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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.  )
_______________________________________

Filed by the Registrant  ý                            Filed by a Party other than the Registrant  ¨
Check the appropriate box:
¨Preliminary Proxy Statement
¨Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
ýDefinitive Proxy Statement
¨Definitive Additional Materials
¨Soliciting Material Pursuant to §240.14a-12
Universal Electronics Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
ýNo Fee required
¨Fee paid previously with preliminary materials
¨Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11



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ueiclogo2a01.jpg
LETTER FROM OUR CHAIRMAN AND CEO
April 25, 2024
Dear Stockholder:
You are cordially invited to attend the 2024 Annual Meeting of Stockholders of Universal Electronics Inc., to be held at our corporate office, 15147 N. Scottsdale Road, Suite H300, Scottsdale, Arizona 85254, on Tuesday, June 11, 2024 at 1:00 p.m., local time in Scottsdale, Arizona.
The following Notice of Annual Meeting of Stockholders and Proxy Statement includes information about the matters to be acted upon by stockholders at the Annual Meeting. We hope that you will exercise your right to vote, either by attending the Annual Meeting and voting in person or by voting through other acceptable means as promptly as possible. You may vote through the Internet, by telephone or by mailing your completed proxy card (or voting instruction form, if you hold your shares through a broker).
Important Notice Regarding the Availability of Proxy Materials
for the 2024 Annual Meeting of Stockholders
We are mailing many of our stockholders a Notice Regarding the Availability of Proxy Materials rather than a full set of our proxy materials. The Notice contains instructions on how to access our proxy materials on the Internet, as well as instructions on how to obtain a paper copy of the full set of proxy materials if a stockholder so desires. This process is more environmentally friendly and reduces our costs to print and distribute these materials to stockholders. All stockholders who do not receive the Notice Regarding the Availability of Proxy Materials will receive a full set of our proxy materials.
On behalf of the Board of Directors and management of Universal Electronics Inc., we thank you for all of your support.
Sincerely yours,
pa_signaturea06.jpg
Paul D. Arling
Chairman and Chief Executive Officer



                                 





UNIVERSAL ELECTRONICS INC.
15147 N. Scottsdale Road, Suite H300
Scottsdale, Arizona 85254
480-530-3000
www.uei.com


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UNIVERSAL ELECTRONICS INC.
Corporate Headquarters
15147 N. Scottsdale Road, Suite H300
Scottsdale, Arizona 85254
Notice of Annual Meeting of Stockholders
to be Held on Tuesday, June 11, 2024
The 2024 Annual Meeting of Stockholders of Universal Electronics Inc., a Delaware corporation ("Universal," "UEI," the "Company," "we," "us" or "our"), will be held at our corporate office, 15147 N. Scottsdale Road, Suite H300, Scottsdale, Arizona 85254, on Tuesday, June 11, 2024 at 1:00 p.m., local time in Scottsdale, Arizona.
The meeting will be conducted for the following purposes:
Proposal One:
To elect Paul D. Arling as a Class I Director to serve on the Board of Directors until the next Annual Meeting of Stockholders to be held in 2025 or until the election and qualification of his successor; and to elect William C. Mulligan, Satjiv S. Chahil, Sue Ann R. Hamilton, Romulo C. Pontual, Eric B. Singer and Edward K. Zinser as Class II directors to serve on the Board of Directors until the Annual Meeting of Stockholders to be held in 2026 or until their respective successors are elected and qualified;

Proposal Two:
To approve, on an advisory basis, the compensation of our named executive officers;
Proposal Three:To adopt and approve the Amended and Restated 2018 Equity and Incentive Compensation Plan;
Proposal Four:To ratify the appointment of Grant Thornton LLP, an independent registered public accounting firm, as our auditors for the year ending December 31, 2024; and
To consider and act upon such other matters as may properly come before this Annual Meeting of Stockholders or any and all postponements or adjournments thereof.
All holders of record of shares of our common stock (NASDAQ: UEIC) at the close of business on Monday, April 15, 2024 are entitled to vote at the meeting and at any postponements or adjournments of the meeting. To ensure that your vote is recorded promptly, please vote as soon as possible, even if you plan to attend the meeting in person. We encourage you to vote via the Internet at www.AALVote.com/UEIC. It is convenient and may save us postage and processing costs. In addition, when you vote via the Internet, your vote is recorded immediately and there is no risk that postal delays will cause your vote to arrive late and therefore not be counted. If you do not vote via the Internet, please vote by telephone or by completing, signing, dating and returning the accompanying proxy card in the enclosed return envelope. Voting early will help avoid additional solicitation costs and will not prevent you from attending the Annual Meeting.
IF YOU PLAN TO ATTEND THE MEETING:
Registration and seating will begin at 12:30 p.m. (local time in Scottsdale, Arizona) on the day of the meeting. Each stockholder will need to bring valid picture identification, such as a driver's license or passport, for admission to the meeting. Stockholders holding stock in brokerage accounts ("street name" holders) will need to bring a copy of a brokerage statement reflecting stock ownership as of the record date.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDERS' MEETING TO BE HELD ON TUESDAY, JUNE 11, 2024.
UEI's Proxy Statement and our 2023 Annual Report on Form 10-K are available online at http://www.viewproxy.com/ueinc/2024 and through the "Investor Relations" section of our website, www.uei.com.        
By Order of the Board of Directors,
rf_signaturea06.jpg
Richard A. Firehammer, Jr.
Secretary
April 25, 2024
Scottsdale, Arizona


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UNIVERSAL ELECTRONICS INC.
15147 N. Scottsdale Road, Suite H300
Scottsdale, Arizona 85254
PROXY OVERVIEW                                                                        

This proxy statement contains information concerning our Annual Meeting of Stockholders ("Annual Meeting") to be held at our corporate office, 15147 N. Scottsdale Road, Suite H300, Scottsdale, Arizona 85254, on Tuesday, June 11, 2024, at 1:00 p.m., local time in Scottsdale, Arizona, and at any adjournments or postponements of the meeting. Holders of the Company's common stock at the close of business on Monday, April 15, 2024, the record date for our Annual Meeting, may vote their shares at the Annual Meeting. Each share owned on the record date is entitled to one vote. At the close of business on the record date, 12,903,172 shares of common stock were outstanding.

Your proxy for the meeting is being solicited by our Board of Directors. This proxy statement and our annual report are being mailed to stockholders beginning on or about Thursday, April 25, 2024.

At the Annual Meeting, stockholders will act upon the matters outlined in the notice of meeting provided with this proxy statement, including the following:
Proposal Board Recommendation
Proposal 1Election of DirectorsFOR ALL NOMINEES
Proposal 2Approval, on an advisory basis, of the compensation of the Company's named executive officers
FOR
Proposal 3Adoption and approval of the Amended and Restated 2018 Equity and Incentive Compensation PlanFOR
Proposal 4Ratification of the appointment of Grant Thornton LLP, an independent registered public accounting firm, as the Company's auditors for the year ending December 31, 2024
FOR

In addition, management will respond to questions from stockholders, if any. We are not aware of any other matters that will be brought before the Annual Meeting for action.

Corporate Governance Highlights

The Board of Directors and management have recognized for many years the need for sound corporate governance practices in fulfilling their duties and responsibilities to our stockholders. Included below are certain corporate governance highlights, including policies we have implemented and other notable governance achievements.

Independent Directors(1)
6 of 7Anti-pledging PolicyYes
Established and Appointed a Lead Independent Director YesFully Independent Board CommitteesYes
Independent Directors Meet Without ManagementYesDirector Attendance (Board and Committee)>75%
Board meetings held in 202312
Minimum Ownership Requirement Met or Exceeded (2)
100%
Stock Ownership Guidelines for Independent Directors (2)
YesCode of Conduct for Directors, Officers and EmployeesYes
Board and Committee Self-assessmentsYesRisk Management ReviewYes
Executive Sessions of Independent DirectorsYesInside Director Elected AnnuallyYes

(1)On October 2, 2023, Carl E. Vogel resigned from the Board of Directors. This vacancy was filled on December 21, 2023 when the Board appointed Eric B. Singer.
(2)Average actual ownership among independent directors was $398,978, including time-based restricted stock units, as of December 31, 2023, which exceeded the minimum ownership guideline of $250,000 by $148,978. New independent directors have five years from the date of joining the Board of Directors of the Company to meet these minimum requirements.

1

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Director Nominees and Board Summary

You are being asked to vote on the election of the following director nominees. Summary biographical information and the committee memberships and leaderships of the director nominees are set forth below. Additional information about the director nominees can be found beginning on page 6.

Director nominees:
NameAgeIndependentAuditCompensationCorporate Governance, Sustainability and NominatingProduct Strategy and InnovationsOther
Public
Company
Boards
Paul D. Arling
Chairman and Chief Executive Officer
61
William C. Mulligan
Lead Independent Director
Retired Partner,
Private Equity
70þ£ø1
Satjiv S. Chahil (1)
Innovations Advisor and Social Entrepreneur
73þ£££
Sue Ann R. Hamilton
Founder and Principal,
Hamilton Media LLC
63þø£1
Romulo C. Pontual (2)
Technology Advisor
64þ£ø
Edward K. Zinser
Financial Consultant
66þø£
Eric B. Singer (3)
President and Chief Executive Officer of Toro 18 Holdings LLC
President, Chief Executive Officer and Chairman of Immersion Corporation
50þ£2
ø Chair £ Member
(1) Mr. Chahil was appointed to the Product Strategy and Innovations Committee in July 2023 as a new member.
(2) Mr. Pontual was appointed to the Corporate Governance, Sustainability and Nominating Committee in April 2023 as a new member. Mr. Pontual was appointed to the Product Strategy and Innovations Committee in July 2023 as the Chair.
(3) Mr. Singer was appointed to the Board of Directors and the Compensation Committee on December 21, 2023.

Executive Compensation Program Highlights

We strongly believe that executive compensation, both pay opportunities and pay actually realized, should be tied to Company performance and long-term stockholder returns. In 2023, over 81% of our CEO's total compensation was in the form of annual and long-term incentives that were tied to the Company's operating results or stock price. Our other named executive officers, on average, received approximately 65% of their total 2023 compensation pursuant to the same annual and long-term incentives. Furthermore, the great majority of named executive officer compensation is not guaranteed but subject to annual financial and performance goals or the Company's stock price. The following chart, which is provided as a supplemental disclosure and not as a substitute for the required Pay Versus Performance disclosure later in the proxy statement, demonstrates the close link between Company performance (measured as cumulative total stockholder return of the Company's common stock for the five-year period beginning January 1, 2019 based on the percentage that the stock price at the end of the years shown represents versus the stock price as of January 1, 2019) and our CEO's annual compensation over that same five-year period:
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4101
We believe this alignment of executive and stockholder interests is best advanced by observing the following principles in developing compensation programs and implementing compensation decisions:

Long-term commitment - The program should be designed to gain a long-term commitment from the proven, accomplished executives that lead our success. Our executive officers have a combined total of approximately 125 years with the Company, during which they have held different positions and have been promoted to increasing levels of responsibility.
Pay-for-performance - A high proportion of total compensation should be at risk and tied to achievement of annual operating and strategic goals and increases in stockholder value.
Equity emphasis - Long-term incentives should be provided annually in Company equity to encourage executives to plan and act with the perspective of long-term stockholders.
Sustainable performance orientation - The mix of incentives provided should motivate sustainable growth in the value of the Company.
Focus on total compensation - Compensation opportunities should be considered in the context of total compensation relative to the pay practices of similar technology companies that compete with us for talent.

Finally, we believe that designing our compensation programs to reward long-term value creation as well as the achievement of annual financial performance goals protects the Company against inappropriate risk taking and conflicts of interest.
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What We DoWhat We Don't Do
üTie the vast majority of our executive compensation to achievement of annual operating and strategic goals and increases in stockholder value.
ýBack-date or reprice options.
üHave competitive and reasonable post-employment and change in control provisions.ýOffer defined benefit or supplemental executive retirement plans.
üHave stock ownership requirements (4x base salary for CEO; 1x base salary for other executive officers).ý
Provide tax gross-ups on employee benefits or perquisites(1).
üHave broad clawback policies.ýAllow margin accounts and pledging stock.
üUse an independent compensation consultant.ýOffer full vesting of equity awards upon retirement.

(1)     Except as grandfathered in per Mr. Arling's Employment Agreement and per Salary Continuation Agreements to certain of our other executive officers.

Our stockholders have expressed broad approval of our compensation programs. At our 2023 Annual Meeting, approximately 83% of the shares entitled to vote on the say-on-pay proposal voted to approve our named executive officer compensation.

Results and Key Initiatives

Historically, we have operated in a highly competitive environment. This past year was no different. It was also a year in which we continued to be impacted by supply chain and transportation issues and reductions in sales to our customers. At the same time, we continued to invest in new products and technologies that we believe will drive improved results in key financial metrics that correlate with long-term stockholder value.
(in millions, except per share amounts and percentages)20192020202120222023
Net Sales$753.5 $614.7 $601.6 $542.8 $420.5 
Net Income (Loss)$3.6 $38.6 $5.3 $0.4 $(98.2)
Diluted Earnings (Loss) Per Share
$0.26 $2.72 $0.39 $0.03 $(7.64)
Cash Flow from Operations$85.3 $73.4 $40.3 $10.9 $25.2 
Gross Margin %22.6 %28.7 %28.8 %28.1 %23.2 %
Operating Margin %2.0 %6.1 %3.9 %2.7 %(20.3)%
Return on Average Assets0.6 %7.2 %1.0 %0.1 %(22.8)%
Closing Y/E Stock Price$52.26 $52.46 $40.75 $20.81 $9.39 

Over the five-year period from 2019 to 2023, the Company generated a total of $235.1 million in cash flow from operations.
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Key strategic initiatives and related achievements for 2023 are listed below:
Strategic InitiativesRelated Achievements
üIncrease new product development efforts in high-growth HVAC OEM channel to grow our market penetration with existing customers and acquire new customers with the goal of achieving market share leadership in climate control channel within two years.üMore than ten customer-initiated climate control products currently in development with major OEM brands as well as integration partners.

Product roadmap expansion to include four new product extensions and two new accessories, including wireless bridges with built-in indoor Air Quality (iAQ) monitoring and air purifier control (IR).
üBroaden our home control and home automation product solutions with the aim of acquiring new customers that represent market share leaders in their respective channels and regions.üDeveloped and launched new smart home wireless control solutions for security, motorized shades and smart lighting applications.

Introduced four white-label, smart home hubs with integrated wireless protocol technologies including Matter® for channel specific use case. Hubs are compatible with the UEI Aspen line of sensors including motion, temperature and door/window sensors.
üExpand our software and service platform, QuickSet, to deliver a complete smart entertainment and smart home managed service platform.üReleased 6th generation Cloud software that blends smart home with video entertainment use cases to drive increased user engagement and personalization leveraging service and content discovery including whole home Audio-Video casting across any device in the home.
üInvest in creating sustainable technology solutions that offer product differentiation across our global product portfolio.üLaunched Eterna and Eterna XLR remote control platforms that rely on built-in energy harvesting capabilities and introduced an innovative batteryless remote control that utilizes a hybrid supercapacitor for energy storage.
üExplore and expand product offerings in our core subscription broadcasting channel beyond traditional entertainment remote controls.üExpanded our software suite to include a Matter-certified, Smart Home dashboard that can run on any entertainment platform in the home; a Virtual Agent for device on-boarding and troubleshooting and a technical support embedded software for remote access and control and simple consumer hand-off.
ü
Seek acquisitions or strategic partners that complement and strengthen our existing business. ü
Our focus this year has been on organic growth through internal new product and technology developments. This strategy may be re-visited when funds are available to pursue inorganic growth opportunities.
üExpedite our long-term factory planning strategy to optimize our manufacturing footprint and reduce our manufacturing concentration in the People's Republic of China.üWe closed our southwestern China factory in September after having gained confidence our newly formed Vietnam facility was operating at the required level of efficiency.

Progress to-date at the Vietnam factory has met or exceeded our expectations, and we expect additional operational efficiencies to be achieved as it continues to scale.
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Proposal 1 - Election of Directors                                        

On October 2, 2023, the Company announced that Carl E. Vogel decided to resign, effective immediately, from the Board. On December 21, 2023, the Company entered into a Cooperation Agreement (the "Cooperation Agreement") with Toro 18 Holdings LLC, a Delaware limited liability company ("Toro 18"), Immersion Corporation, a Delaware corporation ("Immersion"), William C. Martin and Eric Singer. Pursuant to the Cooperation Agreement, the Company appointed Mr. Singer to the Board, filling the vacancy created by Mr. Vogel’s resignation. The Company further agreed to nominate Mr. Singer for election to the Board at the Annual Meeting.

Nominees for Election at the Annual Meeting

Paul D. Arling is nominated for election as a Class I director to serve a one-year term expiring at our 2025 Annual Meeting. William C. Mulligan, Satjiv S. Chahil, Sue Ann R. Hamilton, Romulo C. Pontual, Eric B. Singer and Edward K. Zinser are nominated for election as Class II directors to serve a two-year term expiring at our 2026 Annual Meeting.


