{"url_path":"/sec/jakk/10-k/2026/item-11","section_key":"item-11","section_title":"Item 11 Executive Compensation**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-03-02","source_url":"https://www.sec.gov/Archives/edgar/data/1009829/0001185185-26-000723-index.html","accession_number":"0001185185-26-000723","cik":"0001009829","ticker":"JAKK","issuer_name":"JAKKS PACIFIC INC","edgar_url":"https://www.sec.gov/Archives/edgar/data/1009829/0001185185-26-000723-index.html","primary_entity_key":"0001009829","primary_entity_name":"JAKKS PACIFIC INC"},"word_count":9982,"has_tables":true,"body_markdown":"**Item 11. Executive Compensation**\n\n \n\nWe believe that a strong management team comprised\nof highly talented individuals in key positions is critical to our ability to deliver sustained growth and profitability, and our executive\ncompensation program is an important tool for attracting and retaining such individuals. We also believe that our people are our most\nimportant resource. While some companies may enjoy an exclusive or limited franchise or are able to exploit unique assets or proprietary\ntechnology, we depend fundamentally on the skills, relationships, energy and dedication of our employees to drive our business. It is\nonly through their constant efforts that we are able to innovate through the creation of new products and the continual rejuvenation\nof our product lines, to maintain operating efficiencies, and to develop and exploit marketing channels. With this in mind, we have consistently\nsought to employ the most talented, accomplished and energetic people available in the industry. Therefore, we believe it is vital that\nour named executive officers receive an aggregate compensation package that is both highly competitive with the compensation received\nby similarly-situated executive officers, and also reflective of each individual named executive officer’s contributions to our\nsuccess on both a long-term and short-term basis. As discussed in greater depth below, the objectives of our compensation program are\ndesigned to execute this philosophy by compensating our executives at the top quartile of their peers.\n\n \n\nOur executive compensation program is designed\nwith three main objectives:\n\n \n\n \n●\nto offer a competitive total compensation opportunity that will allow\nus to continue to retain and motivate highly talented individuals to fill key positions;\n\n \n\n \n●\nto align a significant portion of each executive’s total compensation\nwith our annual performance and the interests of our stockholders; and\n\n \n\n \n●\nreflect the qualifications, skills, experience and responsibilities\nof our executives.\n\n \n\nOur executive compensation program is administered\nby the Compensation Committee. The Compensation Committee receives legal advice from our outside general counsel and in previous years\nhas retained a compensation consulting firm, such as Willis Towers Watson, Frederic W. Cook & Co. and Lipis Consulting, Inc., which\nprovides advice directly to the Compensation Committee. Historically, the base salary, bonus structure and long-term equity compensation\nof our executive officers are governed by the terms of their individual employment agreements (see “Employment Agreements and Termination\nof Employment Arrangements”) and we expect that to continue in the future. With respect to our executive officers, the Compensation\nCommittee establishes target performance levels for incentive bonuses based on factors that are designed to further our executive compensation\nobjectives.\n\n \n\n79\n\n[Table of Contents](#TableOfContents) \n\n \n\nHistorically, factors given considerable weight\nin establishing bonus performance criteria are Net Sales, Adjusted EPS, which is the net income per share of our common stock calculated\non a fully-diluted basis in accordance with GAAP, and Adjusted EBITDA applied on a basis consistent with past periods, as adjusted in\nthe sole discretion of the Compensation Committee to take account of extraordinary or special items. However, since at least 2019, bonus\nperformance has been based exclusively upon Adjusted EBITDA. In 2025 an additional performance bonus was established based solely upon\nthe market performance of our common stock.\n\n \n\nIn 2021, the Company amended the employment agreements\nbetween the Company and each of its executive officers. The purpose of the amendments was to change the issuance, past and future, of\nall restricted stock awards to restricted stock units. All other material terms of the respective employment agreements remained the same,\nincluding without limitation, the terms of all such grants including the timing of all vesting periods and the vesting benchmarks.\n\n \n\nThe current employment agreements with our named\nexecutive officers also give the Compensation Committee the authority to award additional compensation to each of them as it determines\nin the Committee’s sole discretion based upon criteria it establishes.\n\n \n\nThe Compensation Committee also annually reviews\nthe overall compensation of our named executive officers for the purpose of determining whether discretionary bonuses should be granted.\nThe Compensation Committee annually reviews the base salaries, annual bonuses, total cash compensation, long-term compensation and total\ncompensation of our senior executive officers.\n\n \n\nOur executive officers receive base salary pursuant\nto the terms of their employment agreements. Mr. Berman has been an executive officer at least since his entry into his employment agreement\nin 2010, Mr. McGrath became an executive officer on August 23, 2011 pursuant to the terms of an amendment to his employment agreement,\nand Mr. Kimble became an executive officer when he entered into a letter employment agreement on November 20, 2019. Mr. McGrath ceased\nbeing an executive officer effective January 1, 2024 when he assumed the position of President European Operations in our United Kingdom\noffice.\n\n \n\nThe Compensation Committee also annually reviews\nthe overall compensation of our named executive officers for the purpose of determining whether discretionary bonuses should be granted.\nThe Compensation Committee consulted with a compensation consultant in 2023 and 2024.\n\n \n\n80\n\n[Table of Contents](#TableOfContents) \n\n \n\nThe compensation packages for the Company’s\nsenior executives have both performance-based and non-performance-based elements. Based on its review of each named executive officer’s\ntotal compensation opportunities and performance, and the Company’s performance, the Compensation Committee determines each year’s\ncompensation in the manner that it considers to be most likely to achieve the objectives of our executive compensation program. The specific\nelements, which include base salary, annual cash incentive compensation and long-term equity compensation, are described below.\n\n \n\nThe Compensation Committee has negative discretion\nto adjust performance results used to determine annual incentive and the vesting schedule of long-term incentive payouts to the named\nexecutive officers and has discretion to grant bonuses even if the performance targets were not met.\n\n \n\nPursuant to the terms of the employment agreement\nfor Messrs. Berman and Kimble in effect as of January 1, 2024, they each receive a base salary which is increased automatically each\nyear by at least $25,000 and 4%, respectively. Any further increase in base salary above the contractually required minimum increase\nis determined by the Compensation Committee based on the Compensation Committee’s analysis of a combination of two factors: the\nsalaries paid in peer group companies to executives with similar responsibilities, and evaluation of the executive’s unique role,\njob performance and other circumstances. Evaluating both of these factors allows us to offer a competitive total compensation value to\neach individual named executive officer that takes into account the unique attributes of and circumstances relating to each individual\nand marketplace factors. This approach has allowed us to continue to meet our objective of offering competitive total compensation value\nand attracting and retaining key personnel. Based on its review of these factors, the Compensation Committee has generally determined\nnot to increase the base salary of Messrs. Berman and Kimble above the contractually required minimum increase as unnecessary to maintain\nour competitive total compensation position in the marketplace.