rcky20210419_def14a.htm

DEF 14A 1 rcky20210419_def14a.htm FORM DEF 14A rcky20210419_def14a.htm

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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:

☐	Preliminary Proxy Statement

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

☒	Definitive Proxy Statement

☐	Definitive Additional Materials

☐	Soliciting Material Under Rule 14a-12

	Rocky Brands, 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):

☒	No fee required.

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

	(1)	Title of each class of securities to which transaction applies:

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☐	Fee paid previously with preliminary materials.

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

	(1)	Amount Previously Paid:

	(2)	Form, Schedule or Registration Statement No:

	(3)	Filing Party:

	(4)	Date Filed:

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ROCKY BRANDS, INC.

39 East Canal Street

Nelsonville, Ohio 45764

April 21, 2021

Dear Shareholder:

I am pleased to invite you to the Annual Meeting of Shareholders of Rocky Brands, Inc. to be held on Wednesday, May 26, 2021, at 3:00 p.m., in the Cutler Ballroom at the Ohio University Inn & Conference Center located at 331 Richland Avenue, Athens, Ohio, 45701.

At the annual meeting, you will be asked to (i) elect Mike Brooks, Jason Brooks, Glenn E. Corlett, Robyn R. Hahn, James L. Stewart and Tracie A. Winbigler for two-year terms as Class I Directors; (ii) approve, on an advisory non-binding basis, the compensation of our named executive officers; (iii) approve the Amended and Restated 2014 Omnibus Incentive Plan; (iv) ratify the selection of Schneider Downs & Co., Inc. as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021; and (v) 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. We encourage you to vote over the internet, by telephone or by submitting your proxy by mail so that we may better protect the health and welfare of our employees, shareholders and community as we continue to cope with the coronavirus (COVID-19) pandemic. 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.

	Sincerely,


	Mike Brooks
	Chairman of the Board

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ROCKY BRANDS, INC.

39 East Canal Street

Nelsonville, Ohio 45764

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

April 21, 2021

To Our Shareholders:

The Annual Meeting of Shareholders of Rocky Brands, Inc. will be held in the Cutler Ballroom at the Ohio University Inn & Conference Center located at 331 Richland Avenue, Athens, Ohio, 45701 on Wednesday, May 26, 2021, at 3:00 p.m. local time for the following purposes:

To elect six Class I Directors of the Company, each to serve for a two-year term expiring at the 2023 Annual Meeting of Shareholders.

To hold an advisory vote relating to the compensation of our named executive officers.

To approve the Amended and Restated 2014 Omnibus Incentive Plan.

To ratify the selection of Schneider Downs & Co., Inc. as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021.

To transact any other business which may properly come before the meeting or any adjournment thereof.

Owners of record of common stock of the Company at the close of business on April 5, 2021, will be entitled to vote at the meeting.

The Company is actively monitoring the coronavirus (COVID-19) situation and is sensitive to the public health and travel concerns shareholders may have, as well as the protocols that federal, state, and local governments may impose. In the event that the Company determines that it is not possible or advisable to hold the meeting in person, the Company will publicly announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting solely by means of remote communication (i.e., a virtual-only meeting) or by changing the date, time or place of the meeting. In such an event, the Company will issue a press release with details on the changes and how to participate in the meeting. The press release will be posted on the Company’s website and filed with the SEC as additional proxy materials. If you are planning to participate in the annual meeting, please check the Company’s website prior to the meeting date.

If you wish to attend the meeting, directions to the annual meeting may be obtained 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 and we may better protect the health and welfare of our employees, shareholders and community. 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 26, 2021:
The proxy statement and annual report to security holders are available at www.edocumentview.com/RCKY.

	By Order of the Board of Directors,


	Curtis A. Loveland
	Secretary

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Proxy Statement	1
Proposal 1 – Election of Directors	3
Proposal 2 – Advisory Vote on the Compensation Paid to Named Executive Officers	7
Proposal 3 – Approval of the Amended and Restated 2014 Omnibus Incentive Plan&NBSP;	8
Information Concerning the Board of Directors and Corporate Governance	15
Information Concerning Executive Officers	17
Principal Holders of Voting Securities	18
Ownership of Common Stock by Principal Shareholders	18
Ownership of Common Stock by Management	19
Executive Compensation	20
Compensation Discussion and Analysis	20
Summary Compensation Table	26
Outstanding Equity Awards at Fiscal Year-End Table	27
Agreements with NEOs and Potential Payments Upon Termination or Change in Control	28
Compensation of Directors for Fiscal Year 2020	32
Equity Compensation Plan Information	33
Report of the Compensation Committee of the Board of Directors	33
Compensation Committee Interlocks and Insider Participation	34
Transactions with Related Persons	34
Report of the Audit Committee of the Board of Directors	35
Proposal 4 – Ratification of Independent Registered Public Accounting Firm	36
Fees of the Independent Registered Public Accounting Firm	37
Delinquent Section 16(a) Reports	37
Proposals by Shareholders for 2022 Annual Meeting	37
Other Matters	38
Exhibit A – Amended and Restated 2014 Omnibus Incentive Plan	A-1

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ROCKY BRANDS, INC.

39 East Canal Street

Nelsonville, Ohio 45764

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

May 26, 2021

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 26, 2021, 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 21, 2021.

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:

●

FOR the election of Mike Brooks, Jason Brooks, Glenn E. Corlett, Robyn R. Hahn, James L. Stewart and Tracie A. Winbigler for two-year terms as Class I Directors of the Company;

●

FOR the approval, on an advisory non-binding basis, of the compensation of the Company’s named executive officers;

●

FOR the approval of the Amended and Restated 2014 Omnibus Incentive Plan;

●

FOR the ratification of Schneider Downs & Co., Inc. as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021; and

●

At the discretion of the persons acting under the proxy, to transact such other business as may properly come before the meeting or any adjournment thereof.

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 5, 2021, the record date for the annual meeting, will be entitled to vote at the annual meeting. At that time, the Company had 7,280,711 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 proposals relating to the compensation of our named executive officers and approval of the Amended and Restated 2014 Omnibus Incentive Plan each require the affirmative vote of the holders of a majority of the shares of our common stock present in person or by proxy at the annual meeting and entitled to vote on such proposal. 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 shares of our common stock present in person or by proxy at the annual meeting and entitled to vote on the proposal. Abstentions will be counted as represented and entitled to vote and will therefore have the effect of a vote against the proposal. There will not be any broker non-votes with respect to this proposal, as it is considered to be a “routine” matter as described above.

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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. The total number of authorized directors has been fixed by the Board of Directors at eleven. Each class of directors consists, as nearly as practical, of one-half of the total number of directors. The Board of Directors proposes the re-election of the six incumbent Class I Directors to continue their service as Class I Directors at the 2021 Annual Meeting of Shareholders. The five incumbent Class II Directors will continue in office until the 2022 Annual Meeting of Shareholders.