Director Background
Paul D. Arling
Chairman and Chief Executive Officer
Director since 1996
Age: 61
Paul D. Arling is our Chairman and Chief Executive Officer. He joined us in May 1996 as Chief Financial Officer and was named to our Board of Directors in August 1996. He was appointed President and Chief Operating Officer in September 1998, was promoted to Chief Executive Officer in October 2000 and appointed as Chairman in July 2001.
Mr. Arling earned a Bachelor of Science degree and an MBA from The Wharton School of the University of Pennsylvania.
At the 2023 Annual Meeting, Mr. Arling was reelected as Chairman of the Company to serve until the 2024 Annual Meeting.
Mr. Arling, who has spent over 28 years with UEI and who currently serves as Chairman and Chief Executive Officer, has an extensive, in-depth knowledge of the Company's business, operations, opportunities and strategies. His wide-ranging roles throughout his career at UEI also provide him with significant leadership, corporate strategy, manufacturing, retail, marketing and international experience in the wireless controls industry.
William C. Mulligan
Lead Independent Director
Audit Committee
Corporate Governance, Sustainability and Nominating Committee (Chair)
Director since 1992
Mr. Mulligan is retired from Primus Capital Funds after 35 years with the private equity firm. Prior to joining Primus Capital Funds, Mr. Mulligan was a consultant with McKinsey and Company. He is a director of TFS Financial Corporation (NASDAQ:TFSL), serving on TFS' Compensation and Audit Committees. Mr. Mulligan is also a Trustee of the Cleveland Clinic Foundation (serving on the Audit Committee), Western Reserve Land Conservancy and Denison University.

Mr. Mulligan earned a Bachelor of Arts in economics from Denison University and an MBA from the University of Chicago.
Age: 70Mr. Mulligan has been a Class II Director of the Company since 1992. In April 2023, Mr. Mulligan was appointed Lead Independent Director. He also serves as Chair of our Corporate Governance, Sustainability and Nominating Committee and as a member of our Audit Committee. At the 2022 Annual Meeting, Mr. Mulligan was reelected as a Class II Director of the Company to serve until the 2024 Annual Meeting.
Mr. Mulligan's extensive knowledge in the fields of financial services, investment banking, and accounting, risk management and his experience in legal and corporate governance areas and audit oversight gained from his membership on the boards and audit committees of other public companies contribute to our Board and the Committees on which he serves.
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Satjiv S. Chahil
Compensation Committee
Corporate Governance, Sustainability and Nominating Committee
Product Strategy and Innovations Committee
Director since 2002
Mr. Chahil is a Silicon Valley-based Global Marketing and Innovations Advisor, and Social Entrepreneur since 2011. Prior to 2011, Mr. Chahil served as a C-Level executive of Apple Corp, Palm Inc, and Hewlett-Packard. In his earlier career he held professional management positions at IBM and Xerox. Additionally, he has served as a Senior Advisor to several global high-tech companies, including Blackberry, BMW, Sony, Swarovski, Beats Electronics and Starkey Hearing Technologies. He also serves as a Founder's Circle member of the American India Foundation (www.aif.org), and is a member of the board of directors of Cinequest, the Silicon Valley Film Festival (www.cinequest.org).
Age: 73Mr. Chahil earned a bachelor's degree in commerce from Punjab University in Chandigarh, India and a master's degree from the American (Thunderbird) Graduate School of International Management in Arizona.
Mr. Chahil has been a Class II Director of the Company since 2002. He also serves as a member of our Compensation, Corporate Governance, Sustainability and Nominating and Product Strategy and Innovations Committees. At the 2022 Annual Meeting, Mr. Chahil was reelected as a Class II Director of the Company to serve until the 2024 Annual Meeting.
Mr. Chahil provides our Board with proven leadership and business experience in the areas of digital convergence, new media and global marketing gained from serving in various executive management positions with multinational information technology, computing and wireless control companies and the extensive management and corporate governance experience gained from those roles.
Sue Ann R. Hamilton Compensation Committee (Chair)
Corporate Governance, Sustainability and Nominating Committee
Director since 2019
Age: 63

Ms. Hamilton is Founder and Principal of Hamilton Media LLC, which advises and represents major and emerging media and technology companies since 2007. In this role, Ms. Hamilton has served as Executive Vice President - Distribution and Business Development for AXS TV LLC, a partnership between founder Mark Cuban, AEG, Ryan Seacrest Media, Creative Artists Agency and CBS. Prior to launching Hamilton Media, she served as Executive Vice President of Programming for Charter Communications (a cable and internet provider) from 2003 until 2007. Before her work at Charter, she held numerous management positions at AT&T Broadband LLC and its predecessor, TCI, between 1993 and 2002. Early in her career, Ms. Hamilton was a partner at Chicago-based law firm Kirkland & Ellis, specializing in complex commercial transactions.
Ms. Hamilton has also served as a member of the board of directors of Liberty Broadband Corporation (NASDAQ:LBDRA) since December 2020. She previously served as a member of the board of directors of GCI Liberty, Inc. (merged into Liberty Broadband Corporation in December 2020) and of FTD Companies, Inc. As representative of Mark Cuban Companies/Radical Ventures, she has been a board observer since 2012 for Philo, Inc., a privately held technology company.
Ms. Hamilton graduated magna cum laude with a Bachelor of Arts from Carleton College and earned a Juris Doctorate from Stanford Law School, where she was Associate Managing Editor of the Stanford Law Review and Editor of the Stanford Journal of International Law.
Ms. Hamilton has been a Class II Director of the Company since 2019. She also serves as Chair of our Compensation Committee and as a member of our Corporate Governance, Sustainability and Nominating Committee. At the 2022 Annual Meeting, Ms. Hamilton was reelected as a Class II Director of the Company to serve until the 2024 Annual Meeting.
Ms. Hamilton’s background as an executive in and advisor to the cable television industry for over 29 years enable her to contribute extensive knowledge and strategic insights in technology, media and telecommunications to our board. In addition, her financial and legal experience strengthen our board's collective qualifications, skills and attributes. Her experience gained from membership on the boards of public and privately-held companies gives the company the benefit of observed best practices in corporate governance.
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Romulo C. Pontual
Corporate Governance, Sustainability and
Nominating Committee Product Strategy and Innovations Committee (Chair)
Director since 2022
Mr. Pontual has served as a seasoned technology expert and advisor since September 2015. During this time, he also served as a member of the board of directors of Greenwave Systems, Inc. from 2016 until May 2019. From January 2004 until August 2015, he served as Executive Vice President and Chief Technology Officer of DirecTV. Before joining DirecTV, Mr. Pontual served as Executive Vice President, Television Platforms of News Corporation from August 1996 until January 2004, during which time he served on the Boards of Sky Brazil, Innova and iDirect. Prior to joining News Corporation, he held various senior engineering roles at SES Satellites (Luxembourg) and Embratel (Brazil).
Age: 64 Mr. Pontual earned a BSc from Universidade Federal Fluminense in Rio de Janeiro. He also earned a specialization in Satellite Communications from Pontificia Universidade Catolica do Rio de Janeiro and a YMP in Business Administration from INSEAD, Fontainebleau France.
Mr. Pontual has served as a Class II director since July 27, 2022 and was appointed to serve until the 2024 Annual Meeting. He also serves as Chair of our Product Strategy and Innovations Committee and as a member of our Corporate Governance, Sustainability and Nominating Committee.
Mr. Pontual brings his extensive experience as an executive in and technological advisor to the subscription broadcasting industry, enabling him to contribute this knowledge and strategic insights to our board. In addition, his engineering background, training and experience strengthen our board's skills and attributes with respect to technology issues facing our Company. Further, our board will benefit from the experience Mr. Pontual has gained from his membership on the various boards of public and privately-held companies.
Eric B. Singer
Appointed as Director and member of the Compensation Committee in December 2023 by recommendation of current Board Members and the Corporate Governance, Sustainability and Nominating Committee
Age: 50
Eric Singer has been the President, CEO and Chairman of Immersion (NASDAQ: IMMR), a licensing company focused on the invention, acceleration, and scaling, through licensing, of innovative haptic technologies since 2023. From 2020 until 2023, he served as Immersion’s Executive Chairman. He is also the President and CEO of Toro 18, an entity wholly-owned by Immersion. From 2014 through 2022, he was a Managing Member of VIEX Capital Advisors, an investment management services company, which he founded. Mr. Singer has substantial experience serving on public boards and has been the lead independent director of A10 Networks (NYSE:ATEN), an application controller and firewall cloud security company, since September 2021. Previously, he served on the boards of Velodyne Lidar; Quantum Corporation, a video data storage and management company; Numerex Corp., a provider of managed machine-to-machine enterprise solutions enabling the Internet of Things; RhythmOne plc and YuMe, Inc., each a provider of brand video advertising software and audience data; Support.com, Inc., a provider of tech support and support center services; Meru Networks, Inc., a Wi-Fi network solutions company; PLX Technology, Inc., a PCI Express and ethernet semiconductor company; and Sigma Designs, Inc., an integrated circuit provider for the home entertainment market, among other companies.

Mr. Singer earned a Bachelor of Arts from Brandeis University.
Mr. Singer was appointed as a director on December 21, 2023 to fill a vacancy on the Board, to serve until the 2024 Annual Meeting, and also appointed to the Compensation Committee.
Mr. Singer has extensive experience in the technology sectors and particularly in developing strategies that are aimed at enhancing the overall value of the corporations he serves. This experience will translate well in creating new ways to unlock and enhance stockholder value through monetizing our intellectual properties and otherwise assisting our Board in developing a roadmap toward greater profitability.
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Edward K. Zinser
Audit Committee (Chair)
Compensation Committee
Director since 2006
Age: 66
Mr. Zinser has served as a financial consultant since 2017. From May 2014 to July 2016, Mr. Zinser was Executive Vice President and Chief Financial Officer of United Online, Inc. (NASDAQ:UNTD) a provider of consumer services and products over the Internet. From January 2008 until November 2014, Mr. Zinser served as Chief Financial Officer of Boingo Wireless, a leading Wi-Fi software and services provider. Prior to that, Mr. Zinser served as Executive Vice President and Chief Financial Officer of THQ, Inc., a worldwide publisher of interactive entertainment software. Prior to joining THQ, Mr. Zinser served as Executive Vice President and Chief Financial Officer of Vivendi Universal Games, a global publisher of entertainment and education software. Mr. Zinser has also served as President and Chief Operating Officer of Styleclick, Inc., Senior Vice President and Chief Financial Officer of Internet Shopping Network LLC, Executive Vice President and Chief Financial Officer of Chromium Graphics, Inc., and in various senior financial positions with The Walt Disney Company.
Mr. Zinser earned a Bachelor of Science in business management from Fairfield University and an MBA in finance from the University of Chicago.
Mr. Zinser has been a Class II Director of our Company since 2006. He also serves as Chair of our Audit Committee, and as a member of our Compensation Committee. At the 2022 Annual Meeting, Mr. Zinser was reelected as a Class II Director of the Company to serve until the 2024 Annual Meeting.
Mr. Zinser, with extensive knowledge in the fields of finance and accounting, his knowledge of investment banking, and his legal, corporate governance, and audit oversight experience gained from his various Chief Financial Officer positions of other public companies contribute to our Board and the Committees on which he serves, particularly our Audit Committee, of which he is Chairman.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ALL OF THE NOMINEES.
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CORPORATE GOVERNANCE                                        

Our board of directors may establish the authorized number of directors from time to time by resolution. The current number of directors is seven. We describe below our key corporate governance policies that enable us to manage our business in accordance with high ethical standards and in the best interests of our stockholders.

Business Ethics — Code of Conduct

Our Code of Conduct applies to each member of our Board of Directors and to all officers and employees of UEI and our subsidiaries wherever located. Our Code of Conduct contains the general guidelines and principles for conducting UEI's business consistent with the highest standards of business ethics. Under our Code of Conduct, our chief executive officer and chief financial officer (who is also our principal accounting officer) are responsible for creating and maintaining a culture of high ethical standards and of commitment to compliance throughout our Company to ensure the fair and timely reporting of UEI's financial results and condition.

We encourage our employees to report all violations of Company policies and the law, including incidents of harassment, discrimination or foreign corrupt practices. To assist our employees in complying with their ethical and legal obligations and in reporting suspected violations of laws, policies and procedures, management, at the direction of the Board of Directors, has established an independent, third-party "Ethics Hotline".

Our Code of Conduct is posted on the Corporate Governance page of our website at www.uei.com. Any amendment to the Code of Conduct or waiver of its provisions with respect to our principal executive officer, principal financial officer or principal accounting officer or any member of our Board of Directors will be promptly posted on our website www.uei.com.

Director Independence

The Board has adopted Director Independence Standards to assist in determining the independence of each director. In order for a director to be considered independent, the Board must affirmatively determine that the director has no material relationship with UEI. In each case, the Board broadly considers all relevant facts and circumstances, including the director's commercial, industrial, banking, consulting, legal, accounting, charitable and family relationships and such other criteria as the Board may determine from time to time. These Director Independence Standards are published on our Corporate Governance page at www.uei.com. The Board has determined that each of the six current Class II Directors, namely, William C. Mulligan, Satjiv S. Chahil, Sue Ann R. Hamilton, Romulo C. Pontual, Eric B. Singer and Edward K. Zinser, meets these standards and thus is independent and, in addition, satisfies the independence requirements of the NASDAQ Stock Market. The Board also determined that Carl E. Vogel, who resigned from the Board in October 2023, met those standards and was independent and satisfied the independence requirements of the NASDAQ Stock Market. To our knowledge, none of the independent directors has any direct or indirect relationships with our Company or its subsidiaries and affiliates, other than serving as a director and being a stockholder.

All members of the Audit, Compensation, Corporate Governance, Sustainability and Nominating and Product Strategy and Innovations Committees must be independent as defined by the Board’s Director Independence Standards. Members of the Audit and Compensation Committees must also satisfy additional independence requirements, which, among other things, provide that they may not accept, directly or indirectly, any consulting, advisory or other compensatory fees from UEI or any of its subsidiaries other than their director compensation.

Board Leadership Structure

We believe that our current board structure is effective in supporting strong board leadership. The board of directors has determined that the Company benefits from having a combined Chairman and CEO position and Mr. Arling’s unique perspective and experience, as highlighted more fully below, are valuable in setting the overall direction and business and product strategy for the Company. In 2023, to further promote effective corporate governance, the board established a Lead Independent Director role and, at that time, appointed Mr. Mulligan as our Lead Independent Director.

Mr. Arling's extensive leadership experience as our CEO since 2000, coupled with his previous positions and deep knowledge of our business, products and operations, provide invaluable insight to our board of directors. As one of our largest shareholders, Mr. Arling is also invested in our long-term success. Mr. Mulligan has been on our Board since 1992 and brings
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extensive governance and financial experience, including experience navigating complex business opportunities and challenges in the private sector, and plays a significant and meaningful role in leading our board of directors.

The Chairman and Lead Independent Director work collaboratively to facilitate effective oversight, governance, and policy- and decision-making by the board of directors. They set the agenda for meetings of the board of directors, and either may call special meetings of the board of directors. As Chairman, Mr. Arling presides over meetings of the board of directors. As our Lead Independent Director, Mr. Mulligan provides independent oversight and promotes effective communication between our board of directors and management, including Mr. Arling. Our Lead Independent Director role also includes the following authority and responsibilities, among others:
presiding at all meetings of the board of directors in which the Chairman/CEO is not present and also at all meetings of the independent directors, including executive sessions of the independent directors;
calling separate meetings of the independent directors;
facilitating discussion and open dialogue among the independent directors during meetings of the board of directors, executive sessions, and otherwise;
serving as principal liaison between the independent directors and the Chairman/CEO;
providing the Chairman/CEO with feedback and counsel concerning his interactions with the board of directors;
providing leadership to the board of directors if circumstances arise in which the role of the Chairman/CEO may be, or may be perceived to be, in conflict;
taking into account input from other independent directors in coordinating with the Chairman/CEO to set the agenda for meetings of the board of directors; and
leading our board of directors in governance matters in coordination with our compensation and corporate governance, sustainability and nominating committees, including the evaluation of the performance of the Chairman/CEO, the selection of committee chairs and members, and our annual board of directors and committee self-evaluations.

Our Lead Independent Director also performs such additional duties as the board of directors may otherwise determine and delegate.

Other Leadership Components. Another key component of our leadership structure is our strong governance practices to ensure that the Board effectively carries out its responsibility for the oversight of management. All directors, with the exception of our Chairman, are independent, and all committees are made up entirely of independent directors. Our independent directors, led by our Lead Independent Director, meet in regularly scheduled executive sessions at the end of every regularly scheduled board meeting. Our Lead Independent Director may schedule additional executive sessions as appropriate. Members of management do not attend these executive sessions. The Board has full access to our management team at all times. In addition, the Board or any committee may retain, at such times and on such terms as determined by the Board or committee in its sole discretion, independent legal, financial and other consultants and advisors to advise and assist the Board or committee in discharging its oversight responsibilities.

Risk Management

Management is responsible for assessing and managing UEI's exposure to various risks while the Board of Directors has responsibility for the oversight of risk management. Management has an enterprise risk management process to identify, assess and manage the most significant risks facing UEI, including financial, strategic, operational, litigation, compliance and reputational risks.

The Audit Committee has oversight responsibility to review management's risk management process, including the policies and guidelines used by management to identify, assess and manage UEI's exposure to risk, including cybersecurity risks. The Audit Committee also has oversight responsibility for financial risks. The Board has oversight responsibility for all other risks. Management reviews financial risks with the Audit Committee at least quarterly and reviews its risk management process with the Audit Committee on an ongoing basis. Management reviews various significant risks with the Board throughout the year, as necessary and/or appropriate, and conducts a formal review of its assessment and management of the most significant risks with the Board on an annual basis.

