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. )
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Filed by the Registrant ☒
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Filed by a Party other than the Registrant ☐
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Check the appropriate box:
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☐ Preliminary Proxy Statement
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☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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☒ Definitive Proxy Statement
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☐ Definitive Additional Materials
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☐ Soliciting Material Pursuant to §240.14a-12
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IEH Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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☒ No fee required.
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☐ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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☐
Fee paid previously with preliminary materials.
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☐
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.
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1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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SEC 1913 (02-02)
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Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.
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IEH CORPORATION
140 58th Street, Bldg. B, Suite 8E
Brooklyn, New York 11220
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on Wednesday, December 16, 2020
To the Shareholders of IEH CORPORATION:
NOTICE IS HEREBY GIVEN
that the Annual Meeting of Shareholders of IEH CORPORATION (“IEH” or the "Company") will be held by virtual
electronic means on Wednesday, December 16, 2020 at 10:00 a.m. (Eastern Standard Time), New York time, for the following purposes:
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1.
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To elect three (3) Class I Directors to IEH's Board of Directors to hold office for a period of
two years or until their successors are duly elected and qualified;
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2.
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To hold a non-binding advisory vote on the compensation of our named executive officers;
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3.
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To ratify the appointment of Marcum LLP, as our independent registered public accounting firm;
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4.
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To adopt the 2020 Equity Based Compensation Plan; and
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5.
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To transact such other business as may properly come before the Annual Meeting or any adjournment
thereof.
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The close of business on
Monday, November 16, 2020 has been fixed as the Record Date for the determination of shareholders entitled to notice of, and to
vote at, the Annual Meeting and any adjournment thereof.
In light of the ongoing
COVID 19 pandemic and restrictions in the State of New York regarding the gathering of public non-essential meetings, the Annual
Meeting will be held via Zoom video conferencing. There will not be an in-person meeting. Voting will not be allowed in person
or through the Zoom meeting process. You are urged to return your proxy card or vote before the date of the meeting via (i) our
Internet process by electronic voting; (ii) telephone voting; or (iii) mailing your proxy card in the envelope provided so that
your proxy vote is received by Computershare, the Company’s transfer agent on or before December 15, 2020, the day before
the Annual Meeting. Votes may be submitted electronically by the Internet process not later than 5:00 AM, December 16, 2020.
The following are the instructions
to participate via Zoom video conferencing in the 2020 virtual Annual Meeting:
Please visit website:
www.Zoom.us/jointo join meeting. (You will be prompted to install the Zoom app, if you do not currently have it installed on your
mobile device or PC)
Meeting ID: 857 6945
7282
Password: 440855
You may use your mobile
device or PC's speaker and microphone for the audio portion (if available) or you may call:
Telephone Dial In: 1 253 215 8782
To find your local dial
in number go to: https://us02web.zoom.us/u/kcmOWl234x.
If you do not have Internet
access or prefer to just call in through your telephone, please simply call the telephone number above, and use the Meeting ID
and Password listed above. If you are asked for a Participant ID, please press # to bypass it.
Please see page 7 of this Proxy Statement for
additional information about voting, the Zoom meeting process and accessing the Zoom website.
Whether or not
you plan to participate, to ensure that your shares are represented and voted at the meeting, please either vote your shares:
(i) by completing and returning your proxy card mailed to you together with this Proxy Statement; or (ii) electronically over
the Internet or (iii) by telephone. Voting instructions are printed on your proxy card and included in the accompanying Proxy
Statement. Please vote as promptly as possible in order to ensure your representation at the meeting. Submitting your
instructions by any of these methods will not affect your right to attend the meeting and vote in person. Any prior proxy
will automatically be revoked if you execute the accompanying proxy or if you notify the Corporate Secretary of the Company,
in writing, prior to the annual meeting of shareholders.
Important Notice Regarding the Availability
of Proxy Materials for the Annual Meeting of Shareholders on Wednesday, December 16, 2020
The Proxy Statement and Our Annual Report to
Shareholders for the Fiscal Year Ended
March 31, 2020 are available at: http://www.investorvote.com/IEHC
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By Order of the Board of Directors
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/s/ Dave Offerman
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Dave Offerman
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Chief Executive Officer
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Dated: November 20, 2020
TABLE OF CONTENTS
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Page
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SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
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4
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MAILING OR INTERNET AVAILABILITY OF PROXY MATERIALS
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4
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Quorum
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5
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Voting Required
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Manner of Voting
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6
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ZOOM Conferencing Participation
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7
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Revocation of Proxies
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Solicitation of Proxies
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Annual Report
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Principal Offices
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Recommendation of the Board of Directors
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QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS
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9
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PROPOSAL 1 ELECTION OF DIRECTORS
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Board Structure and Nominees
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Other Executive Officers
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Significant Employees
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Compliance with Section 16(a) of the Exchange Act
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Delinquent Section 16(a) Reports
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Director Independence; Meetings of Directors; Corporate
Governance; Committees of the Board
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Nominations to the Board of Directors
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Communications with the Board of Directors
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PROPOSAL 2 ADVISORY VOTE ON EXECUTIVE COMPENSATION
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Vote Required and Board Recommendation
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PROPOSAL 3 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
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Principal Accountant Fees and Services During the Fiscal Years
March 31, 2020 and March 29, 2019
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Vote Required and Board Recommendation
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PROPOSAL 4 ADOPTION OF 2020 EQUITY BASED COMPENSATION PLAN
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EXECUTIVE COMPENSATION AND RELATED INFORMATION
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Executive Compensation
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Employment Agreements with Named Executive Officers
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Stock Option Plan
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30
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Cash Bonus Plan
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31
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VOTING SECURITIES AND SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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30
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
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HOUSEHOLDING OF PROXY MATERIALS
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SHAREHOLDER PROPOSALS
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ADDITIONAL INFORMATION
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OTHER BUSINESS
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IEH CORPORATION
140 58th Street
Building B, Suite 8E
Brooklyn, New York 11220
PROXY STATEMENT FOR THE IEH CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, DECEMBER 16, 2020
This proxy statement and
the accompanying form of proxy have been mailed on or about November 20, 2020 to the holders of record on Monday, November 16,
2020 (the “Record Date”) of the common stock, par value $.01 per share (“Common Stock”) of IEH CORPORATION,
a New York corporation (“IEH” or the “Company”) in connection with the solicitation of proxies by the Board
of Directors of IEH for use at the Annual Meeting of Shareholders to be held on Wednesday, December 16, 2020 at 10:00 a.m. (Eastern
Standard Time), New York time, via Zoom video conferencing and at any adjournment thereof.
SOLICITATION, VOTING AND REVOCABILITY OF
PROXIES
On Monday, November 16,
2020, the Record Date, there were issued and outstanding 2,370,251 shares of the Company’s Common Stock. Only holders of
Common Stock of record at the close of business on the Record Date are entitled to receive notice of and to vote at the Annual
Meeting and postponement thereof. Each share of Common Stock is entitled to one vote on each matter submitted to shareholders.
Shares of IEH's Common Stock represented by an effective proxy in the accompanying form will, unless contrary instructions are
specified in the proxy, be voted:
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1.
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FOR the election of the three (3) persons nominated by the Board of Directors to serve as
Class I Directors (Proposal 1);
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2.
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FOR the resolution approving the compensation of the named executive officers, as disclosed
in this proxy statement pursuant to the compensation disclosure rules of the SEC (Proposal 2);
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3.
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FOR the ratification of Marcum LLP as our independent registered public accounting firm
for the fiscal year ending March 31, 2021 (Proposal 3);
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4.
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FOR the adoption of the 2020 Equity Based Compensation Plan (Proposal 4); and
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5.
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FOR such other matters as may properly come before the Annual Meeting (including any vote
to adjourn the meeting) or any adjournment thereof and for which the persons named on the enclosed proxies determine, in their
sole discretion, to vote in favor.
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Any such proxy may be revoked
at any time before it is voted. A shareholder may revoke this proxy by notifying the Secretary of IEH either in writing prior to
the Annual Meeting or in person at the Annual Meeting, by submitting a proxy bearing a later date or by voting at the
Annual Meeting.
MAILING OR INTERNET AVAILABILITY OF
PROXY MATERIALS
We are
furnishing proxy materials to our shareholders both by mailing printed copies of those materials to each shareholder and by
making such materials available by the Internet. On or about November 20, 2020, we mailed to our shareholders our proxy
materials, including our proxy statement and our annual report. For this year’s virtual Annual Meeting, all
determinations of a quorum will be based upon submission of your voting of your shares by proxy, telephone or internet
voting, all of which must be completed or received not later than 5:00 AM, December 16, 2020. Due to the coronavirus
pandemic, there will be no in-person voting at this year’s virtual Annual Meeting. Accordingly, shareholders are urged
to use one of the three voting methods described in this Proxy Statement to vote their shares. Set forth below are
instructions to our shareholders on how to access their proxy card to vote through the Internet or by telephone.
For the 2020 Annual Meeting,
the Company will furnish printed copies of our proxy materials to our record shareholders and make available additional copies
for beneficial holders of the Company’s Common Stock. In the future, the Company may elect to furnish proxy materials to
our shareholders primarily via the Internet, instead of mailing printed copies, and only furnish printed copies of proxy materials
upon shareholder request.
Quorum
The
presence of a majority of the holders of the outstanding shares of Common Stock entitled to vote, in person or represented by proxy,
will constitute a quorum for the transaction of business. Shares are counted as present at the Annual Meeting if you have properly submitted a proxy. There will be no in person attendance taken at this year’s
virtual Annual Meeting. In addition, abstentions and broker non-votes are counted
as present at the Annual Meeting for the purpose of determining the presence of a quorum. A “broker non-vote” occurs
when a broker, bank or other nominee holding shares for a beneficial owner in “street name” does not vote on a particular
proposal because the broker, bank or other nominee does not have discretionary voting power with respect to that proposal and has
not received voting instructions from the beneficial owner.
Voting Required
Election
of Directors (Proposal 1) is by a plurality of the votes cast at a meeting of the shareholders by the holders of shares entitled
to vote in the election with the three (3) nominees receiving the highest vote totals to be elected as a Class I Directors of IEH.
Broker non-votes and properly executed proxies marked “WITHHOLD” with respect to the election of a director will not
be voted with respect to the director indicated. Votes that are withheld and broker non-votes will not affect the outcome of the
election of directors.
The affirmative vote
of a majority of the shares of Common Stock represented in person or by proxy and entitled to vote is required to approve the advisory
vote on executive compensation in Proposal 2. Because this vote is advisory and is not binding on our Board of Directors, the directors
will take into account the outcome of the vote when considering future executive compensation arrangements as it deems appropriate.
Abstentions will have the same effect as voting against the resolution. Because broker non-votes are not counted as votes for or
against this resolution, they will have no effect on the outcome of the vote.
The
ratification of the appointment of Marcum LLP, as our independent registered public accounting firm for the fiscal year ending
March 31, 2021 (Proposal 3) requires the affirmative vote by holders of at least a majority of the shares of IEH’s Common
Stock who attend the Annual Meeting in person or are represented at the meeting by proxy and who cast votes. Abstentions will have
the effect of a vote against this proposal, while broker non-votes will not be taken into account in determining the outcome of
the vote on this proposal.
The
approval and adoption of the 2020 Equity Based Compensation Plan (Proposal 4) requires the affirmative vote majority of the shares
of Common Stock represented in person or by proxy and entitled to vote Broker non-votes and properly executed proxies marked “WITHHOLD”
with respect to Proposal 4 will not be voted with respect to the adoption of the 2020 Equity Based Compensation Plan. Votes that
are withheld and broker non-votes will have the same effect as a “no” vote.
Any
other matter properly submitted to the shareholders will require the affirmative vote of a majority of the shares represented and
entitled to vote, in person or by proxy, at the Annual Meeting, unless a greater percentage is required either through law or by
our amended certificate of incorporation or bylaws. If you “abstain” from voting on any of these matters, your abstention
will be considered as present and entitled to vote for purposes of determining the presence of a quorum, but will have the effect
of a vote against the particular matter. In addition, the proxy confers discretionary authority to the persons named in the proxy
authorizing those persons to vote, in their discretion, on any other matters properly presented at the Annual Meeting of shareholders.
The Board of Directors is not currently aware of any such other matters. If any other matter does properly come before the Annual
Meeting, the Board of Directors intends that the persons named in the enclosed form of proxy will vote on such matter in accordance
with their judgment. The persons named as proxies may propose one or more adjournments of the Annual Meeting to permit further
solicitations of proxies or for other reasons. Any such adjournment would require the affirmative vote of the majority of the outstanding
shares present in person or represented by proxy at the Annual Meeting.
Manner of Voting
Voting by Proxy
– Shareholders of Record
If your shares are registered
directly in your name with our transfer agent, Computershare, you are considered a “shareholder of record” and you
may vote in person by attending the meeting, or by mailing a marked, signed and dated proxy card delivered with these proxy materials
and returning it in the postage-paid envelope provided, or by voting your shares by proxy over the Internet or by telephone by
following the instructions provided below and pursuant to the instructions provided in the proxy card. Instructions for voting
by mail and via the Internet, by telephone are summarized below. There will be no in person meeting and therefore no voting in
person at the meeting. To vote, you must use one of the methods described below:
By Mail - Mark,
sign and date proxy card and return it in the postage-prepaid envelope provided to you.
By Internet - If
you have Internet access, you may submit your proxy by using the Internet or a Mobile Phone to vote your proxy by accessing www.Investorvote.com/IEHC.
Have your proxy card available when you access the above website. Follow the prompts to vote your shares.
By Telephone -
You may submit your proxy via telephone by calling 1-800-652-8683 (VOTE) within the U.S.A., U.S. Territories and Canada
using a touchtone telephone. Have your proxy card available when you call. Follow the voting instructions to vote your shares.
If you are a shareholder
of record, your shares will be voted in the manner that you indicate in your proxy card or via the Internet or by telephone. If
you return a signed proxy card but do not indicate how you wish to vote your shares, your shares will be voted:
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FOR election of the three (3) nominees for Class I Director (Proposal 1);
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FOR the resolution approving the compensation of the named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the SEC (Proposal 2);
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FOR the ratification of Marcum LLP, as our independent registered public accounting firm for fiscal year ending March 31, 2021 (Proposal 3); and
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FOR the adoption of the 2020 Equity Based Compensation Plan (Proposal 4).
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If any other business
properly comes before the shareholders for a vote at the Annual Meeting, or at any adjournments or any postponements of the Annual
Meeting, your shares will be voted according to the discretion of the holders of the proxy.
Voting
by Proxy – Shares held in Street Name
If your shares are
held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in “street
name.” Most beneficial owners whose stock is held in the name of a broker, bank or other nominee receive instructions for
granting proxies from their brokers, banks or nominees, rather than our proxy card. Telephone and Internet voting are usually available
to shareholders owning shares through certain brokers, banks and nominees. You can vote your shares held through a broker, bank
or nominee by following the voting instructions sent to you by that institution. If Internet or telephone voting is unavailable
from your bank or brokerage firm, please complete and return the enclosed voting instruction card in the addressed, postage paid
envelope provided. If you provide specific voting instructions, your shares will be voted as you instruct. If you sign but do not
provide instructions, your shares will be voted as described below. If you hold your shares in “street name” through
a broker or other nominee, then the broker who holds your shares has the authority under the applicable stock exchange rules to
vote on certain items when they have not received instructions from you. However, as explained above, if you hold your shares in
street name you must cast your vote if you want it to count for Proposals 1, 2, or 4; no votes will be cast on your behalf on such
proposals if you hold your shares in street name and you do not instruct your bank or broker how to
vote. Your bank or broker will,
however, continue to have discretion to vote any uninstructed shares on the ratification of the appointment of the Company’s
independent registered public accounting firm (Proposal 3 of this proxy statement).
Voting In Person at
the Annual Meeting
As we are holding the
meeting via electronic means through the Zoom platform, there will be no in person voting at the meeting. Shareholders should vote
by proxy to ensure his or her vote is counted.
ZOOM Conferencing Participation
In light of the ongoing
COVID 19 pandemic and restrictions in the State of New York regarding the gathering of public non-essential meetings, the Annual
Meeting will be held via Zoom video conferencing. There will not be an in-person Annual Meeting. The following are the instructions
to participate via Zoom video conferencing:
Please visit website:
www.Zoom.us/jointo join meeting. (You will be prompted to install the Zoom app, if you do not currently have it installed on your
mobile device or PC)
Meeting ID: 857 6945
7282
Password: 440855
You may use your mobile
device or PC's speaker and microphone for the audio portion (if available) or you may call:
Telephone Dial In from
New York: 1 253 215 8782
To find your local
dial in number go to: https://us02web.zoom.us/u/kcmOWl234x.
If you do not have internet
access or prefer to just call in through your telephone, please simply call the telephone number above, and use the Meeting ID
and password listed above. If you are asked for a Participant ID, please press # to bypass it.
General instructions
for Zoom:
You
can join a Zoom meeting via teleconferencing/audio conferencing (using a traditional phone). This is useful when:
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you do not have a microphone or speaker on your PC/Mac,
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you do not have a smartphone (iOS or Android) while on the road, or
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you cannot connect to a network for video and VoIP (computer audio)
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dial the number provided to you by the meeting host. You will be prompted to enter the meeting
ID - the nine (9), ten (10), or eleven (11) digit ID provided to you by the host, followed by #.
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If
the meeting has not already started and join before host is not enabled, you will be prompted to enter the host key to start the
meeting, or to press # to wait if you are participant.
You
will be prompted to enter your unique participant ID. This only applies if you have joined on the computer or mobile device or
are a panelist in a webinar. Press # to skip.
Revocation of Proxies
Any proxy may be revoked
at any time before it is voted at the Annual Meeting. A shareholder may revoke a proxy by submitting a proxy bearing a later date
or by notifying the Secretary of IEH either in writing prior to the Annual
Meeting. Revocation is effective only upon receipt of
such notice by the Corporate Secretary of IEH.
Solicitation of Proxies
IEH
will bear the cost of the solicitation of proxies by the Board of Directors. The Board of Directors may use the services of its
executive officers and certain directors to solicit proxies from shareholders in person and by mail, telegram and telephone. Arrangements
may also be made with brokers, fiduciaries, custodians and nominees to send proxies, proxy statements and other material to the
beneficial owners of IEH’s Common Stock held of record by such persons, and IEH may reimburse them for reasonable out-of-pocket
expenses incurred by them in so doing.
