UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.____)

Filed by the Registrant  ☒                            Filed by a Party other than the Registrant  ☐

Check the appropriate box:

Orion Energy Systems, Inc.

(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

July 23, 2018

Dear Fellow Shareholders:

Our 2018 Annual Meeting of Shareholders will be held on Thursday, September 6, 2018, at 1:00 p.m., Central Time, on the 40^th Floor of the U.S. Bank Center, located at 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.

Consistent with prior years, we have made access to our meeting easier due to the growing number of our institutional shareholders across the country and the world. So, rather than having to attend our meeting in person, you will be able to listen to our meeting live via the internet. We will broadcast the meeting as a live audio webcast through our website, www.orionlighting.com, and a replay will be available on our website during the month of September. Also, if you desire to ask an appropriate question at the meeting of our Board of Directors, management or auditors, you may do so by submitting your question in writing by Friday, August 31, 2018 to Nicole Passini (npassini@oesx.com).

Despite access to our audio webcast, if you still desire to attend the meeting in person, you will need to comply with our admission procedures. All shareholders as of the meeting record date, July 13, 2018, may attend the meeting, but must present photo identification in order to enter the meeting. No person will be allowed entry into the meeting if such person is deemed by the Company, in its discretion, to be a potential disruption to the meeting or a potential danger to the health or safety of other meeting participants.

We hope that you will be able to attend our annual meeting in person or through our website to hear about the exciting progress we are making at Orion.

Orion Energy Systems, Inc.

2210 Woodland Drive

Manitowoc, Wisconsin 54220

(800) 660-9340

NOTICE OF 2018 ANNUAL MEETING OF SHAREHOLDERS

To the Shareholders of Orion Energy Systems, Inc.:

Our 2018 Annual Meeting of Shareholders will be held on Thursday, September 6, 2018, at 1:00 p.m., Central Time, on the 40th Floor of the U.S. Bank Center, located at 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.

Consistent with prior years, we have made access to our meeting easier for all of our shareholders. So, rather than having to attend our meeting in person, you will be able to listen to our meeting live via the internet. We will broadcast the meeting as a live audio webcast through our website, www.orionlighting.com, and a replay will be available on our website during the month of September. Despite access to our audio webcast, if you still desire to attend the meeting in person, you will need to comply with our admission procedures. All shareholders as of the meeting record date, July 13, 2018, may attend the meeting, but must present photo identification in order to enter the meeting.

At the annual meeting, as we describe in the accompanying proxy statement, we will ask you to vote on the following matters:

1. the election of two nominees named in the attached proxy statement as Class II directors to serve for a term expiring at the 2021 annual
           meeting of shareholders and, in each case, until their successors have been duly elected and qualified;

2. an advisory vote to approve the compensation of our named executive officers as disclosed in the accompanying proxy statement;

3. the ratification of BDO USA, LLP to serve as our independent registered public accounting firm for our fiscal year 2019; and

4. such other business as may properly come before the annual meeting, or any adjournment or postponement thereof.

You are entitled to vote at the annual meeting only if you were a shareholder of record at the close of business on July 13, 2018. A proxy statement and proxy card are enclosed. Whether or not you expect to attend the annual meeting, it is important that you promptly complete, sign, date and submit the proxy card via internet, telephone or mail in accordance with its instructions so that you may vote your shares. If you hold your shares in a brokerage account, you should be aware that, if you do not instruct your broker how to vote, your broker will not be permitted to vote your shares for the election of directors or on the advisory vote to approve the compensation of our named executive officers. Therefore, you must affirmatively take action to vote your shares at our annual meeting. If you do not, your shares will not be voted on these items.

Manitowoc, Wisconsin

July 23, 2018

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting To Be Held on September 6, 2018. Our proxy statement for our 2018 Annual Meeting of Shareholders and our 2018 Annual Report to Shareholders are available at www.proxyvote.com.

Our Annual Report on Form 10-K is enclosed with this notice and proxy statement for sharholders who have elected to receive paper copies of our proxy materials.

PROXY STATEMENT

FOR THE 2018 ANNUAL MEETING OF SHAREHOLDERS

To be Held September 6, 2018

We are providing these proxy materials to you because our board of directors is soliciting proxies for use at our 2018 Annual Meeting of Shareholders to be held on Thursday, September 6, 2018, at 1:00 p.m., Central Time, on the 40th Floor of the U.S. Bank Center, located at 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, and at any adjournment or postponement thereof (which we refer to collectively as our “annual meeting”), for the purposes set forth in the attached Notice of 2018 Annual Meeting of Shareholders and as described herein. We either (i) mailed you a notice of internet availability of our proxy materials on or before July 23, 2018 notifying each shareholder entitled to vote at the annual meeting how to vote and how to electronically access a copy of this proxy statement and form or proxy or (ii) mailed you a printed copy of such proxy materials and a proxy card in paper format.

Like last year, we are using the “notice and access” system adopted by the SEC relating to the delivery of our proxy materials over the internet. The SEC’s notice and access rules allow us to deliver our proxy materials to our shareholders by posting the materials on an internet website, notifying shareholders of the availability of our proxy materials on the internet and sending paper copies of our proxy materials upon shareholder request. We believe that the notice and access rules allow us to use internet technology that many shareholders prefer, continue to provide our shareholders with the information that they need and, at the same time, ensure more prompt delivery of our proxy materials. The notice and access rules also lower our cost of printing and delivering our proxy materials and minimize the environmental impact of printing paper copies.

As a result, we mailed to many of our shareholders a notice of internet availability of our proxy materials instead of a paper copy of our proxy materials. Shareholders who received the notice will have the ability to access our proxy materials over the internet and to request a paper copy of our proxy materials by mail, by e-mail or by telephone. Instructions on how to access our proxy materials over the internet or to request a paper copy may be found on the notice. In addition, the notice contains instructions on how shareholders may request our proxy materials in printed form by mail or electronically by e-mail on an ongoing basis. The notice of internet availability of our proxy materials also serves as a notice of meeting.

Consistent with prior years, we have made access to our meeting easier due to the growing number of our institutional shareholders across the country and the world. Rather than having to attend our meeting in person, you will be able to listen to our meeting live via the internet. We will broadcast the meeting as a live audio webcast through our website, www.orionlighting.com, and a replay will be available on our website during the month of September. Also, if you desire to ask an appropriate question at the meeting of our board of directors, management or auditors, you may do so by submitting your question in writing by Friday, August 31, 2018 to Nicole Passini (npassini@oesx.com). Despite access to our audio webcast, if you still desire to attend the meeting in person, you will need to comply with our admission procedures. All shareholders as of the meeting record date, July 13, 2018, may attend the meeting, but must present photo identification in order to enter the meeting. No person will be allowed entry into the meeting if such person is deemed by us, in our discretion, to be a potential disruption to the meeting or a potential danger to the health or safety of other meeting participants.

Execution of a proxy will not affect your right to attend the annual meeting and to vote in person, nor will your presence revoke a previously submitted proxy. You may revoke a previously submitted proxy at any time before the annual meeting by giving written notice of your intention to revoke the proxy to our board secretary, by notifying the appropriate personnel at the registration desk at the annual meeting in writing or by voting in

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person upon entry to the annual meeting. Unless revoked, the shares represented by proxies received by our board of directors will be voted at the annual meeting in accordance with the instructions thereon. If no instructions are specified on a proxy, the votes represented thereby will be voted: (1) for the board’s two director nominees set forth below; (2) for the advisory vote to approve the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis section and the executive compensation tables set forth below in this proxy statement; (3) for ratification of BDO USA, LLP to serve as our independent registered public accounting firm for our fiscal year 2019; and (4) on such other matters that may properly come before the annual meeting in accordance with the best judgment of the persons named as proxies. Our board of directors has designated Michael W. Altschaefl and William T. Hull, and each or either of them, as proxies to vote the shares of our common stock solicited on its behalf.

IMPORTANT: If you hold your shares in a brokerage account, you should be aware that, if you do not instruct your broker how to vote, your broker will not be permitted to vote your shares for the election of directors, or the advisory vote to approve the compensation of our named executive officers. Therefore, you must affirmatively take action to vote your shares at our annual meeting. If you do not, your shares will not be voted on these items.

The two nominees receiving the highest vote totals of the eligible shares of our common stock, no par value per share (“Common Stock”), will be elected as our directors. With regard to the election of directors, votes may be cast in favor or withheld; votes that are withheld will be excluded entirely from the vote and will have no effect. The advisory vote to approve the compensation of our named executive officers and the appointment of BDO USA, LLP to serve as our independent registered public accounting firm for our fiscal year 2018 will be approved if the votes cast in favor of approval exceed the votes cast against approval. Abstentions and broker non-votes will be counted for purposes of determining the presence of a quorum but will be disregarded in the calculation of votes cast.

Only holders of record of shares of our Common Stock as of the close of business on July 13, 2018 (the “Record Date”) are entitled to vote at the annual meeting. As of the Record Date, we had 31,293,083 shares of Common Stock outstanding and entitled to vote. The record holder of each share of Common Stock outstanding on the Record Date is entitled to one vote per share on each matter submitted for shareholder consideration at the annual meeting. In order for us to validly transact business at the annual meeting, we must have a quorum present. A majority of the votes of the shares of Common Stock entitled to be cast, or shares representing at least 15,646,542 votes, will represent a quorum for the purposes of the annual meeting.

WE INTEND TO BEGIN MAKING THIS PROXY STATEMENT AND THE NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS AVAILABLE TO SHAREHOLDERS ON OR ABOUT JULY 23, 2018.