Our internal auditor ("Internal Auditor") has direct access to the Audit Committee and is responsible for leading the formal risk assessment and management process within the Company. The Internal Auditor, through consultation with the Company's senior management, periodically assesses the major risks facing the Company and works with those executives responsible for managing each specific risk. The Internal Auditor periodically, no less than quarterly, reviews with the Audit Committee the major risks facing the Company and the steps management has taken to monitor and mitigate those risks. The Internal Auditor's
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risk management report, which is provided in advance of the regularly scheduled Audit Committee meetings, is reviewed by the entire Audit Committee. The executive responsible for managing a particular risk may also report to the Audit Committee or full Board on how the risk is being managed and mitigated. Throughout the year, the Chair of the Audit Committee provides the Internal Auditor with performance and development-based feedback.

Management's role to identify, assess and manage risk, and the Board's role in risk oversight, have been well defined for many years. The Board's role in risk oversight has had no significant effect on the Board's leadership structure. However, we believe that the Board's leadership structure, with Mr. Arling serving as Chairman and Chief Executive Officer and Mr. Mulligan serving as our Lead Independent Director, enhances the Board's effectiveness in risk oversight due to their combined extensive knowledge of the Company's operations and the industries in which we conduct business.

In addition, the Board has delegated to other committees the oversight of risks within their areas of responsibility and expertise. For example, the Compensation Committee oversees the risks associated with the Company's compensation practices, including a periodic review of the Company's compensation policies and practices for its employees. The Company has determined that its compensation policies do not pose any risks that are reasonably likely to have a material adverse effect on the Company. The Corporate Governance, Sustainability and Nominating Committee oversees the risks associated with the Company's overall governance and its succession planning process.

Communications with Directors

The Board has adopted a process by which stockholders and other interested parties may communicate with members of the Board, the Lead Independent Director, committee chairs or the independent directors as a group by regular mail. Any communication by regular mail should be sent to Universal Electronics Inc., 15147 N. Scottsdale Road, Suite H300, Scottsdale, Arizona 85254, to the attention of the applicable director or directors with a copy to the Secretary.

Board and Committee Self-Assessments

The Board of Directors, through its Corporate Governance, Sustainability and Nominating Committee periodically decides whether to conduct self-assessments of the Board and its various committees, to assist in determining whether the Board and its committees are functioning effectively. Due to the size of the Board and the committees, often times these assessments are done informally. During 2023, the Audit Committee completed its self-evaluation and reviewed and discussed the results with the full Board. During 2024, the Corporate Governance, Sustainability and Nominating Committee will have the full Board and each Committee conduct a formal self-assessment and will discuss each result with the full Board.

Board Committee Charters and Other Corporate Governance Materials

The Board of Directors has adopted written charters for the Audit Committee, Compensation Committee, Corporate Governance, Sustainability and Nominating Committee and Product Strategy and Innovations Committee. Each committee reviews and evaluates the adequacy of its charter at least annually and recommends any proposed changes to the Board for approval. You may access all committee charters, our Code of Conduct, our Corporate Governance Guidelines, our Director Independence Standards, and other corporate governance materials through the "Investor Relations" section of our website, www.uei.com.

Stock Ownership Guidelines

The Board of Directors believes strongly that its directors and executive officers should have meaningful share ownership in UEI. Accordingly, the Board has established minimum share ownership requirements. Each director is expected to own, at a minimum, that number of shares of common stock equal in value to $250,000, and each executive officer is expected to own, at a minimum, that number of shares of common stock equal in value to a multiple of his or her base salary ranging from a low of one times for certain executive officers to a high of four times for our Chairman and Chief Executive Officer. Any new director or executive officer will have five years from the date they join the Company to meet these minimum ownership requirements. Presently, all of our directors and executive officers meet these guidelines. For purposes of meeting this minimum share ownership requirement, each equivalent share of common stock held under our benefit plans and each time-based restricted stock unit is considered as a share of common stock. Stock options and unvested performance-based restricted stock units are not considered towards meeting this requirement. More information pertaining to executive officer stock ownership guidelines is set forth under the heading "Executive Officer Stock Ownership Guidelines" in the "Compensation Discussion and Analysis"
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section. In addition, more information pertaining to Board of Director stock ownership guidelines is set forth under the heading "Director Stock Ownership Guidelines" in the "Director Compensation and Stock Ownership Guidelines" section.

Board Structure and Committee Membership

Board Composition

We currently have seven directors: one is a Class I Director and six are Class II Directors. A Class I Director is a director who is also an employee of UEI and is elected each year at the Annual Meeting to serve a one-year term and a Class II Director is a director who is not an employee and is elected every even-numbered year at the Annual Meeting to serve a two-year term.

Board of Directors Meetings Held During 2023

During 2023, the Board formally met nine times and acted two times by unanimous written consent and one time by telephone. Each director is expected to attend each meeting of the Board and those committees on which he or she serves. During 2023, no director attended less than 75% of the aggregate of all Board meetings and meetings of committees on which the director served. Since attendance by our stockholders at our Annual Meetings has historically been via proxy and not in person, we do not require our independent outside directors to attend these meetings. At the 2023 Annual Meeting, however, in addition to Mr. Arling attending in person, four independent directors attended virtually.

Role of Primary Board Committees

The Board has four standing committees - Audit, Compensation, Corporate Governance, Sustainability and Nominating and Product Strategy and Innovations. Each committee is composed entirely of independent directors, as determined by the Board in accordance with applicable NASDAQ listing standards and the Board's Director Independence Standards. In addition, Audit Committee and Compensation Committee members meet additional heightened independence criteria applicable to Audit Committee and Compensation Committee members under applicable NASDAQ and Securities and Exchange Commission ("SEC") independence requirements. The table below provides information about the current membership of the committees and the number of meetings held in 2023.
Name/ItemAudit
Committee
Compensation
Committee
Corporate
Governance, Sustainability and
Nominating
Committee
Product Strategy and Innovations
Committee
William C. Mulligan (1)
XChair
Satjiv S. Chahil (2)
XXX
Sue Ann R. HamiltonChairX
Romulo C. Pontual (3)
XChair
Eric B. Singer (4)
X
Edward K. ZinserChairX
Number of Meetings4*5**2***2
(1) Mr. Mulligan was appointed as Lead Independent Director in 2023.
(2) Mr. Chahil was appointed to the Product Strategy and Innovations Committee in July 2023.
(3) Mr. Pontual was appointed to the Corporate Governance, Sustainability and Nominating Committee in April 2023 and appointed to the Product Strategy and Innovations Committee in July 2023.
(4) Mr. Singer was appointed to the Board of Directors and Compensation Committee in December 2023.
* The Audit Committee also acted once by unanimous written consent.
** The Compensation Committee also acted once by unanimous written consent.
*** The Corporate Governance, Sustainability and Nominating Committee also acted twice by unanimous written consent.

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Audit Committee

The Audit Committee is primarily concerned with the integrity of our financial statements, our compliance with legal and regulatory requirements, the independence, qualification, and performance of the independent registered public accounting firm and the performance of our Internal Auditor. The Audit Committee's functions include:
monitoring the Company's major risk exposures, including financial risk, and the steps management has taken to control such exposures;
meeting with our independent registered public accounting firm and management representatives;
making recommendations to the Board regarding the appointment of the independent registered public accounting firm;
approving the scope of audits and other services to be performed by the independent registered public accounting firm;
establishing pre-approval policies and procedures for all audit, audit-related, tax and other fees to be paid to the independent registered public accounting firm;
considering whether the performance of any professional service by the registered public accountants may impair their independence;
reviewing the results of external audits, the accounting principles applied in financial reporting, and financial and operational controls; and
meeting with the Internal Auditor and approving the scope and review of audits performed by the Internal Auditor.

The independent registered public accountants and the Internal Auditor each have unrestricted access to the Audit Committee, and the members of the Audit Committee have unrestricted access to each of the independent registered public accountants and the Internal Auditor.

All of the Audit Committee members are financially literate. The Board has determined that Mr. Zinser is qualified as an "audit committee financial expert" within the meaning of applicable SEC regulations.

Audit Committee Report

The Audit Committee reviews our financial reporting process on behalf of the Board of Directors and while management has the primary responsibility for the financial statements and the reporting process, our independent registered public accountants are responsible for expressing an opinion on the conformity of our audited financial statements to accounting principles generally accepted in the United States, in all material respects. As a result of the resignation of Mr. Vogel, the Audit Committee is presently comprised of only two members. The Committee has until the Annual Meeting to add a third member as required by the NASDAQ rules, which the Committee fully intends to do.

In this context, the Audit Committee hereby reports as follows:
1.The Audit Committee has reviewed and discussed our audited financial statements for the year ended December 31, 2023 with management and the independent registered public accountants.
2.The Audit Committee has discussed the matters required to be discussed by the applicable standards of the Public Company Accounting Oversight Board ("PCAOB") and the SEC with the independent registered public accounting firm.
3.The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by the applicable requirements of the PCAOB regarding the independent registered public accounting firm's communications with the Audit Committee concerning independence and has discussed with the independent registered public accounting firm its independence.
4.The Audit Committee has considered whether the independent registered public accountants' provision of non-audit services provided to us, if any, is compatible with the registered public accountants' independence.

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Relying on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board has approved, that our financial statements for the year ended December 31, 2023, as presented to the Audit Committee, be included in our Annual Report on Form 10-K for the year ended December 31, 2023 to be filed with the SEC in accordance with the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder.
Audit Committee of the Board of Directors
Edward K. Zinser — Chair
William C. Mulligan

Compensation Committee

The Compensation Committee assists the Board in discharging its responsibilities relating to the compensation of the chief executive officer and other executive officers (including "NEOs" as such term is defined below in the "Compensation Discussion and Analysis"). Among other things, the Compensation Committee:
reviews the corporate goals and objectives approved by the Board relevant to the compensation of our chief executive officer and other executive officers, evaluates their performance in light of such goals and objectives and, based on its evaluations and appropriate recommendations, reviews and approves the compensation of our chief executive officer and other executive officers, each on an annual basis;
monitors potential risks relating to the Company's compensation policies and practices;
reviews and discusses with management the Compensation Discussion and Analysis required by SEC rules, recommends to the Board whether the Compensation Discussion and Analysis should be included in the Company's Annual Report and Proxy Statement and prepares the Compensation Committee Report required by SEC rules for inclusion in the Company's Annual Report and Proxy Statement;
reviews periodically compensation for independent directors of the Company and recommends changes to the Board as appropriate;
reviews and approves compensation packages for new executive officers and severance packages for executive officers whose employment with the Company terminates;
reviews and makes recommendations to the Board with respect to the adoption or amendment of incentive and other stock-based compensation plans;
administers the Company's stock incentive plans; and
assesses the independence of any outside compensation consultant of the Company.

Compensation Committee Interlocks and Insider Participation

The following individuals served as a member of our Compensation Committee during the fiscal year 2023: Sue Ann R. Hamilton (Chair), Satjiv S. Chahil, Eric B. Singer (appointed on December 21, 2023) and Edward K. Zinser, none of who have ever been an executive officer of the Company or had or have a relationship requiring disclosure by the Company under Item 404 of Regulation S-K. Further, none of our executive officers serves or has served on the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our Board or Compensation Committee.

Corporate Governance, Sustainability and Nominating Committee

The Corporate Governance, Sustainability and Nominating Committee assists the Board in identifying qualified individuals to become board and committee members, considers matters of corporate governance and assists the board in evaluating the Board's effectiveness. Among other things, the Corporate Governance, Sustainability and Nominating Committee:
develops and recommends to the Board criteria for board membership;
identifies, reviews the qualifications of and recruits candidates for election to the Board and to fill vacancies or new positions on the Board as directed by the Board;
reviews candidates recommended by the Company's stockholders, if any, for election to the Board;
reviews annually our corporate governance principles and recommends changes to the Board as appropriate;
recommends to the Board changes to our Code of Conduct;
oversee the process for identifying, assessing, monitoring and managing sustainability initiatives and risks;
reviews and makes recommendations to the Board with respect to the Board's and each committee's size, structure, composition and functions;
assists the Board in developing and evaluating potential candidates for executive positions and in overseeing the development of executive succession plans; and
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oversees the process for evaluating the Board and its committees.

The Corporate Governance, Sustainability and Nominating Committee will consider director candidates recommended by our stockholders. Stockholders recommending candidates for consideration by the Corporate Governance, Sustainability and Nominating Committee should send their recommendations to our Secretary at Universal Electronics Inc., 15147 N. Scottsdale Road, Suite H300, Scottsdale, Arizona 85254. The recommendation must include the candidate's name, biographical data and qualifications.

Any such recommendation should be accompanied by:
a written statement from the candidate of his or her consent to be named as a candidate and, if nominated and elected, willingness to serve as a director in accordance with our policies and bylaws;
a completed written questionnaire in form and substance to be provided by the Secretary of UEI, covering matters including the background and qualifications of the candidate to serve on the Board; and
a written representation and agreement in form and substance to be provided by the Secretary of UEI, regarding any agreement, arrangement or understanding to which the candidate is a party relating to any voting commitment or assurance made by the candidate, and certain other matters as more particularly described in our bylaws.

The Corporate Governance, Sustainability and Nominating Committee will evaluate director candidates recommended by stockholders, if any, based on the same criteria used to evaluate candidates from other sources. The Corporate Governance, Sustainability and Nominating Committee may employ professional search firms (for which we would pay a fee) to assist in identifying potential Board members with the desired skills and disciplines.

Product Strategy and Innovations Committee

The Product Strategy and Innovations Committee provides strategic and tactical oversight, assistance and guidance to management in the development and lifecycle management of our products and technologies in support of our short- and long-term strategy and performance, and to assist in the development of our annual budget. Among other things, the Product Strategy and Innovations Committee:
provides guidance to management in the development of a five-year product and technology roadmap with value opportunity;
assists management in the development of tactical and strategic revenue and product opportunities to be achieved in the short-term;
reviews and provides guidance to management with respect to the strategic fit, feasibility, market demand, and financial implication of management’s product and technology roadmap;
reviews and provides guidance to management with respect to management’s short- and long-term budget proposals, including research and development budget and spend pertaining to management’s product and technology roadmap; and
reviews with management, current product and technology performance, market dynamics, competitive landscape, and customer feedback, comparing to budget, aimed toward increasing short-term revenue and developing new product opportunities which may include a shift in strategic focus.

Board Composition and Diversity

The Company does not maintain a formal diversity policy for Board membership, however, the Board believes that the directors, considered as a group, should provide a mix of backgrounds, experience, knowledge, and abilities, and as such is committed to be comprised of a diverse selection of individuals who bring their personal and professional experiences to bear in order to create a constructive debate of competing views and opinions in the boardroom. The Board recognizes that it is through this diversity, not only in background and experience, which the Board defines broadly to include, among other things, differences in backgrounds, qualifications, experiences, viewpoints, geographic locations, education, skills and expertise, professional and industry experience, and personal characteristics (including age, gender and race/ethnicity) that will help ensure that the Board best performs its oversight function and more completely represents the diversity of the Company's stockholders, associates, customers, and the communities in which we operate.

Notwithstanding this belief, in carrying out its duties of reviewing the composition of our Board, the Corporate Governance, Sustainability and Nominating Committee has developed specific selection criteria that it employs to assist in identifying candidates for potential admission to the Board with an emphasis on seeking qualified female and other diverse candidates. These criteria include, among other things, candidates possessing:
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the highest personal and professional ethics, character, integrity and values;
the appropriate characteristics, skills, and experience in the following areas, product development/technology, operations, video services, finance, and/or sales and marketing to make a significant contribution to the Board;
an inquisitive and objective perspective, practical wisdom and mature judgment; and
a commitment to represent the interests of all of our stockholders, employees, customers, and the communities within which we operate, and also demonstrate a commitment to long-term service on the Board.

In addition, each director is required to notify the Chairman and the Chair of the Corporate Governance, Sustainability and Nominating Committee upon a change in principal professional responsibilities. The Corporate Governance, Sustainability and Nominating Committee may consider such change of status in recommending to the Board whether the director should continue serving as a member of the Board. The Board encourages, and we will reimburse the costs associated with, directors participating in continuing director education. The Board believes that term limits may result in the loss of long-serving directors who over time have developed unique and valuable insights into our business and therefore can provide a significant contribution to the Board.

Board Diversity Matrix (as of April 1, 2024)
Total Number of Directors7
Part I: Gender IdentityFemaleMaleNon-BinaryDid Not Disclose Gender
Directors151
Part II: Demographic BackgroundFemaleMaleNon-BinaryDid Not Disclose Gender
African American or Black
Alaskan Native or Native American
Asian1
Hispanic or Latinx
Native Hawaiian or Pacific Islander
White13
Two or More Races or Ethnicities1
LGBTQ+
Did Not Disclose Demographic Background1
DIRECTOR COMPENSATION AND STOCK OWNERSHIP GUIDELINES            

Independent Director Compensation

We compete primarily with technology companies in attracting and retaining our independent directors. The advice of our independent directors has been instrumental in our success. As noted in the overview of director backgrounds above, our current directors have deep experience in technology industries, Silicon Valley innovations and global marketing, telecommunications and subscription services TV, electronic devices manufacturing and marketing, private equity investments in technology, and internet-based consumer services and products. And each time our independent directors have been up for re-election, our stockholders have recognized their value by overwhelmingly approving their re-election.