Rules adopted by the
Securities and Exchange Commission (“SEC”) allow companies to send shareholders a “notice of Internet
availability of proxy materials” rather than mail them full sets of proxy materials. This year, we chose to mail full
packages of materials to our shareholders. However, in the future, we may take advantage of this new distribution option. If,
in the future, we choose to send such notices, they would contain instructions on how shareholders can access our Notice of
Annual Meeting and proxy statement and vote via the Internet or telephone. It would also contain instructions on how
shareholders could request to receive their materials electronically or in printed form on a one-time or ongoing basis. For
this year’s virtual Annual Meeting, the Company will offering voting by mail, via the Internet and by telephone. Due to
the coronavirus pandemic, there will be no in-person voting at this year’s virtual Annual Meeting.
Annual Report
The Annual Report to Shareholders
on Form 10-K for the fiscal year ended March 31, 2020, including financial statements, accompanies this proxy statement. Any reference
in this proxy statement to the “year” or the “fiscal year” means IEH’s fiscal year commencing April
1, 2019 to and including March 31, 2020, unless otherwise specifically indicated. This proxy statement and the Annual Report to
Shareholders for the fiscal year ended March 31, 2020, are available at: http://www.investor vote.com/IEHC.
Principal Offices
The principal executive
offices of IEH are located at 140 58th Street, Bldg. B, Suite 8E, Brooklyn, New York 11220. IEH's telephone number is (718) 492-4440.
Recommendation of the Board of Directors
The recommendations of
our Board of Directors are set forth in the description of the matters to be acted on in this proxy statement. In summary, our
Board of Directors recommends a vote:
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FOR election of the three (3) nominees for Class I Director (See Proposal 1);
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FOR the resolution approving the compensation of the named executive officers, as disclosed
in this proxy statement pursuant to the compensation disclosure rules of the SEC (See Proposal 2); and
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FOR the ratification of Marcum LLP, as our independent registered public accounting firm
for fiscal year ending March 31, 2021 (See Proposal 3).
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FOR the adoption of the 2020 Equity Based Compensation Plan (See Proposal 4).
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With respect to any
other matter that properly comes before the Annual Meeting, including any motion to adjourn the Annual Meeting, the proxy holders
will vote as recommended by the Board of Directors or, if no recommendation is given, they will vote in their own discretion. If
you sign and return your proxy card but do not specify how you want to vote your shares, the persons named as proxy holders on
the proxy card will vote in accordance with the recommendations of the Board of Directors.
QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS
Why am I receiving this proxy statement?
This proxy statement describes
the proposals on which our Board of Directors of IEH Corporation would like you, as a shareholder, to vote at the Annual Meeting
of the Shareholders of the Company, which will take place on Wednesday, December 16, 2020 at 10:00 a.m. It also gives you information
on these proposals so that you can make an informed decision. We intend to mail this proxy statement and accompanying proxy card
on or about November 20, 2020 to all shareholders of record entitled to vote at the Annual Meeting as of Monday, November 16, 2020,
the Record Date.
We intend to hold our 2020 Annual Meeting
in light of the COVID-19 pandemic by means of remote communications only (i.e., a virtual-only annual meeting). The 2020 Annual
Meeting will be conducted via live webcast hosted by ZOOM. Information about voting your shares and about attending the virtual
Annual Meeting is available in the 2020 Annual Meeting Proxy Statement. All voting will be conducted by either submitting your
proxy by mail, voting electronically by the Internet, or voting by telephone. Due to the virtual format, there will be no ability
to vote your shares at the Annual Meeting.
In this proxy statement,
we refer to IEH Corporation as “IEH,” the “Company,” “we,” “us” or “our.”
Who can vote at the Annual Meeting of Shareholders?
Shareholders who owned
shares of Common Stock on Monday, November 16, 2020, the Record Date, may attend and vote at the Annual Meeting. Each share is
entitled to one vote. There were 2,370,251 shares of the Company’s Common Stock issued and outstanding on Monday, November
16, 2020. All shares of Common Stock shall vote together as a single class. Information about the shareholdings of our directors
and executive officers is contained in the section of this proxy statement entitled “Voting Securities and Security Ownership
of Certain Beneficial Owners and Management” on pages 31 through 32 of this proxy statement.
What is the proxy card?
The proxy card enables
you to appoint: (i) Dave Offerman, our President and Chief Executive Officer; and (ii) William H. Craig, our Chief Financial Officer
as your representatives at the Annual Meeting. By completing and returning the proxy card, you are authorizing each of these persons
to vote your shares at the Annual Meeting in accordance with your instructions on the proxy card. This way, your shares will be
voted whether or not you attend the Annual Meeting through the Zoom platform. If a proposal comes up for vote at the Annual Meeting
that is not on the proxy card, the proxies will vote your shares, under your proxy, according to their best judgment.
What am I voting on?
At the Annual Meeting you
are being asked to vote on four (4) specific items as follows:
First is the election of Eric C. Hugel, Sonia
Marciano and Michael E. Rosenfeld, as Class I Directors on the Board of Directors of IEH. Each of Eric Hugel, Sonia Marciano and
Michael Rosenfeld are currently directors of the Company.
Second, you are being asked
to vote on and approve a resolution approving the compensation of the named executive officers, as disclosed in this proxy statement
pursuant to the compensation disclosure rules of the SEC.
Third, at the Annual Meeting
you are also being asked to ratify Marcum LLP, as our independent registered public accounting firm for the fiscal year ending
March 31, 2021.
Fourth, you are being asked
to adopt the 2020 Equity Based Compensation Plan.
We are unaware of any other
possible business to be addressed at the Annual Meeting; however, we will also
transact any other business that properly comes
before the Annual Meeting in accordance with our By-Laws.
How does the Board of Directors recommend
that I vote?
Our Board of Directors
unanimously recommends a vote FOR election of the nominees for Class I Director (See Proposal 1).
Our Board of Directors
unanimously recommends a vote FOR the resolution approving the compensation of the named executive officers, as disclosed in this
proxy statement pursuant to the compensation disclosure rules of the SEC (See Proposal 2).
Our Board of Directors
unanimously recommends a vote FOR the ratification of Marcum LLP as our independent registered public accounting firm for fiscal
the year ending March 31, 2021 (See Proposal 3).
Our Board of Directors
unanimously recommends a vote FOR the adoption of the 2020 Equity Based Compensation Plan (See Proposal 4).
With respect to any other
matter that properly comes before the Annual Meeting, the proxy holders (William Craig and Dave Offerman) will vote as recommended
by the Board of Directors, or if no recommendation is given, they will vote in their own discretion. If you sign and return your
proxy card but do not specify how you want to vote your shares, the persons named as proxy holders on the proxy card will vote
in accordance with the recommendations of the Board of Directors.
What is the difference between holding shares
as a shareholder of record and as a beneficial owner?
Most of our shareholders
hold their shares beneficially in an account at a brokerage firm, bank or other nominee holder, rather than holding share certificates
in their own name. As summarized below, there are some distinctions between shares held record and those owned beneficially.
Shareholder of Record
If on Monday, November
16, 2020, the Record Date, your shares were registered directly in your name with our transfer agent, Computershare, you are a shareholder
of record who may vote at the Annual Meeting, and we are sending these proxy materials directly to you. As the shareholder of record,
you have the right to direct the voting of your shares by returning the enclosed proxy card to us or using the electronic voting
process described elsewhere in this proxy statement. or over the telephone. As there will be no in person attendance at the meeting,
please complete, date and sign the enclosed proxy card to ensure that your vote is counted or vote through the telephone or internet
process.
Beneficial Owner
If on Monday, November
16, 2020, the Record Date, your shares are held in an account at a brokerage firm or at a bank or other nominee holder, you are
considered the beneficial owner of shares held “in street name,” and these proxy materials are being forwarded to you
by your broker, bank or other nominee holder who is considered the shareholder of record for purposes of voting at the Annual Meeting.
As the beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote your shares and to attend
the Annual Meeting (by virtual attendance). If your shares are registered in the name of a bank, other nominee holder or brokerage
firm you will receive instructions from your holder of record that must be followed in order for the record holder to vote the
shares per your instructions. If you provide specific voting instructions your shares will be voted as you instruct. If you sign
but do not provide instructions, your shares will be voted as described below. Many banks and brokerage firms have a process for
their beneficial holders to provide instructions over the telephone or via the Internet. If Internet or telephone voting is unavailable
from your bank or brokerage firm, please complete and return the enclosed voting instruction card in the addressed, postage paid
envelope provided. If you hold your shares “in street name” through a broker, bank or other nominee holder, then the
broker, bank or other nominee holder who holds your shares has the authority under the applicable stock exchange rules to vote
on certain items when they have not received instructions from you. If you hold your shares “in street name” it is
critical that you cast your vote, if you want it to count in the election of directors
(Proposal 1) and with respect to Proposal
2 (advisory vote on executive compensation). In the prior years, if you held your shares “in street name” and you did
not indicate how you wanted your shares voted in the election of directors, your bank, broker or other nominee was allowed to vote
your shares on your behalf in the election of directors as they felt appropriate. Recent changes in regulation were made to take
away the ability of your bank, broker or other nominee to vote your uninstructed shares in the election of directors on a discretionary
basis. Thus, if you hold your shares “in street name” and you do not instruct your bank, broker or other nominee how
to vote in the election of directors, no votes will be cast on your behalf. Your bank, broker or other nominee will, however, continue
to have discretion to vote your uninstructed shares on the ratification of the appointment of the Company’s independent registered
public accounting firm (Proposal 3). With respect to Proposal 4 (adoption of the 2020 Equity Based Compensation Plan), if you hold
your shares in street name you must cast your vote if you want it to count for Proposal 4. No votes will be cast on your behalf
on such proposal if you hold your shares in street name and you do not instruct your bank or broker how to vote on Proposal 4.
If you are a beneficial owner, please complete the voting instruction card and return it as instructed to your brokerage firm,
bank or other nominee holder so your shares of Common Stock will be counted toward a quorum and voted at the Annual Meeting.
How do I vote?
There are three methods
to vote at the Annual Meeting - by mail, over the telephone, via the Internet, Due to the coronavirus pandemic, there will be no in-person voting
at this year’s virtual Annual Meeting.
(1)
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You may vote by mail.
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You may vote by mail by
completing, signing and dating your proxy card and returning it in the enclosed, postage-paid and addressed envelope. If you mark
your voting instructions on the proxy card, your shares will be voted:
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·
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according to the best judgment of Messrs. Dave Offerman or William H. Craig if a proposal comes up for a vote at the Annual
Meeting that is not on the proxy card.
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If you return a signed card, but do not provide
voting instructions, your shares will be voted:
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to approve the election of the nominated persons as Class I Directors to the Company’s Board
of Directors;
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to approve the resolution approving the compensation of the named executive officers, as disclosed
on this proxy statement pursuant to the compensation disclosure rules of the SEC;
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to ratify the appointment of the Company’s independent registered public accounting firm
for the fiscal year ending March 31, 2021; and
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according to the best judgment of Messrs. William Craig and Dave Offerman if a proposal comes up
for a vote at the Annual Meeting that is not on the proxy card.
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(2)
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You may vote over the telephone by calling 1-800-652-8683 (VOTE) within the U.S.A., U.S. territories and Canada using a
touchtone telephone
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(3)
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You may vote via the Internet by accessing www.Investorvote.com.
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What does it mean if I receive more than
one proxy card?
You may have multiple accounts
at the transfer agent and/or with stockbrokers. Please sign and return all proxy cards to ensure that all of your shares are voted.
What if I change my mind after I return my proxy?
You may revoke your proxy
and change your vote at any time before the polls close at the Annual Meeting. You may do this by:
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sending a written notice to the Corporate Secretary of the Company, Mr. William Craig, stating
that you would like to revoke your proxy of a particular date; and
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signing another proxy card with a later date and returning it before the polls close at the Annual
Meeting.
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Polls close at 5:00 a.m.
New York time on the date of the Annual Meeting. Please note, however, that if your shares are held of record by a brokerage firm,
bank or other nominee, you must instruct your broker, bank or other nominee that you wish to change your vote by following the
procedures on the voting form provided to you by the broker, bank or other nominee.
Will my shares be voted if I do not sign
and return my proxy card?
If your shares are held
in street name or in your name and you do not sign and return your proxy card, your shares will not be voted unless you vote by
telephone or via the Internet procedures described elsewhere in the proxy statement.
How are votes counted?
You may vote “For”
or “Withhold Authority” on electing the nominated persons to be Class
I Directors on the Board of Directors (Proposal 1), and “For” or “Against”
or “Abstain” with respect to the: (i) non-binding advisory vote on the
compensation of our named executive officers (Proposal 2); and (ii) ratification of Marcum LLP, as our independent registered public
accounting firm for the fiscal year ending March 31, 2021 (Proposal 3) and (iii) adoption of the 2020 Equity Based Compensation
Plan .
How many shareholders are needed either
in person or by proxy to hold the Annual Meeting?
To hold this year’s virtual Annual Meeting and conduct business,
a majority of the Company ‘s outstanding shares of Common Stock entitled to vote must be represented by proxy and therefore
present via the holders of the proxies present at the Annual Meeting. This is called a quorum. Due to the coronavirus pandemic,
there will be no in-person voting at this year’s virtual Annual Meeting.
Shares are counted as present
at the Annual Meeting if the shareholder either:
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the shareholder has voted via the telephone or internet procedures; or
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has properly submitted a proxy card by mail.
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How many votes are required to elect the
nominated persons to be Class I Directors on the Board of Directors?
The affirmative vote of
a plurality of the votes cast at the Annual Meeting of the shareholders by the holders of shares of Common Stock entitled to vote
in the election is required to elect each director.
How many votes are required to adopt the
2020 Equity Based Compensation Plan?
The affirmative vote of
a majority (1,185,126 shares) of the shares issued and outstanding of the Company (2,370,251 shares) are required for the adoption
of the 2020 Equity Based Compensation Plan.
How many votes are required to approve other
matters that may come before the shareholders at the Annual Meeting?
An affirmative vote of
a majority of the votes cast at the Annual Meeting is required for approval of all other items being submitted to the shareholders
for their consideration.
What happens if I don’t indicate how to vote my
proxy?
If you just sign your proxy
card without providing further instructions, your shares will be counted as a “FOR” vote for the election of
the persons nominated to be Class I Directors (See Proposal 1). Your shares will also be counted as a “FOR”
vote: (i) to approve the resolution approving the non-binding advisory vote on the compensation of the
named executive officers
(See Proposal 2); and (ii) to ratify the appointment of the Company’s independent registered public accounting firm for the
fiscal year ending March 31, 2021 (See Proposal 3) and (iii) in favor of adoption of the 2020 Equity Based Compensation Plan (See
Proposal 4).
Is my vote kept confidential?
Proxies, ballots and voting
tabulations identifying shareholders are kept confidential and will not be disclosed except as may be necessary to meet legal requirements.
Where do I find the voting results of the
Annual Meeting?
We will announce preliminary
voting results at the Annual Meeting. We will also publish the final results in our quarterly report on Form l0-Q for the fiscal
quarter following the results of the voting on this matter or by a Current Report on Form 8-K. Each of a Form 10-Q or Form 8-K
shall be filed with the SEC. You can obtain a copy by calling the SEC at l-800-SEC-0330 for the location of the nearest public
reference room, or through the EDGAR system at www.sec.gov.
Who can help answer my questions?
You can contact our corporate
headquarters at (718) 492-4440 or by sending to Mr. William Craig, Chief Financial Officer, at 140 58th Street, Bldg. B, Suite
8E, Brooklyn, New York 11220, any questions about proposals described in this proxy statement or how to execute your vote.
PROPOSAL 1
ELECTION OF DIRECTORS
Board Structure and Nominees
IEH's Certificate of Incorporation
provides that the directors of IEH are to be elected in two (2) classes; each class to be elected to a staggered two (2) year term
and until their successors are duly elected and qualified. The Board of Directors currently consists of six (6) members divided
into two (2) classes with three Class I Members and three Class II Members. The Bylaws of IEH provide that the Board shall consist
of between three and eleven persons, and the Board has currently set the number of persons on the Board at six (6) members. The
Class I Members of the Board are scheduled to be elected at the Company’s 2020 Annual Meeting. All officers are elected by
and serve at the discretion of the Board of Directors.
The persons nominated for
election to IEH's Board of Directors at the 2020 Annual Meeting are Eric C. Hugel, Sonia Marciano and Michael E. Rosenfeld who
will each serve, if elected, as Class I Directors of the Board. Each of the nominees currently serves on the Board of Directors.
The affirmative vote of
a plurality of the votes cast at a meeting of the shareholders by the holders of shares of Common Stock entitled to vote in the
election is required to elect each Director. All proxies received by the Board of Directors will be voted for the election as Directors
of the nominee as indicated below if no direction to the contrary is given. In the event that the nominee is unable to serve, the
proxy solicited hereby may be voted, in the discretion of the holder of the proxy, for the election of another person in his stead.
The Board of Directors knows of no reason to anticipate this will occur. No family relationships exist between any Director or
nominee for election as a Director.
THE BOARD OF DIRECTOR RECOMMENDS THAT YOU VOTE “FOR”
THE THREE (3) NOMINEES FOR CLASS I DIRECTORS AS DESCRIBED IN THIS PROPOSAL 1.
The following table sets
forth certain information as of the date hereof with respect to all of the Directors of IEH, including the three (3) nominees for
election as Class I Directors to IEH's Board of Directors at the Annual Meeting. The information provided below indicates the Directors
whose terms of office expire at the Annual Meeting and the Directors whose term of office expires in 2020. The Directors whose
terms of office expire at the Annual Meeting are the persons nominated to be Class I Directors for election at the Annual Meeting.
Name
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Director
Since
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Age
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Position with Company
|
Term Expires
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Dave Offerman
|
2016
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45
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Chairman of the Board of
Directors and President
|
2021
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Allen Gottlieb
|
1992
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79
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Class II Director
|
2021
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Gerald E. Chafetz
|
2009
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77
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Class II Director
|
2021
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Eric C. Hugel
|
2016
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49
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Class I Director
|
2020
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Dr. Sonia Marciano
|
2016
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57
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Class I Director
|
2020
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Michael E. Rosenfield
|
2018
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37
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Class I Director
|
2020
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________________
Allen Gottlieb (Class
II Director) has been a member of IEH’s Board of Directors since 1992. Mr. Gottlieb is retired. Mr. Gottlieb was previously
engaged in the practice of law for 40 years, specializing in Labor-Management Relations.
