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ROCKY BRANDS, INC.

39 East Canal Street

Nelsonville, Ohio 45764





April 18, 2019





Dear Shareholder:



I am pleased to invite you to the Annual Meeting of Shareholders of Rocky Brands, Inc. to be held on Monday, May 20, 2019, at 3:00 p.m., at the Company’s Rocky Community Room in the Outlet Store Building located at 45 East Canal Street, Nelsonville, Ohio.  We look forward to meeting all of our shareholders who are able to attend.



At the annual meeting, you will be asked to (i) elect Mike Brooks, Jason Brooks, Glenn E. Corlett, and James L. Stewart for two-year terms as Class I Directors; (ii) approve, on an advisory non-binding basis, the compensation of our named executive officers; (iii) ratify the selection of Schneider Downs & Co., Inc. as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019; and (iv) transact any other business which may properly come before the meeting or any adjournment thereof.  A copy of the proxy statement and the proxy card are enclosed.



It is very important that your shares are represented and voted at the meeting whether or not you plan to attend.  Accordingly, please sign, date, and return your proxy card in the enclosed envelope at your earliest convenience.  You may vote over the internet, by telephone or by submitting your proxy by mail. If you are a shareholder of record and attend the meeting, you may vote in person if you wish, and your proxy will not be used.



Your interest and participation in the affairs of the Company are greatly appreciated.  Thank you for your continued support.



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ROCKY BRANDS, INC.

39 East Canal Street

Nelsonville, Ohio 45764



NOTICE OF ANNUAL MEETING OF SHAREHOLDERS



April 18, 2019



To Our Shareholders:



The Annual Meeting of Shareholders of Rocky Brands, Inc. will be held at the Company’s Rocky Community Room in the Outlet Store Building located at 45 East Canal Street, Nelsonville, Ohio, on Monday, May 20, 2019, at 3:00 p.m. local time, for the following purposes:



Owners of record of common stock of the Company at the close of business on April 2, 2019, will be entitled to vote at the meeting.



You will be most welcome at the meeting, and we hope you can attend.  Shareholders may obtain directions to the annual meeting by visiting the Company’s website: www.rockybrands.com.  Directors and officers of the Company and representatives of its independent registered public accounting firm will be present to answer your questions and to discuss its business.



We urge you to execute and return the enclosed proxy, or vote electronically over the Internet or by telephone, as soon as possible so that your shares may be voted in accordance with your wishes.  Please refer to the proxy card enclosed for information on voting electronically or by telephone.  If you attend the meeting, you may vote in person if you are a shareholder of record or authorized by a shareholder of record, and your proxy will not be used.



Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on May 20, 2019: 
The proxy statement and annual report to security holders are available at www.edocumentview.com/RCKY.





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Table of Contents











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Rocky  Brands, Inc.

39 East Canal Street 

Nelsonville, Ohio 45764

_____________________________



PROXY STATEMENT

_____________________________



ANNUAL MEETING OF SHAREHOLDERS



May 20, 2019

_____________________________



This proxy statement is furnished to the shareholders of Rocky Brands, Inc. (throughout the proxy statement the terms “Company,” “we” and “our” refer to Rocky Brands, Inc.) in connection with the solicitation of proxies to be used in voting at the Annual Meeting of Shareholders to be held on May 20, 2019, and at any adjournment thereof.  The enclosed proxy is solicited by the Board of Directors of the Company.  We began mailing this proxy statement to the Company’s shareholders on approximately April 18, 2019.



The Company will bear the cost of the solicitation of proxies, including the charges and expenses of brokerage firms and others for forwarding solicitation material to beneficial owners of stock.  Representatives of the Company may solicit proxies by mail, telephone, or personal interview. 



All shares represented by a properly submitted proxy will be voted as directed if the proxy is received by the Company before the meeting or, in the absence of specific instructions to the contrary, will be voted in accordance with the unanimous recommendations of the Board of Directors, which are:











Any shareholder giving a proxy has the power to revoke it at any time before it is exercised by filing a written notice with the Secretary of the Company prior to the meeting.  Shareholders of record who attend the meeting may vote in person, and their proxies will not be used.



Holders of record of common stock of the Company at the close of business on April 2, 2019, the record date for the annual meeting, will be entitled to vote at the annual meeting.  At that time, the Company had 7,393,851 shares of common stock outstanding and entitled to vote.  Each share of common stock outstanding on the record date entitles the holder to one vote on each matter submitted at the annual meeting.



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The presence, in person or by proxy, of a majority of the outstanding shares of common stock of the Company is necessary to constitute a quorum for the transaction of business at the annual meeting.  Abstentions and broker non-votes are counted for purposes of determining the presence or absence of a quorum.  Broker non-votes occur when brokers, who hold their customers’ shares in street name, sign and submit proxies for such shares and vote such shares on some matters, but not others.  Typically, this would occur when brokers have not received any instructions from their customers, in which case the brokers, as the holders of record, are permitted to vote on “routine” matters.



The election of each director nominee requires the favorable vote of a plurality of all votes cast by the holders of common stock at a meeting at which a quorum is present.  Proxies that are marked “Withhold Authority” and broker non-votes will not be counted toward such nominee’s achievement of a plurality and thus will have no effect.



Approval of the proposal relating to the compensation of our named executive officers requires the affirmative vote of a majority of the shares of our common stock represented in person or by proxy at the annual meeting.  Abstentions will be counted as represented and entitled to vote and will therefore have the effect of a vote against the proposal.  Broker non-votes are disregarded and will have no effect.



The ratification of Schneider Downs & Co., Inc. as the Company’s independent registered public accounting firm requires the affirmative vote of the holders of a majority of the common stock present and entitled to vote on the matter.  Broker non-votes will not be counted as being in favor or against the ratification of Schneider Downs & Co., Inc., while abstentions will be counted and will have the effect of a vote against the ratification of Schneider Downs & Co., Inc.

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Proposal 1 – Election of Directors



The Company’s Code of Regulations provides for a classified board of directors with two classes.  Each class of directors consists, as nearly as practical, of one-half of the total number of directors.  The total number of authorized directors has been fixed by the Board of Directors at ten.  The Board of Directors proposes the re-election of the four incumbent Class I Directors to continue their service as Class I Directors at the 2019 Annual Meeting of Shareholders.  The five incumbent Class II Directors will continue in office until the 2020 Annual Meeting of Shareholders.



Mike Brooks, Jason Brooks, Glenn E. Corlett, and James L. Stewart are currently Class I Directors of the Company and are being nominated by the Board of Directors for re-election for two-year terms as Class I Directors.  



It is intended that, unless otherwise directed, the shares represented by the enclosed proxy will be voted FOR the election of Messrs. Mike Brooks, Jason Brooks, Glenn E. Corlett, and James L. Stewart for two-year terms as Class I Directors. Harley E. Rouda, Jr.  resigned from his position on the Board of Directors effective December 31, 2018, and as a result there is one directorship in Class I that is vacant at this time. As of the date of this proxy statement, the vacancy has not yet been filled and there are only four nominees for five Class I directorships. Proxies cannot be voted for a greater number of persons than the number of nominees named. In the event that any of the nominees for director should become unavailable, the number of directors of the Company may be decreased pursuant to the Company’s Code of Regulations, or the Board of Directors may designate a substitute nominee, in which event the shares represented by the enclosed proxy will be voted for such substitute nominee. 



The Board of Directors recommends that the shareholders vote FOR the election of each of the nominees for Director.

