We cordially invite you to attend our ~~2017~~2019 annual meeting of shareholders, which will be held on ~~Friday,~~Thursday, May ~~19, 2017,~~16, 2019, at 9:30 a.m., Eastern Time, at our offices located at 21680 Haggerty Road, Northville, Michigan. The business to be conducted at the annual meeting is set forth in the attached Notice of ~~2017~~2019 Annual Meeting of Shareholders and proxy statement.

2018 was a year of significant change for Gentherm. It was the first full year under our new President and CEO, Phil Eyler. It was also a year in which we, the Board of Directors, took several steps to demonstrate our ongoing commitment to a strong corporate governance framework that incorporates input from our shareholders.

During 2018, we implemented changes in our short-term and long-term incentive programs. These changes represent a shift to a more performance-based compensation system. Under the new short-term bonus program, compensation for our executive officers is based on achievement of defined, measurable goals. Excluding Mr. Eyler, these goals are a combination of entity-wide financial goals and individual goals. For Mr. Eyler, his bonus compensation is entirely tied to the financial performance of the entire organization.

The long-term incentive equity grants we awarded to our executive team during 2018 are primarily tied to Gentherm’s achievement of performance objectives. While 40% of the grants we awarded during the year vest based on service over time, 60% vest based on an equal weighting of relative total shareholder return (TSR) and return on invested capital (ROIC) metrics over a three year performance period. We believe this change more closely aligns our management team with our shareholders.

To entice Mr. Eyler to join our company in 2017, we offered to match a number of benefits he was entitled to receive from his then-current employer. Among those benefits was an excise tax gross-up benefit upon a change in control. After receiving input from a number of shareholders who expressed a concern with this type of benefit, during 2018 we agreed with Mr. Eyler to eliminate the excise tax gross-up from his compensation package. We no longer provide excise tax gross-ups in any form.

We are committed to an ongoing cycle of Board evaluation and appropriate refreshment to ensure a diversity of experience, skills and perspectives. In 2018, we added two new directors to the Board, John Stacey and Charles “Chuck” Kummeth. John and Chuck bring fresh ideas and perspectives, as well as experiences and skill sets that complement those of their fellow directors. Both are accomplished business leaders with significant experience directly relevant to Gentherm’s corporate strategy.

In light of the low support for our say-on-pay proposal at the 2018 annual meeting of shareholders, and to receive input from shareholders on recent corporate governance changes at Gentherm, the company launched a broad and ongoing shareholder engagement program in 2018. After talking to holders representing almost one-half of our outstanding shares as of the date we launched the program about Gentherm’s corporate governance practices, compensation program, and other topics of interest, we incorporated shareholder feedback into our deliberations as a Board, resulting in direct changes to our compensation program. We remain committed to ongoing, proactive engagement with our shareholders going forward.

We look forward to seeing some of you at the upcoming 2019 annual meeting of shareholders and we thank you for your continued support of Gentherm.

Our ~~2017~~2019 annual meeting of shareholders will be held on ~~Friday,~~Thursday, May ~~19, 2017,~~16, 2019, at 9:30 a.m., Eastern Time, at our offices located at 21680 Haggerty Road, Northville, Michigan to conduct the following items of business:

Only holders of our common stock at the close of business on April ~~3, 2017,~~1, 2019, the record date, are entitled to receive this notice and to attend and vote at the annual meeting.

Your vote is important. Whether or not you plan to attend the meeting, we urge you to vote promptly and save us the expense of additional solicitation. If you attend the annual meeting, you may revoke your proxy in accordance with the procedures set forth in the proxy statement and vote in person.

This proxy summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider and therefore you should read the entire proxy statement before voting. For more complete information regarding ~~2016~~the 2018 performance of Gentherm Incorporated (the “Company”), review our annual report on Form 10-K for the year ended December 31, ~~2016.~~2018.

Your vote is important. Whether or not you plan to attend the annual meeting, we urge you to vote promptly to save us the expense of additional solicitation. Please carefully review the proxy materials for the ~~2017~~2019 annual meeting and follow the instructions below to cast your vote on all of the proposals.

Even if you plan to attend the ~~2017~~2019 annual meeting in person, please vote right away using one of the following voting methods (see page 2 for additional details). Make sure to have your proxy card or voting instruction card in hand and follow the instructions.

Shareholders of record and beneficial owners (if in possession of a proxy from your broker, bank or other nominee) as of April ~~3, 2017~~1, 2019 may attend and vote at the annual meeting.

Gentherm is a global technology and industry leader in the design, development, and manufacturing of innovative thermal management technologies. Our products provide solutions for automotive passenger comfort and convenience, battery thermal management, patient temperature management, and other consumer and industrial temperature control needs. Our automotive products can be found on the vehicles of nearly all major automotive manufacturers operating in North America, Europe and Asia. We have over 13,000 employees and operate in locations around the world that are aligned with our major customers’ product strategies to provide locally enhanced design, integration and production capabilities and to identify future thermal technology product opportunities in both automotive and other markets. We concentrate our research on the development of new technologies and new applications from existing technologies to create product and market opportunities for a wide array of thermal management solutions.

On June 25, 2018, we announced a new strategic plan intended to improve business performance and position the Company to deliver above-market growth and improved profitability to our shareholders. The strategic plan is organized around the following initiatives: focused growth, extend technology leadership, expand margins and ROIC, and optimize capital allocation. Most notably, in developing our focused growth initiative, we determined that we should only be in businesses that have the following characteristics: high revenue growth; strong return on investment; and significant synergies across the business. We therefore divested or are in the process of divesting those businesses that do not meet those characteristics, and are taking steps to accelerate our growth in our core automotive climate and comfort business. Within our margin and ROIC expansion initiative is our Fit-for-Growth program that focuses on purchasing excellence, rationalization of research and development activities, reducing selling, general and administrative expense, minimization or elimination of investments in non-core areas and developing a manufacturing footprint commensurate with the new plan.

During 2018, the automotive industry continued to face headwinds. Nevertheless, Gentherm outperformed both the industry and the competition, and is well positioned to face the expected continued headwinds. Highlights of our 2018 performance include:

We believe our strong absolute and relative TSR (versus the broader market and our industry peers) over the last year demonstrates that investors recognize the progress we have made in executing on our strategic plan.

*$100 invested on 12/31/13 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.

The Board currently consists of nine directors. On November 16, 2016, the Company’s Chairman of the Board, Oscar B. Marx, III, informed the Board of his intention to retire from the Board effective as of the 2017 annual meeting of shareholders. Consequently, Mr. MarxCharles “Chuck” Kummeth is ~~not~~ standing for ~~re-election at~~election for the ~~2017 annual meeting.~~first time this year. Mr. Kummeth brings deep expertise in medical, electronics and global operations to the Board. The Board has re-nominated the remaining eight current directors. All directors are elected annually and serve one-year terms until his or her successor has been duly elected and qualified or until such director’s earlier resignation, retirement or both. The Board has re-nominated the remaining eight current directors and, effective as of the annual meeting, has reduced the number of directors of the Company to eight in accordance with the Company’s bylaws.death. The following table provides summary information about such director nominees.

At the ~~2017~~2019 annual meeting, shareholders are being asked to provide advisory (non-binding) approval of the compensation of our named executive officers in ~~2016,~~2018, as disclosed in this proxy statement in accordance with ~~SEC~~the rules ~~(commonly~~of the Securities and Exchange Commission (the “SEC”), commonly known as a “say-on-pay” ~~proposal).~~proposal. See “Compensation Discussion and Analysis” beginning on page 172 for information regarding our compensation philosophy, objectives and design, our compensation-setting process and our executive compensation program components, as well as the decisions made for ~~2016~~2018 with respect to each of our named executive officers.

The Company’s say-on-pay proposal presented at the ~~2016~~2018 annual meeting of shareholders, whereby shareholders were asked to provide advisory approval of the Company’s compensation for its named executive officers in ~~2015, was approved by approximately 93%~~2017, received support of ~~the~~37% of votes cast (not including abstentions and broker non-votes).

~~The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, commonly known~~Following this disappointing result, the management team, together with Yvonne Hao as the ~~Dodd-Frank Act, requires that~~Chair of our Compensation Committee, in select meetings, undertook a significant engagement effort to solicit feedback from shareholders on our executive compensation program and changes we ~~seek an advisory shareholder vote at least every six years indicating whether shareholders prefer a say-on-pay advisory vote be taken every one, two~~made or ~~three years. At~~were contemplating to more tightly align our ~~2011~~compensation program to performance, our strategy, and shareholders. Following our 2018 annual meeting, we reached out to shareholders representing over 48% of our outstanding common stock and we met with shareholders ~~91%~~representing 42% of our outstanding common stock, based on shareholdings as of the ~~votes cast~~date we began our outreach. Several shareholders explained that their vote against our 2017 say-on-pay proposal was related to our fiscal 2017 CEO transition, while others indicated a concern with the tax gross-up benefit we provided to our incoming CEO, Mr. Eyler. At the same time, a few shareholders suggested certain changes to our general executive compensation programs.

Below is a list of the most common feedback we heard from shareholders regarding our executive compensation programs and how we have responded to the feedback

As a result of the changes we made to our compensation program, the key elements of our compensation program for 2018 are as follows:

Equity Awards Element Pay Philosophy Key Features Components Base Salary Attracts employees in a competitive market Preserves employee’s commitment during downturns in our industry and/or equity markets generally Initial base salaries are based on experience, responsibilities, the market for the role, anticipated individual growth, internal equity pay and other subjective factors Annual review with merit-based increase, benchmarked to market Rewards achievement of rigorous company financial and operational goals and individual performance Attracts and retains employees for short term Aligns executives with Company operating performance Drives profitable growth through revenue and earnings targets Achieves pay for performance goal Cash bonus up to a predetermined amount, as a percentage of base salary Subject to periodic review, with reference to market Paid annually based on full year results Company Financial Performance Adjusted EBITDA1 Revenue Individual Performance Scale Level (excl. CEO) Incentivizes executives to increase long-term shareholder value Aligns management with shareholders Attracts and retains employees for long term Achieves pay for performance goal New program introduced in 2018 consisting of PSUs and RSUs Based on the ~~proposal regarding~~executive’s position, current salary, and competitiveness in the ~~frequency of our say-on-pay advisory vote were~~market 60% PSUs 3 year ROIC 3 year Relative TSR Cliff vesting 40% RSUs 3 year ratable vesting

Our CEO’s 2018 total compensation as reported in ~~favor of every year~~the Summary Compensation Table was as ~~the frequency. At the 2017 annual meeting, shareholders are being asked to again indicate how frequently we should seek an advisory vote on the compensation of our named executive officers.~~follows:

The Company is committed to good corporate governance appropriate to the Company and its shareholders. Highlights include:

~~Ratification of Appointment of Independent Registered Public Accounting Firm for 2017~~vi

At the 2017 annual meeting, shareholders are being asked to ratify the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2017.

The following table sets forth the fees the Company was billed for audit and other services provided by Grant Thornton in 2016 and 2015. All of such services were approved in conformity with the pre-approval policies and procedures described under “Audit Committee Matters—Pre-Approval Policies and Procedures” on page 38. The Audit Committee of the Board, based on its reviews and discussions with management and Grant Thornton, determined that the provision of these services was compatible with maintaining Grant Thornton’s independence.

The Board of Directors (the “Board”) of Gentherm Incorporated (the “Company”) is soliciting your proxy, as a holder of our common stock, for use at the ~~2017~~2019 annual meeting of shareholders and any adjournment or postponement of such meeting (the “annual meeting”). The annual meeting will be held on ~~Friday,~~Thursday, May ~~19, 2017,~~16, 2019, at 9:30 a.m., Eastern Time, at our offices located at 21680 Haggerty Road, Northville, Michigan.

The notice of annual meeting, proxy statement and form of proxy was first mailed to shareholders of record of our common stock on or about April ~~18, 2017.~~16, 2019.

The Board recommends a vote FOR each of the director nominees listed in this proxy statement, FOR the ratification of the appointment of Grant Thornton, and FOR the approval of the compensation of our named executive ~~officers,~~ ~~EVERY YEAR~~ ~~as the frequency of an advisory vote on the compensation of our named executive officers and~~ ~~FOR~~ the approval of an amendment to the Gentherm Incorporated 2013 Equity Incentive Plan to increase the number of shares available for award under the plan and increase the ratio used to count full value awards issued under the plan against the maximum number of shares issuable under the plan.officers. We are not aware of any other matters that will be brought before the shareholders for a vote at the annual meeting. If any other matter is properly brought before the meeting and you are a shareholder of record of our common stock, your signed proxy card gives authority to your proxies to vote on such matter in their best judgment; proxy holders named in the proxy card will vote as the Board recommends or, if the Board gives no recommendation, in their own discretion.

During or immediately following the annual meeting, management will report on our performance and will respond to appropriate questions from shareholders. Representatives of Grant Thornton will be present at the annual meeting, will make a statement, if they desire to do so, and will answer appropriate questions from our shareholders.

You may vote if you owned shares of our common stock at the close of business on April ~~3, 2017,~~1, 2019, the record date, provided such shares are held directly in your name as the shareholder of record or are held for you as the beneficial owner through a broker, bank or other nominee. As of April ~~3, 2017,~~1, 2019, we had ~~36,723,099~~33,653,179 shares of common stock outstanding and entitled to vote. Each share of common stock is entitled to one vote on each matter properly brought before the annual meeting.

What is the difference between holding shares as a shareholder of record and a beneficial owner?

Shareholders of Record. If your common shares are registered directly in your name with our transfer agent, Computershare, you are considered the shareholder of record with respect to those shares, and these proxy materials are being sent directly to you by us. As

the shareholder of record, you have the right to grant your voting proxy directly to us through the enclosed proxy card or to vote in person at the annual meeting.

Beneficial Owners. Many of our shareholders hold their common shares through a broker, bank or other nominee rather than directly in their own names. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner with respect to those shares, and these proxy materials (including a voting instruction card) are being forwarded to you by your broker, bank or nominee who is considered the shareholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker, bank or nominee on how to vote and are also invited to attend the annual meeting. However, since you are not the shareholder of record, you may not vote these shares in person at the annual meeting unless you request and obtain a proxy from your broker, bank or nominee. Your broker, bank or nominee has enclosed a voting instruction card for you to use in directing the broker, bank or nominee on how to vote your shares.

Even if you plan to be present at the annual meeting, we encourage you to vote your shares prior to the meeting.

Shareholders of Record. If you are a shareholder of record and attend the annual meeting, you may deliver your completed proxy card or vote by ballot.

Beneficial Owners. If you hold your common shares through a bank, broker or other nominee and want to vote such shares in person at the annual meeting, you must obtain a proxy from your broker, bank or other nominee giving you the power to vote such shares.

You may vote by completing, signing and returning the enclosed proxy card or voting instruction card. If you are a shareholder of record and the postage-paid envelope is missing, please mail your completed proxy card to Gentherm Incorporated, c/o Corporate Secretary, 21680 Haggerty Road, Northville, MI 48167. You may have the option to vote your shares via the internet or telephone.

Shareholders of Record. You may change your vote at any time before the proxy is exercised by voting in person at the annual meeting or by filing with our corporate secretary either a notice revoking the proxy or a properly signed proxy. In each case, such notice or proxy must bear a later date than your prior proxy. If sent by mail, it must be received by our corporate secretary no later than 5:00 p.m., Eastern Time, on May ~~18, 2017.~~15, 2019. Your attendance at the annual meeting in person will not cause your prior proxy to be revoked unless you file the proper documentation for it to be so revoked.

Beneficial Owners. If you hold your shares through a bank, broker or other nominee, you should contact such person prior to the time such voting instructions are exercised.

What does it mean if I receive more than one proxy card or voting instruction card?

If you receive more than one proxy card or voting instruction card, it means that you have multiple accounts with banks, brokers, other nominees and/or our transfer agent. Please sign and deliver, or otherwise vote, each proxy card and voting instruction card that you receive. We recommend that you contact your nominee and/or our transfer agent, as appropriate, to consolidate as many accounts as possible under the same name and address. Our transfer agent is Computershare, P.O. Box 30170, College Station, TX 77842-3170; Telephone: (800) 962-4284.

What if I do not vote for some of the items listed on my proxy card or voting instruction card?

Shareholders of Record. If you indicate a choice with respect to any matter to be acted upon on your proxy card, the shares will be voted in accordance with your instructions. Proxy cards that are signed and returned, but do not contain voting instructions with respect to certain matters, will be voted in accordance with the recommendations of the Board on such matters or if the Board gives no recommendation, then in the discretion of the proxy holders.

Beneficial Owners. If you indicate a choice with respect to any matter to be acted upon on your voting instruction card, the shares will be voted in accordance with your instructions. If you do not indicate a choice or return the voting instruction card, the bank, broker or other nominee will determine if it has the discretionary authority to vote on each applicable matter. Under applicable law, a bank, broker or nominee has the discretion to vote on routine matters, including the ratification of the appointment of an independent registered public accounting firm. For all other matters at the ~~2017~~2019 annual meeting, brokers and certain banks and nominees will be unable to vote

on your behalf if you do not instruct them how to vote your shares in the manner set forth on your voting instruction card. Therefore, it is very important for you to vote your shares for each proposal.

If any other matter is properly submitted to the shareholders at the annual meeting, its adoption generally will require the affirmative vote of holders of a majority of votes cast at the annual meeting. The Board does not propose to conduct any business at the annual meeting other than as stated above.

Although the advisory votes in ~~Proposals No.~~Proposal Nos. 2 ~~No.~~and 3 ~~and No. 4~~ are not binding on the Company, the Board and/or respective committee will take your vote into consideration in determining future activities.

In order for us to conduct the annual meeting, a majority of the outstanding shares entitled to vote at the annual meeting as of April ~~3, 2017~~1, 2019 must be present in person or by proxy at the meeting. This is known as a quorum. Abstentions, withheld votes and broker non-votes will be considered present for purposes of determining a quorum.

The names of shareholders of record entitled to vote at the annual meeting will be available to such shareholders at the annual meeting for any purpose reasonably relevant to the meeting.

The Inspector of Elections appointed at the ~~2017~~2019 annual meeting will tabulate the voting results. We intend to announce the preliminary voting results at the annual meeting and, in accordance with rules of the ~~Securities and Exchange Commission (the “SEC”),~~SEC, we intend to publish the final results in a current report on Form 8-K within four business days of the annual meeting.

The Board currently consists of nine directors. All directors are elected annually and serve one-year terms. Each director will serve until a successor is duly elected and qualified or until such director’s earlier resignation, retirement or death. ~~Mr. Oscar. B. Marx has determined not to stand for re-election at the 2017 annual meeting.~~ The Board has re-nominated the ~~remaining eight~~nine current directors. As discussed below, the Board has affirmatively determined that ~~seven~~eight of the ~~eight~~nine director nominees are independent under the applicable rules of the ~~NASDAQ~~Nasdaq Global Select Market (“Nasdaq”).

Each nominee has consented to be listed in this proxy statement and agreed to serve as a director if elected by the shareholders. If any nominee becomes unable or unwilling to serve between the date of this proxy statement and the 2019 annual meeting, which we do not anticipate, the Board may designate a new nominee and the persons named as proxies in the attached proxy card will vote for that substitute nominee (unless the proxies were previously instructed to withhold votes for the nominee who has become unable or unwilling to serve). Alternatively, the Board may reduce the size of the Board.

The Board recommends that you vote FOR the election of each of the director nominees.

Specific Qualifications, Attributes, Skills and Experience to be Represented on the Board

The Nominating Committee is responsible for reviewing and assessing with the Board the appropriate skills, experience and background sought of Board members in the context of our business and the then-current membership on the Board. The Committee and the Board review and assess the continued relevance of and emphasis on these factors as part of the Board’s self-assessment process and in connection with candidate searches to determine if they are effective in helping to satisfy the Board’s goal of creating and sustaining a Board that can appropriately support and oversee the Company’s ~~activities.~~activities and strategy.

We believe our directors have an appropriate balance of knowledge, experience, attributes, skills and expertise as a group to ensure that the Board appropriately fulfills its oversight responsibilities and acts in the best interests of shareholders. Although specific qualifications for Board membership may vary from time to time, desired qualities include (A) the highest ethical character, integrity and shared values with the Company, (B) loyalty to the Company and concern for its success and welfare, (C) sound business judgment, and (D) sufficient commitment and availability to effectively carry out a director’s duties. Listed below are additional key skills and experience that we consider important for our directors to have in light of our current business and structure. Thereafter, the biographies of the directors and nominees set forth their business experience during at least the past five years, as well as the specific experience, qualifications, attributes and skills that led to the Nominating Committee’s conclusion that each director and nominee should continue to serve on the Board.

Below is a summary of the key skills and experiences possessed by our current directors and a breakdown of our Board membership by gender, age and tenure:

Senior leadership experience 9 r&d and commercialization of ~~new or improved~~ technologies ~~which can take many~~experience 5 public company experience 7 industry expertise 8 global expertise 7 financial and accounting expertise 3 gender diversity director age balance tenure female 22% male 78% 61-73 22% 60 and below 78% >6 years and be very expensive, is critical to the execution of our business strategy. Directors with experience in companies who have prioritized research and development and commercializing products related thereto can provide useful oversight of such matters.33% 4-6 years 11% <4 years 56%

~~Lewis Booth~~ has served as a director of the Company since 2013. Mr. Booth served as Executive Vice-President and Chief Financial Officer (CFO) of Ford Motor Company from 2008 until his retirement in 2012. Prior to his appointment to CFO, Mr. Booth held the positions of Chairman and CEO of Ford of Europe as well as President of Ford’s Asia Pacific and Africa Operations. He has served on the Board of Directors of publicly-traded Rolls-Royce Holdings since 2011, where he is Chairman of the Audit Committee, and publicly-traded Mondelez International since 2012, where he is a member of the Finance Committee and a member of the Human Resources and Compensation Committee. Mr. Booth, a qualified chartered management accountant, received his Bachelor’s engineering degree from Liverpool University.

As Executive Vice-President and CFO of Ford Motor Company, Mr. Booth was responsible for all of the company’s financial operations, including the Controller’s office, treasury and investor relations. Mr. Booth’s 34-year decorated career at Ford illustrates his financial expertise and knowledge of manufacturing, operations and the investment community. His strategic expertise in the worldwide automotive industry is critical to us as we continue to expand globally. Based on the foregoing, the Board has determined that Mr. Booth is an “audit committee financial expert” in accordance with SEC rules.

~~Francois J. Castaing~~ has served as a director of the Company since 2001. Mr. Castaing retired in 2000 as technical advisor to the Chairman of Chrysler Corporation. Prior to his retirement, Mr. Castaing spent 13 years with Chrysler Corporation, where he held various positions, including Vice-President of Vehicle Engineering from 1988 to 1996 and President of Chrysler International from 1996 to 1997. Mr. Castaing was Vice-President of Engineering and Group Vice-President Product and Quality of American Motors, from 1980 until Chrysler acquired that company in 1987. Mr. Castaing began his career with Renault as Technical Director for Renault Motorsport Programs. From 2004 to 2015, he served as a director of publicly-traded TRW Automotive Holdings Corp., where he was a member of the Audit Committee and the Chairman of the Compensation Committee. Mr. Castaing also serves on the board of FIRST in Michigan: For Inspiration and Recognition of Science and Technology, a not-for-profit foundation.

Mr. Castaing’s distinguished career in the automotive industry has given him extensive experience in our most important customer market. During his tenure at some of the world’s largest automobile manufacturers, Mr. Castaing developed leadership, strategic planning and organizational skills that greatly benefit the Company. In addition, his technical background contributes to his deep understanding of our operations and enables him to assist in problem solving. He also has significant knowledge of the Company based on his 16 years of service on the Board.

~~Daniel R. Coker~~ has served as our President and Chief Executive Officer since 2003, and as a director since 2007. Mr. Coker joined Gentherm in 1996 as Vice-President of Sales and Marketing. Prior to such time, from 1986 to 1995, Mr. Coker served as Vice-

~~President and General Manager of North American Operations for Arvin, Inc. Mr. Coker received his Bachelor’s degree from Tennessee Technological University.~~

Mr. Coker has extensive knowledge of the day to day operations of our business. His product development background allows him to fully understand and manage our business. In addition, Mr. Coker’s experience as our highest ranked officer, coupled with the managerial positions he previously held with other automotive-related companies, gives Mr. Coker industry insight and leadership and executive management skills key to our performance.

~~Sophie Desormière~~ has served as a director of the Company since 2012. Ms. Desormiére has served as General Manager Marketing and Sales, Senior Executive Vice-President at Solvay, a Belgium-based company and a developer of specialty chemicals, since November 2010. Previously, Ms. Desormière spent 17 years in increasingly responsible positions at Valeo, an independent industrial group focused on the design, production and sale of components, integrated systems and modules for the automotive industry, including Research & Development Product Line Director, Branch Marketing Innovation Director, Group Product Marketing Director and Comfort Enhancement Domain Director. Ms. Desormière is a graduate of the Ecole Nationale Supérieure de Chimie de Paris, the Institut de Formation du Caoutchouc and the Program for Management Development at Harvard Business School.

Ms. Desormière has broad experience in product planning, product development and market analysis. Her background in these areas assists the Company in its development of long-term product strategies. In addition, the skills Ms. Desormière has developed while working at global companies with significant European operations enables her to provide key insight with respect to the Company’s integration of its worldwide operations.

~~Maurice E.P. Gunderson~~ has served as a director of the Company since 2007. Mr. Gunderson has served as Managing Member of the consulting firm Shingebiss, LLC since 1999. Previously, Mr. Gunderson spent 15 years as the co-founder and Managing Director of Nth Power, a venture capital firm specializing in investments emerging from the global restructuring of the energy industry, and four years at CMEA Capital, a San Francisco based venture capital firm. Mr. Gunderson previously served as managing director of Runway Capital Management and currently serves as an advisor to Auto Tech Ventures and as a director of Onboard Dynamics, Inc., Mt. Diablo Pilots Association and Herd It Through the Grapevine Herding Dog Rescue, all privately-held companies. Mr. Gunderson received a Bachelor of Arts degree and Master of Science degree in mechanical engineering from Oregon State University and a Master’s in Business Administration from Stanford University.

Mr. Gunderson’s background as a venture capitalist enables him to provide key insight with respect to the Company’s investments in new technologies, industries and products. Mr. Gunderson also has strong leadership and governance skills, as a result of his board service for several energy and materials-related companies. His engineering background gives him a deep understanding of our business and operations.

~~Yvonne Hao~~ has served as a director of the Company since 2016. She is currently the COO and CFO of PillPack, an on-line pharmaceutical delivery service. From 2008 to 2016, Ms. Hao held various positions at Bain Capital, including as an Operating Partner starting in 2013 and, prior to that, as interim executive officer for various portfolio companies. At Bain, Ms. Hao was responsible for portfolio company performance, working closely with management of various Bain investment companies. She held the position of interim CEO or COO at several of these companies, including Gymboree and D&M Holdings. Prior to 2008, Ms. Hao worked at Honeywell in various positions starting in 2003 and at McKinsey & Company starting in 1997. Ms. Hao served as a director of publicly-traded Bombardier Recreational Products from 2011 until 2016. She has also served as a director of privately-held companies, including Gymboree and Consolidated Container Company; she currently remains a director of the latter. Ms. Hao holds a B.A. from Williams College and a Masters of Philosophy in Development Economics from Cambridge University.

Ms. Hao’s current role as COO and CFO at PillPack, as well has her roles as interim CEO and COO at other companies, provides her with expertise in executive management, strategic planning, operations and brand marketing. The Company has recently entered the medical market, through the acquisition of a medical device manufacturer in April 2016, and Ms. Hao’s experience at PillPack offers a healthcare industry perspective on the Board. She also brings a unique institutional investor perspective resulting from her previous positions at Bain Capital, a global private equity and venture capital investment firm. Finally, Ms. Hao has international business experience as a result of managing a business expansion in Asia, where the Company has a significant presence with customers and manufacturing plants.

~~Ronald Hundzinski~~ has served as a director of the Company since 2016. Since 2012, Mr. Hundzinski has served as the Executive Vice President and Chief Financial Officer of BorgWarner, Inc. (NYSE:BWA). From 2005 to 2012, Mr. Hundzinski served in BorgWarner’s finance department in positions of increasing responsibility, including as Controller from 2010 to 2011 and Treasurer from 2011 to 2012. Mr. Hundzinski holds a B.B.A. in finance from Western Michigan University and an M.B.A. from the University of Colorado.

Mr. Hundzinski’s experience as the Chief Financial Officer of a large, global automotive supplier brings important practical experience to our Board of Directors. He understands the key operational, strategic and financial issues of the Company as an

executive of a public company in the automotive industry, and he can provide unique, real-time advice on critical industry matters. Mr. Hundzinski also has significant finance and accounting expertise and the Board has determined this qualifies him as an “audit committee financial expert” under SEC rules. His expertise and knowledge in our largest industry segment brings invaluable insight to our Board of Directors.

~~Byron T. Shaw II~~ has served as a director of the Company since 2013. Dr. Shaw has been the President of Byron Shaw LLC, a consulting firm providing diligence, strategy and execution advisory services focusing on automotive technology and related services, since 2012. From 2006 to 2012, Dr. Shaw worked at General Motors in various positions, most recently as Managing Director of the Silicon Valley Office for General Motors and General Motors Ventures LLC. From 1998 to 2003, he worked at BMW in various positions, including Principal Technology Engineer and Manager of Advanced Technology. Dr. Shaw currently serves on the Board of Directors or Advisory Board of several privately-held companies, including Smalltech LLC, Project Renovo, Qualia Networks, Auto Tech

The Board believes that there should be at least a majority of independent directors on the Board. The Board recently undertook its annual review of director independence in accordance with the applicable rules of Nasdaq. The independence rules include a series of objective tests, including that the director is not employed by us and has not engaged in various types of business dealings with us. In addition, the Board is required to make a subjective determination as to each independent director that no relationship exists which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Consistent with these considerations, the Board has affirmatively determined that ~~Mr. Booth,~~director nominees Mr. Castaing, Ms. Desormière, Mr. Gunderson, Ms. Hao, Mr. Hundzinski, ~~and~~Mr. Kummeth, Dr. Shaw and Mr. Stacey are independent ~~directors~~ under the applicable rules of Nasdaq. Mr. ~~Coker~~Eyler is employed by us and therefore is not an independent director. ~~Mr. Marx is not deemed to be an independent director as a result of his prior role as Interim CEO of the Company.~~

Each member of the Audit Committee, the Compensation Committee, the Nominating Committee, the Corporate Governance Committee and the Technology Committee is independent under Nasdaq rules. In addition, the Board has affirmatively determined that the members of the Audit Committee and Compensation Committee qualify as independent in accordance with the additional independence rules established by the SEC and Nasdaq.

The Board has general oversight responsibility for our affairs and, in exercising its fiduciary duties, the Board represents and acts on behalf of the shareholders. Although the Board does not have responsibility for our day-to-day management, it stays regularly informed about our business and provides oversight and guidance to our management through periodic meetings and other communications. The Board provides critical oversight in, among other things, our strategic planning process, leadership development and succession planning, risk management, as well as other functions carried out through the Board committees as described below.

The Board believes that, by separating the positions of Chairman of the Board and Chief Executive Officer, the Board can provide ~~better~~strong oversight of risks, including credit, liquidity and operational risks, faced by the Company. ~~The~~If the Chairman of the Board is not independent under the applicable rules of Nasdaq, the Board has ~~designated~~adopted a policy of appointing a Lead Independent Director. The Lead Independent Director would act as chairperson of all meetings of the independent directors and would have the authority to call additional meetings of the independent directors at any time. The Lead Independent Director would also act as a liaison both between the Chairman of the Board and the Chief Executive Officer, on the one hand, and the independent directors, on the other hand. As Mr. Castaing is independent, the Board has not appointed a Lead Independent Director at this time.

The Board oversees the Company’s risk management ~~primarily~~directly and through ~~the following:~~

The Board and its committees meet throughout the year on a set schedule, and also hold special meetings and act by written consent from time to time as appropriate. The independent directors hold regularly scheduled executive sessions to meet without management present. These executive sessions generally occur around regularly scheduled meetings of the Board. The independent directors also hold additional meetings periodically as deemed necessary or appropriate.

All directors are expected to attend all meetings of the Board and of the Board committees on which they serve. The Board met six times in 2016, and each director serving in 2016 (as of and from the date he or she joined the Board and applicable committees) attended more than 75% of the aggregate of all meetings of the Board and the committees of which he or she was a member in 2016.