Mike Brooks, Jason Brooks, Glenn E. Corlett, Robyn R. Hahn, James L. Stewart and Tracie A. Winbigler 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 Mike Brooks, Jason Brooks, Glenn E. Corlett, Robyn R. Hahn, James L. Stewart and Tracie A. Winbigler for two-year terms as Class I Directors. 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.

It is the policy of the Board of Directors that any nominee who receives a greater number of votes marked “Withhold” than “For” in an election that is not contested is expected to tender his or her resignation as a director to the Board of Directors promptly following certification of the election results. The Nominating and Corporate Governance Committee will make a recommendation to the Board of Directors as to whether to accept or reject the tendered resignation. The Board of Directors will then act on the tendered resignation, taking into account the Nominating and Corporate Governance Committee’s recommendation and factors the Board of Directors deems relevant, and will disclose its decision regarding the resignation within 90 days after certification of the election results. If the resignation is not accepted, such director will continue to serve until the next annual meeting of shareholders at which such director faces re-election and until such director’s successor is duly elected and qualified.

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 on which they serve and their position with the Company.

DIRECTORS OF THE COMPANY

Director

Term

Director

Board

Name

Age

Since

Expiration

Class

Committees

Position

Mike Brooks

1992

2021

Class I (nominee)

None

Director and Chairman of the Board of Directors

Jason Brooks

2017

2021

Class I (nominee)

None

Director, President and CEO of the Company

Glenn E. Corlett

2000

2021

Class I (nominee)

Audit (Chair)

Director

Robyn R. Hahn

2021

Class I (nominee)

Compensation, Nominating and Corporate Governance

Director

James L. Stewart

1996

2021

Class I (nominee)

Compensation

Director

Tracie A. Winbigler

2019

2021

Class I (nominee)

Audit

Director

Michael L. Finn

2004

2022

Class II

Compensation (Chair), Nominating and Corporate Governance

Director

G. Courtney Haning

2004

2022

Class II

Nominating and Corporate Governance (Chair), Audit

Director

William L. Jordan

2017

2022

Class II

Audit

Director

Curtis A. Loveland

1993

2022

Class II

None

Director and Secretary of the Company

Robert B. Moore, Jr.

2017

2022

Class II

Compensation, Nominating and Corporate Governance

Director

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.

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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 in June 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 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.

Robyn R. Hahn has served as President, Small Business of Westfield Insurance since May 2018. Previously, Ms. Hahn served as Group Marketing and Communications Leader of Westfield Insurance from July 2015 until May 2018. From April 2014 to March 2015, she was Chief Marketing Officer of Fireman’s Fund Insurance Company. From October 2009 to April 2014 she was Vice President of Marketing, Business Insurance, for Travelers Business Insurance. Prior thereto she was employed by Nationwide Insurance and served in multiple leadership roles of increasing responsibility over 15 years, including Vice President of Sales from March 2005 to March 2007 and Vice President, Customer Experience from March 2007 to October 2009. Ms. Hahn began her insurance career as an agent before moving into management. Ms. Hahn has served on the board of the Westfield Insurance Foundation since 2015, the WVIZ/PBS Ideastream Board of Trustees from 2016 to 2020, and is a 2018 alumni of the Cleveland Leadership Center. Ms. Hahn’s business management experience leading sales, operations, marketing, branding, corporate communications, digital and customer experience functions, and the adaptation of the technology to these functions, along with her general management and strategic planning experience, qualifies her 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.

Tracie A. Winbigler has served as Executive Vice President and Chief Financial Officer of Amtrak since June 2019. Previously, Ms. Winbigler served as Chief Financial Officer of REI, a cooperative retailer of outdoor apparel, footwear and equipment from December 2015 until May 2019. From May 2014 to November 2015, she was Chief Operations Officer of National Geographic Society, where she also previously served as Executive Vice President and Chief Financial Officer from August 2012 to April 2014. From 1987 to July 2012, Ms. Winbigler was employed in various positions of increasing responsibility by General Electric Company and its subsidiaries, including as Executive Vice President and Chief Financial Officer of GE Asset Management and as Chief Financial Officer of GE Transportation and GE Nuclear Energy. Ms. Winbigler is a 1987 graduate of Ohio Wesleyan University, Delaware, Ohio, where she is a member of its Board of Trustees and Chair of its Audit Committee. Ms. Winbigler’s business management experience in the areas of accounting, finance and operations, along with her experience in the outdoor and retail industries qualifies her 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.

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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 Chief Growth Officer of Designer Brands Inc., formerly known as DSW Inc., since February 2020. Prior to that, Mr. Jordan served as President of DSW Designer Shoe Warehouse, Inc. (“DSW”) from February 2019 to January 2020 and as Executive Vice President of Designer Brands Inc. from March 2009 to January 2020. 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 been a practicing corporate 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 manufacturing, technology, medical devices, retailing and telecommunications. He has served on the Company’s Board of Directors since 1993 and as Corporate Secretary since 1992. In addition to his law degree, Mr. Loveland holds a business degree with a major in accounting. Mr. Loveland’s board member experience and knowledge and skills with respect to corporate governance, finance and accounting, 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 44 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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PROPOSAL 3 – APPROVAL OF THE AMENDED AND RESTATED 2014 OMNIBUS INCENTIVE PLAN

Introduction

The Company currently maintains the Rocky Brands, Inc. 2014 Omnibus Incentive Plan (the “Plan”), which was originally adopted and approved by the shareholders on May 7, 2014. The Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock units, stock appreciation rights, and other forms of equity compensation, as well as cash awards. The Company’s Board of Directors believes that the Plan has been effective in attracting and retaining highly-qualified employees and that the awards granted under the Plan have provided an incentive that aligns the economic interests of plan participants with those of our shareholders.

The Company’s Board of Directors, together with the Compensation Committee, has reviewed the Plan to determine whether it remains a flexible and effective source of incentive compensation in terms of the number of shares of stock available for awards and in terms of its design, as well as whether it generally conforms with best practices in today’s business environment. The Plan originally authorized 500,000 shares to be available for issuance thereunder. As of March 31, 2021, 322,850 shares of the Company’s common stock were then subject to outstanding awards granted under the Plan, and 2,030 shares were then available for new award grants under the Plan.

Based on its review, the Company’s Board of Directors, following a recommendation by the Compensation Committee, has recommended that the Plan be amended and restated as the Amended and Restated 2014 Omnibus Incentive Plan (the “Restated Incentive Plan”) to increase the number of shares authorized for issuance thereunder by adding 600,000 shares of the Company’s common stock, without par value, to the Plan, thus increasing the number of authorized shares available for issuance under the Plan to 1,100,000 shares, of which 602,030 will be available for grant after shareholder approval of the Restated Incentive Plan.

If shareholders do not approve the Restated Incentive Plan, the Company will no longer be able to issue new awards to eligible participants under the Plan after the remaining shares available for issuance thereunder have been exhausted.