\n\n \n\nThe function of the annual cash bonus is to establish\na direct correlation between the annual incentives awarded to the participants and our financial performance. This purpose is in keeping\nwith our compensation program’s objective of aligning a significant portion of each executive’s total compensation with our\nannual performance and the interests of our shareholders. The employment agreements for Messrs. Berman and Kimble contemplate that the\nCompensation Committee may grant discretionary bonuses in situations where, in its sole judgment, it believes they are warranted. No\ndiscretionary bonuses were awarded for 2023, 2024 to any executive officer. In 2025, discretionary bonuses were awarded to Messrs. Berman\nand Kimble.\n\n \n\nLong-term compensation is an area of particular\nemphasis in our executive compensation program because we believe that these incentives foster the long-term perspective necessary for\nour continued success. This emphasis is in keeping with our compensation program objective of aligning a significant portion of each\nexecutive’s total compensation with our long-term performance and the interests of our shareholders.\n\n \n\nHistorically, our long-term compensation program\nfocused on the granting of stock options that vested over time. However, commencing in 2006 we began shifting the emphasis of this element\nof compensation, and we currently favor the issuance of restricted stock units. The Compensation Committee believes that the award of\nfull-value shares that vest over time is consistent with our overall compensation philosophy and objectives, as the value of the restricted\nstock units vary based upon the performance of our common stock, thereby aligning the interests of our executives with our shareholders.\nThe Compensation Committee has also determined that awards of restricted stock units are anti-dilutive as compared to stock options inasmuch\nas it feels that less restricted units have to be granted to match the compensation value of stock options.\n\n \n\nMr. Berman’s 2010 amended and restated employment\nprovided for annual grants of $500,000 of restricted stock which vest in equal annual installments through January 1, 2017, which was\none year following the life of the agreement, subject to meeting the 3% vesting condition, as defined in the agreement. As described\nin greater detail below, pursuant to the 2012 amendment, commencing in 2013, this bonus changed to $3,500,000 of restricted stock, part\nof which vests over four years and part of which are subject to performance milestones with cliff vesting spread out over three years.\nMr. Kimble’s employment agreement provided for a grant of $250,000 of restricted stock units (“RSUs”) for the initial\nyear and annual grants of $500,000 of RSUs thereafter subject in part to time vesting over three years and in part to performance milestones\nwith cliff vesting spread over three years. The milestone targets for each of these employment agreements are established by the Compensation\nCommittee during the first quarter of each year. The employment agreements for Messrs. Berman and Kimble also provide for an annual performance\nbonus based upon net revenue and EBITDA criteria. This bonus, if earned, is payable partially in cash and partially in shares of restricted\ncommon stock. Messrs. Berman and Kimble earned 100% of the bonus based on Total Shareholders Return, EBITDA, and 50% of the bonus based\non Net Revenue in 2022. In 2023 Messrs. Berman and Kimble, earned 100% of the cash-payable bonus based on Total Shareholders Return,\nEBITDA, and 50% of the bonus based on Net Revenue in 2023. In 2023 only Mr. Kimble had unvested performance-based RSUs outstanding and\nearned 100% of the bonus based on Total Shareholders Return. In 2024 Messrs. Berman and Kimble earned 100% of the cash-payable bonus\nbased on EBITDA, and Mr. Kimble earned 100% and 50% of the remaining performance-based RSUs outstanding, based on EBITDA and Net Revenue,\nrespectively.\n\n \n\n81\n\n[Table of Contents](#TableOfContents) \n\n \n\nMr. Berman’s and Kimble’s employment\nagreements also provide for an additional bonus solely in the discretion of the Compensation Committee. After a review of all of the factors\ndiscussed above, the Compensation Committee determined that, in keeping with our compensation objectives, Messrs. Berman and Kimble were\nnot awarded any discretionary cash bonuses for 2023, and 2024. For 2025 Messrs. Berman and Kimble were awarded discretionary cash bonuses\nof $2,775,000 and $912,489 respectively.\n\n \n\nOur executive officers participate in the health\nand dental coverage, life insurance, paid vacation and holidays, 401(k) retirement savings plans and other programs that are generally\navailable to all the Company’s employees.\n\n \n\nThe provision of any additional perquisites to\neach of the named executive officers is subject to review by the Compensation Committee. Historically, these perquisites include payment\nof an automobile allowance, matching contributions to a 401(k) defined contribution plan and eligibility to participate in a non-qualified\ndeferred compensation plan. In 2023 and 2024, the named executive officers were granted the following perquisites: automobile allowance\nand 401(k) plan matching contribution for Messrs. Berman and Kimble; and a life insurance benefit for Mr. Berman. In 2025 Messrs. Berman\nand Kimble were granted a 401(k) plan matching contribution, and Mr. Kimble was granted an automotive allowance. We value perquisites\nat their incremental cost in accordance with SEC regulations.\n\n \n\nWe believe that the benefits and perquisites we\nprovide to our named executive officers are within competitive practice and customary for executives in key positions at comparable companies.\nSuch benefits and perquisites serve our objective of offering competitive compensation that allows us to continue to attract, retain\nand motivate highly talented people to these critical positions, ultimately providing a substantial benefit to our shareholders.\n\n \n\nWe recognize that, as with any public company,\nit is possible that a change of control may take place in the future and that the threat or occurrence of a change of control can result\nin significant distractions of key management personnel because of the uncertainties inherent in such a situation. We further believe\nthat it is essential and in the best interests of the Company and our shareholders to retain the services of our key management personnel\nin the event of the threat or occurrence of a change of control and to ensure their continued dedication and efforts in such event without\nundue concern for their personal financial and employment security. In keeping with this belief and its objective of retaining and motivating\nhighly talented individuals to fill key positions, which is consistent with our general compensation philosophy, the employment agreement\nfor named chief executive officers contain provisions which guarantee specific payments and benefits upon a termination of employment\nwithout good reason following a change of control of the Company. In addition, the employment agreements also contain provisions providing\nfor certain lump-sum payments if the executive is terminated without “cause” or if we materially breach the agreement leading\nthe affected executive to terminate the agreement for good reason, as applicable.\n\n \n\nCompensation Risk Management\n\n \n\nAs part of its annual review of our executive\ncompensation program, the Compensation Committee reviews with management the design and operation of our incentive compensation arrangements\nfor senior management, including executive officers, to determine if such programs might encourage inappropriate risk-taking that could\nhave a material adverse effect on the Company. The Compensation Committee considers, among other things, the features of the Company’s\ncompensation program that are designed to mitigate compensation-related risk, such as the performance objectives and target levels for\nincentive awards (which are based on overall Company performance), and its compensation recoupment policy. The Compensation Committee\nalso considers our internal control structure which, among other things, limits the number of persons authorized to execute material\nagreements, requires approval of our Board of Directors for matters outside of the ordinary course and its whistle blower program. Based\nupon the above, the Compensation Committee concluded that any risks arising from the Company’s compensation plans, policies and\npractices are not reasonably likely to have a material adverse effect on the Company.