard to whether the Eligible Employee or his or her dependents elect continuation coverage under COBRA; and |

  71. Termination or Change in Control

    | • | a lump sum payment equal to the amount of cash compensation that would be payable to the Eligible Employee under the CIP for the fiscal year during which the termination date occurs if the Eligible Employee’s employment had continued through the end of such fiscal year, computed assuming that the “target” level of performance had been achieved, without regard to any discretionary adjustments that would have the effect of reducing the amount of the annual incentive bonus (other than discretionary adjustments applicable to all similarly-situated employees who did not terminate employment). |

  72. Termination or Change in Control

    If a Qualifying Termination of the Chief Executive Officer occurs 30 days before, on or within 24 months after a change in control, the severance payments described above will be doubled. The plan administrator may remove an individual as an Eligible Employee prior to a Qualifying Termination. An Eligible Employee may not be removed as an Eligible Employee from participation in the Severance Plan on or after a Qualifying Termination. The Company is entitled to clawback all Severance Payments made to an Eligible Employee under the Severance Plan in the event the Eligible Employee breaches any provision of any non-competition, non-solicitation, non-disparagement, confidentiality, or assignment of inventions covenants contained in any agreement between the Eligible Employee and the Company. To receive any severance payments, an Eligible Employee must execute and deliver a severance agreement which provides for a release of claims against the Company, a confidentiality provision and a 12-month non-competition and non-hire clause. The benefits under the Severance Plan replace and supersede all prior existing severance payments applicable to Eligible Employees, whether formal or informal, written or oral. Cash Incentive Compensation Plan and Long-Term Incentive Compensation Plan. Under the terms of the Company’s CIP and LTIP and applicable award agreements, named executive officers are entitled to receive payments as a result of a termination due to death or disability, on or after reaching age 62, or due to an involuntary termination for other than cause in the event of a change in control. The amount to be paid to a participant in such events is based on the pro rata number of days worked during the performance period. The awards will be paid in a lump sum after the end of the performance period, except under certain circumstances as determined by the Compensation Committee. The award agreements for both the CIP and the LTIP provide for the forfeiture of payments received up to six months prior to termination in the event the participant competes with the Company within two years of termination or improperly uses Company confidential information. The Company is also entitled to clawback any awards under the CIP and LTIP pursuant to the terms of the Company’s Incentive Compensation Clawback Policy. Omnibus Stock Plan. Under the terms of the Omnibus Stock Plan and applicable award agreements, the unvested restricted stock units, restricted stock and options held by a named executive officer will vest in full upon the death or disability of such person or, for the fiscal years prior to 2022 upon a change in control. Beginning with awards made in fiscal 2022, in the event of a change in control, the award will only vest due to an involuntary termination for other than cause. The award agreements for the Omnibus Stock Plan provide for the forfeiture of payments received up to six months prior to termination in the event the participant competes with the Company within two years of termination or improperly uses Company confidential information. The Company is also entitled to clawback any awards under the Omnibus Stock Plan pursuant to the terms of the Company’s Incentive Compensation Clawback Policy. 2022 Equity Incentive Plan. Under the terms of the 2022 Equity Incentive Plan (“2022 Plan”) award agreements, the unvested restricted stock units and performance share units held by an executive officer will vest upon the death or disability of such person or for a termination other than for cause, upon the individual reaching age 55 and a minimum length of service of 10 years. The amount vested in such events is based on the pro rata number of days worked during the vesting period or performance period, as applicable. Subject to the Committee’s discretion and the applicable provisions in the event of a merger or change in control, the vesting of options granted under the 2022 Plan does not accelerate upon termination of employment, including as a result of death or disability. The 2022 Plan does not provide for the automatic vesting of awards in connection with a merger or change in control where a successor corporation assumes the awards. In the event of a merger or change in control, each outstanding award will be treated as the Compensation Committee determines, except that if a successor corporation or its parent or subsidiary does not assume or substitute an equivalent award for any outstanding award, then such award will fully vest, all restrictions on such award will lapse, all performance goals or other vesting criteria applicable to such award will be deemed achieved at 100% of target levels, and such award will become fully exercisable, if applicable, for a specified period prior to the transaction. In the event of a merger or change in control and the successor corporation does assume or substitute the award and the participant is involuntarily terminated without cause within 12 months of the merger or change in control, the awards will generally be treated in the same manner as if the awards had not been assumed or substituted. The amendment of the 2022 Plan described in Proposal IV expands this 12 month period relating to a voluntary termination to the period beginning with the execution of an agreement resulting in a change in control and ending 24 months after the change in control. The 2022 Plan award agreements provide for the forfeiture of payments received up to six months prior to termination in the event the participant competes with the Company within two years of termination or improperly uses Company confidential information. The Company is also entitled to clawback any awards under the Omnibus Stock Plan pursuant to the terms of the Company’s Incentive Compensation Clawback Policy.