Overview of Additional Material Changes to the Plan

In addition to replenishing share availability, the Restated Incentive Plan also revised the Plan to:

●

impose a one year minimum period of restriction on all awards other than restricted stock awards to non-employee members of the Board of Directors;

●

prohibit the buyout of underwater options or SARs for cash without shareholder approval;

●

clarify that the Restated Incentive Plan does not permit liberal share recycling;

●

prohibit the payment of dividends on unvested awards during the vesting period;

●

provide that for awards granted after adoption of the Restated Incentive Plan by the Board of Directors on March 4, 2021, the Board of Directors will have discretion to accelerate vesting in the event of a change in control as opposed to automatic acceleration of vesting; and

●

eliminate outdated references to Section 162(m) of the Internal Revenue Code of 1986, as amended, following the changes imposed by the Tax Cuts and Jobs Act of 2017 which became effective for tax years beginning after December 31, 2017.

The Company’s Board of Directors has determined that no further material changes to the Plan are necessary at this time and, other than the changes described herein, the Restated Incentive Plan will continue to provide essentially the same substantive terms and provisions as the Plan.

To effectuate the foregoing changes, the Company’s Board of Directors adopted and approved the Amended and Restated 2014 Omnibus Incentive Plan (the “Restated Incentive Plan”) on March 4, 2021, subject to approval by the Company’s shareholders. A copy of the Restated Incentive Plan is attached as Exhibit A to this proxy statement, and this discussion is qualified in its entirety by reference to the full text of the Restated Incentive Plan. Any shareholder that wishes to obtain a paper copy of the Restated Incentive Plan may do so free of charge by written request to: Rocky Brands, Inc., Attn: Chief Financial Officer, 39 East Canal Street, Nelsonville, Ohio 45764.

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The Company’s management considered various factors when developing the recommended changes the Board of Directors approved, including the following:

●

Number of eligible employees. Based on current practices, we currently have approximately 3,020 employees, officers and directors eligible to receive awards under the Plan. This number includes approximately 550 new employees from the March 15, 2021 acquisition of the lifestyle and performance footwear business of Honeywell International Inc.

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Historical amounts of equity awards. Our three-year annual number of shares granted, calculated on our understanding of the methodology utilized by the Proxy Advisory Services division of Institutional Shareholder Services, Inc. (“ISS”), was 76,500 shares in 2018, 75,000 shares in 2019, and 78,000 shares in 2020. However, these amounts are not necessarily indicative of the shares that might be awarded over the next three years. For example, in January 2021, the Company granted 51,250 options to officers and employees, as well as 45,000 options to its directors, which is approximately 1.32% of the 7,247,631 shares outstanding at December 31, 2020. Subsequently, on March 15, 2021, the Company granted 25,000 inducement options under the 2021 Inducement Option Plan to seven key management employees in connection with the acquisition of the lifestyle and performance footwear business of Honeywell International Inc.

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Historical equity award burn rate. Our three-year average annual equity grant rate, or “burn rate,” for the 2018-2020 period, calculated on our understanding of the methodology utilized by ISS, was 1.04%, which was lower than ISS’s maximum burn rate guidance of 3.36% for our industry classification (i.e., Consumer Durables & Apparel). Our calculation of the burn rate under our Plan for the past three years is set forth in the following table:

Historical Equity Award Burn Rates

Year of Grant	Options Granted To Officers/Employees	Options Granted to Board Members	Total Options Granted	Gross Burn Rate
2018	40,500	36,000	76,500	1.03%⁽¹⁾
2019	43,000	32,000	75,000	1.01%⁽²⁾
2020	42,000	36,000	78,000	1.07%⁽³⁾

⁽¹⁾

At December 31, 2018, there were 7,368.494 shares outstanding.

⁽²⁾

At December 31, 2019, there were 7,354,970 shares outstanding.

⁽³⁾

At December 31, 2020, there were 7,247,631 shares outstanding.

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Current and projected overhang percentage. As of December 31, 2020, we had 351,960 shares of common stock subject to outstanding equity awards or available for future equity awards under the Plan, which represented 4.6% of the fully diluted common shares outstanding. The 600,000 new shares proposed to be included in the Restated Incentive Plan share reserve would increase the overhang percentage to approximately 11.6% of the fully diluted common shares outstanding.

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Anticipated duration. If we continue making equity awards consistent with our practices from 2018 to date with modest increases associated with the increased size of our Company and additional management for the acquired business, we estimate that the 600,000 additional shares, if the Restated Incentive Plan is approved by the shareholders, will be sufficient for awards for the next three years and until the Restated Incentive Plan expires on May 7, 2024. However, there can be no certainty as to the future use of shares under the Plan as the Company's stock price may affect the rate at which shares are utilized under the Plan.

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Historical grant information. From 2018 through 2020, the Company granted stock options under the Plan representing shares equal to approximately 1.01% to 1.07% of the company’s outstanding common shares (calculated based on the number of shares outstanding at the end of each such year). All such options were granted at exercise prices equal to the fair market value at the date of grant. Options granted to officers and employees were designated as incentive stock options to the extent permitted by law and otherwise as non-statutory options, vesting at the rate of 20% per year of continued employment, and expiring after 10 years. Options granted to members of the Board of Directors were non-statutory options, vesting in one year and expiring after five years. Options were granted to non-employee members of the Board of Directors as part of their compensation as outside directors because their annual cash consideration is considered to be below market.

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Plan Summary

Administration

The Restated Incentive Plan will be administered by the Compensation Committee, or such other committee as the Board shall appoint from time to time, which shall consist of two or more directors, all of whom are intended to satisfy the requirement for a “non-employee director” within the meaning of SEC Rule 16b-3 and for director independence under the rules of the NASDAQ Stock Market. The Compensation Committee has the discretion to interpret the Restated Incentive Plan and any award or other agreement employed by the Company in the administration of the Restated Incentive Plan. Subject to the provisions of the Restated Incentive Plan, the Compensation Committee has the power to:

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determine when and to whom awards will be granted;

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make awards under the Restated Incentive Plan;

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determine the fair market value of shares or other property, where applicable;

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determine the terms, conditions, and restrictions applicable to each award and any shares acquired pursuant to such awards;

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determine how an award will be settled;

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approve one or more forms of award agreements;

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amend, modify, extend, cancel, or renew any award or waive any restrictions or conditions applicable to any award or any shares acquired upon the exercise of an award; provided, that the Compensation Committee may not reprice or cancel and replace stock options or SARs or repurchase underwater stock options or SARS without shareholder approval;

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accelerate, continue, extend, or defer the exercisability of any award or the vesting of any shares acquired upon the exercise of an award;

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prescribe, amend, or rescind any rules and regulations relating to the administration of the Restated Incentive Plan; and

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make all other determinations necessary or advisable for the administration of the Restated Incentive Plan.

Notwithstanding the foregoing, the Board of Directors shall perform the functions of the Compensation Committee for purposes of granting awards to non-employee directors.