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PROPOSAL ONE:

ELECTION OF DIRECTORS

We maintain a staggered board of directors divided into three classes. Currently, there are two directors in Class I (2017-2020) (Ms. Richstone and Mr. Young), two directors in Class II (2015-2018) (Messrs. Altschaefl and Williamson) and two directors in Class III (2016-2019) (Messrs. Potts and Otten). Each director generally serves for a term ending on the date of the third annual shareholders’ meeting following the annual shareholders’ meeting at which such director’s class was most recently elected and until his or her successor is duly elected and qualified.

At the annual meeting, the terms of our two current Class II (2015-2018) directors (Messrs. Altschaefl and Williamson) will expire. At the annual meeting, our shareholders will elect two Class II directors to serve until our 2021 annual meeting of shareholders, and, in each case, until their successors are duly elected and qualified.

The individuals named as proxy voters in the accompanying proxy, or their substitutes, will vote for the board’s nominees with respect to all proxies we receive unless instructions to the contrary are provided. If any nominee becomes unavailable for any reason, the votes will be cast for a substitute nominee designated by our board. Our directors have no reason to believe that any of the nominees named below will be unable to serve if elected.

The following sets forth certain information, as of July 23, 2018, about each of the board’s nominees for election at the annual meeting and each director of our company whose term will continue after our annual meeting.

Nominees For Election at the Annual Meeting

Class II Directors (2018-2021) — Terms Expiring 2021

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RECOMMENDATION OF THE BOARD: The board of directors unanimously recommends a vote FOR the above director nominees.

Directors Continuing in Office

Class III Directors (2016-2019) — Terms Expiring 2019

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Class I Directors (2017-2020) — Terms Expiring 2020

We strongly encourage our directors to attend our annual meeting, and it is expected that they will do so. Seven of our eight then-serving directors attended our 2017 annual meeting in person.

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CORPORATE GOVERNANCE

Board of Directors — General

Our board of directors met 13 times during fiscal 2018, consisting of four mandatory meetings of the board of directors and nine optional meetings of the board of directors. All of our incumbent directors attended at least 75% of the aggregate of (a) the total number of mandatory meetings of the board held during the fiscal year while they were a director and (b) the total number of meetings held by all committees of the board on which they served during the fiscal year while they were serving on the committees.

Our board has determined that each of Ms. Richstone and Messrs. Otten, Williamson and Young is independent under the listing standards of the Nasdaq Capital Market. Our board generally uses the director independence standards set forth by the Nasdaq Capital Market as its subjective independence criteria for directors, and then makes an affirmative determination as to each director’s independence by taking into account other, objective criteria as applicable.

Standing Board Committees

Our board of directors has established the following standing committees: an audit and finance committee, a compensation committee and a nominating and corporate governance committee. Our board has adopted charters for each standing committee describing their respective responsibilities. The charters are available on our website at www.orionlighting.com. In connection with his appointment as our chief executive officer, our board of directors determined that Mr. Altschaefl was no longer an independent director and, accordingly, reorganized the structure of our standing board committees to remove Mr. Altschaefl as an official member each committee (although he still serves as an ex-officio member of each committee) in order to comply with the committee independence standards established by the Nasdaq Capital Market.

Our audit and finance committee is currently comprised of Ms. Richstone and Messrs. Otten and Williamson, with Ms. Richstone acting as chair. Each member of the audit and finance committee is an audit committee financial expert, as defined under rules of the Securities and Exchange Commission (the “SEC”) implementing Section 407 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). The principal responsibilities and functions of our audit and finance committee are to (i) oversee the reliability of our financial reporting, the effectiveness of our internal control over financial reporting, and the independence of our internal and external auditors and audit functions and (ii) oversee the capital structure of our company and assist our board of directors in assuring that appropriate capital is available for operations and strategic initiatives. In carrying out its accounting and financial reporting oversight responsibilities and functions, our audit and finance committee, among other things, oversees and interacts with our independent auditors regarding the auditors’ engagement and/or dismissal, duties, compensation, qualifications and performance; reviews and discusses with our independent auditors the scope of audits and our accounting principles, policies and practices; reviews and discusses our audited annual financial statements with our independent auditors and management; and reviews and approves or ratifies (if appropriate) related party transactions. Our audit and finance committee also is directly responsible for the appointment, compensation, retention and oversight of our independent auditors. Our audit and finance committee met nine times in fiscal 2018. Each member of our audit and finance committee meets the requirements for independence under the current rules of the Nasdaq Capital Market and the SEC.

Our compensation committee is currently comprised of Messrs. Otten, Williamson and Young, with Mr. Williamson acting as chair. The principal functions of our compensation committee include (i) administering our incentive compensation plans; (ii) establishing performance criteria for, and evaluating the performance of, our executive officers; (iii) annually setting the salary and other compensation for our executive officers; (iv) overseeing the company’s response to the outcome of our shareholders’ advisory votes on our executive compensation; (v) annually reviewing the compensation paid to our non-employee directors; (vi) annually reviewing the compensation committee’s charter, our equity compensation plans and the compensation committee’s current practices, procedures and controls in order to develop, maintain and implement equity compensation compliance procedures; (vii) providing our board of directors with an annual report on our compliance with our procedures, policies, and guidelines for issuing equity awards; and (viii) reviewing and approving all disclosures

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in our SEC filings, including our annual proxy statement, concerning our equity compensation plans and executive and director compensation matters. In addition members of our compensation committee are required to receive periodic training concerning our operative equity compensation plans and compensation procedures, as well as general best practices for executive compensation. Our compensation committee met four times in fiscal 2018. Each member of our compensation committee meets the requirements for independence under the current Nasdaq Capital Market and SEC rules. Our compensation committee did not engage the services of a compensation consultant to determine executive compensation for either of fiscal 2018-2019. In general, the compensation committee has determined to engage an independent compensation consultant only if relevant factors or circumstances change significantly.

Our nominating and corporate governance committee is comprised of Ms. Richstone and Messrs. Otten and Young, with Mr. Young acting as chair. The principal functions of our nominating and corporate governance committee are, among other things, to (i) establish and communicate to shareholders a method of recommending potential director nominees for the committee’s consideration; (ii) develop criteria for selection of director nominees; (iii) identify and recommend persons to be selected by our board of directors as nominees for election as directors; (iv) plan for continuity on our board of directors; (v) recommend action to our board of directors upon any vacancies on the board; and (vi) consider and recommend to our board other actions relating to our board of directors, its members and its committees. Our nominating and corporate governance committee met four times in fiscal 2018. Each member of our nominating and corporate governance committee meets the requirements for independence under the Nasdaq Capital Market and SEC rules.

Board Leadership Structure and Role in Risk Oversight

Our board of directors does not have a policy on whether or not the roles of chief executive officer and board chair should be separate. Our board reserves the right to assign the responsibilities of the chief executive officer and board chair to different individuals or to the same individual if, in the board’s judgment, a combined chief executive officer and board chair position is determined to be in the best interest of our company. In the circumstance where the responsibilities of the chief executive officer and board chair are vested in the same individual or in other circumstances when deemed appropriate, the board will designate an independent lead director from among the independent directors. The duties of the lead director include (i) conferring with the board chair on, and approving, meeting agendas and meeting schedules to assure there is sufficient time for discussion of all agenda items; (ii) calling and presiding over all meetings of the board at which the board chair is not present, including executive sessions; (iii) leading the annual performance reviews of the chief executive officer and the board; (iv) ensuring that there is open communication between our independent directors, the board chair and other management members; (v) being available, when deemed appropriate by the board, for consultation and direct communication with shareholders; and (vi) reviewing, at his or her discretion, information to be sent to the board.

The positions of chief executive officer and board chair had been separate since August 25, 2010; however, on May 25, 2017, our board restructured our management team and appointed Mr. Altschaefl (our then serving non-executive board chair) to serve as our chief executive officer, thereby combining the positions of chief executive officer and board chair. As a result in June 2017, our board designated Mr. Otten to serve as our board’s independent lead director. Our board believes that this leadership structure assists our board in implementing our companywide focus on cost reductions intended to accelerate our path to profitability while continuing to grow our revenue, creates streamlined accountability for our performance, and facilitates our board’s efficient and effective functioning. Our board also believes that having Mr. Altschaefl serve as both our chief executive officer and our board chair allows him to leverage the information gained from both roles to effectively lead our company, while having Mr. Otten serve as our lead director continues to help our board execute independent oversight of our management team. Our board retains the authority to modify this structure to best address our company’s unique circumstances as and when appropriate.

Our full board is responsible for the oversight of our enterprise risk management process. Our board is responsible for overseeing our management team’s identification of certain enterprise risks that could adversely affect our company, and the steps management has taken or plans to take to monitor, control and report such risks, including risks relating to the execution of our strategy to achieve profitability, our sales and distribution

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model, the sufficiency of our liquidity and capital, competitive pressures on the average sales price of our products, adapting to convergence and commoditization in the lighting industry, the introduction of new, low-cost competitors in the lighting industry, uncertain political and economic conditions, the impact of changes in trade policies and tariffs on our components and products, component inventory supply, retention of key employees, innovation and product development, creating shareholder value, supply chain and inventory management, communication with investors, certain actions of our competitors, the protection of our intellectual property, inventory investment and risk of obsolescence, security of information systems and data, implementation of new information systems, credit risk, exchange rate risk, product liability, and addition of new renewable energy technologies. Our management reports on these periodically to our board. Our board relies on our compensation committee to address significant risk exposures facing our company with respect to compensation. As described herein under the heading “Risk Assessment of our Compensation Policies and Practices,” each year, our compensation committee conducts a review of our compensation policies and practices to assess whether any significant risks arising from such policies and practices are reasonably likely to materially adversely affect our company. In addition, our audit committee supports the board’s risk oversight function by overseeing and managing risks relating to the reliability of our financial reporting and the effectiveness of our internal control over financial reporting, as well as risks related to our liquidity and capital structure. Our board’s role in the oversight of our risk management has not affected our board’s determination that the combined chief executive officer and board chair position (with the designation of an independent lead director) constitutes the most appropriate leadership structure for our company at this time. Our audit and finance committee and our full board review and comment on the draft risk factors for disclosure in our annual and quarterly reports and use the receipt of such draft risk factors to initiate discussions with appropriate members of our senior management if such risk factors raise questions or concerns about the status of enterprise risks then facing our company.