Gerald E. Chafetz (Class
II Director) has been a member of IEH’s Board of Directors since 2009. He is the President of GEC Enterprises, LLC which
he founded in April 2010. GEC Enterprises LLC provides consulting services to property management companies and a group of window
and door retain stores. Prior to April 2010, Mr. Chafetz had been the President of Capitol City Companies since 1989. Capitol City
Companies is a property management and home improvement business headquartered in Hartford, Connecticut. Prior to founding Capitol
City Companies, he had an extended 22-year executive career in the textile industry with several knitwear and high fashion companies.
Dave Offerman (Class II Director) has
been a member of IEH’s Board of Directors since July 15, 2016. On March 26, 2017, Dave was elected by the Board of Directors
to replace his father, Michael Offerman, as Chairman of the Board, President and Chief Executive Officer of the Company following
Michael Offerman’s passing on March 24, 2017. Previously Dave was the Vice President - Sales and Marketing of the Company.
He joined the Company in September 2004 as the National Sales Manager and was appointed to Vice-President – Sales and Marketing
in April 2011. Prior to joining IEH, Dave worked as an account executive and sales manager in the telecommunication industry. Dave
graduated from the University of Michigan in 1993 with a Bachelor of Arts in film and communications. In 2016 he received an MBA
from the NYU Stern School of Business with a concentration in leadership and management.
Dr. Sonia Marciano (Class I Director)
(Nominee) has been a member of IEH’s Board of Directors since July 15, 2016. She is a clinical professor at the NYU Stern
School of Business since July 2007 where she teaches courses and manages academic programs. She graduated from the University of
Chicago in 1984 with a Bachelor of Arts degree. In 2000, Dr. Marciano received from the University of Chicago her MBA in Economics
and Finance and her PhD in Business Economics.
Eric C. Hugel (Class I Director) (Nominee)
has been a member of IEH’s Board of Directors since July 15, 2016. He is the Co-Chief Executive Officer and Chief Financial
Officer of Deb’s Buried Treasure, an online retailer, since July 2014. He is also the owner of Eric C. Hugel, CPA, CFA, a
business that provides tax and business advisory services. From March 2013 to February 2014, Mr. Hugel held the position of Senior
Institutional Specialist in U.S. Fundamental Equity Research Analyst at McGraw Hill Financial – S&P Capital IQ providing
investment advisory services. In particular he provided research and analysis in the U.S. aerospace and defense and industrial
conglomerates sectors. From July 2002 through June 2012 he was a managing director at Stephens Inc. providing investment banking
services in the U.S. aerospace and defenses sectors. Mr. Hugel graduated from Lehigh University in 1993 with a Bachelor of Science
in accounting.
Michael E. Rosenfield (Class I Director)
(Nominee) is a co-founder and principal of Olive Tree Holdings LLC, a real estate private equity company based in New York, NY
and Atlanta, GA since 2017. Olive Tree is an owner-operator of value-added multifamily assets across the Southern U.S. From 2013-2016
he was Vice President and Chief of Staff at Bert E. Brodsky & Associates, Inc., a private investment firm with a diverse portfolio
of companies across several industries. Prior to that from 2006-2013, he served as Vice President of Business Development of Mobile
Health Management Services, Inc., a subsidiary of Bert Brodsky & Associates, Inc. Mr. Rosenfeld received his Bachelor of Arts
in Political Science from Emory University in 2006, and his Master of Business Administration (MBA) in Corporate Finance from the
New York University Stern School of Business in 2016.
Other Executive Officers
William H. Craig
joined IEH in June 2020 and became the Chief Financial Officer of the Company on October 9, 2020. From March 2012 to March 2020,
Mr. Craig served as Chief Executive Officer and Chief Financial Officer of Tarantin Industries, Inc., a family owned industrial
distributor based in Freehold, NJ with operations in the eastern third of the U.S.
Significant Employees
Mark Iskin is the
Director of Purchasing, a position he has held since September 2000. On April 14, 2011, the Board of Directors appointed Mark to
the position of Vice-President – Operations. Prior to joining the Company, Mr. Iskin worked as a materials and purchasing
specialist in manufacturing and distribution companies. In his last position with an industrial distributor, Mr. Iskin was responsible
for purchasing and managing vendors for the cutting tool section of the catalog. In addition, he participated in setting up and
developing the Company’s forecasting and planning software related to that department’s procedures.
Robert Romeo serves
as Vice President of Engineering for IEH, a position he has held since October 2005. Robert has corporate responsibility for engineering
products and driving product enhancements to satisfy the demanding
application requirements of IEH customers. In addition, Robert
is tasked with engineering new product developments in the IEH connector offerings to broaden the market base of potential customers.
These new connectors will introduce the traditional IEH quality and value to industries that specify exceptional reliability and
performance in electrical and electronic equipment. Before joining IEH, Robert worked for more than 20 years in positions of increasing
responsibility for major national manufacturers of electrical and electronic goods for residential, industrial, government and
OEM markets.
Sherif Mahdi joined
IEH in October, 2014 as Director of Quality. Sherif has 22 years of progressive professional experience in total quality management/operations
and engineering management, most notably, with a multinational manufacturing organization and distribution client. He has managed
accounts in the aviation, space, government, commercial, medical, telecommunication, retail, construction, and automotive industries.
His expertise encompasses development, implementation and auditing of quality systems such as ISO9001, AS9100/AS9120, ISO13485,
QS9000, TE Supplement, ISO20000, ISO14000, TS16949 and design for Six Sigma, Lean Six Sigma Black Belt directives impacting the
lifecycle of plant and corporate operations including affiliated business and developmental concerns. His background is strengthened
by significant experience as an industrial engineer. Sherif holds a Master of Science Degree in Engineering Management and
a Master of Business Administration Degree.
Alexa Maldonado
is the Director of Human Resources for IEH, a position she has held since July, 2018. Alexa has responsibility for policy implementation,
handling employee relations, health and welfare benefit, administration, staffing and compliance training, payroll and supervisory
training. She became employed by the Company on a full-time basis in March 2016. Prior to joining IEH, she worked for The New York
Stock Exchange for 10 years in various human resources capacities and responsibilities including as a Human Resources Generalist,
Benefits Administration and Staffing Coordinator.
Compliance with Section 16(a) of the Exchange
Act
Section 16(a) of the Exchange
Act requires the Company’s directors and officers and persons who own, directly or indirectly, more than 10% of a registered
class of IEH’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of
Common Stock of IEH.
Delinquent Section 16(a) Reports
Under U.S. securities laws, directors, certain
officers and persons holding more than 10% of our common stock must report their initial ownership of our common stock and any
changes in their ownership to the SEC. The SEC has designated specific due dates for these reports and we must identify in this
Proxy Statement those persons who did not file these reports when due. Based solely on our review of copies of the reports filed
with the SEC and the written representations of our directors and executive officers, we believe that all reporting requirements
for fiscal year ended March 31, 2020 were complied with by each person who at any time during the fiscal year ended March 31, 2020
was a director or an executive officer or held by a person owning more than 10% of our common stock, except for the following:
Mr. Offerman filed (i) a late Form 3 on November
3, 2020 that was originally due on April 5, 2017; (ii) a late Form 4 on November 4, 2020 that was originally due on March 22, 2018
with respect to a gift of 1,000 shares to him; (iii) a late Form 4 on November 4, 2020 that was originally due on March 6, 2019
with respect to a gift of 900 shares to him; (iv) a late Form 4 on November 4, 2020 that was originally due on July 26, 2019 with
respect to a grant of 225,000 options to him; (v) a late Form 4 on November 4, 2020 that was originally due on September 23, 2019
with respect to the exercise of 3,783 options by him and the cashless exchange of 1,000 shares to pay for such option exercise;
and (vi) a late Form 4 on November 4, 2020 that was originally due on January 19, 2020 with respect to a gift of 665 shares to
him;
Gail Offerman filed (i) a late Form 3 on November
3, 2020 that was originally due on September 21, 2019; (ii) a late Form 4 on November 16, 2020 with respect to 901,991 shares that
were inherited from her late husband, Michael Offerman, Chief Executive Officer of the Company; and (iii) a late Form 4 on November
16, 2020 that was originally due on January 19, 2020 with respect to a gift of 665 shares to Dave Offerman
William H. Craig filed (i) a late Form 3 on November
3, 2020 that was originally due on October 11, 2020; and (ii) a late Form 4 on November 4, 2020 that was originally due on October
11, 2020 to report a grant of 50,000 stock options to him.
Director Independence; Meetings of Directors; Corporate Governance;
Committees of the Board
Our Board of Directors
currently consists of six (6) individuals. We believe that five (5) of our directors, Allen Gottlieb, Gerald Chafetz, Eric C. Hugel,
Sonia Marciano and Michael E. Rosenfield would both qualify as “independent directors” within the meaning of the term
as applied by the Nasdaq Stock Market Rule 4200(a)(15). Our shares of Common Stock are not listed on the Nasdaq Stock Market.
During the fiscal year
ended March 31, 2020, the Board of Directors held one (1) meeting by telephone conference call. All Directors participated in such
meeting of the Board.
During the fiscal year ended March 31, 2020,
the Chief Executive Officer and the Chief Financial
Officer made an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures. They concluded that our disclosure controls and procedures were not effective
during the period covered by the fiscal year ended March 31, 2020. In response to such determination, management immediately undertook
steps to correct the deficiencies in our internal controls over financial reporting. They recommended to the Board of Directors,
and the Board approved that the following mitigation steps be taken and implemented:
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hiring and/or engagement of additional qualified resources;
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the implementation of new controls designed to enhance the monthly
and quarterly financial
close processes to ensure the proper disclosures;
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the implementation of additional review and monitoring of transactions
to ensure compliance
with the new policies and procedures;
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the training of personnel responsible for preparation and review of financial information; and
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☐
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on August 27, 2020, the Company hired a qualified financial executive
to step into the
Principal Financial Officer role upon the retirement of the incumbent
Principal Financial
Officer immediately upon the filing of this Annual Report.
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For the fiscal year ended March 31,
2020, a general description of the duties of the committees were as follows:
Audit Committee. Our Audit Committee will act
to: (i) review with management the finances, financial
condition and interim financial statements of the Company; (ii) review
with our independent registered public accounting firm the year-end financial statements; (iii) review implementation with
the independent registered public accounting firm and management of any action recommended by the independent registered public
accounting firm; and (iv) retain and terminate our independent registered public accounting firm. Mr. Hugel, the Chair of
the Audit Committee was also designated as our Audit Committee Financial Expert. During the fiscal year ending March 31, 2020,
all of the members of our Audit Committee were “independent” within the definition of that term as provided by the
OTCQX Marketplace Rules. During the fiscal year ended March 31, 2020, the Audit Committee held eight (8) meetings. The current
members of the Audit Committee are Mr. Hugel (Chair), Mr. Gottlieb and Mr. Rosenfeld.
Compensation Committee. The
Compensation Committee will act to: (i) review, approve and administer
compensation arrangements for our executive officers; (ii) administer
our equity-based compensation plans, (iii) establish and review general policies relating to the compensation and benefits of our
executive officers and other personnel, (iv) evaluate the relationship between executive officer compensation policies and practices
and corporate risk management to confirm those policies and practices do not incentivize excessive risk-taking, and (iv) evaluate
and makes recommendations to our Board of Directors regarding the compensation of our non-employee directors. During the fiscal
year ended March 31, 2020, the Compensation Committee held three (3) meetings. The current members of the Audit Committee are Mr.
Chafatz (Chair), Dr. Marciano and Mr. Rosenfeld.
The Board did not adopt any modifications to the procedures
by which security holders may recommend
nominees to its Board of Directors.
Director Compensation
Non-executive directors will be compensated
as follows:
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the annual director fee for our non-executive directors will be $5,000, payable quarterly;
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each director will receive an annual fee of $5,000 for service on each committee, payable quarterly; and
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the chairman of each committee will receive an additional annual fee of $2,500, payable quarterly
|
Nominations to the Board of Directors
Given the small size of
our operations, we do not have a separate Nominating Committee of our Board of Directors. As a result, our Board acts as a whole
with respect to the consideration of additional candidates for service on the Board. The Board considers candidates for election
to our Board of Directors, whether recommended by security holders or otherwise, in accordance with the following criteria, applicable
to all candidates:
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Nominees shall have a reputation for integrity, honesty and adherence to high ethical standards;
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Nominees should have demonstrated business acumen, experience and the ability to exercise sound
judgment in matters that relate to
current and long-term objectives of IEH and should be willing and
able to contribute positively to our
decision-making process;
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·
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Nominees should have a commitment to understand IEH and its industries and to regularly attend and participate in meetings
of the Board and its committees;
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·
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Nominees should have the interest and ability to understand that sometimes conflicting interests of the various constituencies
of IEH, which include shareholders, employees, customers, governmental units, creditors and the general public, and to act in the
interests of all shareholders;
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·
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Nominees should not have, nor appear to have, a conflict of interest that would impair the nominees’ ability to represent
the interests of all of IEH shareholders and to fulfill the responsibilities of a director; and
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·
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Nominees shall not be discriminated against on the basis of race, religion, national origin, sex, disability or any other basis
proscribed by applicable law.
|
The renomination of existing
directors is not viewed as automatic, but is based on continuing qualification under the criteria set forth above. In addition,
the Board considers the existing directors’ performance on the Board and any committee thereof. The Board also considers
the backgrounds and qualifications of the directors considered as a group and our ability to attract other persons to serve in
light of our industry, financial condition and financial resources. The Board desires to ensure that the Board, when taken as a
whole, should provide a significant breadth of experience, knowledge and abilities that shall assist the Board in fulfilling its
responsibilities. The three persons standing for election at the Annual Meeting are being renominated by the Company.
Procedure to be Followed by Shareholders
in Submitting Director Candidate Recommendations
Any shareholder who desires
the Board to consider one or more candidates for nomination as a director should either by personal delivery or by United States
mail, postage prepaid, deliver a written recommendation addressed to the Chairman of the Board of Directors, at 140 58th
Street Building B, Suite 8E, Brooklyn, New York 11220, not later than: (i) with respect to an election to be held at an Annual
Meeting of Shareholders, 120 days prior to the anniversary date of the immediately preceding Annual Meeting; and (ii) with respect
to an election to be held at a special meeting of shareholders for the election of directors, the close of business on the 10th
day following the date on which notice of such meeting is first given to shareholders. Each written recommendation should set forth:
(a) the name and address of the shareholder making the recommendation and of the person or persons recommended; (b) the consent
of such person(s) to serve as a director(s) of IEH if nominated and elected; (c) description of how the person(s) satisfy the general
criteria for consideration as a candidate referred to above; and (d) a biography or similar information regarding the
person being
nominated as would satisfy the information requirements required under the rules and regulations of the SEC for inclusion in a
proxy statement.
Communications with the Board of Directors
Any shareholder who wishes
to communicate with the Board of Directors should send a written letter to the Corporate Secretary of the Company, at the Company’s
principal address. Letters may be directed to the Board as a whole or to individual members.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE “FOR” THE THREE (3) NOMINEES FOR CLASS I DIRECTORS AS DESCRIBED IN THIS PROPOSAL 1.
PROPOSAL 2
SAY ON PAY - ADVISORY VOTE ON EXECUTIVE COMPENSATION
We
are providing our shareholders the opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our named
executive officers as disclosed in this proxy statement in accordance with the SEC’s rules. This proposal, which is commonly
referred to as “say-on-pay,” is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010,
which added Section 14A to the Exchange Act.
Our executive compensation
programs are designed to attract, motivate, and retain our executive officers, who are critical to our success. Under these programs,
our named executive officers are rewarded for the achievement of our near-term and longer-term financial and strategic goals and
for driving corporate financial performance and stability. The programs contain elements of cash and equity-based compensation
and are designed to align the interests of our executives with those of our shareholders.
The “Executive Compensation
and Related Information” section of this proxy statement describes in detail our executive compensation programs and the
decisions made by the Board of Directors with respect to the fiscal year ended March 31, 2020. As we describe in this section of
the proxy statement, our executive compensation program incorporates a pay-for-performance philosophy that supports our business
strategy and aligns the interests of our executives with our shareholders. The Board believes this link between compensation and
the achievement of our near- and long-term business goals will help drive our performance over time. At the same time, we believe
our program does not encourage excessive risk-taking by management.
Our Board of Directors
is asking shareholders to approve a non-binding advisory vote on the following resolution:
RESOLVED, that the compensation paid
to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and
Exchange Commission, including the disclosure under “Executive Compensation and Related Information,” the compensation
tables and accompanying narrative disclosure, and any related material disclosed in this proxy statement, is hereby approved.
As an advisory vote, this
proposal is not binding. The outcome of this advisory vote does not overrule any decision by the Company or the Board of Directors,
create or imply any change to the fiduciary duties of the Company or the Board of Directors, or create or imply any additional
fiduciary duties for the Company or the Board of Directors. However, our Board of Directors values the opinions expressed by our
shareholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions
for named executive officers.
Vote Required and Board Recommendation
On this non-binding matter,
the affirmative vote of the holders of at least a majority of the shares of Common Stock present in person or represented by proxy
at the Annual Meeting and entitled to vote is required to approve this Proposal 2. THE BOARD OF DIRECTORS BELIEVES THAT VOTING
FOR THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS IS IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS, AND RECOMMENDS
A VOTE FOR THIS PROPOSAL 2.
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Marcum LLP has been appointed
by the Board of Directors of the Company as our independent registered public accounting firm for the fiscal year March 31, 2021.
The Board of Directors has further directed that management submit the selection of Marcum LLP as our independent registered public
accountants for ratification by the shareholders at the Annual Meeting. Shareholder ratification of the selection of Marcum LLP
as our independent registered public accounting firm, is not required by our bylaws, New York corporate law or otherwise. The Board
of Directors has elected to seek such ratification as a matter of good corporate practice. Should the shareholders fail to ratify
the selection of Marcum LLP as our independent registered public accounting firm, the Board of Directors will reconsider whether
to
retain that firm for the fiscal year ending March 31, 2021. Even if the selection is ratified, the Board of Directors in its
discretion may direct the appointment of a different independent registered accounting firm at any time during the year if they
determine that such a change would be in the best interests of our shareholders and the Company. Representatives of Marcum LLP
are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they so desire, and will be available
to respond to appropriate questions.
