B. RILEY FINANCIAL, INC.
21255 BURBANK11100 SANTA MONICA BOULEVARD, SUITE 400800
WOODLAND HILLS,LOS ANGELES, CA
(818) 884-3737310-966-1444

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To be held on June 18, 2020May 27, 2021

To the Stockholders of B. Riley Financial, Inc.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of B. Riley Financial, Inc. (the “Company”) will be held on June18, 2020,May 27, 2021, at 8:00 a.m. Pacific Time, exclusively via live webcast, athttp://www.viewproxy.com/brileyfin/2020/vm, for the following purposes:

1.      To elect nine (9)eight (8) directors to hold office for a one-year term to expire at the Company’s 20212022 Annual Meeting of Stockholders or until their successors are elected and duly qualified.

2.      To ratify the selection of Marcum LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2020.2021.

3.      To approve the B. Riley Financial, Inc. 2021 Stock Incentive Plan.

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

The foregoing items of business are more fully described in the proxy statement accompanying this notice.

The Company’s Board of Directors has fixed the close of business on May11, 2020April 12, 2021 as the record date for the determination of stockholders entitled to notice of and to vote at this Annual Meeting and at any adjournment or postponement thereof. All stockholders are invited to attend the virtual meeting. To participate in the virtual meeting, you will need the control number included on your proxy card or voting instruction form.

Woodland Hills,Los Angeles, California
May18, 2020April 20, 2021

ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING ONLINE. WHETHER OR NOT YOU EXPECT TO ATTEND THE VIRTUAL MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE ONLINE IF YOU ATTEND THE VIRTUAL MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME AND HAVE IT AVAILABLE WHEN YOU ACCESSEMAIL THAT PROXY TOvirtualmeeting@viewproxy.com, NO LESS THAN ONE HOUR IN ADVANCE OF THE VIRTUAL MEETING WEB PAGE.MEETING.

Revocation of Proxies

You are a stockholder of record if at the close of business on the record date your shares were registered directly in your name with Continental Stock Transfer and Trust Company, our transfer agent. If you are a stockholder of record and give a proxy, you may revoke it at any time before its use, either:

(1)    by revoking it online at the Annual Meeting;

(2)    by writing, delivered to our Corporate Secretary at 21255 Burbank11100 Santa Monica Boulevard, Suite 400, Woodland Hills, California 91367800, Los Angeles, CA 90025 before the proxy is used; or

(3)    by a later dated proxy card delivered to us at the above noted address before the proxy is used.

Your presence at the virtual meeting will not revoke your proxy, but if you attend the meeting and cast an online ballot, your proxy will be revoked as to the matters on which the ballot is cast.

If you hold your shares through a broker, bank, trustee or other nominee, please follow the instructions provided by your broker or other nominee as to how you may change your vote or obtain a legal proxy to vote your shares if you wish to cast your vote online at the Annual Meeting.

Cost and Method of Solicitation

We will bear the entire cost of solicitation of proxies, including preparation, assembly, printing and mailing of this proxy statement, the proxy card and any additional information furnished to our stockholders. Solicitation of proxies by mail may be supplemented by telephone or personal solicitation by our directors, officers, or other regular employees. No additional compensation will be paid to directors, officers, or other regular employees for such services. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding in their names shares of our common stock beneficially owned by others to forward to such beneficial owners. We may reimburse such persons for their costs in forwarding the solicitation materials to such beneficial owners.

Stockholder List

A complete list of registered stockholders entitled to vote at the meeting will be available for examination by any stockholder, for any purpose related to the meeting, via a secure link that will be provided during the virtual meeting. The link will provide a protected PDF version of our registered stockholders list.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 20202021 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE18, 2020.MAY 27, 2021.

Copies of this proxy statement and our 20192020 Annual Report to stockholders are also available online at:http://www.viewproxy.com/brileyfin/20202021.

PROPOSAL NO. 1
ELECTION OF DIRECTORS

The B. Riley board of directors has nominated each of Robert L. Antin, Robert D’Agostino, Thomas J. Kelleher, Randall E. Paulson, Bryant R. Riley, Michael J. Sheldon, Todd D. Sims, Mimi K. Walters and Mikel H. Williams to be elected as a director at the B. Riley annual meeting. If elected, the nominees will serve as directors until B. Riley’s annual meeting of stockholders in 2021,2022, or until their respective successors are duly elected and qualified or their earlier death, resignation, or removal. Andrew Gumaer will not stand for re-election at the Annual Meeting, and his term will end at the commencement of the Annual Meeting. If any of the nominees declines to serve or becomes unavailable for any reason, or if a vacancy occurs before the election (although B. Riley knows of no reason to anticipate that this will occur), the proxies may be voted for such substitute nominees as the B. Riley board of directors may designate. Upon expiration of the term of any director, the successor to such director (or such director, if such director is re-elected) will be elected for a one-year term at the next annual meeting of stockholders.

There are no familial relationships between any of B. Riley’s directors or B. Riley’s executive officers and any other director or executive officer. No arrangement or understanding exists between any nominee and any other person or persons pursuant to whom any nominee was or is to be selected as a director or director nominee of B. Riley.

Information Regarding Directors

The following table provides the name, age and position(s) of each of our directors as of March31, 2020:March 31, 2021:

____________

*        Chairman of the respective committee.

Our Nominees for Director

Bryant R. Rileyhas served as our Chairman and Co-Chief Executive Officer since June 2014 and July 2018 respectively, and as a director since August 2009. He also previously served as our Chief Executive Officer from June 2014 to July 2018. In addition, Mr.RileyMr. Riley served as the Chairman of B. Riley & Co., LLC since founding the stock brokerage firm in 1997 until its combination with FBR Capital Markets & Co., LLC in 2017; Chief Executive Officer of B. Riley & Co., LLC from 1997 to 2006; and as Chairman of B. Riley Principal Merger Corp. from April 2019 to February 2020, at which time it had completed its business combination with Alta Equipment Group, Inc. (NYSE: ALTG) and as Chairman of B. Riley Principal Merger Corp II from May 2020 to November 2020 at which time it had completed it business combination with Eos Energy Enterprises (Nasdaq: EOSE). Mr.RileyMr. Riley has served as director of Babcock & Wilcox Enterprises, Inc. (NYSE: BW) since April 2019, and Select Interior Concepts, Inc. (NASDAQ: SIC) since November 2019. He also previously served on the board of Babcock & Wilcox Enterprises, Inc. (NYSE: BW) from April 2019 to September 2020, Sonim Technologies, Inc. (NASDAQ: SONM) from October 2017 to March 2019 and Franchise Group, Inc. (NASDAQ: FRG) (fka Liberty Tax, Inc.) from September 2018 through March 2020. Mr. Riley received his B.S. in Finance from Lehigh University. Mr. Riley’s experience and expertise in the investment banking industry provides the Board with valuable insight into the capital markets. Mr. Riley’s extensive experience serving on other public company boards is an important resource for the Board.