  73. Pay Versus Performance

    Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between “compensation actually paid” (or “CAP”) to our CEO as principal executive officer (or “PEO) and to our other NEOs and certain metrics of financial performance of the Company. The following table shows the total compensation for our NEOs for the past three fiscal years as set forth in the Summary Compensation Table, the CAP to our CEO as PEO, and, on an average basis, our other NEOs, and our total shareholder return (“TSR”). CAP figures do not reflect the actual amount of compensation earned by or paid to our NEOs during the applicable year as significant portions of this compensation depend on the achievement of performance criteria in subsequent fiscal periods.

  74. Pay Versus Performance

    | Year(1) | Summary compensation table total for PEO(2) | Compensation actually paid to PEO(3) | Average summary compensation table total for non-PEO named executive officers(2) | Average compensation actually paid to non-PEO named executive officers(3) | Value of initial fixed $100 investment based on: total shareholder return(4) | Net income | | 2025 | $2,459,195 | $3,035,387 | $958,500 | $1,118,209 | $215 | $20,154,000 | | 2024 | $3,015,025 | $3,303,559 | $1,170,996 | $1,571,756 | $182 | $10,528,000 | | 2023 | $3,062,037 | $2,952,955 | $1,106,324 | $1,171,216 | $110 | $14,778,000 |

  75. Pay Versus Performance

    | (1) J. Dittmer, former Chief Executive Officer was our PEO for fiscal years 2023 and 2024. Mr. Schmidt, Chief Executive Officer, was our PEO for the fiscal year 2025. Our non-PEO NEOs for 2023 were Mr. Schmidt and T. Newlin, Former VP Strategic Business Development, for 2024 were Mr. Schmidt and Mr. Crimmins, and for 2025 were Mr. Crimmins and Mr. Ressler. |

  76. Pay Versus Performance

    | (2) Amounts reported in this column represent the total compensation reported in the Summary Compensation Table for the applicable year. |

  77. Pay Versus Performance

    | (3) To calculate CAP under SEC disclosure rules, adjustments were made to the amounts reported in the Summary Compensation Table for the applicable year and the reconciliations of such adjustments are set forth in the table below. |

  78. Pay Versus Performance

    | | PEO | | | NEOs - Average | | | | | 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | | Deduction for Amounts Reported under the “Stock Awards” Column in the Summary Compensation Table | ($902,990) | ($992,227) | ($1,392,227) | ($249,419) | ($340,475) | ($423,042) | | Deduction for Amounts Reported under the “Option Awards” Column in the Summary Compensation Table | $— | $— | $— | $— | $— | $— | | Increase for Fair Value of Awards Granted during year that Remain Unvested as of Year end | $1,027,612 | $— | $1,383,755 | $283,844 | $559,235 | $420,468 | | Increase for Fair Value of Awards Granted during year that Vest during year | $ — | $814,890 | $— | $— | $— | $— | | Increase/deduction for Change in Fair Value from Prior Year-end to current Year-end of Awards Granted Prior to year that were Outstanding and Unvested as of Year-end | $117,342 | $370,020 | $72,517 | $43,736 | $184,938 | $19,840 | | Increase/deduction for Change in Fair Value from Prior Year-end to Vesting Date of Awards Granted Prior to year that Vested during year | $317,326 | $557,491 | ($16,394) | $75,170 | $104,909 | $67,793 | | Deduction of Fair Value of Awards Granted Prior to year that were Forfeited during year | $— | ($509,726) | ($198,247) | $— | ($118,261) | ($26,314) | | Increase based upon Incremental Fair Value of Awards Modified during year | $— | $— | $— | $— | $— | $— | | Increase based on Dividends or Other Earnings Paid during year prior to Vesting Date of Award | $16,902 | $48,084 | $41,514 | $6,378 | $10,413 | $6,147 | | +Total Adjustments | $576,192 | $288,533 | ($109,082) | $159,709 | $400,760 | $64,892 |

