BWEN Broadwind Inc

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.           )

☐     Confidential, for Use of the Commission Only (as permitted by Rule 14a‑6(e)(2))

☒    Definitive Proxy Statement

☐    Definitive Additional Materials

☐    Soliciting Material under §240.14a‑12

☒   No fee required.

☐    Fee computed on table below per Exchange Act Rules 14a‑6(i)(1) and 0-11.

☐    Fee paid previously with preliminary materials.

☐    Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

3240 South Central Avenue

Cicero, IL 60804

Telephone: 708-780-4800

Dear Fellow Stockholder:

You are cordially invited to attend Broadwind’s Annual Meeting of Stockholders to be held on April 27, 2017, beginning at 8:00 a.m. local time, at our corporate office located at 3240 South Central Avenue, Cicero, Illinois 60804.

You are being asked to: (i)  elect  six (6)  d irectors to hold office for a term of one year or until their successors are duly elected and qualified, (ii)  cast a non-binding advisory vote to approve the compensation of our named executive officers  (“ Say-on-Pay ” vote), (iii) cast a non-binding advisory vote on the frequency of the Say-on-Pay vote, and (iv)  ratify the appointment of RSM US LLP as our independent registered public accounting firm for 2017. 

Our Board of Directors urges you to read the accompanying Proxy Statement and recommends that you vote FOR all of the proposed nominees for election to the Board, FOR the resolution approving, on a non-binding advisory basis, the compensation of our named executive officers as described in the Proxy Statement,  FOR  the “Annually” option approving, on a non-binding advisory basis, the submittal of a Say-on-Pay vote to our stockholders on an annual basis, and FOR the ratification of the appointment of RSM US LLP as our independent registered public accounting firm for 2017.

We are again delivering our Proxy Statement and Annual Report under the Securities and Exchange Commission rules that allow companies to furnish proxy materials to their stockholders over the Internet. We will mail to our stockholders on or about March 14, 2017, a Notice of Internet Availability of Proxy Materials (the “ Notice ”) containing instructions on how to access our proxy materials. The Notice and the Proxy Statement include instructions on how you can receive a paper copy of the proxy materials.

We appreciate and encourage stockholder participation in Broadwind’s affairs. Whether or not you plan to attend the Annual Meeting of Stockholders, it is important that your shares be represented. You may vote your shares by telephone or over the Internet. If you received a paper copy of the proxy card by mail, you may vote by signing, dating and mailing the proxy card in the envelope provided. Instructions regarding these three methods of voting are contained on the Notice or proxy card.

Thank you for your cooperation.

Cicero, Illinois

March 14, 2017

BROADWIND ENERGY, INC.

BROADWIND ENERGY, INC.

matter to be voted upon at the Annual Meeting. No holders of any of our capital stock are entitled to cumulative voting rights. Proxies received but marked “withhold” or “abstain” and broker non-votes will be counted for purposes of determining whether a quorum exists at the Annual Meeting. A “broker non-vote” occurs when a broker does not vote on some matter on the proxy card because the broker does not have discretionary voting power for that particular item and has not received voting instructions from the beneficial owner. Please note that your bank or broker cannot vote on your behalf on “non-routine” proposals without your instructions. The ratification of the appointment of our independent registered public accounting firm is a “routine” proposal. The election of directors, the non-binding advisory proposal on the compensation of our named executive officers (“ Say-on-Pay ” vote), and the non-binding advisory proposal on the frequency of the Say-on-Pay vote are each “non-routine” proposals.

How do I vote by proxy?

Stockholders can vote in person at the Annual Meeting or by proxy. There are three ways to vote by proxy:

If you vote by telephone or on the Internet by the applicable deadline, or properly fill in your proxy card if you received one by mail and we receive it in time to vote at the Annual Meeting, your “proxy” (one of the individuals named on the Notice or proxy card) will vote your shares on your behalf as you have directed. If you sign and return a proxy card but do not make specific choices for the voting of your shares, then your proxy will vote your shares of common stock as recommended by the Board, as follows:

4. FOR the ratification of the appointment of RSM US LLP (“ RSM ”) as our independent registered public accounting firm for 2017.

If any other matter is presented, your proxy will vote your shares in accordance with your proxy’s best judgment. At present, we know of no other business that is intended to be acted on at the Annual Meeting.

Can I vote by telephone or on the Internet?

Yes. Voting by telephone or on the Internet is fast, convenient and your vote is immediately confirmed and tabulated. If you choose to vote by telephone or on the Internet, instructions to do so are set forth on the Notice or proxy card. The telephone and Internet voting procedures are designed to authenticate votes cast by use of a control number, which appears in the marked area on the Notice or proxy card. These procedures, which comply with Delaware law, allow stockholders to appoint a proxy to vote their shares and to confirm that their instructions have been properly recorded. If you vote by telephone or on the Internet, your vote must be received by 11:59 p.m., Eastern Daylight Time, on April 26, 2017.

If you own your shares in your own name, you can vote by telephone or on the Internet in accordance with the instructions provided on the Notice or proxy card. If your shares are held by a bank, broker or other nominee, you can also vote by telephone or on the Internet. The instructions to vote by telephone or on the Internet will be provided on the voting form supplied by your bank or broker. You may need to contact your bank or broker to vote .

How do I vote if my shares are held by my broker?

If your shares are held by your broker in “street name,” you should instruct your broker concerning how to vote your shares in the manner provided by your broker.

How do I vote the shares I hold through the Company’s 401(k) plan?

If you are a participant in our 401(k) plan, you may vote the number of shares credited to your account as of the Record Date by instructing the plan’s trustee how to vote your shares pursuant to the instruction form being mailed to plan participants with the Notice or this Proxy Statement. Voting instructions must be received by the plan trustee by 12:00 p.m., Central Daylight Time, on April 26, 2017. If you do not provide clear voting instructions, or if you return voting instructions by mail and submit an unsigned voting form, the trustee will vote the shares in your account in accordance with the Board’s recommendations.

May I revoke my proxy and change my vote?

Yes. You may revoke your proxy and change your vote at any time before the Annual Meeting in one of four ways:

How do I vote in person?

If you plan to attend the Annual Meeting and vote in person, we will give you a ballot or a new proxy card when you arrive at the Annual Meeting. However, if your shares are held in the name of your broker, bank or other nominee, you must contact such entity with respect to the procedure for you to vote in person.

What vote is required to approve each proposal?

5. Other Matters .  At present, we know of no other matters to be presented for stockholder action at the Annual Meeting. If any other matter properly comes before the Annual Meeting, the appointees named in the proxies will vote the proxies in accordance with their best judgment.

Are the votes on the Say-on-Pay proposal and the frequency of the Say-on-Pay vote binding on the Board?

Because the votes on the Say-on-Pay proposal and the frequency of the Say-on-Pay vote are advisory, they will not be binding upon the Board. However, the Board values the opinions that our stockholders express in their votes and will take into account the outcome of the votes when considering future executive compensation arrangements as it deems appropriate.

Who pays for the proxy solicitation related to the Annual Meeting?

We will bear the cost of soliciting proxies, including the preparation, assembly and mailing of the Notice, proxies and soliciting material, as well as the cost of forwarding such material to beneficial owners of our common stock. Our directors, officers and regular employees may, without compensation other than their regular remuneration, solicit proxies personally or by telephone.