Consistent with this technology industry context, our Board of Directors has long held the belief that its compensation for serving as a member of our Board of Directors should be closely tied to the interests of our stockholders; thus a significant portion of the independent directors' compensation is in equity. When the Compensation Committee last studied independent directors' compensation, it focused on the Company's Peer Group, which is used for assessing executive compensation. The Peer Group consists of companies in the Electronic Equipment and Instruments, Electronic Manufacturing Services, Electronic Components/Household Appliances, and Consumer Electronics industries (see page 39 below for details of the Peer Group). The Compensation Committee also considered recent developments in law, corporate governance, stockholder activism and pay practices regarding board compensation programs generally, compensation trends and best practices, competitive pay levels, stockholder view of independent director compensation practices, effects of recent legal interpretations, and proxy disclosure.

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Based upon this study and the conclusions reached by the Compensation Committee, the independent directors' annual compensation for 2023 was set as follows:

1.A Board membership cash retainer equal to $50,000 ($12,500 paid quarterly);
2.A Lead Independent Director cash retainer equal to $20,000 ($5,000 paid quarterly);
3.A Committee membership cash retainer as follows:
a.Audit Committee membership - $10,000 ($2,500 paid quarterly),
b.Compensation Committee membership - $10,000 ($2,500 paid quarterly),
c.Corporate Governance, Sustainability and Nominating Committee membership - $5,000 ($1,250 paid quarterly),
d.Product Strategy and Innovations Committee membership - $10,000 ($2,500 paid quarterly);
4.A cash retainer for each committee chaired as follows:
a.Audit Committee Chair - $11,250 ($2,812.50 paid quarterly)
b.Compensation Committee Chair - $10,000 ($2,500 paid quarterly),
c.Corporate Governance, Sustainability and Nominating Committee Chair - $6,000 ($1,500 paid quarterly),
d.Product Strategy and Innovations Committee Chair - $10,000 ($2,500 paid quarterly); and
5.An award of 5,000 restricted stock units (which number of shares may be reduced when determined by the Board to be necessary and appropriate), but in no event may the dollar value of such restricted stock unit award exceed $500,000. These restricted stock units vest ratably each quarter during the fiscal year.

In addition to their annual compensation, independent directors may receive a periodic stock option grant when warranted (for example, upon their initial appointment to the Board of Directors) or to compensate them for stellar past performance or to incentivize them to continue as members of our Board of Directors.
Independent Director Compensation Table 
Name of DirectorYear
Fees Earned or Paid in Cash (1)
($)
Stock
Awards (2)
($)
Option
Awards(3)
  ($)
Total
Compensation ($)
William C. Mulligan (4)
202381,00049,275130,275
Satjiv S. Chahil202370,00049,275119,275
Sue Ann R. Hamilton 202375,00049,275124,275
Romulo C. Pontual202363,33349,275112,608
Eric B. Singer (5)
20231,8331,833
Carl E. Vogel (6)
202345,00049,27594,275
Edward K. Zinser202381,25049,275130,525
 
(1)This column represents the cash compensation earned in 2023 for Board and committee service. See the "Additional Information about Fees Earned or Paid in Cash During 2023" table below.
(2)This column represents the grant date fair value of stock awards granted to Class II Directors as part of their compensation. For additional information regarding stock-based compensation and the assumptions used in calculating the grant date fair value, please refer to Note 15 of our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC. See "Additional Information about Independent Director Equity Awards" for further information related to stock awards granted in 2023.
(3)This column represents the grant date fair value of stock options granted to Class II Directors as part of their compensation. For additional information regarding stock-based compensation and the assumptions used in calculating the grant date fair value, please refer to Note 15 of our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC. See "Additional Information about Independent Director Equity Awards" for further information related to stock awards granted in 2023.
(4)Mr. Mulligan earned compensation as the Lead Independent Director for two quarters in 2023.
(5)Mr. Singer was appointed to the Board of Directors as of December 21, 2023. Mr. Singer was paid cash compensation earned in 2023 for Board and Compensation Committee service.
(6)Mr. Vogel was paid cash compensation earned in 2023 for Board and committee service related to the 2023 term prior to his resignation on October 2, 2023.

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Mr. Arling, who is the Company's Chief Executive Officer and the Company's only Class I Director, received no additional compensation for his service as a director during 2023. All directors are reimbursed for travel expenses and other out-of-pocket costs incurred to attend meetings.

Additional Information about Fees Earned or Paid in Cash During 2023

The following table provides additional information about fees earned or paid in cash to independent directors during 2023:
Name of DirectorYear
Annual Retainers (2)
($)
Committee
Chair Fees (1)
($)
Committee
Membership Fees
(3)
($)
Total
($)
William C. Mulligan202360,0006,00015,00081,000
Satjiv S. Chahil202350,00020,00070,000
Sue Ann R. Hamilton 202350,00010,00015,00075,000
Romulo C. Pontual202350,0005,0008,33363,333
Eric B. Singer20231,5283051,833
Carl E. Vogel202337,5007,50045,000
Edward K. Zinser202350,00011,25020,00081,250

(1)Mr. Mulligan, Ms. Hamilton, Mr. Pontual and Mr. Zinser chaired the Corporate Governance, Sustainability and Nominating Committee, Compensation Committee, Product Strategy and Innovations Committee and Audit Committee, respectively, in 2023.
(2)Mr. Mulligan earned compensation as the Lead Independent Director for two quarters of 2023. Mr. Singer was appointed to the Board of Directors as of December 21, 2023, and as such, his annual retainer was prorated from that date through December 31, 2023. Mr. Vogel resigned from the Board on October 2, 2023, as such his annual retainer reflects what was earned through that date.
(3)Mr. Singer was appointed to the Compensation Committee as of December 21, 2023 and, as such, his annual retainer was prorated from that date through December 31, 2023. Mr. Vogel resigned from the Board on October 2, 2023, as such his membership fee reflects what was earned through that date.

Additional Information about Independent Director Equity Awards
The following table provides additional information about equity awards made to independent directors during 2023 and outstanding awards at the end of the year:
 
Name of DirectorRestricted Stock Unit Awards
Granted During 2023
(#)
Option Awards
Granted During 2023
(#)
Grant Date
Fair Value of Stock and Option Awards Granted During 2023 (1)
($)
Stock Awards
Outstanding at Year End
(#)
Option Awards
Outstanding at Year End
(#)
William C. Mulligan 5,00049,2753,750
Satjiv S. Chahil5,00049,2753,750
Sue Ann R. Hamilton (2)
5,00049,2753,75020,000
Romulo C. Pontual (3)
5,00049,2753,75020,000
Eric B. Singer (4)
Carl E. Vogel (5)
5,00049,275
Edward K. Zinser5,00049,2753,750
 
(1)Represents the grant date fair value of stock and option awards granted during 2023. This number is calculated, with respect to restricted stock units, by multiplying the fair market value of our common stock on the date of grant by the number of shares awarded and, with respect to stock options, is based on the assumptions referred to below. For additional information regarding the assumptions used in calculating the grant date fair value, please refer to Note 15 of our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC.
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(2)Outstanding stock options issued to Ms. Hamilton were comprised of 20,000 stock options granted on November 1, 2019 (upon her appointment to the Board of Directors) that vested ratably over a three-year period and will expire on November 1, 2029.
(3)Outstanding stock options issued to Mr. Pontual were comprised of 20,000 stock options granted on July 27, 2022 (upon his appointment to the Board of Directors) that vests ratably over a three-year period and will expire on July 27, 2032.
(4)Mr. Singer was appointed as a Board Member on December 21, 2023 with stock award grant date of January 1, 2024.
(5)Mr. Vogel resigned from the Board on October 2, 2023 and forfeited his remaining 3,750 stock awards.

Director Stock Ownership Guidelines
The Company requires each of our independent, Class II Directors to own at least $250,000 worth of our common stock (with new members having five years from the date they join the Board of Directors to meet the guidelines). These guidelines are designed to align the Class II Directors' long-term financial interests with those of stockholders. As of December 31, 2023, all of our independent directors satisfied the stock ownership guidelines or were on track to meet them within the required timeframe. Mr. Singer, as a new independent director, has five years from the date of joining the Board of Directors of the Company to meet these minimum requirements.

For the purposes of meeting this minimum stock ownership requirement, each time-based restricted stock unit is considered as a share of common stock. Stock options and unvested performance-based restricted stock units are not considered towards meeting this requirement.

The Compensation Committee reviews ownership levels of our Directors annually. The requirements for our independent Directors, as well as the average actual ownership levels at December 31, 2023 of our independent directors, are set forth in the table below.
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Anti-Pledging and Hedging Policies                                
The Company has an anti-pledging policy prohibiting all independent Directors and executive officers of the Company from pledging any such stock as collateral for any loan or holding Company stock in an account that has margin debt. Hedging the Company's stock is generally permitted within prescribed trading windows and otherwise in accordance with the Company's Insider Trading Policy.

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Proposal 2 - Approval, on an Advisory Basis, of Named Executive Officer Compensation

As required by Section 14A of the Exchange Act, the Company seeks approval, on an advisory basis, from its stockholders of the compensation of its named executive officers as described in the Compensation Discussion and Analysis section beginning on page 32 and the Summary Compensation Table and supporting tables and information beginning on page 47. The Company designed its compensation programs to help recruit, retain and motivate key executives to deliver the successful operating, financial, and stockholder value performance expected by its investors. The Compensation Committee strongly believes that executive compensation, both pay opportunities and pay actually realized, should be tied to Company performance. In 2023, over 81% of our CEO's total compensation was in the form of annual and long-term incentives that were tied to the Company's operating results and stock price. Our Non-CEO NEOs, on average, received approximately 65% of their total 2023 compensation pursuant to the same annual and long-term incentives. At last year's Annual Meeting held on June 6, 2023, the say-on-pay advisory vote was overwhelmingly favorable, with approximately 83% of all shares entitled to vote voting to approve our named executive officer compensation program. At the 2023 Annual Meeting, 90% of the votes cast were in favor of holding future advisory votes on executive compensation every year. Accordingly, we will include an advisory vote on named executive officer compensation in our proxy materials every year at least until the next "Say on Frequency" vote, which will be no later than our 2029 Annual Meeting.

In deciding how to vote on this proposal, the Board encourages you to read the Compensation Discussion and Analysis section for a detailed description of our executive compensation philosophy and programs, the compensation decisions the Compensation Committee has made under those programs and the factors considered in making those decisions.

Accordingly, we are asking our stockholders to vote "FOR" the following resolution:

"RESOLVED, that Universal Electronics Inc.'s stockholders hereby approve, on an advisory basis, the compensation of the named executive officers as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the "Compensation Discussion and Analysis," the compensation tables and any related material disclosed in Universal Electronic Inc.'s proxy statement."

This advisory vote on named executive officer compensation is not binding on us. However, the Board and the Compensation Committee value the opinion of our stockholders. To the extent there is a significant vote against this proposal, we will seek to determine the reasons for our stockholders' concerns, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns when making future named executive officer compensation decisions.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL APPROVING, ON AN ADVISORY BASIS, OUR NAMED EXECUTIVE OFFICER COMPENSATION.
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Proposal 3 - Adoption and Approval of the Universal Electronics Inc. Amended and Restated 2018 Equity and Incentive Compensation Plan

At the 2018 Annual Meeting of Stockholders held on June 4, 2018, the stockholders adopted and approved the Company’s 2018 Equity and Incentive Compensation Plan (the “2018 Plan”). At the 2021 Annual Meeting of Stockholders held on June 8, 2021, the stockholders adopted and approved an amendment to the 2018 Plan (the 2018 Plan, as amended by the 2021 amendment, the “Current Plan”). On April 23, 2024, acting on the recommendation of the Compensation Committee, the Board of Directors unanimously adopted and approved, subject to approval by the stockholders at the Annual Meeting, the Universal Electronics Inc. Amended and Restated 2018 Plan (referred to herein as the “Amended and Restated 2018 Plan”), and is submitting the Amended and Restated 2018 Plan to stockholders for their adoption and approval at the Annual Meeting. The Amended and Restated 2018 Plan allows grants of stock options (including options intended to qualify as incentive stock options (“incentive stock options”) under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and options not intended to qualify as incentive stock options (“nonqualified stock options” and together, “options”), stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), other stock-based awards and cash-based awards (collectively, “awards”), any of which may be performance-based. The Board has adopted and approved the Amended and Restated 2018 Plan, subject to approval by the stockholders, to permit the Company to continue to use stock-based compensation to align stockholder and participant interests to the Company.

Summary of Material Changes from the Current Plan

The Amended and Restated 2018 Plan, if approved by the stockholders, would result in the following material changes from the Current Plan:
An increase in the number of shares of common stock reserved and available for issuance in connection with awards under the Amended and Restated 2018 Plan by 1,000,000 shares, which would result in a new aggregate share reserve under the Amended and Restated 2018 Plan of 3,100,000 shares;
A corresponding increase in the maximum number of shares of common stock actually issued or transferred upon the exercise of incentive stock options granted under the Amended and Restated 2018 Plan to 1,000,000 shares;
The addition of a minimum vesting requirement for all awards granted under the Amended and Restated 2018 Plan providing that such awards generally may not vest prior to the first anniversary of the applicable grant date (other than with respect to 5% of the available share reserve and in certain other limited circumstances);
A new limitation on the Compensation Committee’s ability to accelerate the vesting or exercisability of an award (or any portion thereof) unless explicitly provided for under the terms of an award agreement or employment or service agreement with a participant or in the event of a change in control or a participant’s death or disability;
Awards of stock options, stock appreciation rights and cash-based awards under the Amended and Restated 2018 may not provide for dividends or dividend equivalents, and the payment of dividends or dividend equivalents prior to the vesting of any award of restricted stock or restricted stock units or other stock-based award under the Amended and Restated 2018 Plan is prohibited;
The change in control treatment under the Amended and Restated 2018 Plan is revised to provide that, as a default and unless otherwise provided in an award agreement, awards will become fully vested or exercisable immediately prior to such change in control (with applicable performance metrics deemed satisfied at the actual level of performance for awards with stock price goals and the target level of performance for all other goals) instead of at the discretion of the Compensation Committee;
If a participant elects to give up the right to receive compensation in exchange for shares based on fair market value, such shares will be available for future use under the Amended and Restated 2018 Plan;
The definition of “Fair Market Value” under the Amended and Restated 2018 Plan was updated to mean the average of the high and low sales price of the common stock on a given date or such other amount determined by the Compensation Committee in good faith to be the fair market value;
The expiration date of the Amended and Restated 2018 Plan will be 10 years from the date on which such plan is adopted by both the Board and Company’s stockholders; and
The Amended and Restated 2018 Plan also contains certain other conforming, clarifying or immaterial changes to the terms of the Current Plan.

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Why You Should Vote For the Amended and Restated 2018 Plan

The Board recommends that the Company’s stockholders approve the Amended and Restated 2018 Plan because it believes the Company’s ability to grant equity-based awards continues to be crucial in allowing the Company to effectively compete for, retain and appropriately motivate and reward key talent. It is in the long-term interest of both the Company and its stockholders to strengthen the Company’s ability to attract, motivate and retain employees, officers, and non-employee directors, consultants, and advisors and to provide additional incentive for those persons through stock ownership and other incentives to improve financial performance, increase profits and strengthen the mutuality of interest between those persons and the Company’s stockholders. The Board believes the Company’s interests are best advanced by stimulating the efforts of employees, officers, and non-employee directors, consultants, and advisors, in each case who are selected to be participants, by heightening the desire of such persons to continue working toward and contributing to the success and progress of the Company.

Promotion of Good Corporate Governance Practices

The Board believes the use of stock-based incentive awards promotes best practices in corporate governance by maximizing stockholder value. By providing participants in the Amended and Restated 2018 Plan with a stake in the Company’s success, the interests of the participants are aligned with those of the Company’s stockholders. Specific features of the Amended and Restated 2018 Plan that are consistent with good corporate governance practices include, but are not limited to:
Options and SARs may not be granted with exercise or strike prices lower than the fair market value of the underlying shares on the grant date, except with respect to substitute awards as described in the Amended and Restated 2018 Plan;
There generally may be no repricing of options or other awards without stockholder approval, including no cancellation and replacement of any outstanding option or SAR with a new option or SAR or another award or cash or amendment or modification that reduces the exercise price of an option or strike price of a SAR;
“Liberal” share recycling is prohibited – meaning that shares used to pay the exercise price or withholding taxes related to an outstanding award will not be recycled back into the Amended and Restated 2018 Plan for future grants;
The Amended and Restated 2018 Plan does not contain a liberal change in control definition;
Options and stock awards generally may not be transferred except by will or the laws of descent and distribution or, if approved by the Compensation Committee, to certain family members, trusts, partnerships or limited liability companies or other transferees as approved by the Board or the Compensation Committee or provided in the award agreement evidencing the grant of the award; and
The Compensation Committee may provide for the recoupment or forfeiture of any awards and corresponding gains if a participant has engaged in any “detrimental activity” as defined in the Amended and Restated 2018 Plan. Awards under the Amended and Restated 2018 Plan are also subject to the Company’s recently adopted Compensation and Recoupment Policy, described in the Compensation Discussion and Analysis section of this proxy statement.