The Board has adopted a policy strongly encouraging directors to attend the Company’s annual meeting of shareholders in person or, if necessary, by telephone or similar communication equipment. All current directors attended the 2016 annual meeting of shareholders.

The Board has delegated various responsibilities and authority to Board committees. Each committee has regularly scheduled meetings and reports on its activities to the full Board. Each committee operates under a written charter approved by the Board, which is reviewed annually by the respective committee and the Board and is available on our website, ~~www.gentherm.com, under the “About Us” tab. The table below sets forth the current membership for the five Board committees and the number of meetings held for each in 2016.~~

~~The responsibilities and activities of the Committee are described in greater detail in “Audit Committee Report” and “Audit Committee Matters,” as well as in its charter.~~

~~The~~

Full Board has determined that each Audit Committee member has sufficient knowledge in reading and understanding financial statements to serve on the Committee. The Board has further determined that two Committee members, Mr. Booth and Mr. Hundzinski, qualify as “audit committee financial experts” in accordance with SEC rules. The designation of an “audit committee financial expert” does not impose upon such persons any duties, obligations or liabilities that are greater than those which are generally imposed on each of them as a member of the Committee and the Board, and such designation does not affect the duties, obligations or liabilities of any other member of the Committee or the Board.

•Overall responsibility for risk management oversight

•Reviews and approves an annual business plan, including strategy and liquidity

•Reviews a summary of one or more material risks and opportunities at each regular meeting of the Board

•On at least a quarterly basis, reviews business developments, business plan implementation, liquidity and financial results

•Oversees succession planning

•Oversees capital spending and financings, as well as mergers, acquisitions and divestitures (unless a special sub-committee is established to review one or more particular mergers, acquisitions or divestitures)

Corporate Governance Committee

•Oversees the Company’s governance policies (including the Corporate Governance Guidelines), Board structure, and the self-assessment process of the Board and its committees

Audit Committee

~~Compensation~~Corporate Governance Committee

~~The Compensation Committee’s responsibilities include:~~

evaluating the performance of the Chief Executive Officer and other executive officers, including with respect to established goals and objectives, and making recommendations to the Board concerning all direct and indirect compensation, benefits and perquisites (cash and non-cash) for the executive officers based on such evaluation;

~~administering the incentive and equity plans of the Company, including recommending or approving equity grants;~~

~~reviewing~~•Oversees the Company’s ~~compensation~~governance policies ~~and practices for all employees, at least annually, regarding risk-taking incentives and risk management policies and practices;~~

~~recommending or approving~~(including the ~~non-employee director compensation program; and~~

~~reviewing compensation disclosures in the Company’s proxy statement and other reports filed with or furnished to the SEC.~~

~~The~~Corporate Governance Guidelines), Board has determined that the current members of the Compensation Committee qualify as “non-employee directors” as defined in Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and “outside directors” under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

~~The Compensation Committee has the sole authority to engage outside advisors and establish the terms of such engagement, including compensatory fees.~~ In connection with any such engagement, the Committee reviews the independence of such outside advisor, based on the factors specified by Nasdaq as well as any other factors it deems appropriate, and any conflicts of interest raised by the work of such outside advisor.

The Compensation Committee may form and delegate its authority to subcommittees as appropriate. The responsibilities and activities of the Committee are described further in “Compensation Discussion and Analysis,” as well as in its charter.

~~Role of Management~~. As was also the case in prior years, in 2016 the Compensation Committee received significant input from management with respect to the Company’s executive compensation program. See “Compensation Discussion and Analysis” for further information.

~~Role of Compensation Consultant~~. The Compensation Committee has the sole authority to engage outside advisors and establish the terms of such engagement, including compensatory fees. In connection with any such engagement, the Committee reviews the independence of such outside advisor, based on the factors specified by Nasdaq as well as any other factors it deems appropriate, and any conflicts of interest raised by the work of such outside advisor.

During 2016, the Compensation Committee engaged a compensation consultant, Mercer, to provide general market and peer group information for all executive officers. However, this information was not requested and received until the last quarter of 2016 and was not used with respect to 2016 compensation, but will be used as part of the Committee’s review of 2017 compensation. See “Compensation Discussion and Analysis” for further information. During 2016, Mercer was also retained by the Compensation Committee for the purpose of reviewing the compensation of non-employee directors. See “—Director Compensation – 2016 Compensation Program” for further information. The Committee’s determination to engage Mercer and approve the terms of such engagement has been made independently from the Company’s management. When engaged, the Committee works with management to determine Mercer’s responsibilities and direct its work product, although the Committee is responsible for the formal approval of the work plan. Mercer was paid $50,123 for compensation consulting to the Committee in 2016. The Mercer consultants who performed the compensation consulting at the direction of the Compensation Committee are referred to as the “Compensation Consultants”.

During 2016, based on the determination of management, the Company retained Mercer to provide other services unrelated to executive and non-employee director compensation, which generally consisted of consultation on global employee titles and levels (aggregate fees of $136,800), preparation of standard materials for employees regarding long term incentive equity grants (aggregate fees of $6,000) and market evaluation and proposed compensation plans for a direct sales force at our subsidiary, Cincinnati Sub-Zero Products, LLC (aggregate fees of $20,000). While neither the Compensation Committee nor the Board approved such other services, the Committee believes that the advice it has received from Mercer has been objective and not influenced by Mercer’s other relationships with the Company because of the policies and procedures Mercerstructure, and the ~~Committee have in place. These policies and procedures include:~~

	•		~~the Compensation Consultants receive no incentive or other compensation based on the fees charged to the Company for other services provided by Mercer;~~
	•		~~the Compensation Consultants are not responsible for selling other Mercer services to the Company;~~
	•		~~Mercer’s professional standards prohibit the Compensation Consultants from considering any other relationships Mercer may have with the Company in rendering their advice and recommendations;~~
	•		~~the Committee has the sole authority to retain and terminate the Compensation Consultants;~~
	•		~~the Compensation Consultants were given direct access to the Committee; and~~
	•		~~the Committee evaluated the quality and objectivity of the services provided by the Compensation Consultants.~~

~~Except as set forth above, the Committee noted there were no potential conflicts of interest raised by the work of its Compensation Consultants.~~

~~Nominating Committee~~

~~The Nominating Committee’s responsibilities include:~~

~~evaluating the current directors, as well as any candidates nominated or recommended by shareholders, and nominating directors for election; and~~

~~developing a pool of potential director candidates in the event of a vacancy on the Board.~~

~~The responsibilities and activities of the Committee are described in greater detail in its charter.~~

Audit Committee

•Oversees significant financial risk exposures (including credit, liquidity, legal, regulatory and other contingencies), accounting and financial reporting, disclosure controls and internal control over financial reporting, the ~~operations~~internal audit function, the legal, regulatory and ethical compliance functions (including oversight of the ~~Company~~ethics/whistleblower hotline), enterprise risk management review and the long-term interests of shareholders. See “Proposal No. 1—Election of Directors—Specific Qualifications, Attributes, Skills and Experience to be Represented on the Board” and “Proposal No. 1—Election of Directors—Director Background and Qualifications.” The Committee does not have a specific diversity policy underlying its nomination process, although it seeks to ensure the Board includes directors with diverse backgrounds, qualifications, skills and experience relevant to the Company’s business.

~~The Nominating Committee will consider recommendations from shareholders of director candidates that are sent on a timely basis and otherwise in accordance~~consultations with our Bylaws and other applicable law and regulations. The Committee will evaluate nominees recommended by shareholders against the same criteria that it uses to evaluate other potential nominees. We did not receive any recommendations for director nominations from shareholders for the 2017 annual meeting. See “–Shareholder Communication with the Board” and “Additional Information—Requirements for Submission of Shareholder Proposals and Nominations for 2018 Annual Meeting” for additional information.independent registered public accounting firm

Corporate Governance Committee

~~The Corporate Governance Committee’s responsibilities include:~~

~~exercising general oversight over corporate~~•Oversees the Company’s governance ~~policy matters of the Company, including developing, recommending proposed changes to, and monitoring compliance with,~~policies (including the Corporate Governance ~~Guidelines;~~

~~reviewing and recommending appropriate changes to the Company’s charter documents and key governance policies on a periodic basis; and~~

~~reviewing certain governance disclosures and proposals in the Company’s proxy statement and other reports filed with or furnished to the SEC.~~

The Corporate Governance Committee may form and delegate its authority to subcommittees as appropriate. The responsibilities and activities of the Committee are described in greater detail in its charter.

~~Technology Committee~~

The Technology Committee evaluates and advises management with respect to the development and use of technology by the Company for use in its current and potential future products, including the long-term strategic goals of the Company’s research and development initiatives. The Technology Committee also advises management on its policies and procedures surrounding cyber security. The responsibilities and activities of the Committee are described in greater detail in its charter.

~~Corporate Governance~~

~~The~~Guidelines), Board as well as management, is committed to responsible corporate governance to ensure that we are managed for the benefit of our shareholders. To that end, the Board and management periodically review and update, as appropriate, our corporate governance policies and practices, and, when required, make changes to such policies and practices as mandated by the Sarbanes-Oxley Act, the Dodd-Frank Act, other SEC rules and regulationsstructure, and the ~~Nasdaq listing standards.~~

~~A copy~~self-assessment process of ~~the Board’s committee charters, the Code of Business Conduct and Ethics and the Corporate Governance Guidelines are available on our website,~~ ~~www.gentherm.com, under the “AboutUs” tab andwill be sent to any shareholder, without charge, upon written request to Corporate Secretary, Gentherm Incorporated, 21680 Haggerty Road, Northville, MI 48167.~~

~~Corporate Governance Guidelines~~

The Board has adopted Corporate Governance Guidelines which guidelines provide a structure within which our directors and management can effectively pursue the Company’s objectives for the benefit of our shareholders. The Corporate Governance Guidelines address, among other things, Board and committee structure, composition and procedures, director responsibilities, compensation and continuing education, as well as shareholder communications with the Board.

~~Majority Voting Policy.~~ The Corporate Governance Guidelines includes a policy to be followed if any nominee for director receives a greater number of votes “withheld” from his or her election than votes “for” such election. In such event, the applicable director must promptly tender his or her resignation, conditioned on Board acceptance, following certification of the shareholder vote; provided, however, that this does not apply when the number of individuals nominated for election exceeds the number of directors to be elected, including as a result of a proxy contest. The Nominating Committee will consider the resignation offer and, within 60 days following certification of the shareholder vote, recommend to the Board whether to accept such resignation. The Board will act on the Committee’s recommendation within 90 days following certification of the shareholder vote. The Board will promptly disclose in reasonable detail its decision and rationale regarding the acceptance or rejection of the resignation, as applicable, in a widely disseminated press release, in a filing with the SEC or by other widely disseminated public announcement. If a director’s resignation is accepted by the Board, the Board may either fill the resulting vacancy or decrease the size of the Board pursuant to our Bylaws.

~~Annual Performance Evaluations.~~ ~~The Corporate Governance Committee oversees the annual performance evaluation process. The Board and its committees conduct self-evaluations at least annually to determine whether~~ the Board and its committees ~~are functioning effectively. The Board also reviews~~

Audit Committee

•Oversees significant financial risk exposures (including credit, liquidity, legal, regulatory and other contingencies), accounting and financial reporting, disclosure controls and internal control over financial reporting, the ~~Corporate Governance Committee’s periodic recommendations concerning~~internal audit function, the ~~performance~~legal, regulatory and ~~effectiveness~~ethical compliance functions (including oversight of the ~~Board~~ethics/whistleblower hotline), enterprise risk management review and consultations with our independent registered public accounting firm

Compensation Committee

•Reviews executive officer compensation and its ~~committees.~~

~~Code~~relationship to our business plans, and of ~~Conduct~~

The Board has adopted a Code of Business Conduct and Ethics (“Code of Conduct”), which sets out the basic principles to guide the actions and decisions of our employees, directors and officers, including our principal executive officer, principal financial officer and principal accounting officer. The Code of Conduct addresses, among other things, ethical principles, insider trading, conflicts of interest, compliance with laws and confidentiality. Any amendments to the Code of Conduct, or any waivers that are required to be disclosed by the rules of either the SEC or Nasdaq, will be posted on our website, ~~www.gentherm.com, under the “About Us” tab within four business days of any such amendment or waiver.~~

~~Committee Charters~~

~~See “—Committees of the Board” for a description of the Board’s delegation of authority and responsibilities to the five standing committees.~~

~~Succession Planning~~

~~The succession planning process for executive officers is designed to assist the Board in understanding our readiness~~compensation plans generally and the related ~~transition~~incentives, risks ~~for~~and risk mitigants

The Board is kept informed of the committees’ risk oversight activities via reports to the full Board during Board meetings. In addition, the Board participates in regular discussions with senior management on many core topics, including strategy, operations and finance, in which risk oversight is an inherent element. The Board believes that its leadership structure, whereby the positions of Chairman of the Board and Chief Executive Officer are separate, as described above under “Board Leadership,” facilitates strong oversight of risks, including credit, liquidity and operational risks, faced by the Company. In addition, the Board regularly holds Board and committee executive sessions.

One of the Board’s most important responsibilities is partnering with management to establish the Company’s long-term strategy and then overseeing and providing guidance to management on the execution of the articulated strategy. This was never more important than in 2018, when our management team, with the active participation of our Board, undertook a strategic review that resulted in the announcement of a new strategic plan. The Board and its committees regularly provide guidance and oversight to management with respect to the execution of this new strategy. In addition, the Board dedicates at least one Board meeting each year to focus on strategy, while various elements of strategy are discussed at every Board meeting. The Board also hears on a regular basis from members of management below the executive level regarding the Company’s strategy and performance to inform its perspective on progress against the long-term strategy and ensure that it is able to effectively perform its oversight responsibilities. The Company’s senior management team, consisting of the President and CEO and all of his direct reports, holds periodic meetings to review the Company’s strategy and the implementation thereof. These meetings are typically held off-site rather than at a Company location to ensure proper focus and eliminate distractions. The results of these strategy meetings are used to prepare presentations to the Board regarding the execution of the Company’s strategy.

The Board believes that the Company’s success depends on our people and that we will be most successful if we enable and empower our employees to achieve their aspirations while delivering strong results. We have developed a People Strategy with key platforms. Those platforms are:

The Company has established measurable, quantifiable goals for 2019 that will ensure we remain focused on these areas. The Board regularly requests an update on our progress against the key People Strategy goals.

The Company also places an emphasis on corporate culture and believes that strong corporate culture begins at the top. As such, our commitment to a culture of diversity and inclusion for all employees starts within the boardroom. Our Board is diverse from a gender, age and ethnic perspective, as well as with respect to backgrounds and skillsets. With the input of the Board, the Company has identified cultural behaviors that we believe will both enhance our performance and also make Gentherm an employer of choice. Those cultural behaviors are:

Our Board regularly reviews the development of these cultural behaviors throughout the organization.

The Board and its committees meet throughout the year on a set schedule, and also hold special meetings and act by written consent from time to time as appropriate. The Board met eight times in 2018. The independent directors hold regularly scheduled executive sessions to meet without management present. These executive sessions generally occur around regularly scheduled meetings of the Board. The independent directors also hold additional meetings periodically as deemed necessary or appropriate.

All directors are expected to attend all meetings of the Board and of the Board committees on which they serve. Each director serving in 2018 (as of and from the date he or she joined the Board and applicable committees) attended more than 75% of the aggregate of all meetings of the Board and the committees of which he or she was a member in 2018.

The Board has delegated various responsibilities and authority to Board committees. Each committee has regularly scheduled meetings and reports on its activities to the full Board. Each committee operates under a written charter approved by the Board, which is reviewed annually by the respective committee and the Board and is available on our website, www.gentherm.com, under the “Investor Relations – Corporate Governance” tab. The table below sets forth the current membership for the five Board committees and the number of meetings held for each in 2018.

The responsibilities and activities of the Committee are described in greater detail in “Audit Committee Report” and “Audit Committee Matters,” as well as in its charter.

The Board has determined that each Audit Committee member has sufficient knowledge in reading and understanding financial statements to serve on the Committee. The Board has further determined that three of the Audit Committee members, Mr. Gunderson, Ms. Hao and Mr. Hundzinski, qualify as “audit committee financial experts” in accordance with SEC rules. The designation of an “audit committee financial expert” does not impose upon such persons any duties, obligations or liabilities that are greater than those which are generally imposed on each of them as a member of the Committee and the Board, and such designation does not affect the duties, obligations or liabilities of any other member of the Committee or the Board.

The Board has determined that the current members of the Compensation Committee qualify as “non-employee directors” as defined in Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and “outside directors” under Section 162(m) of the Internal Revenue Code of 1986, as amended (“Code Section 162(m)”). Although the definition of “outside directors” under Code Section 162(m) is no longer relevant for tax purposes starting January 1, 2018, the Company believes it remains a helpful measure of a director’s independence.

The Compensation Committee has the sole authority to engage outside advisors and establish the terms of such engagement, including compensatory fees. In connection with any such engagement, the Compensation Committee reviews the independence of such outside advisor, based on the factors specified by Nasdaq as well as any other factors it deems appropriate, and any conflicts of interest raised by the work of such outside advisor. The Compensation Committee may form and delegate its authority to subcommittees as appropriate. The responsibilities and activities of the Compensation Committee are described further in “Compensation Discussion and Analysis,” as well as in its charter.

Role of Management. As was also the case in prior years, in 2018 the Compensation Committee received significant input from management with respect to the Company’s executive compensation program. See “Compensation Discussion and Analysis” for further information.

Role of Compensation Consultant. The Compensation Committee has the sole authority to engage outside advisors and establish the terms of such engagement, including compensatory fees. In connection with any such engagement, the Compensation Committee reviews the independence of such outside advisor, based on the factors specified by Nasdaq as well as any other factors it deems appropriate, and any conflicts of interest raised by the work of such outside advisor.

In 2018, the Compensation Committee engaged a compensation consultant, ClearBridge Compensation Group, LLC (“ClearBridge”), to provide input, analysis and advice to the Compensation Committee about executive compensation philosophy, compensation design, equity usage and allocation as well as general market and peer group information for all executive officers. That information was used to determine long-term incentive equity grant amounts in 2018 and will be used in 2019 as part of the Compensation Committee’s review of total executive officer compensation. Also during 2018, the Compensation Committee engaged a compensation consultant, Korn Ferry, to provide general guidance and peer group information concerning the implementation of a deferred compensation plan. The Gentherm Incorporated Deferred Compensation Plan was adopted on December 31, 2018 based, in part, on information provided by Korn Ferry. See “Compensation Discussion and Analysis” for further information.

The Compensation Committee’s determination to engage ClearBridge and Korn Ferry, and approve the terms of each such engagement, was made independently from the Company’s management. Upon engagement, the Compensation Committee worked with management to determine each compensation consultant’s responsibilities and direct its work product, although the Compensation Committee is responsible for the formal approval of the work plan. ClearBridge and Korn Ferry are referred to, collectively, as the “Compensation Consultants”. During 2018, the Compensation Consultants received no other compensation for other services provided to the Company. The Compensation Committee insures continued independence of the Compensation Consultants through the following means:

The Compensation Committee has determined there are no potential conflicts of interest raised by the work of the Compensation Consultants.

The responsibilities and activities of the Committee are described in greater detail in its charter.

The Nominating Committee reviews and makes recommendations to the Board, from time to time, regarding the appropriate skills and characteristics required of Board members in the context of the current make-up of the Board, the operations of the Company and the long-term interests of shareholders. See “Proposal No. 1—Election of Directors – Specific Qualifications, Attributes, Skills and Experience to be Represented on the Board” and “Proposal No. 1—Election of Directors – Director Background and Qualifications.” The Committee does not have a specific diversity policy underlying its nomination process, although it seeks to ensure the Board includes directors with diverse backgrounds, qualifications, skills and experience relevant to the Company’s business.

Generally, the Nominating Committee will re-nominate incumbent directors who continue to satisfy the Committee’s criteria for membership on the Board, continue to make important contributions to the Board and consent to continue their service on the Board. If a vacancy on the Board occurs or the Board increases in size, the Committee will actively seek individuals that satisfy the Committee’s criteria for membership on the Board and the Committee may rely on multiple sources for identifying and evaluating potential nominees, including referrals from our current directors and management. During 2018, the Nominating Committee identified Charles Kummeth as a candidate to fill a vacancy on the Board. Mr. Kummeth was identified as part of a search process conducted by the Nominating Committee with assistance from the outside national consulting firm Spencer Stuart.

The Nominating Committee will consider recommendations from shareholders of director candidates that are sent on a timely basis and otherwise in accordance with our Bylaws and other applicable law and regulations. The Committee will evaluate nominees recommended by shareholders against the same criteria that it uses to evaluate other potential nominees. We did not receive any recommendations for director nominations from shareholders for the 2019 annual meeting. See “–Shareholder Communication with the Board” and “Additional Information—Requirements for Submission of Shareholder Proposals and Nominations for 2020 Annual Meeting” for additional information.

The Board, as well as management, is committed to responsible corporate governance to ensure that we are managed for the benefit of our shareholders. To that end, the Board and management periodically review and update, as appropriate, our corporate governance

policies and practices, and, when required, make changes to such policies and practices as mandated by the Sarbanes-Oxley Act, the Dodd-Frank Act, other SEC rules and regulations and the Nasdaq listing standards.

A copy of the Board’s committee charters, the Code of Business Conduct and Ethics (the “Code of Conduct”) and the Corporate Governance Guidelines are available on our website, www.gentherm.com, under the “Investor Relations – Corporate Governance” tab and will be sent to any shareholder, without charge, upon written request to Corporate Secretary, Gentherm Incorporated, 21680 Haggerty Road, Northville, MI 48167.

The Board has adopted Corporate Governance Guidelines that provide a structure within which our directors and management can effectively pursue the Company’s objectives for the benefit of our shareholders. The Corporate Governance Guidelines address, among other things, Board and committee structure, composition and procedures, director responsibilities, compensation and continuing education, as well as shareholder communications with the Board.

Majority Voting Policy. The Corporate Governance Guidelines includes a policy to be followed if any nominee for director receives a greater number of votes “withheld” from his or her election than votes “for” such election. In such event, the applicable director must promptly tender his or her resignation, conditioned on Board acceptance, following certification of the shareholder vote; provided, however, that this does not apply when the number of individuals nominated for election exceeds the number of directors to be elected, including as a result of a proxy contest. The Nominating Committee will consider the resignation offer and, within 60 days following certification of the shareholder vote, recommend to the Board whether to accept such resignation. The Board will act on such Committee’s recommendation within 90 days following certification of the shareholder vote. The Board will promptly disclose in reasonable detail its decision and rationale regarding the acceptance or rejection of the resignation, as applicable, in a widely disseminated press release, in a filing with the SEC or by other widely disseminated public announcement. If a director’s resignation is accepted by the Board, the Board may either fill the resulting vacancy or decrease the size of the Board pursuant to our Bylaws.

Annual Performance Evaluations. The Corporate Governance Committee oversees the annual performance evaluation process for the Board and its committees. The self-evaluations are used to assist in the determination of whether the Board and its committees are functioning effectively and the assessment of director performance and contribution levels. The Board may periodically engage a third party independent advisor to facilitate the Board self-evaluation process, and last did so in 2017. The Board and its committees are evaluated across a number of topics, with the use of a questionnaire to facilitate the process. Areas of focus include: performance, structure, conduct of meetings, quality of information and its timely dissemination, level and robustness of discussion, and prioritization of topics for discussion.

The Board reviews and discusses the evaluation results and any actions to be taken as a result of the discussion, and each committee reviews and discusses its own evaluation results. The Board also reviews the Corporate Governance Committee’s periodic recommendations concerning the performance and effectiveness of the Board and its committees.

The Board has adopted the Code of Conduct, which sets out the basic principles to guide the actions and decisions of our employees, directors and officers, including our principal executive officer, principal financial officer and principal accounting officer. The Code of Conduct addresses, among other things, ethical principles, insider trading, conflicts of interest, compliance with laws and confidentiality. Any amendments to the Code of Conduct, or any waivers that are required to be disclosed by the rules of either the SEC or Nasdaq, will be posted on our website, www.gentherm.com, under the “Investor Relations – Corporate Governance” tab within four business days of any such amendment or waiver.

See “—Committees of the Board” for a description of the Board’s delegation of authority and responsibilities to the five standing committees.

The succession planning process for executive officers is designed to assist the Board in understanding our readiness and the related transition risks for a crisis as well as a planned transition, and to oversee the development of strong leadership quality and executive bench strength. On at least an annual basis, the Board meets with the Chief Executive Officer and in executive session without management to discuss succession planning and strategies to strengthen and supplement the skills and qualifications of internal succession candidates. Key executives have ongoing exposure to the Board to assist in the Board’s oversight. Further, the Chief Executive Officer, other

executive officers and Human Resources periodically provide the Board with an assessment of key executives for potential succession and discuss potential sources of external candidates.

The Company believes effective corporate governance includes regular, constructive conversations with our shareholders on topics including strategy, performance, corporate governance, and compensation. Shareholders provide valuable insights into issues important to them, and the feedback shareholders provide on our efforts is shared with our Board. Since our last annual meeting, we reached out to shareholders representing over 48% of our outstanding common stock and we engaged with shareholders representing 42% of our outstanding common stock, based on shareholdings as of the date we began our outreach. The Chair of our Compensation Committee, Yvonne Hao, participated in several of these meetings. These meetings are invaluable to our Board and management team, and inform our governance and compensation practices. See “Compensation Discussion and Analysis” for a description of changes we made to our compensation program and practices in 2018, in part as a result our shareholder engagement program.

Non-employee directors of the Board receive both cash and equity compensation. Such compensation is intended to encourage non-employee directors to continue Board service, further align the interests of the Board and shareholders, and attract new non-employee directors with outstanding qualifications. Directors who are employees or officers of the Company do not receive any additional compensation for Board service.

The Compensation Committee typically reviews the non-employee director compensation program every other year and makes recommendations to the Board as appropriate. The Board did not review or revise the non-employee director compensation program for 2018 as such compensation was reviewed and revised in 2017.

The following table sets forth the compensation program for non-employee directors in effect for 2018.

Consistent with historical practice, the annual cash retainers were paid to all of our directors in advance immediately following the 2018 annual meeting of shareholders, excluding the cash retainer paid to Mr. Kummeth, which was paid to him upon his appointment to the Board in August 2018. Because Mr. Kummeth was appointed to the Board prior to the first regularly-scheduled meeting following the 2018 annual meeting of shareholders, it was determined that Mr. Kummeth would receive the entire annual cash retainer for 2018-19. Consistent with the terms of the Company’s 2013 Equity Incentive Plan, as amended (the “2013 Equity Incentive Plan”), on the date of such annual meeting, each non-employee director at the time, which did not include Mr. Kummeth, received a restricted stock award having a fair market value of $100,000, or 2,857 shares. Also, consistent with the terms of the 2013 Equity Incentive Plan, at the time of his appointment to the Board, Mr. Kummeth received a pro-rated restricted stock award having a fair market value of $75,000, or 1,682 shares.

The restricted stock vests in full on the first anniversary of the grant date. The restricted stock will be forfeited in the event of termination of service as a non-employee director of the Company prior to the first anniversary of the grant date, subject to acceleration of vesting upon retirement (as defined under the 2013 Equity Incentive Plan), and subject to the Compensation Committee’s right to accelerate the vesting of all or a portion of the restricted stock at any time. During the restricted period, the restricted stock entitles the participant to all of the rights of a shareholder, including the right to vote the shares and the right to receive any dividends thereon. Prior to the end of the restricted period, restricted stock generally may not be sold, assigned, pledged, or otherwise disposed of or hypothecated by participants.

The Company does not provide any perquisites to directors, but does reimburse directors for out-of-pocket expenses incurred in attending Board and committee meetings.

The table below sets forth the compensation of each non-employee director in 2018.

At December 31, 2018, each current non-employee director, excluding Mr. Kummeth, had 2,857 unvested restricted stock awards, Mr. Kummeth had 1,682 unvested restricted stock awards, and Mr. Gunderson had 10,000 vested and unexercised stock option awards (granted to him from service as a director of the Company in prior years) having an exercise price of $11.08.

~~The~~In February 2019, the Board ~~has~~ adopted revised stock ownership requirements for the non-executive directors of the Company to further the alignment of shareholders and directors. ~~Directors~~Non-executive directors are required to own common stock having a value of at least ~~$200,000,~~five times the base annual cash retainer, currently $50,000 (the additional cash retainer for service as chairman or lead independent director or for being a member or chair of a committee of the Board is not included in this computation). Whether a non-executive director has met this minimum stock ownership requirement will be computed as of March 31 each ~~regularly scheduled Board meeting,~~year and is based on the 30-day average closing price of our common stock ~~as of the last day of the then-most recently completed 12 full calendar months.~~on such date. For purposes of such calculation, the following shares are included: shares held by directors individually, ~~shares held by their spouses~~jointly or ~~other~~indirectly with his or her family members, ~~residing~~or in ~~their same households, shares held in~~a trust for ~~their economic benefit or~~ the economic benefit of ~~their spouses~~the director or his or her family ~~members residing in their same households, and shares held in a retirement plan or deferred compensation plan for their benefit.~~members. The value of “in-the-money” vested stock options ~~is also included, but the value of unvested stock options~~ and unvested restricted shares that vest based on the passage of time are also included for purposes of determining whether the director has met this requirement. These new stock ownership requirements replace previous requirements pursuant to which each director was to hold stock having a value of at least $200,000 within four years of their election or appointment to the Board. Non-executive directors have five years after the new requirements were adopted, or after such director is ~~not.~~

~~For~~first elected or appointed to the Board, to become compliant; however, directors first elected or appointed prior to February 2019 remain subject to the prior $200,000 requirement in the interim. As of December 31, 2018, all non-executive directors who were ~~first appointed or elected less than four years ago,~~subject to the ~~minimum~~previous stock ownership ~~level must be achieved by the date which is four years after such individual was first appointed or elected.~~ requirements held common stock having a value in excess of $200,000.

The Compensation Committee is responsible for reviewing any non-compliance with the stock ownership requirements and recommending to the Board any actions necessary to remedy such non-compliance. As

Our CEO, and all of ~~the date hereof, all directors~~our other executive officers, are subject to ~~the above~~separate minimum ~~ownership levels hold common stock having a value in excess of $200,000.~~

~~Our Chief Executive Officer is subject to the same~~ stock ownership ~~requirements as our non-employee directors, regardless as to whether our Chief Executive Officer is also a director.~~requirements. See “Compensation Discussion and ~~Analysis – Other Equity-Related Policies – Executive Stock Ownership Requirements” for further information.~~Analysis”.

Shareholders wishing to send communications directly to the Board or to a specific director are asked to send such communications to Corporate Secretary, Gentherm Incorporated, 21680 Haggerty Road, Northville, MI 48167. Shareholders sending such communications should clearly mark them as intended for delivery to the Board or to a specific director. Our corporate secretary has been instructed by the Board to screen each communication so received only for the limited purposes of ascertaining (A) whether such communication is indeed from a shareholder and (B) whether such communication relates to the Company. Our corporate secretary will promptly forward copies of all such communications that pass such limited screening to each director, in the case of

communications to the entire Board, or to the particular director addressee. Delivery by our corporate secretary will be completed by mail, facsimile or e-mail, as our corporate secretary determines appropriate.

If a shareholder’s communication to the Board involves or concerns our corporate secretary, or if a shareholder has another appropriate reason for communicating to the Board through a means other than through our corporate secretary, such shareholder is asked to send such communication to the attention of either the Company’s President or the Chairman of the Board, in either case at the address above. Any such communication should clearly state that it is a shareholder communication and should clearly state the reason it was not delivered to our corporate secretary for further delivery to the Board.

This section of the proxy statement explains our compensation philosophy, objectives and design, our compensation-setting process and our executive compensation program components, as well as the decisions made for ~~2016~~2018 with respect to each of our named executive officers. This section also provides certain other information as additional context for the “Named Executive Officer Compensation Tables” that follow.