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The following table sets forth for each nominee and each continuing director of the Company, their name, age, the year in which they became a director of the Company, their term expiration, class of Director, the Board committees they serve on, and their position with the Company.



Directors of the company







The following information is provided for each director and each person nominated for election as a director, and includes descriptions of their specific experience, qualifications, attributes, and skills that led to the conclusion that they should serve on the Board of Directors.



Mike Brooks has served as Chairman of the Board since January 2005. He served as Chief Executive Officer of the Company from January 2005 until July 2011, and from September 2016 until May 2017. Prior to that, he served as President and Chief Executive Officer of the Company from August 1991 to January 2005.  Mr. Brooks is a pattern engineering and shoe design graduate of the Ars Sutoria in Milan, Italy. After employment with U.S. Shoe Corporation and various tanning companies, Mr. Brooks returned to the family shoe business in Nelsonville, Ohio, in 1975, serving first as Manager of Product Development and a national salesman and then, in 1984, becoming President.  He has been a director of American Apparel and Footwear Association (formerly Footwear Industries of America) since April 1986 and currently serves on the Executive Board. Mr. Brooks’ education with respect to shoe design and business management experience in product development and strategy development, including decades of service in the footwear industry, qualify him to continue serving as a member of the Board of Directors. Mike Brooks is the father of Jason Brooks.



Jason Brooks has served as President and Chief Executive Officer of the Company since May 2017. Prior to that, he served as President, Core Brands, of Rocky Brands US, LLC from February 2016 until May 2017. He previously served as President, U.S. Wholesale Sales, of Rocky Brands US, LLC from March 2011 until February 2016. Prior to that, he served as the Senior Vice President, U.S. Wholesale from August 2010 until March 2011. From September 2001 until August 2010, Mr. Brooks held various Vice President of Sales positions within the Company. He began his career with the Company in 1997 as an independent sales representative. Mr. Brooks’ position as Chief Executive Officer and his experience in the footwear industry qualifies him to serve as a member of the Board of Directors. Jason Brooks is the son of Mike Brooks.



Glenn E. Corlett was a professor of accounting of the College of Business at Ohio University, Athens, Ohio, from July 1997 until July 2007, and was Dean of the College from July 1997 until he retired on June 30, 2007.  From 1993 to 1996, Mr. Corlett was Executive Vice President and Chief Operating Officer of N.W. Ayer & Partners, an international advertising agency, headquartered in New York, New York.  Mr. Corlett also served as Chief Financial Officer of N.W. Ayer & Partners from 1990 to 1995.  Prior to joining N.W. Ayer & Partners, Mr. Corlett had a long history with PricewaterhouseCoopers where he was partner-in-charge for mergers and acquisitions in New York from 1988 to 1990; tax partner-in-charge in Denver from 1984 to 1988 and in Cleveland from 1979 to 1984; and held partner and staff positions from 1971 to 1979.  Mr. Corlett also serves on the board of directors of Preformed Line Products Company, an international designer and manufacturer of products and systems employed in the construction and maintenance of overhead and underground networks for energy, communications and broadband network companies.  Mr. Corlett’s education and business

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management experience in the areas of marketing, finance, treasury, accounting, and tax, including the skills and knowledge he developed as an accounting practitioner and educator, qualify him to continue serving as a member of the Board of Directors.  



James L. Stewart has served as the proprietor of Rising Wolf Ranch, Inc., East Glacier, Montana, a summer resort and a winter rehabilitation center for teenage boys involved with drug abuse.  Mr. Stewart also consults for various retail and catalog companies.  Between 1984 and 1991, Mr. Stewart served as the President and Chief Executive Officer of Dunns Inc. and as the Vice President and General Manager of Gander Mountain Inc.  Before that time, he served Sears Roebuck & Co. for 28 years in various management capacities.  Mr. Stewart’s business management experience in retail sales and marketing, process management, and corporate leadership qualify him to continue serving as a member of the Board of Directors.



Michael L. Finn has served as Chairman of Power Distributors, LLC, a wholesale distributor of outdoor power equipment in Columbus, Ohio, since 2014, and President of Chesapeake Realty Co., a real estate development and management company in Columbus, Ohio, since 1970.  Prior to that, he served as President of Central Power Systems, the predecessor of Power Distributors, LLC, from 1985 until 2014.  Mr. Finn has also served as Chairman of the Board of Directors of Power Source Canada, a Canadian corporation that markets and distributes outdoor power equipment, since 2004.  Mr. Finn’s board member experience, operations and management experience in retail and distribution, and business management experience, including his service as a president of both a distribution company and real estate development company, qualify him to continue serving as a member of the Board of Directors.



G. Courtney Haning has served as Chairman and Chief Executive Officer of Peoples National BancShares Inc., a bank holding company, since its formation in 1996.  He served as Chairman and Chief Executive Officer of Peoples National Bank, a community bank in New Lexington, Ohio, from January 1991 until April 2015.  He also served as President of Peoples National Bank from January 1991 until January 2015 and President of Peoples National BancShares Inc. from 1996 until April 2015.  Mr. Haning’s business management experience in finance, corporate credit, and community relations, including his service as a chief executive officer, qualify him to continue serving as a member of the Board of Directors.



William L. Jordan has served as President of DSW Designer Shoe Warehouse, Inc. (“DSW”) since February 2019 and as Executive Vice President of DSW’s parent Designer Brands Inc. (formerly known as DSW Inc.) since March 2009. Prior to that, Mr. Jordan served as President of Town Shoes Limited, a wholly owned subsidiary of Designer Brands Inc., from May 2018 to January 2019. From February 2015 to May 2018, Mr. Jordan served as Chief Administrative Officer of Designer Brands Inc. In that role Mr. Jordan’s direct responsibilities included strategy, supply chain, logistics, human resources, real estate, store design and construction, and legal. Designer Brands Inc. is one of North America’s largest designers, producers and retailers of footwear and accessories, and is headquartered in Columbus, Ohio. Mr. Jordan joined Designer Brands Inc. in January 2006 as Vice President & General Counsel and was promoted to Senior Vice President in March 2006.  He was then promoted to Executive Vice President and General Counsel  in March 2009.  Mr. Jordan’s experience in the retail footwear and accessories industry qualify him to serve as a member of the Board of Directors.



Curtis A. Loveland has served as Secretary of the Company since October 1992.  Mr. Loveland has been a practicing attorney for over 40 years and has been a partner in the law firm of Porter Wright Morris & Arthur LLP, Columbus, Ohio since 1979.  He has served as a board member, secretary, or counsel for numerous public and private companies in a variety of industries, including technology, medical devices, retailing, and telecommunications.  Mr. Loveland’s board member experience and knowledge and skills with respect to corporate governance, public company regulation, mergers and acquisitions, and general business law qualify him to continue serving as a member of the Board of Directors.



Robert B. Moore, Jr. has over 43 years of experience in the footwear and apparel industry.  He served as Chief Executive Officer of Bhartiya International, Ltd. (“Bhartiya”), headquartered in New Delhi, India from April 2013 through March 2017, and is now serving as a consultant to Bhartiya. He has also served as a member of the board of directors of Bhartiya since April 2018.  Bhartiya is a public company listed on the Mumbai and NSE exchanges, whose customers include many prominent brands and retailers including Ralph Lauren, Tommy Hilfiger, Calvin Klein, Levi Strauss, and All Saints.  At Bhartiya and in his prior positions, Mr. Moore has had executive experience and responsibilities managing several footwear and leather companies.  Prior to joining Bhartiya, Mr. Moore was President and CEO of Shanghai Richina Leather Company, Ltd., Shanghai, China, a producer of finished leather for the footwear, handbag and auto seat industries, from March 2009 until February 2013.  He also served as President and CEO of Prime Tanning Company, Inc., Berwick, Maine; President of Sperry Topsider, Inc., Lexington, Massachusetts; and President of Bostonian Shoe Company, Kennett Square, Pennsylvania.  Mr. Moore’s experience in the footwear and apparel industry qualify him to serve as a member of the Board of Directors.