\n\n \n\n82\n\n[Table of Contents](#TableOfContents) \n\n \n\nAdditional details of the terms of the change\nof control agreements and termination provisions outlined above are provided below.\n\n \n\nAt our 2025 annual meeting, our shareholders approved\nour current executive compensation with over a majority of all shares actually voting on the issue affirmatively giving their approval.\nAccordingly, we believe that this vote ratifies our executive compensation philosophy and policies, as currently adopted and implemented,\nand we intend to continue such philosophy and policies.\n\n \n\n**Summary Compensation Table**– **2023-2025**\n\n \n\n**Name and\nPrincipal** \n  \n\n**Salary**  \n \n**Bonus**  \n\n**Stock Awards**  \n\n**Option Awards**  \n\n**Non-Equity Incentive Plan Compensation**  \nChange in\nPension\nValue and\nNonqualified\nDeferred\nCompensation\nEarnings  \n \n**All Other Compensation**  \n\n**Total** \n\nPosition \nYear \n($)  \n($)  \n($)(1)  \n($)  \n($)  \n($)(3)  \n($)(2)  \n($) \n\nStephen G. Berman \n2025 \n 1,850,000  \n 2,845,619  \n 5,233,075  \n —  \n —  \n —  \n 29,318  \n 9,958,012 \n\nChief Executive Officer, \n2024 \n 1,826,042  \n 2,943,219  \n 3,500,004  \n —  \n —  \n —  \n 30,806  \n 8,300,071 \n\nPresident and Secretary \n2023 \n 1,800,000  \n 5,171,940  \n 3,499,994  \n —  \n —  \n —  \n 50,441  \n 10,522,375 \n\n  \n  \n    \n    \n    \n    \n    \n    \n    \n   \n\nJohn L. Kimble \n2025 \n 608,326  \n 870,841  \n 1,518,941  \n —  \n —  \n (15,949) \n 67,535  \n 3,049,694 \n\nExecutive Vice President \n2024 \n 584,929  \n 757,018  \n 877,410  \n —  \n —  \n 124,289  \n 54,505  \n 2,398,151 \n\nand Chief Financial Officer \n2023 \n 562,432  \n 1,001,805  \n 843,648  \n —  \n —  \n —  \n 52,550  \n 2,460,435 \n\n \n\n(1)\nFor Mr. Berman, the grant-date fair value of the awards assuming 100% achievement of the applicable service conditions totaled the lesser of (a) $3.5 million in value (based on the closing price of a share of Common Stock on the last business day of the prior year), or (b) 2.25% of outstanding shares of Common Stock in 2025, 2024 and 2023, respectively and assuming 100% achievement of the applicable performance conditions of a grant of 83,334 restricted stock awards with a grant date fair value of $1,732,792 determined in accordance with ASC718. For Mr. Kimble the grant-date fair value of the awards assuming 100% achievement of the applicable service and performance conditions totaled $1,518,941, $877,410 and $843,648 in 2025, 2024 and 2023.\n\n(2)\nRepresents automobile allowances paid in the amount of nil, $3,846 and $24,306 for Mr. Berman for 2025, 2024 and 2023, respectively, and $18,000, $18,000 and $18,000 for Mr. Kimble for 2025, 2024 and 2023, respectively. The amounts include matching contributions made by us to the Named Executive Officer’s 401(k) defined contribution plan in the amount of $21,333 for Mr. Berman and $30,427 for Mr. Kimble, for 2025, and $18,975 and $18,150 for 2024 and 2023, respectively for both Messrs. Berman and Kimble. The amounts include $7,985, $7,985 and $7,985 related to a life insurance policy for Mr. Berman in 2025, 2024 and 2023, respectively.\n\n(3)\nRepresents the unrealized gains during the year based on the net changes in fair value in the underlying mutual fund investments offered as part of the Company’s Non-Qualified Deferred Compensation plan.\n\n  \n\n83\n\n[Table of Contents](#TableOfContents) \n\n \n\nThe following table sets forth certain information\nregarding all equity-based compensation awards outstanding as of December 31, 2025 by the Named Officers:\n\n \n\n**Outstanding Equity Awards At Fiscal Year-end**\n\n \n\nOption Awards \nStock Awards / Units \n\nName \nNumber of\nSecurities\nUnderlying\nUnexercised\nOptions\nExercisable\n(#)  \nNumber of\nSecurities\nUnderlying\nUnexercised\nOptions\nUnexercisable\n(#)  \nEquity\nIncentive\nPlan\nAwards:\nNumber of\nSecurities\nUnderlying\nUnexercised\nUnearned\nOptions\n(#)  \nOption\nExercise\nPrice\n($)  \nOption\nExpiration\nDate  \nNumber of\nShares or\nUnits of\nStock that\nHave Not\nVested\n(#)  \nMarket\nValue of\nShares or\nUnits of\nStock\nthat Have\nNot Vested\n($) (1)  \nEquity\nIncentive\nPlan\nAwards:\nNumber of\nUnearned\nShares,\nUnits or\nOther\nRights that\nHave Not\nVested\n(#)  \nEquity\nIncentive\nPlan\nAwards:\nMarket or\nPayout\nValue of\nUnearned\nShares,\nUnits or\nOther\nRights\nThat Have\nNot\nVested\n($) \n\nStephen G. Berman \n   —  \n —  \n —  \n —  \n —  \n 431,892  \n 7,290,337  \n —  \n — \n\n  \n    \n    \n    \n    \n    \n    \n    \n    \n   \n\nJohn L. Kimble \n —  \n —  \n —  \n —  \n —  \n 115,108  \n 1,943,023  \n —  \n — \n\n \n\n(1)\nThe product of (x) $16.88 (the closing sale price of the\ncommon stock on December 31, 2025) multiplied by (y) the number of unvested restricted shares or units outstanding. The units of\nstock with a service condition vest annually until 2028, the units of stock with a service and performance conditions vest by 2029\nif the performance conditions are met.\n\n \n\nThe following table sets forth certain information\nregarding amount realized upon the vesting and exercise of any equity-based compensation awards during 2025 by the Named Executive Officers:\n\n \n\n**Options Exercises And Stock Vested-2025**\n\n \n\n  \nOption Awards  \nStock Awards / Units \n\n  \nNumber of  \n   \nNumber of  \n  \n\n  \nShares  \nValue  \nShares  \nValue \n\n  \nAcquired on  \nRealized on  \nAcquired on  \nRealized on \n\nName \nExercise\n(#)  \nExercise\n($)  \nVesting\n(#)  \nVesting\n($) \n\nStephen G. Berman \n —  \n —  \n 284,160  \n 7,189,694 \n\n  \n    \n    \n    \n   \n\nJohn L. Kimble \n —  \n —  \n 63,044  \n 1,589,731 \n\n \n\n84\n\n[Table of Contents](#TableOfContents) \n\n \n\n**Potential Payments upon Termination or Change in Control**\n\n \n\nThe following tables describe potential payments\nand other benefits that would have been received by each Named Officer at, following or in connection with any termination, including,\nwithout limitation, resignation, severance, retirement or a constructive termination of such Named Officer, or a change in control of\nour Company or a change in such Named Officer’s responsibilities on December 31, 2025. The potential payments listed below assume\nthat there is no earned but unpaid base salary at December 31, 2025.\n\n \n\n**Stephen G. Berman**\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n**Involuntary**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n**Termination**\n \n\n \n \n \n \n \n**Quits For**\n \n \n \n \n \n \n \n \n \n \n \n**Termination**\n \n \n**In\nConnection**\n \n\n \n \n**Upon**\n \n \n**“Good**\n \n \n**Upon**\n \n \n**Upon**\n \n \n**Termination\nWithout**\n \n \n**For**\n \n \n**with\nChange of**\n \n\n \n \n**Retirement**\n \n \n**Reason” (3)**\n \n \n**Death(4)**\n \n \n**“Disability” (5)**\n \n \n**“Cause”**\n \n \n**“Cause” (6)**\n \n \n**Control (7)**\n \n\nBase Salary\n \n$\n—\n \n \n$\n6,012,500\n \n \n$\n—\n \n \n$\n—\n \n \n$\n6,012,500\n \n \n$\n—\n \n \n$\n27,884,115\n(8)\n\nRestricted Stock Units (1)\n \n \n—\n \n \n \n7,290,337\n \n \n \n—\n \n \n \n—\n \n \n \n7,290,337\n \n \n \n—\n \n \n \n7,290,337\n \n\nAnnual Cash Incentive Award (2)\n \n \n—\n \n \n \n—\n \n \n \n—\n \n \n \n—\n \n \n \n—\n \n \n \n—\n \n \n \n—\n \n\n \n\n(1)\nThe product of (x) $16.88 (the closing sale price of the common stock on December 31, 2025) multiplied by (y) the number of unvested restricted shares outstanding.\n\n(2)\nAssumes that if the Named Officer is terminated on December 31, 2025, they were employed through the end of the incentive period and no bonus was earned and unpaid.