Principal Accountant Fees and Services During
the Fiscal Years Ended March 31, 2020 and March 29, 2019
During the fiscal years
ended March 31, 2020 and March 29, 2019, respectively, the total fees billed for professional audit, non-audit services and other
services rendered by our independent registered public accounting firm were as follows:
Audit Fees. During the fiscal years ended
March 31, 2020 and March 29, 2019, respectively, IEH paid an aggregate of $252,000 and $132,000, respectively, to Marcum LLP and
Manuel Reina CPA for fees related to the audit of its financial statements.
Audit Related Fees. During the fiscal
years ended March 31, 2020 and March 29, 2098, respectively, no fees were paid to Marcum LLP or Manuel Reina CPA with respect to
financial systems design or implementation.
Tax Fees. During the fiscal years ended
March 31, 2020 and March 29, 2019, the Company paid to Jerome Rosenberg, CPA, P.C. the sum of $0 and $6,000, respectively, for
tax compliance and representation, tax advice and tax planning services.
All Other Fees.
During the fiscal years ended March 31, 2020 and March 29, 2019, respectively, IEH did not pay any other fees for services to its
auditors.
The Board of Directors has determined that the
services provided by Marcum LLP and Manuel Reina CPA. and the fees paid to them for such services during the fiscal year ended
March 31, 2020 and March 29, 2019 have not compromised the independence of such auditing firms.
Vote Required and Board Recommendation
The affirmative vote of the holders of a majority
of the votes cast at the Annual Meeting is required for the ratification of Marcum LLP as our independent registered public accounting
firm for the fiscal year ending March 31, 2021. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION
OF MARCUM LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR ENDING MARCH 31, 2021 AS DESCRIBED IN THIS PROPOSAL
3.
PROPOSAL 4
ADOPTION OF THE 2020 EQUITY BASED COMPENSATION
PLAN PROPOSAL
The Board of Directors is asking shareholders
to adopt the proposed IEH Corporation’s 2020 Equity Based Compensation 2020 Plan (“2020 Plan”). The following
summary of the 2020 Plan is qualified in its entirety by the complete text of the 2020 Plan contained in Annex A.
Explanation
Effective November 18, 2020, the Board
of Directors approved the 2020 Plan for submission to the shareholders at the Annual Meeting. The Board of Directors is seeking
to reserve 750,000 shares of Common Stock or issuance pursuant to the 2020 Plan. Equity compensation
is an important component of our future executive, employee and director compensation programs. We believe it aligns employee,
management and director compensation with stockholder interests and motivates participants to achieve long-range goals. Stockholder
approval of the 2020 Plan would permit shares of Common Stock to be awarded as employee incentive compensation, allowing the Board of Directors
to attract and retain key employees, provide them competitive compensation, adapt to evolving compensation practices and account
for IEH’s growth. Upon stockholder approval, awards to participants will be made pursuant to the 2020 Plan. We are seeking
stockholder approval to make shares of Common Stock available for future grants under
the 2020 Plan as described below.
The current 2011 Equity Incentive Plan
is scheduled to expire on August 31, 2021. The Compensation Committee of the Board of Directors may continue to grant options under
such Plan until its expiration date. There are currently 152,500 shares available for grant under the 2011 Equity Incentive Plan.
Purpose of the 2020 Plan
As described more generally above, the
purpose of the 2020 Plan is to:
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attract and retain persons eligible to participate in the 2020 Plan;
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motivate eligible individuals to whom awards under the 2020 Plan will be granted, who we refer to as the “Participants,”
by means of appropriate incentives, to achieve long-range goals;
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provide incentive compensation opportunities that are competitive with those of other similar companies; and
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further align Participants’ interests with those of our other shareholders through compensation that is based on shares of Common Stock.
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The 2020 Plan promotes the long-term financial
interest of our company and its subsidiaries, including the growth in value of our company’s equity and enhancement of long-term
stockholder return.
We use equity-based compensation granted
under our long-term incentive plans as a key element of our executives’ compensation packages, and each year we disclose
the prior year grants to and other compensation of our named executive officers in our proxy statement. We believe the 2020 Plan
assists with linking executives’ overall compensation opportunities to the enhancement of long-term stockholder return.
The 2020 Plan provides for the grant of
non-qualified and incentive stock options, full value awards, and cash incentive awards. The flexibility inherent in the plan permits
the Board of Directors to change the type, terms and conditions of awards as circumstances may change. We believe that this flexibility
and the resulting ability to more affirmatively adjust the nature and amounts of executive compensation are particularly important
for our industry and to a global company such as ours, given the volatility of the public markets and reactions to economic and
world events. Equity compensation, which aligns the interests of executives and our shareholders, is an important tool for the
Board of Directors.
General Terms of the 2020 Plan
The 2020 Plan will be administered by
the Compensation Committee of the Board of Directors (the “Compensation Committee”), unless otherwise provided by the
Board of Directors. The Compensation Committee selects the Participants, the time or times of receipt of awards, the types of awards
to be granted and the applicable terms, conditions, performance targets, restrictions and other provisions of such awards, to cancel
or suspend awards, and to accelerate the exercisability or vesting of any award under circumstances designated by it. The Compensation
Committee may delegate all or any portion of its responsibilities or powers under the 2020 Plan to persons selected by it. If the
Compensation Committee does not exist or for any other reason determined by the Board of Directors, and to the extent not prohibited
by applicable law or the applicable rules of any stock exchange, the Board of Directors may take any action under the 2020 Plan
that would otherwise be the responsibility of the Compensation Committee.
If an award of common stock is settled
in cash, the total number of shares with respect to which such payment is made shall not be considered to have been delivered.
However, (i) if shares covered by an award are used to satisfy the applicable tax withholding obligation, the number of shares
held back by IEH to satisfy such withholding obligation shall be considered to have been delivered; (ii) if the exercise price
of any option granted under the 2020 Plan is satisfied by tendering shares of Common Stock to us (including shares of Common Stock that would otherwise
be distributable upon the exercise of the option), the number of shares of Common Stock tendered to satisfy such exercise price shall be considered
to have been delivered; and (iii) if we repurchase shares of Common Stock with proceeds received from the exercise of an option issued under
the 2020 Plan, the total number of shares repurchased shall be deemed delivered.
Notwithstanding the minimum vesting limitations
described below with respect to options and full value
awards, the Compensation Committee may grant options and full value awards
that are not subject to such minimum vesting provisions. The total aggregate number of shares of Common Stock subject to options and full value
awards granted pursuant to the 2020 Plan that are not subject to such minimum vesting limitations may not exceed five (5%) percent
of the limit of the total number of shares of Common Stock that may be delivered under the 2020 Plan.
The shares of Common Stock with respect to which awards
may be made under the 2020 Plan shall be:
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shares currently authorized but unissued;
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to the extent permitted by applicable law, currently held or acquired by IEH as treasury shares, including shares purchased
in the open market or in private transactions; or
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shares purchased in the open market by a direct or indirect wholly-owned subsidiary of IEH, and we may contribute to the subsidiary
an amount sufficient to accomplish the purchase of the shares to be so acquired.
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At the discretion of the Compensation
Committee, an award under the 2020 Plan may be settled in cash, shares of Common Stock, the granting of awards, or a combination thereof; provided,
however, that if a cash incentive award is settled in shares of Common Stock, it must satisfy the minimum vesting requirements related to full
value awards.
The Compensation Committee may use shares of Common Stock available under the 2020 Plan as the form of payment for compensation, grants or rights earned or due under any other compensation
plans or arrangements of our company or a subsidiary, including the plans and arrangements of our company or a subsidiary assumed
in business combinations.
In the event of a corporate transaction
involving IEH (including, without limitation, any share dividend, share split, extraordinary cash dividend, recapitalization, reorganization,
merger, amalgamation, consolidation, share exchange, split-up, spin-off, sale of assets or subsidiaries, combination or exchange
of shares), the Compensation Committee shall adjust outstanding awards to preserve the benefits or potential benefits of the awards.
Action by the Compensation Committee may include:
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adjustment of the number and kind of shares which may be delivered under the 2020 Plan;
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adjustment of the number and kind of shares subject to outstanding awards;
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adjustment of the exercise price of outstanding options; and
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any other adjustments that the Compensation Committee determines to be equitable, which may include, without limitation:
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replacement of awards with other awards which the Compensation Committee determines have comparable value and which are based
on stock of a company resulting from the transaction; and
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cancellation of the award in return for cash payment of the current value of the award, determined as though the award is fully
vested at the time of payment, provided that in the case of an option, the amount of such payment will be the excess of value of
the shares of Common Stock subject to the option at the time of the transaction over the exercise price.
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Except as otherwise provided by the Compensation
Committee, awards under the 2020 Plan are not transferable except as designated by the Participant by will or by the laws of descent
and distribution.
Eligibility
All employees and directors of, and advisors
and consultants and other persons providing services to, IEH or any of its subsidiaries (or any parent or other related company,
as determined by the Compensation Committee) are eligible to become Participants in the 2020 Plan, except that non-employees may
not be granted incentive stock options.
Options
The Compensation Committee may grant an
incentive stock option or non-qualified stock option to purchase
shares of Common Stock at an exercise price determined by the Compensation
Committee. Each option shall be designated as an incentive stock option, a tax-qualified option or non-qualified stock option when
granted. An incentive stock option is a stock option intended to satisfy additional requirements required by federal tax rules
in the United States as specified in the 2020 Plan (and any incentive stock option granted that does not satisfy such requirements
shall be treated as a non-qualified stock option).
Except as described below, the exercise
price for an option shall not be less than the fair market value of a IEH Share at the time the option is granted; provided, that
the exercise price of an incentive stock option granted to any employee who owns more than 10 percent of the voting power of all
classes of stock in our company or a subsidiary shall not be less than 110 percent of the fair market value of a IEH Share at the
time of grant. The exercise price of an option may not be decreased after the date of grant nor may an option be surrendered to
IEH as consideration for the grant of a replacement option with a lower exercise price, except as approved by our shareholders
or as adjusted for corporate transactions described above.
No option shall be surrendered to IEH
in consideration for a cash payment or grant of any other award if at the time of such surrender the exercise price of such option
is greater than the then current fair market value of a share of Common Stock, except as approved by our shareholders. In addition,
the Compensation Committee may grant options with an exercise price less than the fair market value of the shares of Common Stock at the time
of grant in replacement for awards under other plans assumed in connection with business combinations if the Compensation Committee
determines that doing so is appropriate to preserve the benefit of the awards being replaced. No dividend equivalents may be granted
under the 2020 Plan with respect to any option.
The option shall be exercisable in accordance
with the terms established by the Compensation Committee, but in no event shall an option become exercisable or vested prior to
the earlier of (i) the first anniversary of the date of grant or (ii) the date on which the Participant’s termination occurs
by reason of death or disability. In the event of the Participant’s termination occurs for any reason other than death, disability,
retirement, or involuntary termination without cause, any unvested options will be forfeited. In the event the Participant’s
termination occurs due to death, disability, retirement or involuntary termination without cause, any unvested options shall be
exercisable only as determined by the Compensation Committee in its sole discretion.
The full purchase price of each IEH Share
purchased upon the exercise of any option shall be paid at the time of exercise of an option. Except as otherwise determined by
the Compensation Committee, the purchase price of an option shall be payable in cash, by promissory note, or by shares of Common Stock (valued
at fair market value as of the day of exercise), including shares of stock otherwise distributable on the exercise of the option,
or a combination thereof. If the shares remain publicly traded, the Compensation Committee may permit a Participant to pay the
exercise price by irrevocably authorizing a third party to sell shares of Common Stock (or a sufficient portion of the shares of Common Stock) acquired
upon exercise of the option and remit to IEH a sufficient portion of the sale proceeds to pay the entire exercise price and any
tax withholding resulting from such exercise. The Compensation Committee, in its discretion, may impose such conditions, restrictions,
and contingencies on shares of Common Stock acquired pursuant to the exercise of an option as the Compensation Committee determines to be desirable.
In no event will an option expire more than ten years after the grant date; provided, that an incentive stock option granted to
any employee who owns more than 10 percent of the voting power of all classes of stock in IEH or a subsidiary shall not be more
than 5 years.
The option will expire on the earliest
to occur of (i) the last day of the term of the option as described in the award agreement; (ii) if the Participant’s termination
occurs by reason of death, disability, retirement or an involuntary termination without cause, the one-year anniversary of such
termination date; or (iii) if the Participant’s termination occurs for any reason other than those listed in clause (ii),
the Participant’s termination date.
Full Value Awards
The following types of “full value
awards” may be granted, as determined by the Compensation Committee:
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the Compensation Committee may grant awards in return for previously performed services or in return for the Participant surrendering
other compensation that may be due;
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the Compensation Committee may grant awards that are contingent on the achievement of performance or other objectives during a
specified period; and
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the Compensation Committee may grant awards subject to a risk of forfeiture or other restrictions that lapse upon the achievement
of one or more goals relating to completion of service by the Participant, or achievement of performance or other objectives.
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Any such awards shall be subject to such
conditions, restrictions and contingencies as the Compensation Committee determines. If the right to become vested in a full value
award is conditioned on the completion of a specified period of service with IEH or its subsidiaries, without achievement of performance
targets or other performance objectives being required as a condition of vesting, and without it being granted in lieu of other
compensation, then the required period of service shall not end prior to the first anniversary of the date of grant. If the right
to become vested in a full value award is conditioned on the achievement of performance targets or performance objectives, and
without it being granted in lieu of other compensation, then the required performance period shall not end prior to the first anniversary
of the date of grant. In the event the Participant’s termination occurs due to death, disability or involuntary termination
without cause, any unvested full value awards shall become vested only as determined by the Compensation Committee in its sole
discretion.
Dividends or dividend equivalents settled
in cash or shares of Common Stock may be granted to a Participant in relation to a full value award with payments made either currently or
credited to an account. No dividend or dividend equivalents granted in relation to a full value award that is subject to vesting
shall be settled prior to the date such full value award (or applicable portion thereof) becomes vested and is settled.
Stock Appreciation Rights. The
Compensation Committee is authorized to grant stock appreciation rights (“SARs”) in conjunction with a stock option
or other award granted under the 2020 Plan, and to grant SARs separately. The grant price of a SAR may not be less than 100% of
the fair market value of a share of our Common Stock on the date the SAR is granted. The term of an SAR may be no more than 10
years from the date of grant. SARs are subject to terms and conditions set by the Compensation Committee. Upon exercise of an SAR,
the Participant will have the right to receive the excess of the fair market value of the shares covered by the SAR on the date
of exercise over the grant price.
Restricted Stock Awards. Restricted
stock awards may be issued either alone or in addition to other awards granted under the 2020 Plan, and are also available as a
form of payment of performance awards and other earned cash-based incentive compensation. The Compensation Committee determines
the terms and conditions of restricted stock awards, including the number of shares of Common Stock granted, and conditions for
vesting that must be satisfied, which may be based principally or solely on continued provision of services, and also may include
a performance-based component. Unless otherwise provided in the award agreement, the holder of a restricted stock award will have
the rights of a shareholder from the date of grant of the award, including the right to vote the shares of Common Stock and the
right to receive distributions on the shares. Except as otherwise provided in the award agreement, any shares or other property
(other than cash) distributed with respect to the award will be subject to the same restrictions as the award.
Restricted Stock Unit Awards.
Awards of restricted stock units having
a value equal to an identical number of shares of Common Stock may be granted either alone or in addition to other awards granted
under the 2020 Plan, and are also available as a form of payment of performance awards granted under the 2020 Plan and other earned
cash-based incentive compensation. The Compensation Committee determines the terms and conditions of restricted stock units, including
conditions for vesting that must be satisfied, which may be based principally or solely on continued provision of services, and
also may include a performance-based component. The holder of a restricted stock unit award will not have voting rights with respect
to the award. Except as otherwise provided in the award agreement, any shares or other property (other than cash) distributed with
respect to the award will be subject to the same restrictions as the award.
Other Share-Based Awards.
The 2020 Plan also provides for the award
of shares of our Common Stock and other awards that are valued by reference to our Common Stock or other property (“Other
Share-Based Awards”). Other Share-Based Awards may be paid in cash, shares of our Common Stock or other property, or a combination
thereof, as determined by the Compensation Committee. The Compensation Committee determines the terms and conditions of Other Share-Based
Awards, including any conditions for vesting that must be satisfied.
Performance Awards.
Performance awards provide participants
with the opportunity to receive shares of our Common Stock, cash or other property based on performance and other vesting conditions.
Performance awards may be granted from time to time as determined at the discretion of the Compensation Committee. Subject to the
share limit and maximum dollar value set forth above under “Limits on Awards to Participants,” the Compensation Committee
has the discretion to determine (i) the number of shares of Common Stock under, or the dollar value of, a performance award and
(ii) the conditions that must be satisfied for grant or for vesting, which typically will be based principally or solely on achievement
of performance goals. At the Compensation Committee’s discretion, performance goals for restricted stock awards, restricted
stock units, performance awards or other share-based awards may be based on the attainment of specified levels of one or more of
the following criteria: (a) earnings per share; (b) operating income (before or after taxes); (c) net income (before or after taxes);
(d) net sales; (e) cash flow; (f) gross profit; (g) gross profit return on investment; (h) gross margin return on investment; (i)
gross margin; (j) working capital; (k) earnings before interest and taxes; (l) earnings before interest, tax, depreciation and
amortization; (m) return on equity; (n) return on assets; (o) return on capital; (p) return on invested capital; (q) net revenues;
(r) gross revenues; (s) revenue growth or product revenue growth; (t) total shareholder return; (u) appreciation in and/or maintenance
of the company’s market capitalization; (v) cash flow or cash flow per share (before or after dividends); (w) economic value
added; (x) the fair market value of the shares of the company’s Common Stock; (y) the growth in the value of an investment
in the company’s Common Stock assuming the reinvestment of dividends; (z) reduction in expenses or improvement in or attainment
of expense levels or working capital levels; (aa) financing and other capital raising transactions; (bb) debt reductions; (cc)
regulatory achievements (including submitting or filing applications or other documents with regulatory authorities, having any
such applications or other documents accepted for review by the applicable regulatory authority or receiving approval of any such
applications or other documents); or (dd) strategic partnerships or transactions (including in-licensing and out-licensing of intellectual
property). The performance goals may be based solely by reference to IEH’s performance or the performance of one or more
of its subsidiaries, divisions, business segments or business units, or based upon the relative performance of other companies
or upon comparisons of any of the indicators of performance relative to other companies. The Compensation Committee may also exclude
under the terms of the performance awards the impact of an event or occurrence which the Compensation Committee determines should
appropriately be excluded, including (i) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring
charges, (ii) an event either not directly related to our operations or not within the reasonable control of our management, or
(iii) the cumulative effects of tax or accounting changes in accordance with U.S. generally accepted accounting principles
Change in Control
A Change in Control shall have such effect
on an award as is provided in the applicable award agreement, or, to the extent not prohibited by the 2020 Plan or the applicable
award agreement, as provided by the Compensation Committee. In the event of a Change in Control, the Compensation Committee may
cancel any outstanding awards in return for cash payment of the current value of the award, determined with the award fully vested
at the time of payment, provided that in the case of an option, the amount of such payment will be the excess of value of the shares of Common Stock subject to the option at the time of the transaction over the exercise price (and the option will be cancelled with no payment
if the value of the shares at the time of the transaction are equal to or less than the exercise price).