  79. Pay Versus Performance

    | (4) Cumulative total shareholder return (“TSR”) is calculated based on a hypothetical $100 investment beginning July 1, 2022 and reinvestment of all dividends. The TSR is reported on a cumulative basis over fiscal years 2023 to 2025. Specifically, TSR for fiscal year 2023 in the table will represent TSR over fiscal year 2023. TSR for fiscal year 2024 will represent the cumulative TSR over fiscal years 2023 and 2024. TSR for fiscal year 2025 will represent the cumulative TSR over fiscal years 2023, 2024 and 2025. |

  80. DIRECTORS AND EXECUTIVE OFFICERS

    DIRECTORS AND EXECUTIVE OFFICERS The table below sets forth the shares of the Company’s common stock beneficially owned by the Company’s directors, the named executive officers, and by all directors and executive officers as a group as of October 13, 2025. Unless otherwise indicated, to the best knowledge of the Company, all persons named in the table have sole voting and investment power with respect to the shares shown.

  81. DIRECTORS AND EXECUTIVE OFFICERS

    | Name | Title | Amount of Common Stock Beneficially Owned (#)(1) | Percent of Common Stock Outstanding | | Derek P. Schmidt(2) | President & Chief Executive Officer | 341,059 | 6.2% | | F. Brooks Bertsch(3) | Director | 37,186 | 0.7% | | Thomas M. Levine(4) | Director | 33,936 | 0.6% | | David E. Crimmins | Vice President, Sales and Product Management | 32,688 | 0.6% | | William S. Creekmuir | Director | 30,856 | 0.6% | | Kathryn P. Dickson | Director | 20,089 | 0.5% | | Michael J. Ressler | Chief Financial Officer | 18,453 | 0.3% | | M. Scott Culbreth(5) | Director | 12,556 | 0.2% | | Jeanne McGovern | Director | 10,284 | 0.2% | | Terence P. Calloway | Director | 1,294 | 0.0% | | All Directors, and Executive Officers as a Group (12) | | 613,061 | 11.2% |

  82. DIRECTORS AND EXECUTIVE OFFICERS

    | (1) Includes the following number of shares, which may be acquired as of October 13, 2025, or within 60 days of such date by exercise of stock options: Mr. Schmidt – 122,450; Mr. Ressler – 3,035; All Directors and Executive Officers as a Group – 134,223. |

  83. DIRECTORS AND EXECUTIVE OFFICERS

    | (2) Includes 1,081 shares held by the IRA of Mr. Schmidt’s wife, 1,096 shares held in Mr. Schmidt’s IRA and 60, 913 held in his 401k. |

  84. DIRECTORS AND EXECUTIVE OFFICERS

    | (3) Includes 37,186 shares held by Mr. Bertsch as Trustee for the Frank Brooks Bertsch Revocable Trust. |

  85. DIRECTORS AND EXECUTIVE OFFICERS

    | (4) Includes 30,936 shares held by Mr. Levine as Trustee for the 2013 Revocable Trust of Thomas M. Levine and 3,000 shares held by Mr. Levine within a SEP IRA. |

  86. DIRECTORS AND EXECUTIVE OFFICERS

    | (5) Includes 12,566 shares held by Mr. Culbreth as Trustee for The Culbreth Family Revocable Joint Trust. |