UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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:

POWER SOLUTIONS INTERNATIONAL, INC.

(NamePayment of Registrant as Specified In Its Charter)

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

appropriate box): Payment of Filing Fee (Check the appropriate box):

Power Solutions International, Inc.

POWER SOLUTIONS INTERNATIONAL, INC.

201 Mittel Drive

Wood Dale, Illinois 60191

(630) 350-9400

March 18, 2016June 15, 2023

Dear Stockholder:Fellow Stockholders:

On behalf of the Board of Directors of Power Solutions International, Inc., Iand management, we cordially invite you to attend the 2016 Annual Meeting of Stockholders of Power Solutions International, Inc., which will be held on April 28, 2016, at 10:00 a.m., Central Time, at the offices of Power Solutions International, Inc., 101 Mittel Drive, Wood Dale, Illinois 60191.

The accompanying Notice of Annual Meeting of Stockholders and Proxy Statement describe matters that we expect will be acted upon at the Annual Meeting. Only stockholders of record at the close of business on March 4, 2016 may vote at the annual meeting or any adjournment or postponement thereof.

It is important that your views be represented, whether or not you are able to be present at the Annual Meeting. Please complete, sign and date the enclosed proxy card and promptly return it via mail, telephone or through the internet according to the instructions on the proxy card, whether or not you plan to attend the Annual Meeting. If you sign and return your proxy card without specifying your choices, it will be understood that you wish to have your shares voted in accordance with the recommendations of our Board of Directors contained in the Proxy Statement.

We are gratified by your continued interest in Power Solutions International, Inc. and urge you to vote your shares as soon as possible.

Sincerely,

Gary S. Winemaster

Chief Executive Officer, President and Chairman of the Board

Wood Dale, Illinois

March 18, 2016

POWER SOLUTIONS INTERNATIONAL, INC.

201 Mittel Drive

Wood Dale, Illinois 60191

(630) 350-9400

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON APRIL 28, 2016

To the Stockholders of

Power Solutions International, Inc.:

The2023 Annual Meeting of Stockholders of Power Solutions International, Inc. (the “Company”) on Tuesday, July 25, 2023, at 8:00 a.m. (Central Time) (the “Annual Meeting”). To facilitate broad stockholder attendance and provide a consistent experience to all stockholders, regardless of location, the Annual Meeting will be held on April 28, 2016, at 10:00 a.m., Central Time, at the offices of the Company, 101 Mittel Drive, Wood Dale, Illinois 60191, for the following purposes, as more fully described in the accompanying Proxy Statement:

(1) To re-elect Gary S. Winemaster, Kenneth W. Landini, Jay J. Hansen, Ellen R. Hoffing and Mary E. Vogtvirtually. You will be able to the Company’s Board of Directors, each for a one-year term expiring at the 2017 annual meeting of stockholders and until his or her successor is elected and qualified;

(2) To ratify the appointment by the Board of Directors of independent registered public accounting firm RSM US LLP as the independent auditors of the Company’s financial statements for the year ending December 31, 2016; and

(3) To act upon any other matters properly brought beforeattend the Annual Meeting online, vote your shares electronically, and submit your questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/PSIX2023 and entering the 16-digit control number included in your Notice of Stockholders.

Your vote is important. All stockholders are urgedInternet Availability of Proxy Materials (the “Notice”), on your proxy card or on any additional voting instructions accompanying these proxy materials. You will not be able to attend the meetingAnnual Meeting in person or by proxy. Whether or not you expect to be present at the meeting, please complete, sign and date the enclosed proxy card and return it promptly via mail, telephone or through the internet according to the instructions on the proxy card. Stockholders attending the meeting may vote in person even if they have previously returned proxy cards.person.

The Board of Directors has fixedproxy statement relates to our 2022 performance and compensation, which were affected by the close of business on March 4, 2016 as the record date for determining stockholders entitled to notice of,coronavirus pandemic, supply chain challenges, and to vote at, the meeting.

By Order of the Board of Directors,

Gary S. Winemaster

Chief Executive Officer, President and Chairman of the Board

Wood Dale, Illinois

March 18, 2016

POWER SOLUTIONS INTERNATIONAL, INC.

201 Mittel Drive

Wood Dale, Illinois 60191

(630) 350-9400

PROXY STATEMENT

inflationary cost pressures. The accompanying proxy is solicited by the Board of Directors (the “Board”) and management continues to execute the Company’s business objectives and has implemented certain actions to position the Company for improved financial results in the future. Details about the business to be conducted at the Annual Meeting and other information can be found in the attached proxy statement. As a stockholder of record, you will be asked to vote on three proposals.

Whether or not you plan to virtually attend the Annual Meeting, your vote is important. After reading the attached Notice, please submit your proxy or voting instructions promptly. We encourage you to vote your shares prior to the Annual Meeting.

On behalf of the Board and the management team, thank you for your continued support and interest in Power Solutions International, Inc.

Power Solutions International, Inc.

201 Mittel Drive

Wood Dale, Illinois 60191

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held on July 25, 2023

To the Stockholders of Power Solutions International, Inc.:

The 2023 Annual Meeting of Stockholders (the “Annual Meeting”) of Power Solutions International, Inc., a Delaware corporation for use(the “Company,” “PSI,” “we,” “our” or “us ) will be held on Tuesday, July 25, 2023, at its8:00 a.m. (Central Time). To facilitate broad stockholder attendance and participation and to provide a consistent experience to all stockholders, regardless of location, the Annual Meeting of Stockholders (the “Annual Meeting”) towill be held at 10:00 a.m., Central Time,virtually. You will be able to attend the Annual Meeting online, vote your shares electronically, and submit your questions during the Annual Meeting by visiting http://www.virtualshareholdermeeting.com/PSIX2023 and entering your 16-digit control number included in your Notice of Internet Availability of Proxy Materials (the “Notice”) and proxy statement, on April 28, 2016,your proxy card, or any additional voting instructions accompanying these proxy materials.

The Annual Meeting will be held for the following purposes:

These items of business, including the nominees for director, are more fully described in the proxy statement (the “proxy statement”) accompanying this notice.

The Board of Directors (the “Board”) has fixed the close of business on May 26, 2023, as the record date for determining the stockholders entitled to receive notice of and to vote at the officesAnnual Meeting and any adjournment or postponement thereof. Stockholders who hold shares in street name may vote through their brokers, banks or other nominees.

On or about June 15, 2023, the Company will mail to its stockholders the Notice containing instructions on how to access the proxy materials and vote on the matters described above.

Regardless of the Company, 101 Mittel Drive, Wood Dale, Illinois 60191,number of shares you own and at any adjournmentswhether you plan to virtually attend the Annual Meeting, please vote. All stockholders of record can vote (i) over the Internet by accessing the Internet website specified on the enclosed proxy card or postponements thereof. You may obtain directionsvoting instruction form and following the instructions provided to you, (ii) by calling the meeting location from our websitewww.psiengines.comtoll-free telephone number specified on the enclosed proxy card or voting instruction form and following the instructions when prompted, (iii) by written proxy by signing and dating the enclosed proxy card and returning it, or (iv) by attending the Annual Meeting over the Internet, as described in the “Contact Us” section, or by calling (630) 350-9400. This Proxy Statementmaterials accompanying this notice. If you submit your proxy and accompanying form ofthen decide to virtually attend the Annual Meeting to vote your shares electronically, you may still do so. Your proxy are being mailed to stockholders on or about March 18, 2016. As usedis revocable in this Proxy Statement,accordance with the terms “the Company,” “we,” “us” and “our” refer to Power Solutions International, Inc.

Our Annual Report to Stockholders forprocedures set forth in the fiscal year ended December 31, 2015 (“fiscal 2015”), consisting of our Annual Report on Form 10-K and containing financial and other information pertaining to the Company, is being furnished to stockholders simultaneously with this Proxy Statement.proxy statement.

TABLE OF CONTENTS

i

Who is entitled

ii

Power Solutions International, Inc.

201 Mittel Drive

Wood Dale, Illinois 60191

PROXY STATEMENT

FOR THE 2023 ANNUAL MEETING OF STOCKHOLDERS

To Be Held on July 25, 2023

This proxy statement and enclosed proxy card are being furnished to vote?

Only stockholders of record as of the close of business on March 4, 2016May 26, 2023 in connection with the solicitation by the Board of the Company of proxies for use in voting at the Annual Meeting to be held on Tuesday, July 25, 2023, at 8:00 a.m. (Central Time). To support the health and well-being of our employees, Board, stockholders and other meeting participants, and to facilitate broad stockholder attendance and provide a consistent experience to all stockholders, regardless of location, the Annual Meeting will once again be virtual. Stockholders may attend the Annual Meeting by visiting http://www.virtualshareholdermeeting.com/PSIX2023, or at any and all adjournments or postponements thereof, for the purposes stated in the Notice of Annual Meeting of Stockholders. You are receiving the proxy materials because the Board is seeking your permission (or proxy) to vote your shares at the Annual Meeting on your behalf. This proxy statement presents information that is intended to help you in reaching a decision on voting your shares of the Company’s common stock, par value $0.001 (the “record date”“Common Stock”) are entitled to receive notice of, and.

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QUESTIONS AND ANSWERS ABOUT

THESE PROXY MATERIALS AND VOTING

Why am I receiving these materials?

The Company has sent you these proxy materials because its Board is soliciting your proxy to vote at the Annual Meeting, including at any adjournments or any adjournmentpostponements of the meeting. You are invited to virtually attend the Annual Meeting to vote on the proposals described in this proxy statement. However, you do not need to attend the Annual Meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card, or postponement thereof. Asfollow the instructions on your proxy card or voting instruction form to vote over the telephone or through the Internet.

How do I attend the Annual Meeting?

The Annual Meeting will be held virtually, on Tuesday, July 25, 2023, at 8:00 a.m. (Central Time). To participate in the Annual Meeting visit www.virtualshareholdermeeting.com/PSIX2023 using your desktop or mobile device and enter the control number included on your proxy card. Information on how to vote virtually at the Annual Meeting is discussed below.

Who can vote at the Annual Meeting?