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Proposal 2 – Advisory Vote on the Compensation Paid to Named Executive Officers



Section 14A of the Securities Exchange Act of 1934, as amended, requires the Company to include in its proxy statement at least once every three years an advisory vote regarding named executive officer compensation.  In a non-binding advisory vote on the frequency of future say-on-pay votes held at the 2017 Annual Meeting of Shareholders, the Company’s shareholders approved conducting a say-on-pay vote every year by a majority of the votes cast.  The Company has considered the outcome of this advisory vote and has determined that the Company will hold say-on-pay votes on an annual basis until the occurrence of the next advisory vote on the frequency of say-on-pay votes.  The Company asks that you indicate your approval of the compensation paid to our named executive officers as described in this proxy statement under the heading “Executive Compensation,” which includes compensation tables and narratives included elsewhere in this proxy statement.



Because your vote is advisory, it will not be binding on the Board of Directors.  However, the Board of Directors and the Compensation Committee will review the voting results and take them into consideration when making future decisions regarding executive compensation.  The Compensation Committee has structured its executive compensation programs primarily to motivate executives to achieve the business goals established by the Company and reward executives for meeting business goals and delivering superior performance as measured against those business goals.



For the reasons discussed above and in this proxy statement under the heading “Executive Compensation,” the Board of Directors recommends that shareholders vote to approve the following resolution:



“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion is hereby APPROVED.”



The Board of Directors recommends that shareholders vote FOR the approval of the resolution relating to the compensation of named executive officers.

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Information Concerning the Board of Directors and Corporate Governance



The Board of Directors of the Company held a total of four meetings during 2018.  During 2018, each of the directors attended 75% or more of the total number of (i) meetings of the Board, and (ii) meetings of committees of the Board on which such director served during the period that each served.



Upon consideration of the criteria and requirements regarding director independence set forth in the Marketplace Rules of the NASDAQ Stock Market, the Board of Directors has determined that a majority of its members are independent.  Specifically, the Board has determined that each of Messrs. Corlett, Finn, Haning, Jordan, Loveland, Moore, Rouda, and Stewart, meet the standards of independence established by Marketplace Rule 5605(a)(2). 



The Company has a standing Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee.  The members of the Audit Committee are Messrs. Corlett (Chairman), Haning, and Jordan. The Board of Directors has determined that each of Messrs. Corlett, Haning, and Jordan are independent as independence is defined in Marketplace Rule 5605(a)(2) and Rule 10A-3(b)(1) of the Securities Exchange Act of 1934, as amended, and that the Audit Committee meets the composition requirements of Marketplace Rule 5605(c)(2).  The Board of Directors has determined that Mr. Corlett meets the requirements of an “audit committee financial expert” as set forth in Section 407(d)(5) of Regulation S-K promulgated by the Securities and Exchange Commission (“SEC”).



The Audit Committee met eight times during 2018.  The Audit Committee oversees and monitors management’s and the independent registered public accounting firm’s participation in the accounting and financial reporting processes and the audits of the financial statements of the Company.  The Audit Committee has the responsibility to appoint, compensate, retain and oversee the work of the independent registered public accounting firm and to consult with the independent registered public accounting firm on matters relating to the scope of the audit, any non-audit assignments and related fees, the accounting principles used by the Company in financial reporting, internal financial auditing procedures, and the adequacy of the Company’s internal control procedures.  The Audit Committee is governed by an Amended and Restated Audit Committee Charter, which is posted on the Company’s website at www.rockybrands.com.  The Audit Committee Report relating to the 2018 fiscal year appears beginning on page 29.



The members of the Compensation Committee are Messrs. Finn (Chairman), Stewart, and Moore. The Board of Directors has determined that each of Messrs. Finn, Stewart, and Moore are independent as independence is defined in Marketplace Rule 5605(a)(2).  The Compensation Committee is governed by an Amended and Restated Compensation Committee Charter, which is posted on the Company’s website at www.rockybrands.com.  The Compensation Committee met eight times during 2018.  This Committee administers the 2014 Omnibus Incentive Plan, the 2019 Incentive Compensation Plan, and the Deferred Compensation Plan, and approves compensation for the Company’s executive officers.  The Compensation Committee report relating to the 2018 fiscal year appears on page 26.  For more information on the Compensation Committee, please refer to “Executive Compensation – Compensation Discussion and Analysis – The Compensation Committee,” beginning on page 13.



The members of the Nominating and Corporate Governance Committee are Messrs. Haning (Chairman), Finn, and Moore.  At its meeting on December 14, 2018, the Board of Directors appointed Mr. Moore to the Nominating and Corporate Governance Committee effective January 1, 2019, replacing Harley E. Rouda, Jr. The Board of Directors has determined that each of Messrs. Haning, Finn, Rouda, and Moore are independent as independence is defined in Marketplace Rule 5605(a)(2).  The Amended and Restated Nominating and Corporate Governance Committee Charter is posted on the Company’s website at www.rockybrands.com.  The Nominating and Corporate Governance Committee met three times during 2018.  The Nominating and Corporate Governance Committee oversees the director nomination process and reviews related party transactions.  The Nominating and Corporate Governance Committee has the responsibility to identify and recommend individuals qualified to become directors.



When considering potential candidates, the Nominating and Corporate Governance Committee reviews the candidate’s character, judgment, and skills, including financial literacy, and experience in the context of the needs of the Board of Directors.  Neither the Nominating and Corporate Governance Committee nor the Board of Directors has a formal policy with regard to the consideration of diversity in identifying director nominees; however, how a specific nominee contributes to the diversity of the Board of Directors is considered by both the Nominating and Corporate Governance Committee and the Board of Directors in determining candidates for the Board.  The Committee and the Board consider diversity by identifying a nominee’s experience and background and determining how such experience and background will complement the overall makeup of the Board.  The Committee and the Board prefer nominees who will contribute to a board that is diverse in terms of business training, experience across a range of industries, leadership, background, and education.  The Company generally does not pay any third parties to identify or evaluate, or assist in identifying or evaluating, potential nominees.



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The Nominating and Corporate Governance Committee considers the recommendations of shareholders regarding potential director candidates.  In order for shareholder recommendations regarding possible director candidates to be considered by the Nominating and Corporate Governance Committee: 









The Nominating and Corporate Governance Committee also has the responsibility to develop and recommend to the Board of Directors a set of corporate governance principles applicable to the Company and to administer and oversee the Company’s Code of Business Conduct and Ethics.



Mr. J. Brooks serves as the Chief Executive Officer, and Mr. M. Brooks serves as the Chairman of the Board of Directors.  Although the Board does not have a lead independent director position, the Board believes that each incumbent director’s knowledge of the Company and industry as a result of his years of service on the Board, and the fact that each of the directors other than Mr. M. Brooks and Mr. J. Brooks is independent, allows the independent directors to provide appropriate independent oversight of management and to hold management accountable for the execution of strategy.  The Board has determined that its leadership structure, including each of the committees of the Board, is appropriate because it allows for beneficial communication between the outside directors and the management of the Company and effective management of the oversight tasks required of the Board.



