UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington,WASHINGTON, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

Filed by the Registrant  x                            Filed by a Party other than the Registrant  ¨

Check the appropriate box:

600 North Centennial Street

Zeeland, Michigan 49464

NOTICE OF 20122013 ANNUAL MEETING OF SHAREHOLDERS

Dear Shareholder:

The Annual Meeting of the Shareholders of Gentex Corporation (the “Company”), a Michigan corporation, will be held at The Pinnacle Center, 3330 Highland Drive, Hudsonville, Michigan, on Thursday, May 17, 2012,16, 2013, at 4:30 p.m. EDT, for the following purposes:

Shareholders of record as of the close of business on March 23, 2012,22, 2013, are entitled to notice of, to attend, and to vote at the meeting and are being sent this Proxy Statement on or about April 2, 2012.1, 2013. We are pleased to offer multiple options for voting your shares. As detailed in the “Solicitation of Proxies” section of the Proxy Statement, you can vote your shares via the Internet, by telephone, by mail or by written ballot at the Annual Meeting.We encourage you to use the Internet to vote your shares as it is the most cost-effective method. If your shares are held in “street name,” (that is held for your account by a broker or other nominee), you will receive instructions from the holder of record that you must follow for your shares to be voted.

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Important Notice Regarding the Availability of Proxy Materials for

the Annual Meeting of Shareholders to be held on May 17, 201216, 2013

You are receiving this notice that the proxy materials for our 20122013 Annual Meeting of Shareholders are available on the Internet. The following proxy materials can be foundhttps://www.proxyvote.com:

Whether or not you expect to be present at the meeting, you are urged to promptly vote your shares using one of the methods discussed above. If you do attend the meeting and wish to vote in person, you must withdraw your earlier-dated Proxy as set forth in the Proxy Statement, and provide proof of ownership of Company shares as of the record date of March 23, 2012.22, 2013.

BY ORDER OF THE BOARD OF DIRECTORS

Connie Hamblin

Secretary

April 2, 20121, 2013

GENTEX CORPORATION

600 North Centennial Street

Zeeland, Michigan 49464

PROXY STATEMENT FOR ANNUAL MEETING

OF SHAREHOLDERS TO BE HELD MAY 17, 201216, 2013

QUESTIONS & ANSWERS

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BUSINESS HIGHLIGHTS

In 2012, the Company experienced record net sales, net income, and earnings per share. Highlights include (in thousands, except per share data):

The Company also repurchased approximately two million shares of the Company’s common stock on the open market in calendar year 2012.

SOLICITATION OF PROXIES

This Proxy Statement is being furnished on or about April 2, 2012,1, 2013, to the shareholders of Gentex Corporation as of the record date, in connection with the solicitation by the Board of Directors of the Company of Proxies to be used at the Annual Meeting of Shareholders to be held on Thursday, May 17, 2012,16, 2013, at 4:30 p.m. EDT, at The Pinnacle Center, 3330 Highland Drive, Hudsonville, Michigan.Michigan 49426.

Each shareholder as of the record date, as an owner of the Company, is entitled to vote on matters to come before the Annual Meeting. The use of Proxies allows a shareholder of the Company to be represented at the Annual Meeting if he or she is unable to attend in person.

There are four ways to vote your shares:

If the form of Proxy accompanying this Proxy Statement is properly executed using any of the methods described above, the shares represented by the Proxy will be voted at the Annual Meeting of Shareholders and at any adjournment of the meeting. Where shareholders specify a choice, the Proxy will be voted as specified. If no choice is specified, the shares represented by Proxy will be votedFOR the election of all nominees named in the Proxy;ABSTAIN with respect to the proposal to amend the Restated Articles of Incorporation to declassify the Board of Directors;AGAINST the shareholder proposal requesting that the Board of Directors issue a sustainability report;AGAINST the shareholder proposal requesting that the Board of Directors adopt as policy to require the Chair of the Board, whenever possible, be an independent member of the Board;FOR ratification of Ernst & Young LLP as the Company’s auditors for the fiscal year ending December 31, 2012;2013;FOR approval, on an advisory basis, of the compensation of the Company’s named executive officers; andFOR approval of the 2012 Amended and Restated Nonemployee Director2013 Employee Stock OptionPurchase Plan. These proposals are described in this Proxy Statement. A Proxy may be revoked prior to its exercise by (1) delivering a written notice of revocation to the Secretary of the Company, (2) delivery of a later-dated Proxy, including a telephone or Internet vote, or (3) attending the meeting and voting in person, as discussed above.

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VOTING SECURITIES AND RECORD DATE

March 23, 2012,22, 2013, has been fixed by the Board of Directors as the record date for determining shareholders entitled to vote at the Annual Meeting. On that date, 144,129,782143,456,813 shares of the Company’s common stock, par value $.06 per share, were issued and outstanding. Shareholders are entitled to one vote for each share of the Company’s common stock registered in their names at the close of business on the record date. Abstentions and broker non-votes are counted for the purposes of determining the presence or absence of a quorum for the transaction of business. Abstentions and broker non-votes are not, however, counted in tabulations of votes cast on matters presented to shareholders, though the Board of Directors will consider abstentions in determining future actions.

ELECTION OF DIRECTORS

The Company’s Restated Articles of Incorporation specify that the Board of Directors shall consist of at least six, but not more than nine members, with the exact number to be determined by the Board. The Board has currently set the number of directors at nine. At the present time, theThe Restated Articles of Incorporation specifystate that the Board be divided into three classes,beginning with the classesannual meeting of shareholders that is held in calendar year 2013, directors shall be elected annually for terms expiring at the next annual meeting of shareholders; provided, however, that any director in office prior to such 2013 annual meeting of shareholders shall continue to hold office until the end of the term for staggered terms of three years each. A proposal to declassify the Board of Directors will not impact the election of directors at the 2012 Annual Meeting, but could impact futurewhich such director elections.was elected.

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The majority of the members of the Company’s Board of Directors qualify as “independent directors” as determined in accordance with the current listing standards of The NASDAQ Global Select Market (“NASDAQ”). Based on thethese current NASDAQ listing standards, the Company’s Board has identified and affirmatively determined the following individualsdirectors have no material relationships with the Company other than as a director and are independent: Gary Goode, Arlyn Lanting, John Mulder, Richard Schaum, Fred Sotok, Wallace Tsuha, and James Wallace. In making its independence determinations, the Board consideredconsidered: the former employment and a former consulting arrangement of Mr. Mulder, andMulder; the former employment of Mr. Lanting.Lanting; and the fact that Mr. Sotok’s son has an indirect interest in a former vendor of the Company. The Board determined that these circumstances do not interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Based on information provided to the Board by new director nominee Pete Hoekstra, the Board has affirmatively determined that Mr. Hoekstra has no material relationships with the Company and will qualify as an independent director under the current NASDAQ listing standards, if elected. In addition, Mr. Wallace has been elected as Lead Independent Director under the Company’s Lead Independent Director Policy (attached as Appendix A to this Proxy Statement).