Key Data

The following table includes information regarding (i) all of the Company’s outstanding equity awards (consisting only of options, restricted stock unit awards and performance stock awards) and (ii) shares available for future awards under the Company’s Current Plan, each as of April 1, 2024 (and without giving effect to the additional 1,000,000 shares requested in connection with the approval of the Amended and Restated 2018 Plan):
Total shares underlying all outstanding options691,385
Weighted average exercise price of outstanding options$34.50
Weighted average remaining contractual life of outstanding options4.25 years
Total shares underlying all outstanding and unvested restricted stock awards580,049
Adjusted shares available for future awards that may be issued under the 2018 Plan (1)
10,835

(1)On January 25, 2024, the Compensation Committee approved the issuance of 215,000 shares to our non-executive employee group which is expected to be granted prior to the Annual Meeting. As a result, the 225,835 shares available for future awards that may be issued under the 2018 Plan as of April 1, 2024 has been reduced to reflect this future grant.

Overhang. The total shares of Common Stock subject to outstanding awards as of April 1, 2024 (1,271,434 shares), plus the shares of Common Stock currently available for issuance under the Current Plan (225,835 shares), represent a total current overhang of 1,497,269 shares (11.6%), and together with the additional 1,000,000 shares requested under the Amended and
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Restated 2018 Plan, would represent a total overhang percentage of 19.3% (in other words, the maximum potential straight dilution of our stockholders represented by the Amended and Restated 2018 Plan).

Burn Rate. In 2021, 2022 and 2023, we granted awards under the Current Plan covering 236,159, 400,960 and 575,580 shares of Common Stock, respectively. Based on our basic weighted average shares of Common Stock outstanding for those three years of 13,465,000, 12,703,000, and 12,855,000, respectively, for the three-year period 2021-2023, our average yearly burn rate under the Current Plan, not taking into account forfeitures, was 3.1% (our individual years’ burn rates were 1.8% for 2021, 3.2% for 2022 and 4.5% for 2023).

Based on the closing price of a share of the Company’s Common Stock on April 1, 2024 of $10.02, the aggregate market value as of April 1, 2024 of the new 1,000,000 shares of Common Stock requested under the Amended and Restated 2018 Plan was $10,020,000.

Plan Summary

The following summary of the material terms of the Amended and Restated 2018 Plan are qualified in their entirety by reference to the complete statement of the Amended and Restated 2018 Plan, which is set forth in Appendix B to this Proxy Statement. The Amended and Restated 2018 Plan will become effective on June 11, 2024, after obtaining approval by the Company’s stockholders.

Purpose. The purpose of the Amended and Restated 2018 Plan is to continue to provide a means through which the Company may attract and retain key personnel and to provide a means whereby non-employee directors, officers, employees, consultants and advisors of the Company and its subsidiaries (the “Company Group”) can acquire and maintain an equity interest in the Company, or be paid incentive compensation, which may (but need not) be measured by reference to the value of the shares of the Company’s common stock, par value $0.01 per share (“Common Stock”).

Eligibility. Non-employee directors, executive and non-executive officers, employees, consultants and advisors of the Company Group will be eligible for awards; provided, that, incentive stock options may be granted only to employees. A written agreement between the Company and each participant will evidence the terms of each award granted under the Amended and Restated 2018 Plan other than any cash-based award. As of April 1, 2024, there were 6 non-employee directors, 6 executive officers, 29 non-executive officers, 4,422 other employees, no consultants and no other advisors eligible to receive awards. The basis for participation in the Amended and Restated 2018 Plan is being eligible and selected by the administrator to receive a grant thereunder.

Number of Shares Authorized; Limitations. Pursuant to the Amended and Restated 2018 Plan, the Company has reserved an aggregate of three million one hundred thousand 3,100,000 shares of Common Stock for issuance of awards to be granted thereunder (all of which may be issued as Incentive Stock Options), plus the number of shares of Common Stock underlying an award granted under any Prior Plan (as defined in the Amended and Restated 2018 Plan) that expires, terminates or is canceled or forfeited for any reason or settled in cash or is unearned under the terms of the applicable Prior Plan. This is an increase of 1,000,000 shares over the amount authorized under the Current Plan. Each year, each participant who is a non-employee director will be granted an award covering the lesser of (i) 5,000 shares of Common Stock (which number of shares may be reduced when determined by the Board to be necessary and appropriate) or (ii) shares of Common Stock with an aggregate maximum value at the date of grant of $500,000 (the “Annual Award”). In addition to the Annual Award, as an inducement to commence service with the Company as a non-employee director or, from time to time, to reward extraordinary service rendered by an existing non-employee director, a participant who is or becomes a non-employee director may be granted awards of options covering up to 20,000 shares of Common Stock.

If any award granted under the Amended and Restated 2018 Plan expires unexercised, is canceled, forfeited, settled in cash or unearned, shares of our Common Stock subject to such award will again be made available for future grants. Use of shares of Common Stock to pay the required exercise price or tax obligations, or shares not issued in connection with settlement of an option or SAR, reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of an option, or that are used or withheld to satisfy tax obligations of the participant will not be available again for other awards under the Amended and Restated 2018 Plan. If a participant elects to give up the right to receive compensation in exchange for shares of Common Stock based on fair market value, such shares of Common Stock will be available again for awards under the Amended and Restated 2018 Plan. In general, any fractional shares due on exercise or payment in respect of an award will be settled in cash.

In general, awards granted under the Amended and Restated 2018 Plan (other than cash-based awards) will vest no earlier than the first anniversary of the applicable date of grant; provided, that the following awards shall not be subject to such
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minimum vesting requirement: any (i) awards granted in connection with awards that are assumed, converted or substituted as provided under the Amended and Restated 2018 Plan; (ii) shares of Common Stock delivered in lieu of fully vested cash obligations; (iii) awards to non-employee directors that vest on the earlier of the one-year anniversary of the applicable date of grant and the next annual meeting of the shareholders which is at least 50 weeks after the immediately preceding year’s annual meeting of the shareholders; and (iv) additional awards the Compensation Committee may grant, up to a maximum of five percent (5%) of the available share reserve authorized for issuance. This minimum vesting provision, however, shall not preclude the Compensation Committee from (x) providing for continued vesting or accelerated vesting for any award upon certain events, including, without limitation, in connection with or following a participant’s death, disability, or a change in control, or (y) exercising its authority to amend any terms of, or alter, suspend, discontinue, cancel or terminate any award as provided in the Amended and Restated 2018 Plan.

Following the grant date of an award, the Compensation Committee shall not accelerate the vesting or exercisability of all or any portion of an award, unless (i) explicitly provided under the terms of an award agreement, (ii) explicitly provided under the terms of an employment or service agreement with a participant, or (iii) in connection with a change in control or a participant’s death or disability.

Administration. The Compensation Committee will administer the Amended and Restated 2018 Plan. Among other responsibilities, the Compensation Committee will select participants and determine the type of awards to be granted to participants, the number of shares of Common Stock to be covered by awards and the terms and conditions of awards, interpret the Amended and Restated 2018 Plan and awards granted thereunder, establish, amend, suspend or waive rules and may accelerate the vesting or exercisability of, or the lapse of restrictions on, awards, and make any other determination and take any other action that it deems necessary or desirable to administer the Amended and Restated 2018 Plan.

Amendment or Termination. Unless earlier terminated, the expiration date of the Amended and Restated 2018 Plan will be the tenth (10th) anniversary of the date such plan is approved by both the Board and the Company’s shareholders; provided, however, that such expiration shall not affect awards then outstanding, and the terms and conditions of the Amended and Restated 2018 Plan shall continue to apply to all such awards. The Board may amend or terminate the Amended and Restated 2018 Plan at any time; provided, that, no such amendment or termination shall be made without stockholder approval if such approval is necessary to comply with any tax or regulatory requirement applicable to the Amended and Restated 2018 Plan and that any such amendment or termination that would materially and adversely affect the rights of any participant or any holder or beneficiary of any award granted will not to that extent be effective without the consent of the affected participant, holder or beneficiary. The Compensation Committee may, to the extent consistent with the terms of any applicable award agreement, amend or terminate, any award granted under the Amended and Restated 2018 Plan or the associated award agreement; provided, that, any such amendment or termination that would materially and adversely affect the rights of any participant with respect to any award granted under the Amended and Restated 2018 Plan will not to that extent be effective without the consent of the affected participant and that, in general, without stockholder approval to the extent required by the rules of any applicable national securities exchange or inter-dealer quotation system on which the Common Stock is listed or quoted, (i) no amendment or modification may reduce the exercise price of any option or the strike price of any SAR, (ii) the Compensation Committee may not cancel any outstanding option or SAR and replace it with a new option or SAR, another award or cash and (iii) the Compensation Committee may not take any other action that is considered a “repricing” for purposes of the stockholder approval rules of the applicable securities exchange or inter-dealer quotation system.

Options. The Compensation Committee may, in its discretion, grant incentive stock options and nonqualified stock options to participants. All options granted under the Amended and Restated 2018 Plan will be nonqualified stock options unless the award agreement states that the option is an incentive stock option. Non-employee directors, officers, employees, consultants and advisors may be granted nonqualified stock options, but only employees may be granted incentive stock options. The Compensation Committee will determine the exercise price of options granted under the Amended and Restated 2018 Plan. Subject to certain exceptions, the exercise price of an incentive or nonqualified stock option shall be at least 100% (and in the case of an incentive stock option granted to a more than 10% stockholder, 110%) of the fair market value of the Common Stock subject to the option on the date the option is granted. The Compensation Committee will determine, in its sole discretion, the terms of each option (the “option period”). Options may not be exercisable for more than ten years from the date they are granted (five years in the case of an incentive stock option granted to a more than 10% stockholder). Options may not provide for any dividends or dividend equivalents thereon.

Acceptable consideration for the purchase of the Common Stock issued upon the exercise of an option and the payment of any taxes due upon any such exercise will include cash, check, cash equivalents and/or shares of the Common Stock (or attestation thereof), and the Compensation Committee may permit other forms of consideration, including (1) a broker-assisted cashless exercise or (2) a reduction of the number of shares deliverable upon exercise. Any fractional amounts will be settled in cash.
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Stock Appreciation Rights/SARs. The Compensation Committee may, in its discretion, grant SARs to participants. Generally, SARs permit a participant to exercise the right and receive a payment equal to the value of the Common Stock’s appreciation over a period of time in excess of the fair market value of a share of the Common Stock on the date of grant of the SAR. The Company will pay such amount in cash, in shares of Common Stock valued at fair market value at the time of such payment, or any combination, as determined by the Compensation Committee. Any fractional shares of Common Stock shall be settled in cash. SARs may be granted alone or in tandem with options and may be settled in cash, stock or a combination thereof. If a SAR is granted in tandem with an option, the SAR will become exercisable and will expire according to the same vesting schedule and expiration provisions as such option. A SAR granted independent of an option will become exercisable and will expire in such manner and on such date(s) as determined by the Compensation Committee, not to exceed ten years (the “SAR period”). The Compensation Committee will determine, in its sole discretion, the terms of each SAR. SARs may not provide for any dividends or dividend equivalents thereon.

Restricted Stock and Restricted Stock Unit Awards. The Compensation Committee may, in its discretion, grant restricted stock and/or restricted stock units (a hypothetical account that is paid in the form of shares of Common Stock or cash or a combination of both) to participants. The Compensation Committee will determine, in its sole discretion, the terms of each restricted stock and restricted stock unit award. Subject to the terms of the award, the recipients of restricted stock generally will have the rights and privileges of a stockholder with respect to the restricted stock, including the right to vote the stock. Dividends, if any, that may have been withheld by the Compensation Committee and attributable to any particular share of restricted stock or restricted stock units will be distributed to the participant in cash or shares of Common Stock, contingent upon the release of the restrictions applicable to such award. If a restricted stock or restricted stock unit award is forfeited, the participant will have no right to such dividends. For the avoidance of doubt, any dividends or other distributions on restricted stock or restricted stock units will be deferred until, and paid contingent upon, the vesting of such restricted stock or restricted stock units.

Upon the grant of a restricted stock award, the shares underlying the award will be registered in the name of the participant. Unless otherwise provided by the Compensation Committee in an award agreement or otherwise, restricted stock units will generally be settled in shares of Common Stock. However, the Compensation Committee will have discretion to pay restricted stock units, upon settlement, in cash, shares of Common Stock or a combination thereof. The Compensation Committee may also elect to defer the delivery of such shares of Common Stock or cash or combination of the two.

Other Stock-Based Awards. The Compensation Committee, in its discretion, may award unrestricted shares of Common Stock, or other awards denominated in Common Stock, to participants either alone or in tandem with other awards. The Compensation Committee will determine, in its sole discretion, the terms of each other stock-based award not inconsistent with the terms of the Amended and Restated Plan. The Compensation Committee may authorize the payment of dividend equivalents on other stock-based awards on a deferred and contingent basis, but any such dividend equivalents or other distributions on shares of Common Stock underlying other stock-based awards will be deferred until, and paid contingent upon, the vesting of such awards.

Other Cash-Based Awards. The Compensation Committee may award other cash-based awards that are denominated or payable in cash to participants, either alone or in tandem with other awards. The Compensation Committee will determine, in its sole discretion, the terms of each other cash-based award not inconsistent with the terms of the Amended and Restated Plan. Cash-based awards granted under the Amended and Restated 2018 Plan may not provide for any dividends or dividend equivalents.

Adjustments in Capitalization. In general, in the event of (1) any dividend (other than regular cash dividends) or other distribution, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, combination, repurchase or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to acquire shares of Common Stock of the Company or other securities of the Company or other similar corporate transaction or event (including, without limitation, a “change in control” (as defined in the Amended and Restated 2018 Plan)) that affects the shares of the Common Stock, (2) unusual or nonrecurring events (including, without limitation, a “change in control”) affecting any member of the Company Group or the financial statements of any member of the Company Group, or (3) changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, necessary or appropriate equitable adjustments (as determined by the Compensation Committee) will be made, including to the number of shares of Common Stock or other securities of the Company (or number and kind of other securities or other property) that may be delivered in respect of awards or with respect to which awards may be granted under the Amended and Restated 2018 Plan or any other limit applicable under the Amended and Restated 2018 Plan with respect to the number of awards which may be granted under the Amended and Restated 2018 Plan, and the terms of any outstanding award, including the number of shares of Common Stock or other securities of the
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Company (or number and kind of other securities or other property) subject to outstanding awards or to which outstanding awards relate, the exercise or strike price with respect to any award or any applicable performance measures. In addition, the Compensation Committee may provide for a substitution or assumption of awards, the acceleration of the exercisability of, lapse of restrictions on, or termination of, awards or provide for a period of time for exercise prior to the occurrence of such event or cancel any award and cause a payment (in cash, shares of Common Stock, other securities, other property or any combination thereof) to be made to the award holders equal to the value of such awards, if any, as determined by the Compensation Committee.

Change in Control. Except to the extent otherwise provided in an award agreement, in the event of a “change in control,” the Compensation Committee shall take the following actions with respect to all outstanding awards: (1) all options and SARs shall become immediately exercisable as of immediately prior to the “change in control,” (2) any awards of restricted stock, restricted stock units, other stock-based awards and cash-based awards shall become vested immediately prior to the “change in control,” (3) any performance criteria will be deemed satisfied at the actual level of performance for stock price goals and at the target level of performance for all other performance goals, and (4) any deferred awards shall be settled as soon as practicable, to the extent permitted under Section 409A of the Code.

Section 409A. The Amended and Restated 2018 Plan and the awards that may be granted thereunder are intended to comply with or be exempt from Section 409A of the Code and shall be administered, construed and interpreted in accordance with such intent; provided, that, neither the Company, any affiliates, the Board, the Compensation Committee nor any other party guarantees such compliance or exemption and no such party shall have any liability to any participant if an award intended to comply with or be exempt from Section 409A of the Code does not comply with or is not exempt from Section 409A of the Code as intended.

Transferability. Awards will generally not be transferable, but all awards will be transferable upon the participant’s death by will or the laws of descent and distribution. The Compensation Committee may permit awards, other than incentive stock options, to be transferred to the participant’s family members, a trust solely for the benefit of the participant or his or her family members, a partnership or limited liability company whose only partners or stockholders are the participant or his or her family members, or any other transferee as may be approved by the Board or the Compensation Committee. Designating a beneficiary will not be considered a transfer.

Withholding. A participant shall be required to pay to any member of the Company Group, and any member of the Company Group shall have the right and is hereby authorized to withhold, from any cash or shares of Common Stock deliverable under any award or from any compensation or other amounts owed to a participant, the amount (in cash, Common Stock, other securities or other property) of any required withholding or any other applicable taxes in respect of an award, its exercise, or any payment or transfer under an award and to take such other action as may be necessary in the opinion of the Compensation Committee or the Company to satisfy all obligations for the payment of such withholding and taxes. The Compensation Committee may, in its sole discretion, permit a participant to satisfy, in whole or in part, the foregoing withholding liability by (i) the delivery of shares of Common Stock owned by the participant or (ii) having the Company withhold from the number of shares of Common Stock otherwise issuable or deliverable pursuant to the exercise or settlement of the award a number of shares with a fair market value equal to such withholding liability.

Detrimental Activity; Clawback. If a participant engages in any “detrimental activity” pursuant to Section 15(v) of the Amended and Restated 2018 Plan as determined by the Compensation Committee, the Compensation Committee may (i) cancel any or all of the participant’s outstanding awards or (ii) provide that the participant will forfeit and promptly repay any gain realized on vesting or exercise of an award. Detrimental activity generally includes the participant’s (1) unauthorized use, disclosure or dissemination of confidential information or trade secrets pertaining to the business of any member of the Company Group; (2) engaging in activity that would be grounds to terminate the participant’s employment or service with any member of the Company Group for cause; or (3) breach any restrictive covenant by which such participant is bound. Awards under the Amended and Restated 2018 Plan shall also be subject to recoupment to the extent necessary to comply with the Company’s Compensation Recoupment Policy, as described in the Compensation Discussion and Analysis section of this proxy statement, and any other applicable law.