Our Chief Executive Officer is responsible for providing day-to-day leadership and establishing the Company’s course of action for achieving performance goals, while the independent directors provide strategic guidance.  The Board of Directors believes that this structure helps facilitate the role of the independent directors in the oversight of the Company and the active participation of the independent directors in setting agendas and establishing priorities and procedures that work for the Board of Directors.  The Chairman acts as a key liaison between the Board of Directors and the other members of management.



Our Chief Executive Officer and senior management are responsible for the day-to-day management of the risks we face.  Our Board of Directors, as a whole and through its committees, has responsibility for the oversight of risk management, including general oversight of (i) the financial exposure of the Company, (ii) risk exposure as related to the overall Company portfolio and impact on earnings, (iii) oversight of information technology security and cybersecurity risk, and (iv) all systems, processes, and organizational structures and people responsible for finance and risk functions.  Certain risks are overseen by committees of the Board of Directors and these committees make reports to the full Board of Directors, including reports on noteworthy risk management issues.  Financial risks are overseen by the Audit Committee which meets with management to review the Company’s major financial risk exposure and the steps management has taken to monitor and control such exposures.  Compensation risks are overseen by the Compensation Committee.



We have adopted a Code of Business Conduct and Ethics that applies to our directors, officers and all employees.  The Code of Business Conduct and Ethics is posted on our website at www.rockybrands.com.  The Code of Business Conduct and Ethics may be obtained free of charge by writing to Rocky Brands, Inc., Attn: Chief Financial Officer, 39 East Canal Street, Nelsonville, Ohio 45764.



Members of the Company’s senior management report to the full Board of Directors about their areas of responsibility, including reports regarding risk within such areas of responsibility and the steps management has taken to monitor and control such exposures.  Additional review or reporting of risks is conducted as needed or as requested by the Board of Directors or its committees.



We believe that our board leadership structure promotes effective oversight of the Company’s risk management by providing unified leadership through a single person, while allowing for contributions from our independent Board members, all of whom are fully engaged in Board deliberations and decisions.



The Company’s Board of Directors welcomes communications from shareholders.  Shareholders may send communications to the Board of Directors, or to any director in particular, c/o Rocky Brands, Inc., 39 East Canal Street, Nelsonville, Ohio 45764.  Any correspondence addressed to the Board of Directors, or to any one of the Company’s directors in care of our offices is forwarded to the addressee without review by management.



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It is the Company’s expectation that all members of the Board of Directors attend the Annual Meeting of Shareholders.  Eight of the ten members of the Company’s Board of Directors then serving were present at the Company’s 2018 Annual Meeting of Shareholders.

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Information Concerning Executive Officers



Executive Officers



In addition to Jason Brooks, the following individuals are executive officers of the Company:



David P. Dixon, 54, has served as President, Sourcing and Manufacturing since September 2016. Prior to that, he served as Vice President, Military Liaison Officer from March 2015 to September 2016. He previously served as Senior Vice President of Manufacturing and Distribution Operations from 2013 until March 2015, and Senior Vice President, Product Acquisition from 2009 until 2013.  Prior to that, he served as Vice President, Manufacturing from 2003 until 2009, as Director of Operations from 1997 to 2003, and as Manufacturing Cost Controller from 1993 to 1997.  Mr. Dixon is a nephew of Mike Brooks and a first cousin of Jason Brooks, both by marriage.



Thomas D. Robertson, 34, a CPA (certified public accountant), has served as Executive Vice President, Chief Financial Officer and Treasurer since May 2018.  Prior to that, he served as Vice President, Chief Financial Officer and Treasurer from March 2017 to May 2018. Before that, he served as Senior Financial Analyst since joining the Company in October 2016.  Prior to that, from July 2015 until September 2016, he was an audit manager with Deloitte & Touche LLP. From September 2008 until July 2015, he held various audit positions with Schneider Downs & Co., Inc.  While practicing with Schneider Downs and Deloitte, Mr. Robertson spent the majority of his time working with publicly-traded footwear companies.



Richard Simms, 45, has served as President, Operations of the Company since May 2017. Prior to that, he served as President, Digital Resources and Brand General Manager, Georgia Boot since February 2016.  He previously served as President of Marketing Services from October 2014 until February 2016, and President, Retail Sales, of Lehigh Outfitters, LLC from March 2011 until February 2016.  Prior to that, he served as Senior Vice President and General Manager of Lehigh from February 2007 until March 2011, as Senior Vice President, Sales of Lehigh from May 2006 until February 2007, and as Vice President, Key Accounts of Lehigh from October 2005 until May 2006.  Mr. Simms began his career with Lehigh in 1994 and held various sales and operations positions with Lehigh until his appointment as Vice President, Key Accounts in October 2005.



Byron Wortham, 52, has served as President, Core Brands since June 2017. Prior to that, he served as Vice President, Brand General Manger of Durango since December 2015.  He previously served as Vice President, Sales – Western Division from August 2011 to December 2015. Prior to that, he served as Manager, National Sales – Western Division from November 2010 to August 2011, Region Sales Manager from September 2009 to November 2010, and Key Account Manager from March 2005 to September 2009. Mr. Wortham began his career with the Company in January 2003 as a Sales Representative.



Officers are elected annually by the Board of Directors and serve at its discretion.  There are no family relationships among directors and executive officers of the Company, except as disclosed above.



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Principal Holders of Voting Securities



Ownership of Common Stock by Principal Shareholders



The following table sets forth information relating to the beneficial ownership of common stock by each person known by the Company to own beneficially more than 5% of the outstanding shares of common stock:















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Ownership of Common Stock by Management

The following table sets forth information regarding beneficial ownership of the Company’s common stock by each nominee for director, each director, each of the Company’s executive officers named in the Summary Compensation Table, and the directors and executive officers of the Company as a group as of February 28, 2019:







*  Indicates less than 1%





Executive Compensation



The following information provides discussion, analysis and data tables regarding the compensation of our named executive officers (“NEOs”), who are those officers listed in our Summary Compensation Table on page 19.



Compensation Discussion and Analysis



We have prepared this Compensation Discussion and Analysis (“CD&A”) to provide you with our perspective on executive compensation so that you may understand our compensation policies and our decisions regarding compensation for our NEOs.  We recommend that you review the various executive compensation tables below in conjunction with this CD&A.  Unless otherwise noted, the policies, plans and other information in this CD&A apply to all of our NEOs.  Our CD&A covers the following topics:











The Compensation Committee



The Compensation Committee (referred to in this CD&A as the “Committee”) was appointed by our Board of Directors and is governed by a written charter that is available in the corporate governance section of our website, www.rockybrands.com.  The Committee members are Michael L. Finn, Chairman, James L. Stewart and Robert B. Moore, Jr.  Our Board of Directors has determined that each of the Committee members is independent under the standards of independence established by Marketplace Rule 5605(a)(2).  In addition, each of the Committee members  is a “non-employee” director as defined by Rule 16b-3 under the Securities Exchange Act of 1934 and an “outside director” as defined by the Internal Revenue Code.



Pursuant to its charter, the Committee has the authority and responsibility to:













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The Committee has the sole authority, to the extent it deems necessary or appropriate, to retain any compensation consultant to assist in the evaluation of executive compensation and has the sole authority to approve any such firm’s fees.  The Committee also has the authority to obtain the advice of and assistance from internal or external legal, accounting or other advisors, and may request any officer or employee of our Company, our outside counsel or independent registered public accounting firm to attend a meeting of the Committee or meet with any member of, or consultants to, the Committee.  The Committee will evaluate whether any compensation consultant retained or to be retained by it has any conflict of interest in accordance with Item 407(e)(3)(iv) of Regulation S-K.  Any compensation consultant retained by the Committee to assist with its responsibilities relating to executive compensation will not be retained by the Company for any compensation or other human resource matters.