\n\n(3)\nDefined as (i) our violation or failure to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by us, or (ii) the material change in the nature, titles or scope of the duties, obligations, rights or powers of the Named Officer’s employment resulting from any action or failure to act by us.\n\n(4)\nUnder the terms of Mr. Berman’s employment agreement (see “Employment Agreements”), the provision of health care coverage for Mr. Berman’s children will continue until they reach the maximum age at which a child can be covered as a matter of law under a parent’s policy in the event of his death during the term of his employment agreement.\n\n(5)\nDefined as the Named Officer’s inability to perform his duties by reason of any disability or incapacity (due to any physical or mental injury, illness or defect) for an aggregate of 180 days in any consecutive 12-month period.\n\n(6)\nDefined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based upon convincing evidence, that the Named Officer has:\n\n \n\n \n(A)\ncommitted fraud against, or embezzled or misappropriated funds or other assets of, our Company\n(or any subsidiary);\n\n \n(B)\nviolated, or caused our Company (or any subsidiary) or any of our officers, employees or other\nagents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy,\nrule or directive of our Company or our Board of Directors;\n\n \n(C)\nwillfully, or because of gross or persistent inaction, failed properly to perform his duties or\nacted in a manner detrimental to, or adverse to our interests; or\n\n \n(D)\nviolated, or failed to perform or satisfy any material covenant, condition or obligation required\nto be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred\nto in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur\na substantial casualty, loss, penalty, expense or other liability or cost.\n\n \n\n(7)\nSection 280G of the Code disallows a company’s tax deduction for what are defined as “excess\nparachute payments” and Section 4999 of the Code imposes a 20% excise tax on any person who receives excess parachute\npayments. As discussed above, Mr. Berman is entitled to certain payments upon termination of his employment, including termination\nfollowing a change in control of our Company. Under the terms of his employment agreement (see “Employment Agreements”),\nMr. Berman is entitled to the full amount of the payments and benefits payable in the event of a Change in Control (as defined in\nthe employment agreement) even if it triggers an excise tax imposed by the tax code if the net after-tax amount would still be greater\nthan reducing the total payments and benefits to avoid such excise tax.\n\n(8)\nUnder the terms of Mr. Berman’s employment agreement (see “Employment Agreements”),\nif a change of control occurs and within two years thereafter Mr. Berman is terminated without “Cause” or quits\nfor “Good Reason,” then he has the right to receive a payment equal to 2.99 times his then current base amount as\ndefined in section 280(G) of the Code (which was $9,325,791 in 2025) and continued health care coverage.\n\n \n\n85\n\n[Table of Contents](#TableOfContents) \n\n \n\n**John L. Kimble** \n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n**Involuntary**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n**Termination**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n**In Connection**\n \n\n \n \n \n \n \n**Quits For**\n \n \n \n \n \n \n \n \n**Termination**\n \n \n**Termination**\n \n \n**with**\n \n\n \n \n**Upon\nRetirement**\n \n \n**“Good\nReason” (3)**\n \n \n**Upon\nDeath**\n \n \n**Upon\n“Disability”**\n \n \n**Without\n“Cause”**\n \n \n**For\n“Cause” (4)**\n \n \n**Change of\nControl (5)**\n \n\nBase Salary\n \n$\n—\n \n \n$\n1,977,061\n \n \n$\n—\n \n \n$\n—\n \n \n$\n1,977,061\n \n \n$\n—\n \n \n$\n1,216,653\n \n\nRestricted Stock Units (1)\n \n \n—\n \n \n \n1,943,023\n \n \n \n—\n \n \n \n—\n \n \n \n1,943,023\n \n \n \n—\n \n \n \n1,943,023\n \n\nAnnual Cash Incentive Award (2)\n \n \n—\n \n \n \n—\n \n \n \n—\n \n \n \n—\n \n \n \n—\n \n \n \n—\n \n \n \n—\n \n\n  \n\n(1)\nThe product of (x) $16.88 (the closing sale price of the common stock on December 31, 2025) multiplied\nby (y) the number of unvested restricted shares outstanding.\n\n(2)\nAssumes that if the Named Officer is terminated on December 31, 2025, they were employed through\nthe end of the incentive period and no bonus was earned and unpaid.\n\n(3)\nDefined as (i) any material reduction of the Named Officer’s base salary, (ii) relocation\nof the Named Officer’s principal place of employment by more than thirty miles, or (iii) the material change in the nature,\ntitles or scope of the duties, obligations, rights or powers of the Named Officer’s employment resulting from any action or\nfailure to act by us.\n\n(4)\nDefined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere\n(which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure\nto perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law\nor rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony\noffense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based on convincing evidence, that the\nNamed Officer has:\n\n \n\n \n(A)\ncommitted fraud against, or embezzled or misappropriated funds or other assets of, our Company\n(or any subsidiary);\n\n \n(B)\nviolated, or caused our Company (or any subsidiary) or any of our officers, employees or other\nagents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written\npolicy, rule or directive of our Company or our Board of Directors;\n\n \n(C)\nwillfully, or because of gross or persistent inaction, failed properly to perform his duties or\nacted in a manner detrimental to, or adverse to our interests; or\n\n \n(D)\nviolated, or failed to perform or satisfy any material covenant, condition or obligation required\nto be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred\nto in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur\na substantial casualty, loss, penalty, expense or other liability or cost.\n\n \n\n \n(5)\nUnder the terms of Mr. Kimble’s employment agreement (see “Employment Agreements”),\nif a change of control occurs and within one year thereafter Mr. Kimble is terminated without “Cause” or quits for\n“Good Reason”, then he has the right to receive a payment equal to two times his then current base salary.\n\n \n\n*Compensation of Directors* \n\n \n\nAnalogous to our executive compensation philosophy,\nit is our desire to similarly compensate our non-employee directors for their services in a way that will serve to attract and retain\nhighly qualified members of the Board. As changes in securities laws require greater involvement by, and places additional burdens on,\na company’s directors, it becomes even more necessary to locate and retain highly qualified directors.\n\n \n\nIn August 2019, following the Recapitalization,\nour Board of Directors changed the compensation payable to non-employee directors to provide that (i) each director receives an annual\ncash fee of $100,000 paid quarterly, (ii) each member of a Committee receives an annual cash fee of $5,000, (iii) the chair of the Audit\nCommittee receives an additional cash fee of $15,000 and (iv) the chair of the other Committees receives an additional $10,000. Mr. Winkler,\npursuant to the internal rules of his employer, did not receive any fees as a director until Q2 of 2024 when his fees began to be paid\nto his employer, Benefit Street Partners.\n\n \n\nIn February 2010 our Board determined the terms\nfor the minimum shareholding requirements. Pursuant to the new minimum shareholding requirements, each director will be required to hold\nshares with a value equal to at least two times the average annual cash stipend paid to the director during the prior two calendar years.\nTo illustrate: if an average director wishes to sell shares in 2026, he/she will have to hold shares with a market value of at least $188,333\nprior to and following any sale of shares calculated as of the date of the sale, such $188,333 minimum calculated by taking the average\ncash stipend of $94,167 paid during the prior two years multiplied by two.