How can I obtain additional information about the Company?

A copy of our Annual Report, without exhibits, is available as specified in the Notice or accompanies this Proxy Statement if you received it by mail. No portion of our Annual Report is incorporated herein and no part thereof is to be considered proxy soliciting material. We will furnish to any stockholder, upon written request, any exhibit described in the list accompanying our Annual Report, upon the payment, in advance, of reasonable fees related to us furnishing such exhibit(s). Any such requests should include a representation that the stockholder was the beneficial owner of shares of our common stock on the Record Date, and should be directed to our Corporate Secretary at Broadwind Energy, Inc., 3240 South Central Avenue, Cicero, IL 60804. You may also access the exhibits described in our Annual Report through our website at www.bwen.com or though the SEC’s website at www.sec.gov .  

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), which requires that we file reports, proxy statements and other information with the SEC. The SEC maintains a website on the Internet that contains reports, proxy and information statements, and other information regarding registrants, including the Company, that file electronically with the SEC. The SEC’s website address is www.sec.gov . In addition, our Exchange Act filings, proxy statements and other information may be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, DC 20549. Copies of such materials may also be obtained by mail from the Public Reference Section of the SEC at 100 F Street, N.E., Washington, DC 20549, upon payment of the SEC’s customary fees. Information regarding the public reference facilities may be obtained from the SEC by telephoning 1-800-SEC-0330.

respect to the shares of our common stock set forth opposite the stockholder’s name. We have based this table upon information supplied by our executive officers, directors and 5% stockholders, including filings with the SEC and information supplied by our transfer agent.

*      Less than 1%.

(1)   Based on 14,981,751 shares of our common stock issued and outstanding as of the Record Date. Shares not outstanding but deemed beneficially owned by virtue of the right of a person to acquire them as of the Record Date, or within sixty (60) days of the Record Date, are treated as outstanding when determining the percentage owned by such individual and when determining the percentage owned by a group.

(2) Based solely on information contained in a Schedule 13G/A filed on February 10, 2017 by AWM Investment Company, Inc., a Delaware corporation (“ AWM ”). AWM is the investment adviser to Special Situations Cayman Fund, L.P., a Cayman Islands limited partnership (“ Cayman ”), Special Situations Fund III QP, L.P., a Delaware limited partnership (“ QP ”), Special Situations Technology Fund, L.P., a Delaware limited partnership (“ Tech ”), and Special Situations Technology Fund II, L.P., a Delaware limited partnership (“ Tech 2 ”). As investment adviser, AWM holds sole voting and investment power over and is deemed to beneficially own 1,500,009 shares held by Cayman, QP, Tech and Tech 2. AWM is located at 527 Madison Avenue, Suite 2600, New York, NY 10022.

(3) Based solely on information contained in a Schedule 13D/A filed on May 9, 2016 by Mr. Jeffrey L. Gendell, individually, as managing member of Tontine Capital Management, L.L.C., a Delaware limited liability company (“ TCM ”), as managing member of Tontine Asset Associates, L.L.C., a Delaware limited liability company (“ TAA ”), and Tontine Management, L.L.C., a Delaware limited liability company (“ TM ”), the general partner of Tontine Capital Overseas Master Fund II, L.P., a Cayman Islands limited partnership (“ TCP 2 ”), and as managing member of Tontine Associates, L.L.C., a Delaware limited liability company (“ TA ”). Mr. Gendell, located at 1 Sound Shore Drive, Greenwich, CT 06830, is the managing member of (i) TCM and TM, (ii) TAA, the general partner of TCP 2, and (iii) TA. Therefore, Mr. Gendell is deemed to beneficially own the shares owned by TCM, TM, TAA, TCP 2 and TA, with aggregate beneficial ownership of 1,019,821 shares.   

(4) Based solely on information contained in a Schedule 13 G/A filed on February 7, 2017 by Grace & White, Inc., a New York corporation, as investment adviser (“ Grace & White ”). Grace & White holds sole voting power with respect to 187,617 shares and sole dispositive power with respect to 827,954 shares.

(5) Includes (i) 200,000 shares owned by Terence P. Fox and Paula L. Fox Irrevocable Trust 2005, and (ii) 10,736 restricted stock units (“ RSUs ”) scheduled to vest on April 26, 2017.

(6) Includes 56,862 vested but unexercised options to purchase our common stock.

(7) Does not include 10,000 RSUs scheduled to vest on May 18, 2017.

(8) Includes (i) 2,500 vested but unexercised options to purchase our common stock, and (ii) 10,736 RSUs scheduled to vest on April 26, 2017.

(9) Includes 10,736 RSUs scheduled to vest on April 26, 2017.

(10) Does not include 10,000 RSUs scheduled to vest on May 18, 2017.

Wabash National Corporation, a manufacturer of commercial fleet and consumer/retail transportation equipment. Ms. Kushner holds a bachelor’s degree in economics from Douglass College at Rutgers University and a Master of Business Administration degree from the Wharton School. The Governance/Nominating Committee concluded that Ms. Kushner should serve as a director as of the date of this Proxy Statement on the basis of her knowledge of our operations in her role as our President, Chief Executive Officer and Chief Financial Officer, as well as her more than 30 years of global industrial business leadership and more than 10 years of experience on the boards of multiple public companies.

Persio V. Lisboa has served as a member of the Board since May 18, 2016. He is a member of the Audit Committee and the Compensation Committee. Mr. Lisboa has served as Executive Vice President and Chief Operating Officer of Navistar International Corporation  (with its affiliates, “ Navistar ”), a leading manufacturer of commercial trucks, buses, defense vehicles and engines, since March 2017. Prior to holding this position, he held various positions with Navistar, including President, Operations from November 2014 to March 2017, Senior Vice President, Chief Procurement Officer from December 2012 to November 2014, Vice President, Purchasing and Logistics and Chief Procurement Officer from October 2011 to November 2012, and Vice President, Purchasing and Logistics from August 2008 to October 2011, as well as other management positions within Navistar’s North American and South American operations. Earlier in his career, Mr. Lisboa held positions at Maxion International Motores Brasil, International Engines Argentina S.A., and MWM-International South America. Mr. Lisboa received a Bachelor of Science degree in Business Administration with a Marketing Specialization from Pontificia Universidade Catolica (PUC) de Sao Paulo. The Governance/Nominating Committee concluded that Mr. Lisboa should serve as a director as of the date of this Proxy Statement on the basis of his extensive operational, supply chain and logistics experience. 