Our named executive officers (“NEOs”) for ~~2016 were Daniel R. Coker, President~~2018 and Chief Executive Officer; Barry G. Steele, Vice-President of Finance, Chief Financial Officer and Treasurer; Frithjof R. Oldorff, President of the Automotive Business Unit; Darren Schumacher, President of the Gentherm Technologies Business Unit; and Kenneth J. Phillips, Vice-President, General Counsel and Secretary (collectively, the “named executive officers” or the “NEOs”). Messrs. Coker, Steele, Schumacher and Phillips are referred to as our “U.S. NEOs.” In August 2015, Mr. Oldorff relocated from Germany to the United States and became employed by the Company. Prior to his move, Mr. Oldorff was employed by the Company’s German subsidiary, Gentherm GmbH. The Company and its German Subsidiary are operated as essentially one company, so the compensation arrangement of Mr. Oldorff while employed by Gentherm GmbH was substantially similar to those of the U.S. NEOs, except as noted below. Key differences betweentheir titles during such ~~arrangements are explained in greater detail throughout this section of the proxy statement, as well as in the “Named Executive Officer Compensation Tables” that follow:~~

During 2018, the automotive industry continued to face headwinds. Nevertheless, Gentherm outperformed both the industry and the competition and is well positioned to face the expected continued headwinds. Highlights of our 2018 performance include:

*$100 invested on 12/31/13 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.

~~Say-On-Pay Vote at 2016 Annual Meeting of Shareholders~~Response to Say-on-Pay Result

The Company’s say-on-pay proposal ~~was approved by approximately 93% of the votes cast~~presented at the ~~2016~~2018 annual ~~meeting. Given the high level~~meeting of ~~shareholder support, the Committee did not revise~~shareholders, whereby shareholders were asked to provide advisory approval of the Company’s compensation ~~policies and decisions relating to the~~for its named executive officers ~~directly~~in 2017, received support of 37% of votes cast (not including abstentions and broker non-votes).

Following this disappointing result, the Gentherm team (including members of management and often the Chair of the Compensation Committee), undertook a significant engagement effort to solicit feedback from shareholders on our executive compensation program and changes we were contemplating to more tightly align our compensation program to performance, our strategy, and shareholders. Since our 2018 annual meeting, we reached out to shareholders representing over 48% of our outstanding common stock and we engaged with shareholders representing 42% of our outstanding common stock, based on shareholdings as of the date we began our outreach.

Below is a list of the most common feedback we heard from shareholders and how we have responded to the feedback:

The following table sets forth the primary purpose and key features of each component of our NEO compensation program in 2018.

Element Pay Philosophy Key Features Components Base Salary Attracts employees in a competitive market Preserves employee’s commitment during downturns in our industry and/or equity markets generally Initial base salaries are based on experience, responsibilities, the market for the role, anticipated individual growth, internal equity pay and other subjective factors Annual review with merit-based increase, benchmarked to market Cash Bonus Rewards achievement of rigorous company financial and operational goals and individual performance Attracts and retains employees for short term Aligns executives with Company operating performance Drives profitable growth through revenue and earnings targets Achieves pay for performance goal Cash bonus up to a predetermined amount, as a ~~result~~percentage of ~~such vote.~~market-based salary Subject to periodic review, with reference to market Paid annually based on full year results Company Financial Performance Adjusted EBITDA1 Revenue Individual Performance Scale Level (excl. CEO) Equity Awards Incentivizes executives to increase long-term shareholder value Aligns management with shareholders Attracts and retains employees for long term Achieves pay for performance goal New program introduced in 2018 consisting of PSUs and RSUs Based on the executive’s position, current salary, and competitiveness in the market 60% PSUs 3 year ROIC 3 year Relative TSR Cliff vesting 40% RSUs 3 year ratable vesting

CEO. Our CEO did not receive any equity awards in 2018, following his award of sign-on restricted stock and stock options upon his appointment to the CEO role in December 2017. For 2019, his mix of pay at target, will be as follows, with nearly 60% of total target direct pay in the form of equity (60% PSUs and 40% RSUs), and nearly 80% at risk:

Other NEOs. Our other NEOs also receive a significant portion of their total target direct pay at risk, with an average of 67% of pay at risk, with 50% in the form of equity. The ~~Committee will continue~~average 2018 pay mix for our NEOs (NEOs received equity in 2018, as opposed to ~~consider~~ the ~~outcome of shareholder votes and other shareholder feedback in making future compensation decisions~~CEO, whose pay mix is provided for ~~the named executive officers.~~2019) is as follows:

The compensation program for ~~named executive officers~~NEOs is designed to attract, motivate and retain qualified executives and to provide them incentives to achieve or exceed the Company’s annual operational and financial goals and increase long-term shareholder value. Under this program, our ~~named executive officers~~NEOs are rewarded for their service to the Company, the achievement of performance goals and the realization of increased shareholder value. We believe our NEO compensation program is structured appropriately to support our business objectives, as well as our culture. The Compensation Committee regularly reviews the Company’s NEO compensation program to ensure the fulfillment of our compensation philosophy and goals.

~~The following table sets forth the primary purpose and key features of each component of our NEO compensation program in 2016.~~

Management. In determining the compensation of executive officers, the Compensation Committee receives significant input from ~~Ms. Erin Ascher,~~ the Company’s ~~Vice-President of Talent Development~~President and Chief Executive Officer as well as the Company’s Chief Human Resources ~~Officer, and Mr. Coker, who has more than 13 years’ experience in his executive officer role with the Company. Ms. Ascher and Mr. Coker~~Officer. These individuals have the most involvement in, and knowledge of, the Company’s business goals, strategies and performance, the overall effectiveness of the management team and each person’s individual contribution to the Company’s performance. For each ~~named~~ executive officer, ~~Ms. Ascher and Mr. Coker~~the above officers make a compensation recommendation, which is reviewed by the ~~Chairman~~Chairperson of the ~~Board~~Compensation Committee and presented to such Committee. The President and Chief Executive Officer, and the ~~Committee. Mr. Coker does~~Chief Human Resources Officer, do not provide input with respect to ~~his~~their own compensation. Management also provides the Compensation Committee with information regarding the individual’s experience, current performance, potential for advancement and other subjective factors. The Compensation Committee retains the discretion to modify the recommendations of ~~Mr. Coker~~management and reviews such recommendations for their reasonableness based on individual and Company performance as well as market information. It is not uncommon for the Compensation Committee to modify the initial executive compensation recommendations made by management following due inquiry.

The Compensation Committee works with management to set the agenda for Compensation Committee meetings, and ~~Mr. Coker~~the President and Chief Executive Officer is invited regularly to attend such meetings. The Compensation Committee also meets regularly in executive session to discuss compensation issues generally outside the presence of management, as well as to review the performance and determine the compensation of ~~Mr. Coker.~~the President and Chief Executive Officer. The President and Chief Executive Officer is never present during Compensation Committee discussions or deliberations involving his compensation.

Third-Party Consultants. ~~During 2016,~~As described under “Board Matters – Committees of the Board”, during 2018 the Compensation Committee engaged a compensation ~~consultant, Mercer,~~consultants ClearBridge and Korn Ferry to provide input, analysis and advice about executive compensation philosophy, compensation design, equity usage and allocation to the Compensation Committee as well as general market and peer group information for ~~all~~purposes of determining 2018 long-term equity incentive compensation for executive ~~officers. However, this information~~officers and establishing a deferred compensation plan pursuant to which the President and CEO was ~~not requested and received until the last quarter of 2016 and was not used with respect~~allowed to ~~2016 compensation, but will be used as part of the Committee’s review of 2017 compensation.~~participate.

In evaluating management’s recommendations regarding the compensation of executive officers, the Compensation Committee considers the compensation offered by other similarly-situated companies, based on its review of information from various publications, its extensive experience with compensation practices in other businesses, information included in proxy statements of similar companies with comparable market capitalization and comparable revenues, its engagement of compensation consultants, ~~in prior years (a compensation consultant was engaged by the Compensation Committee as recently as 2015 to do a market survey),~~ and its members’ subjective review of the reasonableness and fairness of proposed compensation in light of all relevant circumstances. The companies which the Committee considers to be comparable for purposes of the above analysis (based on revenue, market capitalization and industry), and for which the Committee has been provided data, include the following (ticker symbols in parentheses): CTS Corporation (CTS), Dorman Products, Inc. (DORM), Drew Industries Incorporated (DW), Fabrinet (FN), Gentex Corp. (GNTX), Kimball Electronics, Inc. (KE), Littlefuse, Inc. (LFUS), Methode Electronics, Inc. (MEI), Modine Manufacturing Company (MOD), Shiloh Industries, Inc. (SHLO), Standard Motor Products, Inc. (SMP), Stoneridge, Inc. (SRI) and Superior Industries International, Inc. (SUP).

In ~~2016,~~2018, each named executive officer received an annual base salary paid in cash. The initial base salaries ~~of the U.S. NEOs~~ were negotiated in connection with their ~~hiring, and the initial base salary of Mr. Oldorff was set forth in his Employment Agreements.~~hiring.

The Compensation Committee reviews the base salaries of the named executive officers on an annual basis and generally grants salary increases following such reviews. Historically, base salary increases have been between 3-6% and represented a combination of a cost of living / inflation adjustment and a merit raise. However, larger base salary increases are considered where market information indicates that an adjustment is ~~appropriate.~~appropriate, or when there is a significant change in executive’s scope of responsibility.

Consistent with prior years, in determining base salaries for ~~2016,~~2018, the Compensation Committee considered an individual’s performance, position, experience and current salary, as well as the Company’s financial resources, the salaries of other executive officers and employees of the Company, and the base salaries paid by similarly-situated companies to individuals having similar job responsibilities as further discussed under “–Process for Making Compensation Determinations – Comparability.” In ~~determining~~the case of Mr. ~~Coker’s~~Eyler, his base salary for ~~2016,~~2018 was not increased from his 2017 base salary because his first day of employment with the ~~Committee also considered his demonstration of leadership and ability to manage~~Company was December 4, 2017. For Ms. Brentano, her base salary for 2018 was established when she started employment with the ~~Company’s growing business.~~Company in February 2018.

For ~~2016,~~2018, the ~~Compensation Committee concluded that a market adjustment in base salaries for several of the NEOs was appropriate based on a review of the factors described above. The~~ Compensation Committee concluded to increase the base salaries for ~~several~~all NEOs, excluding Mr. Eyler and Ms. Brentano for the reasons stated above, by exactly 3% effective January 1, 2018. No additional or special market adjustment or merit increase was deemed necessary. As part of the employment negotiations with Mr. Eyler and Ms. Brentano, each of their initial base salaries was established based on market information and inducements to leave their then-current positions.

The Compensation Committee reviews and approves each of the bonuses set forth below. The Compensation Committee also establishes the annual incentive targets for each NEO in a manner consistent with determining base salaries. For NEOs who begin employment with the Company during a year, annual performance bonuses are prorated based on the number of days worked during such year.

2018 Bonus Plan. For 2018, a new bonus plan for senior level management, including all executive officers ~~in 2016 to reflect individual performance, additional duties and market levels.~~

~~2016~~(collectively, “Senior Level Participants”), was implemented (the “2018 Senior Level Bonus ~~Plan.~~ ~~The 2016 Bonus Plan was substantially similar to the 2015 Bonus Plan.~~Plan”). Under the ~~2016 Bonus Plan, the NEOs and other eligible employees~~new plan, Senior Level Participants earned cash bonuses up to pre-determined amounts ~~(as~~based on percentages of their respective base ~~salaries)~~salaries (100% for Mr. Eyler, 60% for Mr. Steele and 50% for each other NEO), based in part on the financial performance of the Company and, except in the case of Mr. Eyler, based in part on the achievement of specific individual goals. Mr. Eyler’s bonus is determine solely based on the ~~Compensation Committee’s evaluation of individual~~financial performance ~~against individual performance goals approved by the Committee, together with management, in advance~~ of the ~~applicable performance period.~~Company. The goals are aligned with overall Company objectives and were broad-ranging, depended on the individual’s position, and included items such as eliminating or reducing specific expenses, completing engineering objectives, developing new business, streamlining operations, completing other specific projects and other similar types of goals. The performance goals were intended to be subjective, or have overriding subjective elements to them. The Committee had full discretion to determine whether the performance goals had been met, except thatmaximum bonus ~~payouts are conditioned on the satisfaction of minimum threshold Company financial metrics (the “Minimum Metrics”). Regardless~~is 200% of the ~~Committee’s subjective evaluation~~target bonus amount.

Company Performance. For purposes of ~~individual~~determining the Company’s financial performance iffor 2018, the ~~Minimum Metrics are not met no bonuses are payable under~~Compensation Committee concluded to use the ~~2016 Bonus Plan. For 2016, the Committee used~~following two metrics and weigh those metrics equally.

1. earnings before interest, taxes, depreciation and amortization, deferred financing cost amortization, transaction expenses, debt retirement expenses, unrealized currency gain or loss, unrealized revaluation of derivatives ~~(“Adjusted EBITDA”)~~and other extraordinary items as the sole Minimum Metric and set such metric at $144 million (Adjusted EBITDA was $152 million for 2015, $134 million for 2014 and $81.5 million for 2013). The Committee considers Adjusted EBITDA as an appropriate supplemental measure of the Company’s overall operational performance.

The 2016 Bonus Plan also provides that if certain Company financial metrics are exceeded for the full calendar year (the “Stretch Metrics”), then the total amount of discretionary bonus earned by each participant for the year will be increased ratably by an amount determined by the Compensation Committee ~~up to 20% (the “Formula Performance Adjustment”). For 2016,~~

Further, for 2018 the Compensation Committee ~~used~~determined that if a minimum Adjusted EBITDA result was not achieved for the bonus period (the “Minimum Metric”), no bonuses would be paid. The Minimum Metric for 2018 was established by the Compensation Committee as 85% of the target Adjusted EBITDA, or $136 million. Both targets were established based primarily on the Company’s annual operating plan.

At the beginning of 2018, only a few months after Mr. Eyler began as the ~~sole Stretch Metric~~new President and ~~set~~Chief Executive Officer of the Company, the Company began preparation of its revised strategic plan. Two of the major elements of the strategic plan, which was announced on June 25, 2018, were disposal of the Cincinnati Sub-Zero industrial chambers and testing division (“CSZ-Industrial”) and disposal of the

Gentherm Global Power Technologies division (“GPT”). The Company determined that those businesses were not consistent with the long-term strategic plan or the Company’s core competencies. Assets underlying those businesses were reclassified for financial statement purposes as “held for sale” and the Company began its efforts to dispose of such ~~metric at $209 million. Actual~~businesses. On February 1, 2019, CSZ-Industrial was sold. Efforts are ongoing to market and sell GPT. In light of these facts, the Compensation Committee concluded that the effects of the CSZ-Industrial and GPT businesses should be removed from the computations of Adjusted EBITDA and revenue for purposes of computing bonuses under the 2018 Senior Level Bonus Plan. Furthermore, the Compensation Committee concluded to make additional minor adjustments to actual Adjusted EBITDA for ~~2016 was $146 million.~~

~~For each reporting period in 2016,~~purposes of the ~~Committee determined that each named executive officer achieved most or all~~2018 Senior Level Bonus Plan to reflect extraordinary costs associated with trade war tariffs (approximately $1.3 million) and certain older equity grants accounted for on a mark-to-market basis (approximately $800,000), neither of ~~his performance goals~~which amounts were taken into consideration when establishing the original targets. The targets and ~~in some cases, surpassed expectations. For the calendar year 2016, the Committee did not approve a Formula Performance Adjustment~~actuals, after adjusting for the ~~named executive officers or any~~impact of the held for sale businesses and other ~~employees because~~minor adjustments as described above, were as follows:

The Company’s actual financial results, based on the relative achievement and equal weighting of the Adjusted EBITDA ~~did not exceed~~and revenue targets, are then applied to the ~~Stretch Metrics.~~

~~The 2016 Bonus Plan was divided into two distinct performance periods,~~following schedule to determine the ~~first half~~percentage of ~~the year (January 1~~^st ~~through June 30~~^th~~), and the second half of the year (July 1~~^s^t ~~through December 31~~^st~~); however, the Company must be on track (based on estimated projections for the full year) to meet the full year Minimum Metrics for the first half~~each participant’s target bonus that is to be paid, prior to the individual adjustments discussed further below (and if the Company’s financial achievement falls between two levels, a linear calculation is made to determine the exact percentage applied):

As a result of these adjustments, the Company’s financial performance (without rounding) resulted in a payout level of 85.16%.

Individual Performance. Each Senior Level Participant, excluding the CEO, established a number (generally 3-4) of individual performance targets for the year with the input and approval of their supervisor, additional review and approval by the ~~Formula Performance Adjustment~~CEO, and, in the case of executive officers, final review and approval by the Compensation Committee. Each target is ~~only computed after~~measurable and included a threshold amount, a target amount and a stretch amount. Each target was weighted so that the ~~end~~sum of all targets equals 100%. Achievement of the ~~full calendar year~~threshold performance for a particular goal, the lowest level of acceptable performance, resulted in a 50% score for that goal; achievement of the target performance for a particular goal resulted in a 100% score for that goal; and ~~any related~~achievement of stretch performance for a particular goal or higher, a superior level of performance, resulted in a 150% score for that goal. There is a linear adjustment ~~paid with~~to each score if goal achievement is between threshold and target or between target and stretch measurement points. The sum of the weighted scores for all of the individual goals resulted in each participant’s performance modifier.

As noted above, our CEO’s bonus is not modified by his individual performance and his bonus is based solely on the Company’s financial performance as described above. As a result, Mr. Eyler’s actual bonus for 2018 was computed as his target bonus of $750,000 multiplied by the ~~second half~~Company’s achievement payout level of 85.16%, or $639,000.

We do not disclose the specific individual performance targets for our other NEOs, because each of these targets includes sensitive information that we believe would put us at a competitive disadvantage if disclosed. For example, in 2018 these targets included items such as achievement of sales with a particular customer, successful cost cutting measures pertaining to a particular competitive product, achievement of new innovative technologies and other matters which we believe to be proprietary. As a result, we are disclosing only the achievement percentages of each NEO of his or her individual goals in the table below.

Bonus Payouts. Final 2018 bonus payouts for each of our NEOs were determined based on a combination of the ~~year. The achievement or failure to achieve the applicable individual criteria for the first~~Company’s performance ~~period did not impact the achievement or failure to achieve the applicable individual criteria for the second~~and each participant’s performance ~~period. If earned, bonuses~~modifier as follows:

Bonuses are paid approximately two months ofafter the end of the applicable performance period.

Unless an exception is granted by the Compensation Committee, a participant must be employed on the bonus payment date to be eligible to receive a ~~bonus under~~bonus.

On September 18, 2017 the ~~2016~~Company and Mr. Eyler entered into a written agreement concerning Mr. Eyler’s employment with the Company (the “Eyler Contract”), which set forth the initial terms of Mr. Eyler’s employment. The Eyler Contract included two Make-Whole Bonuses of $1 million each that were intended to compensate Mr. Eyler for payments that he was entitled to receive from his former employer but would no longer receive by accepting the position with the Company. The first Make-Whole Bonus ~~Plan.~~

~~For 2016,~~was paid in January 2018 and the Compensation Committee did not have a formal written policy regarding adjustment of bonus payments if the relevant performance measures or underlying facts upon which they are based are restated or otherwise adjustedsecond was paid in ~~a manner that would materially increase or reduce the size~~January 2019. One of the incentive payment. Effective January 1, 2017, the Compensation Committee adopted the Gentherm Compensation Clawback Policy. See “–Other Equity-Related Policies – Clawback Policy” for further information.

Beginning in 2017, bonuses to NEOs and other eligible employees will be governed by the Gentherm Incorporated Performance Bonus Plan (the “New Bonus Plan”). The New Bonus Plan differs from the 2016 Bonus Plan$1 million payments is disclosed in the ~~following material ways: (1) the financial performance~~2017 row of the ~~Company~~Summary Compensation Table. The second $1 million payment is ~~not only used for determining~~disclosed in the ~~Minimum Metric and the Stretch Metric, but will be used to modify every bonus payment by either increasing or decreasing such payment based on the Company’s actual financial results as a percentage~~2018 row of the Company financial performance targets and (2) every participant’s overall performance during the period will be ranked on a scale from “unacceptable” to “breakthrough performer” and the bonus payment will be adjusted according to a stated formula. Otherwise, the New Bonus Plan is substantially similar to the 2016 Bonus Plan. A copy of the New Bonus Plan was filed as Exhibit 10.2 to the Form 8-K filed by the Company on December 16, 2016.Summary Compensation Table.

Equity awards ~~in the form of restricted stock and stock options represented~~represent a significant portion of ~~NEO~~our NEO’s compensation, ~~in 2016,~~ as the Compensation Committee continues to regard increasing long-term shareholder value as senior management’s primary objective. ~~In February 2016,~~We introduced a new long-term incentive program for our Senior Level Participants (which included all of our executive officers) in 2018, following the ~~Committee granted~~disappointing result we received on our 2018 Say-on-Pay vote and a comprehensive review of our overall compensation program. Under the new program, 60% of target value is delivered via PSUs and 40% is delivered via RSUs. Historically, we have delivered equity awards ~~to the named executive officers pursuant to the 2013 Equity Incentive Plan.~~ entirely via time-vested stock options and time-vested restricted stock.

Consistent with prior years, the size of the awards depended on the executive’s position and current salary, as well as management’s recommendations, competitiveness in the market, and other subjective factors deemed relevant by the Committee. ~~The Committee fixed~~

Awards of both PSUs and RSUs for 2018 were made in June 2018, following the ~~exercise~~establishment of the new plan. In 2019, we granted the annual equity awards during the first quarter, and we expect generally to continue to utilize such timing in future years for annual grants as we have in the past.

Performance-Based Restricted Stock Units. A target number of PSUs was granted to each NEO in June 2018. PSUs will ultimately be earned and vest based on two equally weighted metrics: 1) total shareholder return (“TSR”), defined as stock price ~~of stock options~~appreciation plus reinvested dividends, versus a custom comparator group at the ~~fair market value~~end of three years; and 2) return on invested capital (“ROIC”) measured in fiscal year 2020. TSR was selected because it is effective in aligning our NEOs’ performance with shareholder interests, is objective and allows for easy comparison versus our peers and competitors. ROIC was selected as a metric because it aligns with our strategy to focus on businesses that have high revenue growth, strong return on investment and significant synergies across the business.

Any PSUs earned on either portion of the ~~underlying shares on~~award vest three years from the grant ~~date, such~~date. The payout scale is as follows:

The following set of companies was selected by the Compensation Committee, with assistance from ClearBridge, for relative TSR comparison purposes. The companies were identified to reflect companies that ~~grantees only benefit to~~are impacted by the ~~extent~~same external economic forces as Gentherm. Specifically, companies were identified based on their industry and the correlation of their stock price movement with Gentherm’s. Given that this comparison group is used for purposes of measuring relative TSR performance, and not for setting target pay levels, company size was not used as a factor in determining the comparison group.

Restricted Stock Units. RSUs vest ratably over three years, with one third vesting on each anniversary of the grant date.

2018 Award Values. The award values for equity granted in 2018 was determined by the Compensation Committee primarily based on peer group data for similar positions, as well as the executive’s current position and salary, and is shown below. These amounts were divided by the 10-day average closing price of our common stock ~~increases~~on the date of grant and rounded up to the nearest whole share to determine the number of target shares of PSUs and the actual number of RSUs to be awarded. Our CEO did not receive an equity award in 2018 as a result of the sign-on awards of options and restricted stock he received upon appointment to the role in December 2017.

The 10-day average closing price of our common stock on June 11, 2018, the date the RSUs were awarded to the NEOs, was $36.335. As a result, the number of target PSUs and actual RSUs awarded was as follows:

On December 31, 2018, the Company adopted the Gentherm Incorporated Deferred Compensation Plan, effective January 1, 2019 (the “Deferred Compensation Plan"). The Deferred Compensation Plan’s purpose is to attract and retain individuals, including Mr. Eyler, who will contribute significantly to the future business success of the Company. The Plan is intended to provide retirement income benefits to participants, but is not a Supplemental Executive Retirement Program (“SERP”) or a traditional executive pension plan.

The Deferred Compensation Plan is unfunded and permits participants to make annual elections to defer all or a portion of their base salary and annual bonus for the subsequent year, and to receive employer contributions, which such participants would have been able to make and receive under the Company’s existing Retirement Savings Plan (the “401(k) Plan”) but for certain salary reduction and related limitations of the Internal Revenue Code of 1986, as amended. Participants benefit from the deferral of current compensation and the associated taxes thereon until a future date, and also receive tax deferred investment returns on these deferred amounts.

On December 31, 2018, the Company authorized Mr. Eyler to be eligible to receive a performance-based award under the Deferred Compensation Plan pursuant to a Deferred Compensation Agreement, by and between the ~~grant date~~Company and ~~the exercise date.~~

~~All~~Mr. Eyler, effective January 1, 2019 (the “Eyler DC Agreement”). The Eyler DC Agreement provides that Mr. Eyler is eligible to receive annual incentive compensation based on Company achievement of ~~the NEOs received restricted stock~~earnings before interest, taxes, depreciation, amortization and ~~stock options in 2016. The Compensation Committee believes restricted stock aligns interests with shareholders in~~other adjustments compared to a ~~manner similar to stock options, as described above, but also has underlying value on the grant date that might otherwise be paid in cash as an additional bonus.~~

~~In 2016, the restricted stock awards granted vest in three equal annual installments and the stock option awards granted vest in four equal annual installments,~~target amount, in each case ~~commencing~~defined in the same manner as the Company’s annual bonus plan for executives, with metrics to be determined by the Compensation Committee. Mr. Eyler’s maximum annual incentive compensation award under the Eyler DC Agreement is 30% of Mr. Eyler’s base salary in the immediately preceding calendar year. Mr. Eyler will become vested in such award on ~~the first anniversary~~January 1, 2020, 2021, 2022 and 2023 in an aggregate amount of 20%, 40%, 60% and 100%, respectively, if he continues to serve as an employee of the ~~date of grant. See “Named Executive Officer Compensation Tables – Grants of Plan-Based Awards in 2016” for further information.~~

The Compensation Committee also considers using equity awards to reward unique achievements by the NEOs. On April 2, 2016 a small amount of restricted stock was awarded to several NEOs in connection with the acquisition of Cincinnati Sub-Zero Products, LLC in special recognition of the efforts of the recipients in connection withCompany through such ~~acquisition. This one-time award of restricted stock~~vesting dates. Mr. Eyler will become immediately vested in ~~full on April 1, 2017.~~such award, if earlier, upon his death or Disability (as defined in the Deferred Compensation Plan) or upon a Change in Control (as defined in the Deferred Compensation Plan).

During 2008, in recognition of the Company’s need for stability and competence at the executive level, the Compensation Committee recommended, and the independent directors at such time subsequently approved, The Executive Nonqualified Defined Benefit Plan ~~of Gentherm Incorporated effective April 1, 2008 (the “U.S. Defined Benefit Plan”). Mr. Coker has been the only participant in the U.S. Defined Benefit Plan.~~

The U.S. Defined Benefit Plan, more fully described in Note 12 to the audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2016, had a six-year vesting period that began on April 1, 2011. Now fully vested, the U.S. Defined Benefit Plan provides for 15 annual benefit payments to Mr. Coker, each in the amount of $300,000, beginning January 1, 2018. The Committee has reviewed the benefits offered to presidents and chief executive officers of similarly situated companies, and continues to believe that the U.S. Defined Benefit Plan is fair and reasonable.

The Company has also established a corporate-owned life insurance policy (“COLI”) on the life of Mr. Marx, Chairman of the Board. The COLI is held by a trust established for payment of benefits under the U.S. Defined Benefit Plan.

Our German ~~Subsidiary~~subsidiary, Gentherm GmbH, maintains a defined benefit plan for former and current members of its management team (the “German Defined Benefit Plan”). The German Defined Benefit Plan is expected to be funded exclusively by participants’ pre-tax contributions and the earnings on those contributions. However, the amount of future benefits to which a participant is entitled, while based on the amount of such participant’s contributions to the ~~plan,~~German Defined Benefit Plan, is subject to minimum future guaranteed returns on those contributions. As a result, the German ~~Subsidiary~~subsidiary records a liability for the amount that projected future benefit payments exceed projected future defined benefit plan assets. For the year ended December 31, ~~2016,~~2018, Mr. Oldorff was eligible to participate in the German Defined Benefit Plan; however, he did not make any voluntary contributions to the German Defined Benefit Plan in ~~2016.~~2018.

The German Defined Benefit Plan is further described in Note 1210 to the audited financial statements included in our annual report on Form 10-K for the year ended December 31, ~~2016.~~2018.

Other than Mr. Oldorff, no other NEOs are participants in any defined benefit plan.

Vacation Pay. Upon specified events, our employees, including the NEOs, receive lump-sum payments for accumulated vacation time in excess of specified amounts.

•

~~Vacation Pay.~~ Upon specified events, U.S. employees, including the U.S. NEOs, receive lump-sum payments for accumulated vacation time in excess of specified amounts. Mr. Oldorff receives vacation pay in accordance with the terms of his Employment Agreement.

Other Perquisites. The Company provides each NEO with the use of a ~~company-owned~~Company-owned automobile. The Company believes it is important that our named executive officers thoroughly understand our products and present themselves to others as users of our products. The automotive segment represents our largest product segment. ~~The~~During 2018, the Company also ~~provides~~provided club memberships to Mr. ~~Coker,~~Eyler and Mr. Oldorff which facilitates entertainment of current and potential customers and suppliers and other business associates, and are also used for meeting locations. We allocate the costs of these perquisites between business and personal use and report the personal-use portion as compensation to the applicable named executive ~~officers.~~officers and report such personal-use portion on the Summary Compensation Table under the column “All Other Compensation”. As part of his relocation to the United States, Mr. Oldorff is entitled to certain housing and travel allowances as additional perquisites.

Severance and Change in Control Benefits

~~U.S. NEOs.~~General. Other than the ~~U.S.~~Deferred Compensation Plan, the German Defined Benefit Plan and the 401(k) ~~plan~~Plan described above, the Company does not provide or maintain any post-retirement medical benefits, non-qualified deferred compensation plans or retirement or pension plans for ~~U.S. employees, including the U.S.~~ NEOs. ~~However, certain of the~~The Company’s equity compensation plans contemplate possible acceleration of vesting upon, and exercisability of awards following, a termination of a participant’s employment. See “Named Executive Officer Compensation Tables – Potential Payments Upon Termination or Change in Control” for further information.

Mr. Eyler. The Eyler Contract provides for certain benefits to him upon termination of his employment with the Company, including upon a change in control. See “Named Executive Officer Compensation Tables – Potential Payments Upon Termination or Change in Control” for information regarding the potential payments and benefits payable to Mr. Eyler following a termination of employment under the terms of the Eyler Contract.

Mr. Steele. On December 11, 2018, the Company and Mr. Steele entered into a written agreement concerning Mr. Steele’s separation from the Company (the “Steele Contract”). In consideration for Mr. Steele’s assistance in providing transition services to the Company related to the appointment of the Company’s new Chief Financial Officer and other factors, the Steele Contract provides for certain payments and benefits to Mr. Steele as of the date of the public announcement and upon Mr. Steele’s final termination of employment. See “Named Executive Officer Compensation Tables – Potential Payments Upon Termination or Change in Control” for information regarding the payments and benefits paid and payable to Mr. Steele under the Steele Contract in connection with his separation from the Company.

Mr. Oldorff. ~~Other than the German Defined Benefit Plan~~The Company and ~~the German Defined Contribution Plan described above,~~ Mr. Oldorff ~~was not eligible~~are parties to ~~receive or participate in any post-retirement medical~~an Executive Relocation and Employment Agreement with an effective date of August 1, 2015 (“Oldorff Contract”), which sets forth the material terms of his compensation. The Oldorff Contract provides for certain benefits ~~non-qualified deferred compensation plans or retirement or pension plans.~~to him upon termination of his employment with the Company. See “Named Executive Officer Compensation Tables – Potential Payments Upon Termination or Change in Control” for information regarding the potential payments and benefits payable to Mr. Oldorff following a termination of employment under the terms of ~~his Employment Agreement and certain~~the Oldorff Contract.