Nominating and Corporate Governance Committee Procedures

Our nominating and corporate governance committee will consider shareholder recommendations for potential director nominees, which should be sent to the nominating and corporate governance committee, c/o board secretary, Orion Energy Systems, Inc., 2210 Woodland Drive, Manitowoc, Wisconsin 54220. The time by which such recommendations must be received in order to be timely is set forth below under “Shareholder Proposals.” The information to be included with recommendations is set forth in our Amended and Restated Bylaws, and factors that our nominating and corporate governance committee will consider in selecting director nominees are set forth in our Corporate Governance Guidelines. Our Corporate Governance Guidelines are available on our website at www.orionlighting.com. Our nominating and corporate governance committee evaluates all potential nominees in the same manner, and may consider, among other things, a candidate’s strength of character, mature judgment, career specialization, relevant technical skills or financial acumen, industry knowledge and experience and geographic, gender, age, and ethnic diversity. Our nominating and corporate governance committee believes that directors should display the highest personal and professional ethics, integrity and values and sound business judgment. The committee also believes that, while diversity and variety of experiences and viewpoints represented on our board should always be considered, a director nominee should not be chosen nor excluded solely or largely because of geographic, gender, age or ethnic diversity. Our nominating and corporate governance committee evaluates each incumbent director to determine whether he or she should be nominated to stand for re-election, based on the types of criteria outlined above, as well as the director’s contributions to the board during their current term. As part of its periodic self-assessment, our nominating and corporate governance committee assesses the effectiveness of its director selection policy described in this paragraph, including its provisions relating to the consideration of diversity.

Code of Conduct

We have adopted a Code of Conduct that applies to all of our directors, employees and officers, including our principal executive officer, our principal financial officer, our controller and persons performing similar functions. Our Code of Conduct is available on our web site at www.orionlighting.com. Any material amendments or waivers relating to the Code of Conduct will be disclosed on our web site referenced in this paragraph within four business days following the date of such amendment or waiver.

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EXECUTIVE OFFICERS

The following table sets forth information as of July 23, 2018 regarding our current executive officers:

The following biographies describe the business experience of our executive officers. (For a biography of Mr. Altschaefl, see “Proposal One: Election of Directors” above.)

William T. Hull has served as our chief financial officer, chief accounting officer and treasurer since October 2015 and became an executive vice president on April 1, 2017. Prior to his joining our company, Mr. Hull previously served as an executive of RTI International Metals, Inc., a formerly NYSE listed producer and global supplier of titanium mill products, and a manufacturer of fabricated titanium and specialty metal components, serving most recently as senior vice president and chief risk officer since July 2014 and, prior to that time, serving as senior vice president and chief financial officer since April 2007 and as vice president and chief accounting officer since August 2005. Prior to joining RTI International Metals, Inc. in 2005, Mr. Hull served as corporate controller of Stoneridge, Inc., a NYSE listed global designer and manufacturer of highly engineered electrical and electronic components, modules and systems for the commercial vehicle, automotive, agricultural and off-highway vehicles markets, where he was employed since 1986. Mr. Hull is a certified public accountant.

Scott A. Green has served as our chief operating officer since May 25, 2017, and our executive vice president since August 2016. Mr. Green previously served as our division president: innovation, project engineering and construction management from July 2015 to August 2016, our division president: Orion Engineered Systems from February 2014 to July 2015 and our division president: Harris Lighting from July 2013 to February 2014. Prior to joining us in connection with our acquisition of Harris Manufacturing, Inc. and Harris LED, LLC in July 2013 (“Harris”), Mr. Green served as the executive vice president of Harris from January 2011 until July 2013 and as chief executive officer of Harris from June 1997 to January 2011. Mr. Green graduated from Central Michigan University with a bachelor of science in business.

Marc Meade has served as our executive vice president since January 2014. Mr. Meade had previously served as our senior vice president of finance and operations since November 2012, as vice president of finance and operations of Orion Asset Management and director of finance from February 2012 until November 2012, as finance and taxation manager from 2010 until February 2012 and as director of business development from 2009 to 2010. Prior to joining us in May 2009, Mr. Meade was staff assistant at Schenck SC in the government and not-for-profit solutions division from January 2009 until May 2009. Mr. Meade graduated from Lakeland College in May 2009 with a Bachelor of Arts in accounting with an emphasis in taxation and minor in economics.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This compensation discussion and analysis describes the material elements of compensation awarded to, earned by, or paid to each of our named executive officers, whom we refer to as our “NEOs,” during fiscal 2018 and describes our policies and decisions made with respect to the information contained in the following tables, related footnotes and narrative for fiscal 2018. The NEOs are identified below in the table titled “Summary Compensation Table for Fiscal 2018.” In this compensation discussion and analysis, we also describe various actions regarding NEO compensation taken before or after fiscal 2018 when we believe it enhances the understanding of our executive compensation program, including actions taken with respect to the material elements of compensation awarded to our NEOs for fiscal 2019.

Overview of Our Executive Compensation Philosophy and Design

We believe that a skilled, experienced and dedicated senior management team is essential to the future performance of our company and to building shareholder value. We have sought to establish competitive compensation programs that enable us to attract and retain executive officers with these qualities. The other objectives of our compensation programs for our executive officers are the following:

In light of these objectives, we have sought to reward our NEOs for achieving financial performance goals, creating value for our shareholders, and for loyalty and dedication to our company. We have historically implemented executive incentive compensation plans that have focused on EBITDA (defined as our earnings before interest, tax, depreciation and amortization), along with revenue growth. In early fiscal 2018, we completed a restructuring of our management team, and implemented a new corporate culture focused on cutting costs and accelerating our path to profitability while continuing to grow revenue. As a result, our fiscal 2018 compensation program was designed to incentivize decisions that help us achieve our goals related to achieving positive EBITDA and accelerating our path to profitability while continuing to grow revenue. In fiscal 2019, we are maintaining our focus on achieving profitability and have implemented a bonus program for fiscal 2019 that is designed to incentivize decisions that help us achieve our goals related to achieving positive EBITDA and net income.

In late fiscal 2017, our compensation committee initially approved the attributes of our fiscal 2018 executive compensation program, including (i) a freeze on all NEO salaries, other than Mr. Potts, whose salary was decreased to reflect his change in title, responsibilities and compensation structure in connection with his transition to the role of chief risk officer and executive vice president; (ii) freezing the level of long-term equity awards for all NEOs, other than Mr. Potts, whose award was decreased in connection with his decrease in salary; (iii) implementing a fiscal 2018 cash bonus program focused on the relative achievement of our fiscal 2018 EBITDA and revenue targets, with a bonus pool of $496,750 upon the achievement of each target and a total bonus pool of $993,500 if both targets were met; (iv) implementing a maximum $75,000 project-based bonus opportunity for Mr. Potts based on his successful completion of certain cash-generating projects; and (v) implementing a maximum $150,000 discretionary financial performance bonus pool for our NEOs (other than our chief executive officer) contingent on our achievement of at least $500,000 in EBITDA in fiscal 2018 that would be allocated among our NEOs (excluding our chief executive officer) at the discretion of our chief executive officer.

On May 25, 2017, our board restructured our management team with the directive to focus on achieving profitability while continuing to increase revenues. In connection with this restructuring, Mr. Altschaefl replaced Mr. Scribante as our chief executive officer, Mr. Green was appointed our chief operating officer and

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Mr. Scribante retired from our board of directors. In addition, Mr. Potts subsequently agreed that he would retire as our chief risk officer and executive vice president on August 30, 2017. In light of these events, our management team and our compensation committee reevaluated and substantially revised our fiscal 2018 executive compensation program in furtherance of our initiative to reduce costs and achieve profitability. Following this reevaluation, our compensation committee approved the following revised attributes for our fiscal 2018 executive compensation program, effective as of June 2017:

In late fiscal 2018, our management recommended, and our compensation committee approved, the following attributes for our fiscal 2019 executive compensation program:

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Our compensation committee has reserved the right and discretion to make exceptions to our executive compensation programs, including as any such exception may apply to the determination of any and/or all of the relative base salaries, cash bonuses, long-term incentive compensation and/or total direct compensation of our executives, for outstanding contributions to the overall success of our company and the creation of shareholder value, as well as in cases where it may be necessary or advisable to attract and/or retain executives who our compensation committee believes are or will be key contributors to creating and sustaining shareholder value, as determined by our compensation committee based on the recommendations of our chief executive officer (in all cases other than our chief executive officer’s own compensation). Our compensation committee also has the discretion to adjust the achievement of the financial metrics under our annual cash bonus programs for unusual and nonrecurring factors and events, such as acquisitions and other unusual events, costs and expenses.

Setting Executive Compensation

Executive Compensation Decisions in Fiscal 2018

Our board of directors, our compensation committee and our chief executive officer each play a role in setting the compensation of our NEOs. Our board of directors appoints the members of our compensation committee and delegates to the compensation committee the direct responsibility for overseeing the design and administration of our executive compensation program Currently, our compensation committee consists of

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Messrs. Williamson (Chair), Otten and Young. At the time the committee made its decisions regarding executive compensation for fiscal 2018, our compensation committee consisted of Mr. Goodson (Chair), Ms. Rich and Mr. Williamson. Mr. Altschaefl also served on our compensation committee prior to his appointment as our chief executive officer. Each member of our compensation committee is an “outside director” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended, which we refer to as the “Code,” and a “non-employee director” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934 (the “Exchange Act”).