Only stockholders of record at the close of business on May 26, 2023, the record date for the Annual Meeting, we had 10,752,906 shares of our common stock outstanding, and there were no other outstanding classes of stock that arewill be entitled to vote at the Annual Meeting. A record holderAs of outstandingMay 26, 2023, there were 22,951,478 shares of our common stockCommon Stock outstanding and entitled to vote. For ten days prior to the Annual Meeting, during normal business hours, a complete list of all stockholders on the record date is entitled to one vote per share held on each matter towill be considered. As a result,available for examination by any stockholder at the total numberCompany’s offices at 201 Mittel Drive, Wood Dale, Illinois 60191. The list of votes that maystockholders will also be cast by holders of our common stock for the proposals to be voted onavailable electronically at the Annual Meeting is 10,752,906 votes.

Scan

What are the coderecommendations of our Board?

Unless you give other instructions on your proxy card, or by telephone or on the front ofInternet, the enclosedpersons named as proxy card for mobile voting

Beneficial Owner: Shares Registered in such capacity. Mr. Winemaster is Chief Executive Officer and a directorthe Name of the Company, and Ms. Andrews is Secretary and General Counsel of the Company.Broker or Bank

How do I vote if I amIf you are a beneficial owner of shares and myregistered in the name of your broker, bank or other institution holds my shares in “street name”?

Ifagent, you should have received a proxy card and voting instructions with these proxy materials from that organization rather than from the Company. Simply complete and mail the proxy card to ensure that your shares are held in “street name,”vote is counted. Alternatively, you may vote by telephone or through the Internet as instructed by your broker or other institution serving as nominee will send you a request for directions for voting those shares. Many brokers, banks and other institutions serving as nominees

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(but not all) participate in a program that offers internet voting options and may provide you with a Notice of Internet Availability of Proxy Materials. Followbank. To vote virtually at the Annual Meeting, follow the instructions on the Notice of Internet Availability of Proxy Materials to access ourvoting instruction form provided by your bank or brokerage firm. Follow the instructions from your broker or bank included with these proxy materials, online or contact your broker or bank to request a paper or email copyproxy form.

How many votes do I have?

On each matter to be voted upon, you have one vote for each share of our proxy materials. Common Stock you owned at the close of business on May 26, 2023, the record date.

What happens if I do not vote?

Stockholder of Record: Shares Registered in Your Name

If you received theseare a stockholder of record and do not vote by completing your proxy materialscard, by telephone, through the Internet or through the virtual meeting platform at the Annual Meeting, your shares will not be voted, nor will your shares count toward the establishment of a quorum for the meeting.

Beneficial Owner: Shares Registered in paper form, the materials includedName of Broker or Bank

If you are a voting instruction card so you canbeneficial owner and do not instruct your broker, bank or other nomineeagent how to vote your shares.shares, the question of whether your broker or nominee will still be able to vote your shares depends on whether the proposal is considered to be a “routine” matter.

See below under “What are broker Fornon-votes?” for more information. At the Annual Meeting, only Proposal 2 is considered to be a discussionroutine matter. Accordingly, without your instructions, your broker or nominee may not vote your shares on Proposal 1and Proposal 3, but may vote your shares on Proposal 2.

Who is paying for this proxy solicitation?

The Company will pay for the entire cost of soliciting proxies. In addition to these proxy materials, the rules regardingCompany’s directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. The Company may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.

What does it mean if I receive more than one set of proxy materials?

If you receive more than one set of proxy materials, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on the proxy card in the proxy materials to ensure that all of your shares held by beneficial owners, please see the question titled “What are ‘broker non-votes’?”voted.

Can I revokechange my vote after submitting my proxy?

Yes. You can revoke your proxy and changeat any time before the final vote at the Annual Meeting. If you are the record holder of your vote priorshares, you may revoke your proxy in any one of the following ways:

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If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank for changing your vote.

When are stockholder proposals and director nominations due for next year’s annual meeting?

How many votes are needed to approve each proposal?

Who will count the votes?

A representative from Wells Fargo Shareholder Services, the transfer agentstatement for our common stock, will act as the inspector of election who will count the votes at the Annual Meeting.

Is my vote confidential?

Your vote will not be disclosed except (1) as needed to permit the inspector of election to tabulate and certify the vote and (2) as required by law.

What quorum requirement applies?

There must be a quorum for the meeting to be held. The presence at the Annual Meeting, by person or by proxy, of stockholders representingdirector receiving a majority of the votes that couldcast (from the holders of shares present or represented by proxy and

What is the quorum forrequirement?

Holders of a majority of voting power of the transaction of business. Accordingly, the presence ofCompany’s issued and outstanding shares of our common stock entitled to vote at the Annual Meeting, will be considered partpresent virtually or represented by proxy, constitute a quorum. In the absence of the quorum. If you submit a properly executed proxy card, even if you abstain from voting, you will be considered part of the quorum.

What vote is required to approve each proposal?

Proposal No. 1: Election of Directors. Assuming a quorum, is present, to be elected, eachthe holders of the director nominees, Gary S. Winemaster, Kenneth W. Landini, Jay J. Hansen, Ellen R. Hoffing and Mary E. Vogt, must receive a majority of the votesvoting power of stock entitled to vote thereat, present, virtually or represented by proxy, will have the power to adjourn the Annual Meeting to another date, time or place (if any). Your shares castwill be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote virtually at the meeting. Abstentions and broker non-votes will be counted towards the quorum requirement.

How can I find out the results of the voting at the Annual Meeting?

Preliminary voting results may be announced at the Annual Meeting. A majority of the votes cast meansIn addition, final voting results will be published in a Current Report on Form 8-K (a “Form 8-K”) that the numberCompany expects to file with the Securities and exchange Commission (the “SEC”) within four business days after the Annual Meeting. If final voting results are not available to the Company in time to file a Form 8-K within four business days after the meeting, the Company intends to file a Form 8-K to publish preliminary results and, within four business days after the final results are known to the Company, file an additional Form 8-K to publish the final results.

What proxy materials are available on the Internet?

The Notice, Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on April 14, 2023, as amended on Form 10-K/A filed with the SEC on May 1, 2023 (the “Annual Report”) are available on www.proxyvote.com.

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PROPOSAL 1

ELECTION OF DIRECTORS

The Board has nominated the seven individuals listed below to stand for election to the Board for a one-year term ending at the annual meeting of shares voted “for” astockholders in 2024 or until their successors, if any, are elected or appointed. The Company’s Certificate of Incorporation and Bylaws provide for the annual election of directors. Each director must exceedreceive the number of votes cast “against” that director. Abstentions have no effect on the election of directors.

Proposal No. 2: Ratification of Appointment of Independent Registered Public Accounting Firm. The affirmative vote of a majority of the votes of the shares present, in person or represented by proxy, and entitled to

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vote is required to ratify the appointment of RSM US LLP as the independent auditors of our financial statements for the fiscal year ending December 31, 2016.

What other matters might arise at the meeting?

At the date of this proxy statement, the Board does not know of any matterscast to be raised atelected (i.e., the Annual Meeting other than those referred to in this proxy statement. The Proxies named in the proxy card are authorized to vote in their discretion upon such other matters as may properly come before the meeting or any adjournment or postponement thereof.

What if I mark abstain on my proxy card for a proposal?

Abstentions marked on a proxy card will be treated as shares that are present and entitled to vote for purposes of determining whether a quorum is present and for purposes of voting on Proposal No. 2. Accordingly, abstentions marked on a proxy card with respect to Proposal No. 2, will have the same effect as votes against Proposal No. 2.

What are “broker non-votes”?

Under the rules of the New York Stock Exchange (“NYSE”), member brokers who hold shares in street name for their customers that are the beneficial owners of those shares have the authority to only vote on certain “routine” items in the event that they have not received instructions from beneficial owners. Under NYSE rules, when a proposal is not a “routine” matter and a member broker has not received voting instructions from the beneficial owner of the shares with respect to that proposal, the brokerage firm may not vote the shares on that proposal because it does not have discretionary authority to vote those shares on that matter. A “broker non-vote” is submitted when a broker returns a proxy card and indicates that, with respect to particular matters, it is not voting a specified number of shares on those matters, as it has not received voting instructions with respect to those shares from the beneficial owners and does not have discretionary authority to vote those shares on such matters. “Broker non-votes” are not entitled to vote at the Annual Meeting with respect to the matters to which they apply; however, “broker non-votes” will be included for purposes of determining whether a quorum is present at the Annual Meeting.

Proposal No. 1 is considered a “non-routine” matter. As a result, brokers that do not receive instructions with respect to Proposal No. 1 from their customers will not be entitled to vote on that proposal, and any such “broker non-votes” will have no effect on the voting on that proposal. Proposal No. 2 is considered a “routine” matter, and accordingly, brokers and other nominees will have discretionary authority to vote on that proposal.

The Board strongly encourages you to vote your shares and exercise your right to vote as a stockholder on each of the proposals.

Who can attend the Annual Meeting?

All stockholders of record as of March 4, 2016, or their duly appointed proxies, may attend. A list of stockholders entitled to vote at the Annual Meeting, arranged in alphabetical order, showing the address of and number of shares registered in the name of each stockholder, will be available for review starting no later than April 18, 2016, and continuing until the Annual Meeting, at our offices located at 101 Mittel Drive, Wood Dale, Illinois 60191. Please note that, if you hold shares in “street name” (that is, through a broker or other nominee), you will need to bring valid picture identification and evidence of your share ownership as of the record date, such as a copy of a brokerage statement. If you come to the Annual Meeting, you may, of course, vote in person. If you are a “street name” holder and wish to vote at the meeting, you must first obtain a proxy from your bank, broker or other holder of record authorizing you to vote.

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How will the results of voting be published?

We will disclose voting results by filing a current report on Form 8-K with the SEC within four business days following the date of the Annual Meeting. If, on the date of filing that current report on Form 8-K, the inspector of elections for the Annual Meeting has not certified the voting results as final, we will indicate in the filing that the results are preliminary and publish the final results in a subsequent current report onForm 8-K, which we will file within four business days after the final voting results are known.

GOVERNANCE OF THE COMPANY

What principles has the Board established with respect to corporate governance?

The Board has carefully reviewed the corporate governance rules adopted by the Securities Exchange Commission (the “SEC”) and The NASDAQ Stock Market (“NASDAQ”) and other corporate governance recommendations. The Board adopted the corporate governance documents described below.