Compensation Governance

Overview of ~~the Company’s equity compensation plans.~~Compensation Governance Best Practices

~~Other Equity-Related Policies~~


What We Do		What We Prohibit
•	New long-term equity award plan introduced in 2018; 60% of awards for NEOs delivered via PSUs, 40% delivered via RSUs (page 27)	•	Guaranteed bonuses or equity grants (excluding new hires) (page 25-27)
•	Over 75% of CEO’s total direct compensation is at risk, with nearly 60% delivered via long-term equity awards (based on estimated 2019 target direct pay) (page 23)	•	Repricing/replacement of underwater stock options and SARs (page 31)
•	Distinct performance metrics used in annual incentive plan and long-term PSUs (pages 25-27)	•	Pledging, hedging and use of derivatives (page 31)
•	CEO’s annual incentive based solely on Company performance on key financial metrics (page 25)	•	Extensive perquisites (page 29)
•	Stock ownership guidelines applicable to our executive officers and directors (page 31)	•	Tax gross-ups (page 32)
•	Annual say-on-pay shareholder vote (page 51)
•	Compensation Committee oversight to confirm no undue risk in compensation programs of the Company (page 24)
•	Adopted clawback policy (page 31)
	Double-trigger change in control benefit for the CEO (page 40)

Executive Stock Ownership ~~Requirements~~Guidelines

~~Our~~ During February 2019, we significantly revised and enhanced our stock ownership guidelines as follows:


Population	Previous Requirement	New Requirement
Chief Executive Officer	Common stock having a value of at least $200,000	3x Base Salary
Other Executive Officers	No requirement	1x Base Salary
Directors	Common stock having a value of at least $200,000	5x Annual Cash Retainer

The CEO and other executive officers must meet the minimum amount of holdings by the later of five years after the date these guidelines were adopted or five years after such individual is first appointed. Directors must meet the minimum amount of holdings by the later of four years after the date these guidelines were adopted or four years after the Director is first appointed or elected; provided, however, that Directors first appointed or elected prior to the date these guidelines were adopted are subject to the ~~same~~Company’s previously existing stock ownership and holding guidelines until they have met the minimum holding requirements ~~as our non-employee directors. Our Chief Executive Officer must own common stock having a value of at least $200,000.~~hereunder. See “Board Matters – Director ~~Compensation – Director Stock Ownership Requirements”~~Compensation” for further information. ~~The other named executive officers are not subject to stock ownership requirements. Our Chief Executive Officer was in compliance with the stock ownership requirements at all times during 2016.~~

Timing and Pricing of Equity Grants

The Compensation Committee does not coordinate the timing of equity grants with the release of material non-public information. The Compensation Committee usually considers equity awards for executive officers on an annual basis at regularly scheduled meetings of the Compensation Committee, which are generally scheduled a year or more in advance, and for new hires as applicable.

In accordance with the 2013 Equity Incentive Plan, the exercise or base price of stock option or ~~SAR~~stock appreciation right (“SAR”) awards is at least 100% of the fair market value of our common stock on the date of grant (which date is not earlier than the date the Compensation Committee approves such award). The Compensation Committee is authorized to modify, extend or renew outstanding stock options or SARs or accept the cancellation or surrender of such awards. However, except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the Compensation Committee may not take actions that would constitute a repricing of stock options or SARs without satisfying the applicable shareholder approval requirements of Nasdaq. In particular, the 2013 Equity Incentive Plan prohibits direct repricings (lowering the exercise price of a stock option or the base price of a SAR) and indirect repricings (cancelling an outstanding stock option or SAR and granting a replacement or substitute stock option or SAR with a lower exercise or base price, or otherwise exchanging such awards for cash, stock options, SARs or other awards).

~~Policy~~Prohibition on Hedging or Pledging ~~and Hedging~~ Company Securities

In addition to the restrictions set forth in SEC regulations, the Board has adopted a Statement of Policy for Securities Trading by Company Personnel which prohibits the hedging ~~of Company securities and significantly limits any~~or pledging of Company securities. In particular, the policy prohibits employees, officers and directors from making trades while in possession of material, non-public information. Specified restricted persons, including our officers and directors, are also prohibited from trading on a short-term basis of less than six months, short sales and derivative trading generally. In addition, theThe policy prohibits pledging of Company securities or holding Company securities in a margin ~~account, except in situations and on conditions pre-approved by our Chief Financial~~

Officer. At a minimum, such person must demonstrate the financial capacity to repay the applicable loan without resort to the margin or pledged securities. No Company securities beneficially owned by a director or executive officer were pledged or subject to a margin account at any time during 2016.account.

Clawback Policy

The Compensation Committee adopted ~~the Gentherm Incorporated Compensation~~a Clawback Policy ~~(the “Clawback Policy”),~~ effective January 1, 2017. Under the Clawback Policy, in the event the Company is required to make an accounting restatement to correct an error that is material to its previously issued financial statements under applicable securities laws, and the Compensation Committee has determined that any bonus, retention award, or incentive compensation has, based on the erroneous financial statements, been paid to any executive officer who knowingly or through gross negligence engaged in the activity that caused such restatement to be necessary, or who knowingly or through gross negligence failed to prevent such activity, the Committee shall have the discretion to take such action as it deems necessary to recover the compensation so paid, remedy the misconduct, and prevent its recurrence. The Clawback Policy gives the Compensation Committee authority to seek reimbursement of bonuses, retention awards, or incentive compensation paid to an affected executive officer, cancellation of any equity awards granted to such officer, and reimbursement of any gains realized by such officer on the exercise of rights attributable to such awards. The amount recoverable in each case is limited to the extent to which such bonus, retention award, or amount of incentive compensation was calculated based upon the achievement of certain financial results that were subsequently reduced due to a restatement. The recovery period under the Clawback Policy is three full years preceding and including the date the Board concludes, or reasonably should have concluded based on evidence available to it, that the Company’s financial statements contained a material error.

Tax and Accounting Implications

Deductibility of Executive Compensation

Section 162(m) of the Code provides that annual compensation in excess of $1 million paid to a company’s ~~chief~~principal executive officer, principal financial officer and the three other highest compensated executive officers ~~(excluding the chief financial officer)~~ is not deductible by the company for federal income tax ~~purposes, subject to specified exemptions (the most significant of which is certain performance-based compensation).~~purposes. The Committee intends to continue to review the application of Section 162(m) of the Code with respect to any future compensation arrangements considered by the Company. However, to maintain flexibility in compensating the Company’s executive officers to meet a variety of objectives, the Committee reserves the right to compensate Company ~~executes~~executives in amounts deemed appropriate and competitive, regardless of whether such compensation is deductible for federal income tax purposes. Section 162(m) of the Code is expected to prevent the Company from deducting a portion of the compensation paid to ~~Mr. Coker, the Company’s President and Chief Executive Officer,~~our NEOs in ~~2016.~~2018.

Nonqualified Deferred Compensation

Section 409A of the Code provides that amounts deferred under nonqualified deferred compensation arrangements will be included in an employee’s income when vested, as well as be subject to additional taxes, penalties and interest, unless certain requirements are complied with. The Company believes that its compensation arrangements satisfy, or are exempt from, the requirements of Section 409A.

Change in Control Payments

If a company makes “parachute payments,” Section 280G of the Code ~~disallows a company’s tax deduction for~~prohibits the company from deducting the portion of the parachute payments constituting “excess parachute payments” and Section 4999 the Code imposes on the payee a 20% excise tax on the excess parachute payments.” For this purpose, parachute payments generally are defined as payments to specified persons that are contingent upon a change in control in an amount equal to or greater than three times the person’s base amount (i.e. the five-year average Form W-2 compensation). The excess parachute payments, which are nondeductible and subject to a 20% excise tax, equal the ~~amount~~portion of the parachute payments ~~less~~that exceeds one times the payee’s base amount. ~~Additionally, Section 4999 of the Code imposes a 20% excise tax on any person who receives excess parachute payments.~~

The Eyler Contract and the Company’s equity incentive plans may entitle participants to receive payments in connection with a change in control that may result in excess parachute payments. ~~The~~Originally, the Eyler Contract provided that, if any payment Mr. Eyler is entitled to receive in connection with a change in control constitutes a “parachute payment” within the meaning of Section 280G of the Code and is subject to the excise tax imposed by Section 4999 of the Code, then the Company ~~does~~would have grossed-up the amount of such payment to an amount which, after reduction for all taxes (including the excise tax) imposed on both the payment and the gross-up, exactly equals the amount of the payment after reduction for all taxes imposed on the payment other than the excise tax. Mr. Eyler was entitled to a similar benefit from his previous employer and the Company originally agreed to provide the foregoing benefit to entice Mr. Eyler to accept a position with the Company. However, on December 7, 2018, Mr. Eyler and the Company agreed to terminate the foregoing tax gross-up benefit.

As a result of the elimination of the tax gross-up benefit described above, the Company is not obligated to pay any tax gross-ups with respect to the excise tax imposed on any person who receives excess parachute payments.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis (“CD&A”) in this proxy statement with management, including Messrs. ~~Coker~~Eyler and ~~Steele.~~Anversa. Based on such review and discussion, the Committee recommended to the Board that the CD&A be included in the Company’s annual report on Form 10-K for the year ended December 31, ~~2016~~2018 and the proxy statement for the ~~2017~~2019 annual meeting.

The Compensation Committee

~~Maurice Gunderson, Chairman~~Yvonne Hao, Chairperson

Francois Castaing

Sophie Desormière

~~Yvonne Hao~~John Stacey

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

From January 2016 to the 2016 Annual Meeting held on May 26, 2016, the Compensation Committee consisted of Mr. Gunderson, Ms. Desormière and Carlos Mazzorin. Mr. Mazzorin declined to stand for re-election at the 2016 Annual Meeting. From the 2016 Annual Meeting until the end of 2016, the Compensation Committee consisted of Messrs. Gunderson and Mses. Desormière and Hao. All members of the Compensation Committee during ~~2016~~2018 were independent directors and none of them is or has been an employee or officer of ours. During ~~2016,~~2018, none of our executive officers served on the compensation committee (or equivalent) or the board of directors of another entity whose executive officer(s) served on the Compensation Committee or the Board.

NAMED EXECUTIVE OFFICER COMPENSATION TABLES

Summary Compensation Table for ~~2016~~2018

The table below summarizes the total compensation paid or earned by the named executive officers in ~~2016, 2015~~2018, 2017 and ~~2014.~~2016.

Name and Principal Position

Year

Salary
($)

Bonus
($)(1)

Stock
Awards
($)(2)

Option
Awards
($)(3)

Change in
Pension Value and
Nonqualified
Deferred
Compensation
Earnings
($)(4)

All Other
Compensation
($)(5)

Total
($)

Daniel R. Coker

2016

750,000

637,500

731,520

750,330

386,584

94,646

3,350,580

President and Chief Executive

2015

700,000

682,500

750,420

737,660

378,457

96,105

3,345,142

Officer

2014

565,000

1,017,060

471,060

552,800

335,550

61,145

3,002,615

Barry G. Steele

2016

360,500

165,125

488,560

321,570

—

17,248

1,353,003

Vice-President of Finance, Chief

2015

350,000

240,000

416,900

316,140

—

19,349

1,342,389

Financial Officer and Treasurer

2014

274,000

214,560

314,040

276,400

—

24,428

1,103,428

Frithjof R. Oldorff(6)

2016

437,750

196,626

406,400

321,570

—

99,136

1,461,482

President of Automotive Business

2015

404,575

299,838

491,600

316,140

—

185,162

1,697,315

Unit

2014

465,114

345,879

—

276,400

—

52,128

1,139,521

Darren Schumacher

2016

364,440

162,220

447,480

321,570

—

19,958

1,315,668

President of Gentherm Technologies

2015

319,300

220,000

416,900

316,140

—

22,164

1,294,504

Business Unit

2014

310,000

265,080

314,040

276,400

—

17,329

1,182,849

Kenneth J. Phillips

2016

381,100

170,275

488,560

321,570

—

24,476

1,386,251

Vice‑President, General Counsel and

2015

370,000

240,000

416,900

316,140

—

20,913

1,363,953

Secretary

2014

295,000

221,880

314,040

276,400

—

20,906

1,128,226

Name and Principal Position	Year	Salary ($)			Bonus ($)(1)		Stock Awards ($)(2)		Option Awards ($)(3)		Non-Equity Incentive Plan Compensation ($)(4)		All Other Compensation ($)(5)	Total ($)
Phillip M. Eyler(6)	2018		750,000			1,000,000		—		—		639,000	12,825		2,401,825
President and Chief Executive	2017		62,500			1,312,500		1,065,000		1,874,675		—	2,500		4,317,175
Officer
Barry G. Steele(7)	2018		401,700			—		722,672		—		—	241,169		1,365,541
Vice-President of Finance, Chief	2017		390,000	��		194,695		920,826		416,610		—	24,108		1,946,239
Financial Officer and Treasurer	2016		360,500			165,125		488,560		321,570		—	17,248		1,353,003
Frithjof R. Oldorff(8)	2018		464,410			—		833,889		—		208,000	110,263		1,616,562
President of Automotive Climate	2017		450,883			212,592		975,471		416,610		—	105,724		2,161,280
and Comfort	2016		437,750			196,626		406,400		321,570		—	99,136		1,461,482

Kenneth J. Phillips	2018		404,330			100,000		722,672		—		232,000	14,773		1,473,775
Senior Vice‑President, General	2017		392,533			221,693		923,098		416,610		—	17,240		1,971,174
Counsel and Secretary	2016		381,100			170,275		488,560		321,570		—	24,476		1,386,251
Yijing Brentano(9)	2018		280,903			100,000		444,698		—		137,000	69,072		1,031,673
Senior Vice-President, Investor
Relations & Corporate Communications

────────────────────

(1)

Amounts reported for each year reflect bonuses earned in that year, even if paid in a subsequent year. ~~For example,~~Amounts reported for 2016 and 2017 reflect cash payments under the annual bonus plan for such year and, in the case of Mr. Eyler, also represent cash sign-on and make-whole bonuses. Amounts reported for 2018 represent a cash make-whole bonus for Mr. Eyler, a special cash bonus awarded to Mr. Phillips for his efforts as Interim Chief Human Resources Officer of the ~~first six months of 2016 was paid in August 2016~~Company and ~~the~~a sign-on cash bonus for ~~the remainder of 2016 was paid in March 2017. Both payments are reported, collectively, as the bonus earned by the NEO in 2016.~~Ms. Brentano.

(2)

Amounts reported reflect the aggregate ~~grant-date~~grant date fair value of ~~stock awards.~~RSUs and PSUs. All awards in this column for ~~2016~~2018 relate to ~~restricted stock~~ awards granted to the NEOs in ~~2016~~2018 under the 2013 Equity Incentive ~~Plan,~~Plan. 40% of the awards in ~~each case~~this column for 2018 are time-vested RSUs and 60% are PSUs, with one-half of the PSUs based on relative TSR achievement and one-half based on ROIC achievement. Under FASB ASC Topic 718, the provisions of the PSUs that vest upon the achievement of relative TSR are considered a market condition, and therefore the effect of that market condition is reflected in the grant date fair value for this portion award. A third party was engaged to complete a “Monte Carlo simulation” to account for the market condition. That simulation takes into account the beginning stock price of our common stock, the expected volatilities for the TSR comparator group, the expected volatilities for the Company’s stock price, correlation coefficients, the expected risk-free rate of return and the expected dividend yield of the Company and the comparator group. The single grant-date fair value computed by this valuation method is recognized by the Company in accounting for the awards regardless of the actual future outcome of the relative TSR feature. Therefore, there is no separate maximum grant-date fair value reported with respect to the relative TSR PSUs. The grant date fair value of the remaining PSUs and RSUs are calculated as the closing price of our common stock as quoted on Nasdaq on the grant date multiplied by the number of shares subject to the award. ROIC is considered a performance condition and the grant-date fair value used in this table for ROIC PSUs corresponds with management's expectation of the probable outcome of the performance condition as of the grant date. The maximum grant-date fair value for the ROIC PSUs granted in 2018 are as follows: Mr. Steele, $399,626 (compared to $199,813 included in the table); Mr. Oldorff, $461,130 (compared to $230,565 included in the

table); Mr. Phillips, $399,626 (compared to $199,813 included in the table); and Ms. Brentano, $245,942 (compared to $122,971 included in the table).

(3)

Amounts reported reflect the aggregate ~~grant-date~~grant date fair value of option awards. Awards in this column for 2016 relate to stock options granted to the NEOs in 2016 under the 2013 Equity Incentive Plan. Valuation assumptions used in determining the grant-date fair value of stock options are included in Note 7 to the audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2016.

(4)

Amounts reported for ~~2016 for Mr. Coker represent the increase~~each year reflect non-equity incentive compensation earned in ~~the actuarial present value of Mr. Coker’s accumulated benefit~~that year, even if paid in a subsequent year. For example, bonuses under the ~~U.S. Defined Benefit~~2018 Bonus Plan ~~from December 31, 2015 to December 31, 2016, computed~~were paid in ~~accordance with FASB ASC Topic 715, which requires that the Company record a projected benefit obligation representing the present value of future plan benefits when~~March 2019 but are reported as bonus earned by the ~~participant. As of December 31, 2016, the recorded projected benefit obligation~~NEO in 2018. All amounts reported for ~~Mr. Coker was $3,419,385. Valuation assumptions used in determining the projected benefit obligation~~2018 include payments under the ~~U.S. Defined Benefit Plan are included in Note 12 to the audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2016.~~2018 Bonus Plan.

(5)

Amounts reported for ~~2016~~2018 include the following: Mr. Steele’s severance for which performance had been completed as of December 31, 2018 (including $160,000 as bonus determined in accordance with the 2018 Senior Level Bonus Plan and $66,516 in accrued but unused vacation); 401(k) match paid for the benefit of Mr. Oldorff, Mr. Phillips and Ms. Brentano in the ~~NEOs ($10,600 each);~~amount of $11,000; personal use of automobile for ~~each of~~ the ~~named executive officers totaling $16,671~~NEOs, including $15,441 for Mr. ~~Coker; $17,049 for Mr.~~ Oldorff; ~~and $14,146 for Mr. Phillips); excess accrued vacation payments to Mr. Coker of $56,293; and~~ a housing allowance for Mr. Oldorff in the amount of ~~$69,600.~~$69,600; a travel allowance for family visits to his home country of Germany for Mr. Oldorff in the amount of $29,662; and a relocation benefit for Ms. Brentano of $58,072.

(6)	Mr. Eyler was appointed the President and Chief Executive Officer of the Company on December 4, 2017.

(7)	Mr. Steele resigned from the positions of Vice-President Finance, Chief Financial Officer and Treasurer on January 1, 2019.

(8)	Certain cash payments reported for Mr. Oldorff ~~(which excludes option awards, which are denominated in U.S. Dollars)~~ were paid in Euros and converted into U.S. Dollars based on the exchange rate at the time of each applicable payment.

(9)	Ms. Brentano joined the Company in February 2018; as a result, her salary and target bonus were prorated for the partial year.

Narrative Discussion of Summary Compensation Table

Employment Agreements

Mr. ~~Oldorff.~~ ~~From January 1, 2015 to July 31, 2015,~~Eyler and Mr. Oldorff ~~was party~~are the only NEOs that have employment agreements. See “Named Executive Officer Compensation Tables – Potential Payments Upon Termination or Change in Control” for information regarding the potential payments and benefits payable to ~~a Service Agreement with our German Subsidiary. From August 1, 2015 to the date hereof,~~Mr. Eyler and Mr. Oldorff ~~is party to~~following a termination of employment under the ~~Employment Agreement~~terms of their employment agreements.

Mr. Eyler. On September 18, 2017, the Company and Mr. Eyler entered into the Eyler Contract concerning Mr. Eyler’s employment with the Company. ~~His 2016~~The Eyler Contract does not provide for a fixed duration and Mr. Eyler is an at-will employee of the Company. The Eyler Contract provides for an initial annual base salary of $750,000, subject to periodic review and increase, eligibility for bonus compensation, ~~was governed by~~with a target bonus of 100% of annual base salary (prorated for 2017) and other ancillary benefits, such as paid vacation, use of a Company-owned automobile and health and welfare benefits, generally consistent with those provided to other Company executive officers. Under the terms of the ~~Employment Agreement.~~

~~Grants~~Eyler Contract, Mr. Eyler received a signing bonus of ~~Plan-Based Awards~~$250,000, payable after Mr. Eyler’s first day of employment, which was December 4, 2017. The Eyler Contract also included two Make-Whole Bonuses that were intended to compensate Mr. Eyler for payments that he was entitled to receive from his former employer but would no longer receive by accepting the position with the Company. The Make-Whole Bonuses were payable and paid as follows: (1) $1,000,000 no earlier than January 1, 2018 and no later than March 31, 2018 (such amount was paid on January 31, 2018) and (2) $1,000,000 no earlier than January 1, 2019 and no later than March 31, 2019 (such amount was paid on January 31, 2019). The amount of $1,000,000 was required to be repaid if Mr. Eyler’s employment was terminated for “cause” or without “good reason”, each as defined in ~~2016~~

~~The following table provides information about equity awards granted~~the Eyler Contract, before December 4, 2018. Also pursuant to the ~~named executive officers in 2016. The~~Eyler Contract, the Company ~~did not grant any non-equity or equity incentive awards in 2016.~~

Name

Grant Date

All Other
Stock
Awards:
Number of
Shares of
Stock or Units
(#)(1)

All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(2)

Exercise Price
or Base Price
of Option
Awards
($/Sh)

Grant Date
Fair Value of
Stock and
Option
Awards
($)(3)

Daniel R. Coker

02/24/2016

18,000

—

—

731,520

02/24/2016

—

70,000

40.64

750,330

Barry G. Steele

02/24/2016

10,000

—

—

406,400

02/24/2016

—

30,000

40.64

321,570

04/02/2016

2,000

—

—

82,160

Frithjof R. Oldorff

02/24/2016

10,000

—

406,400

02/24/2016

—

30,000

40.64

321,570

Darren Schumacher

02/24/2016

10,000

—

—

406,400

02/24/2016

—

30,000

40.64

321,570

04/02/2016

1,000

—

—

41,080

Kenneth J. Phillips

02/24/2016

10,000

—

—

406,400

02/24/2016

—

30,000

40.64

321,570

04/02/2016

2,000

—

—

82,160

~~────────────────────~~

~~(1)~~

~~Relate to restricted stock granted to the NEOs under the 2013 Equity Incentive Plan.~~

~~(2)~~

~~Relate to stock options granted to the NEOs under the 2013 Equity Incentive Plan.~~

~~(3)~~

The restricted stock granted on February 24, 2016 had a grant-date fair value of $40.64 per share, which was the closing price of our common stock as quoted on Nasdaq on the date of grant. The restricted stock granted on April 2, 2016 had a grant-date fair value of $41.08 per share, which was the closing price of our common stock as quoted on Nasdaq on the last business day prior to the date of grant. The stock options had a grant-date fair value of $10.72 per share. See Notes 2 and 3 to the “Summary Compensation Table for 2016.”

~~Narrative Discussion of Grants of Plan-Based Awards in 2016~~

~~Restricted Stock.~~ ~~The~~granted 30,000 restricted stock ~~granted on February 24, 2016 vests in three equal installments on the first through third anniversaries~~awards and 212,500 stock options as of ~~the date~~December 4, 2017. Such shares of ~~grant, provided such person’s employment is continuing on each such vesting date. The~~ restricted stock ~~granted on April 2, 2016 was awarded in connection with the acquisition of Cincinnati Sub-Zero Products, LLC in special recognition of the efforts of the recipients in connection with such acquisition~~ and ~~vested in full on April 1, 2017.~~

~~Stock Options.~~ ~~The~~ stock options vest in three and four equal annual installments, respectively, with the first such annual vesting occurring on the first ~~through fourth anniversaries~~anniversary of ~~the date~~Mr. Eyler’s start of ~~grant, provided such person’s~~ employment ~~is continuing on each such vesting date.~~

~~Outstanding Equity Awards at December 31, 2016~~

~~The following table presents information on the unexercised option awards and unvested stock awards held by the named executive officers as of December 31, 2016.~~

Stock Awards

Option Awards

Number of
Shares or
Units of
Stock

Market
Value of
Shares or
Units of

Number of Securities
Underlying Unexercised
Options (#)

Option
Exercise

Option
Expiration

That Have Not
Vested

Stock That Have Not
Vested

Name

Grant Date

Exercisable

Unexercisable

Price ($)

Date

(#)(3)

($)(4)

Daniel R. Coker

07/02/2013(1)

20,000

20,000

19.10

07/02/2020

—

—

02/19/2014(1)

20,000

40,000

26.17

02/19/2021

—

—

02/18/2015(1)

17,500

52,500

41.69

02/18/2022

—

—

02/24/2016(1)

—

70,000

40.64

02/24/2023

—

—

Various

—

—

—

—

36,000

1,218,600

Barry G. Steele

07/02/2013(1)

10,000

10,000

19.10

07/02/2020

—

—

02/19/2014(1)

10,000

20,000

26.17

02/19/2021

—

—

02/18/2015(1)

75,000

22,500

41.69

02/18/2022

—

—

02/24/2016(1)

—

30,000

40.64

02/24/2023

Various

—

—

—

—

22,666

767,244

Frithjof R. Oldorff

07/02/2013(2)

20,000

20,000

19.10

07/02/2020

—

—

02/19/2014(2)

10,000

20,000

26.17

02/19/2021

—

—

02/18/2015(1)

7,500

22,500

41.69

02/18/2022

—

—

02/24/2016(1)

—

30,000

40.64

02/24/2023

Various

—

—

—

—

16,666

564,144

Darren Schumacher

11/20/2013(1)

15,000

15,000

23.71

11/20/2020

—

—

02/19/2014(1)

—

20,000

26.17

02/19/2021

—

—

02/18/2015(1)

7,500

22,500

41.69

02/18/2022

—

—

02/24/2016(1)

—

30,000

40.64

02/24/2023

Various

—

—

—

—

21,666

733,394

Kenneth J. Phillips

08/23/2012(1)

12,500

—

11.63

08/23/2019

—

—

07/02/2013(1)

10,000

10,000

19.10

07/02/2020

02/19/2014(1)

10,000

20,000

26.17

02/19/2021

—

—

02/18/2015(1)

7,500

22,500

41.69

02/18/2022

—

—

02/24/2016(1)

—

30,000

40.64

02/24/2023

Various

—

—

—

—

22,666

767,244

~~────────────────────~~

~~(1)~~

Outstanding stock options held by the NEOs vest in four equal installments on the first through fourth anniversaries of the date of grant, provided such person’s employment is continuing on each such vesting date.

~~(2)~~

Outstanding cash-settled SARs held by Mr. Oldorff vest in four equal installments on the first through fourth anniversaries of the date of grant, provided his employment is continuing on each such vesting date.

~~(3)~~

Outstanding restricted stock held by the NEOs as of December 31, 2016 vests, or has vested, as follows, provided that future vesting requires such person to be continuously employed through and including each such vesting date:

February 19,

April 1,

February 18,

February 24,
Name

2017

2017

2017
2018

2017
2018
2019
Daniel R. Coker…………………

6,000

—

6,000
6,000

6,000
6,000
6,000
Barry G. Steele…………………

4,000

2,000

3,333
3,333

3,334
3,333
3,333
Frithjof Oldorff…………………

—

—

3,333
3,333

3,334
3,333
3,333
Darren Schumacher……………

4,000

1,000

3,333
3,333

3,334
3,333
3,333
Kenneth J. Phillips………………

4,000

2,000

3,333
3,333

3,334
3,333
3,333

~~(4)~~

~~Based on the closing price of our common stock as quoted on Nasdaq on December 31, 2016, which was $33.85.~~

~~Option Exercises and~~ ~~Stock Vested in 2016~~

The following table provides information on the value realized by the named executive officers on the exercise of option awards and the vesting of stock awards in 2016. The number of shares acquired and the value realized for each award excludes the payment of any fees, commissions or taxes.

Option Awards

Stock Awards

Name

Number of
Shares
Acquired on
Exercise (#)

Value Realized
on Exercise
($)(1)

Number of
Shares
Acquired on
Vesting (#)

Value
Realized on
Vesting ($)(2)

Daniel R. Coker

—

—

22,000

848,280

Barry G. Steele

—

—

13,334

514,155

Frithjof Oldorff

—

—

3,334

141,295

Darren Schumacher

10,000

115,597

3,667

305,895

Kenneth J. Phillips

—

—

13,334

514,155

~~────────────────────~~

~~(1)~~

Based on the number of stock options or cash-settled SARs exercised multiplied by the difference between (A) the purchase price received upon sale of the underlying shares, in the case of options, or the closing price of our common stock as quoted on Nasdaq on the date of exercise, in the case of cash-settled SARs, and (B) the exercise or base price.

~~(2)~~

Based on the number of shares of restricted stock vested multiplied by the closing price of our common stock as quoted on Nasdaq on the date of vesting (except in certain cases where all or a part of such vested stock was sold on the date of vesting, in which case the actual price received upon sale is used).

~~Pension Benefits in 2016~~

~~The following table provides information related to the U.S. Defined Benefit Plan and the German Defined Benefit Plan in 2016.~~

Name

Plan Name

Number of
Years
Credited
Service (#)

Present
Value of
Accumulated
Benefit ($)(1)

Payments
During Last
Fiscal Year
($)

Daniel R. Coker

The Executive Nonqualified Defined Benefit Plan of Gentherm Incorporated

6

3,419,385

—

Frithjof R. Oldorff

The Gentherm GmbH Deferred Compensation Pension Plan

N/A

1,167,454

—

~~────────────────────~~

~~(1)~~

Represents the present value of future benefits under the U.S. Defined Benefit Plan for Mr. Coker and the German Defined Benefit Plan for Mr. Oldorff through December 31, 2016. Valuation assumptions used in determining the projected benefit obligation under the U.S. Defined Benefit Plan and the German Defined Benefit Plan are included in Note 12 to the audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2016. Amounts reported for Mr. Oldorff is owed in Euros but converted to U.S. Dollars based on the exchange rate at December 31, 2016.

~~Potential Payments Upon Termination or Change in Control~~

~~Equity Awards~~

~~Certain of the Company’s equity compensation plans contemplate acceleration of vesting upon, and exercisability of awards following, specified events.~~

~~Equity Compensation Plans.~~ Outstanding awards of restricted stock, stock options and cash-settled SARs as of December 31, 2016 were granted under the 2013 Equity Incentive Plan, the 2011 Equity Incentive Plan, the 2006 Equity Incentive Plan and the related award agreements. Under each plan, prior to a termination event, the Compensation Committee retains discretionary authority to accelerate the vesting of these awards for any reason, in whole or in part. In addition:

~~Upon any termination of service, the unvested portion of any restricted stock, stock option or SAR award will be immediately terminated or forfeited.~~

•

Upon any termination of service other than for “cause” (as determined by the Committee), the vested portion of any stock option or SAR award will be exercisable for a period of 90 days following such termination and, in the case of SARs, will be deemed exercised on the 90^th ~~day following such termination, if not otherwise exercised prior to such date; provided, however, that such awards will not be exercisable, or deemed exercised, after their expiration dates.~~

~~Upon any termination of service for “cause,” the vested portion of any restricted stock, stock option or SAR award will be immediately terminated or forfeited.~~

Notwithstanding the foregoing, the Committee retains discretionary authority to accelerate the vesting of restricted stock, stock option and SAR awards, in whole or in part, (A) if a termination is due to a participant’s death, permanent disability or retirement, is by the Company or a subsidiary of the Company without cause, or is by agreement of the parties; or (B) upon or in anticipation of a change in control (as defined in the plan).

~~Value of Acceleration of Unvested Equity Awards at December 31, 2016.~~ If the Compensation Committee determined to accelerate, in full, the vesting of the unvested portion of outstanding restricted stock, stock option and cash-settled SAR awards held by the named executive officers as of a December 31, 2016 termination event, the named executive officers would receive the benefits set forth in the table below.

Name

Value of
Acceleration
of Unvested
Restricted
Stock Awards
($)

Value of
Acceleration
of Unvested
Stock Option
and Cash-
Settled SAR
Awards
($)

Total Value of Acceleration
of Unvested
Equity
Awards
($)

Daniel R. Coker

1,218,600

602,200

1,820,800

Barry G. Steele

767,244

301,100

1,068,344

Frithjof R. Oldorff

564,144

448,600

1,012,744

Darren Schumacher

733,394

305,700

1,039,094

Kenneth J. Phillips

767,244

301,100

1,068,344

~~Restricted Stock Awards.~~ The value of such acceleration is calculated as the closing price of our common stock as quoted on Nasdaq on December 31, 2016, $33.85, multiplied by the number of unvested shares of common stock underlying such awards at December 31, 2016.

~~Stock Option and Cash-Settled SAR Awards.~~ The value of such acceleration is calculated as (A) the difference between (i) the closing price of our common stock as quoted on Nasdaq on December 31, 2016, $33.85, and (ii) the exercise or base price of the stock options or cash-settled SARs, (B) multiplied by the number of unvested shares of common stock underlying such awards at December 31, 2016; provided, however, that negative amounts are treated as having zero value.

~~Employment Agreement~~

The U.S. NEOs do not have employment agreements. From January 1, 2015 to July 31, 2015, Mr. Oldorff was party to a Service Agreement with our German Subsidiary. From August 1, 2015 to the date hereof, Mr. Oldorff is party to the Employment Agreement with the Company, which ~~contemplates payment upon specified termination events.~~ start date was December 4, 2017.