Thomas J. Kelleher has served as our Co-Chief Executive Officer since July 2018 and as a member of our board since October 2015. He also previously served as President from August 2014 to July 2018. Mr. Kelleher previously served as Chief Executive Officer of B. Riley & Co., LLC, a position he held from 2006 to 2014. From the firm’s founding in 1997 to 2006, Mr. Kelleher held several senior management positions with B. Riley & Co., LLC, including Chief Financial Officer and Chief Compliance Officer. Mr. Kelleher served on the board of directors of Special Diversified Opportunities Inc. from October 2015 to June 2017. He received his Bachelor of Science in

Mechanical Engineering from Lehigh University. Mr. Kelleher’s experience and expertise in the investment banking industry provides the Board with valuable insight into the capital markets. Mr. Kelleher’s experience serving on other public company boards is an important resource for the Board.

Robert L. Antin has served as a member of the Board since June 2017. Mr.AntinMr. Antin was a co-founder of VCA Inc., a national animal healthcare company that provides veterinary services, diagnostic testing and various medical technology products and related services to the veterinary market and was publicly traded (NASDAQ: WOOF) until the company was privately acquired in September 2017. Mr. Antin has served as a Chief Executive Officer and President at VCA Inc. since its inception in 1986. Mr.AntinMr. Antin also served as the Chairman of the Board of VCA, Inc. from inception through the September 2017 acquisition. Mr.AntinMr. Antin also currently serves on the Board of Directors of Rexford Industrial Realty, Inc. (NYSE: REXR) since July 2013.2013 and Heska Corporation (NASDAQ: HSKA) since November 2020. From September 1983 to 1985, Mr.AntinMr. Antin was President, Chief Executive Officer, a director, and co-founder of AlternaCare Corp., a publicly held company that owned, operated and developed freestanding out-patient surgical centers. From July 1978 until September 1983, Mr.AntinMr. Antin was an officer of American Medical International, Inc., an owner and operator of health care facilities. Mr.AntinMr. Antin received his MBA with a certification in hospital and health administration from Cornell University. Mr.Antin’sMr. Antin’s executive leadership experience provides an important resource to the Board.

Robert D’Agostino has served as a member of the Board since October 2015. Mr. D’Agostino has served as President of Q-mation, Inc. since 1999. Q-mation, Inc. is a leading supplier of software solutions targeted at increasing operational efficiencies and asset performance in manufacturing companies. Mr. D’Agostino joined Q-mation, Inc. in 1990 and held various sales, marketing and operations management positions prior to his appointment as President. He previously served on the board of Alliance Semiconductor Corp. from July 2005 to February 2012. Mr. D’Agostino graduated from Lehigh University with a B.S. in Chemical Engineering. Mr. D’Agostino’s executive leadership experience provides an important resource to the Board.

Randall E. Paulson Mr.PaulsonMr. Paulson has been nominated for election atserved as a member of the Company’s 2020 Annual Stockholder Meeting. Mr.PaulsonBoard since June 18, 2020. Mr. Paulson currently serves on the Board of Directors of Testek Inc. and Dash Medical Holdings, LLC and previously served on the Boards of EAG, Inc. (2008 – 2017) and L-com, Inc. (2012 – 2016),. Testek, EAG and L-com are portfolio companies of Odyssey Investment Partners, LLC where he serves as a Special Advisor. Mr.PaulsonMr. Paulson retired as a Managing Principal of Odyssey in 2019 where he served in such capacity since 2005. Prior to this, Mr.PaulsonMr. Paulson was Executive Vice President — Acquisitions and Strategic Development at National Financial Partners, a New York based consolidator of independent financial services distribution firms. From 1993 to 2000, Mr.PaulsonMr. Paulson was at Bear, Stearns & Co. Inc. where he was a Senior Managing Director in the Mergers and Acquisitions and Corporate Finance groups. Prior to Bear Stearns, Mr.PaulsonMr. Paulson was a member of GE Capital’s merchant banking group. A native of Minnesota, Mr.PaulsonMr. Paulson received a BSB in Accounting from the University of Minnesota and his MBA from the Kellogg Graduate School of Management at Northwestern University. Mr.Paulson’sMr. Paulson’s financial services industry experience will provide an important resource to the Board.

Michael J. Sheldon has served as a member of the Board since July 2017. Mr. Sheldon served as CEO of Deutsch North America, one of the most awarded creative agencies in the United States, from January 2015 until his retirement in December 2019. Mr.SheldonMr. Sheldon had also served as CEO of Deutsch’s Los Angeles office from September 1997 to January 2015. Mr.SheldonMr. Sheldon received a B.A. degree from Michigan State University in Advertising. Mr.Sheldon’sMr. Sheldon’s entrepreneurial skills and marketing experience provide an important resource to the Board.

Todd D. Sims has served as a member of the Board since October 2016. Since August 2018, Mr.Sims also sits on the board of directors of TheMaven, Inc. as a designee of B. Riley Financial, Inc. Since March 2010, Mr. Sims has served as Senior Vice President of Digital Strategy of Anschutz Entertainment Group, Inc., one of the leading sports and entertainment presenters in the world, overseeing business and corporate development for its ticketing business, AXS. Prior to that, Mr. Sims spent more than 15 years building Internet businesses. In the mid 1990’s, he served as ESPN’s executive producer of NFL.com, NBA.com and NASCAR Online. He also served on the management team of eCompanies, LLC, an incubator which has incubated a number of companies including Jamdat Mobile Inc. (acquired by Electronic Arts Inc.), Business.com Inc. (acquired by R.H. Donnelley Corp.) and Boingo Wireless, Inc. (initial public offering). Mr. Sims serves as an advisor to the L.A. Dodgers Tech Accelerator and is a guest lecturer at the University of Southern California’s Marshall School of Business. Mr. Sims’ digital experience provides an important resource to the Board.

Mikel H. Williams has served as a member of the Board since October 2015. Since 2016, Mr. Williams has served as the Chief Executive Officer and a director of Targus International LLC, a privately held, leading global supplier of carrying cases and accessories for the mobile lifestyle, since February 2016.lifestyle. Mr. Williams formerly served as the Chief Executive Officer and a director of JPS Industries, Inc., a composite materials manufacturer, from 2013 until its sale in 2015. Prior to that, Mr. Williams was the President, Chief Executive Officer, and a director of DDi Corporation (NASDAQ: DDIC), a leading provider of time-critical, technologically advanced electronics manufacturing services, from November 2005 until its sale in May 2012. Mr. Williams has also served in various management positions with several technology related companies in the manufacturing, telecommunications, and professional services industries. Since October 2014, Mr. Williams also serves on the board of directors of Centrus Energy Corp. (NYSE: LEU; formerly USEC, until its bankruptcy restructuring in 2014). Mr. Williams formerly served on the board of Tellabs, Inc. (NASDAQ: TLAB) until it was sold in 2013, Lightbridge Communications Corp. until it was sold in February 2015 and Iteris, Inc. (NYSE:ITI) from 2011 until November 2019. Mr. Williams received his B.S. degree from the University of Maryland in accounting and an M.B.A. from Georgetown University. Mr. Williams’s executive leadership experience provides an important resource to the Board.

Vote Required and Board of Directors’ Recommendation

Each director nominee shall be elected to the Board if a majority of the votes cast are in favor of such nominee’s election; provided, however, that, if the number of nominees for director exceeds the number of directors to be elected, directors shall be elected by a plurality of the votes of the shares represented online or by proxy and entitled to vote on such election of directors. A nominee will be deemed to receive a majority of the votes cast in favor of such nominee’s election if the number of votes cast “for” such nominee’s election exceeds the number of votes cast “against” that nominee’s election. The persons named in the enclosed proxy will vote the proxies they receive FOR the election of the nominees named above unless a particular proxy card withholds authorization to do so or provides contrary instructions. “Abstentions” and “broker nonvotes” will not be counted as a vote cast either “for” or “against” a director’s election. Each of the nominees has indicated that he is willing and able to serve as a director. If, before the Annual Meeting, any nominee becomes unable to serve, an event that is not anticipated by the Board, the proxies will be voted for the election of whomever the Board may designate.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTEFOR
THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR.

PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTING FIRM

Our Board has selected Marcum LLP (“Marcum”) as our independent public accounting firm for the fiscal year ending December 31, 20202021 and has further directed that management submit the selection of independent public accounting firm for ratification by our stockholders at our Annual Meeting. Marcum has audited our financial statements since the fiscal year ended December 31, 2006. Representatives of Marcum are expected to be online at the virtual Annual Meeting, will have an opportunity to make a statement if they so desire, and will be available to respond to appropriate questions.

Stockholder ratification of the selection of Marcum as our independent public accounting firm is not required by our Bylaws or otherwise. However, the Board is submitting the selection of Marcum to the stockholders for ratification as a matter of good corporate practice. If the stockholders do not ratify the selection, the Board, and our Audit Committee (“Audit Committee”) will reconsider whether or not to retain Marcum. Even if the selection is ratified, the Board and the Audit Committee may, in their discretion, direct the appointment of a different independent public accounting firm at any time during the year if they determine that such a change would be in our and our stockholders’ best interests.

Audit and All Other Fees

The following table sets forth the aggregate fees for services provided to us by Marcum for the fiscal years ended December 31, 20192020 and 2018:2019:

____________

(1)      Audit Fees consist of audit and various attest services performed by Marcum and include the following for the years ended December 31, 20192020 and 2018:2019: (a) reviews of our financial statements for the quarterly periods ended March 31, June 30, and September 30, and (b) the audit of our financial statements for the year ended December 31, and (c) services rendered in connection with the filing of registration statements and underwriter comfort letters.

(2)      Audit-Related Fees consists of fees for assurance and related services performed by Marcum related to the performance of the audit or review of the Company’s financial statements other than audit fees.

Audit Committee Pre-Approval Policy

As a matter of policy, all audit and non-audit services provided by our independent registered public accounting firm are approved in advance by the Audit Committee, which considers whether the provision of non-audit services is compatible with maintaining such firm’s independence. All services provided by Marcum during fiscal years 20182020 and 2019 were pre-approved by the Audit Committee. The Audit Committee has considered the role of Marcum in providing services to us for the fiscal year ended December 31, 20192020 and has concluded that such services are compatible with their independence as our auditors.

Vote Required and Board of Directors’ Recommendation

Approval of this proposal requires the affirmative vote of the holders of a majority in voting power of our common stock present online or represented by proxy at a meeting at which a quorum is present. Abstentions will be counted as present for purposes of determining the presence of a quorum and will have the same effect as a vote against this proposal. Broker non-votes will not result from the vote on Proposal No. 2.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTEFOR THE RATIFICATION OF THE SELECTION OF MARCUM LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2020.2021.

PROPOSAL NO. 3
APPROVAL OF THE
B. RILEY FINANCIAL, INC. 2021 STOCK INCENTIVE PLAN

Introduction

On April 9, 2021, the Company’s Board of Directors approved the 2021 Stock Incentive Plan (the “2021 Plan”) upon recommendation of the Compensation Committee. The 2021 Plan provides for issuance of (i) 3,844,965 shares of B. Riley Financial (“RILY”) common stock, which includes shares of common stock available but unused under the B. Riley Financial, Inc. Amended and Restated 2009 Stock Incentive Plan (the “Current Plan”) as of the Effective Date (as defined below), including 1,500,463 shares of common stock that are currently are designated under the FBR & Co., 2006 Long Term Incentive Plan share pool (the “FBR share pool”) plus (ii) shares of common stock subject to outstanding awards under the Current Plan as of the Effective Date that, on or after the Effective Date, expire or are forfeited, terminated or cancelled for any reason without having been exercised or settled in full. Upon shareholder approval of the 2021 Plan, no further awards will be granted under the “Current Plan”, which is the plan currently used to grant equity-based awards to employees and non-employee directors. Instead, all future grants of equity-based awards to the Company’s employees, consultants and non-employee directors will be made under the 2021 Plan.

The Current Plan was originally adopted in 2009 and provides for issuance of an aggregate of 3,210,133 shares of RILY common stock. The Current Plan was amended on May 21, 2019 to reflect an increase of 3,000,000 shares for a total of 6,210,133 shares available under the plan. As of March 31, 2021, a total 3,844,965 shares of RILY common stock remained available for issuance under the Current Plan. Of this total, 1,500,463 shares are designated under the FBR share pool and are available to issue to certain employees under the Current plan. The 2021 Plan will eliminate the FBR share pool by moving the 1,500,463 shares of RILY common stock thereunder to the RILY general share pool.

Shareholder approval of the 2021 Plan is necessary in order for the Company to satisfy the shareholder approval requirements of the NASDAQ Stock Exchange, and to permit the grant of incentive stock options.

Highlights of the 2021 Plan

The 2021 Plan contains a number of features and practices intended to promote good governance. The Board of Directors believes that the adoption of the 2021 Plan will serve the best interests of our stockholders by (i) attracting, retaining and motivating key employees, non-employee directors and consultants, (ii) aligning the interests of such persons with our stockholders and (iii) promoting the ownership of the Company’s equity. Highlights of the 2021 Plan include:

•        eligibility of employees, non-employee directors and consultants to participate in the 2021 Plan;

•        that the 1,500,463 shares of RILY common stock that are currently part of the FBR share pool be made available for general use under the 2021 Plan;

•        a minimum vesting period of 12 months following the date of grant for all equity awards, excepting a 5% carve-out and other limited exceptions;

•        no repricing of stock options or stock appreciation rights without stockholder approval; and

•        the 2021 Plan removes references to a performance-based exception to the deductibility limits of Section 162(m) of the Internal Revenue Code (the “Code”) that is now obsolete under the Tax Cuts and Jobs Act of 2017.

We are requesting that our shareholders authorize the issuance of 1,500,463 shares currently reserved for awards granted to certain employees under the FBR share pool for general use under the 2021 Plan. Upon the approval of the proposed 2021 Plan, all remaining shares available under the Current Plan will be available under the 2021 Plan, including the FBR share pool, which will no longer be limited to grants to certain employees, and no additional awards will be made under the Current Plan. Under the 2021 Plan, 3,844,965 total shares of common stock would then be available for issuance, with such number increased by the number of shares subject to the portion of any award outstanding pursuant to the Current Plan which expires or is forfeited, terminated or cancelled for any reason without having been exercised or settled in full on or after the Effective Date. Those shares will be returned to the 2021 Plan at the same ratio in which such award counted against the total shares available for the award at the time of grant under the Current Plan.