The full text of the Corporate Governance Guidelines, the Board Committee charters, our Code of Ethics for Principal and Senior Financial Officers, our Code of Business Conduct and Ethics and our Related Party Transaction Policy are available on our website atwww.psiengines.com in the “Corporate Governance” section. Our website also provides information on how to contact us and other items of interest to investors. We make available on our website, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to these reports, as soon as practical after we file these reports with the SEC. In addition, we will describe on our website any amendments to, or waivers from, the provisions of our Code of Ethics for Principal and Senior Financial Officers.

What is the composition of the Board?

The Board currently consists of five director seats, with each director serving until the next annual meeting of our stockholders and until his or her successor is duly elected and qualified.

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On March 25, 2015, H. Samuel Greenawalt passed away. Mr. Greenawalt was a valued member of our Board and our Audit Committee. Ellen R. Hoffing was selected by the Board as a suitable candidate for nomination. On September 18, 2015, the Board approved the nomination of Ms. Hoffing as an independent director of the Company.

The Board has nominated Gary S. Winemaster, Kenneth W. Landini, Jay J. Hansen, Ellen R. Hoffing and Mary E. Vogt for re-election to the Board at the Annual Meeting and is recommending that you elect each of Messrs. Winemaster, Landini and Hansen and Ms. Hoffing and Ms. Vogt for a one-year term (and until his or her successor is elected and qualified, or until the earlier resignation or removal of such director) at the Annual Meeting.

Which directors are independent and how does the Board make that determination?

As we are listed on The NASDAQ Capital Market, we are subject to the applicable independence requirements for directors of The NASDAQ Stock Market, and the corporate governance rules of NASDAQ require our Board to be composed of a majority of independent directors. Our Board has determined that Mr. Hansen, Ms. Hoffing and Ms. Vogt meet (and Mr. Greenawalt until his passing met) the applicable independence requirements for directors of The NASDAQ Stock Market, and that Mr. Winemaster and Mr. Landini do not meet such standards.

We do not currently have a separately designated nominating committee. Therefore, in accordance with NASDAQ rules, a majority of our independent directors recommend each nominee for the Board’s consideration. Our board has determined that Mr. Hansen, Ms. Hoffing and Ms. Vogt meet the applicable independence requirements of The NASDAQ Stock Market for nominating committee members, audit and compensation committee members (although Ms. Hoffing does not serve on the Compensation Committee), and has determined that Mr. Winemaster and Mr. Landini do not meet such standards.

In addition to the NASDAQ independence requirements, we also apply the independence guidelines set forth in our Corporate Governance Guidelines, which are available on our website atwww.psiengines.com in the “Corporate Governance” section and are substantially similar to the NASDAQ director independence requirements.

Do independent directors meet separately in regularly scheduled executive sessions?

Yes. The independent directors meet for an executive session at each regularly scheduled Board meeting and at various other times throughout the year if deemed necessary. From time to time, the Lead Outside Director will attend such meetings.

How can I communicate with directors?

As set forth in our Corporate Governance Guidelines, stockholders or other interested parties may communicate with the Board, or any individual member or members of the Board, by sending a letter to Power Solutions International, Inc. Board, c/o the General Counsel, Power Solutions International, Inc., 201 Mittel Drive, Wood Dale, IL 60191. The General Counsel will receive the correspondence and forward it to the Board or specified Board member or members to whom the communication is addressed.

How often did the Board meet in fiscal 2015?

During fiscal 2015, the Board met four times. During fiscal 2015, each director who served on the Board during fiscal 2015 attended at least 75% of the aggregate of (1) the total number of meetings held by the Board during the period in which such individual wasvoted “FOR” a director and (2) the total number of meetings held by all

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committees of the Board on which he served during the period in which such individual served on such committees.

What is the Company’s policy regarding Board members’ attendance at the Annual Meeting?

The Corporate Governance Guidelines provide that directors are expected to attend the Annual Meeting. The full text of the Corporate Governance Guidelines is available on our website atwww.psiengines.com in the “Corporate Governance” section. All of our Board members who served on the Board at the time of our 2015 annual meeting of stockholders attended that meeting.

What is the Board’s leadership structure, and why is it the best structure for the Company at this time?

Gary S. Winemaster currently serves as both our Chief Executive Officer (“CEO”) and our Chairman of the Board (“Chairman”). Under our Corporate Governance Guidelines, the Board has the flexibility to determine whether or not to separate the roles based on circumstances which exist from time to time. Although separation of the roles is not required, the Board may determine it is appropriate under certain circumstances. At this time, the Board believes that having one individual serve as both Chairman and CEO is the best governance model for the Company. Due to the varied and complex nature of the Company’s business, the Board believes the CEO is in the best position to lead most effectively and to serve in the critical role of Chairman. Having a Chairman who also serves as CEO facilitates timely communication with other directors on critical business matters. The Board believes that leadership of both the Board and the Company by Mr. Winemaster is the optimal structure to guide the Company and maintain the focus needed to achieve our business goals. The Board also believes there is an effective balance between strong Company leadership and appropriate oversight by independent directors.

Because Mr. Winemaster serves as both our Chairman and as our CEO, the non-management directors have designated Kenneth W. Landini, who is neither an officer nor an employee of the Company, to serve as “Lead Outside Director.” Although the Board has determined that Mr. Landini does not meet the applicable independence requirements of NASDAQ, the Board believes that, given his long history with, and deep knowledge of, the Company and its management, and in light of the Company’s relatively recent listing on The NASDAQ Capital Market, Mr. Landini continues to be the best candidate to serve as the Company’s Lead Outside Director at this time. As Lead Outside Director, Mr. Landini is responsible for (i) presiding at all meetings of the Board at which the Chairman is not present, including executive sessions of non-management directors, (ii) serving as a liaison between the Chairman and the non-management directors, (iii) approving information sent to the Board as a whole, (iv) calling meetings of non-management directors, (v) approving meeting agendas for the Board, (vi) approving meeting schedules for the Board and, (vii) if requested by significant stockholders of the Company, being available for consultation and direct communication with such stockholders (subject to compliance with applicable Company policies).

What is the Board’s role in risk oversight?

From time to time, we are exposed to risks, including strategic, operational, financial, legal, regulatory and compliance risks. The Board as a whole, as well as the committees thereof, are responsible for overseeing our risk management process and evaluating whether this process, as designed, is adequate to effectively manage the risks that we face. Our management is responsible for developing and implementing the Company’s plans and processes for risk management and is responsible for preparing and delivering reports directly to the Audit Committee and the Board with respect to risk management.

Throughout the year, the Board and the committees to which it has delegated responsibility will conduct risk assessments and discuss identified risk and how to eliminate or mitigate such risks, within such areas as operational, financial performance, financial reporting, legal, regulatory and strategic. The Board will review with management its plans and processes for managing risk. In addition, while our Board is ultimately

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responsible for overseeing our risk management, the committees of our Board will assist the Board in fulfilling this responsibility by evaluating and assessing risks within their respective areas of responsibility and advising the Board of any significant risks.

For example, the Audit Committee focuses on assessing and mitigating financial reporting risks, including risks related to internal control over financial reporting. The Compensation Committee considers risks relating to the Company’s compensation programs and policies, and evaluates whether our compensation programs are designed so employees are incentivized to make decisions that lead to long-term value for our stockholders, without encouraging excessive risk-taking.

What are the committees of the Board and what are their functions?

The Board has established two standing committees: an Audit Committee and a Compensation Committee. The current members of the committees are identified in the table below.

Audit Committee

The current members of our Audit Committee are Mr. Hansen, Ms. Hoffing and Ms. Vogt, each of whom is “financially literate” as required by NASDAQ rules. Mr. Hansen, Ms. Hoffing and Ms. Vogt qualify as “audit committee financial experts” as defined in SEC rules under the Sarbanes-Oxley Act of 2002. Our Board has determined that each of Mr. Hansen, Ms. Hoffing and Ms. Vogt meets the independence requirements of NASDAQ for audit committee members. The Audit Committee exercises oversight responsibility regarding the quality and integrity of our accounting and financial reporting processes and the auditing of our financial statements. In fulfilling this responsibility, the Audit Committee, among other things, selects the independent auditors, pre-approves any audit or non-audit services to be provided by the independent auditors, reviews the results and scope of the annual audit performed by the auditors and assesses processes related to risks and the control environment. The Audit Committee reports to the full Board regarding all of the foregoing. The Audit Committee operates pursuant to a written charter that is posted on our website atwww.psiengines.comin the “Corporate Governance” section. The Audit Committee held eight meetings in fiscal 2015.

Compensation Committee

The current members of our Compensation Committee are Mr. Hansen and Ms. Vogt, each of whom meets the director independence requirements of NASDAQ. In affirmatively determining the independence of the Compensation Committee members, the Board considered certain specified factors set forth in NASDAQ’s rule on independence of compensation committee members. As further described in the Compensation Discussion and Analysis below, the Compensation Committee has the primary responsibility for reviewing and approving corporate goals and objectives relevant to executive compensation, evaluating executive performance, reviewing our executive policies and reporting and making recommendations to the full Board regarding executive compensation. The full Board makes all final determinations (other than with respect to equity awards) regarding executive compensation based upon the recommendations of the Compensation Committee. The Compensation

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Committee also has responsibility for administering the Power Solutions International, Inc. 2012 Incentive Compensation Plan, as amended on July 31, 2013 (the “2012 Plan”), determiningnominee must exceed the number of equity-based awards tovotes cast “AGAINST” that nominee). Unless contrary instructions are given, the shares represented by your proxy will be granted to our executive officers, non-employee directors and employees pursuant tovoted “FOR” the 2012 Plan, and reporting to the full Board regarding the foregoing matters. The Compensation Committee operates pursuant toelection of all director nominees. If any nominee becomes unavailable for election as a written charter that is posted on our website atwww.psiengines.comin the “Corporate Governance” section. The Compensation Committee held three meetings in fiscal 2015.

Pursuant to its charter, the Compensation Committee has the authority to retain, as needed, any independent counsel, compensation and benefits consultants and other outside experts or advisors as the Compensation Committee believes toresult of an unexpected occurrence, your shares will be necessary or appropriate. The Compensation Committee has not historically used compensation consultants in determining executive compensation; however, in 2013 and 2014, the Compensation Committee engaged the firm of The Delves Group, which was subsequently acquired by Towers Watson & Co. (the “Compensation Consultant”), as an independent compensation consultant to report and advise on certain matters related to executive compensation, including matters relating to the 2012 Plan and equity awards under the 2012 Plan. The Compensation Committee assessed the independence of the Compensation Consultant pursuant to the SEC’s and NASDAQ’s rules and concluded that the work the Compensation Consultant has performed, and will perform, does not raise any conflict of interest. While the Compensation Consultant was not used in fiscal 2015, the Compensation Committee anticipates regularly calling upon the Compensation Consultant, as appropriate, to attend Compensation Committee meetings, meet with the Compensation Committee without management present and provide third-party data, advice and expertise on proposed executive compensation levels, programs and plan designs.