The Committee meets as often as its members deem necessary to discharge its duties and responsibilities and held eight meetings during fiscal 2018.  The Chairman of the Committee works in conjunction with our Chairman, Chief Executive Officer and Chief Financial Officer to establish the meeting agenda.  The Committee typically meets with the Chairman, Chief Executive Officer, Chief Financial Officer and outside legal advisors and, where appropriate, other executive officers of our Company.  In addition, the Committee regularly meets in executive session without management.  Generally, the Committee receives and reviews materials in advance of each meeting.  These materials include information that management believes will be helpful to the Committee as well as materials that the Committee has specifically requested.



Compensation Philosophy



The philosophy of the Committee is to make compensation decisions based on an executive compensation program that is designed to meet the following objectives:













The Committee believes that an executive compensation program designed with these objectives in mind has a direct impact on the success of the business by helping to ensure we have qualified executive talent in the right positions at the right time.  Our executive compensation program helps ensure that our leadership group is focused on performing effectively to deliver results and build long-term shareholder value.



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The Committee periodically reviews the compensation programs and policies that apply to all of our employees and has determined that such programs and policies are not reasonably likely to have a material adverse effect on us.  Additionally, in establishing and reviewing the executive compensation programs, the Committee considers whether the programs encourage unnecessary or excessive risk taking and has determined that they do not.  On the Committee’s recommendation, the Board of Directors adopted a clawback/recoupment policy during 2015, which provides for the recoupment of certain incentive compensation in the event of an accounting restatement resulting from material noncompliance with financial reporting requirements under the securities laws.  The clawback/recoupment policy also provides for the potential recoupment of certain incentive compensation in the event of misconduct by our executive officers and other specified employees.



The Committee also considered the result of the 2018 advisory, non-binding “say-on-pay” vote in connection with the discharge of its responsibilities.  Because approximately 96% of the votes cast approved the compensation for our NEOs described in our 2018 proxy statement, the Committee determined that no changes to our compensation programs were warranted as a result of the shareholder advisory vote.



Compensation Tax Philosophy



Internal Revenue Code Section 162(m) generally places a $1 million limit on the amount of compensation that a publicly held corporation can deduct in any one year paid to certain executive officers. Historically, including when the Committee made compensation decisions with respect to taxable years that began before the taxable year beginning January 1, 2018, Code Section 162(m) contained an exception to the $1 million limit on deductibility for “performance-based” compensation. Regulations under Code Section 162(m) required several requirements to be satisfied in order for compensation to qualify as performance-based.  Over the years the Committee has worked to balance its compensation philosophy with the goal of achieving maximum deductibility under Code Section 162(m). The Committee reserved the discretion to make payments regardless of the tax deductibility limits of Code Section 162(m) if, in its judgment, such payments were necessary to achieve our compensation objectives and to protect shareholder interests.



In December 2017, the bill popularly referred to as the “Tax Cuts and Jobs Act” (the “TCJA”) was signed into law. The TCJA eliminated the performance-based exception to the $1 million deduction limit effective for tax years beginning after December 31, 2017, such that compensation paid to our covered executive officers in excess of $1 million will not be deductible unless it qualifies for transition relief that applies to compensation paid under binding contracts that were in effect as of November 2, 2017.



Because of the lack of regulatory and other guidance pertaining to the future interpretation of Code Section 162(m) and the transition rule, no assurance can be given that compensation intended to qualify for Code Section 162(m)’s  performance-based exception in fact will qualify. Further, the Committee reserves the right to modify compensation that was initially intended to be exempt from Code Section 162(m) if it determines that such modifications are consistent with our business needs. The Committee will continue to evaluate the impact of the elimination of the performance-based exception and the impact of the transition rule on its compensation programs. In addition, the Committee may award compensation in the future that is not fully deductible under Code Section 162(m) if it believes that such compensation packages are necessary to achieve the Committee’s compensation objectives and to protect shareholder interests.



Compensation Committee Process for Determining Executive Compensation



A substantial amount of the Committee’s annual cycle of work relates to the determination of compensation for our executive officers, including our Chief Executive Officer.  Generally, during or prior to the first quarter of our fiscal year, the Committee makes determinations of base cash compensation, incentive compensation percentages for the year, and equity grants for executive officers, including our Chief Executive Officer.  For a discussion of each individual element of compensation and how it is specifically determined, refer to “Compensation Program Elements” below.



Although many compensation decisions are made near the beginning of the first quarter of the fiscal year, our compensation planning process is not a rigid yearly process with fixed beginning and end points.  Rather, compensation decisions are designed to promote our compensation philosophy and principles throughout the year.  The Committee believes that evaluation of executive performance, business and succession planning, and consideration of our business environment are year-round processes, and the Committee members monitor these as such.



Our Chief Executive Officer is not permitted to be present during deliberations or voting on his compensation.  During this process, the Committee reviews and approves any new corporate goals and objectives with respect to compensation for our Chief Executive Officer.  In light of the established goals and objectives, the Committee evaluates the performance of the Chief Executive Officer and, based upon these evaluations, sets the Chief Executive Officer’s compensation.  The Compensation Committee also reviews and approves on an annual basis the evaluation and compensation structure for the Company’s other executive officers, including approval of salary,

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bonus, incentive, and equity compensation.  Our Chief Executive Officer is present and provides input at the meetings and deliberations on the compensation of the Company’s other executive officers but is not permitted to be present at the vote.



Compensation Program Elements



In fiscal 2018, our NEOs received the following elements of compensation:















The Committee carefully considered and chose each compensation program element as a critical component in a comprehensive “total compensation” package.  Each element is intended to reward and motivate executives in different ways consistent with our overall compensation principles and philosophy.  Each of the elements has a critical relationship with one another with each focusing on and rewarding different areas.  These elements are necessary for us to achieve our compensation program objectives.





Salary is utilized to compensate our executive officers for services rendered during the fiscal year.  The Committee annually reviews and approves the compensation package of each NEO, including salary.  The Committee considers an individual’s qualifications and experience in setting an executive’s salary.  In determining salary increases, the Committee considers the size and responsibility of the individual’s position and the individual’s overall performance and future potential.  The Committee considers these factors subjectively in the aggregate.  Because the Committee believes that each of the factors is significant, the Committee does not assign a formula weight to any single factor in determining a salary increase.



Please refer to the “Salary” column in the Summary Compensation Table on page 19 for more information on each NEO’s salary for fiscal 2018.





Non-equity incentive compensation (“IC”) for our NEOs is determined under our Incentive Compensation Plan (the “IC Plan”).  Our IC Plan is designed to provide a competitive cash compensation program for recruiting and retaining executive talent and a short-term incentive and reward program that aligns pay with performance and motivates our executives to achieve results.  Shareholders approved the terms of our IC Plan, which is designed to satisfy the provisions of Section 162(m) of the Internal Revenue Code at the 2018 Annual Meeting of Shareholders. 