Thomas A. Wagner has served as a member of the Board since March 25, 2011. He is a member of the Compensation Committee and the Governance/Nominating Committee. From July 2012 until his retirement in October 2015, Mr. Wagner was the Chief Product Officer at Ogin, Inc., a wind turbine design and supply company. He is currently supporting various consulting assignments and working on products with potential to consume environmental carbon dioxide. From January 2011 to May 2012, Mr. Wagner was the Engineering Head at Nordic Windpower USA, a wind turbine manufacturer to the community and distributed utility wind power segments. From January 2006 through December 2010, he served as Chief Technology Officer of Gas Turbine Efficiency plc, an early stage company focused on turbine efficiency, where he led the design and validation of technology to enhance the operation of aviation, industrial and power generation turbines around the world. Mr. Wagner has worked in the diversified energy industry for more than 30 years, including positions as Vice President, Technology and Production for Hess Microgen, an affiliate of Amerada Hess Corporation, and various engineering leadership positions at General Electric Company (“ GE ”). From 2002 through 2005, he served as General Manager - Technology Leadership for Wind Energy for GE Wind, where, among other things, he participated in the development of the reliability programs and product improvement plans for GE’s 1.5 MW wind turbine. Mr. Wagner holds a Bachelor of Science degree in engineering from Cornell University and a Master of Science degree in mechanics from Rensselaer Polytechnic Institute. The Governance/Nominating Committee concluded that Mr. Wagner should serve as a director as of the date of this Proxy Statement on the basis of his demonstrated technology leadership over the course of his career, as well as his strong technical background and understanding of the products that we provide and the industries in which we operate.

Cary B. Wood has served as a member of the Board since May 18, 2016. He is Chairman of the Compensation Committee and is also a member of the Audit Committee. Mr. Wood has served on the Board of Directors of Vishay Precision Group, Inc. (NYSE: VPG), an internationally-recognized designer, manufacturer and marketer of resistive foil technology, sensors and sensor-based systems to niche industrial applications, since March 2016, and has served on the Board of Directors of M&G Duravent, Inc., a privately-held venting systems firm, since January 2017. He served as Chief Executive Officer and director of Sparton Corporation (NYSE: SPA) from November 2008 to February 2016, and as its President from April 2009 to February 2016. From August 2004 to November 2008, Mr. Wood served in several roles, including interim Chief Executive Officer and Chief Operating Officer, for Citation Corporation (now known as Grede Holdings, LLC), a private company manufacturing cast, machined and assembled components for the transportation and industrial markets. He began his career with General Motors Corporation, followed by a move to United Technologies Corporation, where he served in a variety of general management, operations and engineering roles. Mr. Wood received a Bachelor of Science degree in Technology from Purdue University in 1989, a Master of Science degree in Industrial Operations in the School of Management from Lawrence Technological University in 1995, and a Master of Business Administration degree in Finance from Loyola University-Chicago in 2014. The

Governance/Nominating Committee concluded that Mr. Wood should serve as a director as of the date of this Proxy Statement on the basis of his broad experience in executive management, operations, corporate turnarounds and corporate growth strategies.

None of our directors are a party to any agreement or arrangement that would require disclosure pursuant to NASDAQ Rule 5250(b)(3).

2016 Director Compensation

In light of our financial performance in 2015, the Compensation Committee and the Board determined that it would be prudent to reduce the overall amount of compensation paid to non-employee directors for service on the Board and its committees. On January 22, 2016, upon the recommendation of the Compensation Committee, the Board voted to amend and restate the Broadwind Energy, Inc. Board Compensation Program (the “ Board Compensation Program ”), effective as of January 1, 2016, to provide that each eligible non-employee director shall receive an annual equity grant of RSUs with a grant value of $35,000 and a cash fee of $10,000 per calendar quarter.

Pursuant to the Board Compensation Program, (i) on April 26, 2016, each of Messrs. Fox, Reiland and Wagner was granted an RSU award representing the right to receive 10,736 shares of our common stock upon vesting, and (ii) on May 18, 2016 (upon their appointment to the Board), each of Messrs. Lisboa and Wood was granted an RSU award representing the right to receive 10,000 shares of our common stock upon vesting. The RSU awards vest one year after the date of grant.

All non-employee directors are subject to our stock ownership guidelines adopted in March 2011, which provide that each non-employee director shall own a number of shares of our common stock having a value equal to three times the annual cash retainer fees earned by the director in the immediately preceding calendar year. Please see the discussion below under the heading “ Stock Ownership Guidelines ” for more information.

Each non-employee director is eligible to participate in the Broadwind Energy, Inc. Deferred Compensation Plan (the “ Deferred Compensation Plan ”), which was adopted by the Board on October 24, 2007. The Deferred Compensation Plan is an unfunded arrangement subject to the provisions of Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the “ IRC ”). The value of each participant’s account is deemed invested in shares of our common stock and is generally payable upon the director’s departure from the Board. During 2016, Mr. Reiland elected to defer one-third of his Board fees pursuant to the Deferred Compensation Plan.

2016 Director Compensation Table

The following table sets forth 2016 compensation information for our non-employee directors. Ms. Kushner, our President, Chief Executive Officer (“ CEO ”) and Chief Financial Officer (“ CFO ”), received no additional compensation for her services as a director. The compensation received by Ms. Kushner as our employee is listed in the 2016 Summary Compensation Table set forth in this Proxy Statement.

(2) Stock Awards represents the aggregate grant date fair value of RSUs awarded during 2016, calculated in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 718—Compensation—Stock Compensation (“ ASC Topic 718 ”), under the Broadwind Energy, Inc. 2015 Equity Incentive Plan (the “ 2015 EIP ”), and assumes no forfeiture rates derived in the calculation of the grant date fair value of the awards. The assumptions used to determine the valuation of these awards are discussed in Note 16 to our consolidated financial statements included in our Annual Report. As of December 31, 2016, each of Messrs. Fox, Reiland and Wagner had outstanding 10,736 RSUs scheduled to vest on April 26, 2017, and each of Messrs. Lisboa and Wood had outstanding 10,000 RSUs scheduled to vest on May 18, 2017. Additionally, as of December 31, 2016, Mr. Reiland had 2,500 vested but unexercised stock options.

CORPORATE GOVERNANCE

Independence

The Board has determined that currently and at all times during the year ended December 31, 2016, a majority of its members are and have been “independent” as defined by the listing standards of the NASDAQ Stock Market (“ NASDAQ ”). Ms. Kushner is not independent since she also serves as an executive officer of the Company. The Board considers in its evaluation of independence information provided by the directors and any nominees in questionnaires and other certifications concerning their relationship to us and any existing related party transactions, which are discussed below in this Proxy Statement in the section entitled “Certain Transactions and Business Relationships.”

Code of Ethics and Business Conduct

We have a written Code of Ethics and Business Conduct (“ Code of Ethics ”) that applies to all of our employees, directors and officers, including our principal executive officer, principal financial officer, principal accounting officer or controller and persons performing similar functions. The Code of Ethics addresses such topics as protection and proper use of our assets, compliance with applicable laws and regulations, accuracy and preservation of records, accounting and financial reporting, conflicts of interest, and insider trading. The Code of Ethics is posted on our Internet website, www.bwen.com , and is available in print, free of charge, to any stockholder who sends a request for a paper copy to Broadwind Energy, Inc., Attn: Corporate Secretary, 3240 South Central Avenue, Cicero, IL 60804. We intend to include on our website any amendment to, or waiver from, a provision of our Code of Ethics that applies to any of our directors or executive officers that relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K under the Securities Act of 1933, as amended (the “ Securities Act ”).