How are nomineesvoted for the Board selected?

We do not have a standing nominating committee. The Board does not believe that it is necessary for us to have a standing nominating committee because we have a relatively small Board and our independent directors serve in the capacityelection of a nominating committee when necessary. Because we do not currently have a standing nominating committee, our full Board participates insubstitute nominee proposed by the consideration of director nominees. However, consistent with applicable NASDAQ corporate governance rules, each director nominee will be recommended for the Board’s selection by a majority of the independent directors of the Board after consultation with our Chief Executive Officer.

The Board considers many factors when evaluating candidatesCompany. Each person nominated for election to the Board, including that the proper skills, experiences and competencies are represented on the Board and its committees and that the composition of the Board and each such committee satisfies applicable legal requirements. Among other criteria, the Board considers a candidate’s independence; ability to exercise business judgment; applicable industry knowledge and experience, other relevant business or professional experience and the ability to offer our management meaningful advice and guidance based on that experience; as well as core competencies or technical expertise necessary for our committees. Additionally, while the Board does not have a formal policy mandating the consideration of diversity in identifying or evaluating director nominees, directors or the Board as a whole, under our Corporate Governance Guidelines, the Board considers factors such as diversity when evaluating directors, director candidates and the overall composition of the Board, with diversity being broadly understood by the Board to mean a variety of opinions, perspectives, personal and professional experiences and backgrounds, including gender, race and ethnicity differences, as well as other differentiating characteristics. The director qualification standards that the Board uses when considering candidates are included in the Corporate Governance Guidelines available on our website atwww.psiengines.com in the “Corporate Governance” section. The Board considers the entirety of each candidate’s credentials and does not have any specific minimum qualifications that must be met by a nominee. However, the Board does believe that all members of the Board should have the highest personal and professional ethics, a commitment to representing the long-term interests of the stockholders and sufficient time to devote to Board matters.

The Board considers candidates for the Board from any reasonable source, including stockholder recommendations and recommendations from current directors and executive officers. The Board does not

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evaluate candidates differently based on who has proposed the candidate. After considering candidates and assessing any material relationships with the Company or third parties that might adversely impact independence and objectivity, as well as such other criteria as the Board determines to be relevant at the time, the Board determines which candidates to nominate.

How can a stockholder recommend a candidate for nomination as a director of Power Solutions International, Inc.?

Stockholders who wish to nominate a qualified director candidate should write to us at our principal executive offices. The procedures to submit stockholder proposals and candidates for nomination for director to the Board for the 2017 annual meeting of stockholders are described under the section entitled “Miscellaneous and Other matters – Deadlines for Submission of Proxy Proposals of Stockholders and Stockholders Nominations of Directors.”

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PROPOSAL NO. 1

ELECTION OF DIRECTORS

The Board currently consists of five (5) directors. Article Fifth of our Certificate of Incorporation provides that the business and affairs of the Company shall be managed by, or under the direction of, a board of directors consisting of no less than five (5) and no more than eleven (11) directors. Each director holds office for a one-year term until the next annual meeting of stockholders and until his or her successor shall be elected and qualified, subject, however, to prior death, resignation, retirement or removal from office.

On March 25, 2015, H. Samuel Greenawalt, a director and member of the Audit Committee, passed away. Mr. Greenawalt provided many years of service through his financial background and general business expertise. The Board recognizes the loss of Mr. Greenawalt’s knowledge and leadership. On September 18, 2015, the Board approved the nomination of Ellen R. Hoffing as an independent member of the Board. Ms. Hoffing also became a member of the Audit Committee.

Each of Messrs. Winemaster, Landini and Hansen and Ms. Hoffing and Ms. Vogt has been nominated to be elected for a term of one year expiring at the 2017 annual meeting of stockholders and until his or her successor is elected and qualified.

THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES NAMED IN THIS PROXY STATEMENT TO SERVE AS A DIRECTOR FOR A ONE-YEAR TERM.

If at the time of the Annual Meeting a nominee should be unable or declinesagreed to serve the person named in the proxy will vote for such substitute nominee as the Board recommends, or vote to allow the vacancy created thereby to remain open until filled by the Board, as the Board recommends.if elected. The BoardCompany’s management has no reason to believe that any nominee for election at the Annual Meeting will be unable or will decline to serve as a director if elected.serve.

The following table listsand biographical summaries set forth, with respect to each nominee for director, his committee membership, his age, the nominees for electionyear in which he first became a director of the Company, and whether or not Weichai America Corp. (“Weichai America”), a wholly owned subsidiary of Weichai Power Co., Ltd. (“Weichai Power”) (herein together referred to as “Weichai”) designated such director to serve on the Board pursuant to the Board, their ages, their positions withInvestor Rights Agreement, entered into by the Company and Weichai (as discussed in the year each was first elected“Related Person Transactions” section in this proxy statement). Ms. Lei, who has served as a director andmember of our Board since 2021, will not be standing for re-election. The Board would like to thank Ms. Lei for her years of dedicated service to the expiration of their current terms.Company.

multinational company located in Wisconsin, which specialized in diesel and gaseous generators, responsible for oversight of the global business operations. Prior to this, Mr. Jiwen Zhang served as Managing Director Commercial of Fiat Powertrain APAC from September 2010 to December 2012, Vice President of Volvo Penta Region Asia from May 2002 to August 2010, and Customer Service General Manager of a Caterpillar distributor Lei Shing Hong machinery from September 1994 to April 2002.

Mr. Jiwen Zhang earned his EMBA from University of Texas at Arlington and Bachelor’s degree of Mechanical & Electrical Engineering from University of Science and Technology of China. Mr. Jiwen Zhang serves on the Board as a Weichai designee.

Mr. Jiwen Zhang brings to the Board extensive and effective leadership experience demonstrated through his executive and management roles at leading engine manufacturers.

Biography: Dr. Sun has served as a Director of the Company since April 2017. Dr. Sun previously served as the Company’s Vice Chairman of the Board. Mr. Winemaster is a co-founderBoard from December 7, 2021 to March 29, 2023, and prior to that, served as Chairman of our Companythe Board from April 1, 2017 to December 7, 2021. In addition, he serves as Chair of the Nominating Committee and has played a significant role in developing and expanding our presence as a distributormember of alternative fuel spark-ignited and diesel power systems. Prior to serving in his rolethe Compensation Committee.

Dr. Sun serves as Chief Executive Officer and President of our company and of Power Great Lakes, Mr. Winemaster served as the Vice President of Sales forShandong Heavy Industry Group Co., Ltd. (“SHIG”), a leading automobile and equipment manufacturing group since 2021. Dr. Sun has been an Executive Director since December 2002 and was an Executive President from October 2007 to November 2021 of Weichai Power, Great Lakes.a publicly traded company on the Hong Kong and the Shenzhen Stock Exchange and leading global designer and manufacturer of diesel engines. Dr. Sun also served as a Director of Weichai Group Holdings Limited (the “Weichai Group”), a multi-field and multi-industry international group which owns six business segments of powertrain, intelligent logistics, automotive, construction machinery, luxury yacht, and finance & after-services, from 2007 to 2021, and Chairman of Shandong Weichai Import and Export Co., Ltd., a wholesale distributor of industrial machinery and equipment. On January 1, 2019, Dr. Sun was appointed a Director of Ballard Power Systems Inc., a publicly traded company on the NASDAQ and Toronto Stock Exchanges that builds fuel cell products. Dr. Sun joined Weifang Diesel Engine Factory in 1988 and held various supervisory positions as a Chief Engineer of Weifang Diesel Engine Factory, and Director of Torch Automobile Group Co., Ltd.

Dr. Sun holds a Master’s degree from Beihang University and a Doctorate degree in Engineering from Tianjin University. Dr. Sun serves on the Board as a Weichai designee.

Dr. Sun brings to the Board extensive managerial experience and leadership gained through his executive roles at leading engine manufacturers.

Biography: Mr. Simpkins has served as a Director of the Company since July 13, 2017. Since January 19, 2021, he has been the Chair of the Audit Committee. Mr. Simpkins is also a member of the Nominating Committee and Strategic Committee.

Mr. Simpkins has over 25 years of executive management and financial experience. From June 2016 to December 2016, he served as Chief Financial Officer of Emerson Network Power, part of Emerson Electric Co., a publicly-traded company on the New York Stock Exchange (the “NYSE”). From 2006 to 2015, Mr. Simpkins

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served as Vice President and Chief Financial Officer of Kennametal Inc., a publicly-traded company on the NYSE and a global leader in the design and manufacture of engineered components, advanced materials and cutting tools. Prior to founding our company,that role, Mr. WinemasterSimpkins held various positions within Kennametal since 1995. Prior to Kennametal, he worked as a Manager for PricewaterhouseCoopers from 1986 to 1995. On September 1, 2022, Mr. Simpkins joined the Advisory Board of Anovion, an advanced battery materials business in sales managementNorth America for synthetic graphite anode materials.

Mr. Simpkins serves on the European operations, with territory responsibility forBoard of Trustees at Seton Hill University, Greensburg and previously served on the German, Scandinavian and Benelux markets,Board of Guardian Industries, a United States glass manufacturer. Trustees of Pennsylvania State University, New Kensington.

Mr. WinemasterSimpkins holds a Bachelor of Science degree in Accounting from Pennsylvania State University. Mr. Simpkins qualifies as an “Audit Committee Financial Expert” under applicable SEC regulations and has substantial public-company reporting experience gained from his roles as Chief Financial Officer during his career.

Mr. Simpkins brings to the Wharton School at the University of Pennsylvania.

Our Board believes that Mr. Winemaster,significant management experience, as our Chief Executive Officer and President andwell as his experience as a co-founder of our Company, should serve as a director because of his unique understanding of the opportunities and challenges that we face and his in-depth knowledge about our business, including our customers, products, operations and key business drivers, and our long-term growth strategies, derived from his long service with the Company.Chief Financial Officer.