When setting IC, the Committee considers individual and corporate performance, levels of responsibility, prior experience, breadth of knowledge and competitive pay practices.  The Committee considers these factors subjectively in the aggregate.  IC is based on base salary and a corresponding percentage of all IC payouts if Company performance goals are met.  Payment of IC is prorated based on the performance level achieved.  The Committee establishes the financial performance goals under the IC Plan for the fiscal year.  These goals are generally determined near the beginning of the year and are based on an analysis of historical performance and growth expectations for our business, expectations of the public markets, and progress toward achieving our long-range strategic plan for the business.



Messrs. J. Brooks, Robertson, Simms, Dixon, and Wortham, were eligible to receive IC under the IC Plan.  The cash incentive was based on a percentage of base salary if performance goals were met for the year. 



The Committee determined that the performance criteria for IC in fiscal 2018 would be based upon the Company’s adjusted operating income for all participants. Adjusted operating income was determined based on the Company’s actual operating income, less any expenses attributable to the IC Plan (including any expenses relating to the grants of long term equity incentives thereunder), unrelated

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bonus compensation, and the grants of restricted shares and stock options to employees. The Committee has the discretion to exclude gains or losses resulting from extraordinary events in calculating adjusted operating income. For fiscal 2018, the threshold was set at 85% of the target and the maximum was set at 120% of the target. 



The Committee approved the following threshold, target and maximum payouts based on specified levels of adjusted operating income:







No IC payments were to be made if we did not meet our threshold performance target.  No IC payments were to be made if the executive was terminated for cause by the Company prior to the date of payment. When the performance results fall somewhere between the threshold and target amounts or between the target and maximum amounts, the payout is prorated accordingly.  The Committee believes that the fiscal 2018 goals represented an appropriate and substantial degree of difficulty for achieving a payout.



At year end, the Committee reviewed the Company’s operating income and determined the extent to which objectives were met. Subject to the foregoing, the actual 2018 IC payouts were based on achievement at the Company level of the maximum level.





In addition to the IC Plan, the Board of Directors from time to time may determine that it is appropriate to pay a NEO a discretionary bonus as a reward based on overall Company performance or individual contributions, but not tied to achievement of specific performance numbers. Jason Brooks, Thomas Robertson, Richard Simms, David Dixon, and Byron Wortham received discretionary bonuses for 2018 in the amounts of $49,000, $36,000, $31,000, $35,000 and $35,000, respectively, based on the overall Company performance which exceeded the maximum level under the IC Plan and for their individual contributions, leadership and performance during 2018.





The Committee believes that equity-based compensation opportunities encourage a high level of long-term performance that enhances shareholder value, thereby further linking leadership and shareholder objectives.  Equity compensation is intended to motivate our NEOs to contribute to our future growth and profitability and to reward performance in a manner that:







Equity compensation is granted to our NEOs under our 2014 Omnibus Incentive Plan.  The Committee determines the award opportunity level for each NEO based on the individual’s responsibility level and potential with our Company, competitive practices, the number of shares available for grant, business needs, individual and Company performance, and the market price of our common stock.



In 2018, we awarded stock options to NEOs in the amounts set forth in the Summary Compensation Table found below beginning on page 19. 





The “All Other Compensation” column in our Summary Compensation Table on page 19 primarily consists of these items:





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We sponsor a qualified retirement and 401(k) plan for eligible employees (the “Retirement Plan”).  The Retirement Plan allows NEOs to defer a portion of their total cash compensation (up to IRS limits) into this retirement account on a pre-tax basis. We make an annual contribution into the Retirement Plan for eligible employees, including NEOs, of three percent of applicable salary. We also provide a company match for eligible employees, including NEOs, on any money they defer into the Retirement Plan up to the maximum allowable in accordance with the Retirement Plan.  



These annual employer contribution amounts to NEOs are included in the Summary Compensation Table’s “All Other Compensation” column on page 19 below.





We provide Messrs. J. Brooks, Robertson, Simms, Dixon and Wortham with basic group term life insurance with a death benefit of $150,000. This is a relatively inexpensive benefit that we offer to our executives.  This element of compensation, though relatively small, provides one additional item to the overall compensation package which strengthens our ability to recruit and retain talented executives. For specific premium amounts paid, please refer to the Summary Compensation Table’s “All Other Compensation” column and footnotes below on page 19.





We have entered into employment agreements with each of Messrs. J. Brooks, Robertson, Simms, Dixon, and Wortham.  For a discussion of these agreements, please refer to “Agreements with NEOs and Potential Payments upon Termination or Change in Control” beginning on page 20 below.    





In addition to the compensation and benefits programs discussed in this proxy statement, we offer our employees, including our NEOs, a comprehensive benefits program.  This program is designed to provide the employees and their families with competitive coverage at competitive rates.  We strive to provide the employees with appropriate health benefits (medical, pharmacy, dental, and vision) to help protect the physical, mental, and financial health of our employees and their immediate families.



Executive Deferred Compensation Plan



On December 14, 2018, the Board adopted the Rocky Brands, Inc. Executive Deferred Compensation Plan (the “Deferred Compensation Plan”), which became effective January 1, 2019. The Deferred Compensation Plan is an unfunded nonqualified deferred compensation plan in which the NEOs are eligible to participate.



Under the Deferred Compensation Plan, participants may elect to defer up to 75% of their base compensation and up to 100% of their bonuses, commissions, and other compensation. The deferred amounts are paid in accordance with each participant’s elections made on or before December 31 of the prior year. In addition to elective deferrals, the Deferred Compensation Plan permits the Company to make discretionary contributions to eligible participants, provided that any participant who is employed on the last day of a plan year will receive a Company contribution equal to no less than 3% of the participant’s base compensation, bonus earned, and non-equity incentive plan compensation in the plan year. Company contributions will vest in accordance with the vesting schedule determined by the Committee, except in the event of the participant’s death, disability or retirement, in which case the contributions will vest 100% upon such event. Participants may elect to receive payment in a lump sum cash payment or, in the event of the participant’s retirement, in annual installments for a period of up to ten years. In the event of a participant’s termination of employment, deferred amounts will generally be paid within 60 days following the later of the date (i) of such termination or (ii) the participant attains age 60, except where such termination is due to such participant’s death, in which case deferred amounts will be paid to such participant’s beneficiary within 30 days of confirmation of the participant’s death.

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Summary Compensation Table



The following table sets forth certain information regarding compensation paid during the Company’s last complete fiscal year to the Company’s named executive officers (“NEOs”) for the 2018 fiscal year.  For a discussion of the various elements of compensation provided in the table below, please refer to the discussion of our various compensation elements in our Compensation Discussion & Analysis under the heading “Compensation Program Elements” beginning on page 16 above.



SUMMARY COMPENSATION TABLE FOR FISCAL YEAR 2018 













With respect to the above performance based awards, we did not achieve a level of performance required to vest the awards noted above and during such vesting period we did not consider the achievement of the performance criteria probable.



For a discussion of the assumptions made in the valuation of the dollar amount recognized, please refer to the Share-based Compensation Note to the Company’s financial statements, which are set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.  The amounts reflected are for the grant date fair value of RSUs and PSUs granted and do not necessarily correspond to the actual value that will be recognized by the NEOs upon vesting.





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Outstanding Equity Awards at Fiscal Year-End Table



The following table provides information concerning unexercised options, shares that have not vested, and equity incentive plan awards outstanding as of the end of the last completed fiscal year:



OUTSTANDING EQUITY AWARDS AT FISCAL 2018 YEAR-END











Agreements with NEOs and Potential Payments Upon Termination or Change in Control



Effective January 2, 2014, we entered into employment agreements (“the 2014 Employment Agreements”) with each of Jason Brooks and Richard Simms. On January 1, 2019, we entered into employment agreements with Jason Brooks and Richard Simms which replace the 2014 Employment Agreements in their entirety. We also entered into employment agreements with each of Thomas Robertson, David Dixon and Byron Wortham on January 1, 2019.