Board Leadership Structure

The Board is led by an independent Chairman, Mr. Reiland. The Board believes that separating the roles of CEO and Chairman of the Board is the most appropriate structure for us at this time. Having an independent Chairman of the Board is a means to ensure that the CEO is accountable for managing us in the best interests of our stockholders while, at the same time, acknowledging that managing the Board is a separate and time intensive responsibility. The Board also believes that an independent Chairman of the Board can serve to avoid conflicts of interest, promote oversight of risk and manage the relationship between the Board and the CEO.

Risk Oversight

The Board and its Audit Committee play an active role in the oversight of risk and our risk management practices. The Audit Committee primarily is responsible for reviewing financial and compliance risks, with the full Board responsible for other risks. We conduct comprehensive Enterprise Risk Assessments on a periodic basis, and review the results with the Board at a regularly scheduled meeting. We update the Board regularly on actions taken as a result of the Enterprise Risk Assessments. Because of our size and available resources, we do not have a dedicated risk management function; rather, certain of our employees are charged with responsibility for specific risk areas, including operational risks, liquidity risks, legal risks and compliance risks. These individuals make periodic reports to the Board and the Audit Committee on their areas of risk oversight.

Stockholder Communications with the Board of Directors

Stockholders may communicate directly with the Board or any of its individual members. Any such communication should be directed to our Corporate Secretary at the address below and should prominently indicate on the outside of the envelope that it is intended for the Board or for non-employee directors, and our Corporate Secretary will forward the communication to all specified directors. If no director is specified, the communication will be forwarded to the entire Board. Stockholder communications to the Board should be sent to:

Director Attendance at Annual Meetings

Directors’ attendance at our Annual Meetings can provide our stockholders with an opportunity to communicate with directors about issues affecting us. Our Principles of Corporate Governance encourage our directors to attend the Annual Meetings. All of our then-current directors attended our 2016 Annual Meeting.

Committee and Board of Directors Meetings

During 2016, the Board met fourteen (14) times, including in-person and telephonic meetings. The directors also communicated informally to discuss our affairs and, when appropriate, took formal action by unanimous written consent of all directors, in accordance with our Certificate of Incorporation and Bylaws and Delaware law. Executive sessions of the independent directors are scheduled at least twice per year in conjunction with regularly scheduled Board meetings.

The Board has three standing committees: the Audit Committee, the Compensation Committee and the Governance/Nominating Committee.  In 2016, each director attended 100% of the meetings of the Board and of committees of which he or she was a member.

Audit Committee

The Board maintains an Audit Committee comprised of three independent directors, including one financial expert (as defined below). The current members of the Audit Committee are Messrs. Reiland (Chairman), Lisboa and Wood. The Board and the Audit Committee believe that the Audit Committee’s current member composition satisfies the NASDAQ requirements and the criteria of Section 10A(m)(3) and Rule 10A-3 of the Exchange Act.

Audit Committee Scope of Authority and Charter

The primary function of the Audit Committee is assisting the Board with oversight responsibilities, including with respect to the following: (a) the financial reports and other material financial information we provide to any governmental body or the public; (b) the relationship with our independent accountants (including appointment and compensation) who report directly to the Audit Committee; (c) pre-approval of all audit services and non-audit services to be performed by our independent accountants; (d) our systems of internal and external reporting processes and internal controls regarding finance, accounting, legal compliance and ethics; (e) oversight with respect to related party transactions and complaints received by us regarding accounting, internal accounting controls and auditing; (f) preparation of an annual Audit Committee Report to be presented to the Board; and (g) our auditing, accounting and financial reporting processes generally. The Audit Committee charter is posted on our Internet website, www.bwen.com , and may be amended by approval of the Board, upon recommendation by the Governance/Nominating Committee. The Audit Committee met five (5) times in 2016.

Audit Committee Financial Expert

The Board has determined that Mr. Reiland is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. The designation of Mr. Reiland as an audit committee financial expert does not impose on Mr. Reiland any duties, obligations or liabilities that are greater than the duties, obligations and liability imposed on Mr. Reiland as a member of the Audit Committee and the Board in the absence of such designation or identification.

Compensation Committee

Responsibility for evaluating our compensation policies, oversight of management’s performance and recommendations regarding compensation of senior management has been delegated by the Board to the Compensation Committee. The current members of the Compensation Committee are Messrs. Wood (Chairman), Fox, Lisboa and Wagner. Messrs. Wood, Fox, Lisboa and Wagner each satisfy, in the judgment of the Board, the independence requirements of NASDAQ Rule 5605(d) and Rule 10C-1 under the Exchange Act.

Compensation Committee Scope of Authority and Charter

Under the Compensation Committee’s written charter, the primary duties and responsibilities of the Compensation Committee include the following: (a) periodically review with management our philosophy of compensation, taking into consideration enhancement of stockholder value from a short, intermediate and long-term perspective; (b) annually consider  strategic and operating plans and the various compensation plans for which the Compensation Committee is responsible; (c) review individual and Company performance goals and objectives of our CEO and other senior management, evaluate such officers’ performance in light of these goals, and determine and approve appropriate compensation levels and equity grants; (d) oversight with respect to compensation policies and plans, including incentive plans, equity plans, benefits and perquisites of senior management; (e) general oversight and risk assessment with respect to human resources policies, strategies and programs and employee benefit plans; (f) recommend compensation plans for members of the Board; and (g) assess potential conflicts of interest raised by the work of compensation consultants that are involved in determining or recommending executive or director compensation. The Compensation Committee’s charter is posted on our Internet website, www.bwen.com , and may be amended by approval of the Board, upon recommendation by the Governance/Nominating Committee. The Compensation Committee met six (6) times in 2016.

The Board and the Compensation Committee make compensation decisions regarding our executive officers. In making its compensation decisions and recommendations, the Compensation Committee may take into account the recommendations of our CEO and other senior management, which, as defined in the Compensation Committee charter, includes any officer who reports directly to our CEO and any other officer of the Company or our subsidiaries so designated by our CEO. Other than giving such recommendations, however, our CEO and other senior management have no formal role and no authority to determine the amount or form of executive and director compensation.

The Compensation Committee may, at our expense, retain legal counsel (which may be, but need not be, our regular corporate counsel) and other consultants and advisors to assist it with its functions. The Compensation Committee has authority to approve such consultants’ and advisors’ fees and other retention terms and to terminate its relationship with any such consultant or advisor. The Compensation Committee will assess the independence of any such legal counsel, consultants or advisors to the extent required by applicable SEC and NASDAQ rules. For additional information regarding these services, please see the discussion entitled “Role of Compensation Consultant” included in the Compensation Discussion and Analysis section of this Proxy Statement. In addition, the Compensation Committee has authority to delegate its responsibilities to subcommittees or individual Compensation Committee members.

Governance/Nominating Committee

The current members of the Governance/Nominating Committee are Messrs. Fox (Chairman), Reiland and Wagner. The Board believes that each member of the Governance/Nominating Committee satisfies the independence requirements of NASDAQ Rule 5605(e). The nominees for election to the Board at the Annual Meeting were recommended by the Governance/Nominating Committee. The Governance/Nominating Committee charter is posted on our Internet website, www.bwen.com , and may be amended by approval of the Board, upon recommendation by the Governance/Nominating Committee. The Governance/Nominating Committee met four (4) times in 2016.