Biography: Mr. Landini has served as a directorDirector of the Company since 2001 and assisted in the development and growth of the business of our companythe Company since 1985. Mr. Landini is a member of the Audit Committee. From August 7, 2017 to January 19, 2021, Mr. Landini was the Chair of the Compensation Committee. He also served as a member of the Nominating Committee from April 2017 to January 19, 2021.

Mr. Landini previously served as the Vice President of Finance for the Company’s subsidiary, Power Great Lakes, Inc., from December 1985 to March 1988 and assisted usthe Company in establishing distributor relationships and expanding the territories into which we provide ourthe Company provides its power systems. Mr. Landini is a partnerPartner and co-founderCo-founder of Landini, Reed & Dawson, P.C., a certified public accounting and consulting firm in southeastern Michigan, which was established in 1988. Mr. Landini has served as a certified public accountant for Landini, Reed & Dawson, P.C. since its inception. Mr. Landini

He holds a Bachelor of Arts degree from Albion College and is a licensed certified public accountantCertified Public Accountant in the state of Michigan.

Our Board believes that Mr. Landini should servequalifies as an “Audit Committee Financial Expert” under applicable SEC regulations and has substantial audit experience gained from his tenure as a director becausepartner at a certified public accounting and consulting firm.

Mr. Landini brings to the Board an in-depth knowledge and understanding of his significant knowledge of our industry, his prior experience with ourthe Company’s business and his financial expertise.operations, having served as Vice President of Finance for one of the Company’s subsidiaries.

Jay Hansen

Biography: Mr. He has served as a Director of the Company since November 14, 2019. Mr. He is a member of the Audit and Compensation Committees.

Mr. He currently serves as Director, Financial Planning & Analysis for CytomX Therapeutics (“CytomX”), a NASDAQ-listed biotechnology company, since February 2021, and previously served as a Consultant to CytomX beginning in February 2020. Previously, Mr. He served as Director of Finance and Reporting for Blackthorn Therapeutics, a clinical-stage biotechnology company, from June 2019 to December 2019. Prior to that, Mr. He served as the Head of Finance at GenapSys, Inc. from 2018 until May 2019. From 2014 until 2018, Mr. He was the finance director since 2011.of SciClone Pharmaceuticals, Inc., a NASDAQ-listed specialty pharmaceutical

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company with main operations in China. From January to June 2014, Mr. Hansen isHe served as Vice President of Finance and the co-founderController of O2 Investment Partners, LLC,Augmedix, Inc., a privately held technology-enabled medical documentation company. From October 2011 to December 2013, Mr. He was employed as Vice President of Finance at Baidu Leho.com, a private equity investment group focusing on smallcompany backed by Baidu, a NASDAQ- listed company. From 2015 to 2020, Mr. He served as Director and middle market manufacturing, niche distribution, select serviceAudit Committee Chairman of Fuling Global, Inc., a disposable serviceware and technology businesses,kitchenware manufacturer.

Mr. He earned his Bachelors of Science degree in Accounting from Beijing University of Technology in July 1992 and his Masters of Business Administration degree from University of Chicago Booth School of Business in December 2006. Mr. He is a U.S. certified management accountant and a China certified public accountant. Mr. He qualifies as an “Audit Committee Financial Expert” under applicable SEC regulations and has substantial public company reporting experience gained from his roles as a financial officer and controller of public companies during his career.

Mr. He brings to the Board substantial financial and managerial experience gained through leadership roles at public companies.

Biography: Mr. Gengsheng Zhang served as a Director of the Company since September 16, 2022. In addition, he serves as a member of the Nominating Committee and Strategic Committee.

Mr. Gengsheng Zhang has served as the PresidentDirector of International Cooperation and Managing PartnerBusiness Synergy Department for SHIG, a leading automobile and equipment manufacturing group, since March 2022. Previously, he served as Deputy General Manager of O2 Investment Partners, LLC since 2010.Weichai Group, which owns six business segments of powertrain, intelligent logistics, automotive, construction machinery, luxury yacht, and finance & after-services, from August 2020 to March 2022. Prior to forming O2 Investment Partners, LLC,Weichai Group, he served as Assistant General Manager of Weichai Group (and later as Deputy General Manager) and Chairman and Chief Executive Officer of SHIG India Pvt Ltd., a subsidiary of SHIG, from December 2019 to August 2020. Prior to that, he served as Assistant General Manager of Weichai Group and General Manager of Shandong Weichai Import & Export Company, from May 2012 to December 2019. Prior to that, he served as Director of Weichai International Service Department from October 2005 to May 2012. Earlier in his career, Mr. Hansen provided consulting servicesGengsheng Zhang was employed in various leadership and engineering roles at manufacturing organizations.

Mr. Gengsheng Zhang earned a Bachelor of Engineering degree from Shandong Polytechnic University in 1990 and an EMBA from China-Europe International Business School in 2014. Mr. Gengsheng Zhang serves on the Board as a Weichai designee.

Mr. Gengsheng Zhang brings to the Board in-depth management experience in engine manufacturing and engineering.

Biography: Mr. Yu is being nominated to the Board for the first time.

Mr. Yu has served as Director of the Overseas Finance Department of Weichai Group since May 2023 and Vice Director from January 2023 to May 2023. Prior to that, Mr. Yu served as Chief Financial Official of Shaanxi Hande Axle Co., Ltd, a leading commercial vehicle axle manufacturer in China from February 2021 to January 2023. From February 2019 to February 2021, Mr. Yu served as Chief Financial Officer of Weichai Ballard Co., Ltd (“Weichai Ballard”), a joint venture of Weichai Power and Ballard Power Systems Inc. Prior to his role at Weichai Ballard, Mr. Yu served in various leadership roles in the financialFinance Department at Weichai Power from January 2009 to February 2019.

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Mr. Yu earned his Bachelor’s degree in management from Beijing Forestry University, China in 2009. Mr. Yu is a China certified public accountant.

Mr. Yu would bring to the Board extensive accounting experience as well as management experience through his roles at engine manufacturers.

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED IN THIS PROXY STATEMENT.

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EXECUTIVE OFFICERS

The following table sets forth certain information with respect to the Company’s executive officers as of May 26, 2023.

businessAmerica, Ms. Gu served as Senior Legal Counsel and financial expertise,then Deputy Director of the legal department of SHIG from May 2012 to August 2017. Prior to her roles as in-house counsel, Ms. Gu practiced corporate and bankruptcy law in New York and Michigan from 2004 to 2012.

Ms. Gu holds Bachelor’s of Engineering degree in Textile Materials and Design from Wuhan Textile University. Ms. Gu also holds a Master’s degree in Management Science from Renmin University of China and a Juris Doctor degree from Brooklyn Law School.

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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Director Independence and Controlled Company Exemption

While the Company’s Common Stock is currently traded on the OTCPink market, which requires the Company to establish and maintain fundamental corporate governance standards, the Company has elected to adopt more exacting governance standards that are substantially similar to the NASDAQ listing governance standards. The Board has determined that the Company is importanta “controlled company,” as ourdefined in Rule 5615(c)(1) of the NASDAQ Marketplace Rules. The Board exerciseshas based this determination on the fact that Weichai currently owns a majority of the Company’s Common Stock. Under the NASDAQ rules, a company where more than 50% of the voting power for the election of directors is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain NASDAQ corporate governance requirements, including:

The Company is not currently relying on the controlled company exemption for the above requirements but may in the future.

Unless the Company avails itself of the “controlled company” status as discussed above, pursuant to NASDAQ listing standards, a majority of the members of the Board must qualify as “independent,” as affirmatively determined by the Board. In addition to the NASDAQ independence requirements, the Company also applies the independence guidelines set forth in its oversight responsibility regardingCorporate Governance Guidelines, which are available on the qualityCompany’s website at www.psiengines.com in the “Investors” section, under “Governance” which are substantially similar to the NASDAQ’s director independence requirements and integrity“controlled company” exemptions. Consistent with this requirement, based on the review and recommendation of our accountingthe Nominating Committee, the Board reviewed all relevant identified transactions or relationships between each of the Company’s directors and financial reporting processesdirector nominees, or any of their family members, and PSI, the Company’s senior management and the auditingCompany’s independent registered public accounting firm, and has affirmatively determined that each of our financial statements.

Ellen HoffingDr. Sun, Messrs. He, Landini, Simpkins, Yu, Gengsheng Zhang, Ms. Lei, and former director, Mr. Mozzi, meet the standards of independence under the applicable NASDAQ listing standards. In making this determination, the Board found Dr. Sun, Ms. Lei and Messrs. He, Landini, Simpkins, Yu, Gensheng Zhang and former director Mr. Mozzi to be free of any relationship that would impair his or her individual exercise of independent judgment with regard to the Company. The Board has served as a director since September 18, 2015. Ms. Hoffing has been a director of Perrigo Company plc, a leading global healthcare provider, since July 2008 and currently serves as chairperson of its remuneration committee and aalso determined that each member of its audit committee. Ms. Hoffing served as Chief Operating OfficerAudit Committee is independent under NASDAQ Rule 5605(a)(2). The Board found that Mr. Jiwen Zhang and Co-Presidentformer director Mr. Shao are not independent under the applicable NASDAQ listing standards.

Board Leadership Structure

The Board is led by a non-executive Chairman, Mr. Jiwen Zhang. The Company believes that such leadership structure is appropriate in light of Neos Therapeutics, a specialty pharmaceutical companythe differences between the roles of Chairman and CEO. The CEO is responsible for day-to-day leadership and performance. The Chairman is responsible for setting the strategic direction of the Company and has the authority, among other things, to call and preside over Board meetings, to set meeting agendas and to determine materials to be distributed to the Board. Accordingly, the Chairman has substantial ability to shape the work of the Board. The Board recognizes that focusesother leadership structures could be appropriate depending on extended release liquidthe circumstances and, orally disintegrating tablet drug development, from September 2009 until April 2014. From 2006 until September 2009, she served as Presidenttherefore, regularly re-evaluates this structure.

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Board Diversity

Michael Lewis has served as our Chief Financial Officer since October 19, 2015. He most recently served as Vice President, Finance and Chief Financial Officer, North American Operations for Benteler Automotive, beginning in 2013. From 2010 to 2012, Mr. Lewis served as Vice President, Treasurer and Director of Investor Relations from 2010 to 2012 at Visteon Corporation. He began at Visteon in 2000, with increasing financial management responsibility, including Director of Mergers and Acquisitions and Assistant Treasurer. Mr. Lewis earned a Bachelor of Science degree in Information Systems from Oakland University, an MBA from Wayne State University and an MSF from Walsh College.