No Right to Continued Employment. The Amended and Restated 2018 Plan does not give any participant any right to be retained in the employ or service of any member of the Company Group. Any member of the Company Group may at any time dismiss a participant from employment or discontinue any consulting relationship, free from any liability or any claim under the Amended and Restated 2018 Plan, unless otherwise expressly provided in the Amended and Restated 2018 Plan or any award agreement.

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Government and Other Regulations. The obligation of the Company to settle awards in Common Stock or other consideration is subject to all applicable laws, rules, and regulations, and to such approvals by governmental agencies as may be required. The Company is under no obligation to offer to sell or to sell, and shall be prohibited from offering to sell or selling, any shares of Common Stock pursuant to an award unless such shares have been properly registered for sale pursuant to the Securities Act of 1933, as amended, with the Securities and Exchange Commission or unless the Company has received an opinion of counsel, satisfactory to the Company, that such shares may be offered or sold without such registration pursuant to an available exemption therefrom and the terms and conditions of such exemption have been fully complied with.

Federal Income Tax Treatment

The following is a general summary of certain U.S. federal income tax consequences of certain types of awards under the Amended and Restated 2018 Plan. The summary does not describe federal taxes other than income taxes (such as Medicare and Social Security taxes), and does not explain the state and local or any foreign tax treatment. The state and local tax treatment may vary from the U.S. federal income tax treatment. The following is limited to the U.S. federal income tax consequences to individuals who are citizens or residents of the United States. The law is technical and complex, and the summary below is general in nature. The following is not considered as tax advice to any persons who may be participants in the Amended and Restated 2018 Plan and participants are advised to consult their tax counsel as to the tax consequences of a particular transaction under the Amended and Restated 2018 Plan.

Incentive Stock Options. A participant who is granted an incentive stock option will not have federal income tax liability upon the grant of an incentive stock option and will not recognize regular taxable income when the incentive stock option is exercised. However, the participant will recognize alternative minimum taxable income equal to the excess of the fair market value of the purchased shares at the time of exercise over the exercise price paid for those shares, if the participant is subject to the alternative minimum tax in the taxable year of the exercise. A participant generally will recognize income in the year in which the participant disposes of the shares purchased under such incentive stock option. If the participant makes a “qualifying disposition,” the participant will recognize a long-term capital gain equal to the excess of (a) the amount realized upon the sale or disposition over (b) the exercise price paid for the shares and the Company cannot take an income tax deduction with respect to those shares. A qualifying disposition occurs when the participant’s sale or other disposition of the shares takes place (a) more than two (2) years after the grant date of the incentive stock option and (b) more than one (1) year after the date the option was exercised for the particular shares involved in the disposition. In contrast, a disqualifying disposition is any sale or other disposition made before both of these minimum holding periods are satisfied. The participant is required to notify the Company in writing immediately after the date the participant makes a disqualifying disposition. Normally, when shares purchased under an incentive stock option are subject to a disqualifying disposition, the participant will recognize ordinary income at the time of the disposition in an amount equal to the excess (if any) of (a) the fair market value of the shares on the exercise date over (b) the exercise price paid for those shares and the Company is entitled to an income tax deduction equal to the amount of ordinary income that the participant recognizes in connection with the disposition.

Nonqualified Stock Options. A participant who is granted a nonqualified stock option will not have federal income tax liability upon the grant of the nonqualified stock option, but normally will recognize ordinary income in the year in which the participant exercises the option in an amount equal to the excess of (a) the fair market value of the purchased shares on the exercise date over (b) the exercise price paid for those shares and the Company will be entitled to an income tax deduction equal to the amount of ordinary income that the participant recognizes. A participant will later also recognize a capital gain to the extent that the amount realized from the sale of the shares acquired pursuant to the exercise of the nonqualified stock option exceeds the participant’s basis in the shares.

Stock Appreciation Rights/SARs. A participant who is granted a SAR will not have federal income tax liability upon the grant of the SAR, but normally will recognize ordinary income in the year in which the participant exercises the SAR in an amount equal to the amount of the cash or the value of the stock that is transferred to the participant upon exercise of the SAR and the Company will be entitled to an income tax deduction equal to the amount of ordinary income that the participant recognizes.

Restricted Stock Awards. Generally, a participant who is granted an award of restricted stock will recognize taxable income when the substantial risk of forfeiture of the shares lapses, i.e., at the time of “vesting.” The taxable income will be equal to the fair market value of the shares of restricted stock when they vest and the Company will be entitled to an income tax deduction equal to the amount of ordinary income that the participant recognizes. The participant may elect under Section 83(b) of the Code to include as ordinary income in the year of the award an amount equal to the fair market value of the shares on the transfer date. If the participant makes the Section 83(b) election, the participant will not recognize any additional income when the shares vest. Any appreciation in the value of the shares of restricted stock after the award is not taxed as compensation but
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instead is taxed as a capital gain when the restricted shares are sold or transferred. If the participant makes a Section 83(b) election and the restricted stock is later forfeited, the participant is not entitled to a tax deduction or a refund of the tax already paid. The Section 83(b) election must be filed with the Internal Revenue Service within thirty (30) days after the shares are awarded to the participant.

Restricted Stock Units/RSUs; Other Awards. A participant who is granted an RSU generally will not recognize income when the RSU is granted or vested, but only when the RSU is settled. The participant will recognize ordinary income equal to the amount of the cash or the value of the stock that the participant receives on settlement and the Company will be entitled to an income tax deduction equal to the amount of ordinary income that the participant recognizes. Other stock-based or cash awards will generally be subject to the same tax treatment as RSUs, described above, depending on the terms of the awards.

Company Deduction and Section 162(m). Section 162(m) of the Code generally limits a company’s ability to deduct compensation paid in excess of $1 million during any fiscal year to certain “covered employees” unless certain exceptions are met, such as, historically, the exception for qualified performance-based compensation. Pursuant to the Tax Cuts and Jobs Act of 2017 as of January 1, 2018, the exception under Code Section 162(m) for qualified performance-based compensation was eliminated and the Company no longer intends to award compensation that qualifies for this exception.

New Plan Benefits

Other than as described below with respect to non-employee director awards to be granted in 2024, the benefits that will be awarded or paid under the Amended and Restated 2018 Plan are not currently determinable. Such awards are within the discretion of the Compensation Committee, and the Compensation Committee has not determined future awards or who might receive them. Based upon past grants under the Company’s previous plans, including the Current Plan, it is the Company's expectation that the Amended and Restated 2018 Plan should be sufficient to cover benefits awarded or paid to participants for the next two to three years. Information about awards granted in prior fiscal years under the Company’s previous plans to the Company’s named executive officers may be found in the Compensation Discussion and Analysis section of this proxy statement and in the Existing Plan Benefits table below.
Amended and Restated 2018 Plan
Name and PositionDollar Value
($)
Number of Units
(#)
Paul D. Arling (Chairman & Chief Executive Officer)
Bryan M. Hackworth (Chief Financial Officer & Senior Vice President)
Ramzi S. Ammari (Senior Vice President, Corporate Planning and Strategy)
Richard K. Carnifax (Senior Vice President, Global Operations)
David Chong (Executive Vice President, Global Sales)
Executive Officer Group
Non-Executive Director Group (1)
300,60030,000
Non-Executive Employee Group
(1)The “Dollar Value” represents the estimated aggregate value of the awards for 6 non-employee directors listed in the “Number of Units” column (using an assumed value of $10.02 per share, which was the closing price of the Company’s common stock on April 1, 2024). Under the terms of the Amended and Restated 2018 Plan, the dollar amount of the annual director awards is capped at $500,000 per director.

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Existing Plan Benefits

As of April 1, 2024, the following aggregate numbers of option and RSU grants (not taking into account forfeitures) have been made under the Current Plan to the persons and categories of persons identified below:
Name and PositionNumber of Shares Subject to Stock Options Granted
(#)
Number of RSUs Granted
(#) (1)
Paul D. Arling (Chairman & Chief Executive Officer)366,235 223,340 
Bryan M. Hackworth (Chief Financial Officer & Senior Vice President)115,760 103,464 
Ramzi S. Ammari (Senior Vice President, Corporate Planning and Strategy)97,280 88,065 
Richard K. Carnifax (Senior Vice President, Global Operations)18,465 46,861 
David Chong (Executive Vice President, Global Sales)19,455 61,050 
Executive Officer Group 675,215 571,923 
Non-Executive Director Group40,000 190,625 
Non-Executive Employee Group19,455 770,432 
Each nominee for election as a director:
Paul D. Arling366,235 223,340 
William C. Mulligan— 30,000 
Satjiv S. Chahil— 30,000 
Sue Ann R. Hamilton20,000 23,333 
Romulo C. Pontual20,000 9,639 
Eric B. Singer— 2,653 
Edward K. Zinser— 30,000 
(1)Includes performance-based RSUs at target level.

Registration with the SEC

We intend to file a Registration Statement on Form S-8 relating to the issuance of the additional shares of Common Stock under the Amended and Restated 2018 Plan with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, as soon as practicable after approval of the Amended and Restated 2018 Plan by our stockholders.

Vote Required and Board Recommendation

Amendment to our 2018 Equity and Incentive Compensation Plan requires the affirmative vote of the majority of the shares present or represented by proxy at the Annual Meeting and entitled to vote on this proposal. Abstentions will count as present or represented by proxy and will have the effect of a vote against this proposal. Broker non-votes are not considered entitled to vote and, as a result, broker non-votes will have no effect on this proposal.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL 3 RELATING TO THE ADOPTION AND APPROVAL OF THE AMENDED AND RESTATED 2018 EQUITY AND INCENTIVE COMPENSATION PLAN
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Equity Compensation Plan Information (as of December 31, 2023)
(a)(b)(c)
Plan CategoryNumber of
Securities to be
issued upon
exercise of
outstanding
options,
warrants and
rights
Weighted-average
exercise price of
outstanding
options, warrants
and rights
Number of
securities
remaining available
for future issuance
under equity
compensation plans
(excluding
securities reflected
in column (a))
Equity compensation plans approved by security holders901,457 $38.78 336,566 
Equity compensation plans not approved by security holders— — — 
Total901,457 $38.78 336,566 
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COMPENSATION DISCUSSION AND ANALYSIS                            

This section provides a description of our executive compensation philosophy, programs and practices, the compensation decisions the Compensation Committee made under those programs and the factors considered in making those decisions. This Compensation Discussion and Analysis focuses on the following executives who were our named executive officers ("NEOs") in 2023:
NameTitle
Paul D. ArlingChairman and Chief Executive Officer
Bryan M. HackworthChief Financial Officer and Senior Vice President
Ramzi S. AmmariSenior Vice President, Corporate Planning and Strategy
Richard K. CarnifaxSenior Vice President, Global Operations
David ChongExecutive Vice President, Global Sales

Pay for Performance                                                

Our compensation programs and practices are designed to help recruit, retain and motivate key executives so that they may deliver the successful operating, financial and stockholder value performance expected by our investors.

Performance-Based Compensation

The Compensation Committee believes that our compensation program and practices are consistent with industry standards and the competitive market in which we operate and is generally aimed at supporting achievement of our operating success and performance for stockholders over the years. The program emphasizes annual and long-term performance-based incentives so that the vast majority of our named executive officers' total compensation is tied to the Company's financial or long-term stock price performance.

In 2023, over 81% of our CEO's total target compensation was in the form of annual and long-term incentives that were tied to the Company's operating results or stock price. Our other named executive officers, on average, received approximately 65% of their total 2023 target compensation in the same annual and long-term incentives.
1141
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1143
The Compensation Committee strongly believes that executive compensation pay opportunities and pay actually realized should be tied to Company performance on an absolute basis, relative to similar technology companies and on competitive pay standards. In addition, realized executive pay should be tied to performance in two key ways: (1) the Company's operating and financial performance and (2) the return to stockholders over time.

Operating Performance

Historically, we have operated in a highly competitive environment. This past year was no different. It was also a year in which we continued to be impacted by supply chain and transportation issues and reductions in sales to our customers. At the same time, we continued to invest in new products and technologies that we believe will drive improved results in key financial metrics that correlate with long-term stockholder value.

(in millions, except per share amounts and percentages)20192020202120222023
Net Sales$753.5 $614.7 $601.6 $542.8 $420.5 
Net Income (Loss)$3.6 $38.6 $5.3 $0.4 $(98.2)
Diluted Earnings (Loss) per Share$0.26 $2.72 $0.39 $0.03 $(7.64)
Cash Flow from Operations$85.3 $73.4 $40.3 $10.9 $25.2 
Gross Margin %22.6 %28.7 %28.8 %28.1 %23.2 %
Operating Margin %2.0 %6.1 %3.9 %2.7 %(20.3)%
Return on Average Assets0.6 %7.2 %1.0 %0.1 %(22.8)%
Closing Y/E Stock Price$52.26 $52.46 $40.75 $20.81 $9.39 

Over the five-year period from 2019 to 2023, the Company has generated $235.1 million in cash flow from operations.
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Key strategic initiatives and related achievements for 2023 are listed below:

Strategic InitiativesRelated Achievements
Increase new product development efforts in high-growth HVAC OEM channel to grow our market penetration with existing customers and acquire new customers with the goal of achieving market share leadership in climate control channel within two years.More than ten customer-initiated climate control products currently in development with major OEM brands as well as integration partners.

Product roadmap expansion to include four new product extensions and two new accessories, including wireless bridges with built-in indoor Air Quality (iAQ) monitoring and air purifier control (IR).
Broaden our home control and home automation product solutions with the aim of acquiring new customers that represent market share leaders in their respective channels and regions.Developed and launched new smart home wireless control solutions for security, motorized shades and smart lighting applications.

Introduced four white-label, smart home hubs with integrated wireless protocol technologies including Matter® for channel specific use case. Hubs are compatible with the UEI Aspen line of sensors including motion, temperature and door/window sensors.
Expand our software and service platform, QuickSet, to deliver a complete smart entertainment and smart home managed service platform.Released 6th generation Cloud software that blends smart home with video entertainment use cases to drive increased user engagement and personalization leveraging service and content discovery including whole home Audio-Video casting across any device in the home.
Invest in creating sustainable technology solutions that offer product differentiation across our global product portfolio.Launched Eterna and Eterna XLR remote control platforms that rely on built-in energy harvesting capabilities and introduced an innovative batteryless remote control that utilizes a hybrid supercapacitor for energy storage.
Explore and expand product offerings in our core subscription broadcasting channel beyond traditional entertainment remote controls.Expanded our software suite to include a Matter-certified, Smart Home dashboard that can run on any entertainment platform in the home; a Virtual Agent for device on-boarding and troubleshooting and a technical support embedded software for remote access and control and simple consumer hand-off.
Seek acquisitions or strategic partners that complement and strengthen our existing business.Our focus this year has been on organic growth through internal new product and technology developments. This strategy may be re-visited when funds are available to pursue inorganic growth opportunities.
Expedite our long-term factory planning strategy to optimize our manufacturing footprint and reduce our manufacturing concentration in the People's Republic of China.We closed our southwestern China factory in September after having gained confidence our newly formed Vietnam facility was operating at the required level of efficiency.

Progress to-date at the Vietnam factory has met or exceeded our expectations, and we expect additional operational efficiencies to be achieved as it continues to scale.

Return to Stockholders

The following graph and table compares the cumulative total stockholder return ("TSR") with respect to our common stock versus the cumulative total return of the Standard & Poor's Small Cap 600 (the "S&P Small Cap 600"), the NASDAQ Composite Index and the Peer Group Index shown below for the five-year period ended December 31, 2023. The comparison assumes that $100 was invested on December 31, 2018 in each of our common stock, S&P Small Cap 600, the NASDAQ Composite Index and the Peer Group Index and that all dividends were reinvested. We have not paid any dividends and, therefore, our cumulative total return calculation is based solely upon stock price appreciation and not upon reinvestment of dividends. The graph and table depicts year-end values based on actual market value increases and decreases relative to the initial investment of $100, based on information provided for each calendar year by the NASDAQ Stock Market and the New York Stock Exchange.
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3026
12/31/201812/31/201912/31/202012/31/202112/31/202212/31/2023
Universal Electronics Inc.$100 $207 $208 $161 $82 $37 
S&P Small Cap 600 Index$100 $121 $132 $166 $137 $156 
NASDAQ Composite Index$100 $135 $194 $236 $158 $226 
Peer Group Index (1)
$100 $121 $200 $186 $139 $186 

(1) Companies in the Peer Group Index are as follows: Dolby Laboratories, Inc.; Logitech International S.A.; VOXX International Corp.; and Xperi Corporation (formerly TiVo Corporation).

Alignment between Executive Pay and Company Performance

The Compensation Committee believes that there should be a strong correlation between executive pay and Company performance. As indicated above, the Company's executive compensation program included many features designed to maintain this alignment, while also protecting the Company against inappropriate risk taking and conflicts among the interests of the Company, its stockholders and its executives.

As explained above, approximately 81% of our CEO's total 2023 target compensation was tied to performance in the form of annual cash incentives and long-term equity incentives. The following chart, which is provided as a supplemental disclosure and not as a substitute for the required Pay Versus Performance disclosure later in the proxy statement, shows the historical alignment between our Chief Executive Officer's total annual compensation ("CEO Annual Compensation") and the Company's performance (measured as TSR) for the past five years.