The Governance/Nominating Committee reviews director nominees proposed by stockholders. A stockholder who wishes to recommend one or more director nominees must provide a written recommendation to our Corporate Secretary, at Broadwind Energy, Inc., 3240 South Central Avenue, Cicero, IL 60804. In order to recommend a nominee for director at an Annual Meeting pursuant to our Bylaws, our Corporate Secretary must receive the written nomination

not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding Annual Meeting (or, if the Annual Meeting is called for a date that is not within 30 days before or after such anniversary date, the written nomination must be so received not later than the close of business on the 10th day following the day on which notice of the date of the Annual Meeting was mailed or public disclosure of the date of the Annual Meeting was made, whichever first occurs).

Our Bylaws require that a notice of a recommendation must include:

• the name and record address of such stockholder and the beneficial owner, if any, on whose behalf the nomination is made,

• the class or series and number of shares of our capital stock which are owned beneficially or of record by such stockholder or such beneficial owner,

• whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares) has been made, the effect or intent of which is to mitigate loss to or manage risk or benefit of share price changes for, or to increase or decrease the voting power of, such stockholder or beneficial owner with respect to any shares of our stock (which information shall be updated by such stockholder and beneficial owner, if any, as of the record date or dates for the determination of stockholders entitled to notice of and to vote at the Annual Meeting not later than ten days after such record date or dates, and in any event, not later than one business day prior to the date of the Annual Meeting),

• a description of all arrangements or understandings between such stockholder or beneficial owner and each proposed director nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder,

• a representation that such stockholder intends to appear in person or by proxy at the Annual Meeting to nominate the person(s) named in its notice, and

• any other information relating to such stockholder or beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.

• the name, age, business address and residence address of such director nominee,

• the principal occupation or employment of such director nominee,

• the class or series and number of shares of our capital stock which are owned beneficially or of record by such director nominee,

• whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares) has been made, the effect or intent of which is to mitigate loss to or manage risk or benefit of share price changes for, or to increase or decrease the voting power of, such director nominee with respect to any shares of our stock (which information shall be updated by such stockholder as of the record date or dates for the determination of stockholders entitled to notice of and to vote at the Annual Meeting not later than ten days after such

record date or dates, and in any event, not later than one business day prior to the date of the Annual Meeting), and

• any other information relating to such stockholder or such beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.

Such notice must be accompanied by a written consent of each proposed director nominee to being named as a nominee and to serve as a director if elected. No person shall be eligible for election as a director unless nominated in accordance with the procedures set forth in our Bylaws. 

The Governance/Nominating Committee is responsible for matters relating to the selection of candidates for, and the tenure of the members of, the Board; for developing and recommending to the Board our Principles of Corporate Governance; and for overseeing and carrying out policies and processes that enhance the effective and efficient governance of the Company.

The Governance/Nominating Committee will consider candidates for the Board who are recommended by stockholders, directors, third party search firms engaged by us, and other sources. When selecting candidates for recommendation to the Board, the Governance/Nominating Committee will consider the attributes of the candidates and the needs of the Board and will review all candidates in the same manner, regardless of the source of the recommendation. In evaluating director nominees, a candidate should have certain minimum qualifications, including being able to read and understand basic financial statements, having familiarity with our business and industry, having high moral character and mature judgment, and being able to work collegially with others. In addition, factors such as the following shall be considered:

In February 2015, the Board amended our Principles of Corporate Governance to establish a mandatory retirement age of 72 years old for directors, provided that the Board may choose to make an exception to this policy when it determines that doing so would be in the best interests of us and our stockholders.

The Governance/Nominating Committee believes in an expansive definition of diversity that includes differences of experience, education and talents, among other things. The Broadwind Energy, Inc. Governance/Nominating Committee Policies for Director Nominations and Stockholder Proposals is available on our website, www.bwen.com . 

Stephanie K. Kushner has served as a member of the Board since February 23, 2016, and has served as our President and Chief Executive Officer since May 16, 2016, and as our Chief Financial Officer and Treasurer since August 15, 2009. She served as our Interim President and Chief Executive Officer from November 30, 2015 to May 16, 2016. Ms. Kushner has more than 30 years of accounting and finance experience, including serving as Chief Financial Officer for publicly traded global manufacturer Federal Signal Corporation (“ Federal Signal ”) from 2002 to 2008. She held several global finance leadership positions with FMC Corporation, and began her career with Amoco Corporation. From May 2011 to November 2014, Ms. Kushner served on the Board of Directors of Columbus McKinnon Corporation, a global manufacturer of material handling equipment. From February 2004 to May 2010, she served on the Board of Directors of Wabash National Corporation, a manufacturer of commercial fleet and consumer/retail transportation equipment. Ms. Kushner holds a bachelor’s degree in economics from Douglass College at Rutgers University and a Master of Business Administration degree from the Wharton School.

Eric B. Blashford has served as President of our wholly-owned subsidiary Broadwind Towers, Inc. since October 2014. From January 2012 to October 2014, he served as President of a group of companies owned by The Heico Companies, LLC (“ Heico ”), including Barko Hydraulics, LLC, Pettibone Traverse Lift, LLC and Tiffin Parts, LLC, all of which are manufacturers of heavy duty off road vehicles (and parts) for the forestry, material handling, oil and gas and construction industries. For the five years prior to joining Heico, Mr. Blashford served as President for a group of companies owned by The Scott Fetzer Co., serving the truck equipment, electrical fittings and industrial equipment markets. He started his career with Waltco Truck Equipment Company, where he served in various operations and accounting roles. Mr. Blashford holds a Bachelor of Science in Business Administration degree in Accounting from the University of Akron and a Master of Business Administration degree from Kent State University, and is a registered Certified Public Accountant (non-practicing) in the state of Ohio.

Jason L. Bonfigt has served as our Vice President, Corporate Controller and Principal Accounting Officer since August 1, 2016. Mr. Bonfigt was previously Vice President - Finance of our wholly-owned subsidiary Brad Foote Gear Works, Inc. (“ BFGW ”), beginning in April 2014, and before that served as our Director, Treasury beginning in March 2011. Mr. Bonfigt joined us in August 2008, and during his tenure has held various financial and operational

roles, focusing on financial reporting and control and financial planning and analysis. He began his career working in business planning functions at Schneider National, a provider of truckload, intermodal and logistics services. Mr. Bonfigt earned his Bachelor of Science degree in Accounting and Finance from the University of Wisconsin - Green Bay, and holds a Master of Business Administration degree in Finance and Economics from the Kellogg School of Business - Northwestern University.

David W. Fell has served as our Vice President since April 2014, as our General Counsel since May 2013 and as our Secretary since January 2013. He was previously our Associate General Counsel and Assistant Secretary, beginning in January 2009. Prior to joining us, Mr. Fell was Vice President and General Counsel of Apex Companies, LLC (“ Apex ”), a privately-held provider of environmental, health, safety and engineering services, starting in June 2007. For more than 12 years prior to joining Apex, he was employed by Equity LifeStyle Properties, Inc. (“ ELS ”), a publicly-traded real estate investment trust. During his tenure at ELS, Mr. Fell held the positions of Vice President, Associate General Counsel and Assistant Secretary. Prior to joining ELS, he was an attorney with the Chicago-based law firm of Winston & Strawn LLP, where he practiced transactional law. Mr. Fell earned his Bachelor of Arts degree in English and Psychology from the University of Wisconsin-Madison, and holds a Juris Doctor degree from Harvard Law School. 