Each of the current members of the Board of Directors members (including(and the nominees for election as directors at the Annual Meeting) have been determined to meet the required experience and qualifications set forth in the Company’sPosition Profile: Member of the Board of Directors, including, but not limited to, knowledge and experience working with an entrepreneurial company,among them, high levels of personal and professional integrity, distinguished management careers, and the demonstrated or perceived ability to work efficiently aseffectively with other Board members. Combined with the other desirable characteristics and experience of such individuals, these individuals have the experience, qualifications, attributes, and/or skills which led the Nominating Committee to recommend such individuals to the Board for nomination for election to the Board, and led the Board to conclude such individuals should be nominated for election to the Board.

The terms of current Board of Directors members Fred Bauer, Gary Goode,John Mulder, Frederick Sotok and James Wallace Tsuha will expire upon the election of the directors to be elected at the 20122013 Annual Meeting. Mr. Tsuha has decided that he will not stand for re-election, as he sold his company in 2012, retired and moved to Hawaii. The Board has (upon the recommendation of the Company’s Nominating Committee), nominated Fred Bauer, Gary Goode,Pete Hoekstra, John Mulder and James WallaceFrederick Sotok for election as directors at the Annual Meeting, each to serve a three-yearone-year term expiring in 2015. The Restated Articles of Incorporation currently require three-year terms.2014.

Unless otherwise specifically directed by a shareholder’s marking on the Proxy Card or Voting Instruction Form, or in directions given either via the Internet or telephone, the persons named as Proxy voters in the accompanying Proxy will vote for the nominees described above and below. If any of these nominees becomes unavailable, which is not now anticipated, the Board may designate a substitute nominee, under the recommendation of the Nominating Committee, in which case the accompanying Proxy will be voted for the substituted nominee. Proxies cannot be voted for a greater number of persons than the number of nominees named.

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A plurality of votes cast by shareholders at the meeting is required to elect directors of the Company under Michigan law. Accordingly, the three nominees who receive the largest number of affirmative votes will be elected, regardless of the number of votes received. Notwithstanding the foregoing, the Company, in response to a shareholder proposal and with the proponent’s concurrence with the Company’s implementation of the same, amended its Bylaws to provide that if a director is elected by less than a majority of the votes cast, then such director shall promptly tender his or her resignation by written notice to the Board of Directors. Each of the nominees has agreed to tender his resignation by writing to the Board if he is not elected by a majority of votes cast. Broker non-votes and votes withheld will not have a bearing on the outcome of the election (though the Nominating Committee and Board of Directors will consider abstentions in making future nominations). Votes will be counted by Inspectors of Election appointed by the presiding officer at the Annual Meeting.

The Board of Directors recommends a voteFOR the election of all persons nominated by the Board.

The content of the following table relating to age and business experience is based upon information furnished to the Company by the nominees and directors, as of March 1, 2012.February 14, 2013.

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COMMON STOCK OWNERSHIP OF MANAGEMENT

The following table contains information with respect to ownership of the Company’s common stock by all directors, nominees for election as directors, executive officers named in the tables under the caption “EXECUTIVE COMPENSATION,” and all directors and such executive officers as a group. The content of this table is based upon information supplied by the Company’s named executive officers, directors and nominees for election as directors, and represents the Company’s understanding of circumstances in existence as of March 1, 2012.2013.

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COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table contains information with respect to ownership of the Company’s common stock by persons or entities that are beneficial owners of more than five percent of the Company’s voting securities as of December 31, 2011.2012. The information contained in this table is based on information contained in Schedule 13G furnished to the Company.13G.

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PROPOSAL TO AMEND THE RESTATED ARTICLES OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS

After careful consideration, the Board of Directors has decided to present to the shareholders a proposal to amend the Restated Articles of Incorporation to declassify the Board and provide for the annual election of all directors, as described below. The Board presents this proposal to the shareholders without recommendation.

Current Classified Board Structure

Pursuant to Article VI.C of the Restated Articles of Incorporation, directors are divided into three classes with each class as nearly equal in number as possible to all other classes. Directors are required to be elected to serve for a term which expires at the third annual meeting of shareholders after election. Consequently, at any given annual meeting of shareholders, the shareholders have the ability to elect only one class of directors, constituting roughly one-third of the entire Board. The Board may fill a vacancy on the Board by the affirmative vote of a majority of the remaining directors, with directors so appointed holding office until the next annual meeting of shareholders.

Proposed Declassification of the Board

The Board of Directors voted to present to shareholders for consideration at the Annual Meeting, an amendment to the Restated Articles of Incorporation that would eliminate the Board’s classified structure. If the shareholders approve the proposed amendment, directors who have been elected to three-year terms prior to the effectiveness of the amendment (including directors elected at the 2012 Annual Meeting) will complete those terms. Beginning with the 2013 Annual Meeting, directors whose previous terms are expiring will be subject to election for a one-year term expiring at the next annual meeting. Thus, beginning with the 2015 Annual Meeting, the entire Board will be elected annually.

Rationale for Declassification

The Board of Directors is committed to good corporate governance. Accordingly, in determining whether to present declassification as described above to the shareholders for vote, the Board carefully reviewed the various arguments for and against a classified board structure and took into account the vote of the shareholders at the Company’s 2011 Annual Meeting into account.

The Board of Directors continues to believe that a classified structure offers several advantages, such as promoting board continuity and stability, independence among directors, encouraging directors to take a long-term perspective, and reducing a vulnerability to coercive takeover tactics. The Board also recognizes, however, that the shareholders expressed a preference for the declassification of the Board at the 2011 Annual Meeting.

Text and Effectiveness of Proposed Amendment

The text of the proposed amendment is set forth in Appendix A to this Proxy Statement (marked to show changes from the existing language). If the shareholders approve the proposed amendment, it will become effective upon the filing of a Certificate of Amendment to the Restated Articles of Incorporation with the Michigan Department of Licensing and Regulatory Affairs, which the Company would do promptly after the Annual Meeting. If the shareholders do not approve the proposed amendment, the Board of Directors will remain classified.

Votes Required

The affirmative vote of shareholders holding at least two-thirds of the Company’s issued and outstanding common stock is required to approve the proposed amendment. Accordingly, you may vote on the following resolution at the 2012 Annual Meeting of Shareholders:

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RESOLVED, that the Restated Articles of Incorporation be amended to provide for the annual election of all directors, beginning at the 2013 Annual Meeting of Shareholders, provided that any director in office at the 2013 Annual Meeting of Shareholders may complete the term to which he has been elected and to make such other conforming and technical changes to the Restated Articles of Incorporation as may be necessary or appropriate.