Our compensation committee has primary responsibility for, among other things, determining our compensation philosophy, evaluating the performance of our executive officers, setting the compensation and other benefits of our executive officers, overseeing the company’s response to the outcome of the advisory votes of shareholders on executive compensation, assessing the relative enterprise risk of our compensation program and administering our incentive compensation plans. Our chief executive officer makes recommendations to our compensation committee regarding the compensation of other executive officers and attends meetings of our compensation committee at which our compensation committee considers the compensation of other executives. Our compensation committee considers these recommendations, but has the final discretionary responsibility for determining the compensation of all of our executive officers.

The compensation committee considered the results from the shareholder advisory vote on executive compensation at our 2017 annual meeting of shareholders as support for the company’s compensation policies and practices. At our 2017 annual meeting of shareholders, more than 87% of the votes cast on the shareholder advisory vote on executive compensation were in favor of our executive compensation. Our board of directors and our compensation committee value the opinions of our shareholders and are committed to ongoing engagement with our shareholders on executive compensation practices. Our board of directors has determined that our shareholders should vote on a say-on-pay proposal each year in accordance with the preference expressed by shareholders on the “say-when-on-pay” proposal at our 2017 annual meeting of shareholders.

Under our fiscal 2018 cash bonus program for NEOs, no bonuses were to be paid unless we achieved positive EBITDA in fiscal 2018. The fiscal 2018 annual cash bonus program provided that if we achieved positive EBITDA in fiscal 2018, our executives would participate in a bonus pool of up to 50% of our positive EBITDA (calculated after taking into account all bonuses), with the total bonus pool capped at a maximum of $710,000. In addition, a maximum $150,000 discretionary financial performance bonus pool for our NEOs (other than our chief executive officer), would be made available to our NEOs if we achieved at least $500,000 in EBITDA in fiscal 2018. In fiscal 2018, the Company did not achieve either EBITDA target. Accordingly, our NEOs did not earn bonuses for fiscal 2018 despite the company’s accomplishments over the past year that should strengthen the foundation and future prospects of the company, including:

Mike Potts’ Employment Agreement

On April 1, 2017, we entered into a new employment agreement with Mr. Potts in connection with his new role as our chief risk officer and executive vice president. The compensation arrangements provided to Mr. Potts were substantially similar to those provided to Mr. Potts’ under his prior employment agreement with the Company, except that the employment agreement included (i) a reduced initial annual base salary of $260,000 for fiscal 2018 (previously $315,000) and (ii) provisions allowing Mr. Potts to participate in any project-based bonus programs established by our board of directors and compensation committee from time to time. In setting the compensation package for Mr. Potts, our compensation committee considered the prior responsibilities and compensation of Mr. Potts, Mr. Potts’ new responsibilities as chief risk officer and executive vice president, the compensation of our other NEOs, as well as general competitive factors. In connection with the management restructuring described below, Mr. Potts elected to retire as our chief risk officer and executive vice president

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effective August 30, 2017 and entered into a Mutual Retirement and Severance Agreement and Complete and Permanent Release of All Claims (the “Retirement Agreement”), which is discussed in detail below.

Management Restructuring and Reevaluating Fiscal 2018 Executive Compensation

On May 25, 2017, our board restructured our management team with the directive to focus on reducing costs and accelerating our path to achieving profitability, while continuing to increase revenues. In connection with this restructuring, Mr. Altschaefl replaced Mr. Scribante as our chief executive officer, Mr. Green was appointed our chief operating officer and Mr. Scribante retired from our board of directors. Following this restructuring, Mr. Potts subsequently agreed to retire as our chief risk officer and executive vice president, effective as of August 30, 2017. In light of these events, our management team and our compensation committee conducted a comprehensive reevaluation of the fiscal 2018 executive compensation program previously approved by the compensation committee in furtherance of our initiative to reduce costs and accelerate our path to achieve profitability.

As a result of this reevaluation, our management proposed, and our compensation committee approved, decreases in the salaries of our NEOs other than Mr. Green, whose salary was increased to reflect his additional responsibilities following his appointment as our chief operating officer. The decrease in the base salaries of our NEOs represented a 26% reduction from the total NEO base salaries approved in fiscal 2017 (including the pro-rating of Mr. Potts’ base salary prior to his retirement). The decision to decrease the base salaries of our NEO’s modified the prior decision by the compensation committee to freeze the fiscal 2018 salaries of each of our NEOs other than Mr. Potts, whose salary had been decreased in order to reflect his change in title, responsibilities and compensation structure in connection with his transition to the role of chief risk officer and executive vice president.

In addition, our management proposed, and our compensation committee approved, revised long-term incentive compensation consisting of awards equal in total initial value to 80% of each of our NEO’s fiscal 2018 annual base salary (a reduction from the prior approval of awards equal to 100% of each of our NEO’s fiscal 2018 annual base salary). These awards were made in the form of three-year pro rata vesting restricted stock grants and cash awards payable in one-third increments upon the annual vesting of tandem restricted stock awards in order to provide liquidity for the personal income tax liabilities incurred by our NEOs upon the vesting of the restricted stock awards. The revised fiscal 2018 long-term incentive awards represent a 43% reduction in the dollar value of the total NEO long term incentive awards approved for fiscal 2017 and a 45% reduction in the dollar value of the total NEO long term incentive awards initially approved for fiscal 2018.

Our compensation committee also considered and approved changes to our annual incentive cash bonus opportunity in order to better motivate our NEOs to achieve our strategic and financial objectives and thereby enhance shareholder value. The committee determined that it would be in the best interest of the company to adopt a cash bonus program that would reward management for generating positive EBITDA in fiscal 2018. Under the revised fiscal 2018 cash bonus program, our NEOs were eligible to participate in a bonus pool of up to 50% of our positive fiscal 2018 EBITDA (calculated after taking into account all bonuses), with the total bonus pool capped at a maximum of $710,000 (a 29% decrease from the target bonus pool under our original fiscal 2018 cash bonus program and a 27% decrease from the target bonus pool approved in fiscal 2017). Payments made to our NEOs from the EBITDA-based bonus pool were to be distributed on a pro rata basis based on each NEO’s percentage share of the total target bonus pool determined by their relative target bonus amount compared to the total target bonus amount. Our compensation committee believed that the changes to our annual incentive cash bonus opportunity better aligned the interests of management with our directive to accelerate our path to profitability while continuing to grow revenue in fiscal 2018, while also imposing limitations that mitigate compensation risk and ensure that our shareholders would be able to benefit (through the appreciation of our stock price) in at least 50% of any positive EBITDA.

Our compensation committee also considered and approved: (i) a maximum $75,000 project-based bonus opportunity for Mr. Potts based on his successful completion of certain cash generating projects, which continued to apply to Mr. Potts in fiscal 2018 following his retirement and (ii) a maximum $150,000 discretionary financial performance bonus pool (triggered if we achieved at least $500,000 in EBITDA in fiscal 2018) for our NEOs.

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The discretionary financial performance bonus pool was to be reduced by an amount equal to any project bonus payments earned by Mr. Potts. In establishing these new cash bonus opportunities, the compensation committee considered the board’s focus on accelerating our path to achieving profitability, the decisions to decrease both of our NEO base salaries and their long-term incentive awards, and that Mr. Potts’ base salary had separately been reduced as a result of his new title and responsibilities prior to the board’s cost reduction initiative and prior to Mr. Potts’ announced retirement. The compensation committee also considered our recent financial performance. Based on these considerations, the compensation committee favored the creation of additional bonus opportunities because the committee believed that any potential additional incentive compensation earned by our NEOs should be tied to the achievement of our financial and strategic goals. In addition, our compensation committee favored the creation of a project-based bonus opportunity for Mr. Potts to be rewarded based on the successful completion of cash generating projects that would enhance our liquidity.

In connection with Mr. Altschaefl’s promotion to chief executive officer, we provided Mr. Altschaefl with the following compensation arrangements: (i) an initial annual base salary of $325,000 (40% less than our prior chief executive officer); (ii) a grant of $260,000 (52% less than our prior chief executive officer), or 113,044 shares, in restricted stock vesting annually pro rata over a three-year period; and (iii) participation by Mr. Altschaefl in our annual and/or long-term bonus plans as well as our employee benefit plans made available to other senior executives. Mr. Altschaefl was also permitted to participate in our fiscal 2018 cash bonus program for executives, with a target maximum bonus equal to 100% of his base salary (with the actual dollar amount being 40% less than the maximum bonus available to our prior chief executive officer). In setting the compensation package for Mr. Altschaefl, our compensation committee considered our cost reduction initiatives, the compensation of our other NEOs, Mr. Altschaefl’s new role and responsibilities, Mr. Altschaefl’s prior and expected contributions to our company, Mr. Altschaefl’s personal and professional sacrifices undertaken to assume the role of our chief executive officer, as well as general competitive factors.

Summary of Changes to Executive Compensation

The following table illustrates the changes made to the major elements of our executive compensation program for fiscal 2018 as a result of the events described above:

Retirement of Michael J. Potts

Following the restructuring of our management team, Mr. Potts subsequently agreed to retire as our chief risk officer and executive vice president, effective as of August 30, 2017. In connection with Mr. Potts’ retirement, we and Mr. Potts entered into the Retirement Agreement on June 30, 2017.