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2014 Employment Agreements



Messrs. J. Brooks and Simms are each referred to below as an “Executive”.



Under the 2014 Employment Agreements, the Executive’s employment was at will, which means that subject to the terms of the 2014 Employment Agreements, either the Company or the Executive was able to terminate the Executive’s employment at any time for any reason or for no reason.



In exchange for performing the duties and responsibilities customarily performed by persons employed in a similar executive capacity, each Executive was entitled to an annual base salary, which could have been decreased up to 20%, or increased, subject to the approval of the Board of Directors.  Each Executive was also entitled to participate in additional compensation and employee benefit plans as are made available to similarly situated executives.



Under the 2014 Employment Agreements, the Executives agreed to maintain the confidential information of the Company and to assign all inventions to the Company, and the Executives agreed not to compete with the Company for six months following termination of employment for any reason or solicit the employees of the Company for 12 months following termination of employment for any reason. 



In the event of termination of an Executive by the Company for cause or due to the Executive’s death or disability (as defined in each employment agreement), or by the Executive for any reason, pursuant to the 2014 Employment Agreements, the Company would have paid the Executive only the earned but unpaid portion of his base salary through the termination date.



Cause was defined in each 2014 Employment Agreement to include:

















Under the 2014 Employment Agreements, in the event an Executive was terminated by the Company without cause, the Company would have paid the Executive the earned but unpaid portion of his base salary through the termination date, and would have continued to pay his base salary for an additional six months; provided, however, any such payments will immediately end if the Executive is in violation of his obligations under the 2014 Employment Agreement or if the Company learned of any facts that would have been grounds for termination for cause.  Such payments would have been reduced by 50% if the Executive becomes employed or self-employed during the severance period.  Additionally, the Company would have paid the Executive any unearned bonus for a completed bonus period and a pro-rated bonus, if any, for such bonus that would have been payable had the Executive remained employed throughout the bonus period, based on the actual performance of the Company.



2019 Employment Agreements



Messrs. J. Brooks, Robertson, Simms, Dixon and Wortham are each referred to below as an “Executive”.



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In exchange for performing the duties and responsibilities customarily performed by persons employed in a similar executive capacity, each Executive is entitled to an annual base salary, which may be decreased up to 20%, or increased, subject to the approval of the Board of Directors. Each Executive is also entitled to participate in additional compensation and employee benefit plans.



Under the 2019 Employment Agreements, the Executives agree to maintain the confidential information of the Company and to assign all inventions to the Company, and the Executives will not compete with the Company for six months following termination of employment for any reason or solicit the employees of the Company for 12 months following termination of employment for any reason. 



In the event of termination of an Executive by the Company for cause, or due to the Executive’s death or disability (as defined in each employment agreement), or by the Executive for any reason, pursuant to the 2019 Employment Agreements, the Company will pay the Executive only the earned but unpaid portion of his base salary through the termination date. The Executive must provide the Company 30 days’ written notice prior to termination of employment by the Executive.



Cause is defined in each 2019 Employment Agreement to include:

















Under the 2019 Employment Agreements, in the event an Executive is terminated by the Company without cause, the Company will pay the Executive the earned but unpaid portion of his base salary through the termination date, and will continue to pay his base salary for an additional six months; provided, however, any such payments will immediately end if the Executive is in violation of his obligations under the 2019 Employment Agreement or if the Company learns of any facts that would have been grounds for termination for cause. Additionally, the Company will pay the Executive any unearned bonus for a completed bonus period and if the Executive was employed for at least half of the days in an applicable bonus period, a pro-rated bonus, if any, for such bonus that would have been payable had the Executive remained employed throughout the bonus period, based on the actual financial performance of the Company. The Company must provide the Executive 14 days’ written notice in the event of a termination without cause, and 30 days’ written notice in the event of a termination for disability.



In the event of termination of an Executive following a change in control (as defined in each 2019 Employment Agreement), the Company will (i) pay the Executive the earned but unpaid portion of his base salary through the termination date and any bonus earned for a bonus period completed prior to the termination date, (ii) continue to pay the Executive his base salary for an additional six months, and (iii) pay the Executive a pro-rated bonus for a bonus based on the financial performance of the Company if the Executive was employed for at least half of the days in an applicable bonus period. Additionally, any outstanding stock options or restricted stock awards issued to the Executive will immediately vest 100%. Further, the Company will maintain COBRA coverage for at least six months after the termination date, provided however, that the Company’s obligation to provide this coverage will cease if the Executive becomes employed or self-employed.

 

Notwithstanding the foregoing, any such payments in (i) – (iii) will immediately end if the Executive is in violation of his obligations under the 2019 Employment Agreement or if the Company learns of any facts that would have been grounds for termination for cause.

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Potential Payments upon Termination or Change in Control Table



Potential payments upon termination or Change in Control under the 2014 Employment Agreements with our NEOs are shown in the tables below.  We have used estimates where it is not possible to give a precise dollar amount for the potential payments.  The estimates assume that the triggering event took place on December 31, 2018, the last day of the Company’s prior fiscal year.  In the tables below, we have assumed that all accrued base salary has been paid as of the termination date.

 

POTENTIAL PAYMENTS TO MR. J. BROOKS UNDER 2014 EMPLOYMENT AGREEMENT







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POTENTIAL PAYMENTS TO MR. SIMMS UNDER 2014 EMPLOYMENT AGREEMENT







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Compensation of Directors for Fiscal Year 2018    



During 2018, the Company compensated each non-employee director as follows:















In addition, the Company granted to each non-employee director serving as of January 2, 2018, an option to purchase 4,000 shares of common stock, exercisable for five years at $18.90 per share.



The table below shows the compensation earned by the Company’s directors during fiscal year 2018:















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Equity Compensation Plan Information



The table below sets forth additional information as of December 31, 2018, concerning shares of our common stock that may be issued upon the exercise of options and other rights under our existing equity compensation plans and arrangements, divided between plans approved by our shareholders and plans or arrangements not submitted to our shareholders for approval.  The information includes the number of shares covered by, and the weighted average exercise price of, outstanding options and other rights and the number of shares remaining available for future grants excluding the shares to be issued upon exercise of outstanding options, warrants, and other rights.









 



Report of the Compensation Committee Of The Board Of Directors



The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with management and based on that review and discussion, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement for filing with the Securities and Exchange Commission.







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Compensation Committee Interlocks and Insider Participation



During 2018, the members of the Compensation Committee were Messrs. Finn (Chairman), Moore, and Stewart. None of these members was an executive officer or employee of the Company or its subsidiaries during or prior to his service as a member of the Compensation Committee and no executive officer of the Company served or serves on the compensation committee or board of any company that employed or employs any member of the Company’s Compensation Committee or Board.



Transactions with Related Persons



Mr. Loveland, a director of the Company, is a partner in the law firm of Porter, Wright, Morris & Arthur llp, which provides legal services to the Company.  During fiscal 2018, the Company paid aggregate fees of approximately $477,000 to that firm. During fiscal 2017, the Company paid aggregate fees of approximately $600,000 to that firm.