THE BOARD OF DIRECTORS IS NEUTRAL WITH RESPECT TO THE AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS.

SHAREHOLDER PROPOSAL BY WALDEN ASSET MANAGEMENT

A shareholder, Walden Asset Management, a division of Boston Trust & Investment Mortgage Company (“Walden”), One Beacon Street, Boston, Massachusetts 02108, has informed the Company that it intends to present the proposal set forth below at the Company’s Annual Meeting of Shareholders on May 17, 2012.16, 2013. The total number of voting securities held by the proponent is approximately 14,960was 167,910 shares as of September 1, 2011.October 9, 2012. The proposal is co-sponsored by Tides FoundationPortico Benefit Services and Calvert Investments. The exact number of voting securities held by Walden or either of the co-filers, along with the co-filers’ addresses, will be provided to shareholders upon the Company receiving an oral or written request.

SUSTAINABILITY REPORTREPORTING SHAREHOLDER PROPOSAL

RESOLVED

Shareholders request that Gentex Corporation (Gentex) issue a sustainability report describing the company’s environmental, social and governance (ESG) performance,risks and opportunities including greenhouse gas (GHG) reduction targets and goals. The report should be available by SeptemberOctober 1, 2012,2013, prepared at reasonable cost, omitting proprietary information.

SUPPORTING STATEMENT

We believe tracking and reporting on ESG business practices makes a company more responsive to a transforming global business environment characterized by finite natural resources, changing legislation, and heightened public expectations for corporate accountability. Reporting also helps companies better integrate and gain strategic value from existing sustainability efforts, identify gaps and opportunities in products and processes, develop company-wide communications, publicize innovative practices, and receive feedback.

Today, companies such as Bloomberg provide information on ESG performance that investors including Goldman Sachs and Morgan Stanley utilize in investment decisions.

The Principles for Responsible Investment (PRI) is a United Nations initiative whose members seek the integration of ESG factors in investment decision making. Members collectively hold over $25$33 trillion of assets under management. PRI membersmanagement and require information on ESG factors to analyze fully the risks and opportunities associated with existing and potential investments.

Transparency on climate change abatement goals is one of the most financially significant environmental issues currently facing investors, who increasingly seek more active leadership from companies in which they invest.

Carbon Disclosure Project (CDP), representing over 550 institutional investors globally with $71more than $70 trillion in combined assets, requestshas for years requested disclosure from companies to measure and discloseon their GHG emissions and climate control change reduction strategies. The 2010 questionnaire response rate formanagement programs. Over two-thirds of the S&P 500 was 70%.

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CorporateSustainability reporting on sustainability is on the rise globally. In 2009,2011, there was a 25%46% increase in the number of organizations worldwide using the GRI guidelinesGlobal Reporting Initiative’s (GRI) Guidelines for their ESG reporting. In the U.S., a 20% increase in documented GRI usage was reported from 2009reporting according to 2010. Increasingly, small and medium capitalizationG&A Institute. Smaller companies are following this trend.

proactively adopting sustainability reporting to report on progress as they grow. Gentex industry peers Asahi Glass and Magna International publish key sustainability factors. In contrast, Gentex does not report on its sustainability efforts nor disclose GHG data.

Companies such as 3M, Apple, Intel and does not disclose specific GHG dataMicrosoft, among many others, increasingly require their suppliers to track and report on key environmental and social factors. Likewise, Gentex customers such as Ford Motor Company and BWM seek ESG performance information to use in their supplier selection programs. Moreover, these and other members of the Automotive Industry Action Group also seek greater transparency on sustainability initiatives.

Gentex states on its website that it has established objectives “to minimize . . . the creation of waste, pollution and adverse impacts on the environment associated with company activities, products or management plans.

Occupational safety and health, vendor and labor standards, waste and water reduction targets and product-related environmental impacts are particularly important factors and have the potential to pose significant regulatory, legal, reputational and financial risks. Shareholdersservices.” However, shareholders currently have no access to substantial information on how the company is meeting these goals or managing these business factors.factors or meeting these goals.

Moreover,

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Information required by investors includes occupational safety and health performance, vendor and labor standards and practices, waste and water reduction targets and product-related environmental impacts. These have the potential to pose significant Gentex customers like Ford Motor Company are increasingly requesting that suppliers expand disclosure of material ESG issues.regulatory, legal, reputational and financial risks if not properly managed.

In 2009, 33% voted in favor and in 2010 38%2012 fully one-third (32.5%) of shares (voting for andor against) supported our proposal forthis sustainability reporting.reporting proposal.

We recommend theThe report should include a company-wide review of policies, practices and metrics related to environmental, socialESG performance using the GRI index and governance performance and that Gentex commit to continuous improvement in reporting. We encourage the use of the Global Reporting Initiative (GRI) Guidelines (G3). The GRI (www.globalreporting.org) ischecklist as a globally accepted reporting framework considered the gold standard of reporting which allows companies to report incrementally over time.reference.

STATEMENT IN OPPOSITION TO SUSTAINABILITY REPORT

SHAREHOLDER PROPOSAL

The Board of Directors unanimously recommends a vote AGAINST the foregoing shareholder proposal.

The Board believes that approval of the proposed resolution is not in the best interests of the Company or its shareholders. The Company already recognizes the importance, as both an ethical and a business responsibility, of addressing the environmental and social impacts of our business. Our Code of Business Conduct and Ethics, posted on our website, reflects our commitment to conduct business in accordance with the letter and spirit of all applicable laws, rules, and regulations, and to avoid even the appearance of impropriety. In addition, as the Company has repeatedly disclosed,the Company has in place an environmental management system, which demonstrates the high priority the Company places on conducting business in a sustainable manner, while protecting the health and safety of team members, partners, and the communities in which we operate.In fact, the Company’s terms and conditions for its suppliers include provisions requiring introduction and maintenance of effective environmental systems at those suppliers.

In addition,the Company has achieved ISO 14001 certification, which requires a structured management system to achieve and demonstrate sound environmental performance by controlling the impact that activities, products, and services have on the environment. Pursuant thereto,a third-party audit is conducted on site annually with Company management to ensure continued compliance. Furthermore, the Company consistently strives for continual improvement and periodically establishes and reviews objectives and targets to minimize the creation of waste, pollution, and adverse impacts on the environment. Management and team members of all levels are expected to support our environmental management system and carry out their responsibilities consistent with the foregoing.