Pursuant to the Retirement Agreement, we affirmed our obligation to provide certain severance payments and benefits required to be provided to Mr. Potts as a result of his mutual termination without “cause” pursuant to

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the terms of his Executive Employment and Severance Agreement with us, including a severance payment of $292,411 payable in variable monthly installments over a period of 10 months (calculated in accordance with Mr. Potts’ Executive Employment and Severance Agreement as (i) Mr. Potts’ base salary, plus (ii) Mr. Potts’ initial fiscal 2018 annual target bonus of fifty percent of his annual base salary (pro-rated based on the number of days that Mr. Potts was our chief risk officer and executive vice president in fiscal 2018)), less applicable taxes and other withholdings. In addition, we agreed to pay Mr. Potts his accrued salary and other compensation through August 30, 2017 and pro-rated fiscal 2018 vacation through the date of his retirement (totaling $1,500). We also affirmed our obligation under Mr. Potts’ Executive Employment and Severance Agreement to continue to provide Mr. Potts with his current family health insurance plan coverage, or equivalent, and we will pay both the employer and employee portion of such coverage until Mr. Potts is eligible for Medicare coverage.

The Retirement Agreement also contains certain provisions concerning Mr. Potts’ continued service as a director. During Mr. Potts’ continued service as director, Mr. Potts will not be entitled to receive any compensation (whether cash or equity-based) as a non-employee director until January 1, 2019, other than the reimbursement of ordinary out of pocket expenses. From and after January 1, 2019 and for the remainder of Mr. Potts’ term (which will expire at the 2019 annual meeting of shareholders), Mr. Potts will be entitled to receive customary non-employee director cash compensation (but not any equity-based compensation), as well as the reimbursement of ordinary out of pocket expenses.

We also agreed to retain Mr. Potts as a consultant for a term that expired on June 15, 2018. During the term, Mr. Potts was paid a $150 per hour fee for consulting services performed as and when requested by us, together with the reimbursement of all ordinary out of pocket expenses (totaling $1,718 in fiscal 2018). In addition, Mr. Potts continued to be eligible to receive his fiscal 2018 $75,000 project-based bonus previously approved by the compensation committee. The project-based goals set by the committee were not achieved in fiscal 2018 or the three-month period thereafter and, as a result, no project-based bonus was paid to Mr. Potts. Mr. Potts is no longer eligible to receive the project-based bonus.

In consideration of the foregoing agreements, Mr. Potts agreed to a mutual general release of claims and a covenant not to sue. Mr. Potts also reaffirmed the application of certain covenants contained in his Executive Employment and Severance Agreement, including his two-year non-solicitation and non-competition covenants and two-year nondisclosure and confidentiality covenant.

In setting the retirement package for Mr. Potts, our compensation committee considered Mr. Potts’ many years of experience and service to our company, Mr. Potts’ continued willingness to support our strategic goals and work toward the achievement of cash generating products that will enhance our liquidity, Mr. Potts’ continued role as both a director and consultant and general competitive factors. In fiscal 2018, Mr. Potts received a total of $188,568 in compensation pursuant to the Retirement Agreement, consisting of $178,696 in severance payments, $1,500 in accrued paid time off, $1,718 in consulting fees and $6,654 in family health insurance plan coverage.

Fiscal 2019 Executive Compensation

For fiscal year 2019, our management proposed, and our compensation committee approved, freezes on the salaries and long-term incentive award dollar amounts for each of our NEOs. In addition, our management proposed, and our compensation committee approved an incentive compensation program consisting of an annual incentive cash bonus opportunity and a discretionary financial performance bonus pool.

In late fiscal 2018 and early fiscal 2019, management and the compensation committee conducted an examination of projected share availability under our 2016 Omnibus Incentive Plan and determined that, based on the then-current price of our Common Stock on the Nasdaq Capital Market, there were insufficient shares remaining available under our 2016 Omnibus Incentive Plan to support the compensation committee’s annual grant of long-term equity awards to our NEOs and non-employee directors at the same aggregate dollar values granted in fiscal 2018. As a result, our management proposed, and our compensation committee approved a restructuring of the composition of our annual long term incentive awards. In fiscal 2019, each of our NEOs received an overall long-term incentive award set at a dollar value equaling 80% of the applicable NEO’s annual base salary

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(identical to the dollar amounts granted in fiscal 2018). The compensation committee further required that (i) 70% of the grant date dollar amount of each NEO’s fiscal 2019 long-term incentive award be in the form of a combined grant of 60% three-year pro rata vesting restricted stock and 40% restricted cash payable in one-third increments upon the annual vesting of the tandem restricted stock awards in order to provide liquidity to our NEOs for their tax liabilities incurred upon the vesting of their restricted stock awards (so that they would not be encouraged to sell any shares to fund their tax liabilities) and (ii) the remaining 30% of the grant date dollar amount of each NEO’s fiscal 2019 long-term incentive award be paid in cash, on the condition that the each of our NEOs (other than Mr. Meade, whose cash payment was made unconditional due to his performance and contributions to the Company) agree to use 60% of such cash payment to purchase shares of our Common Stock in the open market during the 10-business day open trading window period commencing on the third business day after the Company’s fiscal 2018 earnings release. As a result, our executive officers purchased a total of 154,050 shares of our Common Stock.

Internal and External Reports

In setting compensation for fiscal years 2018 and 2019, our compensation committee prepared its own internal reports on recent trends in executive compensation at public companies, including pay-for-performance, say-on-pay, merit increases, annual incentives, long-term incentives and perquisites.

To assure independence, the compensation committee pre-approves all work unrelated to executive compensation proposed to be provided by a compensation consultant, if any. The compensation committee also considers all factors relevant to the consultant’s independence from management, including but not limited to the following factors:

The compensation committee also assessed the independence of the company’s outside legal counsel, with whom the committee consults from time to time, using the factors set forth above and determined that the outside legal counsel was independent and that there were no conflicts of interest with respect to its work for the committee.

Elements of Executive Compensation

Our current executive compensation program for our NEOs consists of the following elements:

Base Salary

We pay our NEOs a base salary to compensate them for services rendered and to provide them with a steady source of income for living expenses throughout the year.

In late fiscal 2017, management recommended, and our compensation committee approved, freezes on the fiscal 2018 salaries for each of our NEOs other than Michael J. Potts, whose salary was decreased to reflect his change in title, responsibilities and compensation structure in connection with his transition to the role of chief risk officer and executive vice president. The salaries for each of our NEOs were frozen due to our fiscal 2017 financial results.

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Promptly after our management restructuring, in early June 2017, our management and compensation committee conducted a reevaluation of the fiscal 2018 salaries for each of our NEOs in view of our new goals of reducing costs, accelerating our path to profitability while continuing to grow revenue. As a result of such reevaluation and our review of our new fiscal 2018 goals and objectives, our management recommended, and our compensation committee approved, decreases to the salaries of our NEOs other than Mr. Green, whose salary was increased to reflect his additional responsibilities following his appointment as our chief operating officer. In addition, Mr. Potts’ salary was pro-rated for fiscal 2018 to reflect his decision to retire on August 30, 2017. The change in the base salaries of our NEOs represented a 26% reduction from the base salaries approved in fiscal 2017 and a 24% reduction in the base salaries initially approved for fiscal 2018.

The revised fiscal 2018 base salaries for our NEOs compared to their original fiscal 2018 base salaries and fiscal 2017 base salaries were as follows:

In late fiscal 2018, management recommended, and our compensation committee approved, freezes on the fiscal 2019 salaries for each of our NEOs. The salaries for each of our NEOs were frozen due our continuing focus on reducing costs and accelerating our path to profitability while continuing to grow revenue, as well as our performance in fiscal 2018.

Incentive Compensation — Fiscal 2018

For fiscal 2018, our management proposed, our compensation committee approved an incentive compensation program consisting of (i) annual incentive cash bonus opportunities and (ii) long-term incentive compensation consisting of awards of three-year pro rata vesting restricted stock grants (representing 60% of the total long-term incentive award) and cash awards payable in one-third increments upon the annual vesting of the tandem restricted stock awards (representing 40% of the total long-term incentive award) in order to provide liquidity to our NEOs for their tax liabilities incurred upon the vesting of the restricted stock awards. The annual incentive cash bonus opportunities and the long-term incentive compensation for fiscal 2018 are discussed in detail below.

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Initial Annual Incentive Cash Bonus Opportunities for Fiscal 2018

In late fiscal 2017, our compensation committee approved an initial fiscal 2018 cash bonus program for our NEOs that allowed our NEOs to earn a cash bonus upon the achievement of certain performance targets approved by the compensation committee. The performance metrics under our initial fiscal 2018 cash bonus program were comprised of two equally weighted components: revenue and EBITDA. The compensation committee established two separate target bonus pools based on the company’s fiscal 2018 revenue and EBITDA that each would have paid a target amount of $496,750 upon the achievement of certain revenue and EBITDA targets, as applicable, with a total target bonus pool of $993,500 if both targets were met.

Revised Annual Incentive Cash Bonus Opportunities for Fiscal 2018

Promptly after our management restructuring, in early June 2018, our management team and the compensation committee conducted a comprehensive reevaluation of the fiscal 2018 executive cash bonus program in furtherance of our initiative to reduce costs and accelerate our path to profitability while continuing to grow revenue. As a result of this reevaluation, our management proposed, and our compensation committee approved, a revised fiscal 2018 cash bonus program that would reward management for achieving positive EBITDA in fiscal 2018. The compensation committee selected EBITDA as the sole component of the revised fiscal 2018 cash bonus program due to our primary focus on accelerating our path to profitability while continuing to grow revenue in fiscal 2018.

Under the revised fiscal 2018 cash bonus program, our NEOs would participate in a bonus pool of up to 50% of our positive fiscal 2018 EBITDA (calculated after taking into account all bonuses), with the total bonus pool capped at a maximum of $710,000. The revised fiscal 2018 target bonus pool represents a 29% decrease from the target bonus pool under our original fiscal 2018 cash bonus program and a 29% decrease from the target bonus pool approved for fiscal 2017. Payments made to our NEOs from the EBITDA-based bonus pool were to be distributed on a pro rata basis based on each NEO’s percentage share of the total target bonus pool determined by their relative target bonus amount compared to the total target bonus amount.