Family Relationships

Gary Winemaster, our ChairmanCommittees of the Board Chief Executive Officer and President, and Kenneth Winemaster, our Senior Vice President, are brothers. There are no other family relationships among

Below is a description of each committee of the membersBoard.

Audit Committee

The Company has a separately designated Audit Committee. Each member of our board of directors or our executive officers.

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COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis (“CD&A”) explains the Company’s executive compensation program for its named executive officers consisting of: Gary Winemaster, our Chief Executive Officer (“CEO”); Eric Cohen, our Chief Operating Office (“COO”), Michael P. Lewis, our Chief Financial Officer (“CFO”); Daniel Gorey, our former Chief Financial Officer (“former CFO”); and Kenneth Winemaster, the Company’s only other executive officer (collectively, the “Named Executive Officers”). This CD&A describes the Company’s compensation philosophy and objectives, how the CompensationAudit Committee establishes executive compensation for the Named Executive Officersis financially literate and the objectivesBoard has determined that each of Mr. Simpkins, the chair of the various compensation elements.

2015 Advisory Vote on Executive Compensation

AtAudit Committee, and Messrs. He and Landini each qualify as an “audit committee financial expert” as defined in applicable SEC rules because he, as applicable, meets the 2015 Annual Meeting,requirement for past employment experience in a non-binding advisory vote, a substantial majority of the stockholders approved the compensation paid to our Named Executive Officers. The Compensation Committee believes that this affirms stockholders’ support of the Company’s approach to executive compensation. Based on the stockholders’ support of the Company’s executive compensation program, the Compensation Committee did not change its approach to the compensation of its Named Executive Officers. The Compensation Committee remains open to any concerns expressed by the Company’s stockholders and will continue to consider the outcome of future “say-on-pay” votes when making compensation decisions for the Company’s Named Executive Officers.

Compensation Philosophy and Objectives

Our compensation program is intended to meet three principal objectives: (1) attract, reward and retain officers and other key employees; (2) motivate these individuals to achieve short-term and long-term corporate goals and enhance stockholder value; and (3) support our core values and culture. To meet these objectives, we have adopted the following overriding policies:

The above policies guide the Compensation Committee in assessing the proper allocation between long-term compensation, current cash compensation and short-term bonus compensation. Other considerations include our business objectives, our fiduciary and corporate responsibilities (including affordability andfinance or accounting, and tax implications)requisite professional certification in accounting or comparable experience. The Board has determined that each of Messrs. Simpkins, He and regulatory requirements.

Role ofLandini meets the Compensationindependence requirements for audit committee members under the NASDAQ rules and therefore, the Audit Committee and Management

Our executive compensation program is overseen and administered by the Compensation Committee, which is composed entirely of independent directors. The responsibilities of the Audit Committee include:

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Compensation Committee

The Compensation Committee is responsible for overseeing matters relating to compensation of PSI’s CEO and other executive officers and employees, including the administration of incentive-based and equity-based compensation plans. The Board has determined that each of Ms. Lei, Dr. Sun and Mr. He meets the independence requirements for compensation committee members under the NASDAQ rules and therefore, the Compensation Committee is composed entirely of independent directors. The responsibilities of the Company’s Compensation Committee include:

Nominating Committee

The Nominating Committee is responsible for overseeing the selection of persons to be nominated to serve on the Board and to assist the Board in developing and ensuring compliance with the Company’s foundational and corporate governance documents. The Nominating Committee is composed entirely of independent directors. The responsibilities of the Company’s Nominating Committee include:

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Strategic Committee

In May 2023, the Board established the Strategic Committee to develop and carry out the strategic initiatives of the Company. The responsibilities of the Company’s Strategic Committee include:

Executive Committee

In March 2022, the Board established the Executive Committee, which was comprised of Ms. Lei, Mr. Gengsheng Zhang and former director, Mr. Mozzi (Chair). The purpose of the Executive Committee was to exercise the powers and authority of the Board to direct the business and affairs of the Company in intervals between meetings of the Board. The Board dissolved the Executive Committee in March 2023.

Director Nominations

The Board has delegated to the Nominating Committee the responsibility of identifying, screening and recommending candidates to the Board. The Nominating Committee considers, without limitation, a potential

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candidate’s independence, skills, qualifications, qualities and other expertise required to be a director (the “Director Criteria”). Although the Nominating Committee does not have a formal policy regarding diversity in making its recommendations, in considering the Director Criteria, the Nominating Committee seeks to have a Board that reflects diversity in background, education, business experience, gender, race, ethnicity, culture, skills, business relationships and associations and other factors applicablethat will contribute to compensation committee members. the Board’s governance of the Company, and reviews its diversity when assessing the composition of the Board. These qualifications may vary from year to year depending on the needs of the Company at the time.

The CompensationDirector Criteria should not be construed as minimum qualifications for director selection nor is it expected that potential candidates will possess all of the Director Criteria identified. Rather, they represent the range of complementary talents, backgrounds and experiences that the Nominating Committee operates underbelieves would contribute to the effective functioning of the Board.

The Company’s Corporate Governance Guidelines and Nominating Committee charter provide guidelines with respect to the consideration of director candidates. Under these guidelines, the Nominating Committee is responsible for, subject to approval by the Board, establishing and periodically reviewing the Director Criteria and selection of new directors, including independence standards. The Nominating Committee also may recommend to the Board changes to the portfolio of Director Criteria required for the effective functioning of the Board, considering PSI’s strategy and the regulatory, geographic and market environments.

The Nominating Committee will consider candidates proposed by stockholders to be potential director nominees. Stockholders wishing to nominate a candidate for consideration by the Nominating Committee as a director nominee should provide the name of any recommended candidate, together with a brief biographical sketch, a document indicating the candidate’s willingness to serve, if elected, and evidence of the nominating stockholder’s ownership of Company stock to the attention of the Company’s CEO at 201 Mittel Drive, Wood Dale, Illinois 60191, and otherwise follow the Company’s nominating process described in the Company’s Bylaws. The Nominating Committee’s policy is to evaluate director nominees proposed by stockholders in the same manner that all other director nominees are evaluated. The Company may, in the future, pay a third-party a fee to assist it in the process of identifying and/or evaluating director candidates.

Stockholder Communications with the Board

Stockholders who wish to communicate with the Board or an individual director may send a written chartercommunication to the Board or such director addressed to the Company’s CEO at 201 Mittel Drive, Wood Dale, Illinois 60191. Each communication must set forth:

Each communication will be reviewed by the Company’s CEO to determine whether it is appropriate for presentation to the Board or such director. Examples of inappropriate communications include advertisements, solicitations or hostile communications. Communications determined by PSI’s CEO to be appropriate for presentation to the Board or such director will be submitted to the Chairman of the Board, the Board or such director on a periodic basis.

Code of Business Conduct and Ethics

The Company has adopted a Code of Business Conduct and Ethics (the “Code”) that applies to all of PSI’s employees, officers and directors, including those officers responsible for financial reporting. The Code is available on the Company’s website at www.psiengines.com under “Investors” and then “Governance.” The information on our website is not part of this proxy statement and is not deemed to be incorporated by reference herein.

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Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our Common Stock and other equity securities. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish PSI with copies of all Section 16(a) forms they file.

To the Company’s knowledge, including PSI’s review of the copies of such reports furnished to the Company and written representations that no other reports were required during 2022, all Section 16(a) filing requirements were satisfied on a timely basis, except the following reports: (i) one Form 4 filed in March 2022 (reporting one transaction) for C. Dino Xykis, (ii) an initial statement of beneficial ownership on Form 3 filed in April 2022 for Matthew Thomas, (iii) an initial statement of beneficial ownership on Form 3 filed in July 2022 for Junhua Gu, and (iv) an initial statement of beneficial ownership on Form 3 filed in September 2022 for Xun (Kenneth) Li. Each late filing was due to inadvertent administrative error by the Company.

Director Compensation

For 2022, PSI directors generally received the following compensation for their services as members of the Board:

The Company also reimburses directors for necessary and reasonable travel and other related expenses incurred in connection with the performance of their official duties and attendance at each meeting of the Board or any Board committee.

The table below summarizes the compensation paid to each director for their service on the Board for the year ended December 31, 2022:

EXECUTIVE COMPENSATION

The named executive officers for the year ended December 31, 2022 were:

Executive Team Transitions

Chief Executive Officer Transition

As previously disclosed, effective May 31, 2022 (the “Separation Date”), Lance Arnett resigned as CEO and C. (Dino) Xykis, then serving as the Company’s Chief Technical Officer, was appointed by the Company’s Board to the additional role of Interim CEO, effective June 1, 2022. As previously disclosed, effective April 24, 2023, the Board appointed Mr. Xykis as the Company’s CEO and Chief Technical Officer. The terms of Mr. Xykis’ agreement with the Company related to his new role as CEO and Chief Technical Officer, as well as the terms of his prior letter agreement related to his previous appointment as Interim CEO, are described under “Employment Agreements with Named Executive Officers” below.

In connection with Mr. Arnett’s resignation from the Company, the Company entered into a Separation Agreement and Release (the “Separation Agreement”) with Mr. Arnett on June 26, 2022. Pursuant to the Separation Agreement, Mr. Arnett is entitled to receive (a) cash severance payments in the total amount of $425,000, payable in 12 monthly installments of $35,416.67 payable on the last day of each month beginning on June 30, 2022, (b) a cash payment of $17,708.33 under the Long-Term Incentive (“LTI”) plan for the period January 1, 2020 to December 31, 2022 (the “LTI Plan”), once approved by the Compensation Committee, at the same time other LTI participants are paid, as full and ratifiedcomplete payment under the LTI Plan, (c) the payment of any Key Performance Indicator (“KPI”) bonus on a pro rata basis through the Separation Date, once determined by the Board. A copyCompany, if any, at the same time as other KPI participants are paid out, and (d) payment by the Company of a proportional share of the charterCOBRA premiums owed by Mr. Arnett as if he were still employed by the Company for a period of 12 months following the effective date of the Separation Agreement. Pursuant to the Separation Agreement, Mr. Arnett acknowledged and agreed that he had 30 days from his termination date to

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exercise any vested Stock Appreciation Rights (“SARs”) granted to him pursuant to the applicable SARs agreements, and that any and all unvested SARs granted to him pursuant to those agreements were forfeited and unenforceable against the Company. Mr. Arnett did not exercise his vested SARs, therefore they were cancelled following the expiration of the 30 day extension.