The Company also meets or exceeds all automotive industry standards, such as the End of Life Vehicles directive, and uses industry resources, such as the International Material Data System (a web-based system that provides automotive suppliers with a common format to report substances of concern within manufactured parts). Overall, the Company’s environmental management system encompasses energy efficiency, recycling, air quality, water quality, and waste disposal, among other issues. The Board believes those familiar with the primary industry in which the Company operates already know about and understand the Company’s sustainability practices precisely because of our primary industry. Nevertheless, the

The Company has offered, more than once,also engaged in discussions with the proponent (including an offer by the Company to produce an Environmental Report that would be updated periodically addressing the above, (with proprietary information redacted), and to provide a link to that document on the Company’s website in response to the proposed resolution. That offer,resolution). The proponents would, however, haslike more detailed information which we do not been satisfactory to the proponents who feel the offered report was too heavily redacted.believe is viewed as necessary by a majority of our shareholders.

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The Company already demonstrates (and will continue to demonstrate) genuine concern about the relevant issues that would be covered in a sustainability report requested by the proponents (and has communicated with and engaged the proponents as noted above). Quite simply, the industries in which the Company operates already require us to do so, as those familiar with ISO 14001 and automotive industry requirements already understand. As such, the Company’s shareholders can in fact access the Company’s performance with respect to environmental matters, notwithstanding that the proponents’ incorrect claimCompany chooses not to the contrary.disclose specific objectives and targets.The amount of time, effort, and other resources (monetary, etc.), however, required to produce and maintain a sustainability report in the form recommended by the proponents would, in the Company’s estimation, divert significant resources that the Board believes should be focused on managing and growing the Company with new technology, product development and sales in a stillan ever increasingly uncertain automotive industryindustry..Importantly, Importantly, such a report would not change existing compliance practices, as the Company’s existing practices are already sound.The Board of Directors strongly feels that preparing such a sustainability report would be an unnecessary and imprudent use of the Company’s resources.resources.

The unwillingness to accept disclosure of an Environmental Report updated periodically, as discussed above, and recommending that the Company use the Global Reporting Initiative’s Sustainability Reporting Guidelines (the “Guidelines”),(GRI) index and checklist as a reference, demonstrates the desire for a report that, based on the Company’s interaction with shareholders to date, ranges far beyond the issue of sustainability, and would not be of sufficient value in light of the resources necessaryrequired to produce it. The Guidelines (identified

As demonstrated by the proponents asreference to the “gold standard of reporting”) address not only environmental performanceGRI index and product responsibility, but also topics such as occupational safety and health, vendor and labor standards, and waste and water reduction targets, among others which, again,checklist, the Company continues to believe that the proponent would require significant resources to report on.

A review of the Global Reporting Initiative’s website (www.globalreporting.org) demonstrates thattheGuidelines are nearly 200 pages in length and appear to be generally more appropriate forlike reports most often produced by global companies with multi-billions of dollars in annual revenues and significant global environmental footprints (as(as opposed to the Company, which has very centralized, domestic manufacturing)manufacturing located in Zeeland, Michigan).While other companies of similar size may use the Guidelines,such references, the Company does not see the benefit given thegiven:

In fact, such Guidelinesthe standards suggested by the proponent are much more commonly used internationally than they are in the U.S. In the Company’s opinion, the recommended use of the Guidelines, in addition to our interactions with the proponents, demonstrate a certain disconnect with the Company in terms of our size,clean centralized domestic manufacturingenvironment and processes (as required by Company policy as well as industry standards), footprint and staffing. It is unclear to the Company how the Company can construct and prepare a sustainability report that would be satisfactory to the proponents and provide any benefit to our shareholders that the Company would consider meaningful, especially considering what the Company has already offered the proponents in terms of disclosure as noted above. Environmental matters, sustainability, and the othersimilar topics covered in the Guidelines have rarely been a topic of discussion in the Company’s interactions with the investment community over many years (including the Company’s largest shareholders), and the Company believes, that based on interaction with our shareholders (especially our largest shareholders), that our shareholders are satisfied with the Company’s performance in these areas.areas as those shareholders fully understand the sustainability requirements the Company already meets or exceeds by virtue of the primary industry in which we operate (including our customer requirements). Notwithstanding the foregoing,the proponents (with the primary proponent being a self-described socially responsible investor) believe that the Company should follow guidelines to an extent that the Company believes is more appropriately intended forstandards which are most often used by organizations with footprints that are vastly larger and more geographically disbursed than the Company.Company’s centralized manufacturing in Zeeland, Michigan.

While the proponent cites the vote of shareholders on a similar proposal last year (32.5% of votes cast), it fails to mention that such vote represents a decrease in support for a similar proposal in 2011 (38% of votes cast), as well as the fact that in 2012 and 2011 only approximately 25% of the outstanding shares of the Company supported such proposals. While the number of outstanding shares voting in favor of similar proposals may not be relevant to the passage of such proposals, it does provide the Board of Directors an indication of how important this issue is to our shareholders overall.

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The proponents’ resolution, if implemented, will, in the Company’s opinion, require an excessive amount of Company time, effort, and money when compared with any incremental benefit. The Company has a long history of dedication to good corporate citizenship.Preparing the requested report would, in the Company’s estimation, deplete human and financial resources without providing any meaningful or demonstrable benefit to our shareholders, our employees, or the communities in which we operate. Such a report would not change existing compliance practices, as the Company’s existing practices are already sound.sound (and are demonstrated by virtue of operating within our primary industry), nor do we believe it would provide any strategic value or make the Company more responsive to sustainability concerns. Again, we do not believe it is in the best interests of our shareholders for the Company to add staff and spend additional time and money to develop a report that lacks an immediate and tangible return for our shareholders.The Board believes that it is far more important to the majority of the Company’s shareholders that management continues to focus on improving areas of the Company that can provide tangible results to our shareholders.

Again, and for all of the above reasons, the Board of Directors unanimously recommends that you voteAGAINST this shareholder proposal.

Any approval of the shareholder proposal requesting that the Board of Directors issue a sustainability report would require a majority of the votes cast by holders of the shares entitled to vote at the Annual Meeting of Shareholders.Shareholders, although further Board action would still be required for implementation.

SHAREHOLDER PROPOSAL BY THE CHRISTOPHER REYNOLDS FOUNDATION

A shareholder, The Christopher Reynolds Foundation, 135 East 83rd Street, 15A, New York, New York 10028, has informed the Company that it intends to present the proposal set forth below at the Company’s Annual Meeting of Shareholders on May 16, 2013. The total number of voting securities held by the proponent was 425 shares as of September 26, 2012. The exact number of voting securities held by The Christopher Reynolds Foundation will be provided to shareholders upon the Company receiving an oral or written request.