Under our 2018 cash bonus program, EBITDA is defined as our earnings before interest, tax, depreciation and amortization.

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The revised fiscal 2018 cash bonus program targets for our NEOs compared to their original fiscal 2018 cash bonus program targets and fiscal 2017 cash bonus program targets were as follows:

For fiscal 2018, the compensation committee also established, and following the reexamination of our fiscal 2018 compensation programs, reaffirmed (i) a maximum $150,000 discretionary financial performance bonus pool for our NEOs and (ii) a maximum $75,000 project-based bonus opportunity for Mr. Potts based on his successful completion of certain cash generating projects identified by the compensation committee (which continued to apply in fiscal 2018 following Mr. Potts’ retirement on August 30, 2017). The availability of the discretionary financial performance bonus pool was contingent on the company achieving at least $500,000 in EBITDA in fiscal 2018 and was to be allocated among our NEOs (excluding our chief executive officer) at the discretion of our chief executive officer. The total amount of the discretionary bonus pool was to be reduced by an amount equal to any project bonus payments earned by Mr. Potts; however, Mr. Potts’ project bonus payments, if earned, were to be payable even if the discretionary bonus pool was not earned and were not subject to the overall limitation on annual cash incentive bonuses paid our NEOs.

We did not achieve the bonus targets in fiscal 2018 (including Mr. Potts’ project-based goals). Accordingly, our NEOs did not earn any incentive bonuses for fiscal 2018.

Initial Long-Term Equity-Based Incentive Compensation for Fiscal 2018

In late fiscal 2017, our management proposed, and our compensation committee approved, long-term incentive awards for fiscal 2018 initially valued upon grant at $545,000 for Mr. Scribante, $315,000 for Mr. Hull, $260,000 for Mr. Potts, $235,000 for Mr. Meade and $225,000 for Mr. Green.

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Revised Long-Term Equity-Based Incentive Compensation for Fiscal 2018

In early June, 2017, following the restructuring of our management team and comprehensive reevaluation of our the fiscal 2018 long-term incentive awards, our management proposed, and our compensation committee approved, revised long-term incentive awards for fiscal 2018 initially valued upon grant at $260,000 for Mr. Altschaefl, $226,800 for Mr. Hull, $220,000 for Mr. Green and $169,200 for Mr. Meade. The revised fiscal 2018 long-term incentive awards represented a 45% reduction in the dollar value of the long term incentive awards initially approved for fiscal 2018 and a 43% reduction in the dollar value of the long term incentive awards approved for fiscal 2017. Mr. Potts did not receive a long-term incentive award in fiscal 2018 as a result of his decision to retire.

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The revised fiscal 2018 long-term incentive awards for our NEOs compared to their original fiscal 2018 long-term incentive awards and fiscal 2017 long-term incentive awards were as follows:

Messrs. Hull and Green’s awards consisted of three-year pro-rata vesting restricted stock. Messrs. Altschaefl and Meade were provided 60% of their award in the form of three-year pro rata vesting restricted stock and 40% in the form of cash payable in one-third increments upon the annual vesting of the tandem restricted stock awards in order to provide liquidity to our NEOs for their personal income tax liabilities incurred upon the vesting of the restricted stock awards. Our compensation committee granted our NEOs awards of three-year pro rata vesting restricted stock because it continues to believe that granting restricted stock rewards our NEOs for increasing shareholder value and also helps to motivate and retain our NEOs while aligning their economic interests with our shareholders through long-term equity ownership.

The restricted stock awards (with the dollar values converted into a specific number of shares based on the closing sale price of our Common Stock on the Nasdaq Capital Market on June 13, 2017) resulted in a grant of the following number of shares to our NEOs on June 13, 2017:

Incentive Compensation — Fiscal 2019

For fiscal 2019, our management proposed, and our compensation committee approved, an incentive compensation program that consisted of (i) annual incentive cash bonus opportunities and (ii) long-term incentive compensation.

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In fiscal 2019, our management proposed, and our compensation committee approved a restructuring of our long-term incentive compensation to preserve share availability under our 2016 Omnibus Incentive Plan. For fiscal 2019, our long-term incentive compensation consisted of (i) 70% of the grant date dollar amount of each NEO’s fiscal 2019 long-term incentive award issued in the form of awards of three-year pro rata vesting restricted stock and restricted cash payable in one-third increments upon the annual vesting of the tandem restricted stock awards in order to provide liquidity for the personal income tax liabilities incurred by our NEOs (so that they would not be encouraged to sell any shares to fund their tax liabilities) upon the vesting of the restricted stock awards (with the restricted stock award representing 60% of the total dollar amount of the long-term restricted stock/restricted cash award and the restricted cash representing 40% of the total dollar amount of the long-term restricted stock/restricted cash award) and (ii) the remaining 30% of the grant date dollar amount of each NEO’s fiscal 2019 long-term incentive award in the form of a cash payment, on the condition that the each of our NEOs (other than Mr. Meade, whose cash payment was made unconditional due to his performance and contributions to the Company) agree to use 60% of such cash payment to purchase shares of our Common Stock in the open market during the 10-business day open trading window period commencing on the third business day after the Company’s fiscal 2018 earnings release. As a result, our executive officers purchased a total of 154,050 shares of our Common Stock.

The annual incentive cash bonus opportunity and the long-term incentive compensation for fiscal 2019 are discussed in detail below.

Annual Incentive Cash Bonus Opportunities for Fiscal 2019

Under our fiscal 2019 cash bonus program, our NEOs will participate in a bonus pool of up to 50% of our positive fiscal 2019 net income (calculated after taking into account all bonuses) above a threshold of $100,000, with the total bonus pool capped at a maximum of $710,000. The compensation committee selected net income as the sole component of the fiscal 2019 cash bonus program due to our continued focus on accelerating our path to profitability while continuing to grow revenue in fiscal 2019 and generating actual positive net income. Payments made to our NEOs from the net income-based bonus pool will be made on a pro rata basis based on each NEO’s percentage share of the total target bonus pool determined by their relative target bonus amount compared to the total target bonus amount. The compensation committee selected net income as the sole component of the fiscal 2019 cash bonus program due to management’s and the committee’s goal to incentivize the generation of actual, unadjusted positive net income in fiscal 2019.

The compensation committee established a target maximum bonus for each of our NEOs as follows for fiscal 2019:

For fiscal 2019, the compensation committee also established a maximum $100,000 discretionary financial performance bonus pool for our NEOs. The availability of the discretionary financial performance bonus pool is

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contingent on the company achieving at least $500,000 in EBITDA in fiscal 2019 and will be allocated among our NEOs (excluding our chief executive officer) at the discretion of our chief executive officer.

Under our 2019 discretionary financial performance bonus pool, EBITDA is defined as our earnings before interest, tax, depreciation and amortization.

The financial goals described above are not a prediction of how we will perform during fiscal year 2019. The purpose of the goals are to provide appropriate financial metrics to determine amounts of compensation under our incentive compensation program. The goals are not intended to serve, and should not be relied upon, as guidance or any other indication of our expected future performance.

Our compensation committee has the discretion to adjust the achievement of the financial goals under the fiscal 2019 cash bonus program for unusual and nonrecurring factors and events, such as acquisitions and other unusual events, costs and expenses.

Long-Term Incentive Compensation for Fiscal 2019

Our management proposed, and our compensation committee approved, long-term incentive awards for fiscal 2019 initially valued upon grant at $260,000 for Mr. Altschaefl, $226,800 for Mr. Hull, $220,000 for Mr. Green and $169,200 for Mr. Meade. The awards consisted of (i) 70% in three-year pro rata vesting restricted stock grants and cash awards payable in one-third increments upon the annual vesting of the tandem restricted stock awards in order to provide liquidity for the personal income tax liabilities incurred by our NEOs (so that they would not be encouraged to sell any shares to fund their tax liabilities) upon the vesting of the restricted stock awards (with the restricted stock award representing 60% of the total dollar amount of the long-term restricted stock/restricted cash award and the restricted cash representing 40% of the total dollar amount of the long-term restricted stock/restricted cash award) and (ii) the remaining 30% of the grant date dollar amount in the form of a cash payment, on the condition that the each of our NEOs (other than Mr. Meade, whose cash payment was made unconditional due to his performance and contributions to the Company) agree to use 60% of such cash payment to purchase shares of our Common Stock in the open market during the 10-business day open trading window period commencing on the third business day after the Company’s fiscal 2018 earnings release.

Our compensation committee continues to grant our NEOs awards of three-year pro rata vesting restricted stock because it continues to believe that granting restricted stock rewards our NEOs for increasing shareholder value and also helps to motivate and retain our NEOs while aligning their economic interests with our shareholders through long-term equity ownership. Our compensation committee further believes that the grants of cash to our NEOs on the condition that the each of our NEOs (other than Mr. Meade) agree to use 60% of such cash payment to purchase shares of our Common Stock maintains the compensation committee’s goal of aligning our NEOs’ economic interests with our shareholders while preserving share availability under our 2016 Omnibus Incentive Plan.

In connection with the restructuring of our long-term incentive compensation program for fiscal 2019, our compensation committee approved long-term incentive awards consisting of the following:

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(6) Mr. Meade was granted an unconditional cash payment due to his performance and contributions to the Company.

The restricted stock awards (with the dollar values converted into a specific number of shares based on the closing sale price of our Common Stock on the Nasdaq Capital Market on the applicable grant date) resulted in a grant of the following number of shares to our NEOs on June 7, 2019:

In addition, our executive officers purchased a total of 154,050 shares of our Common Stock using the cash portion of their long-term incentive awards.