\n\n \n\n86\n\n[Table of Contents](#TableOfContents) \n\n  \n\nThe following table sets forth the compensation\nearned by our non-employee directors for our fiscal year ended December 31, 2025:\n\n \n\n**Director Compensation**\n\n \n\n  \n  \n \n \n \n**Fees Earned or Paid in Cash**  \n \n \n \n \n \n**Stock Awards (3)**  \n \n \n \n \n \n**Option Awards**  \n \n \n \n**Non-Equity Incentive Plan Compensation**  \nChange in\nPension Value\nand\nNonqualified\nDeferred\nCompensation\nEarnings  \n \n \n \n \n \n**All Other Compensation**  \n \n \n \n \n \n \n**Total** \n\nName \nYear \n($)  \n($)  \n($)  \nIncentive ($)  \n($)  \n($)  \n($) \n\nAlexander Shoghi \n2025 \n 137,500  \n 85,003  \n —  \n —  \n —  \n —  \n 222,503 \n\nCarole Levine (1) \n2025 \n 57,500  \n —  \n —  \n —  \n —  \n —  \n 57,500 \n\nLori J. MacPherson \n2025 \n 115,000  \n 85,003  \n —  \n —  \n —  \n —  \n 200,003 \n\nJoshua Cascade (1) \n2025 \n 50,000  \n —  \n —  \n —  \n —  \n —  \n 50,000 \n\nMatthew Winkler (1) \n2025 \n 55,000  \n —  \n —  \n —  \n —  \n —  \n 55,000 \n\nNeilwantie Mahabir \n2025 \n 112,500  \n 85,003  \n —  \n —  \n —  \n —  \n 197,503 \n\nJonathan R. Liebman (2) \n2025 \n 55,000  \n 85,003  \n —  \n —  \n —  \n —  \n 140,003 \n\nJordan Moelis (2) \n2025 \n 52,500  \n 85,003  \n —  \n —  \n —  \n —  \n 137,503 \n\n \n\n(1)\nDid not stand for re-election at the 2025 annual meeting.\n\n(2)\nElected at the 2025 annual meeting.\n\n(3)\nAmounts shown represent the grant date fair value of $17.61 for restricted\nstock units awarded during the fiscal year, calculated in accordance with ASC 718. These awards vest in one installment over twelve\nmonths, subject to continued service.\n\n \n\n*Employment Agreements and Termination of Employment Arrangements*\n\n \n\nWe entered into an amended and restated employment\nagreement with Mr. Berman on November 11, 2010. We entered into a new employment agreement with Mr. Kimble on November 20, 2019 when he\nbecame our Chief Financial Officer.\n\n \n\nOn June 7, 2016, we amended the employment agreement\nbetween us and Mr. Berman, our Chairman, CEO and President, and entered into Amendment Number Two to Mr. Berman’s Second Amended\nand Restated Employment Agreement dated November 11, 2010 (the “Berman Employment Agreement”). The terms of the Berman’s\nEmployment Agreement have been amended as follows: (i) extension of the term until December 31, 2020; (ii) increase of Mr. Berman’s\nBase Salary to $1,450,000 effective June 1, 2016, subject to annual increases thereafter as determined by the Compensation Committee,\nwith annual minimum increases of $25,000 commencing January 1, 2017; (iii) modification of the performance and vesting standards for\neach $3.5 million Annual Restricted Stock Grant (“Annual Stock Grant”) provided for under Section 3(b) of the Employment\nAgreement, effective as of January 1, 2017, so that 40% ($1.4 million) of each Annual Stock Grant will be subject to time vesting in\nfour equal annual installments over four years and 60% ($2.1 million) of each Annual Stock Grant will be subject to three year “cliff\nvesting” (i.e. payment is based upon performance at the close of the three year performance period), with vesting of each Annual\nStock Grant determined by the following performance measures: (a) total shareholder return as compared to the Russell 2000 Index (weighted\n50%), (b) net revenue growth as compared to our peer group (weighted 25%) and (c) growth in Earnings Before Interest, Taxes, Depreciation\nand Amortization (“EBITDA”) as compared to our peer group (weighted 25%); (iv) modification of the performance measures for\naward of the Annual Performance Bonus equal to up to 300% of Base Salary (“Annual Bonus”) provided for under Section 3(d)\nof the Berman Employment Agreement, effective as of January 1, 2017, so that the performance measures will be based only upon net revenues\nand EBITDA, each performance measure weighted 50%, and with the specific performance criteria applicable to each Annual Bonus determined\nby the Compensation Committee during the first quarter of each fiscal year; and (v) provision of health and dental insurance coverage\nfor Mr. Berman’s children in the event of his death during the term of the Berman Employment Agreement.\n\n \n\n87\n\n[Table of Contents](#TableOfContents) \n\n  \n\nOn August 9, 2019, we further amended the Berman\nEmployment Agreement as follows: (i) increase of Mr. Berman’s Base Salary to $1,700,000, effective immediately; (ii) addition of\na 2020 performance bonus opportunity in a range between twenty-five percent (25%) and three hundred percent (300%) of Base Salary, based\nupon the level of EBITDA achieved for the fiscal year, as determined by the Compensation Committee, and subject to additional terms and\nconditions as set forth therein; (iii) addition of a special sale transaction bonus equal to $1,000,000 if we enter into and consummate\na Sale Transaction on or before February 15, 2020, subject to additional terms and conditions as set forth therein; (iv) modification\nof the Berman Annual Stock Grant provided for under section 3(b) of the Berman Employment Agreement, effective as of January 2020, so\nthat the number of shares of Restricted Stock granted pursuant to the Berman Annual Stock Grant equal the lesser of (a) $3,500,000 in\nvalue (based on the closing price of a share of Common Stock on December 31, 2019), or (b) 1.5% of outstanding shares of Common Stock,\nwhich shall vest in four equal installments on each anniversary of grant; (v) waiver of certain “Change of Control”, Liquidity\nEvent, and other provisions under the Berman Employment Agreement with respect to certain Specified Transactions; and (vi) modification\nof the definition of “Good Reason Event” to include a change in membership of the Board such that following such change,\na majority of the directors are not Continuing Directors. All capitalized terms used but not defined in the previous sentence have the\nmeanings ascribed thereto in the Berman Employment Agreement, as amended by the third amendment.\n\n  \n\nOn November 18, 2019, we further amended the Berman\nEmployment Agreement as follows: (i) to extend the term of the Berman Employment Agreement for an additional year through December 31,\n2021; (ii) addition of a 2021 performance bonus opportunity in a range between twenty-five percent (25%) and three hundred percent (300%)\nof Base Salary, based upon the level of EBITDA achieved for the fiscal year, as determined by the Compensation Committee, which shall\nbe payable in cash and is subject to additional terms and conditions as set forth therein; (iii) modification of the Berman Annual Stock\nGrant provided for under section 3(b) of the Berman Employment Agreement, effective as of January 2020, so that the number of shares\nof Restricted Stock granted pursuant to the Berman Annual Stock Grant equal the lesser of (a) $3,500,000 in value (based on the closing\nprice of a share of Common Stock on the last business day of the prior year), or (b) 1.5% of outstanding shares of Common Stock, which\nshall vest in four equal installments on each anniversary of grant, provided, that no such award under (a) or (b) above shall be made\nto Executive (and no cash substitute shall be provided to Executive) to the extent shares are not available for grant under the Company’s\n2002 Plan as of such date; and, provided, further, that we shall not be obligated to amend the 2002 Plan and/or seek shareholder approval\nof any amendment to increase the amount of available shares under the 2002 Plan. All capitalized terms used but not defined in the previous\nsentence have the meanings ascribed thereto in the Berman Employment Agreement, as amended by the fourth amendment.