Erik W. Jensen has served as our Vice President and Chief Human Capital Officer since July 2014.  Prior to joining us, he was Vice President of Human Resources of Pettibone, LLC (“ Pettibone ”), part of a privately-held group of manufacturing companies, starting in August 2011. For more than three years prior to joining Pettibone, Mr. Jensen was employed by ThyssenKrupp Crankshaft Company, a publicly-traded German company, where he held the position of Director of Human Resources. He began his career in the chemical industry with Stepan Company, a publicly-traded company, where during his 14 year career he transitioned from operations to human resources. Mr. Jensen earned his Bachelor of Science degree in Industrial Technology, with a concentration in Manufacturing Engineering from Eastern Illinois University, and holds a Master of Business Administration degree from Olivet Nazarene University.

Joseph V. Reisinger has served as our Vice President of Business Development since July 2016, as our Vice President of Product Management from December 2012 to July 2016, and as our Director of Environment, Health & Safety from June 2011 to December 2012. Prior to joining us, he was employed by GE for more than ten years. During his tenure at GE, Mr. Reisinger held various roles with the company’s nuclear, gas and steam power generation businesses as well as GE’s capital finance business. Mr. Reisinger earned his Bachelor of Science degree from the Massachusetts Maritime Academy.

Daniel E. Schueller has served as President of BFGW since May 2016.  He also served as President of BFGW from April 2010 to March 2013. In the interim period, Mr. Schueller was Vice President of Bronto Skylift (a subsidiary of Federal Signal) in Tampere, Finland, a manufacturer of truck mounted aerial equipment for fire protection and industrial applications. Prior to that assignment, he was Vice President/General Manager Parts and Service and Vice President/General Manager of Vactor Manufacturing, part of the Environmental Solutions Group of Federal Signal, from March 2003 to April 2010. Mr. Schueller previously held manufacturing positions at Tecumseh Engines and at Case New Holland. Mr. Schueller earned a Bachelor of Science Degree in Mechanical Engineering Technology from the Milwaukee School of Engineering, and a Master of Business Administration degree from St. Ambrose University. He currently serves on the Board of Directors of HCC Inc., a supplier of combine components to the agricultural industry, and was previously on the Advisory Board of the Illinois Manufacturing Excellence Center.

SEC Settlement Involving Chief Financial Officer

On February 11, 2015, a settlement was approved in connection with the SEC investigation previously disclosed in our SEC reports. The investigation related to certain accounting practices in 2009 - 2010 related to revenue recognition, cost accounting and intangible and fixed asset valuations concerning BFGW. In connection with the settlement, Ms. Kushner agreed to pay disgorgement and prejudgment interest of $23,109 and a penalty of $50,000 related solely to the intangible valuation issue. We subsequently reimbursed her for the disgorgement and prejudgment interest payment. For additional information regarding the investigation, please see Item 3 “Legal Proceedings” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as filed with the SEC.

COMPENSATION DISCUSSION AND ANALYSIS

Business Summary

We are a precision manufacturer of structures, equipment and components for clean tech and other specialized applications. We provide technologically advanced high value products to energy, mining and infrastructure sector customers, primarily in the U.S. Our most significant presence is within the U.S. wind energy industry, although we have diversified into other industrial markets in order to improve our capacity utilization and reduce our exposure to uncertainty related to favorable governmental policies currently supporting the U.S. wind energy industry. Within the U.S. wind energy industry, we provide products primarily to wind turbine manufacturers. Outside of the wind energy market, we provide precision gearing and specialty weldments to a broad range of industrial customers for oil and gas, mining, steel and other industrial applications.

On February 1, 2017, we acquired Red Wolf Company, LLC, a privately-held fabricator, kitter and assembler of industrial systems primarily supporting the global gas turbine market. The acquisition enables us to expand our market reach, competencies, capabilities and customer relationships, as well as diversify our product portfolio and geography. It also aligns with our new three-year growth strategy approved by our Board in late 2016 to expand and diversify our business through organic growth and strategic bolt-on acquisitions.

For a more detailed discussion of our business, please see Item 1, “Business”, of our Annual Report.

2016 Business Highlights

Following are highlights of our 2016 fiscal year:

How We Make Compensation Decisions

Pay for Performance Alignment

Our executive compensation program is intended to align the interests of our executive officers with those of our stockholders through the use of performance based incentives. The Compensation Committee designed the 2016 executive compensation program so that variable pay elements (performance based bonuses and long-term incentives) constituted a significant portion of the target compensation opportunity for each executive officer. 

Corporate Governance Framework

The Compensation Committee engages in an ongoing review of our executive compensation program to evaluate whether it supports our compensation policy and ultimately serves the interests of our stockholders. Following are highlights of our corporate governance framework, which the Compensation Committee believes reinforces our pay for performance philosophy:

Role of Compensation Consultant

Pursuant to the terms of its charter, the Compensation Committee has the authority to retain independent advisors to assist in carrying out its responsibilities. Beginning in 2011, the Compensation Committee engaged FW Cook, an independent compensation consultant, to advise the Compensation Committee on certain executive compensation matters, including with respect to benchmarking, compensation trends and retention practices. In 2016, FW Cook performed the following services for the Compensation Committee:

FW Cook does not provide any other services to us or management directly. Accordingly, its work on behalf of the Compensation Committee has not presented any conflict of interest.

Role of Senior Management in Compensation Decisions

The Board and the Compensation Committee make compensation decisions regarding our executive officers. However, in making executive compensation decisions, the Compensation Committee seeks and considers input from senior management. Senior management regularly participates in the Board’s and the Compensation Committee’s activities in the following specific respects:

Consideration of Prior Year Say-on-Pay Vote

In the Compensation Committee’s 2016 compensation setting process, the Compensation Committee considered the approval by approximately 88.9% of the votes cast on the “say-on-pay” proposal at our 2015 Annual Meeting and determined that our executive compensation philosophy, objectives and elements continue to be appropriate. Accordingly, the Compensation Committee did not make any changes to our 2016 executive compensation program in response to the 2015 “say-on-pay” vote. 

Use of Peer Group

Since 2008, the Compensation Committee has used a customized peer group for benchmarking purposes. The peer group has been revised and/or updated periodically, following recommendations from the Compensation Committee’s independent compensation consultant. The Compensation Committee most recently considered the appropriate peer group in October 2015. Following this review, the Compensation Committee approved the custom peer group set forth below to be used for 2016 executive compensation benchmarking purposes:

Elements of Compensation

Overview

The Compensation Committee has implemented a formalized compensation structure for our executive officers that includes base salary, an annual incentive opportunity and long-term incentives. In allocating compensation among these components, the Compensation Committee believes that each executive officer’s target compensation should include a significant performance-based component. The Compensation Committee does not solely use a formulaic approach in determining the weighting of each component of total compensation. Rather, after setting each separate component of compensation, the Compensation Committee reviews the total compensation package of each executive officer relative to market and performance.