Retirement and Other Benefits

Welfare and Retirement Benefits.    As part of a competitive compensation package, we sponsor a welfare benefit plan that offers health, life and disability insurance coverage to participating employees. We also sponsor an employee stock purchase plan under which our employees may purchase shares of our Common Stock. In addition, to help our employees prepare for retirement, we sponsor the Orion Energy Systems, Inc. 401(k) Plan and match employee contributions at a rate of 3% of the first $5,000 of an employee’s contributions (i.e., capped at $150). Our NEOs participate in the broad-based welfare plans, our employee stock purchase plan and the 401(k) Plan on the same basis as our other employees, except that they are not eligible for the loan program under the employee stock purchase plan. We also provide enhanced life and disability insurance benefits for our NEOs. Under our enhanced life insurance benefit, we pay the full cost of premiums for life insurance policies for our NEOs. The amounts of the premiums are reflected in the Summary Compensation Table below. Our enhanced disability insurance benefit includes a higher maximum benefit level than under our broad-based plan, cost of living adjustments and a portability feature.

Perquisites and Other Personal Benefits.    We provide perquisites and other personal benefits that we believe are reasonable and consistent with our overall compensation program to better enable our executives to perform their duties and to enable us to attract and retain employees for key positions. We provide Messrs. Altschaefl (following his appointment as chief executive officer) and Hull with a car allowance of $1,000 per month. In addition, we provided a car allowance of $1,000 per month to Mr. Scribante and Mr. Potts prior to their departures in fiscal 2018. In fiscal 2018, we also provided our NEOs with an aggregate business development pool of $35,000 for use with respect to business development, customer experience and other related items with individual expenditures approved at the discretion of our chief executive officer.

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Severance and Change of Control Arrangements

General

We provide certain protections to our NEOs in the event of certain terminations of their employment, including enhanced protections for certain terminations that may occur after a change of control of our company. However, our NEOs (other than Mr. Altschaefl) will only receive the enhanced severance benefits following a change in control if their employment terminates without cause or for good reason. We describe this type of severance arrangement as being subject to a “double trigger.”

All payments, including any severance payments, to be made to our NEOs in connection with a change of control under their employment agreements and any other of our agreements or plans will be subject to a potential “cut-back” in the event any such severance payments or other benefits become subject to non-deductibility or excise taxes as “excess parachute payments” under Code Section 280G or 4999. The cut-back provisions have been structured such that all amounts payable under their employment agreements and other of our agreements or plans that constitute change of control payments will be cut back to one dollar less than three times the executive’s “base amount,” as defined by Code Section 280G, unless the executive would retain a greater amount by receiving the full amount of the payment and paying the related excise taxes (a so-called “valley provision”).

Our 2003 Stock Option Plan, 2004 Stock and Incentive Awards Plan and 2016 Omnibus Incentive Plan also provide potential protections to our NEOs in the event of certain changes of control. Under these plans, our NEOs’ stock options and restricted stock that are unvested at the time of a change of control may become vested on an accelerated basis in the event of certain changes of control. In addition, our restricted stock award agreements under the 2004 Stock and Incentive Awards Plan and 2016 Omnibus Incentive Plan provide for the automatic vesting of all unvested shares of restricted stock upon a change of control.

We selected these triggering events to afford our NEOs some protection in the event of a termination of their employment, particularly after a change of control of our company. We believe these types of protections better enable our NEOs to focus their efforts on behalf of our company without undue concern over the impact on their employment or financial security of a change of control of our company. We also provide severance benefits in order to obtain from our NEOs certain concessions that protect our interests, including their agreement to confidentiality, intellectual property rights waiver, non-solicitation and non-competition provisions. See below under the heading “Payments upon Termination or Change of Control” for a description of the specific circumstances that would trigger payment or the provision of other benefits under these arrangements, as well as a description, explanation and quantification of the payments and benefits under each circumstance.

Management Changes in Early Fiscal 2018

On May 25, 2017, we announced the restructuring of our management team, including the departure of Mr. Scribante as our chief executive officer. In connection with this management restructuring, Mr. Altschaefl was appointed by our board as our new chief executive officer.

Scribante Severance Agreement.    In connection with Mr. Scribante’s departure, we and Mr. Scribante entered into a Mutual Termination and Severance Agreement and Complete and Permanent Release of All Claims (the “Severance Agreement”) on June 8, 2017. Pursuant to the Severance Agreement, we affirmed our obligation to provide certain severance payments and benefits required to be provided to Mr. Scribante as a result of a termination without “cause” pursuant to the terms of his Executive Employment and Severance Agreement with us, including a lump sum severance payment of $1,172,123.29 (calculated in accordance with Mr. Scribante’s Executive Employment and Severance Agreement as (i) two times Mr. Scribante’s base salary, plus (ii) Mr. Scribante’s fiscal 2018 annual target bonus of one-hundred percent of his annual base salary (pro-rated based on the number of days that Mr. Scribante was our chief executive officer in fiscal 2018)), less applicable taxes and other withholdings. We also paid Mr. Scribante his accrued salary through May 31, 2017 and vacation pro-rated fiscal 2018 vacation (totaling $78,756) through the date of his departure (the “termination date”) and agreed to pay the employer’s portion of the premiums for Mr. Scribante’s COBRA continuation coverage for 18 months after the termination date.

In addition, under the Severance Agreement, Mr. Scribante retained all vested restricted stock and stock option awards that vested as of the date of the Severance Agreement, and was permitted to exercise any vested

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stock options within 90 days of the termination date. Mr. Scribante did not exercise any of his stock options prior to their expiration. We also agreed to assign all the policies of insurance on Mr. Scribante’s life currently in effect to Mr. Scribante and obtain a six-year tail director and officer insurance policy covering Mr. Scribante.

In consideration of the foregoing severance payments, Mr. Scribante agreed to retire as a director and provide a mutual general release of claims, as well as agreeing to a covenant not to sue. Mr. Scribante has also reaffirmed the application of certain covenants contained in his Executive Employment and Severance Agreement, including two year non-solicitation and non-competition covenants and a two-year nondisclosure and confidentiality covenant.

In fiscal 2018, Mr. Scribante received a total of $1,262,881 in compensation pursuant to the Severance Agreement, consisting of $1,172,123 in severance payments, $78,756 in accrued salary and paid time off and $12,002 in COBRA continuation coverage.

Altschaefl Employment Agreement. Following Mr. Scribante’s departure as our chief executive officer, we entered into an Executive Employment and Severance Agreement with Mr. Altschaefl as our new chief executive officer.

Mr. Altschaefl’s Executive Employment and Severance Agreement entitles Mr. Altschaefl to certain pre-change of control severance payments and other benefits upon a qualifying employment termination. If Mr. Altschaefl’s employment is terminated without cause or for good reason prior to the end of his employment period and prior to us experiencing a change of control, Mr. Altschaefl will be entitled to (i) a severance benefit payable in a lump sum equal to two times the sum of his base salary plus the average of his prior three years’ bonuses; (ii) a pro rata bonus for the year of termination based on Mr. Altschaefl’s annual target cash bonus opportunity (if any) for such year multiplied by a fraction representing the portion of the annual performance period that has elapsed at the time of termination; and (iii) pay COBRA premiums at the active employee rate for the duration of Mr. Altschaefl’s COBRA continuation coverage period. To receive these benefits, Mr. Altschaefl must execute and deliver to us (and not revoke) a general release of claims acceptable to us.

In addition, Mr. Altschaefl’s Executive Employment and Severance Agreement contains protections that would provide Mr. Altschaefl with certain payments in the event that (i) a change of control of our company occurs prior to the end of Mr. Altschaefl’s employment period or (ii) prior to the occurrence of a change of control of our company, but following our entry into a legally binding written agreement, arrangement or understanding that would result in a change of control, Mr. Altschaefl’s employment is terminated by us without cause or Mr. Altschaefl terminates his employment with us for good reason. We describe this type of change of control arrangement as being subject to a “single trigger.” The compensation committee determined that it was in the best interest of our company to provide Mr. Altschaefl with a single trigger change of control provision in his employment agreement in consideration of Mr. Altschaefl’s goals and objectives and his personal and professional sacrifices undertaken to assume the role of our chief executive officer and Mr. Altschaefl’s willingness to receive significantly less in total annual compensation than our prior chief executive officer and the chief executive officers of our “peer companies” (as identified by ISS).

Potts Retirement Agreement. Following the restructuring of our management team, Mr. Potts subsequently agreed to retire as our chief risk officer and executive vice president, effective as of August 30, 2017. In connection with Mr. Potts’ retirement, we and Mr. Potts entered into a Mutual Retirement and Severance Agreement and Complete and Permanent Release of All Claims (the “Retirement Agreement”) on June 30, 2017.

Pursuant to the Retirement Agreement, we affirmed our obligation to provide certain severance payments and benefits required to be provided to Mr. Potts as a result of his mutual termination without “cause” pursuant to the terms of his Executive Employment and Severance Agreement with us, including a severance payment of $292,411 payable in variable monthly installments over a period of 10 months (calculated in accordance with Mr. Potts’ Executive Employment and Severance Agreement as (i) Mr. Potts’ base salary, plus (ii) Mr. Potts’ initial fiscal 2018 annual target bonus of fifty percent of his annual base salary (pro-rated based on the number of days that Mr. Potts was our chief risk officer and executive vice president in fiscal 2018)), less applicable taxes and other withholdings. In addition, we paid Mr. Potts his accrued salary and other compensation through August 30, 2017 and pro-rated fiscal 2018 vacation through the date of his retirement (totaling $1,500). We also

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affirmed our obligation under Mr. Potts’ Executive Employment and Severance Agreement to continue to provide Mr. Potts with his current family health insurance plan coverage, or equivalent, and we will pay both the employer and employee portion of such coverage until Mr. Potts is eligible for Medicare coverage.