Mr. Oldorff. On August 1, 2015, the Company and Mr. Oldorff entered into the Oldorff Contract concerning Mr. Oldorff’s employment with the Company. The ~~Employment Agreement~~Oldorff Contract provides ~~for~~for: (A) aan initial three-year term (however, on October 3, 2017 the term was extended until July 1, 2019); (B) an initial annual base salary of $425,000, subject to periodic review and increase; (C) eligibility for bonus compensation, ~~at the discretion of the Board,~~ with a target bonus of 50% of annual base salary; (D) eligibility for equity compensation at the discretion of the Board, generally on the same terms and conditions as other senior executive officers (although the award size can vary); (E) other ancillary benefits, including benefits under the Company’s welfare benefit programs generally as provided to other senior executive officers and use of a Company-owned car; (F) continuing ancillary benefits applicable to German executives or German expatriates, including minimum contributions to maintain eligibility for the statutorily required pension and health insurances and life insurance programs, and specified airfare for personal travel; (G) housing expenses and relocation expenses, each as approved by the Company’s chief executive ~~officer,~~officer; and (H) an income differential tax ~~gross-up,~~benefit, such that Mr. Oldorff will pay the income taxes that he would have paid had he been an employee of the German ~~Subsidiary~~subsidiary and residing in Germany and the Company will reimburse Oldorff for the income tax amounts payable in excess thereof.

Separation Agreement

Mr. Steele. On December 11, 2018, the Company and Mr. Steele entered into the Steele Contract concerning Mr. Steele’s separation from the Company. In consideration for Mr. Steele’s assistance in providing transition services to the Company related to the appointment of the Company’s new Chief Financial Officer and other factors, the Steele Contract provides for certain payments and benefits to Mr. Steele as of the date of the public announcement and upon Mr. Steele’s final termination of employment.

See “Named Executive Officer Compensation Tables – Potential Payments Upon Termination or Change in Control” for information regarding the payments and benefits paid and payable to Mr. Steele under the Steele Contract in connection with his separation from the Company. With respect to accelerated equity awards in connection with his separation (consisting of 9,398 shares of restricted stock granted to Mr. Steele on October 3, 2017 that were scheduled to vest on April 3, 2019 and options to purchase 24,000 shares of Company common stock and 7,083 shares of restricted stock that were scheduled to vest during February 2019) the total value of such awards at the time of acceleration was $763,770. Related to these equity awards, a total of $1,085,589 had been reported in Summary Compensation Tables in prior years, a difference of $321,819.

Stock Awards and Option Awards

The Stock Awards for Messrs. Steele, Oldorff and Phillips for 2017 include, in addition to recurring annual grants, the special one-time retention awards issued on October 3, 2017. Pursuant to such awards, each applicable executive officer received a fixed number of shares of restricted common stock in the Company that vests on the 18-month anniversary of the grant date, or April 3, 2019; however, such restricted shares will automatically vest if the executive officer’s employment is terminated without “cause” or for “good reason”, each as defined in the award agreement. These shares of restricted stock were awarded by the Compensation Committee as a means of retaining executive officers during the transition of the office of President and Chief Executive Officer and for a period of time thereafter. Pursuant to the terms of the Steele Contract, the restricted shares under the special one-time retention award issued to Mr. Steele vested on December 12, 2018 when his successor was named.

Bonuses

For Mr. Eyler, the amount reported as bonus in 2018 represents $1,000,000 in Make-Whole Bonus pertaining to his initial employment acceptance. Per the terms of the Eyler Contract, if, prior to the first anniversary of Mr. Eyler’s start date with the Company, which was December 4, 2017, Mr. Eyler’s employment would have been terminated for “cause” or without “good reason”, each as defined in the Eyler Contract, $1,000,000 would have been required to be repaid to the Company; consequently, a $1,000,000 Make-Whole Bonus was deemed earned by Mr. Eyler on December 4, 2018. For Mr. Phillips, the amount reported as bonus in 2018 is comprised of a $100,000 special bonus awarded to Mr. Phillips for his efforts as Interim Chief Human Resources Officer of the Company during the year. For Ms. Brentano, the amount reported as bonus in 2018 is comprised of $100,000 as a sign-on bonus to entice Ms. Brentano to join the Company.

Grants of Plan-Based Awards in 2018

The following table provides information about equity and non-equity awards granted to the NEOs in 2018. All equity awards were made under the 2013 Equity Incentive Plan.

		Estimated Possible Payouts Under Non- Equity Incentive Plan Awards (4)			Estimated Future Payouts Under Equity Incentive Plan Awards			All Other Stock Awards: Number of Shares of Stock or		Grant Date Fair Value of Stock and Option
Name	Grant Date	Threshold ($)	Target ($)	Maximum ($)	Threshold (#)	Target (#)	Maximum (#)	Units (#)		Awards ($)(5)
Phillip M. Eyler	N/A	375,000	750,000	1,500,000	—	—	—		—		—
Barry G. Steele	06/11/2018(1)	—	—	—	2,683	5,366	10,732		—		256,441
	06/11/2018(2)	—	—	—	2,684	5,367	10,734		—		199,813
	06/11/2018(3)	—	—	—	—	—	—		7,156		266,418
	N/A	120,510	241,020	482,040	—	—	—		—		—
Frithjof R. Oldorff	06/11/2018(1)	—	—	—	3,093	6,192	12,384		—		295,916
	06/11/2018(2)	—	—	—	3,097	6,193	12,386		—		230,565
	06/11/2018(3)	—	—	—	—	—	—		8,257		307,408
	N/A	117,352	234,705	469,409	—	—	—		—		—
Kenneth J. Phillips	06/11/2018(1)	—	—	—	2,683	5,366	10,732		—		256,441
	06/11/2018(2)	—	—	—	2,684	5,367	10,734		—		199,813
	06/11/2018(3)	—	—	—	—	—	—		7,156		266,418
	N/A	101,083	202,165	404,330	—	—	—		—		—
Yijing Brentano	06/11/2018(1)	—	—	—	1,651	3,302	6,604		—		157,803
	06/11/2018(2)	—	—	—	1,652	3,303	6,606		—		122,971
	06/11/2018(3)	—	—	—	—	—	—		4,403		163,924
	N/A	83,750	167,500	335,000	—	—	—		—		—

────────────────────

(1)	PSUs that vest based on relative TSR.

(2)	PSUs that vest based on ROIC.

(3)	Time vested RSUs.

(4)

Represents bonuses under the Company’s 2018 Bonus Plan. Actual bonuses earned in 2018 are disclosed in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table for 2018, except Mr. Steele’s earned bonus is included in the “All Other Compensation” column due to the Steele Contract relating to his separation. Ms. Brentano’s bonus reflects proration based on her start date in February 2018.

(5)

The PSUs granted on June 11, 2018 that vest based on relative TSR had a grant-date fair value of $47.79 per target share, as computed under FASB ASC Topic 718 using a Monte Carlo simulation. The PSUs granted on June 11, 2018 that vest based on ROIC, and the RSUs granted on June 11, 2018 that are time-vested, have a grant-date fair value of $37.23 per share (per target share, with respect to ROIC-based PSUs), which was the closing price of our common stock as quoted on Nasdaq on the grant date. See Note 2 to the Summary Compensation Table for 2018.

Narrative Discussion of Grants of Plan-Based Awards in 2018

PSUs – Relative TSR. These PSUs awarded on June 11, 2018 will be earned and vest based upon relative TSR, defined as stock price appreciation plus reinvested dividends, versus a custom comparator group at the end of three years, provided such person’s employment is continuing on each such earning and vesting date. The relative TSR PSUs are earned from 50% to 200% of target based on actual performance, which thereafter represents the right to receive one share of the Company’s common stock for each PSU.

PSUs – ROIC. These PSUs awarded on June 11, 2018 will be earned and vest based upon ROIC measured in fiscal year 2020, provided such person’s employment is continuing on each such earning and vesting date. The ROIC PSUs are earned from 50% to 200% of target based on actual performance, which thereafter represents the right to receive one share of the Company’s common stock for each PSU.

Time-Vested RSUs. The time-vested RSUs awarded on June 11, 2018 vest in three equal installments on the first through third anniversaries of the date of grant, provided such person’s employment is continuing on each such vesting date. Each time-vested RSU represents the right to receive one share of the Company’s common stock upon vesting.

Outstanding Equity Awards at December 31, 2018

The following table presents information on the unexercised option awards and unvested stock awards held by the named executive officers as of December 31, 2018.

								Stock Awards
		Option Awards							Number of Shares or Units of Stock			Market Value of Shares or Units of			Equity Incentive Plan Awards: Number of Unearned			Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
		Number of Securities Underlying Unexercised Options (#)		Option Exercise		Option Expiration				That Have Not Vested			Stock That Have Not Vested			Shares, Units or Other Rights That Have Not Vested			Other Rights That Have Not Vested
Name	Grant Date	Exercisable	Unexercisable	Price ($)		Date				(#)			($)(5)			(#)(6)			($)(5)
Phillip M. Eyler	12/4/2017(2)(3)	—	212,500		35.50		12/04/2021				20,000			799,600			—			—
Barry G. Steele(1)	2/18/2015(2)	30,000	—		41.69		5/16/2019				—			—			—			—
	2/24/2016(2)	22,500	7,500		40.64		5/16/2019				—			—			—			—
	2/22/2017(2)	18,000	27,000		38.05		5/16/2019				—			—			—			—
	Various(3)	—	—		—		—				7,500			299,850			—			—
	6/11/2018(4)	—	—		—		—				7,156			286,097			10,733			429,105
Frithjof R. Oldorff	2/18/2015(2)	22,500	7,500		41.69		2/18/2022				—			—			—			—
	2/24/2016(2)	15,000	15,000		40.64		2/24/2023				—			—			—			—
	2/22/2017(2)	9,000	36,000		38.05		2/22/2024				—			—			—			—
	Various(3)	—	—		—		—				25,448			1,017,411			—			—
	6/11/2018(4)	—	—		—		—				8,257			330,115			12,385			495,152
Kenneth J. Phillips	2/18/2015(2)	22,500	7,500		41.69		2/18/2022				—			—			—			—
	2/24/2016(2)	15,000	15,000		40.64		2/24/2023				—			—			—			—
	2/22/2017(2)	—	36,000		38.05		2/22/2024				—			—			—			—
	Various(3)	—	—		—		—				24,042			961,199			—			—
	6/11/2018(4)	—	—		—		—				7,156			286,097			10,733			429,105
Yijing Brentano	6/11/2018(4)	—	—		—		—				4,403			176,032			6,605			264,068

────────────────────

(1)

On December 11, 2018, Mr. Steele and the Company entered into a Separation Agreement concerning Mr. Steele’s eventual departure from the Company. In accordance with the terms of the Separation Agreement, upon the public announcement that Mr. Steele would no longer serve as Chief Financial Officer of Gentherm, which announcement occurred on December 12, 2018, the incentive equity held by Mr. Steele that was scheduled to vest on or before April 3, 2019 was automatically vested as of the date of such announcement. The equity that vested as of the announcement date pursuant to the foregoing provision consisted of 24,000 options and 16,481 shares of restricted stock. Mr. Steele has 90 days after his last date of employment, which was February 15, 2019, to exercise his vested options; consequently, the option expiration date for all of Mr. Steele’s options is shown as May 16, 2019 in the above table.

(2)

Outstanding stock options held by the NEOs vest in four equal installments on the first through fourth anniversaries of the date of grant, except for the stock options held by the NEOs that were granted on February 22, 2017, which stock options vest in five equal installments on the first through fifth anniversaries of the date of grant, in each case provided such person’s employment is continuing on each such vesting date.

(3)

Outstanding restricted stock held by the NEOs as of December 31, 2018 vests, or has vested, as follows, provided that future vesting requires such person to be continuously employed through and including each such vesting date (as Mr. Steele’s employment with the Company terminated on February 15, 2019, the unvested restricted stock he held on December 31, 2018 that was scheduled to vest after February 15, 2019, as included in the tables above and below, was forfeited):

	February 24,		February 22,					April 3,		December 4,
Name	2019			2019		2020	2021	2019	2020		2021
Phillip M. Eyler	—			—		—	—	—	10,000		10,000
Barry G. Steele		—			—	3,750	3,750	—	—		—
Frithjof Oldorff		3,333			3,750	3,750	3,750	10,865	—		—
Kenneth J. Phillips		3,333			3,750	3,750	3,750	9,459	—		—

(4)	Outstanding RSUs held by the NEOs as of December 31, 2018 vest as follows, provided that future vesting requires such person to be continuously employed through and including each such vesting date (as Mr. Steele’s employment with the Company

terminated on February 15, 2019, the unvested RSUs he held on December 31, 2018 that were scheduled to vest after February 15, 2019, as included in the tables above and below, were forfeited):

		June 11,
Name	2019			2020		2021
Barry G. Steele			2,386		2,385		2,385
Frithjof Oldorff	2,753			2,752		2,752
Kenneth J. Phillips	2,386			2,385		2,385
Yijing Brentano	1,468			1,468		1,467

(5)	Based on the closing price of our common stock as quoted on Nasdaq on December 31, 2018, which was $39.98.

(6)	Represents outstanding relative TSR and ROIC PSUs with performance conditions that have not yet been satisfied. The number of PSUs has been calculated for purposes of this table based on the assumption that target performance goals will be achieved for each metric.

Option Exercises and Stock Vested in 2018

The following table provides information on the value realized by the named executive officers on the exercise of option awards and the vesting of stock awards in 2018. The number of shares acquired and the value realized for each award excludes the payment of any fees, commissions or taxes.

	Option Awards				Stock Awards
Name	Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)(1)		Number of Shares Acquired on Vesting (#)			Value Realized on Vesting ($)(3)

Phillip M. Eyler		—		—		10,000			464,000
Barry G. Steele		50,000		832,900		26,897	(2)		1,031,469
Frithjof Oldorff		30,000		779,800		10,416			329,708
Kenneth J. Phillips		59,000		1,054,640		10,416			329,708
Yijing Brentano		—		—		—			—

────────────────────

(1)

Based on the number of stock options (Mr. Steele and Mr. Phillips) or cash-settled SARs (Mr. Oldorff) exercised multiplied by the difference between (A) the purchase price received upon sale of the underlying shares, in the case of options, or the closing price of our common stock as quoted on Nasdaq on the date of exercise, in the case of cash-settled SARs, and (B) the exercise or base price.

(2)

With respect to Mr. Steele, the amount shown in this column includes 16,481 shares of restricted stock that vested in accordance with the Steele Contract. The Steele Contract provided that, upon the public announcement that Mr. Steele would no longer serve as Chief Financial Officer of Gentherm, which announcement occurred on December 12, 2018, the incentive equity held by Mr. Steele that was scheduled to vest on or before April 3, 2019 was automatically vested as of the date of such announcement.

(3)

Pension Benefits in 2018

The following table provides information related to the German Defined Benefit Plan in 2018.

Name

Plan Name

Number of

Years

Credited

Service (#)

Present

Value of

Accumulated

Benefit ($)(1)

Payments

During Last

Fiscal Year

($)

Frithjof R. Oldorff

The Gentherm GmbH Deferred Compensation Pension Plan

N/A

1,264,382

—

────────────────────

(1)

Represents the present value of future benefits under the German Defined Benefit Plan for Mr. Oldorff through December 31, 2018. Valuation assumptions used in determining the projected benefit obligation under the German Defined Benefit Plan are included in Note 10 to the audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2018. Amounts reported for Mr. Oldorff is owed in Euros but converted to U.S. Dollars based on the exchange rate at December 31, 2018. See “Compensation Discussion and Analysis” for a description of the material terms of the above plan.

Potential Payments Upon Termination or Change in Control

Equity Awards

The Eyler Contract and certain of the Company’s equity compensation plans contemplate acceleration of vesting upon, and exercisability of awards following, specified events. In addition, certain equity awards of Mr. Steele were accelerated in connection with his separation from the Company and in accordance with the Steele Contract, as further described below.

Eyler Contract. Under the terms of the Eyler Contract, if Mr. Eyler’s employment is terminated by the Company without “cause”, or by Mr. Eyler for “good reason” (each as defined in the Eyler Contract), Mr. Eyler is entitled to accelerated vesting of (1) any unvested portion of the 212,500 stock options and 30,000 shares of restricted stock granted to him on his hire date and (2) any additional unvested equity awards that are scheduled to vest within 12 months after such termination date. If such termination occurs within 12 months after a “change in control” (as defined in the Eyler Contract), then Mr. Eyler is also entitled to accelerated vesting of any additional unvested equity awards, regardless of scheduled vesting date.

Equity Compensation Plans. Outstanding awards of restricted stock, PSUs, RSUs, stock options and cash-settled SARs as of December 31, 2018 were granted under the 2013 Equity Incentive Plan, the 2011 Equity Incentive Plan, the 2006 Equity Incentive Plan and the related award agreements. In addition:

Upon any termination of service, the unvested portion of any restricted stock, PSU, RSU, stock option or SAR award will be immediately terminated or forfeited, unless an agreement to the contrary has been made with the recipient, such as the case for Mr. Eyler under the Eyler Contract.

•

Upon any termination of service other than for “cause” (as determined by the Committee), the vested portion of any stock option or SAR award will be exercisable for a period of 90 days following such termination and, in the case of SARs, will be deemed exercised on the 90^th day following such termination, if not otherwise exercised prior to such date; provided, however, that such awards will not be exercisable, or deemed exercised, after their expiration dates.

Upon any termination of service for “cause,” the vested portion of any stock option or SAR award will be immediately terminated or forfeited.

Value of Acceleration of Unvested Equity Awards at December 31, 2018. If the Compensation Committee determined to accelerate, in full, the vesting of the unvested portion of outstanding restricted stock, stock option and cash-settled SAR awards held by the named executive officers as of a December 31, 2018 termination event, the named executive officers would receive the benefits set forth in the table below.

Name	Value of Acceleration of Unvested Restricted Stock, PSU and RSU Awards ($)		Value of Acceleration of Unvested Stock Option and Cash- Settled SAR Awards ($)		Total Value of Acceleration of Unvested Equity Awards ($)
Phillip M. Eyler		799,600		952,000		1,751,600
Barry G. Steele (1)		1,015,052		52,110		1,067,162
Frithjof R. Oldorff		1,842,678		69,480		1,912,158
Kenneth J. Phillips		1,676,401		69,480		1,745,881
Yijing Brentano		440,100		—		440,100

(1)

Mr. Steele resigned from the positions of Vice-President Finance, CFO and Treasurer on January 1, 2019 and ceased to be an employee of the Company on February 15, 2019. The unvested awards shown in this table for Mr. Steele were automatically forfeited upon his employment termination.

Restricted Stock, PSU, and RSU Awards. The value of such acceleration is calculated as the closing price of our common stock as quoted on Nasdaq on December 31, 2018, $39.98, multiplied by the number of unvested shares of common stock underlying such awards at December 31, 2018. Each applicable PSU award agreement provides that, in the event of a change in control of the Company, the number of PSUs that will vest will be calculated based on actual performance through the change in control for RSUs based on a stock price or total shareholder return measure, and will be calculated at target for RSUs based on any other measure, including the financial performance of the Corporation. For purposes of this table, all PSU awards are assumed to be accelerated at target.

Stock Option and Cash-Settled SAR Awards. The value of such acceleration is calculated as (A) the difference between (i) the closing price of our common stock as quoted on Nasdaq on December 31, 2018, $39.98, and (ii) the exercise or base price of the stock options or cash-settled SARs, (B) multiplied by the number of unvested shares of common stock underlying such awards at December 31, 2018; provided, however, that negative amounts are treated as having zero value.

Employment Agreements

Other than Mr. Eyler and Mr. Oldorff, the NEOs do not have employment agreements.

Mr. Eyler. The Eyler Contract does not provide for a fixed duration and Mr. Eyler is an at-will employee of the Company. However, in the event of a termination without “cause” or by Mr. Eyler for “good reason” (each as defined in the Eyler Contract), but not during the 12 months following a change in control of the Company, Mr. Eyler will be entitled to receive a lump sum cash payment of 12 months’ salary, any portion of the Make-Whole Bonuses not paid previously, continued health and welfare benefits for 12 months, a lump sum cash payment equal to one year’s target bonus, a prorated cash bonus for the year of termination (at a minimum of the prorated target bonus), $50,000 for outplacement services and accelerated vesting for all unvested equity in the Company that was scheduled to vest during the 12 months following the date of termination (except that the initial shares of restricted stock and stock options awarded to Mr. Eyler pursuant to the Eyler Contract will vest in full no matter how much time remains for full vesting). The cash value of the foregoing benefits, excluding the value of accelerated vesting of unvested equity and assuming a termination at December 31, 2018, is approximately $2,600,000. The foregoing amount includes the $1,000,000 Make-Whole Bonus that was paid to Mr. Eyler on January 31, 2019.

In the event of a termination of Mr. Eyler without “cause” or by Mr. Eyler for “good reason” in the first 12 months following a change in control, the Eyler Contract provides that Mr. Eyler will receive a lump sum cash payment of 24 months’ salary, any portion of the Make-Whole Bonuses not paid previously, continued health and welfare benefits for 24 months, a lump-sum cash payment of two year’s target bonus, a prorated cash bonus for the year of termination (at a minimum of the prorated target bonus), $50,000 for outplacement services and full vesting of all unvested equity he holds at the time of termination. The cash value of the foregoing benefits, excluding the value of accelerated vesting of unvested equity and assuming a termination at December 31, 2018, is approximately $4,100,000. The foregoing amount includes the $1,000,000 Make-Whole Bonus that was paid to Mr. Eyler on January 31, 2019.

In addition, see “–Equity Awards” above for the value of accelerated vesting of unvested equity awards held by Mr. Eyler as of December 31, 2018.

Mr. Eyler’s right to receive the foregoing severance is conditioned upon his execution of a general release of claims, which becomes irrevocable, for the benefit of the Company. Further, during employment and thereafter, Mr. Eyler is subject to confidentiality and non-disparagement requirements. During employment and for 12 months after the termination of employment, Mr. Eyler also is subject to non-competition and non-solicitation requirements.

Mr. Oldorff. From January 1, 2015 to July 31, 2015, Mr. Oldorff was party to a Service Agreement with our German subsidiary. From August 1, 2015 to the date hereof, Mr. Oldorff is party to the Oldorff Contract with the Company, which contemplates payment upon specified termination events.

In the event of any termination of the ~~Employment Agreement,~~Oldorff Contract, Mr. Oldorff shall be entitled to specified repatriation benefits (including flights to Germany, freight to Germany of household goods and brokerage commissions on the sale of his U.S. home) estimated to be worth approximately $150,000 in the aggregate, in addition to any earned but not paid compensation and any vested benefits at the time of such termination. In addition, in the event of any termination of the ~~Employment Agreement~~Oldorff Contract other than a termination for ~~Cause~~“cause” (as defined therein) or a resignation by Mr. Oldorff, Mr. Oldorff shall be entitled to lump sum severance under the Company’s severance policy in effect at the time of such termination, ~~of the Employment Period (as defined therein),~~ subject to his execution and delivery of a release agreement in favor of the Company and its officers, directors, affiliates, and representatives. In addition, see “–Equity Awards” above for ~~a description of~~ the value of ~~acceleration~~accelerated vesting of unvested equity awards held by Mr. Oldorff as of December 31, ~~2016.~~2018.

Steele Separation Agreement

On December 11, 2018, the Company and Mr. Steele entered into the Steele Contract. In consideration for Mr. Steele’s valuable assistance in providing transition services to the Company related to the appointment of the new Chief Financial Officer and other factors, the Steele Contract provided for certain payments and benefits to Mr. Steele as of the date of the public announcement and upon Mr. Steele’s final termination of employment. The public announcement occurred on December 12, 2018, and his last day of employment with the Company was February 15, 2019 (the “Steele Separation Date”).

Pursuant to the Steele Contract, for so long as Mr. Steele remained employed by the Company, he continued to receive his current salary and automobile allowance and continued to be eligible to receive his bonus under the Amended and Restated Gentherm Incorporated Performance Bonus Plan for 2018 (although he was not eligible for a bonus for 2019). In addition, the Steele Contract provided that, effective as of the date of the public announcement, Mr. Steele received (1) payment of all accrued but unused vacation time, (2) immediate vesting of the 9,398 shares of restricted stock granted to Mr. Steele on October 3, 2017 that were scheduled to vest on April 3, 2019 and (3) immediate vesting of the options to purchase 24,000 shares of Company common stock and 7,083 unvested restricted shares of the Company’s common stock that were scheduled to vest during February 2019. The total value of such awards at the time of acceleration was $763,770. Mr. Steele has 90 days after the Steele Separation Date to exercise his vested options.

As of the Steele Separation Date, pursuant to the Steele Contract, Mr. Steele received (1) a cash payment of $642,720, the equivalent of one years’ salary and target bonus and (2) $10,000 for outplacement services. Mr. Steele was also eligible for continued health and welfare benefits for up to one year, which Mr. Steele has declined.

Mr. Steele’s right to receive the foregoing amounts and benefits were conditioned upon his execution of a general release of claims, which becomes irrevocable, for the benefit of the Company.

Any incentive cash or equity compensation paid to Steele remains subject to the Gentherm Incorporated Compensation Clawback Policy. Pursuant to a previously-executed Confidential Information and Inventions Assignment Agreement, (1) during his remaining employment and thereafter Mr. Steele remains subject to confidentiality requirements and (2) Mr. Steele is subject to non-competition and non-solicitation requirements that extend for 12 months following termination of his employment with the Company.

CEO Pay Ratio

Gentherm Employee Pool

Given the profile of our global workforce, in which approximately 88% of our workforce is located in countries with generally low prevailing wages, namely China, Macedonia, Mexico, Ukraine and Vietnam, and approximately 94% of our workforce is located outside of the United States, the factors that influence the level of compensation of our Chief Executive Officer are quite different from the factors that influence a vast majority of our workforce.

We are a global manufacturer with operations in the United States, Germany, Canada, China, Hungary, Japan, Korea, Macedonia, Malta, Mexico, United Kingdom, Ukraine, and Vietnam. Of these countries, the bulk of our employees are located in countries that have much lower prevailing wages than the United States. Most of those employees are direct labor workers, meaning they work on our assembly lines or otherwise on the factory floor.

As of December 31, 2018, our employee population was distributed as follows (all numbers are approximate):

China			2,200
Macedonia			1,800
Mexico			5,500
Ukraine			2,000
Vietnam			700
Total of Above Low Prevailing Wage Countries			12,200
All Other Countries			1,700
Total			13,900

Our compensation practices vary from country to country and, within each country, vary according to job title, skill level and other factors; however, a large majority of our factory workers are lower-skilled employees, working in countries having low prevailing wages and paid on an hourly basis. We believe that we pay market rates to all of our employees in every country in which we do business. As a vast majority of our employees are located in countries having low prevailing wages, our median employee necessarily is part of that group.

For purposes of the computation below, we selected October 1, 2017 as the measurement date for selecting the “median employee” because such date was within the last three months of 2017, the first year in which this CEO Pay Ratio disclosure was required, and because selection of that date allowed sufficient time to identify the median employee for our 2017 disclosure, given the global scope of our operations. The rules pertaining to this CEO Pay Ratio disclosure permit us to use that same median employee for up to three years. However, the median employee we selected on October 1, 2017 has left the Company. In such event, the disclosure rules permit us to select an employee whose compensation is comparable to the original median employee based on the compensation measures used to select the original median employee. We revisited the data from October 1, 2017 and we selected a substitute median employee whose compensation was exactly the same as the now-departed median employee. Due to overtime differentials, as well as the effects of foreign exchange rate fluctuation, the annual total compensation of our median employee for 2018, as converted to United States dollars, was slightly less than the annual total compensation of the median employee of our Company for 2017.

CEO Annual Total Compensation

Mr. Eyler’s annual total compensation for 2018 was $2,401,825.

Pay Ratio

SEC rules for identifying the median employee and calculating the pay ratio allow companies to apply various methodologies and apply various assumptions and, as a result, the pay ratio reported by us may not be comparable to the pay ratio reported by other companies.

For 2018, our last completed fiscal year, the annual total compensation of the median employee of our Company (other than our Chief Executive Officer) was $5,650; consequently, for 2018 the ratio of the annual total compensation of Mr. Eyler, our Chief Executive Officer, to the annual total compensation of our median employee was 425 to 1.

The form and amount of our Chief Executive Officer’s annual total compensation is largely influenced by prevailing compensation practices in the United States, as well as the competitive market for senior executive talent in the United States. We believe it is useful to understand the relationship between the annual total compensation of our Chief Executive Officer and the annual total compensation of our median employee solely based on full-time employees in the United States.

For 2018, the annual total compensation of such median United States full-time employee (other than our CEO) was $70,966 and the ratio of the 2018 annual total compensation of Mr. Eyler to the total annual total compensation of such United States full-time employee was 34 to 1.

Methodology Used to Determine Median Employee and Annual Total Compensation of Median Employee/CEO

For purposes of the above disclosure, we are required to identify our median employee based on our worldwide workforce, without regard to their location, compensation arrangements or employment status (full-time versus part-time). Accordingly, to identify our median employee, the methodology and the material assumptions, adjustments and estimates that we used were as follows: Employment data on every employee in our Company as of October 1, 2017 was gathered by our Human Resources departments at each of our locations. We annualized the compensation of all employees, included cash bonuses for those employees eligible to receive such amounts, and converted all amounts from each employee’s local currency to U.S. Dollars, but we did not make any cost-of-living adjustments.

With respect to calculating the annual total compensation of the median employee, we identified and calculated the elements of such employee’s compensation for 2018 on the same basis as Mr. Eyler’s annual total compensation included in the Summary Compensation Table in 2018, resulting in annual total compensation in the amount of $5,650. However, as permitted in the regulations, we elected not to include any personal benefits, such as health care benefits, in computing the annual total compensation of the median employee nor did we include any such personal benefits in computing the annual total compensation of our Chief Executive Officer. With respect to the annual total compensation of our Chief Executive Officer, we used the amount reported in the “Total” column of our 2018 Summary Compensation Table included in this proxy statement.

RELATED PERSON TRANSACTIONS

Policies and Procedures

Under SEC rules, a related person transaction is any transaction or series of transactions in which the Company or a subsidiary is a participant, the amount involved exceeds $120,000 and a related person has a direct or indirect material interest. A “related person” is a director, officer, nominee for director or a more than 5% shareholder since the beginning of the Company’s last completed fiscal year, and any immediate family member of such person.

The Board has adopted a written policy with respect to proposed related person transactions. In general, all proposed related person transactions must be submitted to the ~~independent directors~~Audit Committee for approval, and only those related person transactions approved by the ~~independent directors~~Audit Committee may be consummated. ~~Compensation of~~If any related ~~parties who have become employees, such as those identified in~~party transactions involve compensation, the ~~2016 Related Person Transactions descriptions below, are approved by~~transaction must also be submitted to the Compensation ~~Committee.~~Committee for approval. The ~~independent directors~~Audit Committee and, if such transaction involves compensation, the Compensation Committee only approve those transactions ~~and amounts of compensation~~ that are on terms comparable to, or more beneficial to the Company than, those that could be obtained in arm’s length dealings with an unrelated third party and that are otherwise in the best interests of the Company and its shareholders. If ~~an independent~~a director sitting on the Audit Committee or the Compensation Committee has any interest in a related person transaction presented to such committee for approval, such director must abstain from the vote on whether to approve the transaction. The policy further requires that all related person transactions be disclosed to the full Board and, ~~in our filings with the SEC,~~ to the extent required by SEC ~~rules.~~rules, in our filings with the SEC.

~~2016~~2018 Related Person Transactions

John Marx, the Company’s Vice-President of Business Planning and Advanced Product Commercialization, is the son of Oscar B. Marx, III, Chairman of the Board. John Marx received the following compensation for his services during 2016: approximately $337,909 in cash compensation, perquisites valued at approximately $12,414, a restricted stock award for 10,000 shares and a stock option for 30,000 shares with an exercise price of $40.64 per share, which was equal to the fair market value of our common stock on the date of grant. The Company and John Marx agreed that he wouldThere were no longer be an employee of the Company starting January 1, 2017, but he would be available for consulting purposes. As a result of his employment termination, John Marx is eligible to receive severance in accordance with the Company’s severance guidelines. A total severance benefit of approximately $308,629 will be paid to John Marx in 2017.

Brian Coker, a program manager and employee of the Company, is the son of Daniel R. Coker, the Company’s President and Chief Executive Officer. Brian Coker received the following compensation for his services during 2016: approximately $108,164 in cash compensation and perquisites valued at approximately $12,894.