CEO Annual Compensation for each year is the sum of salary received, actual annual incentive earned, all other compensation received (as set forth in the Summary Compensation Table), and year-end values of equity awards granted during the year. Equity award balances are valued at the year-end closing price of the Company's stock in the respective year of grant and include restricted stock units and "in-the-money" stock options. TSR reflects the stock price appreciation or declines since year-end 2018, and is shown as the percentage that the stock price at the end of each year shown represents compared to the stock price at the end of 2018.

The Compensation Committee believes that the relationship of our CEO Annual Compensation to Total Stockholder Return demonstrates effective pay for performance in our executive compensation program.
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5069
Pay Decisions

The Compensation Committee makes decisions for the named executive officer base salary and long-term incentive grants in January each year. At that time, final annual incentive awards are also confirmed based on prior year results relative to targets. In consideration of our prior year performance, our expectations for current year results, input from Pay Governance LLC, and guidance from other sources, the Compensation Committee made the following decisions related to compensation for NEOs in 2023:
Messrs. Carnifax and Chong received an increase to their respective base salaries.
Based on Company performance and our incentive plan funding schedule, no annual incentives were paid to our Chief Executive Officer and our Non-CEO NEOs for 2023 (please see the 2023 Performance Incentive Plan calculation chart on page 43).
Made annual grants of stock options and restricted stock units on February 9, 2023 and May 23, 2023 at grant values that represented an increase of 33% for our Chief Executive Officer and 30% for certain of our Non-CEO NEOs over 2022 grants. See also table contained in the section titled "Long Term Incentives" on page 43.

Historically the equity portion of the executive compensation program included a grant of stock options. For 2024 awards, the Compensation Committee has modified this equity portion of the compensation plan for the CEO and Non-CEO NEOs by removing grants of stock options and replacing them with grants of performance-based stock units that generally vest subject to both the applicable NEO’s continued employment and the achievement of certain performance criteria set by the Compensation Committee. This change was made by the Compensation Committee with the intention to more closely align executive equity grants with stockholder interests.

Say on Pay

At our 2023 Annual Meeting, approximately 83% of our shares entitled to vote cast a vote to approve our named executive officer compensation. The Compensation Committee was pleased with this favorable outcome and believes it conveyed our stockholders' support of the Compensation Committee's decisions and our existing executive compensation programs. Consistent with this support, the Compensation Committee did not make any changes as a direct result of this vote and decided
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to retain the core design of our executive compensation programs for the remainder of 2023, as it believes the programs continue to attract, retain and appropriately incent senior management.

We also welcomed input on executive compensation as we interacted with stockholders on a number of matters throughout the year. The Board of Directors and the Compensation Committee duly consider stockholder input as well as the other factors discussed in this Compensation Discussion and Analysis and routinely review our executive compensation programs and practices.

In addition, at our 2023 Annual Meeting, 90% of the votes cast were in favor of holding future advisory votes to approve named executive officer compensation every year. Accordingly, we will include an advisory vote on named executive officer compensation in our proxy materials every year at least until the next "Say on Frequency" vote, which will be no later than our 2029 Annual Meeting.

Summary of Executive Compensation Practices                                

Below we list executive compensation practices that we have implemented to appropriately structure our executive rewards and practices that we have not implemented because we do not believe they would serve our stockholders' long-term interests.

Corporate Governance and Best Practices

Consistent with our commitment to executive compensation best practices, the Company continued the following executive compensation practices for 2023:
Pay for performance by tying the vast majority of our executive compensation to achievement of annual operating and strategic goals and increases in stockholder value.
No back-dating or repricing stock options.
No defined benefit pension plan.
No supplemental executive retirement plan.
No tax gross-ups on employee benefits or perquisites (except as grandfathered in per Mr. Arling's Employment Agreement and per Salary Continuation Agreements to certain of our other executive officers).
Competitive and reasonable post-employment and change in control provisions.
Subject executives to stock ownership guidelines.
Subject executives to clawback requirements.
Prohibit executives from holding Company stock in margin accounts or pledging such stock as collateral for loans.
Monitor potential risks relating to the Company's compensation policies and practices.
Committee retention of an independent compensation consultant.

Philosophy and Overview of Our Compensation Program                        

This section describes our executive compensation philosophy and provides an overview of our compensation program and the rationale for each component of the program.

Philosophy and Objectives

The Compensation Committee believes that stockholder interests are best advanced by attracting and retaining a high-performing management team. To promote this objective, the Compensation Committee was guided by the following underlying principles in developing our executive compensation program:
Long-term commitment - The program should be designed to gain a long-term commitment from the proven, accomplished executives that lead our success. Our executives have a combined total of approximately 125 years with the Company, during which they have held different positions and have been promoted to increasing levels of responsibility.
Pay-for-performance - A high proportion of total compensation should be at risk and tied to achievement of annual operating and strategic goals or increases in stockholder value.
Equity emphasis - Long-term incentives should be provided annually in Company equity to encourage executives to plan and act with the perspective of long-term stockholders.
Sustainable performance orientation - The mix of incentives provided should motivate to achieve sustainable growth in the value of Company.
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Focus on total compensation - Compensation opportunities should be considered in the context of total compensation relative to the pay practices of similar technology companies that compete with us for talent.

The Compensation Committee regularly evaluates the Company's compensation arrangements to assess whether they are appropriately structured to support these objectives and are effective in enabling the Company to attract and retain top talent in key leadership positions.

Program Overview

Our executive compensation program is simple in design and limited in scope. We provide only one low-cost executive benefit and no perquisites to our executives located in the United States. Each program component and the rationale for it are highlighted below.
ElementRole and Purpose
Base salary
Provide competitive foundation for total compensation.
Annual incentives
Motivate and reward achievement of annual financial targets, which drive the valuation of our stock.
Enforce accountability for individual performance through discretionary increases or reductions in awards as deemed appropriate.
Long-term incentivesAlign interests of executives with those of stockholders.
Retirement savings
Permit executives to participate in the Company's 401(k) plan to facilitate retirement saving.
Executive benefits
Provide for executives' families through supplemental life insurance policies.

How We Make Pay Decisions                                            

This section describes the participants and process for setting executive compensation at the Company.

Role of Chief Executive Officer in Setting Compensation

Each year management and the Board identify operating objectives that we believe need to be achieved for the Company to be successful. These objectives are derived largely from the Company's financial and strategic planning sessions led by the Chief Executive Officer, during which the Company's growth opportunities are analyzed and goals are established for the upcoming year. In addition to financial targets, the goals include qualitative strategic and operational objectives that are aimed at creating long-term stockholder value. Achievement of these objectives is considered in making pay decisions for the Chief Executive Officer and our other executive officers.

The Compensation Committee reviews all elements of compensation for the Chief Executive Officer based upon consideration of his contribution to the development and operating performance of the Company and competitive pay practices. The Compensation Committee develops and recommends pay changes for the Chief Executive Officer to the full Board of Directors for their approval. The Compensation Committee considers the recommendations of the Chief Executive Officer in establishing compensation for all other named executives. Throughout the process, the Compensation Committee also considers input from our independent compensation consultant as it deems necessary and advisable.

Compensation Consultant

The Compensation Committee has the authority to retain compensation consulting firms exclusively to assist it in the evaluation
of executive officer and employee compensation and benefit programs. In late 2022, the Compensation Committee retained Pay Governance LLC, a nationally-recognized independent compensation consulting firm, to assist in performing its duties. Pay Governance LLC advised the Company with respect to compensation trends and best practices, stockholder view of compensation practices, and proxy disclosure. Since the Committee retained the core design of our last year’s executive compensation program, the Committee did not request Pay Governance LLC to conduct a detailed review and analysis of our executive compensation program, rather the Committee requested advice and counsel with respect to levels of specific components of the program, which included industry and peer group median pay benchmarking. In addition, the Committee sought and obtained guidance from other sources as it deemed appropriate. While our adviser periodically consults with management in performing work requested by the Compensation Committee, Pay Governance LLC did not perform any separate additional services for management.

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The Compensation Committee has determined that Pay Governance LLC is independent and there was no conflict of interest resulting from retaining Pay Governance LLC. In reaching these conclusions, the Compensation Committee also considered the
factors set forth in Rule 10C-1 of the Exchange Act and applicable listing standards.

Peer Group

The Compensation Committee believes that it is appropriate to offer competitive total compensation packages to our named executive officers in order to attract and retain top executive talent. The compensation peer group (the "Peer Group") allows the Compensation Committee to monitor the compensation practices of our primary competitors for executive talent. The Compensation Committee utilizes this information to establish pay ranges for our NEOs and each individual's pay is targeted within those market-based pay ranges in consideration of a range of factors as described earlier in this disclosure.

The Compensation Committee reviews and approves the Peer Group each year. The Peer Group was revised for 2023 to better align with our lines of business and company size. As such, Littlefuse, Inc. and Kimball Electronics, Inc. were removed from the existing Peer Group and Alarm.com Holdings, Arlo Technologies, Bel Fuse Inc., InterDigital, Inc., Knowles Corporation, Vishay Precision Group, Inc., VOXX International Corporation and Xperi Inc. were added.

The Compensation Committee believes that these companies are an appropriate peer group for comparison, as well as a group that is large and diverse enough so that any one company does not alter the overall analysis.
Universal Electronics 2023 Executive Compensation Peer Group
Electronic Equipment and InstrumentsElectronic Components/
Household Appliances
Electronic
Manufacturing Services
Application SoftwareConsumer ElectronicsSystems Software
Arlo TechnologiesBel Fuse Inc.CTS CorporationAlarm.com Holdings, Inc.GoPro, Inc.Dolby Laboratories, Inc.
Cognex CorporationCoherent, Inc.Methode Electronics, Inc.InterDigital, Inc.VOXX International CorporationXperi Inc.
Daktronics Inc.iRobot Corporation
FARO Technologies, Inc.Knowles Corporation
Novanta Inc.Rogers Corporation
OSI Systems, Inc.
Vishay Precision Group, Inc.
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The 20 companies in the Peer Group generally had 2023 revenue, market capitalization and total enterprise value (as of December 31, 2023) in a relevant range around those of the Company as set forth below.
(in millions)RevenueMarket
Capitalization
Industry
Company
Coherent Corp.$1,823 $4,868 Electronic Components
Dolby Laboratories, Inc.$1,300 $8,193 Systems Software
OSI Systems, Inc.$1,278 $2,192 Electronic Equipment and Instruments
Methode Electronics, Inc.$1,180 $809 Electronic Manufacturing Services
GoPro, Inc.$1,005 $528 Consumer Electronics
Rogers Corporation$908 $2,459 Electronic Components
iRobot Corporation$891 $1,078 Household Appliances
Alarm.com Holdings, Inc.$882 $3,230 Application Software
Novanta Inc.$882 $6,031 Electronic Equipment and Instruments
Cognex Corporation$838 $7,185 Electronic Equipment and Instruments
Daktronics, Inc.$754 $392 Electronic Equipment and Instruments
Knowles Corporation$708 $1,617 Electronic Components
Bel Fuse Inc.$640 $848 Electronic Components
CTS Corporation$550 $1,363 Electronic Manufacturing Services
InterDigital, Inc.$550 $2,790 Application Software
VOXX International Corporation$534 $242 Consumer Electronics
Xperi Inc.$521 $479 Systems Software
Arlo Technologies, Inc.$491 $901 Electronic Equipment and Instruments
Universal Electronics Inc.$420 $122 Consumer Electronics
FARO Technologies, Inc.$359 $427 Electronic Equipment and Instruments
Vishay Precision Group, Inc.$355 $461 Electronic Equipment and Instruments
Peer Group Median$754 $1,078 
Data source: Standard & Poor's Capital IQ.
Setting Executive Compensation for 2023

In determining base salary, target annual incentives and guidelines for equity awards, the Compensation Committee reviews total compensation using the named executives' current level of compensation as the starting point. Decisions to change compensation consider:
the scope and complexity of the functions each executive oversees;
the contribution of those functions to our overall performance;
individual capability and maturity in role;
individual performance;
role criticality and difficulty to replace the executive; and
compensation practices of our peers, including members of our Peer Group.

The Chief Executive Officer assesses individual performance of each other named executive against established goals and expectations using criteria identified by the Compensation Committee. The Chief Executive Officer also provides the Compensation Committee with a self-assessment using the same criteria, including the following:

results on key financial metrics;
achievement of strategic operating objectives such as mergers and acquisitions, technological innovations, and global expansion;
advancement of commercial excellence through new or improved products and services, market leadership, and customer attraction and retention;
achieving operational goals in areas such as productivity, efficiency and risk management;
improving organizational excellence through employee practices and organization structure; and
support of Company values such as integrity and high ethical standards.
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The Compensation Committee reviews the Chief Executive Officer's assessments and approves an overall rating for the Chief Executive Officer and each of the other named executives. The overall rating indicates the warranted placement of the individual named executive in the lower, middle or upper third of the competitive market ranges for base salary, target annual incentive, guideline long-term incentive opportunity, and target total direct compensation (base salary, target annual incentive and guideline long-term equity award value).

Competitive market ranges are based on benchmark pay data for comparable positions which the Compensation Committee obtained, in part, from Pay Governance LLC's analysis. For an individual named executive the midpoint of the range is anchored to the market 50th percentile, the low end of the range reflects the market 25th percentile, and the high end of the range reflects the market 75th percentile. This approach to setting pay is consistent with our intent of offering compensation that is contingent on performance and contributions to the Company yet competitive within the marketplace.

2023 Total Direct Compensation Opportunity

Based on the Compensation Committee's review, the 2023 Total Direct Compensation opportunities of our NEOs were:
ExecutiveBase
Salary
Target Annual Incentive as a % of Base Salary Target Cash (Base Salary + Annual Incentives)Long-Term IncentivesTarget Total Direct Compensation
Paul D. Arling$830,000 100%$1,660,000 $2,800,000 $4,460,000 
Bryan M. Hackworth$400,000 70%$680,000 $800,000 $1,480,000 
Ramzi S. Ammari$400,000 60%$640,000 $700,000 $1,340,000 
Richard K. Carnifax$302,300 50%$453,300 $400,000 $853,300 
David Chong$367,140 50%$551,140 $95,000 $646,140 

Elements of Named Executive Compensation                             

We generally allocate among the principal elements of our total compensation program (base salary, annual performance incentives, and long-term equity awards) based on market practices. This ensures that our compensation program is effective for attracting and retaining key leaders.

Base Salary

We review base salaries annually, and change them from time to time in consideration of performance, increased responsibilities, peer group studies and market competitiveness. During 2023, Messrs. Carnifax and Chong received base salary increases of 17.8% and 10.7%, respectively. These increases were made to more closely align their base salaries to the median salaries per the compensation study.
Executive2023 Base Salary2022 Base SalaryPercent Change
Paul D. Arling$830,000 $830,000 0.0%
Bryan M. Hackworth$400,000 $400,000 0.0%
Ramzi S. Ammari$400,000 $400,000 0.0%
Richard K. Carnifax$302,300 $256,600 17.8%
David Chong$367,140 $331,755 10.7%

Annual Incentives

Our executives participate in the Universal Electronics Inc. Annual Performance Incentive Plan (the "Performance Incentive Plan"). Within 90 days after the commencement of the year, the Compensation Committee identifies the named executive officers who will participate in the Performance Incentive Plan for that year and establishes the annual performance criteria.
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In 2023, the Performance Incentive Plan payment for named executives was determined in two steps. First, the Preliminary Annual Incentive was calculated using the following formula:

Base Salary x Target Annual Incentive % x Company Performance Factor = Preliminary Annual Incentive

The Preliminary Annual Incentive may be modified in the discretion of the Compensation Committee in consideration of individual performance.

Company Performance Factor. For 2023, the Compensation Committee selected Adjusted Non-GAAP Diluted Earnings per Share ("EPS") as the appropriate performance measure for the Performance Incentive Plan. Adjusted Non-GAAP Diluted EPS is a reflection of the operating performance of the Company and directly influences return to stockholders. In addition, management and stockholders use Adjusted Non-GAAP Diluted EPS to value the Company.

Given the challenging economic environment and after taking into consideration that the actual Adjusted Non-GAAP Diluted EPS for 2022 was $2.56, the Compensation Committee established an Adjusted Non-GAAP Diluted EPS of $3.00 for Performance Incentive Plan funding at target levels for 2023. In the course of determining the Adjusted Non-GAAP Diluted EPS target, the Compensation Committee concluded that its achievement was substantially uncertain. Actual 2023 Adjusted Non-GAAP loss per share of $0.18 resulted in a Company Performance Factor of 0% (as shown below) and therefore no annual incentives were paid under the Performance Incentive Plan.

Adjusted Non-GAAP diluted earnings (loss) per share may be found in our press releases related to our quarterly and annual earnings releases and excludes the following items:

Amortization and depreciation expense relating to acquired assets;
Stock-based compensation;
Excess manufacturing overhead and factory transition costs;
Impairment of fixed assets;
Impairment of goodwill;
Factory restructuring costs;
Adjustments to acquired tangible assets;
Amortization of acquired intangible assets;
Litigation costs;
Foreign currency gains and losses; and
Tax effects of the above adjustments.