In addition, under the Retirement Agreement, all of Mr. Potts’ unvested restricted stock (and any related restricted cash) awards continue to vest in accordance with such award’s applicable vesting schedule pursuant to the terms of the applicable award agreements during the period that Mr. Potts remains a member of our board. On the date that Mr. Potts ceases to be a member of our board, Mr. Potts will retain all vested restricted stock and stock option awards that have vested as of such date, and will be permitted to exercise any vested stock options during the period provided in the applicable option award agreement. We also assigned all the policies of insurance on Mr. Potts’ life currently in effect to Mr. Potts and will obtain a six-year tail director and officer insurance policy covering Mr. Potts after he ceases to be a member of our board.

The Retirement Agreement also contains certain provisions concerning Mr. Potts’ continued service as a director. During Mr. Potts continued service as director, Mr. Potts will not be entitled to receive any compensation (whether cash or equity-based) as a non-employee director until January 1, 2019, other than the reimbursement of ordinary out of pocket expenses. From and after January 1, 2019 and for the remainder of Mr. Potts’ term (which will expire at the 2019 annual meeting of shareholders), Mr. Potts will be entitled to receive customary non-employee director cash compensation (but not any equity-based compensation), as well as the reimbursement of ordinary out of pocket expenses.

We also retained Mr. Potts as a consultant for a term that expired on June 15, 2018. During this term, Mr. Potts was paid a $150 per hour fee for consulting services performed as and when requested by us, together with the reimbursement of all ordinary out of pocket expenses (totaling $1,718 during fiscal 2018). In addition, Mr. Potts continued to remain eligible to receive his fiscal 2018 $75,000 project-based bonus previously approved by the compensation committee, which was ultimately not achieved in fiscal 2018. Mr. Potts is no longer eligible to receive the project-based bonus.

In consideration of the foregoing agreements, Mr. Potts agreed to a mutual general release of claims, as well as agreeing to a covenant not to sue. Mr. Potts has also reaffirmed the application of certain covenants contained in his Executive Employment and Severance Agreement, including two-year non-solicitation and non-competition covenants and two-year nondisclosure and confidentiality covenant.

In fiscal 2018, Mr. Potts received a total of $188,568 in compensation pursuant to the Retirement Agreement, consisting of $178,696 in severance payments, $1,500 in accrued paid time off, $1,718 in consulting fees and $6,654 in family health insurance plan coverage.

Other Policies

Policies On Timing of Equity Awards.    Our compensation committee and board of directors have adopted a general policy on the timing of equity awards, under which our compensation committee generally will make annual equity awards beginning effective as of the date three business days after our next quarterly (or fiscal year-end) earnings release following the decision to make the grant, regardless of the timing of the decision. Our compensation committee has elected to grant equity awards shortly following our earnings releases so that the restricted stock awards are granted (and valued) at a point in time when the most important information about our company then known to management and our board is likely to have been disseminated in the market.

Our board of directors has also delegated limited authority to our chief executive officer, acting as a subcommittee of our compensation committee, to grant equity-based awards under our 2016 Omnibus Incentive Plan. Our chief executive officer may grant awards covering up to 250,000 shares of our Common Stock per fiscal year to certain non-executive officers in connection with offers of employment, promotions and certain other circumstances. Shares subject to awards granted under this delegated authority which are subsequently cancelled or forfeited may be added back to the delegated share authority grant amount. Under this delegation of authority, any restricted stock awards granted by our chief executive officer must have an effective grant date on the first business day of the month following the event giving rise to the award. In fiscal 2019, the authority of our chief executive officer to grant awards was reduced to 50,000 shares of our Common Stock per fiscal year in order to preserve share availability under our 2016 Omnibus Incentive Plan.

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Our equity incentive plans do not permit awards of stock options or stock appreciation rights with an effective grant date prior to the date our compensation committee or our chief executive officer takes action to approve the award.

Executive Officer Stock Ownership Guidelines.    One of the key objectives of our executive compensation program is alignment of the interests of our executive officers with the interests of our shareholders. We believe that ensuring that executive officers are shareholders and have a significant financial interest in our company is an effective means to accomplish this objective.

The number of shares required to be held by our executive officers is as follows:

Executive officers are permitted to satisfy these ownership guidelines with shares of our Common Stock that they acquire through the exercise of stock options or other similar equity-based awards, through retention upon vesting of restricted stock awards or other similar equity-based awards and through direct share purchases. Our executive officers who were executive officers at the time of the adoption of the amended guidelines have until the fifth anniversary of the adoption to satisfy the ownership requirement. Newly appointed executive officers have until the fifth anniversary of their appointment as executive officers to satisfy the ownership requirement. All of our executive officers have either satisfied the ownership requirement or have additional time to do so.

Tax Considerations.    Section 162(m) of the Code generally prohibits publicly traded companies from taking a tax deduction for compensation in excess of $1.0 million that is paid to its “covered executives.” For compensation paid for fiscal 2018, our covered executives were limited to our chief executive officer and other NEOs, excluding our chief financial officer. However, for fiscal 2018, compensation that met the requirements for “performance-based” compensation under Section 162(m) was not subject to the $1.0 million limit on deductibility. While our compensation committee considered the deductibility of performance-based compensation under Section 162(m) in setting compensation for our NEOs for fiscal 2018, its policy is that it may approve compensation that will not meet the requirements of Section 162(m) in order to ensure competitive compensation levels and structures for our executive officers. For example, as disclosed in this Compensation Discussion and Analysis, we have granted restricted stock to our NEOs that vests based solely on continued service. Such restricted stock will not qualify as performance-based compensation under Section 162(m) and, therefore, will not be exempt from the $1.0 million limit on deductibility under Section 162(m). Despite not being eligible for deductibility under Section 162(m) to the extent the value of any individual’s restricted stock exceeds $1.0 million in value, our compensation committee believed that such awards were appropriate to provide motivational and retention incentives to our NEOs that are tied directly to the value of the Common Stock. In addition, notwithstanding our intentions, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be given that compensation intended to satisfy the requirements for performance-based compensation under Section 162(m) will so qualify.

Beginning with fiscal 2019, as a result of changes made to Section 162(m) by the Tax Cuts and Jobs Act, our number of covered executives will increase and will include the four executives mentioned above who were our covered executives for fiscal 2018, plus any executive who serves as our Chief Executive Officer or Chief Financial Officer at any time on or after January 1, 2018, or any executive who is among our three most highly compensation executive officers for any fiscal year beginning with fiscal 2019. Also starting with fiscal 2019, the only performance-based compensation that will be exempt from the $1.0 million deduction limit is performance-based compensation that is paid pursuant to a binding contract in effect on November 2, 2017. Accordingly, any compensation paid in the future pursuant to compensation arrangements entered into after November 2, 2017, even if performance-based, will count towards the $1.0 million deduction limit if paid to a covered executive.

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We also maintain certain deferred compensation arrangements for our employees and non-employee directors that are potentially subject to Code Section 409A. If such an arrangement is neither exempt from the application of Code Section 409A nor complies with the provisions of Code Section 409A, then the employee or non-employee director participant in such arrangement is considered to have taxable income when the deferred compensation vests, even if not paid at such time, and such income is subject to an additional 20% income tax. In such event, we are obligated to report such taxable income to the IRS and, for employees, withhold regular income taxes (but no withholding is required on the 20% additional income tax). If we fail to do so, we could be liable for the withholding taxes and interest and penalties thereon. Stock options with an exercise price lower than the fair market value of our Common Stock on the date of grant are not exempt from coverage under Code Section 409A. We believe that all of our stock option grants are exempt from coverage under Code Section 409A. Our deferred compensation arrangements are intended to either qualify for an exemption from, or to comply with, Code Section 409A.

Compensation Committee Interlocks and Insider Participation

During the last fiscal year, no member of the compensation committee had a relationship with us that required disclosure under Item 404 of Regulation S-K. During the past fiscal year, none of our executive officers served as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any entity that has one or more executive officers who served as members of our board of directors or our compensation committee. None of the members of our compensation committee is an officer or employee of our company, nor have they ever been an officer or employee of our company.

Compensation Committee Report

Our compensation committee has reviewed and discussed the “Compensation Discussion and Analysis” contained in this proxy statement with management. Based on our compensation committee’s review and discussions with management, our compensation committee recommended to our board of directors that the Compensation Discussion and Analysis be included in this proxy statement.

Mark A. Williamson, Chair

Anthony L. Otten

Kenneth M. Young

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Summary Compensation Table for Fiscal 2018

The following table sets forth for our NEOs the following information for each of the past three fiscal years or for such shorter period as the NEO has been a NEO: (i) the dollar amount of base salary earned; (ii) the dollar value of bonuses and non-equity incentive plan compensation earned; (iii) the grant date fair value, determined under Accounting Standards Codification Topic 718 (“ASC Topic 718”), for all equity-based awards held by our NEOs; (iv) all other compensation and (v) the dollar value of total compensation.

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Grants of Plan-Based Awards for Fiscal 2018

As described above in the Compensation Discussion and Analysis, under our 2004 Stock and Incentive Awards Plan, 2016 Omnibus Incentive Plan and employment agreements with certain of our NEOs, we granted restricted stock and non-equity incentive awards (i.e., cash bonuses) to our NEOs in fiscal 2018. The following table sets forth information regarding all such awards.

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Outstanding Equity Awards at Fiscal 2018 Year End

The following table sets out information about the outstanding equity awards held by our NEOs as of March 31, 2018.

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Option Exercises and Stock Vested for Fiscal 2018

The following table sets forth information about the exercise of options by our NEOs and the vesting of their restricted stock awards in fiscal 2018.