\n\n \n\nOn February 18, 2021, we further amended the Berman\nEmployment Agreement as follows: (i) to extend the Term of the Berman Employment Agreement for an additional three years through December\n31, 2024; (ii) addition of a performance bonus opportunity for 2022 – 2024 in a range between twenty-five percent (25%) and three\nhundred percent (300%) of Base Salary, based upon the level of EBITDA achieved by the Company for the fiscal year, as determined by the\nCompensation Committee, which shall be payable in cash and is subject to additional terms and conditions as set forth therein; and (iii)\nmodification of the Annual Restricted Stock Grant provided for under section 3(b) of the Berman Employment Agreement, effective as of\nJanuary 2022, so that the number of shares of Restricted Stock granted pursuant to such Annual Restricted Stock Grant equal the lesser\nof (a) $3,500,000 in value (based on the closing price of a share of Common Stock on the last business day of the prior year), or (b)\n2.25% of outstanding shares of Common Stock, which shall vest in three equal installments on each anniversary of grant, provided, that\nno such award under (a) or (b) above shall be made to Mr. Berman (and no cash substitute shall be provided to Mr. Berman) to the extent\nshares are not available for grant under the Plan as of such date; and, provided, further, that the Company shall not be obligated to\namend the Plan and/or seek shareholder approval of any amendment to increase the amount of available shares under the Plan. All capitalized\nterms used but not defined in the previous sentence have the meanings ascribed thereto in the Berman Employment Agreement, as amended\nby the fifth amendment.\n\n  \n\nEffective November 20, 2019, we entered into a\nletter agreement with John L. Kimble (the “Kimble Employment Agreement”). The Kimble Employment Agreement provides that Mr.\nKimble will be our Executive Vice President and Chief Financial Officer as an at-will employee at an annual salary of $500,000. Mr. Kimble\nwill also receive a grant of $250,000 restricted stock units (“RSUs”) on the date hereof and annual grants of $250,000 of\nRSUs for the initial year and $500,000 annual grants of RSUs for every year thereafter. The number of shares in each annual grant of\nRSUs will be determined by the closing price of our common stock on the last trading day prior to the day of each annual grant. 60% ($150,000\nfor the first year and $300,000 thereafter) of each annual grant of RSUs will be subject to three year “cliff vesting” (i.e.\nvesting is based upon performance at the close of the three year performance period), with vesting of each annual grant of RSUs determined\nby the following performance measures: (i) Total shareholder return as compared to the Russell 2000 Index (weighted 50%); (ii) Net revenue\ngrowth as compared to the Company’s peer group (weighted 25%), and (iii) EBITDA growth as compared to the Company’s peer\ngroup (weighted 25%). 40% ($100,000 for the first year and $200,000 thereafter) of each annual grant of RSUs will vest in 3 equal annual\ninstallments commencing on the first anniversary of the date of grant and on the second and third anniversaries thereafter. The Kimble\nEmployment Agreement also contains provisions relating to benefits, change of control, and an annual performance-based bonus award equal\nto up to 125% of base salary.\n\n \n\n88\n\n[Table of Contents](#TableOfContents) \n\n \n\nOn February 18, 2021, we amended the Kimble Employment\nAgreement as follows: (i) changing Mr. Kimble’s status from an “employee at will” by providing for a term extending\nthrough December 31, 2024; (ii) increase in annual salary to $520,000 effective immediately and annual increases of at least 4% commencing\nJanuary 1, 2022; (iii) modification of the cash performance bonus opportunity for 2021 – 2024 in a range between twenty-five percent\n(25%) and one hundred twenty five percent (125%) of Base Salary, based upon the level of EBITDA achieved by the Company for the fiscal\nyear, as determined by the Compensation Committee, which shall be payable in cash and is subject to additional terms and conditions as\nset forth therein; (iv) modification of the provision of the Kimble Employment Agreement captioned “Restricted Stock Awards”,\neffective as of January 2022, to provide for the annual grant of a number of shares of Restricted Stock equal to the lesser of (a) Mr.\nKimble’s Base Salary in value (based on the closing price of a share of Common Stock on the last business day of the prior year),\nor (b) 1.05% of outstanding shares of Common Stock, which shall vest in three equal installments on each anniversary of grant, provided,\nthat no such award under (a) or (b) above shall be made to Mr. Kimble (and no cash substitute shall be provided to Mr. Kimble) to the\nextent shares are not available for grant under the Plan as of such date; and, provided, further, that the Company shall not be obligated\nto amend the Plan and/or seek shareholder approval of any amendment to increase the amount of available shares under the Plan; and (v)\nas described above, inasmuch as this first amendment changes Mr. Kimble’s status as an employee at will, the Kimble Employment\nAgreement has also been revised to include provisions regarding minimum stock ownership requirements, “clawback” provisions\nand termination provisions for “Cause” and “Good Reason”, all of which new provisions, are similar to the provisions\nin the employment agreements of the Company’s other executive officers. All capitalized terms used but not defined in the previous\nsentence have the meanings ascribed thereto in the Kimble Employment Agreement, as amended by the first amendment.\n\n \n\nOn September 27, 2021, the Company amended the\nemployment agreements between the Company and Mr. Stephen G. Berman, our Chief Executive Officer, Mr. John (a/k/a Jack) McGrath,\nour former Chief Operating Officer, and Mr. John Kimble, our Chief Financial Officer. The purpose of the amendments was to change the\nissuance, past and future, of all restricted stock awards to restricted stock units. All other material terms of the respective employment\nagreements remain the same, including without limitation, the terms of all such grants including the timing of all vesting periods and\nthe vesting benchmarks.\n\n \n\nOn October 25, 2022, the Company amended the employment\nagreement between the Company and Mr. Stephen G. Berman, Chief Executive Officer and President, and entered into Amendment NO. 7 to the\nBerman Employment Agreement. The terms of the Berman’s Employment Agreement have been amended as follows: (i) to extend the terms\nof the Berman Employment Agreement for an additional two years through December 31, 2026; (ii) addition of a performance bonus opportunity\nfor 2025-2026 in a range between twenty-five percent (25%) and three hundred percent (300%) of Base Salary, based upon the level of EBITDA\nachieved by the Company for the fiscal year, as determined by the Compensation Committee, which shall be payable in cash and is subject\nto additional terms and conditions as set forth herein; (iii) provision of an Annual Restricted Stock Unit Grant as provided for under\nsection 3(b) of the Berman Employment Agreement, effective as of January 2025, if a number of shares of Restricted Stock Units granted\npursuant to such Annual Restricted Stock Unit Grant equal the lesser of (a) $3,500,000 in value (based on the closing price of a share\nof Common Stock on the last business day of the prior year), or (b) 2.25% of outstanding shares of Common Stock, which shall vest in\nthree equal installments on each anniversary of grant, provided, that no such award under (a) or (b) above shall be made to Mr. Berman\n(and no cash substitute shall be provided to Mr. Berman) to the extent shares are not available for grant under the Plan as of such date;\nand provided, further, that the Company shall not be obligated to amend the Plan and/or seek shareholder approval of any amendment to\nincrease the amount of available shares under the Plan; and (iv) in consideration of Mr. Berman agreeing to extend the term of his employment\nagreement, a grant of 183,748 Restricted Stock Units, which shall vest in two equal installments of 91,874 Restricted Stock Units each\non October 25, 2025 and October 25, 2026 (provided that Executive remains employed by the Company on such date(s), as applicable.) All\ncapitalized terms used but not defined in the two previous sentences have the meanings ascribed thereto in the Berman Employment Agreement,\nas amended by the seventh amendment.