For the purposes of the 2020 Plan, a “change
in control” is generally deemed to occur when:
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any person becomes the beneficial owner of 50 percent or more of IEH’s voting stock;
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the consummation of a reorganization, merger, consolidation, acquisition, share exchange or other corporate transaction involving
our company where, immediately after the transaction, the IEH shareholders immediately prior to the combination hold, directly
or indirectly, 50 percent or less of the voting stock of the combined company;
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the consummation of any plan of liquidation or dissolution providing for the distribution of all or substantially all of the
assets of IEH and its subsidiaries or the consummation of a sale of substantially all of the assets of IEH and its subsidiaries;
or
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at any time during any period of two consecutive years, individuals who at the beginning of such
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period were members of the Board
of Directors, who we refer to as Incumbent Directors, cease for any reason to constitute at least a majority thereof (unless the
election, or the nomination for election by IEH’s shareholders, of each new director was approved by a vote of at least
two-thirds of the Incumbent Directors.
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Amendment and Termination
The Board of Directors may amend or terminate
the 2020 Plan at any time, and the Board of Directors or the Committee may amend any award granted under the 2020 Plan, but no
amendment or termination may adversely affect the rights of any Participant without the Participant’s written consent. The
Board of Directors may not amend the provision of the 2020 Plan related to re-pricing without approval of shareholders or make
any material amendments to the 2020 Plan without stockholder approval. The 2020 Plan will remain in effect as long as any awards
under the 2020 Plan remain outstanding, but no new awards may be granted after the tenth anniversary of the date on which the shareholders
approve the 2020 Plan.
United States Income Tax Considerations
The following is a brief description of
the U.S. federal income tax treatment that will generally apply to awards under the 2020 Plan based on current U.S. income taxation
with respect to Participants who are subject to U.S. income tax. Participants subject to taxation in other countries should consult
their tax.
Non-Qualified Options.
The grant of a non-qualified option will
not result in taxable income to the Participant. Except as described below, the Participant will realize ordinary income at the
time of exercise in an amount equal to the excess of the fair market value of the shares of Common Stock acquired over the exercise price for
those shares. Gains or losses realized by the Participant upon disposition of such shares will be treated as capital gains and
losses, with the basis in such shares of Common Stock equal to the fair market value of the shares at the time of exercise.
Incentive Stock Options.
The grant of an incentive stock option
will not result in taxable income to the Participant. The exercise of an incentive stock option will not result in taxable income
to the Participant provided that the Participant was, without a break in service, an employee of IEH or a subsidiary during the
period beginning on the date of the grant of the option and ending on the date three months prior to the date of exercise (one
year prior to the date of exercise if the Participant is “disabled,” as that term is defined in the Internal Revenue Code).
The excess of the fair market value of
the shares of Common Stock at the time of the exercise of an incentive stock option over the exercise price is an adjustment that is included
in the calculation of the Participant’s alternative minimum taxable income for the tax year in which the incentive stock
option is exercised. For purposes of determining the Participant’s alternative minimum tax liability for the year of disposition
of the shares acquired pursuant to the incentive stock option exercise, the Participant will have a basis in those shares equal
to the fair market value of the shares of Common Stock at the time of exercise.
If the Participant does not sell or otherwise
dispose of the shares of Common Stock within two years from the date of the grant of the incentive stock option or within one year after the
transfer of such shares of Common Stock to the Participant, then, upon disposition of such shares of Common Stock, any amount realized in excess of the
exercise price will be taxed to the Participant as capital gain. A capital loss will be recognized to the extent that the amount
realized is less than the exercise price.
If the above holding period requirements
are not met, the Participant will generally realize ordinary income at the time of the disposition of the shares, in an amount
equal to the lesser of (i) the excess of the fair market value of the shares of Common Stock on the date of exercise over the exercise price,
or (ii) the excess, if any, of the amount realized upon disposition of the shares over the exercise price. If the amount realized
exceeds the value of the shares on the date of exercise, any additional amount will be capital gain. If the amount realized is
less than the exercise price, the Participant will recognize no income, and a capital loss will be recognized equal to the excess
of the exercise price over the amount realized upon the disposition of the shares.
Full Value Awards.
A Participant who has been granted
a full value award will not realize taxable income at the time of grant, provided that the shares of Common Stock subject to the award are
not delivered at the time of grant, or if the shares of Common Stock are delivered, it is subject to restrictions that constitute a “substantial
risk of forfeiture” for U.S. income tax purposes. Upon the later of delivery or vesting of shares of Common Stock subject to an award,
the holder will realize ordinary income in an amount equal to the then fair market value of those shares. Gains or losses realized
by the Participant upon disposition of such shares will be treated as capital gains and losses, with the basis in such shares equal
to the fair market value of the shares at the time of delivery or vesting. Dividends paid to the holder during the restriction
period, if so provided, will also be compensation income to the Participant.
Withholding of Taxes.
IEH may withhold amounts from Participants
to satisfy withholding tax requirements. Except as otherwise provided by the Committee, Participants may satisfy withholding requirements
through cash payment, by having shares of Common Stock withheld from awards or by tendering previously owned shares of Common Stock to IEH to satisfy tax
withholding requirements. The shares of Common Stock withheld from awards may be used to satisfy not more than the maximum individual tax rate
for the Participant in the applicable jurisdiction for such Participant (based on the applicable rates of the relevant tax authorities,
including the Participant’s share of payroll or similar taxes, as provided in tax law, regulations, or the authority’s
administrative practices, not to exceed the highest statutory rate in that jurisdiction, even if that rate exceeds the highest
rate that may be applicable to the specific Participant).
Change In Control.
Any acceleration of the vesting or payment
of awards under the 2020 Plan in the event of a change in control in IEH may cause part or all of the consideration involved to
be treated as an “excess parachute payment” under the Internal Revenue Code, which may subject the Participant to a
20 percent excise tax and preclude deduction by a subsidiary.
ERISA.
The 2020 Plan is not subject to the provisions
of the Employee Retirement Income Security Act of 1974, as amended and is not intended to be qualified under Section 401 of the
Internal Revenue Code.
Tax Advice
The preceding discussion is based on U.S.
tax laws and regulations presently in effect, which are subject to change, and the discussion does not purport to be a complete
description of the U.S. income tax aspects of the 2020 Plan. A Participant may also be subject to state and local taxes in connection
with the grant of awards under the 2020 Plan. In addition, a number of Participants reside outside the U.S. and are subject to
taxation in other countries. The actual tax implications for any Participant will depend on the legislation in the relevant tax
jurisdiction for that Participant and their personal circumstances.
What Happens If Shareholders Do Not Approve This Proposal?
In the event this proposal is not approved
by shareholders, IEH will not have the ability to grant equity compensation as a component of our executive, employee and director
compensation programs.
Required Vote
Adoption of the 2020 Equity Based
Compensation Plan Proposal requires the affirmative vote of the holders of a majority of shares of Common Stock represented
by proxy at the 2020 Annual Meeting of IEH shareholders and entitled to vote thereon.
New Plan Benefits
Because benefits under the 2020 Plan will
depend on the Compensation Committee’s actions and the fair market value of shares of Common Stock on future dates, it is not possible
to determine the benefits that will be received by
directors, executive officers and other employees if the 2020 Plan is approved
by IEH shareholders.
Board of Directors’ Recommendation
The Board of Directors recommends a vote
“FOR” adoption of the 2020 Equity Based Compensation Plan .
Vote Required and Board Recommendation
The affirmative vote of the holders of a majority of the votes cast
at the Annual Meeting is required for the adoption of the 2020 Equity Based Compensation Plan. THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE FOR THE ADOPTION OF THE 2020 EQUITY BASED COMPENSATION PLAN AS DESCRIBED IN THIS PROPOSAL 4.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Executive Compensation
The following table sets
forth below the summary compensation paid or accrued by the Company during the fiscal years ended March 31, 2020, March 29, 2019
and March 30, 2018 for the Company’s Chief Executive Officer and Chief Financial Officer:
Name and Principal Position
|
Year
|
Salary
|
Bonus
|
Other Annual
Compensation
|
Total
|
Dave Offerman, Chief Executive Officer, President
|
March 31, 2020
March 29, 2019
March 30, 2018
|
394,992
305,192
$ 346,533
|
$ 65,000
83,947
$ 45,000
|
$ 2,274,858
0
$ 0
|
2,734,850
389,139
$ 391,533
|
Robert Knoth, Chief Financial Officer*
|
March 31, 2020
March 29, 2019
March 30, 2018
|
221,998
198,153
181,122
|
$ 40,000
40,100
$ 40,000
|
$ 0
0
$ 0
|
261,998
238,253
$ 221,222
|
* Mr. Knoth retired as Chief Financial Officer effective October
9, 2020.
Employment Agreements with Named Executive Officers
The following are summaries
of the agreements with our named executive officers. The agreements provide the general framework and the specific terms for the
compensation of the named executive officers.
Dave Offerman
On July 29, 2019, the Company entered into an
employment agreement with Dave Offerman, its President and Chief Executive Officer. The employment agreement with Mr. Offerman
is effective as of July 29, 2019 and will expire on December 31, 2024. Mr. Offerman serves as the Chief Executive Officer and President
of the Company and as a member of its board of directors. Under the employment agreement, Mr. Offerman will receive a base salary
of $395,000 per annum and be eligible to receive an annual bonus of up to 100% of base salary for each fiscal year of employment
based on performance targets and other key objectives established by the Committee.
His employment agreement also contemplated that
he would be eligible to receive additional option grants to the Company’s 2011 Equity Incentive Plan as follows: 225,000
additional options to purchase 225,000 shares of the Company’s common stock at an exercise price of $20.00 per common share
for the fiscal year ended March 29, 2019, provided that one-third (75,000 shares) shall vest immediately, 75,000 shares will vest
on July 29, 2020, and 75,000 shares will vest on July 29, 2021.
During the term of the
employment agreement, he shall also be eligible to receive equity or performance awards
pursuant to any long-term incentive compensation
plan adopted by the Committee or the board of directors.
Robert Knoth
On September 1, 2009, the
Company entered into an agreement with Robert Knoth, its Chief Financial Officer, providing for certain retirement benefits to
be payable to him after termination of such officer’s active service of employment with the Company. Such agreement provides
that Mr. Knoth’s employment with the Company shall be divided into an “active period” and a “retirement
period”. The active period shall mean the period of time until the officer attains the age of 70 years, or further period
of employment beyond such date if extended by mutual agreement of the officer and the Company. The retirement period shall mean
the period beginning with the officer attaining the age of 70 years and continuing until 10 years thereafter unless the officer’s
employment has been previously terminated or extended by the mutual agreement of the officer and the Company. The retirement period
shall take effect only on termination of the active period. Pursuant to Mr. Knoth’s agreement, he will be entitled to receive
$12,000 per annum and aggregate payments during the retirement period not to exceed $120,000. During the fiscal year ended March
29, 2019, Mr. Knoth and the Board of Directors mutually agreed to extend Mr. Knoth’s employment agreement for an additional
year.
On September 1, 2017, the
Company and Mr. Knoth executed an Amended and Restated Employment Agreement amending certain terms of the 2009 Employment Agreement
including increasing the per annum payment to him to $25,000, payable in monthly installments of $2,083.33. While the retirement
payments would be payable for up to 10 years, the aggregate payments during the retirement period were increased to a maximum not
exceed $250,000. In addition, during the active period, the Company shall provide Mr. Knoth (a) group healthcare and insurance
benefits as generally made available to the Company’s senior management; and (b) such other insurance benefits obtained by
the Company and generally made available to the Company’s senior management. Also, during the first five (5) years of the
retirement period, the Company shall provide Mr. Knoth with group health insurance benefits as generally made available to the
Company’s senior management. Upon expiration of such five (5) year period, Mr. Knoth shall be entitled to all applicable
COBRA benefits.
On October 9, 2020, the
Compensation Committee approved an amendment to Mr. Knoth’s 2015 Option Agreement extending the expiration date on his unexercised
options (45,000 shares) to July 1, 2025.
Mr. Knoth retired as Chief
Financial Officer of the Company effective as of the close of business on October 8, 2020.
Stock Option Plan
On August 31, 2011,
the Company’s shareholders approved the adoption of the Company’s 2011 Employees Stock Option Plan (“2011
Plan”) to provide for the grant of options to purchase up to 750,000 shares of the Company’s Common Stock to all
employees, including senior management. The plan terminates on August 30, 2021 and as of March 31, 2020, the Company had
issued 597,500 options or awards: Options granted to employees under the 2011 Plan may be designated as options which qualify
for incentive stock option treatment under Section 422A of the Internal Revenue Code, or option which do not so qualify
(non-qualified stock options). All options granted were non-qualified stock options.
Under the 2011 Plan, the
exercise price of an option designated as an incentive stock option shall not be less than the fair market value of the Company’s
Common Stock on the day the option is granted. In the event an option designated as an incentive stock option is granted to a ten
percent (10%) shareholder, such exercise price shall be at least 110 percent (110%) of the fair market value or the Company’s
Common Stock and the option must not be exercisable after the expiration of ten years from the day of the grant.
Exercise prices of non-incentive
stock options may be less than the fair market value of the Company’s Common Stock. The aggregate fair market value of shares
subject to options granted to a participant, which are designated as incentive stock options, and which become exercisable in any
calendar year, shall not exceed $100,000.
In the event of the termination
of each recipient’s employment by, or association with, the Company (as applicable), the options will remain exercisable
in accordance with the terms of the 2011 Plan.
The table below summarizes
the option awards for the named executive officers and non-management directors:
Name
|
Stock Option Grants
|
|
|
Dave Offerman
|
271,217(1)
|
Robert Knoth
|
45,000
|
Allen Gottlieb
|
0
|
Gerald Chafetz
|
4,000
|
Sonia Marciano
|
5,000
|
Eric Hugel
|
5,000
|
Michael Rosenfeld
|
5,000
|
|
(1)
|
Includes unvested options for 75,000 shares of Common Stock which shall vest on July 29, 2021.
|
Cash Bonus Plan
In 1987, the Company adopted
a cash bonus plan for executive officers (“Cash Bonus Plan”) for non-union, management and administration staff. Contributions
to the Cash Bonus Plan are made by the Company only when the Company is profitable for the fiscal year. The Company has accrued
a contribution provision for the fiscal years ended March 31, 2020 and March 29, 2019 of $324,000 and $324,000, respectively.
VOTING SECURITIES AND SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The securities entitled
to vote at the Annual Meeting are IEH's Common Stock. The presence, in person or by proxy, of a majority of shares of Common Stock
issued and outstanding entitled to vote will constitute a quorum for the Annual Meeting. Each share of Common Stock entitles its
holder to one (1) vote on each matter submitted to shareholders. The close of business on Monday, November 16, 2020 has been fixed
as the Record Date for the determination of the shareholders entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. At that date, 2,370,251 shares of Common Stock were issued and outstanding. Voting of the shares of Common Stock is on
a non-cumulative basis.
The following table sets
forth certain information as of Monday, November 16, 2020 with respect to: (i) the persons (including any "group" as
that term is used in Section 13(d)(3) of the Exchange Act), known by IEH to be the beneficial owner of more than five percent (5%)
of any class of IEH's voting securities; (ii) each Executive Officer and Director who owns Common Stock in IEH; and (iii) all Executive
Officers and Directors as a group. As of Monday, November 16, 2020, there were 2,370,251 shares of Common Stock issued and outstanding.
Shares of Common Stock subject to options or warrants exercisable within 60 days from the date of this table are deemed to be outstanding
and beneficially owned for purposed of computing the percentage ownership of such person but are not treated as outstanding for
purposes of computing the percentage ownership of others. The figures stated below are based upon Schedules 13Ds, Schedule 13D/As,
Schedule 13Gs, Schedule 13G/As, Form 3s and Form 4s filed with the Securities and Exchange Commission by the named persons.
Title of Class
|
Name and Address of Beneficial Owner
|
Amount of and
Nature of
Beneficial
Ownership
|
Percentage of Class
|
Common Stock
$.01 Par Value
|
Dave Offerman(1)
c/o IEH Corporation
140 58th Street
Brooklyn, NY 11220
|
201,665
|
8%
|
|
|
|
|
|
Robert Knoth(2)
c/o IEH Corporation
140 58th Street
Brooklyn, NY 11220
|
52,195
|
2%
|
|
|
|
|
|
Allen Gottlieb(3)
c/o IEH Corporation
140 58th Street
Brooklyn, NY 11220
|
0
|
*
|
|
|
|
|
|
Gerald E. Chafetz(3)
c/o IEH Corporation
140 58th Street
Brooklyn, NY 11220
|
5,000
|
*
|
|
|
|
|
|
Dr. Sonia Marciano(4)
c/o IEH Corporation
140 58th Street
Brooklyn, NY 11220
|
5,000
|
*
|
|
|
|
|
|
Eric C. Hugel(4)
c/o IEH Corporation
140 58th Street
Brooklyn, NY 11220
|
5,000
|
*
|
|
|
|
|
|
Michael E. Rosenfeld ()
c/o IEH Corporation
140 58th Street
Brooklyn, NY 11220
|
5,000
|
*
|
|
|
|
|
All Officers & Directors as a Group
(7 in number) (1) (2) (3) (4) (6)
|
273,860
|
10%
|
|
|
|
|
5% Shareholders
|
Zeff Capital LP.(5)
1601 Broadway, 12th Floor
New York, NY 10019
|
332,862
|
14%
|
|
|
|
|
|
Gail Offerman
c/o IEH Corporation
140 58th Street
Brooklyn, NY 11220
|
900,246
|
37%
|
__________________________
* Denotes ownership percentage of less than 1%.