~~The above~~ related person transactions ~~were approved~~ in ~~accordance with the policies and procedures described above.~~2018.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial ownership (as defined in Rule 13d-3 of the Exchange Act) of our common stock as of April ~~3, 2017~~1, 2019 by (A) each of the directors and named executive officers, (B) all of the directors and executive officers as a group, and (C) to our knowledge, beneficial owners of more than 5% of our common stock. As of April ~~3, 2017,~~1, 2019, there were ~~36,723,099~~33,653,179 shares of our common stock outstanding. Unless otherwise indicated and subject to applicable community property laws, each owner has sole voting and investment powers with respect to the securities listed below.

Name of Beneficial Owner

Shares Owned
(1)

Right to
Acquire
(2)

Total

Aggregate
Percent of
Class
Lewis Booth (Director)

10,333

—

10,333

*
Francois J. Castaing (Director)

13,806

—

13,806

*
Daniel R. Coker (Director, President and CEO)

73,480

112,500

185,980

*
Sophie Desormière (Director)

12,320

—

12,320

*
Maurice E.P. Gunderson (Director)

13,806

20,000

33,806

*
Yvonne Hao (Director)

2,723

—

2,723

*
Ronald Hundzinski (Director)

2,723

—

2,723

*
Oscar B. Marx, III (Chairman of the Board)

127,918

—

127,918

*
Byron T. Shaw II (Director)

8,766

—

8,766

*
Barry G. Steele (Vice-President Finance, CFO, Treasurer)

55,077

52,500

107,577

*
Frithjof R. Oldorff (President Automotive Business Unit)

31,701

22,500

54,201

*
Darren Schumacher (President Gentherm Technologies Business Unit)

32,881

47,500

80,381

*
Kenneth J. Phillips (Vice-President, General Counsel and Secretary)

42,608

65,000

107,608

*

Executive officers and directors as a group (15 persons)

480,148

387,500

867,648

2.3%
T. Rowe Price Associates, Inc.(3)
    100 E. Pratt Street
    Baltimore, MD  21202

5,102,053

—

5,102,053

13.9%
BlackRock, Inc.(4)
    55 East 52nd Street
    New York, NY  10055

4,211,269

—

4,211,269

11.5%
The Vanguard Group(5)
    100 Vanguard Blvd.
    Malvern, PA 19355

2,994,011

—

2,994,011

8.2%
Fuller & Thaler Asset Management, Inc.(6)
    411 Borel Ave., Suite 300
    San Mateo, CA  94402

1,985,788

—

1,985,788

5.4%
Van Berkom & Associates Inc.(7)
    1130 Sherbrooke Street West, Suite 1005
    Montreal, Quebec, Canada  H3A 2M8

1,930,552

—

1,930,552

5.3%

Name of Beneficial Owner	Shares Owned (1)	Right to Acquire (2)		Total	Aggregate Percent of Class
Francois J. Castaing (Director)	19,414	—		19,414	*
Sophie Desormière (Director)	17,928	—		17,928	*
Phillip M. Eyler (Director, President and CEO)	30,000	53,125		83,125	*
Maurice E.P. Gunderson (Director)	19,414	10,000		20,414	*
Yvonne Hao (Director)	8,331	—		8,331	*
Ronald Hundzinski (Director)	9,831	—		9,831	*
Charles Kummeth (Director)	1,682	—		1,682	*
Byron T. Shaw II (Director)	14,374	—		14,374	*
John Stacey (Director)	2,857	—		2,857	*
Barry G. Steele (Former Vice-President Finance, CFO and Treasurer)(3)	41,934	18,000		59,934	*
Frithjof R. Oldorff (President of Automotive Climate and Comfort)	36,876	70,500		107,376	*
Kenneth J. Phillips (Senior Vice-President, General Counsel and Secretary)	21,712	61,500		83,212	*
Yijing Brentano (Senior Vice-President, IR and Corp. Communications)	—	—		—	—
Executive officers and directors as a group (16 persons)	213,085	303,875		516,960	1.5%
BlackRock, Inc.(3) 55 East 52nd Street New York, NY 10055	5,123,843		—	5,123,843	15.2%
The Vanguard Group(4) 100 Vanguard Blvd. Malvern, PA 19355	3,533,497		—	3,533,497	10.5%
T. Rowe Price Associates, Inc.(5) 100 E. Pratt Street Baltimore, MD 21202	2,235,309		—	2,235,309	6.7%
Van Berkom & Associates Inc.(6) 1130 Sherbrooke Street West, Suite 1005 Montreal, Quebec, Canada H3A 2M8	2,068,922		—	2,068,922	6.1%
Fuller & Thaler Asset Management, Inc.(7) 411 Borel Ave., Suite 300 San Mateo, CA 94402	1,759,645		—	1,759,645	5.2%

────────────────────

*	Less than one percent.

(1)

Amounts include the following number of unvested shares of restricted stock as of April ~~3, 2017: Messrs. Booth,~~1, 2019: Directors Castaing, Desormière, Hao, Hundzinski, Gunderson, ~~Marx and~~ Shaw and ~~Ms. Desormière and Hao: 2,723~~Stacey: 2,857 shares each; ~~Mr. Coker, 43,000~~Director Kummeth, 1,682 shares; Mr. ~~Steele, 26,999~~Eyler, 20,000 shares; Mr. Oldorff, ~~24,999 shares; Mr. Schumacher, 25,999~~18,365 shares; Mr. Phillips, ~~26,999~~16,959 shares; and all executive officers and directors as a group, ~~219,445~~101,318 shares.

(2)

Amounts reflect the number of shares that such holder could acquire through the exercise of stock options within 60 days of April ~~3, 2017.~~1, 2019. No unvested RSUs are scheduled to vest within 60 days of April 1, 2019. For Mr. Steele, his last day of employment with the Company was February 15, 2019 and he has the right to exercise options to acquire the shares shown in this column during the 90-day period following his employment termination.

(3)	Mr. Steele resigned from the positions of Vice-President Finance, CFO and Treasurer on January 1, 2019 and ceased to be an employee of the Company on February 15, 2019. The beneficial ownership information shown for Mr. Steele is based on the

most recent filing made by Mr. Steele with the SEC and other information known to the Company, such as information regarding restricted stock that was forfeited and stock option exercises consummated by Mr. Steele.

(3)

Based on Schedule 13G/A filed with the SEC on ~~February 7, 2017. T. Rowe Price Associates,~~January 28, 2019. This report includes holdings of various subsidiaries of the holding company. BlackRock, Inc. has sole power to vote ~~752,237~~5,028,002 shares and sole power to dispose ~~5,102,053~~5,123,843 shares.

(4)	Based on Schedule 13G/A filed with the SEC on ~~January 12, 2017. This report includes holdings of various subsidiaries of the holding company. BlackRock, Inc. has sole power to vote 4,076,308 shares and sole power to dispose 4,211,269 shares.~~

~~(5)~~

~~Based on Schedule 13G/A filed with the SEC on~~ February ~~13, 2017.~~11, 2019. This report includes holdings of various subsidiaries of the holding company. The Vanguard Group, Inc. has sole power to vote ~~72,318~~34,613 shares, shared power to vote ~~4,726~~8,326 shares, sole power to dispose ~~2,918,667~~3,494,364 shares and shared power to dispose ~~75,344~~39,133 shares.

(5)	Based on Schedule 13G/A filed with the SEC on January 10, 2019. T. Rowe Price Associates, Inc. has sole power to vote 434,860 shares and sole power to dispose 2,235,309 shares.

(6)	Based on Schedule 13G filed with the SEC on February 11, 2019.

(7)	Based on Schedule 13G/A filed with the SEC on February ~~23, 2017.~~14, 2019. Fuller & Thaler Asset Management, Inc. has sole power to vote ~~1,947,688~~1,722,240 shares and sole power to dispose ~~1,985,788~~1,759,645 shares.

~~(7)~~

~~Based on Schedule 13G filed with the SEC on February 9, 2017.~~

AUDIT COMMITTEE REPORT

The Board has determined that each member of the Audit Committee is independent under the applicable rules and regulations of Nasdaq and the SEC. The Committee operates under a written charter approved by the Board, which is reviewed annually by the Committee and the Board, and is posted on the Company’s website, www.gentherm.com, under the ~~“About Us”~~“Investor Relations – Corporate Governance” tab.

As described more fully in its charter, the purpose of the Audit Committee is to assist the Board in its general oversight of the Company’s financial reporting and internal control functions, to review our reports filed with or furnished to the SEC that include financial statements or results, to monitor compliance with significant legal and regulatory requirements and other risks related to financial reporting and internal control, and the Committee is directly responsible for the appointment, retention, compensation and oversight of the work of our independent registered public accounting firm, currently Grant Thornton. See “Audit Committee Matters” below for a description of the Committee’s pre-approval policies regarding Grant Thornton’s services. The Committee further has the authority to engage independent advisors as it determines appropriate, apart from counsel or advisors hired by management. Management has the primary responsibility for the preparation, presentation and integrity of the Company’s financial statements, accounting and financial reporting principles, internal controls and compliance with applicable laws and regulations. Grant Thornton is responsible for performing an independent audit of the Company’s consolidated financial statements and the effectiveness of the Company’s internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (U.S.) (“PCAOB”) and for expressing their opinions thereon.

Relating to the Company’s financial statements for ~~2016,~~2018, among other matters, the Audit Committee:

Reviewed and discussed with management and Grant Thornton the unaudited quarterly financial statements included in Form 10-Qs filed with the SEC.

Reviewed and discussed with Grant Thornton the overall scope and plans for its audit for ~~2016.~~2018.

Reviewed and discussed with management and Grant Thornton the audited consolidated financial statements, and Grant Thornton’s opinion thereon, included in the Form 10-K for ~~2016~~2018 filed with the SEC and the ~~2016~~2018 annual report delivered to shareholders.

Reviewed and discussed with management its significant accounting policies and key judgments.

Reviewed and discussed with management its assessment and report, and reviewed and discussed with Grant Thornton its opinion, on the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2016.~~2018.

Discussed with Grant Thornton the matters required to be discussed by the Statement on Auditing Standard No. 1301 (Communications With Audit Committees).

Received the written disclosures and the letter from Grant Thornton required by the applicable requirements of the PCAOB regarding Grant Thornton’s communications with the Committee concerning independence, and discussed with Grant Thornton its independence with respect to the Company, including any relationships which may impact its objectivity and independence and whether the provision of specified non-audit services is compatible with the auditors’ independence under current guidelines.

Based on the foregoing, the Audit Committee recommended to the Board that the audited consolidated financial statements of the Company be included in the Company’s annual report on Form 10-K for ~~2016,~~2018, which was filed with the SEC on February ~~23, 2017.~~26, 2019.

Submitted by the Audit Committee:

~~Lewis Booth, Chairman~~

~~Francois Castaing~~

Ronald Hundzinski, Chairperson

Maurice Gunderson

Yvonne Hao

Charles Kummeth

AUDIT COMMITTEE MATTERS

Pre-Approval Policies and Procedures

It is the Audit Committee’s policy and practice to review and approve in advance all services, audit and non-audit, to be rendered by the Company’s independent registered public accounting firm. In pre-approving such services, the Committee must consider whether the provision of services is consistent with maintaining the independence of the Company’s independent registered public accounting firm. The Committee does not delegate this responsibility (or any other Committee function) to Company management, except that ~~Mr. Steele~~the Chief Financial Officer has been delegated permission to commit up to $50,000 between Committee meetings for audit-related services only, which must be reported to the Audit Committee no later than the next scheduled Committee meeting. If a product or service arises that has not been pre-approved by the Committee, the Committee has delegated to the ~~Chairman~~Chairperson of the Committee the authority to consider and pre-approve any such product or service between regular meetings of the Committee. Any interim approvals granted by the ~~Chairman~~Chairperson of the Committee are reported to the entire Committee at its next regularly scheduled meeting.

Grant Thornton Fees

The following table sets forth the fees we were billed for audit and other services provided by Grant Thornton in ~~2016~~2018 and ~~2015.~~2017. All of the services described below were approved in conformity with the Audit Committee’s pre-approval policies and procedures described above.

	2016 ($)		2015 ($)		2018 ($)		2017 ($)
Audit Fees(1)		1,936,000		1,607,000		1,904,644		2,278,000
Audit-Related Fees(2)		24,000		77,000		26,841		135,000
Tax Fees(3)		43,000		5,000		35,681		30,000
All Other Fees(4)		3,000		20,000		2,984		3,000
Total Fees		2,006,000		1,709,000		1,970,150		2,446,000

PROPOSAL NO. 2—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR ~~2017~~2019

In accordance with applicable law, the Audit Committee has ultimate authority and responsibility to appoint, compensate, evaluate and, when appropriate, replace our independent registered public accounting firm. In ~~2017,~~2019, the Committee reappointed Grant Thornton to be our independent registered public accounting firm for the year ending December 31, ~~2017.~~2019. See “Audit Committee Report” and “Audit Committee Matters” for additional information on Grant Thornton’s services provided to us in ~~2016.~~2018.

As the Audit Committee has responsibility for the appointment of our independent registered public accounting firm, your ratification of the appointment of Grant Thornton is not necessary. However, the Committee will take your vote on this proposal into consideration when appointing our independent registered public accounting firm in the future. Even if the shareholders ratify the appointment of Grant Thornton, the Committee may in its sole discretion terminate the engagement of Grant Thornton and direct the appointment of another independent auditor at any time during the year, although it has no current intent to do so.

Representatives of Grant Thornton will attend the annual meeting, will have the opportunity to make a statement, if they desire to do so, and will be available to answer appropriate questions from shareholders.

The Board recommends that you vote FOR the ratification of the Audit Committee’s appointment of Grant Thornton LLP as our independent registered public accounting firm for the year ending December 31, ~~2017.~~2019.

PROPOSAL NO. ~~PROPOSAL NO .~~ 3—ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION

The Board proposes that shareholders provide advisory (non-binding) approval of the compensation of our named executive officers, as disclosed in this proxy statement in accordance with SEC rules, ~~(commonly~~commonly known as a “say-on-pay” ~~proposal).~~proposal. We recognize the interest our shareholders have in the compensation of our executives and we are providing this advisory proposal in recognition of that interest and as required by Section 14 of the Exchange Act.

In a non-binding advisory vote on the frequency of the say-on-pay proposal held at our ~~2011~~2017 annual meeting of shareholders, a majority of shareholders voted in favor of holding say-on-pay votes annually. In light of this result and other factors considered by the Board, the Board determined that the Company would hold advisory say-on-pay votes on an annual basis until the next required advisory vote on such frequency, which ~~is this year. Proposal No. 4 on page 41 describes the advisory vote on say-on-pay vote frequency.~~must be held no later than 2023.

As described in detail under the heading “Compensation Discussion and Analysis,” our compensation program is designed to attract, motivate, and retain our named executive officers who are critical to our success, and to ensure alignment of the interests of such persons with our shareholders. Under this program, our named executive officers are rewarded for their service to the Company, the achievement of specific performance goals and the realization of increased shareholder value. We believe our compensation programs also are structured appropriately to support our business objectives, as well as to support our culture. The Compensation Committee regularly reviews the compensation programs for our named executive officers to ensure the fulfillment of our compensation philosophy and goals.

Please read the “Compensation Discussion and Analysis,” beginning on page ~~17,~~20, and the “Named Executive Officer Compensation Tables,” beginning on page ~~26,~~34, for additional details about our named executive officer compensation program, including information related to the compensation determinations for ~~2016.~~2018.

We are asking our shareholders to indicate their support for our named executive officer compensation as described in this proxy statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we will ask our shareholders to vote “FOR” the following resolution at the ~~2017~~2019 annual meeting:

“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s ~~Proxy Statement~~proxy statement for the ~~2017 Annual Meeting~~2019 annual meeting of ~~Shareholders~~shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure.”

The say-on-pay vote is advisory, and therefore not binding on the Company, the Compensation Committee or the Board. We value the opinions of our shareholders and to the extent there is any significant vote against the compensation of our named executive officers as disclosed in this proxy statement, we will consider our shareholders’ concerns and the Committee will evaluate whether any actions are necessary to address those concerns.

The Board recommends a vote FOR the approval of the compensation of our named executive

officers, as disclosed in this proxy statement pursuant to the rules of the SEC.

~~PROPOSAL NO. 4—ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION~~

At the 2011 annual meeting, our shareholders were asked how frequently we should seek an advisory vote on the compensation of our named executive officers, such as Proposal No. 3 above. Under the rules of the Dodd-Frank Act, we are required to ask our shareholders every six years to vote on whether to seek an advisory vote on the compensation of our named executive officers once every one, two or three years. At the 2011 annual meeting, our shareholders voted overwhelmingly in favor of an advisory vote on compensation every year, which was consistent with the recommendation of our Board of Directors.

After considering the matter, our Board of Directors has reconfirmed its support for an advisory vote on named executive officer compensation every year as the most appropriate alternative for the Company. An annual advisory vote on named executive officer compensation allows our shareholders to provide us with timely feedback on our compensation philosophy, policies and practices as disclosed in the proxy statement each year. Additionally, an annual advisory vote on named executive officer compensation is consistent with the annual performance goals used to evaluate and compensate our named executive officers. We understand that shareholders may have different views as to what is the best approach for the Company, and we look forward to hearing from our shareholders on this proposal.

The vote on the frequency of advisory votes on named executive officer compensation is not binding on the Board of Directors or the Company in any way. Therefore, the Board of Directors may decide that it is in the best interests of our shareholders and the Company to hold an advisory vote on named executive officer compensation more or less frequently than the option approved by our shareholders. We value the opinions of our shareholders and will carefully consider our shareholders’ preference.

~~The Board recommends a vote for the approval on an advisory basis of the option~~

~~PROPOSAL NO. 5— APPROVAL OF AN AMENDMENT TO~~ ~~THE GENTHERM INCORPORATED 2013 EQUITY INCENTIVE PLAN~~

~~The shareholders are being asked to approve an amendment (the “Amendment”) to the Gentherm Incorporated 2013~~ Equity Incentive Plan (the “2013 Plan”). The Amendment, if so approved, would (1) increase by 2,000,000 the maximum number of shares of common stock that may be issued pursuant to awards granted under the plan and (2) increase the ratio used to count full value awards issued under the plan against the maximum number of shares issuable under the plan from 1.58 shares to 1.85 shares.

When originally adopted by our Board and approved by our shareholders, the 2013 Plan provided for a number of common shares available for issuance (the “Share Limit”) equal to the sum of (1) 3,500,000 shares, plus (ii) the number of shares of common stock that, as of the effective date of the 2013 Plan, were subject to awards granted under the Gentherm Incorporated 2006 Equity Incentive Plan and the Gentherm Incorporated 2011 Equity Incentive Plan (the “Previous Plans”) and that, after the effective date of the 2013 Plan, expire or are terminated, surrendered or canceled without the delivery of any shares of stock, in the case of options, or are forfeited or reacquired by the Company in accordance with the terms of the applicable Previous Plan, in the case of unvested restricted stock awards. As of April 3, 2017, there remained 107,441 shares of our common stock available for awards granted under the 2013 Plan. There are no shares available for grant under any other Company equity incentive plan.

The 2013 Plan permits the granting of the following types of “Awards”: (1) stock options, including both nonqualified options and incentive options (“Options”), (2) stock appreciation rights (“SARs”), (3) restricted stock and restricted stock units (“RSUs”), (4) performance-based shares (“Performance Shares”), and (5) other awards which are denominated or payable in, valued by reference to, or otherwise based on our common stock, including rights to make an outright purchase of unrestricted or restricted stock (“Other Stock-Based Awards”). Awards may only be issued to key employees, outside directors, consultants and advisors of the Company and its subsidiaries. Awards of restricted stock, RSUs, Performance Shares and Other Stock-Based Awards are referred to herein as “Full Value Awards.” Unlike Options and SARs, a recipient of a Full Value Award receives, in most cases, the entire value of the underlying shares at the time the Award is granted, vested or settled. Awards of Options and SARs, on the other hand, typically provide the recipient with value only upon an increase in the market price of the underlying shares. Under the current terms of the 2013 Plan, Full Value Awards shall count against the Share Limit as 1.58 shares of common stock for each share of common stock covered by such Awards and all Options and SARs shall count against the Share Limit as 1.00 share of common stock for each share of common stock covered by such Awards. The Amendment, if so approved, would increase the ratio used to count Full Value Awards issued under the plan against the Share Limit from 1.58 shares to 1.85 shares of common stock for each share of common stock covered by such Awards. The ratio used to count all Options and SARs against the Share Limit would remain at 1.00 share of common stock for each share of common stock covered by such Awards.

The Board of Directors believes that it is in the best interest of the Company and its shareholders for the Company to be in a position to offer Awards to key employees, outside directors, consultants and advisors in accordance with the terms of the Plan. Such Awards provide incentive to such key individuals to make significant and extraordinary contributions to our long-term performance and growth. In addition, such awards align the interests of key employees, outside directors, consultants and advisors with the interests of our shareholders and help us attract and retain key individuals with exceptional ability. The Board of Directors believes that the proposed increase in shares available for new Awards is necessary and appropriate. The Board of Directors also believes that it is in the best interest of the Company and its shareholders to increase the ratio used to count of Full Value Awards against the Share Limit to more appropriately reflect the differences in anticipated dilution effect between Full Value Awards, on the one hand, and Options and SARs, on the other hand.

The proposed Amendment is set forth on Appendix A to this Proxy Statement. The full text of the 2013 Plan (not reflecting the proposed Amendment) is set forth on Appendix B to this Proxy Statement. The material features of the Plan are summarized below, but each shareholder should review the Plan itself for a full understanding of its contents.

~~The Plan authorizes a “Committee” (which will be comprised of the~~ Compensation Committee of the Board of Directors, unless the Board of Directors determines otherwise) to interpret the Plan, to promulgate, amend and rescind rules and regulations relating to the Plan and to make all other determinations necessary or advisable for its administration. Unless otherwise determined by the Board of Directors, the Compensation Committee’s determinations and interpretations under the Plan will be binding on participants. Under the Plan, the Company has agreed to indemnify the Compensation Committee members for reasonable expenses incurred in connection with the defense of any action, suit or proceeding involving any action or failure to act with respect to the Plan (other than matters where the Compensation Committee member is determined to have acted in bad faith).

Participants are chosen by the Compensation Committee from among those individuals who are or who become key employees (including officers and directors), outside directors, consultants and advisors who, in the judgment of the Compensation Committee, are or will become responsible for the Company’s direction and financial success. The Compensation Committee determines those

~~eligible participants or classes of participants to be granted Awards, the type of Award and the amounts, terms and conditions of the Awards.~~

The Plan may be terminated or amended at any time by the Board of Directors. Unless sooner terminated, the Plan will terminate 10 years after its approval by the shareholders, and no Awards may be awarded under the Plan thereafter. The termination of the Plan will not affect the validity of any Award outstanding on the date of termination.

For purposes of conforming to any changes in applicable law or governmental regulations, or for any other lawful purpose, the Board of Directors has the right, with or without approval of the Company’s shareholders, to amend or revise the terms of the Plan at any time; however, no such amendment or revision can (i) with respect to the Plan, increase the maximum number of shares in the aggregate which are subject to the Plan or with respect to which Awards may be made to individual participants (other than anti-dilution adjustments), materially change the class of persons eligible to be participants under the Plan or establish additional and different business criteria on which performance share goals are based without approval or ratification of the Company’s shareholders; or (ii) with respect to an Award previously granted under the Plan, except as otherwise specifically provided in the Plan, alter or impair any such Award without the consent of the holder thereof.

Subject to adjustment as described below, the Share Limit (i.e., the number of shares of common stock available for issuance under the 2013 Plan) is currently equal to the sum of (i) 3,500,000 shares, plus (ii) the number of shares of common stock of the Corporation that, as of the effective date of the Plan are subject to awards granted under the 2006 Plan or the 2011 Plan and that, on or after the effective date of the Plan, expire or are terminated, surrendered or canceled without the delivery of any shares of Stock in the case of options, or are forfeited or reacquired by the Corporation, in accordance with the terms of the relevant plan, in the case of unvested restricted stock awards. Under the terms of the 2013 Plan, Full Value Awards currently count against the Share Limit as 1.58 shares of common stock for each share of common stock covered by such Awards and all Options and SARs count against the Share Limit as 1.00 share of common stock for each share of common stock covered by such Awards. The aggregate fair market value (determined at the time an incentive option is granted) of shares with respect to which incentive options are exercisable for the first time by any individual during any calendar year cannot exceed $100,000. The amount of cash and the value of any property paid to any individual during any calendar year in settlement of a Performance Share cannot exceed $2,000,000.

The Compensation Committee, in its discretion, may adjust the number of shares which may be made the subject of new Awards or are then subject to outstanding Awards, the option price with respect to each outstanding stock option, the grant value with respect to outstanding SARs, the aggregate number of shares available at any time under the Plan to reflect such events as a stock split, stock dividend, or other extraordinary corporate event. The total number of Awards that may be granted under the Plan cannot presently be determined. In addition, nothing in the Plan prevents the Company from adopting or continuing in effect other or additional compensation arrangements.

Awards granted under the Plan will be evidenced by a written agreement between the Company and each participant, which will be in accordance with the Plan and may contain restrictions and limitations that do not violate the terms of the Plan. Subject to the terms of the Plan, the Compensation Committee may grant a participant one or more of the following Awards and any combination thereof:

The Compensation Committee in its discretion may grant either incentive options meeting the definition of incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (“Code”) or nonqualified options not meeting such definition, or any combination of incentive and nonqualified options. The option price for incentive options may not be less than 100% (110% for a participant owning 10% or more of our voting stock) of the fair market value of the common stock on the grant date. The option price for nonqualified options may not be less than 100% of the fair market value of the common stock on the grant date. Incentive options may only be granted to an employee of the Company or any of the subsidiaries in which the Company owns directly or indirectly 50% or more of the combined voting power of all classes of its stock.

SARs may be granted in conjunction with or independent of any stock option granted under the Plan. A SAR granted in conjunction with a stock option may either be an alternative right or an additional right. The exercise of a SAR granted as an alternative right will terminate the stock option to the extent of the number of shares with respect to which the SAR is exercised and vice versa. For SARs granted as an additional right, both the SAR and the stock option may be exercised. Upon exercise of a SAR, a participant is generally entitled to receive an amount equal to the difference between the fair market value of the shares with respect to which the participant exercises the SAR at the time of grant and the fair market value of the shares with respect to which the participant exercises the SAR at the time of exercise. This amount may be payable in cash or shares of common stock or any combination thereof.

Incentive options and related SARs are generally nontransferable by a participant other than by will or the laws of descent and distribution. Stock options and SARs will be exercisable, during the lifetime of the participant, only by the participant. However, the Compensation Committee in its discretion may permit the transfer of a nonqualified option or any related or independently granted SAR in limited circumstances.

At the time of exercise, the option price for the exercise of options must be paid in full in cash or, with the consent of the Compensation Committee, in common stock. In the discretion of the Compensation Committee, payment may also be made by (i) the Company retaining from the shares to be delivered upon exercise of the option that number of shares having the fair market value on the date of exercise equal to the option price, or (ii) by delivery of irrevocable instructions to a stock broker to promptly deliver to the Company full payment of the option price of the shares so purchased from the proceeds of the stock broker’s sale of, or loan against, such shares (a “Regulation T Stock Option Exercise”).

The Compensation Committee may grant restricted stock or RSUs to a participant. Restricted stock and RSUs are nontransferable and will have an established restriction period that may differ for each participant and with respect to all or any portion of the same Award. Participants are entitled to all dividend and voting rights with respect to restricted stock. A participant will have no stock ownership interest as a result of being granted RSUs, but may, in the discretion of the Compensation Committee, receive dividend equivalents on such units. The Compensation Committee may make performance-based restricted stock or RSU awards that condition release of the restrictions on the attainment of one or more performance goals during the restricted period in addition to or in lieu of conditioning the release of restrictions on the continued employment of the participant. The performance goals applicable to a performance-based restricted stock or RSU award must be based on the same criteria as are applicable to Performance Shares permitted under the Plan as described below. Upon a termination of employment or service other than due to death or disability, any unvested restricted stock or RSUs shall be immediately forfeited; provided, however, the Committee may in its discretion accelerate any applicable time-based vesting conditions upon certain qualifying terminations. Unless otherwise determined by the Compensation Committee in the case of a participant who dies or becomes permanently disabled, the restrictions applicable to performance-based restricted stock or RSU awards will lapse only after attainment of the performance goals during the restricted period and written certification by the Compensation Committee that the performance goals and any other material term of the award have been attained or satisfied. If the performance goal has not been attained by the end of the restricted period, the performance-based restricted stock or RSUs will be forfeited. At the expiration of the restricted period, (i) with respect to restricted stock, the Company will deliver stock certificates to the participant or the legal representative of the participant’s estate or, if the shares were previously issued with a legend, the Company will reissue certificates without the legend, and (ii) with respect to RSUs, the Company will pay a participant an amount equal to the fair market value of that number of shares to which such RSU relates. In the discretion of the Compensation Committee, the amount paid with respect to an RSU may be paid in cash, common stock, other property or any combination thereof and may be paid in a lump sum or in installments, currently or on a deferred basis with provision for the payment or crediting of a dividend equivalent or a reasonable rate of interest on installment or deferred payment; provided, however, that the amount of cash and the value of any other property paid to a participant during any calendar year in settlement of a performance-based RSU may not exceed $2,000,000.

The Plan provides for each non-employee director (referred to herein as an “outside director”) to be automatically granted upon such director’s initial election or appointment an award of a number of shares of restricted common stock equal to (i) $4,167 (which amount was increased by the Committee to $8,333 in 2015 and may be further modified from time to time by the Committee in its Discretion), multiplied by (ii) the number of full months between the date of such election or appointment and the first anniversary of the last completed annual meeting of the Corporation’s stockholders, and divided by (iii) the closing price of the Corporation’s common stock on such date. In addition, on the date of each annual meeting of the Corporation’s stockholders each outside director then in office is automatically granted an award of a number of shares of restricted common stock equal to $50,000 (which amount was increased by the Committee to $100,000 in 2015 and may be modified from time to time by the Committee in its Discretion) divided by the closing price of the Corporation’s common stock on such date. The restricted period with respect to each share of restricted stock granted to outside directors pursuant to the foregoing (“Automatic Director Restricted Stock”) lapses on the date of the annual meeting of stockholders held during the calendar year following the date of grant or, if earlier, on the first anniversary of the date of grant, in each case so long as the applicable director remains a director through such date. Such shares of Automatic Director Restricted Stock are forfeited if the applicable director ceases to be a director prior to the date the restrictions with respect to such restricted stock are to lapse, except that if an outside director’s services as a member of the Board terminates because of (1) total disability, (2) death, (3) retirement on or after age 65 and after at least ten years of service as a member of the Board or (4) any other circumstance that the Committee, in its Discretion, deems to be applicable, then all restrictions with respect to such restricted stock immediately lapses upon the occurrence of such event.

The Compensation Committee may grant to a participant the right to obtain Performance Shares. Unless otherwise determined by the Compensation Committee, rights to obtain Performance Shares are nontransferable. A participant’s right to obtain Performance Shares will be subject to the attainment of one or more pre-established performance goals over a performance period prescribed by the Compensation Committee. The performance goal will be established in writing no later than the earlier of 90 days after the start of a performance period or expiration of the first 25% of the performance period and while the outcome of the performance goal is substantially uncertain. The Compensation Committee, in its discretion, will establish the specific targets and other details of the performance goal. A performance goal must, however, be objective so that a third party with knowledge of the relevant facts could determine whether the goal has been attained. Unless otherwise determined by the Compensation Committee in the case of a participant who dies or becomes permanently disabled, the Performance Shares will be issued to a participant only after the expiration of the performance period and the Compensation Committee has certified in writing that the performance goal and any other material terms of the Award have been satisfied. No participant will have the rights of a shareholder with respect to Performance Shares until their actual issuance.

The Compensation Committee may grant participants other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of common stock as are deemed by the Compensation Committee, in its discretion, to be consistent with the purpose of the Plan, provided that such grants must comply with applicable law. Additionally, the Compensation Committee may permit a participant to make a current, outright purchase of common stock, which shares may or may not be subject to any restrictions or conditions, for a price equal to, less than or greater than the then fair market value of the common stock, with the price payable by the participant in such form and manner and at such time as determined by the Compensation Committee in its discretion.