Eligibility

The Restated Plan gives the Compensation Committee full discretion to designate any non-employee director of the Company, any employee of the Company or an affiliate, and consultants and advisors who render services to the Company, as a participant in the Restated Incentive Plan. The Company currently has 11 non-employee directors, and the Company and its affiliates currently have approximately 3,020 employees eligible to participate in the Restated Incentive Plan.

Number of Shares and Limitations

If approved by the shareholders, the total number of shares of common stock of the Company available for issuance under the Restated Incentive Plan is 600,000, plus the 2,030 shares remaining available for new award grants under the Plan and the number of shares subject to outstanding awards granted under the Plan that expire or terminate for any reason (subject to adjustment for future stock splits, stock dividends, and similar changes in the capitalization of the Company). The following shares related to awards will be available for issuance again under the Restated Incentive Plan:

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shares related to awards paid in cash; and

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shares related to awards that expire, are forfeited, are cancelled, or terminate for any other reason without the delivery of the shares.

Shares delivered that have an aggregate fair market value on the date of exercise equal to the option exercise price and shares withheld by the Company in payment of the option exercise price or tax withholdings shall not be available for issuance again under the Plan.

The maximum number of shares for which awards may be granted under the Restated Incentive Plan during the term of the Restated Incentive Plan to any one individual may not exceed 250,000 shares. The maximum aggregate cash-based award or cash equivalent value of an award under the Restated Incentive Plan at the date of grant is $2 million per year.

Types of Awards

The types of awards that may be granted under the Restated Incentive Plan include incentive and nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards, and other stock-based awards.

Subject to certain restrictions applicable to incentive stock options, awards granted under the Restated Incentive Plan will be exercisable by the participants at such times as are determined by the Compensation Committee, but in no event may the term of an award be longer than ten years after the date of grant. In addition to the general characteristics of all of the awards described above, the basic characteristics of awards that may be granted under the Restated Incentive Plan are as follows:

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Incentive and Nonqualified Stock Options (“ISOs” and “NSOs”). Both incentive and nonqualified stock options may be granted to participants at such exercise prices as the Compensation Committee may determine, but the exercise price for any option may not be less than 100% of the fair market value (as defined in the Restated Incentive Plan) of a share of common stock of the Company as of the date the option is granted. Stock options may be granted and exercised at such times as the Compensation Committee may determine, except that (a) ISOs may be granted only to employees, (b) no ISOs may be granted more than ten years after the effective date of the Restated Incentive Plan, (c) an option shall not be exercisable more than ten years after the date of grant, and (d) the aggregate grant date fair market value of the shares of common stock of the Company with respect to which ISOs granted under the Restated Incentive Plan and any other plan of the Company first become exercisable in any calendar year for any employee may not exceed the $100,000 maximum amount permitted under Code Section 422(d). Additional restrictions apply to an ISO granted to an individual who beneficially owns more than 10% of the combined voting power of all classes of stock of the Company.

The purchase price payable upon exercise of options generally may be paid in any of the following methods:

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in cash; or, at the discretion of the Compensation Committee;

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by authorizing a third party with which the optionee has a brokerage or similar account to sell the shares (or a sufficient portion of such shares) acquired upon the exercise of the option and remit to the Company a portion of the sale proceeds sufficient to pay the entire option exercise price;

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by delivering shares that have an aggregate fair market value on the date of exercise equal to the option exercise price;

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by authorizing the Company to withhold from the total number of shares as to which the option is being exercised the number of shares having a fair market value on the date of exercise equal to the aggregate option exercise price for the total number of shares as to which the option is being exercised;

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by such other means by which the Compensation Committee determines to be consistent with the purpose of the Restated Incentive Plan and applicable law; or

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by any combination of items listed above.

Stock Appreciation Rights (“SARs”). The value of a SAR granted to a participant is determined by the appreciation in the number of shares of common stock of the Company subject to the SAR during its term, subject to any limitations upon the amount or percentage of total appreciation that the Compensation Committee may determine at the time the right is granted. The participant receives all or a portion of the amount by which the fair market value of a specified number of shares, as of the date the SAR is exercised, exceeds a price specified by the Compensation Committee at the time the right is granted. The price specified by the Compensation Committee must be at least 100% of the fair market value of the specified number of shares of common stock of the Company to which the right relates, determined as of the date the SAR is granted. A SAR may be granted in connection with a previously or contemporaneously granted option, or independent of any option. A SAR may be paid in cash, shares of common stock of the Company or a combination of cash and shares as determined by the Compensation Committee. No SAR may be exercised more than ten years after its date of grant.

Restricted Stock and Restricted Stock Units (“RSUs”). The Compensation Committee may grant participants awards of restricted stock and RSUs. Restricted stock involves the granting of shares to participants subject to restrictions on transferability and any other restrictions the Compensation Committee may impose. The restrictions lapse if either the holder continues to perform services to the Company or its affiliates for a specified period of time established by the Compensation Committee under the applicable award agreement or satisfies other restrictions, including performance-based restrictions, during the period of time established by the Compensation Committee. RSUs are similar to restricted stock except that no shares actually are awarded to the participant on the date of grant, and the holder typically does not enjoy any shareholder rights with respect to the units. Restricted stock awards are settled in shares. RSU awards may be settled in cash, shares, or a combination of cash and shares, as determined by the Compensation Committee and provided in the applicable award agreement.

Performance Shares. The Compensation Committee may grant participants awards of performance shares. The period of time over which performance targets are measured will be of such duration as the Compensation Committee shall determine in an award agreement. Upon satisfaction of the applicable performance targets during the performance period, the participant will be entitled to receive shares of common stock of the Company.

Performance Units. The Compensation Committee may grant participants awards of performance units. The period of time over which the performance goals are measured will be of such duration as the Compensation Committee shall determine in an award agreement. Upon satisfaction of the applicable performance targets during the performance period, the participant will be entitled to receive either shares, cash, or a combination of cash and shares, as determined by the Compensation Committee in the applicable award agreement.

Cash-Based Awards. Cash-based awards entitle the participants to payments of amounts of cash determined by the Compensation Committee based upon the achievement of specified performance targets during a specified performance period, which typically will be one year unless otherwise determined by the Compensation Committee. Each cash-based award will have its value determined by the Compensation Committee.

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Other Stock-Based Awards. The Compensation Committee may also grant other awards that are valued in whole or in part by reference to, or are otherwise based on and/or payable in, shares of common stock of the Company. Other stock-based awards are a catch-all category to provide for awards of stock-based compensation that do not fit within the scope of the other specifically described types of awards. Payments with respect to other stock-based awards may be made in cash, shares, or a combination of cash and shares, as determined by the Compensation Committee. The Compensation Committee has the discretion to determine the terms and conditions of these other stock-based awards.