Components

Base Salary

We pay our executive officers fixed annual salaries, which provide a degree of financial stability and are intended to reflect the competitive marketplace, to attract and retain quality executive officers. The Compensation Committee reviews base salaries for all executive officers on an annual basis. In determining the base salary for each executive officer, the Compensation Committee assesses the responsibilities associated with the executive officer’s position, individual contributions and performance, skill set, prior experience, and external pressures to attract and retain talent. Although the median of peer group market data is used as a benchmark to set base salaries for our executive officers, actual base salaries may be higher or lower than the median based on the factors set forth above.

Annual Incentive Opportunity

We provide our executive officers with short-term incentive compensation through our annual cash bonus program, the Short-Term Incentive Program (the “ STIP ”). The STIP is designed to reward our executive officers for achieving pre-established performance goals. The Compensation Committee administers the STIP, including setting annual incentive goals based upon both corporate financial and individual performance and determining the annual threshold, target and maximum payout levels for each executive officer. Under the STIP, each executive officer has an annual target bonus opportunity that is a fixed percentage of base salary and takes into account peer group market data and the unique skills and contributions of each individual. All payments under the STIP are subject to the discretion of the Compensation Committee. 

Long-Term Incentives

We provide our executive officers with long-term incentive compensation through our Long-Term Incentive Program (the “ LTIP ”). The LTIP is designed as a long-term incentive vehicle to retain key executive officers, promote higher levels of Company stock ownership by executive officers, and encourage long-term planning by the senior leadership team. The LTIP is intended to deliver market competitive long-term incentive opportunities that encourage the behaviors and long-term perspective necessary for creating stockholder value. The Compensation Committee administers the LTIP, including setting long-term incentive goals based upon corporate performance and determining the threshold, target and maximum payout levels for each plan year. Under the LTIP, each executive officer has a target bonus opportunity that is based on peer group market data and the unique skills and contributions of each individual. LTIP equity awards are made pursuant to the 2015 EIP.

Mix of 2017 Compensation Components for CEO

The chart below shows the targeted compensation components for our CEO for 2017:

2016 Actions

Base Salary

In connection with her promotion to President and CEO, effective May 20, 2016, Ms. Kushner’s annual base salary was increased from $350,700 to $418,000. Mr. Jensen’s annual base salary was increased from $205,000 to $215,250 effective August 1, 2016, pursuant to the Compensation Committee’s annual review of executive officers’ base salaries. Mr. Fell’s base salary was not adjusted in 2016. The following table sets forth 2016 base salary information for our NEOs:

Annual Incentive Opportunity

2015 STIP Payout .  The 2015 STIP used operating income (“ OI ”) as the financial measure for short-term incentive compensation purposes. Under the terms of the 2015 STIP, 70% of the potential bonus payout was based on the financial measure and 30% was based on achievement of individual objectives. Our 2015 OI results ($11,908,000 operating loss) fell short of the threshold payout level ($5,934,000 operating loss), and therefore no payments were made with respect to the 70% financial measure. Although various individual objectives were achieved, no payments were made with respect to the individual performance components because the terms of the 2015 STIP provided that such payments would only be funded to the extent of positive EBITDA (earnings before interest, taxes, depreciation, amortization, share-based payments and restructuring costs) and we did not achieve positive EBITDA in 2015. Therefore, the Compensation Committee determined in February 2016 that no payments would be made pursuant to the 2015 STIP to our executive officers. 

2016 STIP Structure . In January 2016, the Compensation Committee modified the STIP structure from the previous year to provide that 80% of the potential bonus payout would be based on financial performance and 20% would be based on achievement of individual objectives, as more fully described below.

Long-Term Incentives

2016 Payout under 2013 LTIP Performance-Based Cash Awards.

As shown in the table below, the performance targets for the 2013 LTIP, payable in 2016, were:

Our total adjusted EBITDA for the two-year performance period was $19,223,000, which resulted in a 53% payout of the performance-based cash incentive for the two-year performance period, subject to an additional one-year vesting requirement such that the award was paid if the executive officer was still employed by us on December 31, 2015. The following table summarizes the awards paid or issued to our NEOs in 2016 pursuant to the 2013 LTIP awards:  

Note :  As EBITDA is a non-GAAP (U.S. generally accepted accounting principles) measure, following is a reconciliation of total adjusted EBITDA over this two-year performance period to the most directly comparable GAAP measure:

2016 LTIP Structure . The 2016 LTIP structure was unchanged from prior years. Under the 2016 LTIP, the performance-based cash award payout ranges from 0% to 150% of target based on the total OI achieved over the two-year performance period ending December 31, 2017, subject to an additional one-year vesting requirement such that the executive officer must remain employed by us on December 31, 2018 in order to receive the award. The Compensation Committee utilized total OI as the performance metric in order to drive improved profitability. The table below shows,

for each NEO, the targeted LTIP value as a percentage of base salary, the target performance-based cash amount, and the time-based RSU grants which vest over three years in equal tranches as part of the 2016 LTIP awards to our NEOs:

2017 Actions

Base Salary

Pursuant to the Compensation Committee’s annual review of our executive officers’ base salaries, on February 21, 2017, Mr. Jensen’s annual base salary was increased from $215,250 to $221,708. Neither Ms. Kushner nor Mr. Fell received a base salary adjustment. The following table sets forth 2017 year-to-date base salary information for our NEOs:

Annual Incentive Opportunity

2016 STIP Payout .  The following table shows the threshold, target and maximum 2016 OI levels established for purposes of determining 2016 STIP award payouts for all executive officers:

For 2016, we reported OI of $1,909,000, an improvement of $13,817,000 from our 2015 operating loss of ($11,908,000), resulting in an award for the 80% financial performance component of the 2016 STIP equal to 126% of target. Additionally, based on the Compensation Committee’s assessment of each NEO’s performance against the NEO’s individual goals, the Compensation Committee awarded Ms. Kushner a payout of 111%, Mr. Fell a payout of 43%, and Mr. Jensen a payout of 115% against their respective individual performance targets, resulting in total 2016 STIP payouts to the NEOs as follows:

2017 STIP Structure . At its February 2017 meeting, the Compensation Committee did not change the structure of the STIP for 2017, with 80% of the potential bonus payout based on OI targets and 20% based on achievement of individual objectives.

Long-Term Incentives

2017 Payout under 2014 LTIP Performance-Based Cash Awards . Under the 2014 LTIP, the performance-based cash award payout ranged from 0% to 150% of target based on the total OI achieved over the two-year

performance period ending December 31, 2015, subject to an additional one-year vesting requirement such that the executive officer must remain employed by us on December 31, 2016 in order to receive the award. The Compensation Committee utilized total OI as the performance metric in order to drive improved profitability.

As shown in the table below, the performance targets under the 2014 LTIP, payable in 2017, were:

Actual OI for the two-year period totaled ($17,842,000) operating loss, below the threshold. Accordingly, no performance-based LTIP award payout was made to the participating executive officers in 2017.