The Separation Agreement contains a release of the Company by Mr. Arnett and mutual non-disparagement provisions. Mr. Arnett also agreed that the confidentiality, non-competition, non-solicitation and IP assignment provisions in his employment agreement with the Company would remain in effect. Finally, Mr. Arnett agreed to cooperate with, and make himself reasonably available to, the Company for a period of 12 months following the effective date of the Separation Agreement in order to assist with the transition of his duties at a rate of $250 per hour plus reasonable expenses.

Chief Financial Officer Transition

As previously disclosed, on August 26, 2022, the Board appointed Xun (Kenneth) Li as CFO, effective August 29, 2022, succeeding Matthew Thomas who had been serving in an interim role since April 2022. Mr. Thomas then resumed his role as Controller. On August 29, 2022, the Company entered into an employment agreement with Mr. Li, the terms of which are described under “Employment Agreements with Named Executive Officers” below.

Prior to Mr. Li’s appointment as the Company’s CFO, Mr. Thomas was appointed as the Company’s Interim CFO which role Mr. Thomas assumed on April 3, 2022. Mr. Thomas and the Company entered into a letter agreement on June 9, 2022 for his services as Interim CFO. Pursuant to the letter agreement, in addition to his normal salary for his services as Controller, Mr. Thomas would be (i) entitled to a bonus of $8,333 per month from April 3, 2022 until such time as a successor CFO is publicly availableappointed by the Board (the “Interim CFO Term”), calculated at the end of the Interim CFO Term, and (ii) eligible to receive an award of 2,000 SARs, subject to certain conditions, with a vesting period of one year from the date of grant after the end of the Interim CFO Term, subject to Mr. Thomas’ continued service with the Company through the vesting date.

Summary Compensation Table

The table below summarizes the compensation paid for the services rendered to the Company, in all capacities, by its named executive officers for the “Corporate Governance” sectionyears ended December 31, 2022 and 2021.

Employment Agreements with Named Executive Officers

C. (Dino) Xykis. In connection with Mr. Xykis’ appointment as CEO and Chief Technical Officer on April 24, 2023, Mr. Xykis and the Company entered into an employment agreement, effective April 24, 2023 (the “Xykis Employment Agreement”), which supersedes his previous employment-related agreements with the Company. The Xykis Employment Agreement provides for the following: (a) an annual base salary of our website atwww.psiengines.com.$525,000; (b) eligibility to participate in any KPI plan, with a target opportunity equal to 70% of his KPI base salary (generally, annual W-2

In determining earnings, referred to herein as “KPI Base Salary” or “LTI Base Salary”), or as generally determined by the appropriate compensation packagesBoard for our executives,the overall KPI plan; (c) Mr. Xykis’ eligibility to participate in any LTI plan, with a target equal to 60% of his LTI Base Salary, or as generally determined by the Board for the overall LTI plan; (d) subject to approval by the Compensation Committee, considersan award of 85,000 SARs with a strike price to be determined at the time of the Compensation Committee’s approval and vesting in essentially 3 equal installments on the anniversary of the grant date, subject to Mr. Xykis’ continued employment in good standing as of each executive’s historical compensation, including equity and non-equity based compensation, and

equity holdings. In addition,automobile lease, $1,750 per month towards the CEO reviewscost of gasoline for travel as long as Mr. Xykis commutes from his current home to the performance of eachCompany’s headquarters, and reimbursement for reasonable amounts spent on auto insurance for the leased vehicle capped at $2,500 per year; and (f) Mr. Xykis’ entitlement to participate in all Company employee benefit programs for which senior employees of the executives. The conclusions reached,Company are generally eligible. If the Company terminates Mr. Xykis without cause (as defined in the Xykis Employment Agreement), in addition to payment of any accrued obligations, Mr. Xykis would be eligible to receive severance, subject to his execution and recommendations made,non-revocation of a general release of claims in favor of the Company, consisting of: (i) any determined, but unpaid, KPI or LTI bonus relating to the fiscal year prior to the fiscal year of termination; (ii) any prorated KPI or LTI bonus for the fiscal year in which his termination occurs once determined by the CEO based on these reviews forBoard; (iii) 12 months of base salary levelscontinuation payments; and discretionary(iv) subject to his election to receive COBRA health insurance, payment by the Company of a proportional share of the premiums owed by Mr. Xykis as if he were still employed by the Company for 12 months. If Mr. Xykis is terminated for cause, any outstanding KPI bonus amounts are presentedor LTI award, including any not yet paid for the fiscal year prior to the Compensation Committee. fiscal year of his termination, and any restricted stock units, unexercised stock options and SARs (whether vested or unvested) will be automatically forfeited. The Xykis Employment Agreement contains certain restrictive covenants, including an indefinite confidentiality provision and IP assignment provision, and non-competition and non-solicitation covenants applicable for one-year post-termination.

As part of this process,stated above, and as previously disclosed, the CEO takes into accountXykis Employment Agreement supersedes his general knowledge of industry pay levels, using this information for general reference and for perspective on market compensation practices. However, neither the CEO nor the Compensation Committee has engaged in any specific compensation benchmarking or reviewed or relied upon any formal surveys of compensation practices within the Company’s industry or more broadly.

The Compensation Committee relies to a large extent on the CEO’s conclusions and recommendations on each executive’s performance and compensation. However, it is the Compensation Committee which makes the final executive officer compensation determinations, subject (except in the case of equity awards) to the final approval by the full Board. Ultimately, the Compensation Committee makes these determinations on a discretionary basis, applying the compensation philosophy discussed above. Also, in the case of Mr. Cohen and Mr. Lewis, the Compensation Committee is bound by the terms of their employmentprior employment-related agreements with the Company, including the letter agreement he and the Company entered into on June 15, 2022 related to his appointment as applicable.the Company’s Interim CEO, the terms of which were in addition to the terms of his employment agreement with the Company, dated March 15, 2021, that remained in full force and effect and continued to govern his role as the Company’s Chief Technical Officer. For purposes of Mr. Xykis’ 2022 compensation, the Interim CEO letter agreement provided that (i) in addition to his salary, he would receive a bonus paid semi-monthly in the amount of $5,000 per month from June 1, 2022 until such time as a successor CEO was appointed by the Board (the “Interim CEO Term”), subject to an aggregate minimum bonus payment of $25,000 on a pre-tax basis (the “Minimum Bonus Payment”), and (ii) that he was also eligible to receive an award of 3,333 SARs per month during the Interim CEO Term (the “SARs Award”), subject to certain conditions, with an initial award of 20,000 SARs (the “Minimum SARs Award”) as part of the SARs Award due to vest on the one-year anniversary of the grant date, subject to Mr. Xykis’ continued service with the Company through the vesting date. As the Company continues to evolve and grow as a public company, the Compensation Committee may further formalize its compensation practices, which may include benchmarking against industry/peer group compensation, engaging compensation consultants to advise on specific compensation elements and/or tying cash and other incentive awardsInterim CEO Term was greater than 6 months, pursuant to the achievementterms of pre-established financial performance targets.

Rolethe letter agreement, Mr. Xykis also received any additional SARs grant of Compensation Consultant16,663 SARs as part of the SARs Award granted on April 25, 2023, which vests on the one-year

The Company has not historically used compensation consultants in determining compensation for our Named Executive Officers. Although anniversary of the grant date, subject to Mr. Xykis’ continued service with the Company previously utilized a Compensation Consultant for informal analyses of compensation in similar-sized organizations in like industries and to report and advise on certain mattersthrough the vesting date.

Xun (Kenneth) Li. On August 29, 2022, Mr. Li entered into an employment agreement with the Company, effective August 29, 2022 (the “Li Employment Agreement”), related to executive compensation, including matters relatinghis employment as CFO. The Li Employment Agreement provides for (i) an annual base salary of no less than $360,000; (ii) a sign-on bonus of $20,000 (subject to reimbursement from Mr. Li if he voluntarily resigns within 1 year from the 2012 Plan and equity awards undereffective date of his employment); (iii) eligibility to participate in the 2012 Plan,Company’s KPI plan at a target amount equal to 50% of his KPI Base Salary or as determined by the Board (with eligibility for 2022 on a prorated basis); (iv) eligibility to participate in any Company LTI plan with a target LTI bonus equal to 60% of his LTI Base Salary or as generally determined by the Company did not retain a Compensation Consultant with respectfor the overall LTI plan (with eligibility to 2015 compensation decisions.

Elements of Executive Compensation

As describedparticipate in more detail below, the principal elements of our executive compensation program include a mixstay portion of the following,LTI Plan on a prorated basis); and (v) eligibility to receive an award of 30,000 SARs with a strike price determined at the discretionclose of business on the day of the Compensation Committee:

The Compensation Committee uses its discretion to create a mix of compensation elements for each Named Executive Officer that emphasizes both long-term strategic value for stockholders and shorter-term strategic and operational goals.

Base Salary

We provide Named Executive Officers and other employees with a base salary to compensate them for services rendered duringCommittee’s approval (i.e., the fiscal year. For executives,grant date), vesting in four equal installments on the amount of base salary is meant to reflect the primary responsibilitiesanniversaries of the executive’s position, experience level, management skills andgrant date subject to Mr. Li’s continued employment with the executive’s contributionCompany through the vesting date (which award was granted on September 2, 2022). Pursuant to the performance of the Company. In adjusting base salary levels, the Compensation Committee considersLi Employment Agreement, Mr. Li is also eligible to participate in the Company’s overall performance (including as to financial results and creation of stockholder value) and, with respect to executives other than the CEO, relies to a large degree upon the recommendations from the CEO

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following his review of the performance of the executive officers. The Compensation Committee does not apply any formulas or assign any criteria specific mathematical weight; instead, the Compensation Committee exercises its judgment and discretion.