The following table shows the percentage of target funding for the various levels of performance and shows, for each NEO, the amount of his annual incentive as a percentage of base salary paid at each performance level:
ThresholdTargetMaximumActual
Adjusted Non-GAAP Diluted Earnings (Loss) per Share (1)
$2.90$3.00$3.30$(0.18)
Percent of Target Funding50%100%200%0%
Paul D. Arling50%100%200%
Bryan M. Hackworth35%70%140%
Ramzi S. Ammari30%60%120%
Richard K. Carnifax25%50%100%
David Chong25%50%100%
(1)Adjusted Non-GAAP Diluted Earnings (Loss) per share targets are inclusive of Performance Incentive Plan amounts funded.

Individual Performance Factor. The Compensation Committee also evaluates individual performance in determining the final incentive awards for our named executives. In making this evaluation, the Chief Executive Officer provides his assessment of the other executives as input to the Compensation Committee's evaluations. This assessment is described above in "Setting Named Executive Compensation."

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The 2023 Performance Incentive Plan award calculations for our NEOs are indicated in the following table:
ExecutiveBase SalaryTarget Annual Incentive %Target Annual IncentiveCompany Performance Factor
Individual Performance Rating (1)
Actual Annual Incentive Award
Paul D. Arling$830,000 100%$830,000 0%N/A$— 
Bryan M. Hackworth$400,000 70%$280,000 0%N/A$— 
Ramzi S. Ammari $400,000 60%$240,000 0%N/A$— 
Richard K. Carnifax$302,300 50%$151,000 0%N/A$— 
David Chong$367,140 50%$184,000 0%N/A$— 

(1)     Since the Company Performance Factor was zero (0), there were no incentive awards given, thus no need to provide an Individual Performance Rating.

Long-Term Incentives

The Compensation Committee sets guideline award levels for long-term equity compensation for our NEOs. The 2023 guidelines were expressed as grant values and in determining such values, the Committee members used grant values as determined by the compensation study.

Each executive's actual grant value of long-term equity compensation relative to the guideline value is individually determined at the discretion of the Compensation Committee, after considering:
the named executive's skills, experience, long-term contributions, and potential; and
individual and Company performance in the prior year.

Existing stock ownership levels are not a factor in award determination, as we do not want to discourage executives from holding our stock beyond the level of the established stock ownership guidelines.

Once the value of the long-term equity compensation award is determined, the Compensation Committee uses a mix of stock options and restricted stock units when making the annual long-term equity awards. The Compensation Committee believes that the use of these equity vehicles strikes an appropriate balance between rewarding increases in the market value of our Common Stock (stock options) and motivating retention with the Company (restricted stock units). In addition, restricted stock units provide executives the benefits of stock price increases while still carrying the risks that other stockholders assume for stock price declines.

The grant price of stock options and restricted stock units granted to our employees under our stock incentive plans is the average of the high and low trades of our stock on the grant date. The grant price of our 2023 equity grants to our NEOs (excluding Mr. Chong) was $24.77. The grant price of our 2023 equity grant to Mr. Chong was $9.51 (due to the fact that the grant occurred on a different date). The 2023 stock option grants had a Black-Scholes fair value of $10.83. We prohibit the re-pricing or backdating of stock options. Due to rounding in the number of shares granted, the amounts reported in the Summary Compensation Table may not reflect the exact same proportion of stock options and restricted stock units.

Our 2023 equity awards to the NEOs are indicated in the table below:
Target Grant Value of all Equity AwardsRestricted Stock Units
Granted
Stock Options
Granted
Final Award Value
ExecutiveRestricted Stock UnitsStock OptionsActual Grant Value
Paul D. Arling$2,800,000 56,530 129,270 $1,399,965 $1,399,995 $2,799,960 
Bryan M. Hackworth$800,000 16,150 36,935 $399,955 $400,005 $799,960 
Ramzi S. Ammari$700,000 14,135 32,320 $350,055 $350,025 $700,080 
Richard K. Carnifax$400,000 8,075 18,465 199,975 199,975 399,950 
David Chong$95,000 10,002 — 95,120 — 95,120 

Stock Option Features. The 2023 stock option awards granted to our NEOs have a maximum seven-year term and are subject to a three-year vesting period (33.33% on February 9, 2024 and 8.33% each quarter thereafter). We believe that this vesting schedule aids us in retaining executives and motivating long-term performance. Under the terms of our stock incentive plans, unvested stock options are forfeited if the executive voluntarily leaves the Company.

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Restricted Stock Unit Features. We determine the vesting schedule of each award after considering our performance, alignment, and retention objectives, as well as the financial impact of the award. The 2023 restricted stock units granted to our NEOs (excluding Mr. Chong) are subject to a three-year vesting period (33.33% on February 9, 2024 and 8.33% each quarter thereafter). The 2023 restricted stock units granted to Mr. Chong are subject to a three-year ratable annual vesting period beginning May 23, 2024 (due to the fact that the grant to Mr. Chong occurred on a different date). Under the terms of our stock incentive plans, unvested restricted stock units are forfeited if the executive voluntarily leaves the Company.

Post-Employment Compensation

We provide all of our executive officers, including our NEOs with certain post-employment compensation and benefits, including change in control severance benefits, which are described below in the section entitled Potential Payments upon Termination or Change in Control. These change in control severance benefits are provided so that our executives may focus on change in control transactions without concern for their personal financial situation.

Other Compensation

We provide certain executives who reside in the United States, including the NEOs, only one benefit beyond those in which all full-time employees in the United States participate. We believe this approach is reasonable and consistent with our overall executive compensation philosophy that emphasizes pay for performance.

These executives receive imputed income for company-paid supplemental life insurance policies above IRS limits for non-taxation. The Company does not provide a tax gross-up on the premiums paid on behalf of the named executive officers for their supplemental life insurance policies.

Executive Officer Stock Ownership Guidelines

The Company maintains stock ownership guidelines for our executive officers, including the NEOs. These guidelines are designed to align the executives' long-term financial interests with those of stockholders. The ownership guidelines are as follows:
PositionValue of Common Stock to be Owned
Chief Executive OfficerFour times base salary
Other executives, including the NEOsOne times base salary

For the purposes of meeting this minimum stock ownership requirement, each equivalent share of common stock held under our benefit plans and each time-based restricted stock unit is considered as a share of common stock. Stock options and unvested performance-based restricted stock units are not considered towards meeting this requirement.

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The Compensation Committee reviews ownership levels of our executives annually. The requirements for our NEOs, as well as their actual ownership levels at December 31, 2023, are set forth in the table below. All five of our NEOs have met the required guidelines.
9577

Anti-Pledging and Hedging Policies

The Company has an anti-pledging policy prohibiting all independent Directors and executive officers of the Company from pledging any such stock as collateral for any loan or holding Company shares in an account that has margin debt. Hedging the Company's stock is generally permitted within prescribed trading windows and otherwise in accordance with the Company's Insider Trading Policy.

Tax Deductibility of Compensation                                        

Section 162(m) of the Code generally limits a company's ability to deduct compensation paid in excess of $1 million during any fiscal year to certain "covered employees". Prior to January 1, 2018, there was an exception to this deductibility limitation for compensation that qualified as "performance-based" compensation under the Section 162(m) of the Code. However, the Tax Cuts and Jobs Act of 2017 ("TCJA") eliminated the performance-based exception and expanded the definition of "covered employee" to include the chief financial officer and other executive officers of a company. TCJA includes a transition rule under which the changes to Code Section 162(m) will not apply to compensation payable pursuant to a written binding contract that was in effect on November 2, 2017, and is not materially modified after that date. The Company historically intended for certain awards to qualify for the performance-based exception, and while some of those awards may be grandfathered under this transition rule, the Company cannot guarantee that such awards will qualify for the transition relief or will ultimately be deductible by the Company.
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Clawback Policies

Effective November 13, 2023, in accordance with SEC and Nasdaq requirements, the Company adopted a new Compensation Recoupment Policy (the “Clawback Policy”), which provides for the reasonably prompt recovery (or clawback) of certain excess incentive-based compensation received during an applicable three-year recovery period by current or former executive officers in the event the Company is required to prepare an accounting restatement due to the material noncompliance with any financial reporting requirement under the securities laws. Excess incentive-based compensation for these purposes generally means the amount of incentive-based compensation received (on or after October 2, 2023) by such executive officer that exceeds the amount of incentive-based compensation that would have been received by such executive officer had it been determined based on the restated amounts, without regard to any taxes paid. Incentive-based compensation potentially subject to recovery under the Clawback Policy is generally limited to any compensation granted, earned or vested based wholly or in part on the attainment of one or more financial reporting measures.

The Clawback Policy does not condition such clawback on the fault of the executive officer, but the Company is not required to recoup amounts in limited circumstances set forth in the Clawback Policy where the Compensation Committee has made a determination that recovery would be impracticable. Operation of the Clawback Policy is subject to a brief phase-in process during the first few years after its effectiveness. The Company may not indemnify any such executive officer against the loss of such recovered compensation in the event of a mandatory accounting restatement.

The Company also maintains its previous clawback policy applicable to our executive officers (the “Original Policy”), which will continue to apply to incentive-based compensation received prior to October 2, 2023. Pursuant to the Original Policy, if the Board determines that an executive officer has engaged in fraudulent or intentional misconduct, the Board will take action to remedy the misconduct, prevent its recurrence, and impose discipline on the wrongdoer as appropriate. Discipline may vary depending on the facts and circumstances, and may include, without limit, (i) termination of employment, (ii) initiating an action for breach of fiduciary duty, and (iii) if the misconduct resulted in a significant restatement of the Company's financial results, seeking reimbursement of any portion of performance-based or incentive compensation paid or awarded to the executive that is greater than would have been paid or awarded if calculated based on the restated financial results. These remedies would be in addition to, and not in lieu of, any actions imposed by law enforcement agencies, regulators or other authorities.

The Amended and Restated 2018 Plan also provides that the Compensation Committee may provide for the recoupment or forfeiture of any awards and corresponding gains if a participant has engaged in any “detrimental activity” as defined in the Amended and Restated 2018 Plan.

Compensation Committee Report                                        

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on its review and discussions with management, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis should be included in our Annual Report on Form 10-K for 2023 and in our 2024 Proxy Statement. This report is provided by the following independent directors, who comprise the Compensation Committee:
Compensation Committee of the Board of Directors
Sue Ann R. Hamilton — Chair
Satjiv S. Chahil
Eric B. Singer
Edward K. Zinser
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Summary Compensation Table                                        
 
Name and Principal PositionYearSalary
($)
Stock
 Awards (1)
($)
Option
Awards (2)
($)
Non-Equity Incentive Plan Compensation (3)
($)
All Other
Compensation (4)
($)
Total
($)
Paul D. Arling2023830,0001,399,9651,399,99528,7753,658,735
Chairman of the Board and 2022830,0001,049,9551,049,97027,2752,957,200
Chief Executive Officer2021830,0001,050,1301,050,00526,7752,956,910
Bryan M. Hackworth2023400,000399,955400,00517,6051,217,565
Senior Vice President and2022400,000299,935300,00023,7951,023,730
Chief Financial Officer2021400,000300,120299,98530,9901,031,095
Ramzi S. Ammari2023400,000350,055350,02516,3301,116,410
Senior Vice President, 2022400,000275,060275,02018,330968,410
Corporate Planning and Strategy2021400,000274,865275,05514,330964,250
Richard K. Carnifax2023302,300199,975 199,97511,250713,500
Senior Vice President, 2022256,600180,005 10,250446,855
Global Operations2021246,090149,940 9,750405,780
David Chong2023367,14095,12010,270472,530
Executive Vice President,2022331,755200,0206,745538,520
Global Sales2021334,230175,0506,795516,075
 
(1)This column represents the total grant date fair value of restricted stock unit awards granted during 2023, 2022 and 2021 and the amounts were computed in accordance with FASB ASC Topic 718, "Stock Compensation". For additional information regarding stock-based compensation and the assumptions used in calculating the grant date fair value, please refer to Note 15 of our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC.
(2)This column represents the total grant date fair value of stock options granted during 2023, 2022 and 2021 and the amounts were computed in accordance with FASB ASC Topic 718, "Stock Compensation". For additional information regarding stock-based compensation and the assumptions used in calculating the grant date fair value, please refer to Note 15 of our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC.
(3)This column represents cash amounts earned under the Company's Performance Incentive Plan.
(4)See the "All Other Compensation Table" for additional information.

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All Other Compensation Table

The following table describes each component of the All Other Compensation column in the Summary Compensation Table.
 
Name of ExecutiveYear
Premiums
for Life
Insurance(1)
($)
Company Contributions
to Retirement
Plan
($)
Leased
Vehicle
($)
Other
Benefits
($)
Total All
Other
Compensation
($)
Paul D. Arling202313,77515,00028,775
202213,77513,50027,275
202113,77513,00026,775
Bryan M. Hackworth (2)
20232,60515,00017,605
20222,60513,5007,69023,795
20212,60513,00015,38530,990
Ramzi S. Ammari (3)
20231,33015,00016,330
20221,33013,5003,50018,330
20211,33013,00014,330
Richard K. Carnifax202311,25011,250
202210,25010,250
20219,7509,750
David Chong20234,7605,51010,270
20226,7456,745
20216,7956,795
 
(1)This column represents taxable payments made for supplemental life insurance premiums for the current year NEOs. The aggregate face value was $2,740,000 at the end of each fiscal year.
(2)Mr. Hackworth's other benefits received during 2022 and 2021 represents a buyout of vacation hours due to reaching the maximum allowed vacation accrual under Company policy.
(3)Mr. Ammari's other benefits received during 2022 represents an award for 25 years of service.

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Grants of Plan-Based Awards in Fiscal 2023                                

The following table provides information about equity and non-equity compensation granted to our NEOs during 2023. 
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (2)
Stock Awards: Number of Shares of Stock or Units
(#)
Option Awards: Number of Securities Underlying Options
(#)
Option Exercise or Base Price of Option Awards(3)
($/Share)
Closing
Market
Price on
Option
Grant Date
($/Share)
Grant Date Fair Value of Stock and Option Awards
($)
Name of Executive
Grant
Date (1)
Threshold
($)
Target
($)
Maximum
($)
Paul D. Arling415,000 830,000 1,660,000
2/9/202356,5301,399,965
2/9/2023129,27024.7724.381,399,995
Bryan M. Hackworth140,000 280,000 560,000
2/9/202316,150399,955
2/9/202336,93524.7724.38400,005
Ramzi S. Ammari120,000 240,000 480,000
2/9/202314,135350,055
2/9/202332,32024.7724.38350,025
Richard K. Carnifax75,500 151,000 302,000 
2/9/20238,075199,975
2/9/202318,46524.7724.38199,975
David Chong92,000 184,000 368,000 
5/23/202310,00295,120

(1)The restricted stock unit and stock option awards granted on February 9, 2023 are subject to a 3-year vesting period (33.33% on February 9, 2024 and 8.33% each quarter thereafter). The restricted stock unit awards granted on May 23, 2023 are subject to a 3-year ratable annual vesting period.
(2)This column represents the threshold, target and maximum grant date values of the annual incentive awards under the Performance Incentive Plan based on achievement of the Company's performance measures. The amounts are subject to further adjustment based on individual performance at the discretion of the Compensation Committee.
(3)The option exercise price is based upon the average of the high and low trades on the grant date.
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Outstanding Equity Awards at Fiscal 2023 Year-End                            

The following table provides information on the stock options and restricted stock unit awards held by the NEOs at December 31, 2023: 
 Option AwardsRestricted Stock Unit Awards
Name of ExecutiveGrant Date
Number of Securities Underlying Unexercised Options
(#)
Exercisable (1)
Number of Securities Underlying Unexercised Options
(#)
Unexercisable (1)
Option Exercise
Price (2)
($)
Option
Expiration
Date
Number of Shares or Units of Stock That Have Not Vested (3)
(#)
Market Value of Shares or Units of Stock That Have Not Vested (4)
($)
Paul D. Arling2/8/201738,24562.7002/8/2024
2/8/201852,59544.9502/8/2025
2/13/201963,23027.0652/13/2026
2/12/202059,32046.1702/12/2027
2/11/202140,1553,65059.4302/11/2028
2/10/202241,19029,42034.5552/10/2029
2/9/2023129,27024.7652/9/2030
Various (5)
70,662663,516
Bryan M. Hackworth2/8/201715,30062.7002/8/2024
2/8/201821,04044.9502/8/2025
2/13/201929,18527.0652/13/2026
2/12/202016,95046.1702/12/2027
2/11/202111,4731,04259.4302/11/2028
2/10/202211,7698,40634.5552/10/2029
2/9/202336,93524.7652/9/2030
Various (6)
20,185189,537
Ramzi S. Ammari2/13/201919,45527.0652/13/2026
2/12/202015,53546.1702/12/2027
2/11/202110,51995659.4302/11/2028
2/10/202210,7897,70634.5552/10/2029
2/9/202332,32024.7652/9/2030
Various (7)
17,835167,471
Richard K. Carnifax2/9/202318,46524.765 2/9/2030
Various (8)
12,779119,995
David Chong2/8/201712,75062.7002/8/2024
2/8/201814,02544.9502/8/2025
2/13/201919,45527.0652/13/2026
Various (9)
15,276143,442

(1)The stock options vest at a rate of 33.33% on the first anniversary of the date of grant and 8.33% each quarter thereafter with full vesting on the third anniversary of the date of grant.
(2)The option exercise prices are based upon the average of the high and low trades on the grant dates.
(3)Please see "Compensation Discussion and Analysis" under the heading "Long-Term Incentives" for further information related to our restricted stock unit awards.
(4)