2017 LTIP Structure . For 2017, the Compensation Committee modified the LTIP structure by (i) adopting a performance index (as described below, the “ PI ”) formula as the metric for calculating performance-based LTIP payouts, (ii) shifting to a higher level of performance-based versus time-based awards, (iii) providing that the award will be paid completely in our common stock (rather than 50% in common stock and 50% in cash, as in prior years), (iv) extending the performance period from two years to three years, and (v) providing that potential achievement ratings may range from 0% to 200% of target (rather than 0% to 150%, as in prior years). The 2017 LTIP awards were allocated in the following manner: 45% time-based RSUs which vest in three equal annual tranches on the anniversary of the grant date; and 55% performance-based RSUs tied to successful growth in the PI over a three-year performance period, beginning at the start of the fiscal year during which the RSUs are granted.

The performance-based RSU awards are tied to our success at growing stockholder value over the three-year performance period, as calculated below:

PI is measured annually, as:  ( Consolidated EBITDA x Target Multiple) – Average Net Debt  

Average Shares Outstanding

Where :

Target Multiple : Is set annually by the Board to approximate market EBITDA multiples for peers 

Average Net Debt :  Average of 12 monthly totals of Short-term debt + Long-term debt –Cash & Marketable Securities

Average Shares Outstanding : As presented in our external financial statements

Performance goals were set based on achieving targeted annual growth in PI from the initial base year (2016).  Payout of the performance-based bonus will be linked to achievement of cumulative total PI relative to the targeted PI for the three-year performance period. The Compensation Committee believes that this new LTIP structure will motivate management behaviors that further drive stockholder value.

The following table summarizes the awards granted to the NEOs under the 2017 LTIP, as approved by the Compensation Committee at its February 2017 meeting:

Severance and Change in Control Provisions

Our employment agreement with Ms. Kushner and our severance and non-competition agreements with our other executive officers contain severance and change in control provisions. These are more fully described below under the heading “Potential Payments Upon Termination of Employment or Change in Control.” The severance provisions are intended to protect the executive officers from the loss of reasonably expected compensation and benefits (i) if we terminate the executive officer’s employment without cause or (ii) in the case of Ms. Kushner, if she terminates her employment for good reason. We provide severance benefits to recruit and retain executive officers, and we believe this benefit enhances our ability to attract and retain executive officers during challenging economic circumstances and a competitive job market for executive talent. We believe the change in control provisions are aligned with the interests of our stockholders, enabling us to retain the executive officers in the event of a pending, threatened or actual change in control. The provisions are also intended to provide our executive officers with incentives to obtain the highest possible value in the event of a future acquisition of the Company, despite the risk of losing employment.

Other Benefits

Our executive officers participate in our corporate-wide benefit programs and are provided benefits that are generally commensurate with the benefits provided to other full-time employees, which includes participation in our qualified defined contribution plan. We do not provide our executive officers with perquisites or other personal benefits such as Company vehicles, club memberships, financial planning assistance, tax preparation, or other benefits. Term life insurance is provided to Ms. Kushner. Such perquisites are disclosed in the “Details Behind All Other Compensation Column” table below.

Other Compensation Practices and Policies

Stock Ownership Guidelines

To further align the interests of our executive officers and directors with the interests of our stockholders, the Board adopted stock ownership guidelines for our executive officers and directors in March 2011. The required stock ownership levels are to be achieved within five years of first appointment or election as an executive officer or director, as applicable. The stock ownership guidelines require (i) each director to own a number of shares of our common stock having a value equal to three times the annual cash retainer fees earned in the immediately preceding calendar year, and (ii) each executive officer to own a number of shares of our common stock having a value equal to a multiple of the executive officer’s base salary then in effect, divided by the closing price of the stock, as follows:

If an executive officer fails to satisfy the requirements of the stock ownership guidelines, the executive officer may have 25% of his or her annual incentive bonus paid solely in shares of our common stock until the executive officer owns the requisite number of shares. If a director fails to satisfy the requirements of the stock ownership guidelines, the director may have 25% of his or her director fees paid solely in shares of our common stock until the director owns the requisite number of shares. The Board has the authority and discretion to administer, interpret, amend or modify the stock ownership guidelines and to make all determinations that may be necessary or advisable in connection therewith ( e.g ., to take into account market volatility and instances of individual hardship).

Policies on Hedging and Pledging

Under our Policy Statement on Inside Information and Securities Trading (the “ Policy ”), all “Designated Persons” (as defined in the Policy to include our directors, officers and certain other key employees or representatives), are prohibited from entering into hedging or monetization transactions or similar arrangements with respect to our

securities, including the purchase or sale of “puts” or “calls” or the use of any other derivative instruments. Additionally, under the Policy, Designated Persons (i) may not pledge our securities as collateral for a loan, and (ii) must obtain pre-clearance from a “Securities Trading Administrator” (as defined in the Policy) before engaging in any transaction in our securities.

Clawback Policy

Under our Policy on Recoupment of Incentive Compensation, the Compensation Committee may in its discretion, and to the extent legally permitted, require the return, repayment or forfeiture of any annual or long-term incentive payment or award made or granted to any current or former executive officer during the 12-month period following the filing with the SEC of financial statements that are later the subject of a material negative restatement (a “ Restatement ”), if: (i) the payment or award was predicated upon achieving certain financial results that were subsequently the subject of the Restatement; (ii) the Compensation Committee determines that the executive officer engaged in intentional misconduct that caused the need for the Restatement; and (iii) a lower payment or award would have been made to the executive officer based upon the restated financial results. In each such instance, the amount required to be returned, repaid or forfeited shall be the amount by which the executive officer’s payment or award for the relevant period exceeded the lower payment or award that would have been made or granted based on the restated financial results.

In addition, the Compensation Committee may in its discretion, and to the extent legally permitted, require the return or repayment of any profits realized by such executive officer on the sale of our securities received pursuant to any such award granted during such 12-month period following the filing with the SEC of financial statements that are later the subject of such a Restatement, if the Compensation Committee determines that the executive officer engaged in intentional misconduct that caused the need for the Restatement.

Tax Deductibility of Executive Compensation

Section 162(m) of the IRC (“ Section 162(m )”) limits to $1,000,000 per year the deduction that a publicly held corporation may take for compensation paid to each of its CEO and the three other most highly compensated employees other than the CFO. An exception to this rule exists for compensation that is “performance-based,” as defined in the IRC. The structure of our executive compensation program has not historically given rise to Section 162(m) concerns. The Compensation Committee recognizes the desirability of preserving the deductibility of payments made to our executive officers and will continue to assess the impact of Section 162(m) on our compensation practices, taking into account other relative factors in its discretion including our net operating losses. However, the Compensation Committee believes that it must maintain flexibility in its approach in order to structure a program that is the most effective in attracting, motivating and retaining our key executive officers and therefore may, in its discretion, issue compensation to executive officers which is in excess of the amount deductible by reason of Section 162(m) or other provisions of the IRC.

2016 Summary Compensation Table

The following table provides information regarding the compensation earned during the last two fiscal years by the following executive officers, whom we collectively refer to as our “named executive officers” or “NEOs” for purposes of this Proxy Statement.

Outstanding Equity Awards at 2016 Year End  

The following table includes certain information with respect to the value of all unexercised options to purchase shares of our common stock and unvested shares of restricted stock and RSUs previously awarded to the NEOs as of December 31, 2016.