We continue to actively manage our use of shares of common stock available for equity-based compensation each year to maintain an acceptable burn rate (how fast a company uses the supply of shares authorized for issuance under its stock plan), and believe our historical share usage has been responsible and demonstrated prudence. Common measures of a stock plan’s cost include burn rate, dilution and overhang. The following table sets forth information regarding the number of shares of common stock subject to performance-based restricted stock unit grants and time-based restricted stock unit grants in each of 2018, 2019 and 2020:

Eligibility

Employees (including prospective employees), non-employee directors and consultants will be eligible to participate in the 2021 Plan. As of March 31, 2021, all of our approximately 1,335 employees, six (6) directors and 669 consultants would have been eligible to participate in the 2021 Plan. The Compensation Committee reserves the right to determine which employees, directors and consultants will receive awards under the 2021 Plan and reserves the right to grant no awards in a particular year.

Common Stock Available for Awards under the 2021 Plan

Subject to adjustment as described below, the maximum aggregate number of shares of our common stock available for issuance under the 2021 Plan will be (a) 3,844,965shares of common stock (including the FBR share pool) plus (b) the number of shares of common stock underlying awards outstanding under the Current Plan which expires or is forfeited, terminated or cancelled for any reason without having been settled in full on or after the date the 2021 Plan is approved by our stockholders (the “Effective Date”) (the sum of (a) and (b), the “Share Limit”). If an award granted under the 2021 Plan is forfeited, expires, is settled for cash or withheld by the company to satisfy any tax withholding obligation, the shares underlying such award will again become available for subsequent issuance under the 2021 Plan. The payment of dividend equivalent rights in cash in conjunction with any outstanding awards granted under the 2021 Plan will not be counted against the shares available for issuance under the 2021 Plan. Shares subject to awards that are assumed, converted or substituted under the 2021 Plan as a result of the Company’s acquisition of another company (including by way of merger, combination or similar transaction) will not count against the number of shares that may be granted under the 2021 Plan. In addition, available shares under a stockholder approved plan of an acquired company (as appropriately adjusted to reflect the applicable transaction) may be used for awards under the 2021 Plan and do not reduce the maximum number of shares available for grant under the 2021 Plan, subject to applicable stock exchange requirements. The number of shares available under the 2021 Plan will be reduced upon the exercise of a stock option or stock appreciation right by the gross number of shares for which the award is exercised even if the option or stock appreciation right is exercised by means of a net-settlement exercise procedure.

Adjustments

In connection with a recapitalization, stock split, reverse stock split, stock dividend, spinoff, split up, combination, reclassification or exchanges of shares of common stock, merger, consolidation, rights offering, separation, reorganization or liquidation or any other change in our corporate structure or shares of our common stock, including any extraordinary dividend or extraordinary distribution, the Compensation Committee will make adjustments as it deems appropriate (including, without limitation, by payment of cash) to (i) the maximum number of shares reserved for issuance as grants, (ii) the maximum number of shares that can be issued through incentive stock options and (iii) the terms of any outstanding awards (including, without limitation, the number of shares covered by each outstanding award, the type of property or securities to which the applicable award relates and the exercise or strike price of any award).

Limits on Compensation to Non-Employee Directors

Under the 2021 Plan, no non-employee director of the Company may be granted (in any calendar year) compensation with a value in excess of $500,000, with the value of any equity-based awards based on the accounting grant date value of such award.

Minimum Vesting

Under the 2021 Plan, awards are subject to a minimum vesting schedule of at least 12 months following the date of grant (with the exception of awards in respect to up to 5% of the Share Limit). The foregoing limitation will not preclude the acceleration of vesting of any such award upon the death, retirement or involuntary termination of the applicable grantee or in connection with a change of control of the Company, as determined by the Compensation Committee in its discretion or to the extent provided in the applicable award agreement.

Types of Awards

The 2021 Plan provides for the grant of stock options (both stock options intended to meet the requirements of “incentive stock options” under Section 422 of the Code and “non-qualified stock options” that do not meet such requirements), stock appreciation rights, restricted shares, restricted stock units, dividend equivalent rights and other share-based or cash-based awards.

All of the awards described above are subject to the conditions, limitations, restrictions, vesting and forfeiture provisions determined by the Compensation Committee, in its sole discretion, subject to certain limitations set forth in the 2021 Plan. The Compensation Committee may condition the vesting of or the lapsing of any applicable vesting restrictions or conditions on awards upon the attainment of performance goals, continuation of services, or any other term or conditions. The vesting conditions placed on any award need not be the same with respect to each grantee and the Compensation Committee will have the sole discretion to amend any outstanding award to accelerate or waive any or all goals, restrictions, vesting provisions or conditions set forth in the applicable award agreement.

Each award granted under the 2021 Plan will be evidenced by an award agreement, which will govern that award’s terms and conditions. In the case of any conflict or potential inconsistency between the 2021 Plan and a provision of any award agreement, the 2021 Plan will govern.

Stock Options

A stock option entitles the recipient to purchase shares of the Company’s common stock at a fixed exercise price. The Compensation Committee may award non-qualified stock options or incentive stock options under the 2021 Plan. Incentive stock options may only be granted to persons eligible to receive incentive stock option under the Code and from a plan that has been properly approved by the Company’s stockholders in compliance with the relevant provisions of the Code. The aggregate fair market value of shares of our common stock (determined based on the closing price per share on the trading day immediately prior to the grant date) with respect to which incentive stock options are exercisable for the first time by a grantee during any calendar year (whether issued under the 2021 Plan or any other plan of the Company and of any subsidiary of the Company) may not exceed $100,000. No more than the Share Limit (subject to adjustment as described above) may be issued upon the exercise of incentive stock options granted under the 2021 Plan.

The exercise price per share with respect to each stock option will be determined by the Compensation Committee but will not be less than 100% of the fair market value of a share of common stock on the trading day immediately prior to the date the applicable stock option is granted (for incentive stock options granted to 10% stockholders, the exercise price per share will not be less than 110% of the fair market value).

The Compensation Committee may determine the vesting schedule and expiration dates for stock options; provided that the expiration date may not exceed 10 years (or, in the case of an incentive stock option granted to a ten percent stockholder, 5 years) from the date on which such stock option is granted.

The 2021 Plan provides for a variety of methods to exercise stock options. The exercise price of any stock option may be paid using cash or in another form determined by the Compensation Committee, which may include (a) a personal check, (b) shares of our common stock, (c) other consideration approved by us and permitted by applicable law or (d) any combination of the foregoing.

The repricing of stock options, including through amendment, cancellation in exchange for the grant of a substitute award or repurchase for cash or other consideration (in each case that has the effect of reducing the exercise price), is not permitted without the approval of our stockholders. We will not grant any stock options with automatic reload features.

Stock Appreciation Rights

A stock appreciation right entitles the recipient to receive shares of the Company’s common stock, cash or other property equal in value to the appreciation of the Company’s common stock over the stated exercise price. The exercise price per share for each stock appreciation right will be determined by the Compensation Committee, but (except as subject to adjustment by the Compensation Committee) may not be less than 100% of the fair market value of a share of the Company’s common stock on the trading day immediately prior the date the stock appreciation right is granted.

The Compensation Committee may determine the vesting schedule and expiration dates for stock appreciation rights; provided that the expiration date may not exceed ten years from the date of grant.

Each stock appreciation right will entitle the applicable grantee to receive, upon exercise, an amount equal to the number of shares of the Company’s common stock underlying the stock appreciation right, multiplied by the excess of the fair market value of the shares of the Company’s common stock on the date of exercise over the exercise price of the stock appreciation right. Payment to a grantee upon the exercise of a stock appreciation right may be either in shares of the Company’s common stock, cash or other securities or property, or a combination of the foregoing, as determined by the Compensation Committee.