The rules governing the tax treatment of Options, SARs, restricted stock awards, RSUs, Performance Shares and Other Stock-Based Awards, including treatment of stock acquired upon the exercise of an Option or SAR, and the receipt or release from restriction of Performance Shares or other shares, are quite technical. Therefore, the description of the tax consequences set forth below is necessarily general in nature and does not purport to be complete. Moreover, the statutory provisions are subject to change, as are their interpretations, and their application may vary in individual circumstances. Finally, the tax consequences under applicable state and local income tax laws may not be the same as under the federal income tax laws.

Incentive options granted pursuant to the Plan are intended to qualify as “incentive stock options” within the meaning of Section 422 of the Code. If the participant makes no disposition of the shares acquired pursuant to exercise of an incentive option within one year after the transfer of shares to such participant and within two years from the grant of the option, the participant will realize no taxable income as a result of the grant or exercise of such option (except that the alternative minimum tax may apply), and any gain or loss that is subsequently realized upon disposition may be treated as long-term capital gain or loss, as the case may be. Under these circumstances, the Company will not be entitled to a deduction for federal income tax purposes with respect to either the issuance of such incentive options or the transfer of shares upon their exercise.

If shares subject to incentive options are disposed of prior to the expiration of the above time periods, the participant will recognize ordinary income in the year in which the disqualifying disposition occurs, the amount of which will generally be the lesser of (i) the excess of the market value of the shares on the date of exercise over the option price, or (ii) the gain recognized on such disposition. In general, such amount will be deductible by the Company for federal income tax purposes in the same year, as long as the amount constitutes reasonable compensation, and the Company must comply with certain federal income tax reporting requirements with respect to such amount. In addition, the excess, if any, of the amount realized on a disqualifying disposition over the market value of the shares on the date of exercise will be treated as capital gain.

A participant who acquires shares by exercise of a nonqualified option generally realizes, as taxable ordinary income at the time of exercise, the difference between the exercise price and the fair market value of the shares. In general, such amount will be deductible by the Company in the same year, provided that the amount constitutes reasonable compensation, and the Company must satisfy certain federal income tax withholding and reporting requirements with respect to such amount. Subsequent appreciation or decline in the value of the shares on the sale or other disposition of the shares will generally be treated as capital gain or loss.

A participant generally will recognize ordinary income upon the exercise of a stock appreciation right in an amount equal to the amount of cash received and the fair market value of any shares received at the time of settlement of the stock appreciation right, plus the amount of any taxes withheld. Such amount will ordinarily be deductible by the Company in the same year as long as the amounts constitute reasonable compensation, and the Company must satisfy certain federal income tax withholding and reporting requirements with respect to such amount.

A participant who is granted a restricted stock award under the Plan is not required to include the value of such shares in ordinary income until the first time such participant’s rights in the shares are transferable or are not subject to substantial risk of forfeiture, whichever occurs earlier, unless such participant timely files an election under Section 83(b) of the Code to be taxed on the receipt of the shares. A participant who is granted RSUs under the Plan is not required to include the value of such RSUs in ordinary income until such time the value of the RSUs is paid to the participant in cash or stock. In the case of either restricted stock or RSUs, the amount of such income will be equal to the fair market value of the shares or RSUs at the time the income is recognized. The Company will ordinarily be entitled to a deduction, in the amount of the ordinary income recognized by the participant, at the same time the participant recognizes such income, as long as the amount constitutes reasonable compensation, and the Company must satisfy certain federal income tax withholding and reporting requirements with respect to such amount.

A participant who is granted a performance share Award will generally not recognize any income upon the grant of the Award. The participant will generally recognize as ordinary income the fair market value of the shares or cash transferred upon receipt of the shares or cash by the participant after the completion of the performance period and the attainment of the performance goal, and the Company will generally be entitled to a deduction equal to the fair market value of the shares or cash transferred to the participant at that time as long as the amount constitutes reasonable compensation, and the Company must satisfy certain federal income tax withholding and reporting requirements with respect to such amount.

A participant who is permitted to make an outright purchase of unrestricted common stock will recognize ordinary income at the time of purchase if and to the extent the purchase price is less than the fair market value of the common stock on the date of purchase. A participant who is permitted to make an outright purchase of restricted common stock, depending on the nature of the restrictions, will recognize ordinary income at the time the restrictions lapse if and to the extent the then value of the common stock exceeds the price paid by the participant, unless the participant makes an election under Section 83(b) of the Code to measure and recognize any income at the time of purchase. The Company will be entitled to a corresponding deduction equal to the amount of any ordinary income recognized by a participant who makes an outright purchase of common stock, at the time the participant recognizes the ordinary income, provided that such amount constitutes reasonable compensation, and the Company must satisfy certain federal income tax withholding and reporting requirements with respect to such amount.

Section 162(m) of the Code denies a deduction to any publicly held corporation for compensation paid to certain covered employees in a taxable year to the extent such compensation exceeds $1,000,000. For this purpose, a covered employee means the Company’s principal executive officer and the Company’s three highest compensated officers (other than the principal executive officer and the principal financial officer). It is possible that compensation attributable to Awards under the Plan to a covered employee, when combined with all other types of compensation received by the covered employee from the Company, may cause this limitation to be exceeded in any particular year. Certain types of compensation, however, including so-called “performance-based compensation,” are disregarded for purposes of the deduction limitation. Compensation attributable to stock options and SARs awarded under the Plan that have an exercise price or base amount not less than the fair market value of the common stock on the grant date should qualify as performance-based compensation under the Plan. Compensation attributable to Performance Shares, performance-based restricted stock awards and performance-based RSUs has also been structured to qualify for the performance-based compensation exclusion to the $1,000,000 deduction limitation.

The foregoing general tax discussion is intended for the information of shareholders considering how to vote with respect to this proposal and not as tax guidance to participants in the Plan. Different tax rules may apply to specific participants and transactions under the Plan.

If, upon the grant, exercise, release of restrictions or settlement of or in respect of an Award, or upon any other event or transaction under or relating to the Plan, the Company must pay amounts for federal income or employment tax withholding, in the Compensation Committee’s discretion, either the Company will appropriately reduce the amount of stock, cash or other property to be paid to the participant or the participant must pay such amount to the Company to enable the Company to pay, or reimburse the Company for paying, such income or employment tax withholding. The Compensation Committee may, in its discretion, permit the participant to satisfy such withholding obligations (i) by, in whole or in part, electing to reduce the number of shares of common stock delivered or deliverable by the Company in respect of an Award, (ii) by electing to tender common stock back to the Company subsequent to receipt of such shares in respect of an Award, or (iii) in the case of a Regulation T Stock Option Exercise, by irrevocably instructing the stock broker to promptly deliver (in addition to the option price) an amount equal to such withholding tax from the proceeds of the stock broker’s sale of or loan against some or all of the shares. The Company also may withhold the amount of such taxes from any other sums or property due or to become due to the participant. The Company may also defer issuance of shares under the Plan until payment by the participant to the Company of the amount of any such tax. The Compensation Committee may make such other arrangements with respect to income or employment tax withholding as it may determine.

The following table sets forth certain information as of December 31, ~~2016~~2018 concerning our equity compensation plans:

As of December 31, ~~2016,~~2018, there were ~~210,481~~136,566 shares of unvested, restricted stock awards outstanding. The number of shares issued during ~~2016, 2015~~2018, 2017 and ~~2014~~2016 in the form of ~~Restricted Stock~~restricted stock were 21,681, 237,542 and 141,784, ~~108,026 and 104,584,~~ respectively.

The Amendment would, (1) subject to the adjustment described under “Maximum Awards” above with respect to such events as a stock split, stock dividend or other extraordinary corporate event, increase by 2,000,000 the maximum number of shares which may be issued pursuant to Awards under the Plan and (2) increase the ratio used to count Full Value Awards issued under the plan against the Share Limit from 1.58 shares to 1.85 shares. The market value of the additional 2,000,000 shares of common stock that would be added to the maximum number of shares which may be issued pursuant to awards under the Plan is $73,000,000 as of April 3, 2017.

~~Interests of Directors and Executive Officers; New Benefits Under the Plan Resulting from the Amendment~~

All executive officers, non-executive directors, non-executive officers and employees who are deemed to be “key employees” under the Plan are eligible for Awards under the Plan. In addition, each current outside director is eligible to receive Automatic Director Restricted Stock under the Plan. Consequently, each current director and each current executive officer has a personal interest in the approval of the Amendment. However, the actual benefit and number of shares to be issued to the directors, executive officers, non-executive officers and other employees under the Plan if the Amendment is approved cannot be determined at this time because Awards to be made under the Plan have not been determined or granted and are not determinable using an objective formula. No additional benefits or amounts would have been awarded to directors, executive officers, non-executive officers and employees during the fiscal year ending December 31, 2016 if the Amendment had been in effect during such period.

Section 16(a) of the Exchange Act requires our directors, our executive officers and persons who beneficially own more than 10% of a registered class of our equity securities (“insiders”) to file reports with the SEC regarding their pecuniary interest in our equity securities and any changes thereto, and to furnish copies of these reports to us. Based on our review of the insiders’ forms furnished to us or filed with the SEC and representations made by the directors and applicable executive officers, one report on Form 4 reporting the sale of shares of our common stock was filed one day late by Barry Steele, Vice-President of Finance, Chief Financial Officer and Treasurer; otherwise, no insider failed to file on a timely basis a Section 16(a) report in ~~2016.~~2018.

We will bear the entire cost of preparing, assembling, and mailing the proxy materials. We may supplement our solicitation of proxies by mail with telephone, e-mail or personal solicitation by our officers or other regular employees. In such case, we would expect our Chief Executive Officer and/or Chief Financial Officer to oversee such supplemental solicitation. We will not pay any additional compensation to any of our employees for their supplemental solicitation services. We have requested banks, brokers and other nominees to forward the proxy materials to, and to obtain proxies from, the beneficial owners and we will reimburse such record holders for their reasonable out-of-pocket expenses in doing so upon request.

Requirements for Submission of Shareholder Proposals and Nominations for ~~2018~~2020 Annual Meeting

Under SEC rules, if a shareholder wants us to include a proposal in our proxy statement and form of proxy for presentation at our ~~2018~~2020 annual meeting of shareholders (pursuant to Rule 14a-8 of the Exchange Act), the proposal must be received by us at our principal

executive offices (Corporate Secretary, Gentherm Incorporated, 21680 Haggerty Road, Northville, MI 48167) by the close of business on December ~~19, 2017.~~17, 2019. As the rules of the SEC make clear, simply submitting a proposal does not guarantee that it will be included.

Any shareholder director nomination or proposal of other business intended to be presented for consideration at the ~~2018~~2020 annual meeting, but not intended to be considered for inclusion in our proxy statement and form of proxy relating to such meeting (i.e. not pursuant to Rule 14a-8 of the Exchange Act), must be received by us at the address stated above not less than 90 days and not more than 120 days before the first anniversary of the date of the ~~2017~~2019 annual meeting. Therefore, such notice must be received between January ~~19, 2018~~16, 2020 and the close of business on February ~~18, 2018~~15, 2020 to be considered timely. However, if our ~~2018~~2020 annual meeting occurs more than 30 days before or 60 days after May ~~19, 2018,~~16, 2020, we must receive nominations or proposals (A) not later than the close of business on the later of the 90^th day prior to the date of the ~~2018~~2020 annual meeting or the 10^th day following the day on which public announcement is made of the date of the ~~2018~~2020 annual meeting, and (B) not earlier than the 120^th day prior to the ~~2018~~2020 annual meeting.

The above-mentioned proposals must also be in compliance with our Bylaws and the proxy solicitation rules of the SEC and Nasdaq, including but not limited to the information requirements set forth in our Bylaws. We reserve the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with the foregoing and other applicable requirements.

The Company has elected to send a single copy of its annual report and this proxy statement to any household at which two or more shareholders reside unless one of the shareholders at such address provides notice that he or she desires to receive individual copies. This “householding” practice reduces the Company’s printing and postage costs. Shareholders may request to discontinue or re-start householding, or request a separate copy of the ~~2016~~2018 annual report and ~~2017~~2019 proxy statement, as follows:

The Company undertakes to deliver promptly, upon written or oral request, a separate copy of such materials to a shareholder that previously elected to receive a single copy of materials with one or more other shareholders.

SEC rules require us to provide a copy of our ~~2016~~2018 annual report to shareholders who receive this proxy statement. Our ~~2016~~2018 annual report to shareholders includes our annual report on Form 10-K for ~~2016~~the year ended December 31, 2018 (including certain exhibits). We will also provide copies of our ~~2016~~2018 annual report to shareholders, and to brokers, dealers, banks, voting trustees and their nominees for the benefit of beneficial owners. Additional copies of the ~~2016~~2018 annual report to shareholders (excluding certain exhibits or documents incorporated by reference in our annual report on Form 10-K for ~~2016)~~the year ended December 31, 2018) are available to shareholders at no charge upon written request to: Corporate Secretary, Gentherm Incorporated, 21680 Haggerty Road, Northville, MI 48167 or on our website, www.gentherm.com, under the “Investor Relations – ~~Financial~~Annual Reports” tab.

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on May ~~19, 2017~~16, 2019

The ~~2017~~2019 proxy statement and ~~2016~~2018 annual report are available at www.edocumentview.com/THRM.

Your cooperation in giving this matter your immediate attention and in voting your proxies promptly is appreciated.

~~APPENDIX A – AMENDMENT TO GENTHERM~~ IN~~CORPORATED 2013 EQUITY INCENTIVE PLAN~~

~~Section 5(a) is hereby amended~~1 U P X Mark here to ~~read in its entirety as follows:~~

~~(a) The maximum number of shares of stock which may be issued pursuant~~vote FOR all nominees 01 - Francois Castaing 02 - Sophie Desormiere 03 - Phillip Eyler 04 - Maurice Gunderson 05 - Yvonne Hao 06 - Ronald Hundzinski 07 - Charles Kummeth 08 - Byron Shaw 09 - John Stacey Mark here to ~~Awards granted under~~WITHHOLD vote from all nominees For All EXCEPT - To withhold authority to vote for any nominee(s), write the Plan or with respect to which Awards may be granted under the Plan shall not exceed in the aggregate the sum of (i) 5,500,000 shares of Common Stock of the Corporation, plus (ii) the number of shares of Common Stock of the Corporation that, as of the effective date of the Plan are subject to awards granted under the Gentherm Incorporated 2006 Equity Incentive Plan or the 2011 Equity Incentive Plan and that, on or after the effective date of the Plan, expire or are terminated, surrendered or canceled without the delivery of any shares of Stock in the case of options, or are forfeited or reacquired by the Corporation, in accordance with the terms of the relevant plan, in the case of unvested restricted stock awards (in each case, subject to adjustments as provided in this Paragraph 5) (the “~~Share Limit”).~~

(b) Awards of restricted stock, restricted stock units, unrestricted stock, and dividend equivalents (including performance shares and performance units) payable in shares of Common Stock shall count against the Share Limit as ~~1.85 shares~~ ~~of Common Stock for each share of Common Stock covered by such Awards. Awards of Incentive Options, Nonqualified Options, and stock appreciation rights shall count against the Share Limit as~~ ~~1.00 share~~ of Common Stock for each share of Common Stock covered by such Awards. The full number of shares of Common Stock subject to an option or stock appreciation right shall count against the Share Limit, even if the exercise price of the such option or stock appreciation right is satisfied in whole or in part through net-settlement or by delivering shares of Common Stock to the Corporation (by either actual delivery or attestation). Shares of Common Stock issued or to be issued under the Plan shall be authorized but unissued Common Stock or issued Common Stock that has been reacquired by the Corporation or a Subsidiary or affiliate of the Corporation. If any Common Stock covered by an Award is not purchased or is forfeited, or if an Award otherwise terminates without delivery of Common Stock subject thereto, then the number of shares of Common Stock related to such Award and subject to such forfeiture or termination shall not be counted against the limit set forth above (or included for purposes of the calculation in the proviso, above), but shall again be available for making Awards under the Plan. Notwithstanding the foregoing, there shall not be added back to the Share Limit: (x) shares of Common Stock that are subject to an option or a share-settled stock appreciation right (including those stock appreciation rights that may be settled in either shares or cash) and are not issued upon the net settlement or net exercise of option or stock appreciation right; (y) shares of Common Stock delivered to or withheld by the Corporation or a subsidiary or affiliate of the Corporation to pay the exercise price or the withholding taxes under options or stock appreciation rights; or (z) shares of Stock repurchased on the open market with the proceeds of an Option exercise.

~~(a) “Award” means any stock option, stock appreciation right, restricted stock, restricted stock unit, performance share award or other stock-based award granted under the Plan.~~

~~(c) “Committee~~” means a committee consisting of two or more members of the Board, each of whom (1) shall be an “outside director” as defined under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “~~Code~~”), and the Treasury Regulations thereunder, and (2) may be a “non-employee director” as defined under Rule 16b-3 of the Rules and Regulations under the Securities Exchange Act of 1934, as amended, or any similar or successor provision, as appointed by the Board to administer the Plan. In the absence of any action of the Board to the contrary, the Compensation Committee of the Board shall comprise the Committee.

~~(d) “Corporation” means Gentherm Incorporated, a Michigan corporation, or any successor thereof.~~

~~(e) “Discretion~~” means in the sole discretion of the Committee, with no requirement whatsoever that the Committee follow past practices, act in a manner consistent with past practices, or treat a Participant (as hereinafter defined) in a manner consistent with the treatment afforded other Participants with respect to the Plan, which may be set forth in a written grant agreement or otherwise.

~~(f) “409A Award” means any Award that is treated as a deferral of compensation subject to the requirements of Section 409A of the Code.~~

~~(g) “Incentive Option~~” means an option to purchase Common Stock of the Corporation which meets the requirements set forth in the Plan and also meets the definition of an incentive stock option set forth in Section 422 of the Code.

~~(h) “Nonqualified Option~~” means an option to purchase Common Stock of the Corporation which meets the requirements set forth in the Plan but does not meet the definition of an incentive stock option set forth in Section 422 of the Code.

~~(i) “Other stock-based award” means any right granted under Paragraph 20 of the Plan.~~

~~(j) “Participant~~” means any individual or class of individual designated by the Committee under Paragraph 6 for participation in the Plan who is or becomes (i) a key employee (including an officer or director who is also a key employee) of the Corporation or any Subsidiary, (ii) a director of the Corporation who is not also an employee of the Corporation or any Subsidiary (hereinafter sometimes referred to as an “outside director”), and (iii) a consultant or advisor of the Corporation or any Subsidiary.

~~(k) “Performance share” means a grant of Common Stock of the Corporation upon the attainment of one or more performance goals during a performance period established by the Committee, as provided in Paragraph 19.~~

~~(m) “Restricted stock~~” means a grant of Common Stock of the Corporation which is subject to restrictions against transfer, forfeiture and such other terms and conditions determined by the Committee, as provided in Paragraph 18.

~~(n) “Restricted stock unit~~” means a grant of a right to earn the value of a share of Common Stock of the Corporation which is subject to restrictions against transfer, forfeiture and such other terms and conditions determined by the Committee, as provided in Paragraph 18.

~~(o) “Stock appreciation right” means a right to receive the appreciation in value, or a portion of the appreciation in value, of a specified number of shares of the Common Stock of the Corporation, as provided in Paragraph 12.~~

~~(p) “Subsidiary~~” means any corporation, limited liability company, partnership or any other entity in which the Corporation owns, directly or indirectly, stock or other ownership interest therein, possessing more than fifty percent (50%) of the combined voting power of all classes of stock or other ownership interest.

~~2. Purpose of Plan.~~ The purpose of the Plan is to provide key employees (including officers and directors who are also key employees), outside directors, consultants and advisors of the Corporation and its Subsidiaries with incentives to make significant and extraordinary contributions to the long-term performance and growth of the Corporation and its Subsidiaries, to join the interests of key employees, outside directors, consultants and advisors with the interests of the shareholders of the Corporation, and to facilitate attracting and retaining key employees, outside directors, consultants and advisors with exceptional abilities.

~~3. Administration.~~ The Plan shall be administered by the Committee provided that the Board may exercise all of the Committee’s powers, authority and obligations under this Plan (and any grant agreement) at any time, in whole or in part, in the Board’s discretion. Subject to the provisions of the Plan, the Committee shall determine, from those who are or become eligible to be Participants under the Plan, the persons or class of persons to be granted Awards, the type of Awards and the amount or maximum amount of stock or rights covered by Awards to be granted to each such person or class of person, and the terms and conditions of any Awards. Subject to the provisions of the Plan, the Committee is authorized to: grant awards; determine the rights of Participants with respect to an Award upon any termination of service; determine whether, and to what extent, and under what circumstances an Award may be settled, cancelled, forfeited, exchanged or surrendered; accelerate the vesting of any Award; interpret the Plan; promulgate, amend and rescind rules and regulations relating to the Plan; and make all other determinations necessary or advisable for its administration. Interpretation and construction of any provision of the Plan by the Committee (or the Board) shall be final and conclusive. A majority of the Committee shall constitute a quorum, and the acts approved by a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by a majority of the Committee, shall be the acts of the Committee.

~~4. Indemnification of Committee Members.~~ In addition to such other rights of indemnification as they may have, the members of the Committee shall be indemnified by the Corporation against the reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any Award granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by the Board or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be determined in such action, suit or proceeding that such Committee member has acted in bad faith); provided, however, that within sixty (60) days after receipt of notice of institution of any such action, suit or proceeding, a Committee member shall offer the Corporation in writing the opportunity, at its own cost, to handle and defend the same.

(a) The maximum number of shares of stock which may be issued pursuant to Awards granted under the Plan or with respect to which Awards may be granted under the Plan shall not exceed in the aggregate the sum of (i) 3,500,000 shares of Common Stock of the Corporation, plus (ii) the number of shares of Common Stock of the Corporation that, as of the effective date of the Plan are subject to awards granted under the Gentherm Incorporated 2006 Equity Incentive Plan or the 2011 Equity Incentive Plan and that, on or after the effective date of the Plan, expire or are terminated, surrendered or canceled without the delivery of any shares of Stock in the case of options, or are forfeited or required by the Corporation, in accordance with the terms of the relevant plan, in the case of unvested restricted stock awards (in each case, subject to adjustments as provided in this Paragraph 5) (the “~~Share Limit”).~~

(b) Awards of restricted stock, restricted stock units, unrestricted stock, and dividend equivalents (including performance shares and performance units) payable in shares of Common Stock shall count against the Share Limit as ~~1.58 shares~~ ~~of Common Stock for each share of Common Stock covered by such Awards. Awards of Incentive Options, Nonqualified Options, and stock appreciation rights shall count against the Share Limit as~~ ~~1.00 share~~ of Common Stock for each share of Common Stock covered by such Awards. The full number of shares of Common Stock subject to an option or stock appreciation right shall count against the Share Limit, even if the exercise price of the such option or stock appreciation right is satisfied in whole or in part through net-settlement or by delivering shares of Common Stock to the Corporation (by either actual delivery or attestation). Shares of Common Stock issued or to be issued under the Plan shall be authorized but unissued Common Stock or issued Common Stock that has been reacquired by the Corporation or a Subsidiary or affiliate of the Corporation. If any Common Stock covered by an Award is not purchased or is forfeited, or if an Award otherwise terminates without delivery of Common Stock subject thereto, then the number of shares of Common Stock related to such Award and subject to such forfeiture or termination shall not be counted against the limit set forth above (or included for purposes of the calculation in the proviso, above), but shall again be available for making Awards under the Plan. Notwithstanding the foregoing, there shall not be added back to the Share Limit: (x) shares of Common Stock that are subject to an option or a share-settled stock appreciation right (including those stock appreciation rights that may be settled in either shares or cash) and are not issued upon the net settlement or net exercise of option or stock appreciation right; (y) shares of Common Stock delivered to or withheld by the Corporation or a subsidiary or affiliate of the Corporation to pay the exercise price or the withholding taxes under options or stock appreciation rights; or (z) shares of Stock repurchased on the open market with the proceeds of an Option exercise.

(c) Any shares that are delivered by the Corporation, and any awards or grants that are made by, or become obligations of, the Corporation through the assumption by the Corporation or a Subsidiary of, or in substitution for, outstanding awards or grants previously made by an acquired company, shall not be counted against the number of shares available under the Plan. Consistent with the purpose of the Plan and with a view to avoiding over or under counting, the Committee shall, in its Discretion, determine the number of shares to charge against the shares remaining available under the Plan as a result of the grant or settlement of Awards made under the Plan.

(d) The number of shares with respect to each outstanding Award, the option price with respect to outstanding stock options, the grant value with respect to outstanding stock appreciation rights, the aggregate number of shares available at any time under the Plan, and the maximum number of shares with respect to which Awards may be made to an individual Participant during the term of the

Plan shall be subject to such adjustment as the Committee, in its Discretion, deems appropriate to reflect such events as stock dividends, stock splits, recapitalizations, mergers, consolidations or reorganizations of or by the Corporation; provided, however, that no fractional shares shall be issued pursuant to the Plan, no Awards may be granted under the Plan with respect to fractional shares, and any fractional shares resulting from such adjustments shall be eliminated from any outstanding Award.

~~6. Participants.~~ The Committee shall determine and designate from time to time, in its Discretion, those individuals who are or who become key employees (including officers and directors who are also key employees), outside directors, consultants or advisors of the Corporation or any Subsidiary to receive Awards who, in the judgment of the Committee, are or will become responsible for the direction and financial success of the Corporation or any Subsidiary. Subject to the provisions of the Plan, the Committee may authorize in advance the grant of Awards to individuals or classes of individuals who are not at the time of Committee authorization, but who subsequently become, key employees, outside directors, consultants or advisors of the Corporation or any Subsidiary; provided, however, that (i) for all purposes of the Plan, the date of grant of any Award made to an individual pursuant to such authorization shall be no earlier than the date on which such individual becomes an employee, outside director, consultant or advisor of the Corporation or any Subsidiary, and (ii) such authorization shall prescribe the principal terms or range of terms of the Awards that may be made to such individuals or classes of individuals including, without limitation, the type or types of Awards and the number or maximum number of shares to be covered by such Awards.

~~7. Written Agreement.~~ Each Award granted under the Plan shall be evidenced by a written grant agreement between the Corporation and the Participant which shall contain such provisions as may be approved by the Committee. The written grant agreement may be in an electronic medium, may be limited to a notation on the Company’s books and records and, if approved by the Committee, need not be signed by a representative of the Company or a Participant. Such agreements shall constitute binding contracts between the Corporation and the Participant, and every Participant, upon acceptancename(s) of such agreement, shall be bound by the terms and restrictions of the Plan and of such agreement. The terms of each such agreement shall be in accordance with the Plan, but the agreements may include such additional provisions and restrictions determined by the Committee, provided that such additional provisions and restrictions do not violate the terms of the Plan.

~~8. Allotment of Shares.~~ Subject to the terms of the Plan, the Committee shall determine and fix, in its Discretion, the number or maximum number of shares with respect to which each Participant may be granted Awards and such determination shall be set forth in the grant agreement; provided, however, that no Incentive Option may be granted under the Plan to any one Participant which would result in the aggregate fair market value, determined as of the date the option is granted, of underlying stock with respect to which Incentive Options are exercisable for the first time by such Participant during any calendar year under any plan maintained by the Corporation (or any parent or Subsidiary of the Corporation) exceeding $100,000.

~~9. Stock Options.~~ Subject to the terms of the Plan, the Committee, in its Discretion, may grant to Participants either Incentive Options, Nonqualified Options or any combination thereof; provided, however, that an Incentive Option may only be granted to an employee of the Corporation or a Subsidiary, and in the case of a Subsidiary only if (i) the Subsidiary is treated as a disregarded entity owned by the Corporation, or (ii) the Subsidiary is a corporation (or is treated as a disregarded entity owned by a corporation) fifty percent or more of the combined voting power of all classes of stock of which is owned, directly or indirectly, by the Corporation. Each option granted under the Plan shall designate whether such option is intended to be an Incentive Option or Nonqualified Option, the number of shares covered thereby, the price per share for which the shares covered by such option may be purchased, the date on which such option was granted, the expiration date of such option, and such other terms as determined by the Committee in its Discretion.

~~10. Stock Option Price.~~ The Committee, in its Discretion, shall establish the price per share for which the shares covered by the option may be purchased, which price shall be set forth in the grant agreement. With respect to an Incentive Option, such option price shall not be less than 100% of the fair market value of the stock on the date on which such option is granted; provided, however, that with respect to an Incentive Option granted to a Participant who at the time of the grant owns (after applying the attribution rules of Section 424(d) of the Code) more than 10% of the total combined voting stock of the Corporation or of any parent or Subsidiary, the option price shall not be less than 110% of the fair market value of the stock on the date such option is granted. With respect to a Nonqualified Option, the option price shall not be less than 100% of the fair market value of the stock on the date such option is granted. Fair market value of a share shall be determined by the Committee as permitted in Treas. Reg. §1.409A-1(b)(5)(iv), and may be determined by taking the mean between the highest and lowest quoted selling prices of the Corporation’s stock on any exchange or other market on which the shares of Common Stock of the Corporation shall be traded on such date or, if there are no sales on such date, on the next preceding or following day on which there are sales. The option price shall be subject to adjustment in accordance with the provisions of Paragraph 5 of the Plan.

conditions as may be established by, the Committee, payment of the option price may also be made by the Corporation retaining from the shares to be delivered upon exercise of the stock option that number of shares having a fair market value on the date of exercise equal to the option price of the number of shares with respect to which the Participant exercises the option. In the Discretion of the Committee, a Participant may exercise an option, if then exercisable, in whole or in part, by delivery to the Corporation of written notice of the exercise in such form as the Committee may prescribe, accompanied by irrevocable instructions to a stock broker to promptly deliver to the Corporation full payment for the shares with respect to which the option is exercised from the proceeds of the

~~stock broker’s sale of or loan against some or all of the shares (a “Regulation T Stock Option Exercise~~”). Such payment may also be made in such other manner as the Committee determines is appropriate, in its Discretion. No Participant shall have any of the rights of a shareholder of the Corporation under any stock option until the actual issuance of shares to said Participant, and prior to such issuance no adjustment shall be made for dividends, distributions or other rights in respect of such shares, except as provided in Paragraph 5.

~~12. Stock Appreciation Rights.~~ Subject to the terms of the Plan, the Committee may grant stock appreciation rights to Participants either in conjunction with, or independently of, any stock options granted under the Plan. A stock appreciation right granted in conjunction with a stock option may be an alternative right wherein the exercise of the stock option terminates the stock appreciation right to the extent of the number of shares purchased upon exercise of the stock option and, correspondingly, the exercise of the stock appreciation right terminates the stock option to the extent of the number of shares with respect to which the stock appreciation right is exercised. Alternatively, a stock appreciation right granted in conjunction with a stock option may be an additional right wherein both the stock appreciation right and the stock option may be exercised. A stock appreciation right may not be granted in conjunction with an Incentive Option under circumstances in which the exercise of the stock appreciation right affects the right to exercise the Incentive Option or vice versa, unless the stock appreciation right, by its terms, meets all of the following requirements:

~~(a) the stock appreciation right will expire no later than the Incentive Option;~~

(b) the stock appreciation right may be for no more than the difference between the option price of the Incentive Option and the fair market value of the shares subject to the Incentive Option at the time the stock appreciation right is exercised;

~~(c) the stock appreciation right is transferable only when the Incentive Option is transferable, and under the same conditions;~~

~~(d) the stock appreciation right may be exercised only when the Incentive Option is eligible to be exercised; and~~

~~(e) the stock appreciation right may be exercised only when the fair market value of the shares subject to the Incentive Option exceeds the option price of the Incentive Option.~~

Upon exercise of a stock appreciation right, a Participant shall be entitled to receive, without payment to the Corporation (except for applicable withholding taxes), an amount equal to the excess of or, in the Discretion of the Committee, a portion of the excess of (i) the then aggregate fair market value of the number of shares with respect to which the Participant exercises the stock appreciation right, over (ii) the aggregate fair market value of such number of shares at the time the stock appreciation right was granted. This amount shall be payable by the Corporation, in the Discretion of the Committee, in cash, in shares of Common Stock of the Corporation, in other property or any combination thereof.