Termination of Service

If a participant ceases to be an employee, consultant, adviser, or director of the Company or its affiliates, the Compensation Committee may provide for special vesting and payment conditions upon such termination in an applicable award agreement.

Dividends and Dividend Equivalents

The Compensation Committee may grant dividends and dividend equivalents (but only after shares the shares subject to the award have been earned, vested, or acquired) in connection with other awards, except for options and SARs. Dividend or dividend equivalent amounts credited to an account for a participant may be settled in cash or shares or a combination of both, as determined by the Compensation Committee.

Transferability

In general, awards may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined in the Code or Title 1 of the Employee Retirement Income Security Act or the rules thereunder. Except as otherwise provided in the Restated Incentive Plan, all rights with respect to an award granted to a participant shall be available during his or her lifetime only to such participant. Notwithstanding the foregoing, a participant, at any time prior to his death, may assign all or any portion of an NSO or SAR to:

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the participant’s spouse or lineal descendant;

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the trustee of a trust for the benefit of the participant’s spouse or lineal descendants; or

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a tax exempt organization as described in Code Section 501(c)(3).

Notwithstanding the foregoing, non-employee directors may assign all or any portion of any award granted to them to assignees described above. In the event of an assignment, the spouse, lineal descendant, trustee or tax-exempt organization shall be entitled to all of the rights of the participant with respect to the assigned portion of such award, and such portion of the award shall continue to be subject to all of the terms, conditions and restrictions applicable to the award as set forth in the Restated Incentive Plan and in the related award agreement, immediately prior to the effective date of the assignment. Any such assignment shall be permitted only if (i) the participant does not receive any consideration therefore, and (ii) the assignment is expressly approved by the Compensation Committee or its delegate. Further notwithstanding the foregoing, no incentive stock option may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or the laws of descent or distribution.

Duration, Adjustments, Modifications, Terminations

The Restated Incentive Plan will remain in effect until all shares of the Company subject to the Restated Incentive Plan are distributed, or the Restated Incentive Plan is terminated as described below.

In the event of a recapitalization, stock split, reverse stock split, spin-off, spin-out or other distribution of assets to shareholders, stock distributions or combinations of shares, payment of stock dividends, other increase or decrease in the number of such shares outstanding effected without receipt of consideration by the Company, or any other occurrence for which the Compensation Committee determines an adjustment is appropriate, the Compensation Committee shall equitably adjust the number and type of shares available for awards or the number and type of shares and amount of cash subject to outstanding awards, the option exercise price of outstanding options, and provisions regarding payment with respect to outstanding awards. The Compensation Committee has the discretion to make similar adjustments in connection with other changes in the Company’s capitalization, including due to a merger, reorganization, or consolidation.

The Restated Incentive Plan also gives the Board and the Compensation Committee the right to terminate, suspend or amend the Restated Incentive Plan without the authorization of shareholders to the extent allowed by law, including without limitation any rules issued by the Securities and Exchange Commission under Section 16 of the Securities Exchange Act of 1934, insofar as shareholder approval thereof is required in order for the Restated Incentive Plan to continue to satisfy the requirements of SEC Rule 16b-3, or the rules of any applicable stock exchange. No termination, suspension or amendment of the Restated Incentive Plan shall adversely affect any right acquired by any participant under an award granted before the date of such termination, suspension or amendment, unless such participant shall consent; but it shall be conclusively presumed that any adjustment for changes in capitalization as provided for herein does not adversely affect any such right.

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The Board of Directors has discretion to accelerate vesting of all outstanding awards upon a change in control and, upon exercise of such discretion, all restrictions thereon shall terminate; provided, however, that notwithstanding the above, with respect to performance shares, performance units, cash-based awards, and other stock-based awards, the Compensation Committee shall determine and provide through an award agreement or other means the extent of vesting and the treatment of partially completed performance periods for any such performance shares, performance units, cash-based awards, and other stock-based awards outstanding upon a change in control. Further, the Compensation Committee, as constituted before such change in control, is authorized, and has sole discretion, as to any award, either at the time such award is granted or any time thereafter, to take any one or more of the following actions:

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provide for the cancellation of any such award for an amount of cash equal to the difference between the exercise price and the then fair market value of the shared covered thereby had such award been currently exercisable;

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make such adjustment to any such award then outstanding as the Compensation Committee deems appropriate to reflect such change in control; or

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cause any such award then-outstanding to be assumed, by the acquiring or surviving corporation, after such change in control.

Federal Tax Considerations

The Company has been advised by its counsel that awards made under the Restated Incentive Plan generally will result in the following tax events for United States citizens under current United States federal income tax laws.

Nonqualified Stock Options. A participant will have no taxable income, and the Company will not be entitled to any related deduction, at the time a NSO is granted under the Restated Incentive Plan. At the time of exercise of NSOs, the participant will realize ordinary income, and the Company will be entitled to a deduction equal to the excess of the fair market value of the stock on the date of exercise over the option exercise price. Upon disposition of the shares, any additional gain or loss realized by the participant will be taxed as a capital gain or loss.

Incentive Stock Options. A participant will have no taxable income, and the Company will not be entitled to any related deduction, at the time an ISO is granted under the Restated Incentive Plan. If a participant disposes of shares acquired from the exercise of an ISO no earlier than (a) two years after the grant of the option and (b) one year after the exercise of the option (both (a) and (b) collectively referred to as the “Holding Periods”), then no taxable income will result upon the exercise of such ISO, and the Company will not be entitled to any deduction in connection with such exercise. Upon disposition of the shares after expiration of the Holding Periods, any gain or loss realized by a participant will be a capital gain or loss. The Company will not be entitled to a deduction with respect to a disposition of the shares by a participant after the expiration of the Holding Periods.

Except in the event of death, if the participant disposes of the shares before the end of the Holding Periods (a “Disqualifying Disposition”), such participant will recognize a gain (taxable at ordinary income tax rates) which equals the lesser of (a) the difference between the fair market value on the exercise date and the option exercise price, or (b) the difference between the sale price of the shares and the option exercise price on the date of sale. The balance, if any, will be taxed as short-term or long-term capital gain, depending upon how long the participant held the shares. The Company will be entitled to a deduction at the same time and in the same amount as the participant is deemed to have realized ordinary income. If the participant pays the option exercise price with shares that were originally acquired pursuant to the exercise of an ISO and the Holding Periods for such shares have not been met, the participant will be treated as having made a Disqualifying Disposition of such shares, and the tax consequence of such Disqualifying Disposition will be as described above.

For alternative minimum tax purposes, an ISO will be treated as if it were a nonqualified stock option, the tax consequences of which are discussed previously.

Stock Appreciation Rights. There will be no federal income tax consequences to either the participant or the Company upon the grant of an SAR. The participant, however, generally must recognize ordinary taxable income upon the exercise or surrender of an SAR in an amount equal to the fair market value (on the date of exercise) of the shares exercised, less the exercise price. Gain or loss recognized upon any later sale or other disposition of the acquired shares generally will be a capital gain or loss.