The repricing of stock appreciation rights, including through amendment, cancellation in exchange for the grant of a substitute award or repurchase for cash or other consideration (in each case that has the effect of reducing the exercise price), is not permitted without the approval of our stockholders. We will not grant any stock appreciation rights with automatic reload features.

Restricted Shares

Restricted shares are shares of the Company’s common stock that are registered in the recipient’s name, but are subject to transfer and/or other restrictions for a period of time. Restricted shares may be granted in such amounts and with such terms and conditions as are determined by the Compensation Committee. The Compensation Committee will issue a certificate in respect of restricted shares granted under the 2021 Plan, unless the Compensation Committee elects to use another system, such as book entries by the transfer agent, as evidencing ownership of such shares of the Company’s common stock. In the event a certificate is issued, it may be registered in the name of the grantee, and we will hold the certificate until the restrictions upon the award have lapsed.

During the period that any restrictions apply, the transfer of restricted shares is generally prohibited. Grantees have full voting rights with respect to their restricted shares during the restricted period. If provided in the applicable award agreement, all ordinary cash dividend payments or other ordinary distributions paid upon any restricted share will be paid to the applicable grantee during the restricted period. The fair market value of the restricted shares upon vesting will be determined based on the closing price per share of our common stock on the trading day immediately prior to the vesting date.

Restricted Stock Units

A restricted stock unit is an unfunded, unsecured right to receive a share of the Company’s common stock, cash or other property at a future date. Restricted stock units may be granted in such amounts and with such terms and conditions as are determined by the Compensation Committee.

During the period that any restrictions apply, the transfer of restricted stock units is generally prohibited. Grantees only have the rights of a general unsecured creditor until delivery of the shares of the Company’s common stock, cash or other property is made as specified in the applicable award agreement. On the delivery date, the grantee of each restricted stock unit not previously forfeited or terminated will receive one share of the Company’s common stock, cash or other securities or property that is equal in value to such share of common stock or a combination thereof, as determined by the Compensation Committee, unless otherwise prescribed in the applicable award agreement. The fair market value of the restricted stock units upon vesting and delivery will be based on the closing price per share of our common stock on the trading day immediately prior to such date.

Dividend Equivalent Rights

The Compensation Committee may, in its discretion, include in the award agreement with respect to any award a dividend equivalent right entitling the recipient to receive amounts equal to all or any portion of the regular cash dividends that are paid on the shares of the Company’s common stock underlying a grant while the grant is outstanding. Grantees only have the right of a general unsecured creditor until payment of such amounts is made.

Dividend equivalent rights may be paid in cash, in shares of the Company’s common stock or in another form, as determined by the Compensation Committee and specified in an award agreement. In addition, the Compensation Committee will determine the time or times at which payments will be made and such other terms and conditions as the Compensation Committee will deem appropriate; provided, that in no event may such payments be made unless and until the award to which they relate vests.

Performance-Based and Other Share-Based or Cash-Based Awards

Under the 2021 Plan, the Compensation Committee may grant other types of equity-based, equity-related or cash-based awards, including awards subject to performance-based criteria, in such amounts and subject to such terms and conditions that the Compensation Committee may determine. Such awards may include the grant or offer for sale of unrestricted shares of the Company’s common stock, performance share awards and performance units settled in cash.

Change of Control

Unless otherwise provided in an award agreement, the Compensation Committee will determine the treatment of a grantee’s award in the event of a change in control. Unless the Compensation Committee determines otherwise or as otherwise provided in the applicable award agreement, as of the change in control date, any outstanding performance-based awards shall be deemed earned at the target level with respect to all open performance periods and will cease to be subject to any further performance conditions but will continue to be subject to time-based vesting following the change in control in accordance with the original performance period.

In the event of a change in control, the Compensation Committee has the sole discretion, to the extent determined by the Compensation Committee to be permitted under Section 409A of the Code and subject to the applicable award agreement, to (i) settle awards for an amount equal to their value of cash or securities (in the case of stock options and stock appreciation rights that are settled in cash, the amount paid will be equal to their in-the-money spread value (if any), (ii) provide for the assumption of or the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected awards previously granted under the 2021 Plan, (iii) modify the terms of such awards to add events, conditions or circumstances (including termination of employment within a specified period after a change in control) upon which the vesting of such awards or lapse of restrictions thereon will accelerate, (iv) deem any performance conditions satisfied at target, maximum or actual performance through closing or provide for the performance conditions to continue (as is or as adjusted by the Compensation Committee) after closing or (v) provide that for a period of 20 days prior to the change in control, any stock options or stock appreciation rights that would not otherwise become exercisable prior to the change in control will be exercisable as to all shares of the Company’s common stock subject thereto (provided, that any such exercise will be contingent upon and subject to the occurrence of the change in control and if the change in control does not take place within a specified period after giving such notice for any reason whatsoever, the exercise will be null and void) and that any stock options or stock appreciation rights not exercised prior to the consummation of the change in control will terminate and be of no further force and effect as of the consummation of the change in control.

For purposes of the 2021 Plan, “change in control” generally includes (a) a majority of the individuals constituting the Board of Directors is replaced during any 24-month period by directors whose appointment or election is not endorsed by at least two-thirds of the members of the Board of Directors before the date of the appointment or election, (b) a person or entity acquiring more than 50% of the combined voting power of the Company’s outstanding voting securities eligible to vote for the election of the Board of Directors, (c) the consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company that requires the approval of our stockholders, unless, among other requirements, immediately following any such transaction, more than 50% of the total voting power of the entity resulting from such transaction is represented by the Company’s voting securities that were outstanding immediately prior to such transaction, and such voting power is in substantially the same proportion of the voting power of such Company voting securities among the Company’s stockholders immediately prior to such transaction, (d) the consummation of a sale of all or substantially all of the Company’s and its subsidiaries’ assets on a consolidated basis to a third party, or (e) the approval of a plan of complete liquidation or dissolution of the Company by the Company’s stockholders.

Effectiveness

The 2021 Plan will become effective only upon its approval by the Company’s stockholders.

Amendment; Termination

The Board of Directors may amend or terminate the 2021 Plan at any time; provided, that no such amendment may materially adversely impair the rights of any grantee of any award without the grantee’s consent. Our stockholders must approve any amendment to the extent required to comply with applicable laws, regulations or rules of a securities

exchange or self-regulatory agency. Unless terminated sooner by the Board of Directors or extended with stockholder approval, the 2021 Plan will terminate on the day immediately preceding the tenth anniversary of the date on which our stockholders approve the 2021 Plan, but any awards made under the 2021 Plan before its termination will remain in effect until such awards have been satisfied or terminated in accordance with the 2021 Plan and the applicable award agreements.

Tax Withholding and Right of Offset

Grantees will be solely responsible for any applicable taxes (including, without limitation, income and excise taxes) and penalties, and any interest that accrues thereon, that they incur in connection with the receipt, vesting or exercise of any award granted under the 2021 Plan. As a condition to the delivery of shares of the Company’s common stock, cash or other securities or property pursuant to any award or the lifting or lapse of restrictions on any award, or in connection with any other event that gives rise to federal or government tax withholding obligations on the part of the Company relating to an award (including, without limitation, the Federal Insurance Contributions Act (FICA) tax), (a) the Company may deduct or withhold (or cause to be deducted or withheld) from any payment or distribution to a grantee whether or not pursuant to the 2021 Plan, (b) the Compensation Committee will be entitled to require that the grantee remit cash to the Company (through payroll deduction or otherwise) or (c) the Company may enter into any other suitable arrangements to withhold, in each case, in the Company’s discretion the amount of such taxes to be withheld based on the individual tax rates applicable to the grantee.