SEPARATE CHAIR AND CEO – GENTEX

RESOLVED: The shareholders request the Board of Directors to adopt as policy, and amend the bylaws as necessary, to require the Chair of the Board, whenever possible, be an independent member of the Board. This policy should be phased in for the next CEO transition. Compliance with this policy is waived if no independent director is available and willing to serve as Chair.

Supporting Statement:

We believe:

CEO Fred Bauer now serves both as CEO and Board Chair. We believe the combination of these two roles in one person weakens a corporation’s governance structure, which in turn can harm shareholder value.

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As Intel’s former chair Andrew Grove stated, “The separation of the two jobs goes to the heart of the conception of a corporation. Is the CEO an employee? If he’s an employee, he needs a boss, and that boss is the Board. The Chairman runs the Board. How can the CEO be his own boss?”

We believe shareholders are best served by an independent Board Chair who provides a balance of power between the CEO and Board and supports strong Board leadership. The primary duty of a Board of Directors is to oversee a company’s management on behalf of its shareholders. We believe a combined CEO/Chair can result in excessive management influence on the Board and weaken oversight of management.

Numerous institutional investors recommend separation of these two roles. For example, CalPERS’ Principles & Guidelines encourage separation, even with a lead director in place.

Chairing the Board is a time intensive responsibility. A separate Chair enables the CEO to focus exclusively on managing the company and building effective business strategies.

We believe separating the roles of Chair and CEO also increases accountability of the Board to shareholders, avoids conflict of interest, improves oversight of risk and can improve the company’s focus on important governance and environmental matters.

An independent Chair is the prevailing practice in the United Kingdom and many international markets and it is an increasing trend in the U.S. Globally in 2009 less than 12 percent of incoming CEOs were also the Chair, compared with 48 percent in 2002 according to a Booz & Co. 2010 study. (CEO Succession 2000-2009: A Decade of Convergence and Compression).

Shareholder resolutions urging separation of CEO and Chair averaged approximately 36% support with 48 companies in 2012.

To ensure a simple transition, we propose this policy be phased in when the next CEO is chosen.

STATEMENT IN OPPOSITION TO INDEPENDENT CHAIR SHAREHOLDER PROPOSAL

The Board of Directors unanimously recommends a vote AGAINST the foregoing shareholder proposal.

The Board believes that approval of the proposed resolution is not in the best interest of the Company or its shareholders. The Board believes strongly that it is in the best interests of the Company and its shareholders for the Board to have flexibility to determine the person most qualified to serve as Chairman of the Board, whether that person is an independent director or otherwise. Currently, the Board leadership structure consists of a Chairman, who is also the Chief Executive Officer, but the Board also has strong influence from independent directors who constitute a super majority of the Board, with those independent directors now being led by a Lead Independent Director elected under the Company’s Lead Independent Director Policy (attached as Appendix A to this Proxy Statement). The independent members of the Board continue to have as an agenda item, in connection with each Board meeting, the opportunity to meet. The Board believes this structure currently provides the optimum benefit of having the CEO, who is most familiar with day-to-day operations, chair regular Board meetings while maintaining the strong influence and appropriate oversight of the independent directors. Nevertheless, the Lead Independent Director has the authority to: preside at meetings of the Board at which the Chairman is not present; preside at and schedule meetings of independent directors; approve all information sent to the Board, including Board agendas and meeting schedules; serve as liaison between independent directors and the Chairman; be available for consultation with major shareholders; and retain advisors.

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The proponent states that having the CEO serve as Board Chair weakens a corporate governance structure. The Board disagrees with this in light of the role that the current Chairman and CEO has played in 35 plus years of service, during which the Company’s market capitalization has grown from $17 million to approximately $2.9 billion as of the record date. Mr. Bauer’s service as the Chairman and CEO have been a key and integral part of the Company’s growth and success, which may not have occurred or been the same without such service.

The Board believes that the optimal leadership structure depends on the needs of the Company as well as the makeup of the Board. The Board also understands that its leadership structure is likely to evolve, and acknowledges that having an independent director serve as Chairman may, at some point in the future, be in the best interests of the Company and its shareholders. With that said, the current structure provides for clear accountability (avoiding dilution of leadership); allows the Board to focus on key policy and operational issues; and creates consistency of leadership (while at the same time getting appropriate independent oversight of the independent directors, including the Lead Independent Director). To prohibit, by policy, service by someone in the future like Mr. Bauer does not, in the Board’s estimation, make sense. Not providing the Board with the flexibility to do what is in the best interests of the shareholders is unnecessarily rigid.

The Company takes seriously its commitment to good corporate governance, which has been demonstrated by responsiveness to shareholders (e.g., declassification of the Board and implementation of majority voting by director resignation bylaw in response to shareholder proposals); by adoption of the Lead Independent Director Policy (see Appendix A); and by implementation of a longstanding compensation system which is relatively low in base salary and emphasizes stock-based compensation (so our executives’ interests are aligned with those of other shareholders). Anyone who analyzes the long-term compensation structure and practices of the Company would be forced to admit that the Board, including the Chairman, has acted in the best interests of the shareholders, without conflicts of interest in this important area of corporate governance.

The Board understands that independent directors who are forthright, engaged, and assertive are important to investor-sensitive management, and that is exactly what is already in place at the Company (including a Lead Independent Director). That fact, combined with the Company’s excellent track record of performance and good governance, makes a fixed policy regarding an independent Chairman unnecessary and could unduly impair the Board’s ability to elect the individual deemed best suited to serve as Chairman, especially given that a Lead Independent Director is already in place. It would seem that the proponent is at least tacitly agreeing that there are circumstances where it is best to have one person serve as both Chairman and CEO by virtue of the proponent’s suggestion that the phase-in of such a policy occur when the next CEO is named. The Board certainly agrees that there are circumstances where it is best to have the Chairman and CEO roles filled by one person, and believes it should continue to have such flexibility in the future, so as to be able to implement a leadership structure that most efficiently addresses the purpose and mission of the Company (while at the same time facilitating meaningful oversight of implementation of Company plans).

Again, and for all of the above reasons, the Board of Directors unanimously recommends that you vote AGAINST this shareholder proposal.

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Any approval of the shareholder proposal requesting that the Board of Directors adopt as policy to require the Chair of the Board, whenever possible, be an independent member of the Board would require a majority of the votes cast by holders of the shares entitled to vote at the Annual Meeting of Shareholders, although further Board action would still be required for implementation.

CORPORATE GOVERNANCE

The Company operates within a comprehensive plan of corporate governance as written herein for the purpose of defining responsibilities, setting high standards of professionalism and personal conduct, and assuring compliance with such responsibilities and standards. The Company regularly monitors developments in the area of corporate governance.