Restricted Stock. Unless the participant files an election to be taxed under Code Section 83(b), the participant will not realize income upon the grant of restricted stock. Instead, the participant will realize ordinary income, and the Company will be entitled to a corresponding deduction, when the restrictions lapse. The amount of such ordinary income and deduction will be the fair market value of the restricted stock on the date the restrictions lapse. If the participant files an election to be taxed under Code Section 83(b), the tax consequences to the participant and the Company will be determined as of the date of the grant of the restricted stock rather than as of the date of the lapse of the restrictions. When the participant disposes of restricted stock, the difference between the amount received upon such disposition and the fair market value of such shares on the date the participant realizes ordinary income will be treated as a capital gain or loss.

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Restricted Stock Units. A recipient of RSUs will not recognize taxable income upon the award of RSUs, and the Company will not be entitled to a deduction at such time. Upon payment or settlement of a RSU award, the participant will recognize ordinary income equal to the value of the shares or cash received, and the Company will be entitled to a corresponding deduction. Upon disposition of shares received by a participant in payment of an award, the participant will recognize capital gain or loss equal to the difference between the amount received upon such disposition and the fair market value of the shares on the date they were originally received by the participant.

Performance Shares, Performance Units, and Cash-Based Awards. Generally, the participant will not realize taxable income on the date of grant of a performance share, performance unit or cash-based award. Instead, the participant will realize ordinary income, and the Company will be entitled to a corresponding deduction, in the year cash, shares, or a combination of cash and shares are delivered to the participant in payment of the award. The amount of such ordinary income and deduction will be the amount of cash received plus the fair market value of the shares received, if any, on the date of issuance. Upon disposition of shares received by a participant in payment of an award, the participant will recognize capital gain or loss equal to the difference between the amount received upon such disposition and the fair market value of the shares on the date they were originally received by the participant.

Code Section 409A. Code Section 409A provides that covered amounts deferred under a nonqualified deferred compensation plan are includable in the participant’s gross income to the extent not subject to a substantial risk of forfeiture and not previously included in income, unless certain requirements are met, including limitations on the timing of deferral elections and events that may trigger the distribution of deferred amounts. The Restated Incentive Plan has been designed so that awards should be exempt from coverage under Code Section 409A. Certain terms have been defined in a manner so that if awards are subject to Code Section 409A, they should comply with Code Section 409A.

Forfeiture and Over/Under Payments

The Compensation Committee may specify in an award agreement that the participant’s rights, payments, and benefits with respect to an award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of specified events, in addition to any otherwise applicable vesting or performance conditions of an award. Such events may include, but shall not be limited to, termination of service for cause or any act by a participant, whether before or after termination of service, that would constitute cause for termination of service. If any participant or beneficiary receives an underpayment of shares or cash payable under the terms of any award, payment of any such shortfall shall be made as soon as administratively practicable. If any participant or beneficiary receives an overpayment of shares or cash payable under the terms of any award for any reason, the Compensation Committee or its delegate shall have the right, in its sole discretion, to take whatever action it deems appropriate, including but not limited to the right to require repayment of such amount or to reduce future payments under the Restated Incentive Plan, to recover any such overpayment. Notwithstanding the foregoing, if the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, and if the participant knowingly or through gross negligence engaged in the misconduct, or knowingly or through gross negligence failed to prevent the misconduct, or if the participant is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, the participant shall reimburse the Company the amount of any payment in settlement of an award earned or accrued during the twelve-month period following the first public issuance or filing with the SEC of the financial document embodying such financial reporting requirement.

Withholding

The Restated Incentive Plan permits the Company to withhold from awards an amount sufficient to cover any required withholding taxes. The Restated Incentive Plan also permits the Company to require a participant to remit to the Company an amount sufficient to satisfy any required withholding taxes. In lieu of cash, the Compensation Committee may permit a participant to cover withholding obligations through a reduction in the number of shares to be delivered to such participant or by delivery of shares already owned by the participant.

Board Recommendation

The Board of Directors and the Compensation Committee believe that the adoption of the Restated Incentive Plan is in the best interests of the Company. The Board of Directors believe that the Restated Incentive Plan will continue to promote the achievement of both short-term and long-term objectives of the Company by (a) aligning compensation of participants with the interests of the Company shareholders, (b) enhancing the interests of participants in the growth and success of the Company, and (c) attracting and retaining participants of outstanding competence.

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The Board of Directors recommends that shareholders vote FOR the approval of the Amended and Restated Omnibus Incentive Plan.

INFORMATION CONCERNING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

The Board of Directors of the Company held a total of eleven meetings during 2020. During 2020, 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 and Stewart, and Mses. Winbigler and Hahn 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, and Ms. Winbigler. The Board of Directors has determined that each of Messrs. Corlett, Haning and Jordan, and Ms. Winbigler 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 2020. 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 a Fourth 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 2020 fiscal year appears beginning on page 36.

The members of the Compensation Committee are Messrs. Finn (Chairman), Stewart and Moore, and Ms. Hahn. The Board of Directors has determined that each of Messrs. Finn, Stewart and Moore, and Ms. Hahn are independent as independence is defined in Marketplace Rule 5605(a)(2). The Compensation Committee is governed by a Second Amended and Restated Compensation Committee Charter, which is posted on the Company’s website at www.rockybrands.com. The Compensation Committee met five times during 2020. This Committee administers the 2014 Omnibus Incentive Plan, the 2021 Incentive Compensation Plan and the summary com, and approves compensation for the Company’s executive officers. The Compensation Committee report relating to the 2020 fiscal year appears on page 33. For more information on the Compensation Committee, please refer to “Executive Compensation – Compensation Discussion and Analysis – The Compensation Committee,” beginning on page 20.

The members of the Nominating and Corporate Governance Committee are Messrs. Haning (Chairman), Finn and Moore, and Ms. Hahn. The Board of Directors has determined that each of Messrs. Haning, Finn and Moore, and Ms. Hahn are independent as independence is defined in Marketplace Rule 5605(a)(2). The Second 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 six times during 2020. 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:

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Such recommendations must be provided to the Nominating and Corporate Governance Committee c/o Rocky Brands, Inc., 39 East Canal Street, Nelsonville, Ohio 45764, in writing at least 120 days prior to the date of the next scheduled annual meeting;

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The nominating shareholder must meet the eligibility requirements to submit a valid shareholder proposal under Rule 14a-8 of the Securities Exchange Act of 1934, as amended; and

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The nominating shareholder must describe the qualifications, attributes, skills, or other qualities of the recommended director candidate.

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 the director’s 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. Given the COVID-19 pandemic, only three of the ten members of the Company’s Board of Directors then serving were present at the Company’s 2020 Annual Meeting of Shareholders.