The Company will have the right to offset against its obligation to deliver any shares of the Company’s common stock (or other property or cash) under the 2021 Plan or any award agreement any outstanding amounts that the grantee then owes to the Company and any amounts the Compensation Committee deems appropriate pursuant to any tax equalization policy or agreement. Notwithstanding the foregoing, if an award provides for the deferral of compensation within the meaning of Section 409A of the Code, the Compensation Committee will have no right to offset against its obligation to deliver shares of the Company’s common stock (or other property or cash) under the 2021 Plan or any award agreement if such offset could subject the grantee to additional tax imposed under Section 409A of the Code in respect of an outstanding award.

Assignability and Transferability

Unless otherwise determined by the Compensation Committee, no award granted under the 2021 Plan will be transferable or assignable by a grantee, other than by will, the laws of descent and distribution, or to any trust established solely for the benefit of the applicable grantee or such grantee’s immediate family. All awards will be exercisable during the life of the grantee only by the grantee or the grantee’s legal representative or trustee, as applicable. The Compensation Committee may permit, under such terms and conditions as it deems appropriate in its sole discretion, a grantee to a transfer any award to any person or entity that the Compensation Committee so determines.

Clawback

All awards under the 2021 Plan will be subject to any clawback or recapture policy that we may adopt from time to time.

U.S. Federal Income Tax Considerations

The following is a brief description of the principal U.S. federal income tax consequences generally arising with respect to the grant of awards under the 2021 Plan based on an analysis of the current provisions of the Code and the regulations promulgated thereunder, all of which are subject to change, possibly on a retroactive basis. This summary is intended for the information of our stockholders considering how to vote at the Annual Meeting. This summary is not intended to constitute tax advice, is not intended to be exhaustive and, among other things, does not describe state, local or foreign tax consequences or withholding and other payroll tax matters. Different tax rules may apply to variations on transactions that are permitted under the 2021 Plan. Participants are advised to consult with their own independent tax advisors with respect to the specific tax consequences that, in light of their particular circumstances, might arise in connection with their receipt of awards under the 2021 Plan, including any state, local or foreign tax consequences and the effect, if any, of gift, estate and inheritance taxes.

Incentive Stock Options

A grantee will not be subject to tax upon the grant of an incentive stock option or upon the exercise of an incentive stock option. However, the excess of the fair market value of the shares on the date of exercise over the exercise price paid will be included in such grantee’s alternative minimum taxable income. Whether a grantee is subject to the alternative minimum tax will depend on such grantee’s particular circumstances. A grantee’s basis in the shares received will be equal to the exercise price paid, and the holding period in such shares will begin on the day following the date of exercise.

If a grantee disposes of the shares on or after the later of (i) the second anniversary of the date of grant of the incentive stock option and (ii) the first anniversary of the date of exercise of the incentive stock option (the “Statutory Holding Period”), such grantee will recognize a capital gain or loss in an amount equal to the difference between the amount realized on such disposition and the basis in such shares. Such capital gain or loss will be subject to the rules set forth under “Disposition of Shares” below.

If a grantee disposes of the shares before the end of the Statutory Holding Period, such grantee will have engaged in a “disqualifying disposition.” As a result, such grantee will be subject to tax:

•        on the excess of the fair market value of the shares on the date of exercise (or the amount realized on the disqualifying disposition, if less) over the exercise price paid, as ordinary income, and

•        on the excess, if any, of the amount realized on such disqualifying disposition over the fair market value of the shares on the date of exercise, as capital gain. Such capital gain will be subject to the rules set forth under “Disposition of Shares” below.

If the amount a grantee realizes from a disqualifying disposition is less than the exercise price paid (i.e., a grantee’s basis) and the loss sustained upon such disposition would otherwise be recognized, such grantee will not recognize any ordinary income from such disqualifying disposition and instead such grantee will recognize a capital loss. In the event of a disqualifying disposition, the amount recognized by a grantee as ordinary income is generally deductible by the Company.

The current position of the Internal Revenue Service is that income tax withholding and FICA and FUTA taxes (“Employment Taxes”) do not apply upon the exercise of an incentive stock option or upon any subsequent disposition, including a disqualifying disposition, of Shares acquired pursuant to the exercise of the incentive stock option.

Non-Qualified Stock Options

A grantee will not be subject to tax upon the grant of a stock option which is not intended to be (or does not qualify as) an incentive stock option. Upon exercise of a non-qualified stock option, an amount equal to the excess of the fair market value of the shares acquired on the date of exercise over the exercise price paid is taxable to a grantee as ordinary income, and such amount is generally deductible by the Company. This amount of income will be subject to income tax withholding and Employment Taxes. A grantee’s basis in the shares received will equal the fair market value of the shares on the date of exercise, and a grantee’s holding period in such shares will begin on the day following the date of exercise.

Exercise of Stock Options with Previously Acquired Shares

If a grantee uses previously acquired shares to pay all or a portion of the exercise price on the exercise of an incentive stock option or a non-qualified stock option, such grantee will not be subject to tax with respect to the shares that the grantee transfers to the Company. Instead, the number of shares the Company delivers to the grantee upon exercise of the stock option that equals the number of shares such grantee transferred to the Company (the “Substitute Shares”) will have the same basis and holding period as the shares the grantee transferred to the Company.

However, where a grantee uses shares that were acquired pursuant to the previous exercise of an incentive stock option (the “First Incentive Stock Option”) to acquire shares under another incentive stock option (the “Second Incentive Stock Option”), and the Statutory Holding Period discussed above has not been met with respect to the shares that such grantee transfer to the Company, the exchange will be deemed a disqualifying disposition and the grantee

will recognize ordinary income to the extent the fair market value of the shares on the date of exercise of the First Incentive Stock Option (or, if less, the fair market value of the shares on the date of exercise of the Second Incentive Stock Option) exceeds the exercise price paid pursuant to the exercise of the First Incentive Stock Option. In such a case, the grantee’s basis in the Substitute Shares received will be equal to the basis of the shares that such grantee transferred to the Company plus the ordinary income taxable to the grantee as a result of the disqualifying disposition, and the grantee’s holding period in the Substitute Shares received will be the same as the holding period in the shares that the grantee transferred to the Company. However, the grantee’s Statutory Holding Period in the Substitute Shares received will begin on the date of exercise of the Second Incentive Stock Option.

If the grantee uses previously acquired shares to pay the entire option exercise price of a non-qualified stock option, then the fair market value of the shares received which are not Substitute Shares (the “Additional Shares”) is taxable to the grantee as ordinary income, and such amount will generally be deductible by the Company. The grantee’s basis in the Additional Shares will be equal to the fair market value of the shares on the date of exercise, and the grantee’s holding period in the Additional Shares will begin on the day following the date of exercise. In the event the grantee uses previously acquired shares to pay a portion of the exercise price of a non-qualified option and the grantee uses cash to pay the remainder of such exercise price, then the exercise shall be bifurcated into (i) an exercise using previously acquired shares which will be subject to the tax rules in the two immediately preceding paragraphs and (ii) an exercise using cash which will be subject to the tax rules under “Non-Qualified Stock Options” above.