The Board of Directors has an Audit Committee, a Compensation Committee, and a Nominating Committee, and, in accordance with the Company’s Bylaws, may appoint other committees from time to time. Each committee has a written charter. All such charters, as well as any documents marked with an asterisk (*) in this Proxy Statement, are available under the heading “Corporate Governance” on the Company’s internet web site athttp://ir.gentex.com. A hard copy of any of these documents will be provided to any shareholder who submits a request in writing to the Corporate Secretary, Gentex Corporation, 600 North Centennial Street, Zeeland, MI 49464.

Each member of the Board of Directors is expected to make a reasonable effort to attend all meetings of the Board, all applicable committee meetings, and each annual meeting of shareholders. While no formal policy with respect to attendance has been adopted, attendance at these meetings is encouraged and expected. All members of the Board attended the 20112012 Annual Meeting of Shareholders. Each of the current members of the Board is expected to attend the 20122013 Annual Meeting of Shareholders.Shareholders (along with the one first-time nominee). During 2011,2012, the Board met onheld four occasions.Board meetings and two informational sessions (during which a meeting was not formally called to order). All directors attended at least 75%75 percent of the aggregate number of meetings of the Board and Board committees on which they served.

Responsiveness to Shareholders

Lead Independent Director/Independent Directors

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Board of Directors Leadership Structure

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Audit Committee

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Compensation Committee

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Nominating Committee

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Codes

Shareholder Communication with Members of the Board of Directors

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Personal Loans to Executive Officers and Directors

Director and Executive Officer Stock Transactions

Risk Oversight

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Report of the Audit Committee Report

The primary purpose of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities for management’s conduct of the Company’s accounting and financial reporting processes and the Company’s system of internal controls regarding finance, accounting, legal compliance and ethics. The Audit Committee’s function is more fully described in its Charter, which the Board has adopted and is available on the Company’s website. The Audit Committee reviews this Charter on an annual basis. The Board annually reviews the NASDAQ listing standards’ definition of independence for audit committee members and has determined that each member of the Audit Committee meets that standard.

Management is responsible for the preparation, presentation, and integrity of the Company’s financial statements, and financial reporting principles, internal controls and procedures designed to ensure compliance with accounting standards, applicable laws and regulations. The Company’s independent auditors, Ernst & Young LLP, are responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles.

Pursuant to a meeting of the Audit Committee on February 15, 2012,13, 2013, the Audit Committee reports that it has: (i) reviewed and discussed the Company’s audited financial statements with management; (ii) discussed with the independent auditors the matters required to be discussed by the statement on Auditing Standards No. 61, as amended (AICPA,Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T; and (iii) received the written disclosures and the letter from the independent accountants required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with the independent accountant the independent accountant’s independence. Based on the review and discussions referred to in Items (i)-(iii) above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s annual report on Form 10-K for the year ended December 31, 2011,2012, for filing with the Securities and Exchange Commission.

The Audit Committee has selected Ernst & Young LLP as the Company’s independent auditors for the year ending December 31, 2012,2013, and has submitted the same to the shareholders for ratification at the Annual Meeting.

This report of the Audit Committee does not constitute “soliciting material” and should not be deemed “filed” or incorporated by reference into any of the other Company filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically requests that the information be treated as soliciting material or specifically incorporates this report by reference therein.

February 15, 201213, 2013

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Compensation Committee Report

The primary purpose of the Compensation Committee of the Board of Directors of the Company is to assist the Board in discharging its responsibilities related to compensation of the Company’s executives. The Compensation Committee’s function is more fully described in its Charter, which the Board has adopted and is available on the Company’s website. The Compensation Committee reviews its Charter on an annual basis, recommending changes to the Board when and as appropriate. The Compensation Committee is comprised of three members, each of whom the Board has determined meets the appropriate independence tests for compensation committee members under the NASDAQ listing standards.

Pursuant to a meeting of the Compensation Committee held on February 15, 2012,13, 2013, the Compensation Committee reports that it has reviewed and discussed the Company’s Compensation Discussion and Analysis with management. Based on the above-referenced review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s annual report on Form 10-K for the year ended December 31, 2011,2012, and this Proxy Statement, for filing with the Securities and Exchange Commission.

This report of the Compensation Committee does not constitute “soliciting material” and should not be deemed “filed” or incorporated by reference into any of the other Company filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically requests that the information be treated as soliciting material or specifically incorporates this report by reference therein.

February 15, 201213, 2013

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COMPENSATION DISCUSSION AND ANALYSIS

Introduction

Overview of Our Compensation System

The Primary Objectives Are:

The Elements Comprise:

What We Emphasize Stock-Based IncentivesDo:

What We Do Not Do:

Responsibilities

Compensation Committee. The Compensation Committee of our Board of Directors is appointed to assist our Board in discharging its responsibilities relating to the compensation of our executives. The Compensation Committee:

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The Chief Executive Officer and other members of management attend meetings of the Compensation Committee at the request of the Committee. The Compensation Committee does, however, meet in executive session as appropriate. The Compensation Committee has the authority to engage outside consultants and advisors to advise the Committee with respect to compensation of executives, in its discretion, but has not done so to date.

Board of Directors. The Board of Directors has responsibility to annually assess our director compensation program. Members of management attend meetings of the Board at the Board’s request, but the Board meets in executive session when required.

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Role of Executives in Establishing Compensation

While the Compensation Committee is responsible for recommending CEO and other executive officer compensation to the Board of Directors for approval in accordance with the Compensation Committee Charter, the CEO in particular provides input and makes recommendations to the Compensation Committee with respect to compensation decisions for non-CEO executive officers. In fact, the CEO (along with management) is primarily responsible for making compensation decisions for our other employees within guidelines established by the Compensation Committee. The Compensation Committee does, however, review and approveall stock-based awards. Since the Compensation Committee and the entire Board recognize that the CEO and other executive officers have the greatest opportunity to influence our performance, our Compensation Committee concentrates its efforts on establishing proper rewards and incentives for executive officers. This structure provides our CEO and executive officers the freedom to influence and motivate our employees to positively impact our Company performance within the guidelines established by the Compensation Committee.

Compensation Committee Activity

During fiscal year 2011,2012, the Compensation Committee met six times and also met in February of 20122013 to approve the Compensation Committee Report included in the Proxy Statement. Included in the activities of the Compensation Committee was a review of each element of compensation payable to named executive officers, as well as the total compensation payable to them, by use of an Executive Officer Compensation Tally Sheet and Stock Appreciation Tally Sheet. These Tally Sheets total aggregate compensation for the current year and for a certain number of previous years so that compensation decisions of the Compensation Committee and the Board can be placed in the appropriate context.

Consistency

The global financial crisis, among other circumstances, prompted a shift in attitudes with regard to executive pay, as demonstrated by changing pay practices and certain requirements of the Dodd-Frank Act. The Company, however, has not wavered from its compensation philosophy and has maintained consistency in aligningthe entirety of its compensation program structure and features which are intended to align the interests of executives and employees with those of our shareholders.