INFORMATION CONCERNING EXECUTIVE OFFICERS

Executive Officers

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

David P. Dixon, 56, has served as President, Manufacturing/Sourcing Operations 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, 36, 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, 47, 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, 54, has served as President, Core Brand Sales, Marketing & P.D. 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:

Name and Address of Beneficial Owner	Number of Shares of Common Stock Beneficially Owned ⁽¹⁾			Percent of Class ⁽²⁾

Dimensional Fund Advisors LP		609,192	⁽³⁾		8.4	%⁽³⁾
6300 Bee Cave Road
Austin, Texas 78746

BlackRock, Inc.		513,315	⁽⁴⁾		7.1	%⁽⁴⁾
55 East 52nd Street
New York, NY 10055

The Vanguard Group		374,307	⁽⁵⁾		5.2	%⁽⁵⁾
100 Vanguard Blvd.
Malvern, PA 19355

⁽¹⁾	Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission which generally attribute beneficial ownership of securities to persons who possess sole or shared voting power and/or investment power with respect to those securities.

⁽²⁾	“Percent of Class” is calculated by dividing the number of shares beneficially owned by the total number of outstanding shares of the Company, plus the number of shares such person has the right to acquire within 60 days.

⁽³⁾

Based on information filed on Schedule 13G/A with the Securities and Exchange Commission on February 16, 2021, as of December 31, 2020. Dimensional Fund Advisors LP (“Dimensional”), an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (collectively, the “Funds”). In certain cases, subsidiaries of Dimensional may act as an adviser or sub-adviser to certain Funds. In its role as investment advisor, sub-adviser and/or manager, Dimensional or its subsidiaries may possess investment and/or voting power over the securities of the Company owned by the Funds and may be deemed to be the beneficial owner of the shares held by the Funds. Of the shares beneficially owned, Dimensional reported that it has sole dispositive power with respect to 609,192 shares and sole voting power with respect to 585,793 shares.

⁽⁴⁾

Based on information filed on Schedule 13G/A with the Securities and Exchange Commission on February 1, 2021, as of December 31, 2020. BlackRock, Inc. (“BlackRock”) is a parent holding company or control person in accordance with Rule 13d-1(b)(1)(ii)(G). Of the shares beneficially owned, BlackRock reported that it has sole dispositive power with respect to 513,315 shares and sole voting power with respect to 505,124 shares.

⁽⁵⁾

Based on information filed on Schedule 13G with the Securities and Exchange Commission on February 10, 2021, as of December 31, 2020. The Vanguard Group (“Vanguard”) is an investment advisor in accordance with Section 240.13d-1(b)(1)(ii)(E). Of the shares beneficially owned, Vanguard reported that it had shared voting power with respect to 4,570 shares, sole dispositive power with respect to 367,589 shares, and shared dispositive power with respect to 6,718 shares.

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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 March 31, 2021:

Name	Common Stock		Stock Options ⁽¹⁾		Total Beneficial Ownership⁽²⁾		Percent of Class⁽²⁾
Jason Brooks		10,188		15,800		25,988		*
Mike Brooks		255,247		15,250		270,497		3.7	%
Glenn E. Corlett		25,278		15,250		40,528		*
David P. Dixon		4,300		4,400		8,700		*
Michael L. Finn		21,234		9,250		30,484		*
Robyn R. Hahn		--		--		--		*
G. Courtney Haning		15,534		13,250		28,784		*
William L. Jordan		8,522		1,250		9,772		*
Curtis A. Loveland		97,933		15,250		113,183		1.6	%
Robert B. Moore, Jr.		28,587		9,250		37,837		*
Thomas D. Robertson		1,800		13,800		15,600		*
Richard Simms		8,045		6,000		14,045		*
James L. Stewart		10,755		15,250		26,005		*
Tracie A. Winbigler		1,817		5,250		7,067		*
Byron Wortham		4,200		2,000		6,200		*
All directors and executive officers as a group (15 persons)		493,440		141,250		634,690		8.6	%

* Indicates less than 1%

⁽¹⁾	Includes common stock which could be acquired under stock options exercisable within 60 days of March 31, 2021.

⁽²⁾

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission which generally attribute beneficial ownership of securities to persons who possess sole or shared voting power and/or investment power with respect to those securities. Except as otherwise noted, none of the named individuals shares with another person either voting or investment power as to the shares reported. “Percent of Class” is calculated by dividing the number of shares beneficially owned by the total number of outstanding shares of the Company on March 31, 2021, plus the number of shares such person has the right to acquire within 60 days of March 31, 2021.

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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 26.

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 role of the Compensation Committee in setting executive compensation;

●

Our compensation philosophy and its underlying principles – including the objectives of our executive compensation program and what it is designed to reward;

●

Our process for setting executive compensation; and

●

The elements of our executive compensation program – including a discussion of why we choose to pay each element of compensation, how we determine the amount of such element, and how each element fits into our overall compensation objectives and “total compensation” for our NEOs.

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, Robert B. Moore, Jr. and Robyn R. Hahn. 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.

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

●

Review and approve on an annual basis the corporate goals and objectives with respect to compensation for the chief executive officer and evaluate at least once a year the chief executive officer’s performance in light of these established goals and objectives and based upon these evaluations has sole authority to set the chief executive officer’s annual compensation, including salary, bonus, incentive and equity compensation;

●

In determining the incentive component of the chief executive officer’s compensation, consider the Company’s performance and relative stockholder return, the value of similar incentive awards given to chief executive officers at comparable companies, the awards given to the Company’s chief executive officer in past years and the results of the most recent stockholder advisory vote on executive compensation (“Say on Pay Vote”) required by Section 14A of the Exchange Act;

●

Review and approve on an annual basis the evaluation process and compensation structure for all of the Company’s non-CEO executive officers and evaluate the performance of such executive officers and approve the annual compensation, including salary, bonus, incentive and equity compensation, for such executive officers, considering the results of the most recent Say on Pay Vote;

●

Review and approve on an annual basis the compensation structure for any other employee of the Company who is a family member of an executive officer or director of the Company and evaluate the performance of such family member employees and approve the annual compensation, including salary, bonus, incentive and equity compensation, for such family member employees;

●

Review and make recommendations to the Board regarding any employment agreements and any severance arrangements or plans, including any benefits to be provided in connection with a change in control, for the chief executive officer and other executive officers;

●

Review and recommend to the Board the compensation for Board members;

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●

Meet to review and discuss with management the CD&A required by the rules and regulations of the SEC and recommend to the Board whether the CD&A should be included in the Company’s proxy statement or other applicable SEC filings;

●

Produce an annual report on executive compensation for inclusion in the proxy statement or annual report on Form 10-K as the Compensation Committee Report, which will state whether the Committee reviewed and discussed with management the CD&A, and whether, based on such review and discussion, the Committee recommended to the Board that the CD&A be included in the Company’s proxy statement or other applicable SEC filing;

●

Review the Company’s compensation programs and plans, including, but not limited to, the Company’s incentive compensation, equity-based, retirement, and other benefit plans and recommend changes in such plans to the Board of Directors and exercise all the authority of the Board of Directors with respect to the administration of such plans, including designation of the employees to whom the awards are to be granted, the amount of the award or equity to be granted, and the terms and conditions applicable to each award or grant, subject to the provisions of each plan;

●

In reviewing and making recommendations regarding incentive compensation plans and equity-based plans, including whether to adopt, amend or terminate any such plans, consider the results of the most recent Say on Pay Vote; and

●

Review the charter periodically for adequacy and recommend to the Board of Directors any necessary changes.