All shares set forth above are owned directly by the named individual
unless otherwise stated.
|
(1)
|
Includes vested options to purchase 196,217 shares of Common Stock but excludes unvested options to purchase 75,000
shares of Common Stock.
|
|
(2)
|
Includes vested options to purchase 45,000 shares of Common Stock.
|
|
(3)
|
Includes vested options to purchase 4,000 shares of Common Stock.
|
|
(4)
|
Includes vested options to purchase 5,000 shares of Common Stock
|
|
(5)
|
Includes vested options to purchase 5,000 shares of Common Stock
|
|
(6)
|
Based on a Schedule 13G dated January 3, 2020 filed by the reporting person.
|
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Except as disclosed herein,
we have not entered into any material transactions or series of similar transactions with any director, executive officer or any
security holder owning 5% or more of our Common Stock. For information concerning employment agreements with, and compensation
of, our executive officers and directors, see the disclosure in the section of this proxy statement captioned “Executive
Compensation and Related Information.”
Messrs. Gottlieb, Chafetz,
Hugel, Rosenfeld and Dr. Marciano are deemed independent directors of the Company.
HOUSEHOLDING OF PROXY
MATERIALS
The SEC has
adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for Notices of Internet
Availability or other proxy materials, as applicable, with respect to two or more shareholders sharing the same address by delivering
a single Notice of Internet Availability or a copy of other proxy materials, as applicable, addressed to those shareholders. This
process, which is commonly referred to as “householding,” potentially means extra convenience for shareholders and
cost savings for companies. A number of brokers with account holders who are our shareholders may be “householding”
our proxy materials. This means that only one copy of the Notice of Internet Availability (or other proxy materials) may be delivered
to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once
you have received notice from your broker that they will be “householding” communications to your address, “householding”
will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate
in “householding” and would prefer to receive a Notice of Internet Availability or other proxy materials, as applicable,
please notify your broker or the company. To contact us, direct your written request to Corporate Secretary, IEH Corporation.,
140 58th Street, Bldg. B, Suite 8E, Brooklyn, New York 11220 or call at (718) 492-4440. If you revoke your consent,
we will promptly deliver to you a separate copy of the Notice of Internet Availability and, if applicable, our other proxy materials.
Shareholders who currently receive multiple copies of the Notice of Internet Availability or other proxy materials, as applicable,
at their addresses and would like to request “householding” of their communications should contact their brokers or
our corporate secretary. Shareholders that have previously received a single set of disclosure documents may request their own
copy by contacting their bank, broker or other nominee record holder. We will also deliver a separate copy of this proxy statement
to any shareholder upon written request to our Corporate Secretary at our principal executive offices.
SHAREHOLDER PROPOSALS
Eligibility
to Submit a Proposal. Under Rule 14a-8 promulgated under the Exchange Act, in order to be eligible to submit a proposal,
you must have continuously held at least $2,000 in market value, or 1%, of the Company’s securities entitled to be voted
on the proposal at the meeting for at least one year by the date you submit the proposal. You must continue to hold those securities
through the date of the meeting.
Inclusion
in Next Year’s Proxy Statement. A shareholder who desires to have his or her proposal included in next year’s
proxy statement must deliver the proposal to our principal executive offices (at the address noted above) no later than the close
of business on June 24, 2021.
Presentation
at Meeting. Rule 14a-4(c) under the Exchange Act provides that if a proponent of a proposal fails to notify us at the
address below at least 45 days prior to the month and day of mailing of the prior year’s proxy statement (or any date specified
in an advance notice provision), then the management proxy holders will be allowed to use their discretionary voting authority
with respect to the voting of proxies when the proposal is presented at the meeting, without any discussion of the matter in the
proxy statement. With respect to our 2020 Annual Meeting of Shareholders, if we are not provided notice of a stockholder proposal,
which the Shareholder has not previously sought to include in our proxy statement, by September 8, 2020, the management
proxy holders will be allowed to use their discretionary authority with respect to the voting of proxies.
ADDITIONAL INFORMATION
A
COPY OF THE COMPANY’S ANNUAL REPORT ON FORM l0-K FOR THE FISCAL YEAR ENDED MARCH 31, 2020 FILED WITH THE SEC WILL BE
FURNISHED WITHOUT EXHIBITS TO SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST SENT TO WILLIAM H. CRAIG, CORPORATE SECRETARY, IEH
CORPORATION, 140 58TH STREET, BUILDING B, SUITE 8E, BROOKLYN, NEW YORK 11220. Each request must set forth a good
faith representation that as of the Record Date, the person making the request was the beneficial owner of Common Stock of
IEH entitled to vote at the 2020 Annual Meeting of Shareholders. We are subject to the informational requirements of the
Exchange Act, and in accordance therewith file reports, proxy and information statements and other information with the SEC.
Such reports, proxy and information statements and other information we file can be inspected and copied at the public
reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. at prescribed rates. You can contact the
SEC at 1-800-SEC-0330 for additional information about these facilities. The SEC maintains a web site that contains reports,
proxy and information statements and other information filed through the SEC’s Electronic Data Gathering, Analysis and
Retrieval System. This web site can be accessed at http://www.sec.gov.
OTHER BUSINESS
As of the date of this
proxy statement, the items discussed herein contain the only business which the Board of Directors intends to present, and is not
aware of any other matters which may come before the Annual Meeting. If any other matter or matters are properly brought before
the Annual Meeting, or any adjournments thereof, it is the intention of the persons named in the accompanying form of proxy to
vote the proxy on such matters in accordance with their judgment.
|
By Order of the Board of Directors
|
|
|
|
/s/ DAVE OFFERMAN
|
|
Dave Offerman
|
|
Chief Executive Officer
|
Dated: November 20, 2020
WHETHER OR NOT YOU EXPECT TO ATTEND
THE ANNUAL MEETING, YOU ARE URGED TO VOTE AS SOON AS POSSIBLE BY PROXY EITHER BY MAIL OR VIA TELEPHONE OR VIA THE INTERNET, IN
ACCORDANCE WITH THE ENCLOSED VOTING INSTRUCTIONS. IF YOU VOTE BY MAIL, MARK, SIGN AND DATE THE PROXY CARD IN ACCORDANCE WITH THE
INSTRUCTIONS ON THE PROXY CARD AND RETURN IT IN THE ENCLOSED PRE-ADDRESSED POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE.
ANNEX A
IEH CORPORATION
2020 EQUITY BASED COMPENSATION PLAN
SECTION
1. Establishment and Purpose.
(a) Purpose. The
purpose of the 2020 Equity Based Compensation Plan (the “Plan”) is to promote the interests of IEH CORPORATION, a New
York corporation (the “Corporation”), and its shareholders by providing eligible employees, directors and consultants
with additional incentives to remain with the Corporation and its affiliated entities and subsidiaries, to increase their efforts
to make the Corporation more successful, to reward such persons by providing an opportunity to acquire shares of Common Stock on
favorable terms and to attract and retain the best available personnel to participate in the ongoing business operations of the
Corporation.
The Plan permits the grant of Incentive
Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units
and Performance Shares.
(b) Adoption
and Term. The Plan has been approved by the Board of Directors of the Corporation, and subject to
the approval of a majority of the voting power of the shareholders of the Corporation, is effective as of January 1, 2021. The
Plan will remain in effect until terminated or abandoned by action of the Board of Directors except as otherwise provided in Section 15.
The Plan replaces and supersedes any prior stock option or stock incentive plan maintained by the Corporation and its affiliated
entities and subsidiaries.
SECTION 2. Definitions.
(a) “Applicable
Laws” means the requirements relating to the administration of equity-based awards under U.S. state corporate laws,
U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or
quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan.
(b) “Award”
means the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation
Rights, Performance Units or Performance Shares made pursuant to the Plan.
(c) “Award
Agreement” means an agreement entered into by the Corporation and the Participant setting forth the terms applicable
to an Award granted to the Participant under the Plan.
(d) “Board
of Directors” means the Board of Directors of the Corporation, as constituted from time to time.
(e) “Cause”
means (i) conviction of, or the entry of a plea of guilty or no contest to, a felony or any other crime that causes the Corporation
public disgrace or disrepute, or adversely affects the Corporation’s operations, condition (financial or otherwise), prospects
or interests, (ii) gross negligence or willful misconduct with respect to the Corporation, including, without limitation fraud,
embezzlement, theft or dishonesty in the course of his or her employment; (iii) alcohol abuse or use of controlled drugs other
than in accordance with a physician’s prescription; (iv) refusal, failure or inability to perform any material obligation
or fulfill any duty (other than any duty or obligation of the type described in clause (6) below) to the Corporation (other
than due to a disability), which failure, refusal or inability is not cured within 10 days after delivery of notice thereof;
(v) material breach of any agreement with or duty owed to the Corporation; or (vi) any breach of any obligation or duty
to the Corporation (whether arising by statute, common law, contract or otherwise) relating to confidentiality, noncompetition,
nonsolicitation or proprietary rights. Notwithstanding the foregoing, if a Participant and the Corporation have entered into an
employment agreement, consulting agreement or other similar agreement that specifically defines “Cause,” then with
respect to such Participant, “Cause” shall have the meaning defined in that employment agreement, consulting agreement
or other agreement.
(f) “Change
of Control” means the occurrence of any of the following, in one transaction or a series of related transactions:
(i) any person (as such term is used in Section 13(d) and 14(d) of the Exchange Act) becoming a
“beneficial owner”
(as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Corporation representing more
than 50% of the voting power of the Corporation’s then outstanding capital stock; (ii) a consolidation, share exchange,
reorganization or merger of the Corporation resulting in the shareholders of the
Corporation immediately prior to such event not owning at
least a majority of the voting power of the resulting entity’s securities outstanding immediately following such event or,
if the resulting entity is a direct or indirect subsidiary of the entity whose securities are issued in such transaction(s), the
voting power of such issuing entity’s securities outstanding immediately following such event; (iii) the sale or other
disposition of all or substantially all the assets of the Corporation (other than a transfer of financial assets made in the ordinary
course of business for the purpose of securitization or any similar purpose); (iv) a change in the effective control of the
Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by Directors
whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or
election; (v) a liquidation or dissolution of the Corporation; or (vi) any similar event deemed by the Committee to constitute
a Change in Control for purposes of the Plan. For the avoidance of doubt, a transaction or a series of related transactions will
not constitute a Change in Control if such transaction(s) result(s) in the Corporation, any successor to the Corporation, or any
successor to the Corporation’s business, being controlled, directly or indirectly, by the same person or persons who controlled
the Corporation, directly or indirectly, immediately before such transaction(s).
(g) “Code”
means the Internal Revenue Code of 1986, as amended.
(h) “Committee”
means the Compensation Committee of the Board of Directors or such other committee or individuals satisfying Applicable Laws appointed
by the Board in accordance with Section 3 hereof.
(i) “Common
Stock” means the common stock, par value $0.01 of the Corporation.
(j) “Consultant”
means any person other than an Employee, engaged by the Corporation or Subsidiary to render services to such entity.
(k) “Corporation”
means IEH Corporation., a New York corporation and where applicable, its Subsidiaries.
(l) “Date
of Grant” means the date on which the Committee grants an Award pursuant to the Plan.
(m) “Disability”
means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards
other than Incentive Stock Options, the Committee in its discretion may determine whether a permanent and total disability exists
in accordance with uniform and non-discriminatory standards adopted by the Committee from time to time.
(n) “Effective
Date” means January 1, 2021.
(o) “Employee”
means any individual who is a common-law employee of the Corporation or a Subsidiary.
(p) “Exchange
Act” means the Securities Exchange Act of 1934, as amended.
(q) “Exchange
Program” means a program established by the Committee under which outstanding Awards are amended to provide for a
lower Exercise Price or surrendered or cancelled in exchange for (i) Awards with a lower exercise price, (ii) a different
type of Award or awards under a different equity incentive plan, (iii) cash, or (iv) a combination of (i), (ii) and/or
(iii). Notwithstanding the preceding, the term Exchange Program does not include any (i) action described in Section 12
or any action taken in connection with a Change in Control transaction or (ii) transfer or other disposition permitted under
Section 12. For the purpose of clarity, each of the actions described in the prior sentence, none of which constitute
an Exchange Program, may be undertaken (or authorized) by the Committee in its sole discretion without approval by the Corporation’s
shareholders.
(r) “Exercise
Price” with respect to an Option, means the price per share at which an Optionee may exercise his Option to acquire
all or a portion of the shares of Common Stock that are the subject of such Option, as determined by the Committee on the Date
of Grant. In no event shall the Exercise Price of any Common Stock made the subject of an Option, be less than the Fair Market
Value on the Date of Grant.
(s) “Fair
Market Value” means, as of any date, the value of Common Stock determined as follows:
(i) If the
Common Stock is listed on any established stock exchange or a national market system, including without limitation the New York
Stock Exchange, the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market of The Nasdaq Stock Market,
its Fair Market Value will be the closing sale price for such stock (or the closing bid, if no sales were reported) as quoted on
such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source
as the Committee deems reliable;
(ii) If the
Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, or if the Common Stock
is quoted on the Over-the-Counter (OTC) market, be that the OTCQB, OTCBB or Pink Sheets, the Fair Market Value of a Share will
be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in The
Wall Street Journal, the OTC, or such other source as the Committee deems reliable;
(iii) For
purposes of any Awards granted on the Registration Date, the Fair Market Value will be the initial price to the public as set forth
in the final prospectus included within the registration statement in Form S-1 filed with the Securities and Exchange Commission
for the initial public offering of the Corporation’s Common Stock; or
(iv) In the
absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Board of Directors
after taking into account such factors as the Board shall deem appropriate
(t) “Incentive
Stock Option” or “ISO” means a stock option intended to satisfy the requirements of Section 422(b)
of the Code.
(u) “Nonstatutory
Option” means a stock option not intended to satisfy the requirements of Section 422(b) of the Code.
(v) “Officer”
means a person who is an officer of the Corporation within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(w) “Option”
means an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase shares of Common Stock.
(x) “Option
Stock” means those shares of Common Stock made the subject of an Option granted pursuant to the Plan.
(y) “Optionee”
means an individual who is granted an Option.
(z) “Outside
Director” means a member of the Board of Directors who is not an Employee.
(aa) “Participant”
means a person who has an outstanding Award under the Plan. The term Participant also refers to an Optionee.
(bb) “Performance
Goal” means a performance goal established by the Committee pursuant to Section 10(c) of the Plan.
(cc) “Performance
Share” means an Award denominated in Shares which may be earned in whole or in part upon attainment of Performance
Goals or other vesting criteria as the Committee may determine pursuant to Section 10.
(dd) “Performance
Unit” means an Award which may be earned in whole or in part upon attainment of Performance Goals or other vesting
criteria as the Committee may determine and which may be settled for cash, Shares or other securities or a combination of the foregoing
pursuant to Section 10.
(ee) “Plan”
means this IEH Corporation 2020 Equity Based Compensation Plan.
(ff) “Registration
Date” means the effective date of the first registration statement that is filed by the Corporation and declared
effective pursuant to Section 12(g) of the Exchange Act, with respect to any class of the Corporation’s securities.
(gg) “Restricted
Stock” means those shares of Common Stock made the subject of an Award granted under the Plan.
(hh) “Restricted
Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted
pursuant to Section 8. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Corporation.
(ii) “Rule 16b-3”
means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised
with respect to the Plan.
(jj) “Section 16(b)”
means Section 16(b) of the Exchange Act.
(kk) “Service”
means service as an Employee, Consultant or Outside Director.
(ll) “Share”
means a share of the Common Stock, as adjusted in accordance with Section 12 of the Plan.
(mm) “Stock
Appreciation Right” or “SAR” means a right awarded to a Participant pursuant to Section 9 of the
Plan, which shall entitle the Participant to receive cash, Common Stock, other property or a combination thereof, as determined
by the Committee, in an amount equal to or otherwise based on the excess of (a) the Fair Market Value of a share of Common
Stock at the time of exercise over (b) the exercise price of the right, as established by the Committee on the date the award
is granted..
(nn) “Subsidiary”
means any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation if each
of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that
attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such
date.
SECTION 3. Administration.
(a) Committee
of the Board of Directors. The Plan may be administered by the Compensation Committee of the Board
of Directors or such other Committee or individuals as appointed by the Board to administer the Plan. Each Committee shall have
such authority and be responsible for such functions as the Board of Directors has assigned to it. Members of the Committee shall
serve for such period of time as the Board of Directors may determine and shall be subject to removal by the Board of Directors
at any time. The Board of Directors may also at any time terminate the functions of the Committee and reassume all powers and authorities
previously delegated to the Committee. If no Committee has been appointed, the entire Board of Directors shall administer the Plan.
To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements
for exemption under Rule 16b-3.
(b) Authority. Subject
to the terms and conditions of the Plan, the Committee shall have the sole discretionary authority:
(i) to
authorize the granting of Awards under the Plan;
(ii) to
select the Employees, Consultants or Outside Directors who are to be granted Awards under the Plan and to determine the conditions
subject to such Awards;
(iii) to
construe and interpret the Plan;
(iv) to
determine Fair Market Value;
(v) to
establish and modify administrative rules for the Plan;
(vi) to
impose such conditions and restrictions with respect to the Awards, not inconsistent with the terms of the Plan, as it determines
appropriate;
(vii) to
execute or cause to be executed Award Agreements; and
(viii) generally,
to exercise such power and perform such other acts in connection with the Plan and the Awards, and to make all determinations under
the Plan as it may deem necessary or advisable or as required, provided or contemplated hereunder.
Any person delegated
or designated by the Committee shall be subject to the same obligations and requirements imposed on the Committee and its members
under the Plan.
(c) Exchange
Program. Notwithstanding anything in this Section 3, the Committee shall not implement an Exchange
Program without the approval of the holders of a majority of the Shares that are present in person or by proxy and entitled to
vote at any annual or special meeting of Corporation’s shareholders.
(d) Delegation
by the Committee. The Committee, in its sole discretion and on such terms and conditions as it may
provide, may delegate all or any part of its authority and powers under the Plan to one or more Directors or officers of the Corporation;
provided, however, that the Committee may not delegate its authority and powers (a) with respect to an Officer or (b) in
any way which would jeopardize the Plan’s qualification under Code Section 162(m), if applicable, or Rule 16b-3.