\n\n \n\n89\n\n[Table of Contents](#TableOfContents) \n\n \n\nOn October 25, 2022, the Company amended the employment\nletter agreement between the Company and Mr. John L. Kimble, Chief Financial Officer and Executive Vice President, and entered into Amendment\nNo. 1 to the Kimble Employment Agreement. The terms of the Kimble Employment Agreement have been amended as follows: (i) ) to extend\nthe Term of the Kimble Employment Agreement for an additional two years through December 31, 2026; (ii) modification of existing cash\nperformance bonus opportunity for 2023 – 2026 in a range between twenty-five percent (25%) and two hundred percent (200%) of Base\nSalary, based upon the level of EBITDA achieved by the Company for the fiscal year, as determined by the Compensation Committee, which\nshall be payable in cash and is subject to additional terms and conditions as set forth therein; (iii) modification of the Kimble Employment\nAgreement captioned “Restricted Stock Awards”, effective as of January 2023, to provide for the annual grant of a number\nof shares of Restricted Stock Units equal to the lesser of (a) 150% of Base Salary in value (based on the closing price of a share of\nCommon Stock on the last business day of the prior year), or (b) 1.50% of outstanding shares of Common Stock, which shall vest in three\nequal installments on each anniversary of grant, provided, that no such award under (a) or (b) above shall be made to Mr. Kimble (and\nno cash substitute shall be provided to Mr. Kimble) to the extent shares are not available for grant under the Plan as of such date;\nand, provided, further, that the Company shall not be obligated to amend the Plan and/or seek shareholder approval of any amendment to\nincrease the amount of available shares under the Plan; and (iv) in consideration of Mr. Kimble agreeing to extend the term of his employment\nagreement, a grant of 41,988 Restricted Stock Units, which shall vest in two equal installments of 20,994 Restricted Stock Units each\non October 25, 2025 and October 25, 2026 (provided that Executive remains employed by the Company on such date(s), as applicable.) All\ncapitalized terms used but not defined in the previous sentence have the meanings ascribed thereto in the Kimble Employment Agreement,\nas amended by the first amendment.\n\n \n\nOn March 31, 2023, the Company amended the employment\nagreement between the Company and Mr. Stephen G. Berman, Chief Executive Officer and President, and entered into Amendment No. 8 to the\nBerman Employment Agreement. The terms of the Berman Employment Agreement have been amended to increase Mr. Berman’s Base Salary\nto an annual rate of $1,800,000, effective January 1, 2023, and for each subsequent calendar year during the Term at an annual rate to\nbe determined by the Compensation Committee of the Company’s Board of Directors, but is at least $25,000 more than the annual rate\nin the immediately preceding year.\n\n \n\nOn February 18, 2025, the Company amended the\nemployment agreements between the Company and Messrs. Berman and Kimble to, among other things, (i) extend the terms of their respective\nEmployment Agreements for an additional twenty-seven months through March 31, 2029; (ii) provide for the addition of a performance award\nconsisting of RSUs which will vest in tranches based upon the market price of our common stock, and (iii) under certain circumstances\ncontinue, post-termination, to provide certain health insurance benefits to the executive and his family.\n\n \n\nOn March 2, 2026, the Company corrected and restated\nthe employment agreements between the Company and Messrs. Berman and Kimble to provide that the annual issuance of RSU’s will continue\non the same terms for the periods covered by the February 18, 2025 extension, which provision had inadvertently been omitted in such amendment.\n\n \n\nThe foregoing is only a summary of the material\nterms of our employment agreements with the Named Executive Officers. For a complete description, copies of such agreements are annexed\nherein in their entirety as exhibits or are otherwise incorporated herein by reference.\n\n \n\nOn October 19, 2011, our Board of Directors approved\nthe material terms of and adoption of our Company’s Change in Control Severance Plan (the “Severance Plan”), which\napplies to certain of our key employees. None of our named executive officers participate in the Severance Plan. The Severance Plan provides\nthat if, within the two year period immediately following the “change in control” date (as defined in the Severance Plan),\na participant has a qualifying termination of employment, the participant will be entitled to severance equal to a multiple of monthly\nbase salary, which multiple is the greater of (i) the number of months remaining in the participant’s term of employment under\nhis or her employment agreement and (ii) a number ranging between 12 and 18; accelerated vesting of all unvested equity awards; and continued\nhealth care coverage for the number of months equal to the multiple used to determine the severance payment. On February 26, 2020 our\nBoard of Directors terminated the Severance Plan, but such termination would not be effective as to any employee who was a participant\nas of the termination date if a Change In Control were to occur prior to the twelve-month period following the termination date.\n\n \n\n90\n\n[Table of Contents](#TableOfContents) \n\n* *\n\n*Employee Benefits Plan*\n\n \n\nWe sponsored for our U.S. employees, a defined\ncontribution plan under Section 401(k) of the Internal Revenue Code. The Plan provided that employees may defer up to 50% of their annual\ncompensation subject to annual dollar limitations, and that the Company would make a matching contribution equal to 100% of each employee’s\ndeferral, up to 5% of the employee’s annual compensation. Company-matching contributions, which vest immediately, totaled $2.0 million,\n$1.7 million and $1.5 million for the year ended December 31, 2025, 2024 and 2023, respectively.\n\n \n\nStarting December 2023, we sponsored for certain\nof our U.S.-based senior employees, a nonqualified deferred compensation plan which includes provisions for salary deferrals and discretionary\ncontributions on a deferred tax basis. As of December 31, 2025 we have not made any discretionary matching contributions to the plan.\nEmployees direct the investment of their account balances, and we invest amounts held in the associated investment trust consistent with\nthese directions. The value of the assets held in trust by the non-qualified plan was $4.5 million and $1.7 million as of December 31,\n2025 and 2024, respectively.\n\n \n\nThe Company has statutory benefit plans outside\nthe U.S., which are not material.\n\n \n\n*Compensation Committee Interlocks and Insider Participation*\n\n \n\nNone of our executive officers has served as a\ndirector or member of a compensation committee (or other Board committee performing equivalent functions) of any other entity, one of\nwhose executive officers served as a director or a member of our Compensation Committee.\n\n \n\n91\n\n[Table of Contents](#TableOfContents) \n\n \n\n**Pay vs. Performance**\n\n \n\nIn accordance with rules adopted by the SEC pursuant\nto the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following information about the relationship\nbetween executive compensation for our principal executive officers (“PEOs”) and non-PEO named executive officers (“NEOs”)\nas well as certain financial performance of the Company. The following table sets forth additional compensation information for our principal\nexecutive officer (PEO) and our non-PEO named executive officers (“Non-PEO NEOs”), calculated in accordance with Item 402(v)\nof Regulation S-K, for fiscal years 2025, 2024 and 2023.\n\n \n\nYear \nSummary\nCompensation\nTable Total\nFor PEO (1)  \nCompensation\nActually Paid\nTo PEO (2)  \nAverage\nSummary\nCompensation\nTable\nTotal for\nNon-PEO\nNEOs (3)  \nAverage\nCompensation\nActually\nPaid to\nNon-PEO\nNEOs (4)  \nValue of\nInitial\nFixed $100\nInvestment\nBased on\nTotal\nShareholder Return (5)  \nNet Income\n(in millions) \n\n2025 \n$9,958,012  \n$4,894,240  \n$3,049,694  \n$1,782,034  \n$101.49  \n$9,871 \n\n2024 (6) \n 8,300,071  \n 4,538,126  \n 2,273,861  \n 1,144,099  \n 277.07  \n 34,200 \n\n2023 (6) \n 10,522,375  \n 21,044,059  \n 2,126,995  \n 4,182,165  \n 349.90  \n 38,113 \n\n \n\n(1)\nThe dollar amounts reported are the amounts of total compensation reported for our PEO, Stephen G. Berman, in the Summary Compensation Table of our 10-K for fiscal years 2025, 2024 and 2023.