Objectives of Compensation Program

Compensation Philosophy. Our compensation program is comprised of three fundamental elements:

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These elements are intended to reflect our cultural emphasis on all team members sharing in the financial opportunities and sacrifices at our Company, just as our shareholders do and are intended and structured to avoid encouraging excessive and unnecessary risk taking. The compensation program is designed in light of our desire to maintain an entrepreneurial culture and to incentivize desired performance and growth. The elements of compensation are utilized to accomplish several objectives, including:

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The compensation program is available to all of our salaried employees generally and in operation provides for the same method of allocation of benefits between executive and non-executive participants. Our compensation program is reviewed and compared to market periodically, though it has not changed significantly in a number of years due to the fact it has continued to accomplish its objectives. Ingenuity of our employees, employee turnover, employee morale, ability to hire, and individual and Company performance are important factors in determining whether our compensation program is consistent with our philosophy and is meeting its objectives. No changes to our compensation system were made this past year based on the determination that our compensation system continues to accomplish its objectives.

Compensation Elements in General

As noted above, the compensation program is comprised of three fundamental elements: (1) base salary; (2) bonus; and (3) stock-based incentives.

Base Pay. Base compensation for executive officers is predicated primarily on:

Historically, base salaries for our employees have been relatively low, and stock-based compensation has received more emphasis to encourage and implement our entrepreneurial culture. A variety of factors are considered concerning executive officer compensation which are discussed in more detail below.

Bonuses. Bonus compensation is comprised of two elements:

All of our full-time employees, including the CEO and other executive officers, are eligible to share in our Profit-Sharing Bonus Plan after they have completed one full calendar quarter in our employ. A percentage of pre-tax income, in excess of an established threshold for shareholder return on equity is distributed quarterly to eligible employees under this plan. During 2011,2012, this Profit-Sharing Bonus Plan paid approximately $22,889,376$23,556,406 to approximately 3,2233,436 employees. In addition, discretionary performance bonuses may be awarded to various managerial and technical employees, including named executive officers, based on individual performance and our overall performance.

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Stock-Based Compensation. Stock-based compensation is intended to align the interests of shareholders and executives and other employees by making our executives and other employee shareholders in a meaningful amount. We attempt to foster and maintain an entrepreneurial culture that seems to work best when our employees are owners and, therefore, win when our shareholders win. History and the current climate have confirmed for us that stock-based compensation provides appropriate incentives to incent long-term performance and is also a good retention tool. Stock-based compensation includes:

Stock options are granted under our Employee Stock Option Plan and restricted stock is granted under our Second Restricted Stock Plan, each of which has been approved by our shareholders. Our stock-based incentives vest over time to encourage our employees to take a long-term perspective.

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Details of Compensation Program Design

The fundamental elements of our compensation program allow compensation to be impacted by our overall performance and by individual performance as well.

Impact of Performance on Compensation

Each year, the Compensation Committee undertakes a CEO performance review which involves a multi-step process. First, the entire Board of Directors evaluates CEO performance on a variety of factors including:

The Compensation Committee gathers the results of this evaluation. The Compensation Committee then considers these evaluations and discusses the same with the CEO. Based on the foregoing, the Compensation Committee then makes CEO compensation recommendations to the entire Board of Directors. Pursuant to this process, the CEO’s base salary, discretionary performance bonus, and stock-based awards are determined and approved by the Board. Evaluations are also undertaken for non-CEO executive officers. Through these evaluation processes, the Compensation Committee and the Board can exercise positive or negative discretion concerning compensation decisions. Evaluations of all our employees take place on or about the employee’s anniversary date of employment. Specific performance targets are not used as we have found that emphasizing stock-based compensation has not required them.

Instead, the Compensation Committee considers the foregoing factors in varying degrees. In its 20112012 review of CEO performance which occurred in addition to favorable overall rankings,August 2012, the Compensation Committee in particular noted high ratings for leadership and financial performance (with the Board stressed positive aspects of Directorsperformance during the preceding twelve months, and also desiring continuing strategic planningduring the previous three years (including strong results in terms of sales and succession planning efforts)profits). ThoseThe review also addressed year-over-year changes in performance with regard to certain of the factors among others,listed above. A variety of factors were considered by the Compensation Committee and the Board of Directors in determining CEO compensation. Overall, the 2011 review noted that CEO performance was deemed to be consistent with previous years.

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Specifics on Elements of Compensation for 20112012

Tables. The “Summary Compensation Table for 2011”2012” shows the base salary, bonuses, stock awards, stock option awards and other compensation for each of our named executive officers. Total compensation for each applicable named executive officer is also reflected in that Table. The “Grants of Plan-Based Awards for 2011”2012” Table demonstrates our emphasis on stock-based compensation. The “Outstanding Equity Awards at Fiscal Year-End December 31, 2011,2012,” Table and the “Option Exercises and Stock Vested for 2011”2012” Table further demonstrate the aligning of our executive officers’ interests with those of our shareholders. We continue to believe these compensation elements and the mix of these elements are appropriate for the Company given its culture, performance, industry, and current opportunities and challenges.

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Base Salary.Salary. The base salaries for our named executive officers are set forth in the “Summary Compensation Table for 2011.2012.” The Company approved guidelines for 20112012 that salaried employees, including executive officers, were eligible for an increase in base salary of up to 4 percent per year for performance alone, and up to 10 percent per year total if increased responsibilities are undertaken (or, potentially more in the case of a promotion). These guidelines have not changedbeen revised for 2012.2013 to provide that salaried employees, including executive officers, are eligible for an increase in base salary of up to 3 percent in the case where no additional responsibilities have been undertaken.

Bonuses. Profit-Sharing Bonuses, in accordance with the above-described formula, and discretionary performance bonuses for named executive officers are also set forth in the “Summary Compensation Table for 2011.2012.” The Company has approved a guideline such that employees, including executive officers, are eligible for discretionary performance bonuses of up to 30 percent of base salary (or, potentially more, in the case of exemplary performance), based on individual and Company performance as determined in the evaluation process.

Discretionary bonuses reflect our Compensation Committee’s and Board of Directors’ positive and negative discretion. As noted, the Compensation Committee and the Board generally prefer to emphasize stock-based compensation for the CEO, which evidenced by the CEO not receiving a discretionary bonus in 20112012 or 2010.2011.