Mr. Jordan, a director of the Company, is an executive officer of Designer Brands Inc., a footwear and accessories designer, producer and retailer. Designer Brands Inc., through its subsidiaries, makes purchases of footwear from the Company in its normal course of business. Mr. Jordan is not responsible for decisions regarding what footwear products are purchased.  During fiscal 2018, Designer Brands Inc. made payments of approximately $321,000 to the Company for purchases of footwear. During fiscal 2017, Designer Brands Inc. made payments of approximately $444,974 to the Company for purchases of footwear. 



During 2018, the Company employed certain members of Mr. M. Brooks’ immediate family.  Jason Brooks, Mr. M. Brooks’ son currently serves as President and Chief Executive Officer, and as a director of the Company. Mr. J Brooks’ compensation is listed in our Summary Compensation Table on page 19.  David Dixon, Mr. M. Brooks’ nephew and Mr. J. Brooks’ first cousin, both by marriage, serves as the Company’s President of Sourcing and Manufacturing. Mr. Dixon’s compensation is listed in our Summary Compensation Table on page 19. Stuart Brooks, Mr. M. Brooks’ brother, served as a Key Account Manager for the Company, and Mark Pitts, Mr. M. Brooks son-in-law, also served as a Key Account Manager for the Company; and each earned base salaries, commission and bonuses of $102,000 and $170,500, respectively, in 2018. During 2018, the Company also employed certain members of Mr. J. Brooks’ immediate family. David Bush, Mr. J. Brooks’ brother-in-law, served as a Manager, Territory – Rocky Outdoor for the Company and earned a base salary, commission and bonus of $153,987 in 2018.



The Company believes that all terms of the transactions and existing arrangements set forth above are no less favorable to the Company than similar transactions and arrangements which might have been entered into with unrelated parties. 

 

It is the written policy of the Company that the Nominating and Corporate Governance Committee will review the material facts of all Interested Transactions that require approval and either approve or disapprove of the entry into the Interested Transaction.  An Interested Transaction is any transaction, arrangement, relationship, or series of similar transactions, arrangements, or relationships (including any indebtedness or guarantee of indebtedness) in which:









A Related Party includes:









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In determining whether to approve or ratify an Interested Transaction, the Nominating and Corporate Governance Committee will take into account, among other factors it deems appropriate, whether the Interested Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the Related Party’s interest in the transaction.  Certain types of Interested Transactions, such as compensation to directors and officers that are required to be reported in the Company’s proxy statement, have been deemed to be pre-approved.

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Report of the Audit Committee Of The Board Of Directors



The following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent the Company specifically incorporates this Report by reference therein.



General.  In accordance with the Audit Committee Charter adopted by the Board of Directors, the Audit Committee assists the Board in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing, and financial reporting practices of the Company.  During the 2018 fiscal year, the Audit Committee met eight times.  



Review and Discussion with Independent Registered Public Accounting Firm.  In fulfilling its oversight responsibility as to the audit process, the Audit Committee obtained from its independent registered public accounting firm the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding all relationships between it and the Company that might bear on its independence and the communications, discussed with the independent registered public accounting firm any relationships that may impact the independent registered public accounting firm’s objectivity and independence, and satisfied itself as to the independent registered public accounting firm’s independence.  The Audit Committee also discussed with management and the independent registered public accounting firm the quality and adequacy of the Company’s internal controls.  In addition, the Audit Committee reviewed and discussed with the independent registered public accounting firm the matters required to be discussed by the Statement on Auditing Standards No. 1301, as amended, and, with and without management present, discussed and reviewed the results of the independent registered public accounting firm’s examination of the consolidated financial statements.



Review with Management.  The Audit Committee reviewed and discussed the audited consolidated financial statements of the Company as of and for the fiscal year ended December 31, 2018, with management.  Management has the responsibility for the preparation of the Company’s consolidated financial statements, and the Company’s independent registered public accounting firm has the responsibility for the examination of those statements.



Conclusion.  Based on the reviews and discussions with management and the Company’s independent registered public accounting firm noted above, the Audit Committee recommended to the Board that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 to be filed with the Securities and Exchange Commission. 





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Proposal 3 – Ratification of Independent Registered Public Accounting Firm



The Board of Directors has appointed Schneider Downs & Co., Inc. as its independent registered public accounting firm for the Company for the fiscal year ending December 31, 2019. Although not required, the Board of Directors is submitting its selection to the shareholders of the Company for ratification.  The Board of Directors will reconsider the appointment of Schneider Downs & Co., Inc. if its selection is not ratified by the shareholders.   



Representatives of Schneider Downs & Co., Inc. will be present at the meeting and will have an opportunity to make a statement if they desire to do so.  Such representatives will be available to respond to appropriate questions.



The Board of Directors unanimously recommends that shareholders vote FOR ratification of its appointment of Schneider Downs & Co., Inc.

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Fees Of The Independent Registered Public Accounting Firm



The following table shows the aggregate fees billed to the Company by Schneider Downs & Co., Inc., its independent registered public accounting firm, for services rendered during the fiscal year ended December 31, 2018 and 2017.













The Audit Committee has considered whether the provision of services other than those performed in connection with the “Audit Fees” above is compatible with maintaining the independent registered public accounting firm’s independence.



The Audit Committee is required to pre-approve all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent registered public accounting firm or other registered public accounting firm, subject to the de minimus exceptions for non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934, as amended, that are approved by the Audit Committee prior to completion of the audit.



Section 16(a) Beneficial Ownership Reporting Compliance



 Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s officers and directors, and greater than 10% shareholders, to file reports of ownership and changes in ownership of the Company’s securities with the Securities and Exchange Commission.  Copies of the reports are required by SEC regulation to be furnished to the Company.  Based on its review of such reports and written representations from reporting persons, the Company believes that all filing requirements were complied with during fiscal 2018 with the exception of one late Form 4 filing relating to one transaction for Mr. M. Brooks, three late Form 4 filings relating to three transactions for Mr. J. Brooks, one late filing for Mr. Stewart relating to three transactions,  and one late filing for each of Messrs. Simms and Wortham relating to one transaction. 



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Proposals By Shareholders For 2020 Annual Meeting



Each year the Board of Directors submits its nominations for election of directors at the Annual Meeting of Shareholders.  Other proposals may be submitted by the Board of Directors or the shareholders for inclusion in the proxy statement for action at the annual meeting.  Any proposal submitted by a shareholder for inclusion in the proxy statement for the Annual Meeting of Shareholders to be held in 2020 must be received by the Company (addressed to the attention of the Secretary) on or before December 20, 2019.  Any shareholder proposal submitted outside the processes of Rule 14a-8 under the Securities Exchange Act of 1934 for presentation at our 2020 annual meeting will be considered untimely for purposes of Rule 14a-4 and 14a-5 if notice thereof is received by the Company in writing less than 30 days or more than 60 days prior to the date of the 2020 annual meeting.  However, if the Company give less than 40 days’ notice of the date of the next scheduled annual meeting to shareholders, then a shareholder proposal must be received no later than the close of business on the tenth day following the earlier of (i) the day of public notice of the annual meeting or (ii) the day on which such notice of the date of the meeting was mailed.  To be submitted at the meeting, any such proposal must be a proper subject for shareholder action under the laws of the State of Ohio.



Other Matters



As of the date of this proxy statement, management knows of no other business that will properly come before the meeting.  Should any other matter requiring a vote of the shareholders arise, the proxy in the enclosed form confers upon the persons designated to vote the shares discretionary authority to vote with respect to such matter in accordance with their best judgment.



The Company’s Annual Report to Shareholders for the fiscal year ending December 31, 2018, including financial statements, was furnished to shareholders concurrently with the mailing of this proxy material.