\n\n(2)\nThe dollar amounts reported represent the amount of “compensation actually paid”, as computed in accordance with SEC rules. The dollar amounts reported are the amounts of total compensation reported for Mr. Berman during the applicable year, but also include (i) the year-end value of equity awards granted during the reported year, (ii) the change in the value of equity awards that were unvested at the end of the prior year, measured through the date the awards vested, or through the end of the reported fiscal year, (iii) value of equity awards issued and vested during the reported fiscal year, and (iv) reduced by the value of equity awards granted in prior years that were forfeited in subsequent years.\n\n(3)\nThe dollar amounts reported are the average of the total compensation reported for our NEOs, other than our PEO, namely Mr. Kimble for fiscal year 2025 and 2024 and Messrs. Kimble and McGrath for fiscal year 2023.\n\n(4)\nThe dollar amounts reported represent the average amount of “compensation actually paid”, as computed in accordance with SEC rules, for our NEOs, other than our PEO. The dollar amounts reported are the average of the total compensation reported for our NEOs, other than our PEO in the Summary Compensation Table for fiscal years 2025, 2024 and 2023, but also include (i) the year-end value of equity awards granted during the reported year, (ii) the change in the value of equity awards that were unvested at the end of the prior year, measured through the date the awards vested, or through the end of the reported fiscal year, (iii) value of equity awards issued and vested during the reported fiscal year, and (iv) reduced by the value of equity awards granted in prior years that were forfeited in subsequent years.\n\n(5)\nAssumes an investment of $100 for the period starting on January 1, 2023 through the end of the listed fiscal year. The closing prices of the Company’s common stock as reported on Nasdaq, as applicable, on the following trading days were: (i) $35.55 on December 31, 2023; (ii) $28.15 on December 31, 2024; and (iii) $16.88 on December 31, 2025.\n\n(6)\nCorrection of Prior Year Disclosure\n\nIn preparing the fiscal 2025 Pay vs. Performance disclosure, the Company identified an error in the previously reported Compensation Actually Paid amounts for fiscal 2024 and fiscal 2023. The error related to the calculation of the change in fair value of certain equity awards granted in a prior year that vested during the applicable year. Specifically, the Company measured the change in fair value using the fiscal year-end stock price rather than the applicable vesting-date stock price, as required under Item 402(v) of Regulation S-K. The Pay Versus Performance table and the related table detailing adjustments to Summary Compensation Table total compensation have been revised to reflect the corrected amounts. As a result, Compensation Actually Paid (i) increased by $605,024 for fiscal year 2024 and decreased by $1,409,944 for fiscal year 2023 for the Principal Executive Officer and (ii) increased by $198,594 for fiscal year 2024 and decreased by $604,432 for fiscal year 2023 for the average of the other Named Executive Officers. The Company has concluded that this error did not affect its previously issued consolidated financial statements.\n\n \n\n92\n\n[Table of Contents](#TableOfContents) \n\n \n\nThe following table details the adjustments to\nthe Summary Compensation Table to determine average “compensation actually paid” for the PEO and NEOs (other than the PEO),\nas computed in accordance with SEC Item 402(v). Amounts do not reflect the actual compensation earned by or paid to our PEO and NEOs\nduring the applicable year.\n\n \n\n  \nPEO  \nNEO \n\n  \n2025  \n2024  \n2023  \n2025  \n2024  \n2023 \n\nTotal Compensation (Per Comp Table) \n$9,958,012  \n$8,300,071  \n$10,522,375  \n$3,049,694  \n$2,273,861  \n$2,126,995 \n\nLess: Grant date FV of RSUs on Summary Compensation Table \n (5,233,075) \n (3,500,004) \n (3,499,994) \n (1,518,941) \n (877,410) \n (681,822)\n\nAdd: YE FV of RSUs granted in CY and unvested in CY \n 3,505,605  \n 2,771,452  \n 7,114,053  \n 1,039,487  \n 694,770  \n 1,385,863 \n\nAdd: Change in FV of unvested awards granted in PY \n (2,526,892) \n (3,033,393) \n 6,907,625  \n (603,249) \n (679,964) \n 1,370,420 \n\nAdd: Change in FV from PY to vesting date of awards granted in PY that vested in CY \n (809,410) \n —  \n —  \n (184,957) \n —  \n — \n\nLess: Performance-based shares forfeited in CY (FV @ end of PY YE) \n —  \n —  \n —  \n —  \n (267,158) \n (19,291)\n\nAverage compensation actually paid \n$4,894,240  \n$4,538,126  \n$21,044,059  \n$1,782,034  \n$1,144,099  \n$4,182,165 \n\n \n\nEquity awards were remeasured in accordance with\nthe requirements of Item 402(v).\n\n \n\nOption Grant Practices\n\n \n\nIn recent years, we have not granted stock options,\nstock appreciation rights or similar instruments with option-like features to our employees. We therefore (i) do not grant, and have\nnot granted, such instruments in anticipation of the release of material nonpublic information, (ii) we do not time, and have not timed,\nthe release of material nonpublic information based on grant dates of such instruments or for the purpose of affecting the value of executive\ncompensation and (iii) we do not take, and have not taken, material nonpublic information into account when determining the timing and\nterms of such instruments. As options, stock appreciation rights or similar instruments with option-like features have not been an element\nof employee compensation in recent years, we do not have a formal policy with respect to the timing of grants thereof, and we did not\ngrant options, stock appreciation rights or similar instruments with option-like features in 2025.\n\n \n\nCompensation Recovery Policy\n\n \n\nEffective December 1, 2023, our Board of Directors\nadopted a policy (commonly known as a “clawback” policy) which provides for the recovery of erroneously awarded incentive\ncompensation to certain of our officers in the event that we are required to prepare an accounting restatement due to material noncompliance\nby us with any financial reporting requirements under the federal securities laws. This policy is designed to comply with Section 10D\nof the Securities Exchange Act of 1934, as amended, Rule 10D-1 promulgated thereunder, Nasdaq Listing Rule 508, and such other applicable\nrules and regulations (the “Listing Standards”). The policy is administered by our Board of Directors or, if so designated\nby the Board of Directors, the Compensation Committee (in either case, the “Administrator”). Any determinations made by the\nAdministrator shall be final and binding on all affected individuals.\n\n \n\nThe individuals covered by this policy (the “Covered\nExecutives”) are any current or former executive officers, as determined by the Administrator in accordance with the definition\nof executive officer set forth in Rule 10D-1 and the Listing Standards.\n\n \n\nThe policy covers our recoupment of “Incentive-Based\nCompensation” (as defined in the policy) received by a person after beginning service as a Covered Executive and who served as\na Covered Executive at any time during the performance period for that Incentive Compensation. In the event we are required to prepare\nan accounting restatement, the policy requires us to recover, reasonably promptly, any erroneously awarded Incentive-Based Compensation\nreceived by any Covered Executive during the three completed fiscal years immediately preceding the date on which we are required to\nprepare such accounting restatement, all as as determined by the Administrator.\n\n \n\nThe amount required to be recovered is the excess\nof the amount of Incentive-Based Compensation received over the amount that otherwise would have been received had it been determined\nbased on the restated financial measure.\n\n \n\nThe foregoing description of our Clawback Policy\ndoes not purport to be complete and is qualified in its entirety by the terms and conditions of such policy, a copy of which is filed\nas an exhibit to this Report and is incorporated herein by reference. Capitalized terms used above and not defined shall have the meanings\nassigned them in the Policy.\n\n \n\n93\n\n[Table of Contents](#TableOfContents)"}