Stock-Based Compensation. Our named executive officers are also eligible to receive grants of stock options under our Employee Stock Option Plan and grants of restricted stock under our Second Restricted Stock Plan. The Company has approved guidelines so that stock option awards up to an established percentage may be made under our Employee Stock Option Plan and restricted stock awards of up to an established percentage may be made under our Second Restricted Stock Plan, which guidelines in operation provide for the same method of allocation of benefits between executive and non-executive participants. During 2011:2012:

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These awards are predicated on both individual and company performance, while creating incentives to help achieve our long-term goals and align employee interests with those of our shareholders. In particular, in the case of our CEO, the Compensation Committee prefers stock option grants to the CEO rather than more significantly increasing base pay and discretionary bonuses to a level that would be more commensurate with the market for chief executive talent. In light of the fact that our CEO’s base pay is relatively low, and the fact that he received no discretionary bonus or restricted stock award, along with the Company’s emphasis as stock-based compensation, our CEO was granted the foregoing stock option award in 2011,2012, which will only benefit him if our shareholders benefit as well. While the variability of these compensation decisions among our executive officers demonstrates discretion with respect thereto, it also demonstrates how important it is to our culture for all our salaried employees to be compensated within the same parameters.

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Our Employee Stock Option Plan makes stock options generally available to all of our salaried employees. All options, including those granted to named executive officers, are granted to employees around the end of the quarter in which their anniversary date of employment occurs at scheduled meetings of the Compensation Committee (except in the case of CEO stock option grants, which are done when approved by the entire Board of Directors). Stock options are only granted at their fair market value on the date of Compensation Committee meetings with all such grants being reviewed and approved by the Compensation Committee (except CEO stock option grants, which are only granted at their fair market value on the date approved by the entire Board). Generally, stock option awards to officers have a seven-year term and become exercisable (as long as employment continues), for 20 percent of the shares on each anniversary of the grant date commencing on the first anniversary of the grant date, although a five-year term might be used in order to accommodate certain circumstances. Stock options for other employees generally carry a five- to seven-year term and similarly vest over time. Restricted stock awards are granted at the discretion of the Compensation Committee at scheduled meetings of the Compensation Committee. Generally, grants of restricted stock to eligible employees, including executive officers, are considered once every three years for each eligible employee. Usually, these share grants are restricted for five years from the date of grant, and as such are viewed as an important retention tool.tool (especially in light of the Company’s historically low base salaries). Dividends are paid on suchrestricted shares so granted if, and to the extent, we pay dividends on our common stock. The vesting schedules associated with stock option and restricted stock awards, in part, discourage excessive and unnecessary risk-taking (especially when considered in connection with the stock ownership guidelines for executive officers).

Other Compensation. All other compensation for named executive officers set forth in the Summary Compensation Table for 20112012 includes “matching” contributions by the Company pursuant to our 401(k) plan, restricted stock dividends, and the personal use of automobiles by certain executive officers, and certain fixed costs associated with the personal use of Company aircraft, as detailed in the notes to the Summary Compensation Table. Also, membership fees at a local country club are paid for the CEO as detailed in the notes to the Summary Compensation Table. We also make available to our executives Company aircraft for personal use, provided it does not conflict with any business purpose for the aircraft. All executives are required to reimburse the Company for the incremental costs for such use. The incremental cost to the Company related to personal use of Company aircraft is calculated using our average variable operating costs. Those average variable operating costs include fuel, maintenance, use tax and other miscellaneous variable costs. The fixed costs associated with the personal use of Company aircraft are included in an executive officer’s income as a taxable fringe benefit as reflected in the notes to the Summary Compensation Table. For tax purposes, the additional income is included in wages based on personal use of Company aircraft as reflected in the notes to the Summary Compensation Table.

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We do not generally utilize any employment agreements (and no employee currently has a written employment agreement) as it has been our practice that all employees, including the CEO and other executive officers, serve the Company on an at-will basis. Similarly, we do not have any “golden parachute” agreements or contracts with current employees that guarantee severance payments or any kind of deferred compensation arrangements.arrangements or other pensions.

Director Compensation

Our Board of Directors has responsibility for periodically assessing our director compensation program.

During 2011, our directors2012, each director who arewas not employeesan employee of the Company received:

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The Chairmen of our Compensation and Audit Committees also received an additional retainer fee in the amount of $3,000. The non-employee directors annual option to purchase 6,000 shares of our common stock is at a price per share equal to the closing price of our stock on the NASDAQ on the date of each annual meeting of shareholders in accordance with our shareholder approved Nonemployee Director Stock Option Plan. See the Director Compensation Table for 2011.2012. Like executives, Board members may make personal use of Company aircraft if such use does not conflict with any business purpose for the aircraft and provided the director reimburses us for the incremental cost of such use. No director used the aircraft for personal use during 2011.2012. We believe this director compensation to be reasonable and appropriate.

Stock Ownership

The Company has adopted Stock Ownership Guidelines (*) providing that executive officers should own three times their annual salaries in Company common stock and directors should own two times their annual director fees in Company common stock. As noted above, such guidelines help discourage excessive and unnecessary risk-taking in the context of the Company’s emphasis on stock-based compensation.

Impact of Regulatory Requirements

In making compensation design and award decisions, we have considered the ability to deduct compensation in accordance with Internal Revenue Code Section 162(m). We have also considered the impact of Section 16 of the Securities and Exchange Act of 1934 and rules promulgated thereunder. Since we do not have a deferred compensation plan, consideration of the impact of Internal Revenue Code Section 409A in compensation design and award decisions has not been significant. We have also, in the past, undertaken certain actions disclosed in our SEC filings with respect to the impact of expensing stock-based awards (including stock options) under FASB ASC Topic 718. The executive compensation disclosure rules applicable to annual reports and proxy statements after December 15, 2006, new rules effective February 28, 2010, with respect to the disclosure of compensation-related risks for all employees, certain matters related to compensation consultants, reporting of equity awards in the Summary Compensation table, and the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act related to compensation have had no material impact on our decisions regarding compensation. The shareholder advisory vote on named executive officer compensation occurring this year, as well as future shareholder advisory votes on named executive officer compensation will be considered by the Compensation Committee and Board of Directors in making future compensation decisions.

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Conclusion

We have reached the conclusion that each individual element of compensation, as well as the total compensation, delivered to our named executive officers and to our directors during 20112012 are reasonable, appropriate, and in the best interests of our Company and our shareholders. That determination is based on a continuation of our compensation philosophy and practices which we believe align both the short-term and long-term interests of our employees with those of our shareholders. It remains the case that each element of our compensation program is important to accomplishing the Company’s goals of creating an entrepreneurial environment so that our employees are motivated to remain with us, individually perform to the best of their abilities, and focus on our long-term success.

EXECUTIVE COMPENSATION

Summary Compensation

The following table sets forth the compensation earned by the principal executive officer, principal financial officer, and other executive officers for services rendered to the Company for the fiscal year ended December 31, 2011.2012.

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Summary Compensation Table for 20112012