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 five meetings during fiscal 2020. 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:

●

To attract and retain qualified executives;

●

To reward current and past individual performance;

●

To provide short-term and long-term incentives for superior future performance;

●

To align compensation policies to further shareholder value; and

●

To relate total compensation to individual performance and performance of our Company.

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 2020 advisory, non-binding “say-on-pay” vote in connection with the discharge of its responsibilities. Because approximately 97% of the votes cast approved the compensation for our NEOs described in our 2020 proxy statement, the Committee determined that no changes to our compensation programs were warranted as a result of the shareholder advisory vote.

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, 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 2020, our NEOs received the following elements of compensation:

●

Salary;

●

Non-equity incentive compensation;

●

Equity compensation;

●

Retirement benefits; and

●

Health and welfare benefits.

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.

(1)

Salary:

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.

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Please refer to the “Salary” column in the Summary Compensation Table on page 26 for more information on each NEO’s salary for fiscal 2020.

(2)

Non-Equity Incentive Compensation:

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 at the 2017 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 in fiscal 2020. 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 2020 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), the Company’s manager bonus plan and the Company’s hourly bonus plan, and exclusive of any gains or losses resulting from one-time, extraordinary events, such as charges for goodwill impairment, charges relating to mergers or acquisitions, gains or losses on the sale of assets other than in the ordinary course of business and charges resulting from changes in accounting policies, all as may be determined in good faith by the Committee in its discretion. For fiscal 2020, 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:

	Payout as a Percentage of Base Salary
Name	Threshold			Target			Maximum
Jason Brooks		8	%		40	%		80	%
Thomas D. Robertson		8	%		40	%		80	%
Richard Simms		8	%		40	%		80	%
David P. Dixon		8	%		40	%		80	%
Byron Wortham		8	%		40	%		80	%

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 2020 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 2020 IC payouts were based on achievement at the Company maximum level.

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(3)

Equity Compensation:

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:

●

Provides them with a means to increase their holdings of the common stock of the Company; and

●

Aligns their interests with the interests of the shareholders of the Company.

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 2020, we awarded stock options to NEOs in the amounts set forth in the Summary Compensation Table found below beginning on page 26.

(4)

All Other Compensation:

The “All Other Compensation” column in our Summary Compensation Table on page 26 primarily consists of these items:

●

Annual employer contributions into the retirement/401(k) plan;

●

Employer-paid premiums for life insurance; and

●

A deferred compensation plan for our NEOs.

(a)

Retirement and 401(k) Plan:

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 26 below.

(b)

Employer-Paid Premiums for Life Insurance:

We provide each of 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 26.

(c)

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.

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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.

(d)

Employment Agreements:

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 28 below.

(5)

Health and Welfare Benefits:

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.

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Summary Compensation Table

The following table sets forth certain information regarding compensation of each named executive officer (each, an “NEO”) of the Company for fiscal 2020, 2019 and 2018. 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 22 above.

SUMMARY COMPENSATION TABLE FOR FISCAL YEAR 2020

Name and Principal Position	Year	Salary ($)			Bonus ($)		Stock Awards ($)		Option Awards ($) ⁽¹⁾		Non-Equity Incentive Plan Compensation ($)		All Other Compensation ($) ⁽²⁾		Total ($)
Jason Brooks	2020		341,000			-		-		52,975		272,800		30,354		697,129
President and Chief Executive Officer	2019		325,000			-		-		49,042		157,442		25,743		557,227
President and Chief Executive Officer	2018		300,000			49,000		-		34,700		180,000		11,234		574,934
Thomas D. Robertson	2020		257,000			-		-		52,975		205,600		25,818		541,393
Executive Vice President, Chief Financial Officer and Treasurer	2019		245,000			-		-		49,042		118,687		21,463		434,192
	2018		224,375	⁽³⁾		36,000		-		34,700		138,000		10,024		443,099
Richard Simms	2020		240,000			-		-		52,975		192,000		24,900		509,875
President, Operations	2019		234,000			-		-		49,042		113,358		20,808		417,208
	2018		227,300			31,000		-		34,700		136,380		11,234		440,614
David P. Dixon	2020		220,000			-		-		52,975		176,000		23,820		472,795
President, Manufacturing/ Sourcing Operations	2019		210,000			-		-		49,042		101,732		20,728		381,502
President, Manufacturing/ Sourcing Operations	2018		205,000			35,000		-		34,700		123,000		10,532		408,232
Byron Wortham	2020		212,000			-		-		52,975		169,000		23,388		457,363
President, Core Brand Sales, Marketing & P.D.	2019		200,000			-		-		49,042		96,887		19,493		365,422
President, Core Brand Sales, Marketing & P.D.	2018		190,000			35,000		-		34,700		114,000		10,568		384,268

⁽¹⁾

Represents the grant date fair value of awards of stock options determined for accounting purposes in accordance with FASB ASC Topic 718. The assumptions made in the valuation are discussed in Note 12 “Share-Based Compensation” to the Notes to the Consolidated Financial Statements for the year ended December 31, 2020, which are set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

⁽²⁾

The amounts shown under “All Other Compensation” reflect employer contributions to the Deferred Compensation Plan, 401(k) retirement plan, and employer paid premiums for life insurance. In 2020, for Messrs. J. Brooks, Robertson, Simms, Dixon and Wortham, $18,414, $13,878, $12,960, $11,880, and $11,448 was paid in employer contributions to the Deferred Compensation Plan, respectively. In 2020, $540 was paid for group term life insurance premiums for each of Messrs. J. Brooks, Robertson, Simms, Dixon and Wortham. In 2020, $11,400 was paid in employer contributions to the 401(k) plan for each of Messrs. J. Brooks, Robertson, Simms, Dixon and Wortham.

⁽³⁾	In May 2018, the Committee adjusted Mr. Robertson’s salary for 2018 to reflect his promotion to Executive Vice President. The Committee determined that given the nature of his promotion, he should receive the IC payout as if the higher salary had been in effect for the entirety of 2018.

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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 2020 YEAR-END

		Option Awards ⁽¹⁾				Stock Awards
Name	Grant Date	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($)
	1/2/2015	600	-	13.42	1/2/2025	-	-
	1/4/2016	600	600	11.56	1/2/2026	-	-
	1/3/2017	1,000	2,000	11.55	1/3/2027	-	-
Jason Brooks	6/1/2017

SEC Form DEF 14A filed by Rocky Brands, Inc.