(e) Indemnification. To
the maximum extent permitted by law, the Corporation shall indemnify each member of the Committee, the Board, and any Employee
with duties under the Plan, against all liabilities and expenses (including any amount paid in settlement or in satisfaction of
a judgment) reasonably incurred by the individual in connection with any claims against the individual by reason of the performance
of the individual’s duties under the Plan. This indemnity shall not apply, however, if: (i) it is determined in the
action, lawsuit, or proceeding that the individual is guilty of gross negligence or intentional misconduct in the performance of
those duties; or (ii) the individual fails to assist the Corporation in defending against any such claim. The Corporation
shall have the right to select counsel and to control the prosecution or defense of the suit. The Corporation shall not be obligated
to indemnify any individual for any amount incurred through any settlement or compromise of any action unless the Corporation consents
in writing to the settlement or compromise.
SECTION 4. Eligibility and Award Limitations.
(a) Award
Eligibility. Employees, Consultants and Outside Directors shall be eligible for the grant of Awards
under the Plan. Only Employees shall be eligible for the grant of Incentive Stock Options.
(b) Award
Limitations. The Corporation may apply limits on the grant of Awards during any fiscal year or any
particular type or amount of Award.
SECTION 5. Stock Subject To The Plan.
(a) Shares
Subject to the Plan. Subject to the provisions of Section 12 of the Plan, the maximum aggregate
number of Shares that may be issued under the Plan is 750,000 Shares (the “Initial Share Reserve”). The Shares
may be authorized, but unissued, or reacquired Common Stock. Notwithstanding the foregoing and, subject to adjustment as
provided in Section 12, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options will
equal the aggregate Share number stated in this Section 5(a), plus, to the extent allowable under Section 422 of the
Code and the Treasury Regulations promulgated thereunder, any Shares that become available for issuance under the Plan pursuant
to Section 5(b).
(b) Lapsed
Awards. To the extent an Award expires, is surrendered pursuant to an Exchange Program or becomes
unexercisable without having been exercised or, with respect to Restricted Stock, Restricted Stock Units, Performance Units or
Performance Shares, is forfeited to or repurchased by the Corporation due to failure to vest, the unpurchased Shares (or for Awards
other than Options or Stock Appreciation Rights the forfeited or repurchased Shares), which were subject thereto will become available
for future grant or sale under the Plan (unless the Plan has terminated). Notwithstanding the foregoing (and except with
respect to Shares of Restricted Stock that are forfeited rather than vested), Shares that have actually been issued under the Plan
under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided,
however, that if Shares issued pursuant to Awards of Restricted Stock, Restricted Stock Units, Performance Shares or Performance
Units are repurchased by the Corporation or are forfeited to the Corporation, such Shares will become available for future grant
under the Plan. Shares used to pay the exercise price of an Award or to satisfy the tax withholding obligations related to
an Award will become available for future grant under the Plan. To the extent an Award under the Plan is paid out
in cash
rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan.
SECTION 6. Terms And Conditions Of Stock Options.
(a) Power
to Grant Options. Subject to the maximum per person share limitation in Section 4, the Committee
may grant to such Employees or persons as the Committee may select, Options entitling the Optionee to purchase shares of Common
Stock from the Corporation in such quantity, and on such terms and subject to such conditions not inconsistent with the terms of
the Plan, as may be established by the Committee at the time of grant or pursuant to applicable resolution of the Committee, and
as set forth in the Participant’s Option Award Agreement. Options granted under the Plan may be Nonstatutory Stock Options
or Incentive Stock Options.
(b) Optionee
to Have No Rights as a Stockholder. An Optionee, or a transferee of an Optionee, shall have no rights
as a stockholder of the Corporation with respect to the shares of Common Stock made subject to an Option unless and until such
Optionee exercises such Option and is issued the shares purchased thereby. No adjustments shall be made for distributions, dividends,
allocations, or other rights with respect to any shares of Common Stock prior to the exercise of such Option.
(c) Award
Agreements. The terms of any Option shall be set forth in an Award Agreement in such form as the
Committee shall from time to time determine. Each Award Agreement shall comply with and be subject to the terms and conditions
of the Plan and such other terms and conditions as the Committee may deem appropriate. In the event that any provision of an Option
granted under the Plan shall conflict with any term in the Plan as constituted on the Date of Grant of such Option, the term in
the Plan constituted on the Date of Grant of such Option shall control. No person shall have any rights under any Option granted
under the Plan unless and until the Corporation and the Optionee have executed an Award Agreement setting forth the grant and the
terms and conditions of the Option.
(d) Vesting. Unless
a different vesting schedule is listed in an individual Award Agreement, the Shares subject to an Option granted under the Plan
shall vest and become exercisable in accordance with the following schedule:
Completed Years of Employment/Service From Date of Grant
|
|
Cumulative
Vesting Percentage
|
1
|
|
25%
|
2
|
|
50%
|
3
|
|
75%
|
4 Years or more
|
|
100%
|
(e) Exercise
Price and Procedures.
(1) Exercise
Price. The Exercise Price means the price per share at which an Optionee may exercise his Option to
acquire all or a portion of the shares of Common Stock that are the subject of such Option. Notwithstanding the foregoing, in no
event shall the Exercise Price of any Common Stock made the subject of an Option be less than the Fair Market Value of such Common
Stock, determined as of the Date of Grant.
(2) Exercise
Procedures. Each Option granted under the Plan shall be exercised by providing written notice to the
Committee, together with payment of the Exercise Price, which notice and payment must be received by the Committee on or before
the earlier of (i) the date such Option expires, and (ii) the last date on which such Option may be exercised as provided
in paragraph (f) below.
(3) Payment
of Exercise Price. The Exercise Price times the number of the shares to be purchased upon exercise of
an Option granted under the Plan shall be paid in full at the time of exercise. The Committee will determine the acceptable form
of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the
Committee will determine the acceptable form of consideration at the time of grant. Such consideration for both types of
Options may consist entirely of: (i) cash; (ii) check; (iii) promissory note, to the extent permitted by Applicable
Laws, (iv) other Shares, provided that such Shares have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which such Option will be exercised and provided that accepting such Shares will not result
in any adverse accounting consequences to the Corporation, as the
Committee determines in its sole discretion; (v) consideration
received by the Corporation under a broker-assisted (or other) cashless exercise program (whether through a broker or otherwise)
implemented by the Corporation in connection with the Plan; (vi) by net exercise; (vii) such other consideration and
method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (viii) any combination of the
foregoing methods of payment.
(f) Effect
of Termination of Service. Subject to paragraph (k) below regarding Special Rules for Incentive
Stock Options, the following provisions shall govern the exercise of any Options granted to an Optionee that are vested and outstanding
at the time Optionee’s Service ceases:
(1) Termination
of Employment for Reasons Other than Death, Disability or a Termination for Cause. Should Optionee’s
Service with the Corporation cease for any reason other than death, Disability or a termination for Cause (as determined by the
Committee), then each Option shall remain exercisable until the close of business on the earlier of (i) 3 months following the
date Optionee’s Service ceased or (ii) the expiration date of the Option.
(2) Termination
of Employment Due to Death or Disability. Should Optionee’s Service cease due to death or Disability,
then each Option shall remain exercisable until the close of business on the earlier of (i) the 12 month anniversary of the
date Optionee’s Service ceased, or (ii) the expiration date of the Option.
(3) Termination
for Cause. Should Optionee’s Service be terminated for Cause while his Option remains outstanding,
each outstanding Option granted to Optionee (whether vested or unvested) shall terminate immediately and Optionee shall forfeit
all rights with respect to such Award.
(g) Limited
Transferability of Options. An Option shall be exercisable only by the Optionee during his lifetime
and shall not be assignable or transferable other than by will or by the laws of inheritance following Optionee’s death.
(h) Acceleration
of Exercise Vesting. Notwithstanding anything to the contrary in the Plan, the Committee, in its
discretion, may allow the exercise in whole or in part, at any time after the Date of Grant, any Option held by an Optionee, which
Option has not previously become exercisable. In the event of a Change of Control of the Corporation, the Committee, in its discretion
may provide that Options shall become 100% vested and exercisable on the date of the Change of Control. Options shall also become
100% vested in the event Optionee dies or becomes Disabled while employed.
(i) Modification,
Extension, Cancellation and Regrant. Within the limitations of the Plan and after taking into account
any possible adverse tax or accounting consequences, the Committee may modify, or extend outstanding Options or may accept the
cancellation of outstanding Options (whether granted by the Corporation or another issuer) in return for the grant of new Options
for the same or a different number of shares and at the same or a different Exercise Price. The foregoing notwithstanding, no modification
of an Option shall, without the consent of the Optionee, impair the Optionee’s rights or increase the Optionee’s obligations
under such Option or cause a violation of Code Section 409A.
(j) Term
of Option. No Option shall have a term in excess of ten (10) years measured from the date that the
Option is granted.
(k) Special
Rules For Incentive Stock Options (“ISOs”). In addition to the provisions of this Section 6,
the terms specified below shall be applicable to all Incentive Stock Options granted under the Plan. Except as modified by the
provisions of this paragraph (k), all of the provisions of the Plan shall be applicable to Incentive Stock Options. Options that
are specifically designated as Nonstatutory Options are not subject to the terms of this paragraph (k).
(1) Eligibility. Incentive
Options may only be granted to Employees.
(2) Dollar
Limitation. The aggregate Fair Market Value of the shares of Common Stock (determined as of the Date
of Grant) for which one or more Incentive Options granted to any Employee pursuant to the Plan may for the first time become exercisable
as Incentive Options during any one calendar year shall not exceed $100,000. To the extent that an Optionee’s Options exceed
that limit, they will be treated as Nonstatutory Options (but all of the other provisions of the Option shall remain applicable),
with the first Options that were awarded to Optionee to be treated as Incentive Stock Options.
(3) Restrictions
on Sale of Shares. Shares issued pursuant to the exercise of an Incentive Stock Option may not be sold
by the Employee until the expiration of 12 months after exercise and 24 months from the Date of Grant. Shares that do not satisfy
these restrictions shall be treated as a grant of Nonstatutory Options.
(4) Special
Rules for Incentive Stock Options Granted to 10% Stockholder.
a. Exercise
Price. If any Employee to whom an Incentive Stock Option is granted is a 10% Stockholder, the Exercise
Price of the Incentive Stock Option must be at least 110% of the Fair Market Value of the Corporation’s Common Stock.
b. Term
of Option. If any Employee to whom an Incentive Stock Option is granted is a 10% Stockholder, then the
Option term shall not exceed five years measured from the date the Incentive Stock Option is granted.
c. Definition
of 10% Stockholder. For purposes of the Plan, an Employee is deemed to be a “10% Stockholder”
if he owns more than 10% of the Corporation or any Subsidiary.
(5) Special Rules for Exercise of
Incentive Stock Options Following Termination of Employment.
a. Death
or Disability. In order to preserve tax treatment as an Incentive Stock Option, Options granted to an
Optionee who dies or becomes Disabled while employed must be exercised by the Optionee or his executor or beneficiary no later
than (i) 12 months following the date of death or Disability, or (ii) the expiration date of the Incentive Stock Option, if
earlier.
b. Termination
For Reason Other Than Death or Disability. In order to preserve tax treatment as an Incentive Stock
Option, an Optionee must exercise any vested and outstanding Incentive Stock Options no later than: (i) three (3) months
following the date the Optionee terminates employment for any reason other than death or Disability; or (ii) the expiration
date of the Incentive Stock Option if earlier.
(6) Miscellaneous. With
respect to Incentive Stock Options, if this Plan does not contain any provision required to be included herein under Section 422
of the Code, such provision shall be deemed to be incorporated herein with the same force and effect as if such provision had been
set out at length herein. To the extent any Option that is intended to qualify as an Incentive Stock Option cannot so qualify,
such Option, to that extent, shall be deemed to be a Nonstatutory Stock Option for all purposes of this Plan.
(l) Shareholder
Rights. Until the Shares covered by an Option are issued (as evidenced by the appropriate entry
on the books of the Corporation or of a duly authorized transfer agent of the Corporation), no right to vote or receive dividends
or any other rights as a stockholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of
the Option. The Corporation will issue (or cause to be issued) such Shares promptly after the Option is exercised.
No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued,
except as provided in Section 12 of the Plan.
SECTION 7. Restricted Stock.
(a) Grant
of Restricted Stock. The Committee may cause the Corporation to issue shares of Restricted Stock
under the Plan, subject to such restrictions, conditions and other terms as the Committee may determine in addition to those set
forth herein.
(b) Establishment
of Performance Criteria and Restrictions. Restricted Stock Awards will be subject to time vesting
under paragraph (f) of this Section 7. The Committee may, in its sole discretion, at the time a grant is made, prescribe
restrictions in addition to or other than time vesting, including the satisfaction of corporate or individual performance objectives,
which shall be applicable to all or any portion of the Restricted Stock. Corporate or individual performance criteria include,
but are not limited to, designated levels or changes in total shareholder return, net income, total asset return, or such other
financial measures or performance criteria as the Committee may select. Such restrictions shall be set forth in the Participant’s
Restricted Stock Agreement.
(c) Share
Certificates and Transfer Restrictions. Restricted Stock awarded to a Participant may be held under
the Participant’s name in a book entry account maintained by or on behalf of the Corporation. Upon vesting of the Restricted
Stock, the Corporation will establish procedures regarding the delivery of share certificates or the transfer of shares in book
entry form. None of the Restricted Stock may be sold, transferred, assigned, pledged or
otherwise encumbered or disposed of prior
to the date on which such Restricted Stock vests in accordance with the Plan.
(d) Voting
and Dividend Rights. Except as otherwise determined by the Committee either at the time Restricted
Stock is awarded or at any time thereafter prior to the lapse of the restrictions, holders of Restricted Stock shall not have the
right to vote such shares or the right to receive any dividends with respect to such shares, until such shares are vested. All
distributions, if any, received by the Participant with respect to Restricted Stock as a result of any stock split, stock distributions,
combination of shares, or other similar transaction shall be subject to the restrictions of the Plan.
(e) Award
Agreements. The terms of the Restricted Stock granted under the Plan shall be as set forth in an
Award Agreement in such form as the Committee shall from time to time determine. Each Award Agreement shall comply with and be
subject to the terms and conditions of the Plan and such other terms and conditions as the Committee may deem appropriate. No Person
shall have any rights under the Plan unless and until the Corporation and the Participant have executed an Award Agreement setting
forth the grant and the terms and conditions of the Restricted Stock. The terms of the Plan shall govern all Restricted Stock granted
under the Plan. In the event that any provision of an Award Agreement shall conflict with any term in the Plan as constituted on
the Date of Grant, the term in the Plan shall control.
(f) Time
Vesting. Except as otherwise provided in a Participant’s Award Agreement, the Restricted Stock
granted under the Plan will vest in accordance with the following schedule:
Completed Years of Employment/Service From Date of Grant
|
|
Cumulative
Vesting Percentage
|
1
|
|
25%
|
2
|
|
50%
|
3
|
|
75%
|
4 Years or more
|
|
100%
|
In the event a Participant terminates employment
prior to 100% vesting, any Shares of Restricted Stock which are not vested shall be forfeited immediately and permanently. However,
a Participant shall be 100% vested in his Restricted Stock in the event he terminates employment by reason of death or Disability.
A Participant shall also be 100% vested in his Restricted Stock on the date of a Change of Control. If a Participant’s Service
is terminated for Cause as determined in the sole discretion of the Committee, his or her Restricted Stock Award (whether vested
or unvested) shall be forfeited immediately. The Committee may approve Restricted Stock grants that provide alternate vesting schedules.
Fractional shares shall be rounded down.
(g) Acceleration
of Vesting. Notwithstanding anything to the contrary in the Plan, the Board of Directors, in its
discretion, may accelerate, in whole or in part, the vesting schedule applicable to a grant of Restricted Stock.
SECTION 8. Restricted Stock Units
(a) Grant. Restricted
Stock Units may be granted at any time and from time to time as determined by the Committee. After the Committee determines
that it will grant Restricted Stock Units under the Plan, it will advise the Participant in an Award Agreement of the terms, conditions,
and restrictions (if any) related to the grant, including the number of Restricted Stock Units.
(b) Vesting
Criteria and Other Terms. The Committee will set vesting criteria in its discretion, which, depending
on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant.
The Committee may set vesting criteria based upon the achievement of Corporation-wide, business unit, or individual goals (including,
but not limited to, continued employment), or any other basis (including the passage of time) determined by the Committee in its
discretion. Unless a different vesting schedule is set forth in the Award Agreement, the following time vesting schedule will apply:
Completed Years of Employment/Service From Date of Grant
|
|
Cumulative
Vesting Percentage
|
1
|
|
25%
|
2
|
|
50%
|
3
|
|
75%
|
4 Years or more
|
|
100%
|
(c) Earning
of Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be
entitled to receive a payout as determined by the Committee and as set forth in the Award Agreement on the Date of Grant.
Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Committee, in its sole discretion, may
reduce or waive any vesting criteria that must be met to receive a payout as long as such reduction or waiver does not violate
Code Section 409A.
(d) Dividend
Equivalents. The Committee may, in its sole discretion, award dividend equivalents in connection
with the grant of Restricted Stock Units that may be settled in cash, in Shares of equivalent value, or in some combination thereof.
(e) Form and
Timing of Payment. Payment of earned Restricted Stock Units will be made upon the date(s) determined
by the Committee and set forth in the Award Agreement. The Committee, in its sole discretion, may settle earned Restricted
Stock Units in cash, Shares, or a combination of both. Timing and payment of Restricted Stock Units will be subject to and structured
to comply with the rules of Code Section 409A and the treasury regulations thereunder.
(f) Cancellation. On
the date set forth in the Award Agreement, all unearned Restricted Stock Units will be forfeited to the Corporation.
SECTION 9. Stock Appreciation Rights.
(a) Grant. A
Participant may be granted one or more Stock Appreciation Rights under the Plan and such SARs shall be subject to such terms and
conditions, consistent with the other provisions of the Plan, as shall be determined by the Committee in its sole discretion. A
SAR may relate to a particular Stock Option and may be granted simultaneously with or subsequent to the Stock Option to which it
relates. Except to the extent otherwise modified in the grant, (i) SARs not related to a Stock Option shall be granted subject
to the same terms and conditions applicable to Stock Options as set forth in Section 6, and (ii) all SARs related to
Stock Options granted under the Plan shall be granted subject to the same restrictions and conditions and shall have the same vesting,
exercisability, forfeiture and termination provisions as the Stock Options to which they relate. SARs may be subject to additional
restrictions and conditions. The per-share base price for exercise or settlement of SARs shall be determined by the Committee,
but shall be a price that is equal to or greater than the Fair Market Value of such shares. Other than as adjusted pursuant to
Section 12, the base price of SARs may not be reduced without shareholder approval (including canceling previously awarded
SARs and regranting them with a lower base price).