If the grantee uses previously acquired shares to pay the entire stock option exercise price of an incentive stock option, then the grantee will have a zero basis in the Additional Shares received, and the grantee’s holding period in the Additional Shares will begin on the day such shares are transferred to the grantee. However, for purposes of determining whether the grantee has held the additional shares for the Statutory Holding Period, the date of exercise of the incentive stock option will be counted towards meeting such holding period. In the event the grantee uses previously acquired shares to pay a portion of the exercise price of an incentive stock option and the grantee uses cash to repay the remainder of such exercise price, then the exercise shall be bifurcated into (i) an exercise using previously acquired shares which will be subject to the tax rules in the two immediately preceding paragraphs and (ii) an exercise using cash which will be subject to the tax rules under “Incentive Stock Options” above.

Share Appreciation Rights

A grantee will not be subject to tax upon the grant of a share appreciation right. Upon exercise of a share appreciation right, an amount equal to the cash and/or the fair market value (measured on the date of exercise) of the shares received will be taxable to such grantee as ordinary income, and such amount generally will be deductible by the Company. This amount of income will be subject to income tax withholding and Employment Taxes. A grantee’s basis in any shares received will be equal to the fair market value of such shares on the date of exercise, and the holding period in such shares will begin on the day following the date of exercise.

Restricted Shares

A grantee will not be subject to tax upon receipt of an award of shares subject to forfeiture conditions and transfer restrictions (the “restrictions”) under the Plan unless such grantee makes the election referred to below. Upon lapse of the restrictions, a grantee will recognize ordinary income equal to the fair market value of the shares on the date of lapse (less any amount such grantee may have paid for the shares), and such income will be subject to income tax withholding and Employment Taxes. A grantee’s basis in the shares received will be equal to the fair market value of the shares on the date the restrictions lapse, and the holding period in such shares begins on the day after the restrictions lapse. If any dividends are paid on such shares prior to the lapse of the restrictions they will be includible in a grantee’s income during the restricted period as additional compensation (and not as dividend income) and will be subject to income tax withholding and Employment Taxes.

If permitted by the applicable award agreement and the 2021 Stock Incentive Plan, a grantee may elect, within 30 days after the date of the grant of the restricted shares, to recognize immediately (as ordinary income) the fair market value of the restricted shares awarded (less any amount such grantee may have paid for the shares), determined on the date of grant (without regard to the restrictions). Such income will be subject to income tax withholding and

Employment Taxes at such time. This election is made pursuant to Section 83(b) of the Code and the regulations thereunder. If a grantee makes this election, the holding period will begin the day after the date of grant, dividends paid on the shares will be subject to the normal rules regarding distributions on stock, and no additional income will be recognized by such grantee upon the lapse of the restrictions. However, if a grantee forfeits the restricted shares before the restrictions lapse, no deduction or capital loss will be available to such grantee (even though such grantee previously recognized income with respect to such forfeited shares).

In the taxable year in which a grantee recognizes ordinary income on account of shares awarded to such grantee, the Company generally will be entitled to a deduction equal to the amount of income recognized by the grantee. In the event that the restricted shares are forfeited by a grantee after having made the Section 83(b) election referred to above, the Company generally will include in its income the amount of the Company’s original deduction.

Restricted Stock Units

A grantee will not be subject to tax upon the grant of a restricted stock unit. Upon vesting of the restricted stock unit, the fair market value of the shares covered by the award on the vesting date will be subject to Employment Taxes. Upon distribution of the cash and/or shares underlying the restricted stock units, a grantee will recognize as ordinary income an amount equal to the cash and/or fair market value (measured on the distribution date) of the shares received, and such amount will generally be deductible by the Company. This amount of income will generally be subject to income tax withholding on the date of distribution. A grantee’s basis in any shares received will be equal to the fair market value of the shares on the date of distribution, and the holding period in such shares will begin on the day following the date of distribution. If any dividend equivalent amounts are paid to a grantee, they will be includible in such grantee’s income as additional compensation (and not as dividend income) and will be subject to income and Employment Tax withholding.

Dividend Equivalent Rights

A grantee will not be subject to tax upon the grant of a dividend equivalent right. Upon payment of any dividend equivalent amounts, a grantee will recognize such payment as ordinary income (and not as dividend income).

Performance-Based and Other Share-Based or Cash-Based Awards

The income tax consequences of other share-based awards will depend on how such awards are structured. A grantee who receives a cash-based award will not recognize any taxable income for federal income tax purposes at grant. Any cash received pursuant to the award will be treated as compensation income received by the grantee generally in the year in which such grantee receives the cash, and such amount will generally be deductible by the Company.

Disposition of Shares

Unless stated otherwise above, upon the subsequent disposition of shares acquired under any of the preceding awards, a grantee will recognize capital gain or loss based upon the difference between the amount realized on such disposition and a grantee’s basis in the shares, and such amount will be long-term capital gain or loss if such shares were held for more than 12 months. Capital gain is generally taxed at a maximum rate of 20% if the property is held more than one year. These tax consequences are subject to change, possibly on a retroactive basis.

Section 409A

If an award is subject to Section 409A of the Code, but does not comply with the requirements of Section 409A of the Code, the taxable events as described above could apply earlier than described, and could result in the imposition of additional taxes and penalties. Grantees are urged to consult with their tax advisors regarding the applicability of Section 409A of the Code to the awards.

New Plan Benefits

The benefits or amounts that will be awarded under the 2021 Plan for 2021 cannot currently be determined because awards made by the Compensation Committee will be subject to the Compensation Committee’s discretion. Therefore, such awards cannot be calculated at this time. The awards granted for the 2020 year, which would not have changed if the 2021 Plan had been in place instead of the Current Plan, are set forth in the following table.

CORPORATE GOVERNANCE

Corporate Governance Guidelines

Our Board of Directors has adopted corporate governance guidelines to assist it in the exercise of its responsibilities and to serve the interests of the Company and our stockholders. The corporate governance guidelines are available for review on our website athttp://ir.brileyfin.com/corporate-governancegovernance.

Director Independence

Our Board has unanimously determined that six (6) of our directors, Messrs. Antin, D’Agostino, Paulson, Sheldon, Sims, and Williams, and Ms. Walters, a majority of the Board, are “independent” directors as that term is defined by Nasdaq Marketplace Rule 5605(a)(2). In addition, our Board has unanimously determined that nominee Mr.Paulson is “independent” as that term is defined by Nasdaq Marketplace Rule 5605(a)(2). In addition, based upon such standards, the Board determined that Messrs. Riley Gumaer and Kelleher are not “independent” because of their service as employees of the company.Company.