Salaries for executive officers are reviewed annually or when there is a change in position or responsibilities, such as a promotion. The Compensation Committee typically approves the base salary increases in January for that fiscal year. In January 2015, the Compensation Committee determined, considering the recommendation of the CEO, that base salaries for fiscal 2015 be as follows: Gary Winemaster, $540,000, Eric Cohen, $500,000, Daniel Gorey, $300,000 and Kenneth Winemaster, $272,500, attempting to align the salary of each Named Executive Officer with his respective responsibilities. The base salaries for Gary Winemaster, Eric Cohen and Kenneth Winemaster in fiscal 2015 remainedemployee benefit programs on the same basis as in fiscal 2014. Daniel Gorey’s base salary was increased from $285,000.its other employees. In accordance with his employment agreement, Michael Lewis’ base salary for 2015 was set at $325,000 and was paid on a pro-rata basis from his start date of October 19, 2015.

Discretionary Bonus

The Compensation Committee utilizes discretionary bonuses to provide additional compensation to the Named Executive Officers, and to award them for their performance. The Compensation Committee believesevent that the immediacy of these bonuses provides an incentive to the Named Executive Officers to raise their individual level of performance, and thus the Company’s overall level of performance. Accordingly, the Compensation Committee believes the bonuses are an important motivating factor for the Named Executive Officers.

The Company has not adopted any formal, or informal, performance or other financial performance or other targets or objectives for the calculation or payment of these discretionary bonuses. Instead, in determining discretionary bonuses awarded, the Compensation Committee considers factors such as the Company’s overall performance for the previous year and stockholder value creation, discretionary bonuses awarded in previous years and the individual performance of the Named Executive Officer, including his particular contributions to the success of the Company (taking into account his particular roles and responsibilities for the Company). As part of its determination, the Compensation Committee relies to a large degree upon the recommendations and conclusions of the CEO with respect to the performance of each of the Named Executive Officers other than the CEO.

In determining discretionary bonus payments for the Named Executive Officers for fiscal 2015, the Compensation Committee took into account the performance by the Company and each Named Executive Officer’s individual contribution to that performance. Given the overall performance of the Company during 2015 and consistent with its compensation and bonus philosophy, the Compensation Committee determined it was not appropriate to approve bonus compensation to any of the Named Executive Officers.

Long-Term Equity Incentive Awards

The Compensation Committee has the authority to grant stock options, restricted stock and other awards under the 2012 Plan to the Named Executive Officers and other employees, consultants and directors. The purpose of granting such awards is to provide equity compensation that provides value to these employees when value is also created for the stockholders, and applicable vesting periods are designed to motivate award recipients to remain employees of the Company. For Company executives, the equity compensation is intended to motivate them to make stronger business decisions, improve financial performance and focus on both short-term and long-term objectives and to encourage behavior that protects and enhances the long-term interests of the Company’s stockholders. The Compensation Committee also believes that equity incentive awards are an important retention tool.

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The Compensation Committee determines grants of long-term equity incentive awards based on factors such as overall Company and individual performance, job positions and responsibilities within the Company, growth potential and level of responsibility. The Compensation Committee also considers, for each individual, prior grants and equity holdings, length of time in current position and any change in responsibility, as well as the financial statement expense associated with the grants. As part of its determination, the Compensation Committee relies to a large degree upon the recommendations and conclusions of the CEO, based upon his review of the performance of each of the Named Executive Officers.

To date, the Compensation Committee has only granted three equity awards to Named Executive Officers: (i) the Compensation Committee granted a stock appreciation right (SAR) to Eric Cohen in 2012 as contemplated by his employment agreement executed when he joined the Company in June of 2012; (ii) the Compensation Committee granted Daniel Gorey restricted stock in 2013; and (iii) the Compensation Committee granted a SAR to Michael Lewis in 2015 as contemplated by his employment agreement executed when he joined the Company in October of 2015. The grants to Messrs. Cohen and Lewis were designed to incentivize them over a long-term horizon, so the Compensation Committee did not consider that any additional award to them was necessary or appropriate for 2015.

In 2015, Mr. Cohen’s SAR Agreement was amended to extend the vesting dates with respect to his unvested award as follows: 100,000 shares underlying the SAR award vest on June 6, 2017 and 81,290 shares underlying the SAR award vest on June 6, 2019. In consideration for extending the vesting dates, the Company will pay Mr. Cohen $250,000 for each of the calendar years 2016, 2017, 2018 and 2019 so long as he remains employed by the Company. If hisLi’s employment is terminated by the Company without cause (as defined in the Li Employment Agreement), he will be entitled to receive (i) severance equal to his base salary for 6 months if his employment period is less than 48 months, and for 12 months if his employment period is 48 months or bylonger, subject to his execution and non-revocation of a general release in favor of the Company, and (ii) payment for any KPI bonus or LTI award related to the fiscal year in

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which the termination occurs, if any, which may be prorated based on when his termination date occurs during the fiscal year. If Mr. CohenLi is terminated for good reasoncause, any outstanding KPI bonus or LTI award, including any not yet paid for the fiscal year prior to January 1, 2020, he will receive a bonus for the year of termination. Untilhis termination, and any restricted stock units, unexercised stock options and SARs (whether vested or unvested) will be automatically forfeited. Mr. Li’s employment agreement contains certain restrictive covenants, including an indefinite confidentiality provision and IP assignment provision and non-competition and non-solicitation covenants applicable for one-year post-termination.

Mr. Arnett’s employment agreement was terminated in connection with his resignation from the earlierCompany. The terms of June 6, 2017 orhis Separation Agreement are described above under “Executive Team Transitions—Chief Executive Officer Transition.” The terms of the dateletter agreement Mr. Thomas entered into with the Company implements a stock retention policy, Mr. Cohen will not sell more than $750,000 of any vested common stock underlyingfor his SAR award within a six-month period without the written consent of the Compensation Committee.services as Interim CFO are described above under “Executive Team Transitions—Chief Financial Officer Transition.”

Long-Term Incentive Plan

Pursuant to the CooperationLTI Plan, executives, including the named executive officers, are eligible to receive 50% to 150% of a target incentive amount (which target incentive amount is equal to 60% of the executive’s LTI Base Salary), with (i) 50% of the target incentive amount to be received as a bonus that is not tied to performance conditions and Transition Agreement dated October 3, 2015 between Daniel Gorey and the Company,(ii) the remaining 1,111 sharesamount of common stock underlying Mr. Gorey’s restricted stock grant50% (plan target) to 100% (maximum) of the target incentive amount subject to the Company’s performance against a performance indicator based on return on assets over the three-year performance period. The 50% of the target incentive amount (equal to 30% of the executive’s LTI Base Salary) vests in equal annual installments as follows: (i) one-third vested on November 30, 2015.

Gary WinemasterDecember 31, 2020 and Kenneth Winemaster have not yet received any awards under the 2012 Plan in light of their significant equity holdings, but the Compensation Committee may make awards to these Named Executive Officerswas paid out in the future to reward outstandingfirst quarter of 2021; (ii) one-third vested on December 31, 2021 and was paid out in April of 2022; and (iii) one-third vested on December 31, 2022 and was paid out in the first quarter of 2023. No amounts were paid at the end of the three-year performance and creation of stockholder value.

Retirement Benefits under the 401(k) Plan, Executive Perquisites and Generally Available Benefit Programs

We also provide the Named Executive Officersperiod with benefits under a 401(k) retirement plan, perquisites and other personal benefits that the Compensation Committee believes are reasonable and consistent with our overall executive compensation program and the Compensation Committee’s executive compensation philosophy, as well as the Compensation Committee’s objective to better enable us to attract and retain the most talented and dedicated executives possible. The Compensation Committee periodically reviews the levels of perquisites and other personal benefits providedrespect to the Named Executive Officers.

Employment Related Agreements

The Company has employment agreements with Mr. Cohen and Mr. Lewis. The Company has also entered into a Cooperation and Transition Agreement with Mr. Gorey. See the discussion following the Summary Compensation Table and under the heading “Potential Payments upon Termination or Change in Control” for details about the agreements.

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Other Matters

Tax-Deductible Performance-Based Compensation

Section 162(m)performance-related component of the Internal Revenue Code limits to $1,000,000 the annual tax deduction for compensation paid to a Named Executive Officer (other than the Chief Financial Officer), unless such compensation qualifies as performance-based compensation and is paid pursuant to a stockholder approved plan. While base salary, discretionary bonuses and time-based restricted stock do not qualify as performance-based, the stock appreciation rights granted under the 2012 Plan are intended to qualify as performance-based compensation and thus fully deductible under Internal Revenue Code Section 162(m). The Company maintains the flexibility to pay non-deductible compensation if it determines it is in the best interests of the Company and its stockholders.

Compensation Risk Assessment

During fiscal 2015, Company management, along with the Compensation Committee, considered whether anyLTI Plan. A full description of the Company’s compensation policies and practices had the potentialLTI Plan is available at Exhibit 10.35, “Description of Long-Term Incentive Plan” to create risks that are reasonably likely to have a material adverse effect on the Company. Management considered the risk profile of the Company’s businessAnnual Report.

2022 Key Performance Indicator Plan

The named executive officers were eligible to earn a cash incentive award for 2022 under the 2022 KPI Plan. For 2022, the annual target incentive opportunity for each named executive officer as a percentage of his or her KPI Base Salary for the year was 56% for Mr. Xykis, 60% for Mr. Arnett, 50% for Mr. Li, 29% for Ms. Gu and the design38% for Mr. Thomas, with their individual cash incentive awards weighted as follows: (i) for Messrs. Xykis and structure of its compensation policies and practices. TheLi, 70% was tied to Company concluded that the risks arising from its compensation policies and practices are not reasonably likelyperformance relative to have a material adverse effect on the Company based onperformance metrics and 30% was tied to individual performance; (ii) for Ms. Gu and Mr. Thomas, 60% was tied to Company performance relative to the following:Company performance metrics and 40% was tied to individual performance, and for Mr. Arnett, 90% was tied to Company performance relative to the Company performance metrics and 10% was tied to individual performance.

The following four separately weighted performance metrics were established as the Company’s performance metrics under the 2022 KPI Plan: (i) gross revenue, (ii) net income, (iii) inventory at December 31, 2022, and (iv) gross revenue of strategic products. Weightings, performance thresholds and payout ranges are shown in the table below with no payout earned for performance below the threshold. Set forth in the table below are the weightings, performance thresholds and payout ranges for each Company performance metric.

The Company’s base salary, retirement benefits, executive perquisites and generally available benefit programs create little, if any, risk2022 performance in relation to the Company.