(b) Exercise
and Payment. To the extent a SAR relates to a Stock Option, the SAR may be exercised only when the
related Stock Option could be exercised and only when the Fair Market Value of the shares subject to the Stock Option exceed the
exercise price of the Stock Option. When a Participant exercises such SARs, the Stock Options related to such SARs shall automatically
be cancelled with respect to an equal number of underlying shares. Unless the Committee decides otherwise (in its sole discretion),
SARs shall only be paid in cash or in shares of Common Stock. For purposes of determining the number of shares available under
the Plan, each Stock Appreciation Right shall count as one share of Common Stock, without regard to the number of shares, if any,
that are issued upon the exercise of the Stock Appreciation Right and upon such payment. Shares issuable in connection with a SAR
are subject to the transfer restrictions under the Plan.
SECTION 10. Performance Units and Performance Shares.
(a) Grant
of Performance Units/Shares. Subject to the terms of the Plan, Performance Units and Performance
Shares may be granted to eligible Employees, Consultants or Outside Directors at any time and from time to time, as shall be determined
by the Committee, in its sole discretion. The Committee shall have complete discretion in determining the number of Performance
Units and Performance Shares granted to each Participant.
(b) Value
of Performance Units/Shares. Each Performance Unit shall have an initial value that is established
by the Committee at the time of the grant. Each Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant. The Committee shall set performance goals in its discretion which, depending on the extent to which
they are met, will determine the number and/or value of Performance Units/Shares that will be paid out to the Participants. The
time period during which the performance goals must be met shall be called a “Performance Period.”
(c) Performance
Objectives and Other Terms. The Committee will set Performance Goals or other vesting provisions
(including, without limitation, continued status as an Employee, Consultant or Outside Director) in its discretion which, depending
on the extent to which they are met, will determine the number or value of Performance Units/Shares that will be paid out to an
Employee, Consultant or Outside Director. The time period during which the performance objectives or other vesting provisions
must be met will be called the “Performance Period.” Each Award of Performance Units/Shares will be evidenced
by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Committee, in its sole
discretion, will determine. The Committee may set performance objectives based upon the achievement of Corporation-wide,
divisional, or individual goals, applicable federal or state securities laws, or any other basis determined by the Committee in
its discretion.
(d) Measurement
of Performance Goals. Performance Goals shall be established by the Committee on the basis of targets
to be attained (“Performance Targets”) with respect to one or more measures of business or financial performance (each,
a “Performance Measure”), subject to the following:
(i) Performance
Measures. For each Performance Period, the Committee shall establish and set forth in writing the
Performance Measures, if any, and any particulars, components and adjustments relating thereto, applicable to each Participant.
The Performance Measures, if any, will be objectively measurable and will be based upon the achievement of a specified percentage
or level in one or more objectively defined and non-discretionary factors preestablished by the Committee. Performance Measures
may be one or more of the following, as determined by the Committee: (i) sales or non-sales revenue; (ii) return on revenues;
(iii) operating income; (iv) income or earnings including operating income; (v) net income; (vi) pre-tax income
or after-tax income; (vii) net income excluding amortization of intangible assets, depreciation and impairment of goodwill
and intangible assets and/or excluding charges attributable to the adoption of new accounting pronouncements; (viii) raising
of financing or fundraising; (ix) project financing; (x) revenue backlog; (xi) power purchase agreement backlog;
(xii) gross margin; (xiii) operating margin or profit margin; (xiv) capital expenditures, cost targets, reductions
and savings and expense management; (xv) return on assets (gross or net), return on investment, return on capital, or return
on shareholder equity; (xvi) cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash
provided by operations, or cash flow in excess of cost of capital; (xvii) performance warranty and/or guarantee claims; (xviii) stock
price or total stockholder return; (xix) earnings or book value per share (basic or diluted); (xx) economic value created;
(xxi) pre-tax profit or after-tax profit; (xxii) strategic business criteria, consisting of one or more objectives based
on meeting specified market penetration or market share, geographic business expansion, objective customer satisfaction or information
technology goals; (xxiii) objective goals relating to divestitures, joint ventures, mergers, acquisitions and similar transactions;
(xxiv) construction projects consisting of one or more objectives based upon meeting project completion timing milestones,
project budget, site acquisition, site development, or site equipment functionality; (xxv) objective goals relating to staff
management, results from staff attitude and/or opinion surveys, staff satisfaction scores, staff safety, staff accident and/or
injury rates, headcount, performance management, completion of critical staff training initiatives; (xxvi) objective goals
relating to projects, including project completion timing milestones, project budget; (xxvii) key regulatory objectives; and
(xxviii) enterprise resource planning.
(ii) Committee
Discretion on Performance Measures. As determined in the discretion of the Committee, the Performance
Measures for any Performance Period may (a) differ from Participant to Participant and from Award to Award, (b) be based
on the performance of the Corporation as a whole or the performance of a specific Participant or one or more Subsidiaries, divisions,
departments, regions, stores, segments, products, functions or business units of the Corporation, (c) be measured on a per
share, per capita, per unit, per square foot, per employee, per branch basis, and/or other objective basis (d) be measured
on a pre-tax or after-tax basis, and (e) be measured on an absolute basis or in relative terms (including, but not limited
to, the passage of time and/or against other companies, financial metrics and/or an index). Without limiting the foregoing,
the Committee shall adjust any performance criteria, Performance Measures or other feature of an Award that relates to or is wholly
or partially based on the
number of, or the value of, any stock of the Corporation, to reflect any stock dividend or split, repurchase,
recapitalization, combination, or exchange of shares or other similar changes in such stock.
(e) Earning
of Performance Units/Shares. After the applicable Performance Period has ended, the holder of Performance
Units/Shares shall be entitled to receive a payout of the number of Performance Unit/Shares earned by the Participant over the
Performance Period, to be determined as a function of the extent to which the corresponding Performance Goals have been achieved.
Notwithstanding the preceding sentence, after the grant of a Performance Unit/Share, and subject to restrictions under Applicable
Laws such as Code Section 409A, the Committee, in its sole discretion, may waive the achievement of any performance goals
for such Performance Unit/Share.
(f) Form
and Timing of Payment of Performance Units/Shares. Payment of earned Performance Units/Shares shall
be made in a single lump sum, within 90 calendar days following the close of the applicable Performance Period. The Committee,
in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate fair market
value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in combination
thereof. Prior to the beginning of each Performance Period, Participants may, if so permitted by the Corporation, elect to defer
the receipt of any Performance Unit/Share payout upon such terms as the Committee shall determine.
(g) Cancellation
of Performance Units/Shares. Subject to the applicable Award Agreement, upon the earlier of (a) the
Participant’s termination of employment, or (b) the date set forth in the Award Agreement, all remaining Performance
Units/Shares shall be forfeited by the Participant to the Corporation, the Shares subject thereto shall again be available for
grant under the Plan.
(h) Non-transferability. Performance
Units/Shares may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by
the laws of descent and distribution. Further a Participant’s rights under the Plan shall be exercisable during the Participant’s
lifetime only by the Participant or the Participant’s legal representative.
SECTION 11. Tax Withholding.
(a) Tax
Withholding for Options. The Corporation shall be entitled, if the Committee deems it necessary
or desirable, to withhold (or secure payment in cash in United States dollars from an Optionee or beneficiary in lieu of withholding)
the amount of any withholding or other tax required by law to be withheld or paid by the Corporation with respect to any amount
payable and/or shares of Common Stock issuable under such Optionee’s Option, and the Corporation may defer payment or issuance
of the shares of Common Stock upon such Optionee’s exercise of an Option unless indemnified to its satisfaction against any
liability for such tax. The amount of any such withholding shall be determined by the Corporation.
(b) Tax
Withholding for Restricted Stock and Other Awards. When a Participant incurs tax liability in connection
with the vesting, lapse of a restriction or distribution of Restricted Stock or other Award, and the Participant is obligated to
pay an amount required to be withheld under applicable tax laws, the Committee shall establish procedures to satisfy the withholding
tax obligation. The Participant also has the option to make payment in cash in United States dollars pursuant to procedures
established by the Corporation. The amount of any such withholding shall be determined by the Corporation.
SECTION 12. Adjustment of Shares and Representations.
(a) General. Should
any change be made to the Common Stock by reason of any stock split, reverse stock split, stock dividend, recapitalization, combination
of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s
receipt of consideration, the Committee shall make appropriate adjustments to (i) the maximum number and/or class of securities
issuable pursuant to the Plan, (ii) the number and/or class of securities and the Exercise Price per share in effect for each
outstanding Option in order to prevent the dilution or enlargement of benefits, (iii) the number of shares of Restricted Stock
granted; or (iv) the number of Performance Shares awarded, if applicable. As a condition to the exercise of an Award, the
Corporation may require the person exercising such Option to make such representations and warranties at the time of any such exercise
as the Corporation may at that time determine, including without limitation, representations and warranties that (i) the Shares
are being purchased only for investment and without any present intention to sell or distribute such
Shares in violation of applicable
federal or state securities laws, and (ii) such person is knowledgeable and experienced in financial and business matters
and is capable of evaluating the merits and the risks associated with purchasing the Shares.
The inability of the Corporation to obtain
authority from any regulatory body having jurisdiction, which authority is deemed by the Corporation’s counsel to be necessary
to the lawful issuance and sale of any Shares under this Plan, shall relieve the Corporation of any liability in respect of the
failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
(b) Mergers
and Consolidations. In the event that the Corporation is a party to a Change of Control, outstanding
Awards that are not yet vested shall be subject to the agreement of merger or consolidation or asset sale. Such agreement, without
the Participant’s consent, may provide for:
(i) The continuation
of such outstanding Awards by the Corporation (if the Corporation is the surviving Corporation);
(ii) The
assumption of the Plan and such outstanding Awards by the surviving Corporation;
(iii) The
substitution by the surviving Corporation of options with substantially the same terms for such outstanding Awards;
(iv) Such
other action as the Board of Directors determines.
Each Option that is assumed or otherwise
continued in effect in connection with a Change of Control shall be appropriately adjusted, immediately after such Change of Control,
to apply to the number and class of securities which would have been issuable to the Optionee in connection with the consummation
of such Change of Control, had the Option been exercised immediately prior to such Change of Control.
(c) Reservation
of Rights. Except as provided in this Section 12, a Participant shall have no Shareholder rights
by reason of (i) any subdivision or consolidation of shares of stock of any class, or (ii) any other increase or decrease
in the number of shares of stock of any class. Any issuance by the Corporation of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number
or Exercise Price of shares subject to an Option. The grant of an Option pursuant to the Plan shall not affect in any way the right
or power of the Corporation to make adjustments, reclassifications, reorganizations or changes of its capital or business structure,
to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.
SECTION 13. Miscellaneous.
(a) Regulatory
Approvals. The implementation of the Plan, the granting of any Options, Restricted Stock or Performance
Unit/Performance Share Awards under the Plan, and the issuance of any shares of Common Stock upon the exercise of any Option, lapse
of restrictions on Restricted Stock, or payout of Performance Share Award shall be subject to the Corporation’s procurement
of all approvals and permits required by regulatory authorities, if any, including applicable securities laws having jurisdiction
over the Plan, the Options or Restricted Stock granted, and the shares of Common Stock issued pursuant to it.
(b) Strict
Construction. No rule of strict construction shall be implied against the Committee, the Corporation
or Subsidiary or any other person in the interpretation of any of the terms of the Plan, any Award granted under the Plan or any
rule or procedure established by the Committee.
(c) Choice
of Law. All determinations made and actions taken pursuant to the Plan shall be governed by the
internal laws of the State of New York and construed in accordance therewith.
(d) Compliance
With Code Section 409A. Awards will be designed and operated in such a manner that they are
either exempt from the application of, or comply with, the requirements of Code Section 409A such that the grant, payment,
settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A. The
Plan and each Award Agreement under the Plan is intended to meet the requirements of Code Section 409A (or an exemption
therefrom) and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion
of the Committee. To the extent that an Award or payment, or
the settlement or deferral thereof, is subject to Code Section 409A,
the Award will be granted, paid, settled or deferred in a manner that will meet the requirements of Code Section 409A (or
an exemption therefrom), such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest
applicable under Code Section 409A. In no event will the Corporation be responsible for or reimburse a Participant for
any taxes or other penalties incurred as a result of applicable of Code Section 409A.
(e) Date
of Grant. The date of grant of an Award will be, for all purposes, the date on which the Committee
makes the determination granting such Award, or such other later date as is determined by the Committee. Notice of the determination
will be provided to each Participant within a reasonable time after the date of such grant.
(f) Conditions
Upon Issuance of Shares.
(i) Legal
Compliance. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such
Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval
of counsel for the Corporation with respect to such compliance.
(ii) Investment
Representations. As a condition to the exercise of an Award, the Corporation may require the person
exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment
and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Corporation, such a representation
is required.
(g) Stockholder
Approval. The Plan will be subject to approval by the shareholders of the Corporation within twelve
(12) months after the date the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and
to the degree required under Applicable Laws.
SECTION 14. No Employment or Service Retention Rights.
Nothing in the Plan or in any Award granted
under the Plan shall confer upon the Participant any right to continue in Service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation (or any Subsidiary employing or retaining the Participant)
or of the Participant, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for
any reason, with or without cause.
SECTION 15. Duration and Amendments.
(a) Term
of the Plan. The Plan, as set forth herein, shall become effective on the date of its adoption by
the Board of Directors, subject to the approval of the Corporation’s shareholders. In the event that the shareholders fail
to approve the Plan within 12 months after its adoption by the Board of Directors, any grants of Awards that have already
occurred for which shareholder approval is a prerequisite for the granting of such Awards, shall be rescinded, and no such additional
grants or awards shall be made thereafter under the Plan. The Plan shall terminate automatically ten (10) years after its adoption
only with respect to the Corporation’s ability to grant ISOs under the Plan and may be terminated at any date by the Board
of Directors pursuant to paragraph (b) below.
(b) Right
to Amend or Terminate the Plan. The Committee may amend, suspend or terminate the Plan at any time
and for any reason; provided, however, that certain amendments, including amendments that increase the number of Shares of Common
Stock available for issuance under the Plan (except as provided in Section 12) or change the class of persons who are eligible
for the grant of ISOs, shall be subject to the approval of the Corporation’s shareholders. The Corporation will obtain shareholders
approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.
(c) Effect
of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will
impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Committee, which agreement
must be in writing and signed by the Participant and the Corporation. No Shares of Common Stock shall be issued or sold under the
Plan after the termination thereof, except upon exercise of an Option granted prior to such termination. The termination of the
Plan, or any amendment thereof, shall not affect any shares of Restricted Stock or Performance Shares previously issued or any
Option previously granted under the Plan.
SECTION 16. Execution.
To record the adoption
of the Plan by the Board of Directors, the Corporation has caused its authorized officer to execute the same.
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IEH CORPORATION
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By: /s/Dave Offerman
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Title: President and CEO
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Date:
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IEH Corporation
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ENDORSEMENT_LINE______________ SACKPACK_____________
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MR A SAMPLE DESIGNATION (IF ANY) ADD 1
ADD 2
ADD 3
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Your vote matters – here’s how to vote!
You may vote online or by phone instead of mailing this card.
Votes submitted electronically must be received by December 16, 2020 at
5:00AM EST New York time.
Online
GIof ntoo welwewct.rinovneicstvoortviontge,.com/IEHC or scan
delete QR code and control # ?e QR cod˜e — login details are
the shaded bar below.
Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas.
Phone
Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada
Save paper, time and money!
Sign up for electronic delivery at www.investorvote.com/IEHC
Annual Meeting Proxy Card
1234 5678 9012 345
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
A Proposals — The Board of Directors recommends a vote FOR all the nominees listed, for every 1 YEAR on Proposal 2 and FOR Proposals 3 and 4.
For Withhold For Withhold For Withhold +
1. Election of Directors:
01 - Eric C. Hugel,
Class I Director Nominee
02 - Sonia Marciano,
Class I Director Nominee
03 - Michael E. Rosenfeld, Class I Director Nominee
2. Say on Pay – an advisory vote regarding the approval of executive compensation.
1 Year
2 YFeoarrs
A3gYaeianrsst Abstain
3. Ratification of the appointment of Marcum LLP as the Independent Registered Public Accounting Firm for the fiscal year ending March 31, 2021.
For Against Abstain
4. Adoption of the 2020 Equity Based Compensation Plan
For Against Abstain
B Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
Date (mm/dd/yyyy) — Please print date below.
Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box.
MMMMMMM
C 1234567890 J N T
MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE
140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND
MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND
03CHCB
1 U P X
4 8 2 3 8 0
MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND +
Small steps make an impact.
Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/IEHC
Proxy — IEH Corporation
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
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Notice of 2020 Annual Meeting of Shareholders
Proxy Solicited by Board of Directors for Annual Meeting — Wednesday, December 16, 2020 at 10:00 a.m. Local Time.
Dave Offerman and Bill Craig, or any of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Shareholders of IEH Corporation to be held on Wednesday, December 16, 2020 or at any postponement or adjournment thereof.
Shares represented by this proxy will be voted by the shareholder. If no such directions are indicated, the Proxies will have authority to vote FOR all nominees to the Board of Directors as Class I Directors, FOR adoption of Say on Pay on executive compensation for 1 year, FOR ratification of the appointment of Marcum LLP as the Independent Registered Public Accounting Firm for the fiscal year ending March 31, 2021, and FOR adoption of the 2020 Equity Based Compensation Plan.
In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
We intend to hold our 2020 Annual Meeting in light of the COVID-19 pandemic by means of remote communications only (i.e., a virtual-only annual meeting). The 2020 Annual Meeting will be conducted via live webcast hosted by ZOOM. Information about voting your shares and about attending the virtual Annual Meeting is available in the 2020 Annual Meeting Proxy Statement. All voting will be conducted by either submitting your proxy by mail, voting electronically by the Internet, or voting by telephone. See the 2020 Annual Meeting Proxy Statement for more information about voting and attending the 2020 Annual Meeting by ZOOM webcast. Due to the virtual format there will be no ability to vote your shares at the Annual Meeting.
(Items to be voted appear on reverse side.)
C Non-Voting Items
Change of Address — Please print new address below. Comments — Please print your comments below. Meeting Attendance Mark box to the right if you plan to attend the Virtual Annual Meeting.
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