Nominations for Directors

Our Corporate Governance Committee (“Corporate Governance Committee”) evaluates and recommends to the Board of Directors director nominees for each election of directors. In fulfilling its responsibilities, the Corporate Governance Committee considers the following factors: (i) demonstrated personal integrity and moral character; (ii) willingness to apply sound and independent business judgment for the long-term interests of the stockholders; (iii) relevant business or professional experience, technical expertise or specialized skills; (iv) personality traits and background that appear to fit with those of the other directors to produce a collegial and cooperative Board responsive to the Company’s needs; and (v) ability to commit sufficient time to effectively carry out the substantial duties of a director. The Corporate Governance Committee and the Board will not consider as a director candidate anyone who is an officer, director or principal of an enterprise which is in substantial competition with the Company. Other than the foregoing factors, there are no stated minimum criteria for director nominees. However, the Corporate Governance Committee may also consider such other factors as it may deem are in the best interests of the Company and its stockholders. The Corporate Governance Committee does, however, recognize that under applicable regulatory requirements at least one member of the Board must, and believes that it is preferable that more than one member of the Board should, meet the criteria for an “audit committee financial expert” as defined by SEC rules. Further, although the Company does not have a formal diversity policy, the Corporate Governance Committee seeks to nominate a board of directors that brings to the Company a variety of perspectives, skills, expertise, and sound business understanding and judgment, derived from business, professional, governmental, finance, community and industry experience.

The Corporate Governance Committee identifies nominees by first evaluating the current members of the Board of Directors willing to continue in service. Current members of the Board of Directors with skills and experience that are relevant to the Company’s business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of the Board of Directors with that of obtaining a new perspective. If any member of the Board of Directors up for re-election at an upcoming annual meeting of stockholders does not wish to continue in service, the Corporate Governance Committee identifies the desired skills and experience of a new nominee in light ofconsidering the criteria above. If the Corporate Governance Committee believes that the Board of Directors requires additional candidates for nomination, the committee may explore alternative sources for identifying additional candidates. This may include engaging, as appropriate, a third-party search firm to assist in identifying qualified candidates. Director nominee Mr.Paulson was identified to the Corporate Governance Committee by our Chairman and Co-Executive Officer.

The Corporate Governance Committee reviews all nominees, including those recommended by stockholders, for nomination by the Board in accordance with the above requirements and qualifications to determine whether they possess attributes the Corporate Governance Committee believes would be most beneficial to the Company. The Corporate Governance Committee will select qualified candidates and make its recommendations to the Board, which will formally decide whether to nominate the recommended candidates for election to the Board. Stockholders may recommend nominees for consideration by the Corporate Governance Committee by submitting the names and the following supporting information to the Company’s Secretary: Corporate Secretary, Stockholder Nominations, B. Riley Financial, Inc., 21255 Burbank11100 Santa Monica Blvd., Suite 400, Woodland Hills,800, Los Angeles, California 91367.90025. The submissions should include a current resume of the candidate and statement describing the candidate’s qualifications and contact

information for personal and professional references. The submission should also include the name and address of the stockholder who

Meetings and Committees of the Board

Our Board is responsible for overseeing the management of our business. We keep our directors informed of our business at meetings and through reports and analyses presented to the Board and the committees of the Board. Regular communications between our directors and management also occur apart from meetings of the Board and committees of the Board.

Charter”), and a copy of that charter is available for review on our website athttp://ir.brileyfin.com/corporate-governancegovernance. The responsibilities of the Corporate Governance Committee include making recommendations to the Board with respect to the nominations or elections of directors and providing oversight of our corporate governance policies and practices.

Board Leadership Structure

Pursuant to our Corporate Governance Guidelines and Bylaws, the Board may, but is not required to, select a Chairman of the Board on an annual basis. In addition, the positions of Chairman of the Board and Co-Chief Executive Officer may be filled by one individual or two different individuals. Mr. Riley, our Co-Chief Executive Officer, currently serves as Chairman of our Board.

Compensation Committee Interlocks and Insider Participation

No member of our Compensation Committee is or has been an officer or employee of the Company. No member of our Compensation Committee or our Board is or has been in 20192020 an executive officer of another entity at which one of our executive officers serves or has in 20192020 served on either the board of directors or the Compensation Committee. For information about related person transactions involving members of our Compensation Committee, see “Certain Relationships and Related Transactions.”

Certain Relationships and Related Party Transactions

Other than as described below, since the beginning of fiscal year 2019,2020, there were no transactions with respect to which we were a participant or currently proposed transactions with respect to which we are to be a participant in

Babcock & Wilcox

The Company hasOne of our wholly owned subsidiaries is party to a last-out term loan receivable due fromservices agreement with Babcock & Wilcox Enterprises, Inc. (“B&W”) that is included in loans receivable with a total carrying value of $109,146,855 at December31, 2019. The carrying value of the loan is comprised of the principal amount of $113,330,153 less original issue discount of $4,183,298 at December31, 2019. Interest is payable monthly at the fixed rate of 12.0% per annum. The loan was made to B&W as part of various amendments to B&W’s existing credit agreement with other lenders not related to the Company. In connection with making the loan to B&W, in April 2019 the Company received warrants to purchase 1,666,667shares of common stock of B&W with an exercise price of $0.01 per share. The option to exercise the warrants expires on April5, 2022.

Randall E. Paulson

Mr.Paulson, a nominee forMr. Paulson, our board of directors,director, holds investments in BRCPOF in an aggregate amount ofaggregating approximately $3,000,000 at cost as of March31, 2020.March 31, 2021.

On February12,February 12, 2020, Mr.PaulsonMr. Paulson entered into a Securities Purchase Agreement (the “Paulson Purchase Agreement”) with BRPM and BRCPOF pursuant to which Mr.PaulsonMr. Paulson purchased 35,000shares35,000 shares of Alta’s common stock for an aggregate purchase price of $350,000. Pursuant to the Paulson Purchase Agreement, BRCPOF transferred and assigned to Mr.PaulsonMr. Paulson an additional 1,842shares1,842 shares of Alta’s common stock and 13,125 warrants to purchase shares of Alta’s common stock with an exercise price of $11.50 per share.

On March 2, 2021, we purchased a $2,400,000 minority equity interest in Dash Medical Holdings, LLC (“Dash”) as part of Mr. Paulson’s acquisition of the company. We also loaned Dash Holding Company, Inc. (together with Dash Medical Holdings, LLC, “Dash”) $3,000,000 pursuant to that certain Subordinated Working Capital Promissory Note (the “Note”) and Subordination Agreement that was entered into on March 2, 2021, The Note matures in March 2027. Dash is controlled by Mr. Paulson, who also sits on its board of directors.

Andrew Gumaer

On May12,May 12, 2020, the Companywe entered into a separation agreement and general release (the “Separation Agreement”) and a three year-year consulting services agreement (the “Consulting Agreement”) with Andrew Gumaer, our former director and the former chief executive officer of GAG, LLC.

Pursuant to the terms of the Separation Agreement, the Company will pay Mr.Gumaerwe paid Mr. Gumaer $500,000 following the expiration of the 7 day revocation period provided for in the Separation Agreement as required under applicable lawon June 15, 2020 in exchange for a customary waiver by Mr.GumaerMr. Gumaer of any claims he may have against the Company,us, subject to applicable law.

Pursuant to the terms of the Consulting Agreement, Mr.GumaerMr. Gumaer will provide services to the Companyus related to the Company’sour asset appraisal, auction and liquidation business in exchange for aggregate compensation of $25,000 per month plus a $25,000monthly$25,000 monthly bonus during the first year of the Consulting Agreement; $12,500 per month plus a $20,833monthly$20,833 monthly bonus during the second year of the Consulting Agreement; and $4,167 per month plus a $12,500monthly$12,500 monthly bonus during the third year of the Consulting Agreement. Mr.GumaerMr. Gumaer is also eligible for discretionary bonuses, against which any monthly bonuses are creditable.