~~13. Granting and Exercise of Stock Options and Stock Appreciation Rights.~~ Subject to the provisions of this Paragraph 13, each stock option and stock appreciation right granted hereunder shall be exercisable at any such time or times or in any such installments as may be determined by the Committee and set forth in the written grant agreement. To the extent that the aggregate fair market value of shares (determined at the date such option was granted) with respect to which options designated as Incentive Options first become exercisable by a Participant in any calendar year (under this Plan and any other plan or agreement of the Company or any affiliate) exceeds $100,000 (or such other amount as may be specified in Section 422 of the Code), such excess options shall be treated as Nonqualified Options. A Participant may exercise a stock option or stock appreciation right, if then exercisable, in whole or in part, by delivery to the Corporation of written notice of the exercise, in such form as the Committee may prescribe, accompanied, in the case of a stock option, by payment for the shares with respect to which the stock option is exercised as provided in Paragraph 11 (unless the Committee, in its Discretion, permits a cashless form of option exercise permitted by Paragraph 11). Except as provided in Paragraph 17 or an applicable written grant agreement, stock options and stock appreciation rights may be exercised only while the Participant is an employee, outside director, consultant or advisor, as the case may be, of the Corporation or a Subsidiary. Successive stock options and stock appreciation rights may be granted to the same Participant, whether or not the stock option(s) and stock appreciation right(s) previously granted to such Participant remain unexercised. A Participant may exercise a stock option or stock appreciation right, if then exercisable, notwithstanding that stock options and stock appreciation rights previously granted to such Participant remain unexercised.

~~14. Non-transferability of Stock Options and Stock Appreciation Rights.~~ No stock option or stock appreciation right granted under the Plan to a Participant shall be transferable by such Participant otherwise than by will, or by the laws of descent and distribution, and stock options and stock appreciation rights shall be exercisable, during the lifetime of the Participant, only by the Participant. Notwithstanding the foregoing, in its Discretion and subject to such terms and conditions as it may prescribe, the Committee may permit a Participant to transfer a Nonqualified Option or a related or independently granted stock appreciation right.

~~15. Term of Stock Options and Stock Appreciation Rights.~~ If not sooner terminated, each stock option and stock appreciation right granted hereunder shall expire not more than ten (10) years from the date of the granting thereof; provided, however, that with respect to an Incentive Option granted to a Participant who, at the time of the grant, owns (after applying the attribution rules of

Section 424(d) of the Code) more than 10% of the total combined voting stock of all classes of stock of the Corporation or any parent or Subsidiary, such option shall expire not more than five (5) years after the date of granting thereof.

~~16. Continuation of Employment.~~ The Committee may require, in its Discretion, that any Participant under the Plan to whom a stock option or a stock appreciation right shall be granted shall agree in writing as a condition of the granting of such stock option or stock appreciation right to remain an employee, consultant, advisor or outside director of the Corporation or a Subsidiary, as the case may be, for a designated minimum period from the date of the granting of such stock option or stock appreciation right as shall be fixed by the Committee, and the Committee may further require, in its Discretion, that any Participant agree in writing to comply with any confidentiality, non-solicitation, non-competition and non-disparagement provisions and covenants that the Committee may require as a condition precedent to the exercise of a stock option or a stock appreciation right.

~~17. Termination of Employment.~~ Except as set forth in an applicable grant agreement, if the employment of an employee Participant terminates, if the consultancy or advisorship of a consultant or advisor Participant terminates, or if an outside director Participant ceases to be a director (hereinafter collectively referred to as a “termination of employment”), the Committee may, in its Discretion, permit the exercise of stock options and stock appreciation rights granted to such Participant (a) for a period not to exceed three months following such termination of employment (or one year following termination of employment on account of the Participant’s death or permanent disability) with respect to Incentive Options or related stock appreciation rights, in either case, not to extend beyond the expiration date with respect to such options or stock appreciation rights, and (b) for a period not to extend beyond the expiration date with respect to Nonqualified Options or related or independently granted stock appreciation rights. A stock option or stock appreciation right may only be exercised after a Participant’s termination of employment to the extent exercisable on the date of termination of employment; provided, however, that if the termination of employment is due to the Participant’s death, permanent disability or retirement at a retirement age permitted under the Corporation’s or Subsidiary’s retirement plan or policies or as otherwise determined by the Committee, or if the termination of employment results from action by the Corporation or a Subsidiary without cause or from an agreement between the Corporation or a Subsidiary and the Participant (hereinafter collectively referred to as a “qualifying termination of employment”), the Committee, in its Discretion, may permit all or part of the stock options and stock appreciation rights granted to such Participant to thereupon become exercisable in full or in part. For purposes of this Paragraph 17 and any other provision of the Plan where the term is used, the Committee’s definition of “cause” shall be final and conclusive.

~~18. Restricted Stock or Restricted Stock Units.~~ Subject to the terms of the Plan, the Committee may award Participants shares of restricted stock and/or the Committee may grant Participants restricted stock units with respect to a specified number of shares of stock. All shares of restricted stock and all restricted stock units granted to Participants under the Plan shall be subject to the following terms and conditions (and to such other terms and conditions prescribed by the Committee):

(a) At the time of each award of restricted stock or restricted stock units, there shall be established for the shares or units a restricted period, which period may differ among Participants and may have different expiration dates with respect to portions of shares or units covered by the same award. Notwithstanding the foregoing, and excluding awards granted under Section 18(i) below, unless the Committee determines otherwise with respect to any applicable Award, (i) the restricted period for non-performance-based restricted stock awards shall not be less than two years; provided that such condition shall be met if there are varying restricted periods within any award of non-performance-based restricted stock and the average restricted period for such non-performance-based restricted stock is not less than two years, and (ii) the restricted period for performance-based restricted stock awards shall not be less than one year.

(b) Unless otherwise provided in the written grant agreement, shares of restricted stock or restricted stock units granted to a Participant may not be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered during the restricted period applicable to such shares or units. Except for such restrictions on transfer, a Participant may be provided all of the rights of a shareholder in respect of shares of restricted stock including, but not limited to, the right to receive dividends on, and the right to vote, the shares. All dividends, if any, received by a Participant with respect to shares of restricted stock, shall be subject to the restrictions applicable to the original Award. If any such dividends are paid in cash, such dividends shall be accumulated during the restricted period (without interest) and paid or forfeited when the shares of restricted stock vest or are forfeited, and in no event shall any cash dividends be paid later than 2-¹/₂ months after the end of the tax year in which the applicable restricted period ends. A Participant shall have no ownership interest in shares of stock with respect to which restricted stock units are granted; provided, however, that the Committee may, in its Discretion, permit payment to such Participant of dividend equivalents on such units equal to the amount of dividends, if any, which are paid on that number of shares with respect to which the restricted stock units are granted. Any dividend equivalent rights granted to a Participant shall be subject to the restrictions applicable to the original Award, and shall be paid in a manner that either complies with, or is exempt from, Section 409A of the Code.

(c) Unless otherwise provided in the written grant agreement, if there is a termination of employment of a Participant, all shares or units granted to the Participant which are still subject to the restrictions imposed by Paragraph 18(a) shall upon such termination of employment be forfeited and transferred back to the Corporation, without payment of any consideration by the Corporation; provided, however, that in the event of a qualifying termination of employment, the Committee may, in its Discretion, release some or all of the shares or units from the restrictions. In addition to or in lieu of conditioning the release of restrictions applicable to restricted stock or restricted stock units on the continued employment of the Participant for the restricted period applicable to the shares or units, the

Committee may condition release of the restrictions on the attainment of one or more performance goals during the restricted period (hereinafter referred to as a “performance-based restricted stock or restricted stock unit award”).

(d) The performance goal(s) applicable to a performance-based restricted stock or restricted stock unit award shall be based upon free cash flow, cash flow return on investment, stock price, market share, sales, revenues, earnings per share, return on equity, total shareholder return, costs, net income, working capital turnover, inventory or receivable turnover, margins and/or other objective financial results of the Corporation, a Subsidiary, or a division or unit thereof. The specific targets and other details of the performance goal(s) shall be established by the Committee, in its Discretion. A performance goal must, however, be objective so that a third party with knowledge of the relevant facts could determine whether the goal has been attained. The performance goal(s) applicable to a performance-based restricted stock or restricted stock unit award shall be established by the Committee in writing on or before the date the award is made, and there must be substantial uncertainty whether a performance goal(s) will be attained at the time it is established by the Committee.

(e) Unless otherwise determined by the Committee in the case of a Participant who dies or becomes permanently disabled, the restrictions imposed by Paragraph 18(a) on restricted stock or restricted stock units subject to a performance-based goal shall lapse only after (i) the attainment of the performance goal(s) during the restricted period, and (ii) issuance of a written certification by the Committee (including approved minutes of the meeting of the Committee at which the certification is made) that the performance goal(s) and any other material terms of the award have been attained or satisfied. If the performance goal(s) applicable to a performance-based restricted stock or restricted stock unit award has not been attained by the end of the restricted period, either in whole or in part, the shares or units subject to the award shall be forfeited and transferred back to the Corporation by the Participant, in whole or in part, as applicable (as required by the grant agreement), without payment of any consideration by the Corporation.

(f) Shares of restricted stock (including shares of performance based restricted stock) granted under the Plan may be evidenced in such manner as the Committee may deem appropriate, including, without limitation, book-entry registration or issuance of stock certificates. If stock certificates are issued in respect of shares of restricted stock, such certificates shall be registered in the name of the Participant, deposited with the Corporation or its designee, together with a stock power endorsed in blank, and, in the Discretion of the Committee, a legend shall be placed upon such certificates reflecting that the shares represented thereby are subject to restrictions against transfer and forfeiture.

(g) After the expiration of the restricted period applicable to restricted stock (and/or, in the case of performance-based restricted stock, after attainment of the applicable performance goal(s) and issuance of the written certification by the Committee pursuant to Paragraph 18(e)), the Corporation shall deliver to the Participant or the legal representative of the Participant’s estate stock certificates for such shares. If stock certificates were previously issued for the shares and a legend has been placed on such certificate, the Corporation shall cause such certificates to be reissued without the legend.

(h) After the expiration of the restricted period applicable to restricted stock units (and/or, in the case of performance-based restricted stock units, after attainment of the applicable performance goal(s) and issuance of the written certification by the Committee pursuant to Paragraph 18(e)), the Corporation shall pay to the Participant an amount equal to the then fair market value of the shares to which the restricted stock units relate. In the Discretion of the Committee, such amount may be paid in cash, stock, other property or any combination thereof; provided, however, that the amount of cash and the value of any other property paid to a Participant during any calendar year in settlement of a performance-based restricted stock unit award shall not exceed $2,000,000. Moreover, in the Discretion of the Committee, such amount may be paid in a lump sum or in installments, on a current or deferred basis, with provision for the payment or crediting of an additional amount on installment or deferred payments based upon a reasonable rate of interest or the actual rate of return on one or more predetermined specific investments, in the Discretion of the Committee.

In the case of events such as stock dividends, stock splits, recapitalizations, mergers, consolidations or reorganizations of or by the Corporation any stock, securities or other property which a Participant receives or is entitled to receive by reason of his ownership of restricted stock (including performance-based restricted stock) shall, unless otherwise determined by the Committee, be subject to the same restrictions applicable to the restricted stock.

Performance-based restricted stock and restricted stock unit awards under the Plan are intended to constitute qualified performance-based compensation for purposes of Section 162(m)(4)(C) of the Code and the Treasury Regulations thereunder, and the provisions of this Paragraph 18 (and the other provisions of the Plan relating to performance-based restricted stock and restricted stock unit awards) shall be interpreted and administered to effectuate that intent. Moreover, the Committee may revise or modify the requirements of this Paragraph 18 or the terms of outstanding performance-based restricted stock and restricted stock unit awards to the extent the Committee determines, in its Discretion, that such revision or modification is necessary for such awards to constitute qualified performance-based compensation.

(i) Outside directors who are first elected or appointed to the Corporation’s Board shall be granted automatically (without any action by the Committee or the Board) an award of a number of shares of restricted common stock equal to (i) $4,167 (which amount may be modified from time to time by the Committee in its Discretion), multiplied by (ii) the number of full months between the date of such election or appointment and the first anniversary of the last completed annual meeting of the Corporation’s shareholders, and

divided by (iii) the closing price of the Corporation’s common stock on the date of first election or appointment. In addition, on the date of each annual meeting of the Corporation’s shareholders, each outside director then in office shall be granted automatically (without any action by the Committee or the Board) an award of a number of shares of restricted common stock equal to $50,000 (which amount may be modified from time to time by the Committee in its Discretion) divided by the closing price of the Corporation’s common stock on such date. The restricted period with respect to each share of restricted common stock granted under this paragraph shall lapse on the date of the annual meeting of shareholders held during the calendar year following the date of grant or, if earlier, on the first anniversary of the date of grant, in each case so long as the applicable director remains a director through such date. Restricted stock granted pursuant to this paragraph shall be forfeited and immediately returned to the Company if the applicable director ceases to be a director prior to the date the restrictions with respect to such restricted stock are to lapse, except that if an outside director’s services as a member of the Board terminates because of (1) total disability (as determined by the Committee), (2) death (3) retirement on or after age 65 and after at least ten years of service as a member of the Board, or (4) any other circumstance that the Committee, in its Discretion, deems to be applicable, then all restrictions with respect to the restricted stock granted pursuant to this paragraph shall immediately lapse upon the occurrence of such event.

~~19. Performance Shares.~~ ~~The Committee may grant to a Participant the right to earn performance shares subject to the following terms and conditions:~~

~~(a) The Participant’s right to earn performance shares shall be subject to attainment of one or more performance goals over a performance period prescribed by the Committee.~~

(b) The performance goal applicable to an award to a Participant of the right to earn performance shares shall be based upon free cash flow, cash flow return on investment, stock price, market share, sales, revenues, earnings per share, return on equity, total shareholder return, costs, net income, working capital turnover, inventory or receivable turnover margins and/or other objective financial results of the Corporation, a Subsidiary, or a division or unit thereof. The specific targets and other details of the performance goal shall be established by the Committee in its Discretion. A performance goal must, however, be objective so that a third party with knowledge of the relevant facts could determine whether the goal has been attained.

(c) The performance goal applicable to an award to a Participant of the right to earn performance shares shall be established by the Committee in writing at any time during the period beginning on the date of the award and ending on the earlier of (i) ninety (90) days after commencement of the performance period applicable to the award, or (ii) expiration of the first 25% of the performance period; provided, however, that there must be substantial uncertainty whether a performance goal will be attained at the time it is established by the Committee.

(d) The performance goal established by the Committee must prescribe an objective formula or standard, that could be applied by a third party having knowledge of the relevant performance results, to compute the number of performance shares issuable to the Participant if the goal is attained.

(e) Unless otherwise determined by the Committee in the case of a Participant who dies or becomes permanently disabled, performance shares shall be issued to a Participant (in whole or in part, as applicable) only after (i) expiration of the performance period and attainment of the performance goal applicable to the award, and (ii) issuance of a written certification by the Committee (including approved minutes of the meeting of the Committee at which the certification is made) that the performance goal and any other material terms of the award have been attained or satisfied.

(f) No Participant shall have any of the rights of a shareholder of the Corporation in respect of the shares covered by a performance share award until the actual issuance of the shares to said Participant and, prior to such issuance, no adjustments shall be made for dividends, distributions or other rights in respect of such shares, except as provided in Paragraph 5.

(g) In its Discretion and subject to such terms and conditions as it may impose, the Committee may permit a Participant to elect to defer receipt of performance shares to a time later than the time the shares otherwise would be issued to the Participant; provided, that such deferral election complies with rules adopted by the Committee, which comply with, or are exempt from, the requirements of Section 409A of the Code. In such event, the Committee may, in its Discretion, provide for the payment by the Corporation of an additional amount representing interest at a reasonable rate or the actual rate of return on one or more predetermined specific investments, as determined by the Committee.

(h) In the Discretion of the Committee, in lieu of settling a performance share award by issuance of shares of Common Stock of the Corporation to a Participant, all or a portion of the award may be settled by payment of cash or other property to the Participant in an amount or having a value equal to the then value of the otherwise issuable shares; provided, however, that the amount of cash and the value of any other property paid to any Participant during any calendar year in settlement of a performance share award shall not exceed $2,000,000.

(i) Unless otherwise determined by the Committee, performance shares or rights therein awarded to a Participant may not be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered by the Participant at any time before actual issuance of the shares to the Participant.

(j) In its Discretion, the Committee may subject a performance share award to a Participant to any other terms or conditions not inconsistent with the foregoing, including, without limitation, a requirement that the Participant remain an employee of the Corporation or a Subsidiary (including at or above a specified salary grade), or that the Participant remain a consultant, advisor or outside director of the Corporation or a Subsidiary, for the entire performance period applicable to the award.

Performance share awards under the Plan are intended to constitute qualified performance-based compensation for purposes of Section 162(m)(4)(C) of the Code and the Treasury Regulations thereunder, and the provisions of this Paragraph 19 (and the other provisions of the Plan relating to performance share awards) shall be interpreted and administered to effectuate that intent. Moreover, the Committee may revise or modify the requirements of this Paragraph 19 or the terms of outstanding performance share awards to the extent the Committee determines, in its Discretion, that such revision or modification is necessary for such awards to constitute qualified performance-based compensation.

~~20. Other Stock-Based Awards.~~ The Committee may grant to Participants such other awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of Common Stock of the Corporation as are deemed by the Committee, in its Discretion, to be consistent with the purposes of the Plan; provided, however, that such grants must comply with applicable law. Without limitation, the Committee may permit a Participant to make a current, outright purchase of shares of Common Stock of the Corporation, which shares may or may not be subject to any restrictions or conditions, for a price equal to, less than or greater than the then fair market value of the shares, with the price payable by the Participant in such form and manner and at such time as determined by the Committee in its Discretion.

~~21. Investment purpose.~~ If the Committee, in its Discretion, determines that as a matter of law such procedure is or may be desirable, it may require a Participant, upon any acquisition of stock hereunder and as a condition to the Corporation’s obligation to deliver certificates representing such shares, to execute and deliver to the Corporation a written statement in form satisfactory to the Committee, representing and warranting that the Participant’s acquisition of shares of stock shall be for such person’s own account, for investment and not with a view to the resale or distribution thereof and that any subsequent offer for sale or sale of any such shares shall be made either pursuant to (a) a Registration Statement on an appropriate form under the Securities Act of 1933, as amended (the “~~Securities Act~~”), which Registration Statement has become effective and is current with respect to the shares being offered and sold, or (b) a specific exemption from the registration requirements of the Securities Act, but in claiming such exemption the Participant shall, prior to any offer for sale or sale of such shares, obtain a favorable written opinion from counsel for or approved by the Corporation as to the availability of such exemption. The Corporation may endorse an appropriate legend referring to the foregoing restriction upon the certificate or certificates representing any shares issued or transferred to the Participant under the Plan.

~~22. Rights to Continued Employment.~~ Nothing contained in the Plan or in any Award granted pursuant to the Plan, nor any action taken by the Committee hereunder, shall confer upon any Participant any right with respect to continuation of employment or service as an employee, consultant, advisor or outside director of the Corporation or a Subsidiary nor interfere in any way with the right of the Corporation or a Subsidiary to terminate such person’s employment or service at any time with or without cause.

~~23. Withholding Payments.~~ If, upon the grant, exercise, release of restrictions or settlement of or in respect of an Award, or upon any other event or transaction under or relating to the Plan, there shall be payable by the Corporation or a Subsidiary any amount for income or employment tax withholding, in the Committee’s Discretion, either the Corporation shall appropriately reduce the amount of stock, cash or other property to be paid to the Participant or the Participant shall pay such amount to the Corporation or Subsidiary to enable it to pay or to reimburse it for paying such income or employment tax withholding. The Committee may, in its Discretion, permit Participants to satisfy such withholding obligations, in whole or in part, by electing to have the amount of Common Stock delivered or deliverable by the Corporation in respect of an Award appropriately reduced, or by electing to tender Common Stock back to the Corporation subsequent to receipt of such stock in respect of an Award. The Corporation or any of its Subsidiaries shall also have the right to withhold the amount of such taxes from any other sums or property due or to become due from the Corporation or any of its Subsidiaries to the Participant upon such terms and conditions as the Committee shall prescribe. The Corporation may also defer issuance of stock under the Plan until payment by the Participant to the Corporation or any of its Subsidiaries of the amount of any such tax. In the case of a Regulation T Stock Option Exercise, the Committee may in its Discretion permit the Participant to irrevocably instruct a stock broker to promptly deliver to the Corporation an amount (in addition to the option exercise price) equal to any withholding tax owing in respect of such option exercise from the proceeds of the stock broker’s sale of or loan against some or all of the shares.

~~24. Change in Control.~~ Notwithstanding any other provision of the Plan or any provision of a grant agreement, in the event the Committee determines that there has been or will be a Change in Control (as such term is defined below) of the Corporation, the Committee may, without the consent of the holder, provide for any treatment of outstanding Awards which it determines, in its Discretion, to be appropriate. Such treatment may (but not automatically) include, without limitation, acceleration of vesting of stock

options and stock appreciation rights, release of restrictions applicable to restricted stock or restricted stock units, or deeming performance share awards and performance-based restricted stock and restricted stock unit awards to have been earned.

~~For purposes of the Plan, a “Change in Control~~” means any of the following: (a) the consummation of a merger, consolidation or reorganization involving the Corporation, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to such transaction; (b) the consummation of a transfer, sale or other disposition, in one or a series of related transactions, of all or substantially all of the Corporation’s assets to any individual entity or group (a “~~Person~~”) (other than any Person that is directly controlled by or under common control with the Corporation); (c) the consummation of an acquisition, directly or indirectly, by any Person (other than the Corporation or any Person that is directly controlled by or under common control with the Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities; (d) individuals who, as of the date hereof, constitute the Board (the “~~Incumbent Board~~”) cease for any reason to constitute at least a majority of the Board; provided that, any individual who becomes a director of the Corporation subsequent to the date hereof whose election, or nomination for election, by the Corporation’s shareholders was approved by the vote of at least a majority of the Independent Directors (as defined by applicable Nasdaq listing standards or, if the Corporation ceases to be listed on The Nasdaq Stock Market and is instead listed on another stock exchange, then as defined by the applicable rules of such other stock exchange) then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; or (e) the consummation of a complete liquidation or dissolution of the Corporation. In no event, however, shall a Change in Control be deemed to occur in connection with (a) a merger or reorganization of the Corporation, the sole purpose of which is to reincorporate the Corporation in a different state, or (b) any public offering of stock, the primary purpose of which is to raise additional capital.

~~25. Prohibition on Repricing.~~ Except in connection with a corporate transaction involving the Corporation (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding Awards may not be amended to reduce the exercise price of outstanding stock options or stock appreciation rights or cancel outstanding stock options or stock appreciation rights in exchange for cash, other Awards or stock options or stock appreciation rights with an exercise price that is less than the exercise price of the original stock options or stock appreciation rights without shareholder approval.

~~26. Effectiveness of Plan.~~ The Plan shall be effective on the date the shareholders approve the Plan, subject to adoption by the Board if adoption had not already occurred prior to such shareholder approval. Awards may not be granted prior to shareholder approval of the Plan.

~~27. Termination, Duration and Amendments of Plan.~~ The Plan may be abandoned or terminated at any time by the Board. Unless sooner terminated by the Board, the Plan shall terminate on the date ten (10) years after its approval by the shareholders, and no Awards may be granted thereafter. The termination of the Plan shall not affect the validity of any Award outstanding on the date of termination.

For the purpose of conforming to any changes in applicable law or governmental regulations, or for any other lawful purpose, the Board shall have the right, without approval of the shareholders of the Corporation, to amend or revise the terms of the Plan at any time; provided however, that no such amendment or revision shall (i) with respect to the Plan, increase the maximum number of shares in the aggregate which are subject to the Plan or with respect to which Awards may be made to individual Participants (subject in each case, however, to the provisions of Paragraph 5), materially change the class of persons eligible to be Participants under the Plan, establish additional and different business criteria on which performance goals applicable to performance share awards or performance-based restricted stock or restricted stock unit awards are based, or materially increase the benefits accruing to Participants under the Plan, without approval or ratification of the shareholders of the Corporation; or (ii) with respect to an Award previously granted under the Plan, except as otherwise specifically provided in the Plan, adversely affect the rights grant under any such Award without the consent of the holder thereof.

~~28. Section 409A of the Code.~~ It is intended that Awards granted under the Plan either be exempt from, or comply with, the requirements of Section 409A of the Code and the guidance and regulations issued thereunder and, accordingly, to the maximum extent permitted, the Plan and agreements granting Awards shall be interpreted consistent with such intent. In the event that any Award is subject to but fails to comply with Section 409A of the Code, the Corporation may revise the terms of the grant to correct such noncompliance to the extent permitted under any guidance, procedure or other method promulgated by the Internal Revenue Service now or in the future or otherwise available that provides for such correction as a means to avoid or mitigate any taxes, interest or penalties that would otherwise be incurred by the Participant on account of such noncompliance; provided, however, that in no event whatsoever shall the Corporation be liable for any additional tax, interest or penalty imposed upon or other detriment suffered by a Participant under Code Section 409A or damages for failing to comply with Section 409A of the Code. Notwithstanding anything to the contrary contained herein or in any agreement pertaining to an Award, the payment or settlement of any 409A Award that would otherwise be payable or distributable upon the occurrence of a Change in Control, the Participant’s disability or termination of employment, shall not be payable or distributable to the Participant by reason of such circumstance unless (i) the circumstances giving

rise to such event also constitutes a change in control within the meaning of Treas. Reg. §1.409A-3(i)(5), a disability within the meaning of Treas. Reg. §1.409A-3(i)(4), or a “separation from service” within the meaning of Treas. Reg. §1.409A-1(h), respectively, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A of the Code by reason of the short-term deferral exemption or otherwise. This provision does not prohibit the vesting of any Award. If this provision prevents the payment or distribution of any amount or benefit, such payment or distribution shall be made on the next earliest payment or distribution date or event specified in the grant agreement that is permissible under Section 409A of the Code. Notwithstanding anything else to the contrary in the Plan, to the extent that a Participant is a “specified employee” (as determined in accordance with the requirements of Section 409A of the Code), no payment on account of a Participant’s separation from service (determined in accordance with Treas. Reg. §1.409A-1(h)) in settlement of a 409A Award may be made before the date which is six months after such Participant’s date of separation from service, or, if earlier, the date of the Participant’s death.

(a) The granting of Awards and the issuance of shares of Common Stock hereunder shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies as may be required. No shares of Common stock shall be issued or transferred pursuant to this Plan unless and until all legal requirements applicable to such issuance or transfer have, in the opinion of counsel to the Corporation, been complied with. In connection with any such issuance or transfer, the person acquiring the shares shall, if requested by the Corporation, give assurances satisfactory to counsel to the Corporation in respect to such matters as the Corporation may deem desirable to assure compliance with all applicable legal requirements.

(b) Neither the adoption of the Plan nor the submission of the Plan to the Corporation’s shareholders for approval shall be construed as creating any limitations upon the right and authority of the Board to adopt such other incentive compensation arrangements (which arrangements may be applicable either generally to a class or classes of individuals or specifically to a particular individual or particular individuals) as the Board in its discretion determines desirable, including, without limitation, the granting of options otherwise than under the Plan.

(c) Payments and other benefits received by a Participant under an Award made pursuant to the Plan shall not be deemed a part of Participant’s compensation for purposes of determining the Participant’s benefits under any other benefit plans or arrangements provided by the Corporation or any affiliate, except where the Committee expressly provides otherwise in writing.

(d) Notwithstanding any other provision of this Plan or of any other agreement, contract, or understanding heretofore or hereafter entered into by a Participant with the Corporation or any affiliate, except an agreement, contract, or understanding hereafter entered into that expressly modifies or excludes application of this paragraph (an “~~Other Agreement~~”), and notwithstanding any formal or informal plan or other arrangement for the direct or indirect provision of compensation to the Participant (including groups or classes of Participants or beneficiaries of which the Participant is a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for the Participant (a “~~Benefit Arrangement~~”), if the Participant is a “disqualified individual,” as defined in Section 280G(c) of the Code, any options, stock appreciation rights, restricted stock, restricted stock units, performance shares or units or other Awards hereunder held by that Participant and any right to receive any payment or other benefit under this Plan shall not become exercisable or vested (i) to the extent that such right to exercise, vesting, payment, or benefit, taking into account all other rights, payments, or benefits to or for the Participant under this Plan, all Other Agreements, and all Benefit Arrangements, would cause any payment or benefit to the Participant under this Plan to be considered a “parachute payment” within the meaning of Section 280G(b)(2) of the Code as then in effect (a “~~Parachute Payment~~”) and (ii) if, as a result of receiving a Parachute Payment, the aggregate after-tax amounts received by the Participant from the Corporation under this Plan, all Other Agreements, and all Benefit Arrangements would be less than the maximum after-tax amount that could be received by the Participant without causing any such payment or benefit to be considered a Parachute Payment. In the event that the receipt of any such right to exercise, vesting, payment, or benefit under this Plan, in conjunction with all other rights, payments, or benefits to or for the Participant under any Other Agreement or any Benefit Arrangement would cause the Participant to be considered to have received a Parachute Payment under this Plan that would have the effect of decreasing the after-tax amount received by the Participant as described in clause (ii) of the preceding sentence, then the Participant shall have the right, in the Participant’s sole discretion, to designate those rights, payments, or benefits under this Plan, any Other Agreements, and any Benefit Arrangements that should be reduced or eliminated so as to avoid having the payment or benefit to the Participant under this Plan be deemed to be a Parachute Payment, provided that any such payment or benefit that is excluded from the coverage of Section 409A of the Code shall be reduced or eliminated prior to the reduction or elimination of any benefit that is related to a 409A Award.

~~(e) The interests of any Participant under the Plan or any Award shall not be subject to the claims of creditors and may not, in any way, be assigned, alienated, or encumbered.~~

(f) The Plan, and all Awards made pursuant hereto, shall be governed, construed, and administered in accordance with and governed by the laws of the State of Michigan (regardless of the laws that might otherwise govern under applicable principles of conflicts of laws of such jurisdiction or any other jurisdiction).

(g) It is the intent of the Corporation that Awards and transactions permitted by Awards be interpreted in a manner that, in the case of Participants who are or may be subject to Section 16 of the Exchange Act, qualify, to the maximum extent compatible with the express terms of the Awards, for the exemption from liability provided in Rule 16b-3 promulgated under the Exchange Act. The Corporation shall have no liability to any Participant or other person for Section 16 consequences of Awards or events in connection with Awards if an Award or related event does not so qualify.

(h) References in the Plan to any law, rule or regulation shall include a reference to any corresponding rule (or number redesignation) of any amendments or restatements to such law, rule or regulation adopted after the effective date of the Plan’s adoption.

(i) Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

(j) In the event that any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

(k) Nothing contained in the Plan shall be construed to limit the authority of the Corporation to exercise its corporate rights and powers, including but not by way of limitation, the right of the Corporation to grant or issue options for proper corporate purposes other than under the Plan with respect to any employee or other person, firm, corporation, or association.

~~.MMMMMMMMMMMM GENTHERM INCORPORATED IMPORTANT ANNUAL MEETING INFORMATION MMMMMMMMM~~nominee(s) below. _____________________________________________________________________ Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. ~~X Annual Meeting Proxy Card • PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. • A~~02ZPNC + + Proposals — The Board of Directors ~~recommends~~recommend a vote FOR A all the nominees listed and FOR Proposals 2 3 and ~~5 and EVERY YEAR as the frequency on Proposal 4. 1. The election to the Board~~3. 2. Ratification of Directors of the nominee(s) specified in the Proxy Statement: + 01 -Lewis Booth 02 -Francois Castaing 03 -Daniel Coker 04 -Sophie Desormière 05 -Maurice Gunderson 06 -Yvonne Hao 07 -Ronald Hundzinski 08 -Byron Shaw Mark here to WITHHOLD For All EXCEPT -To withhold authority to vote for any FOR all nominees Mark here to vote vote from all nominees nominee(s), write the name(s) of such nominee(s) below. For Against Abstain For Against Abstain 2. To ratify the appointment of Grant Thornton LLP to act as ~~3. To approve, on an advisory basis, the compensation of our~~ the Company’s independent registered public accounting ~~named executive officers.~~ firm for the year ended December 31, ~~2017. 1 Year 2 Years 3 Years Abstain For Against Abstain 4. To approve, on an advisory basis, whether an 5. To approve an amendment to~~2019. 3. Advisory (non-binding) approval of the ~~Gentherm Incorporated advisory vote on the~~2018 compensation of our named ~~2013 Equity Incentive Plan (1) increasing by 2,000,000 the~~ executive ~~officers should occur once every one, two maximum number~~officers. 1. Election of shares of common stock that may be or three years. issued pursuant to awards granted under the plan and (2) increasing the ratio used to count full value awards issued under the plan against the maximum number of shares issuable under the plan from 1.58 shares to 1.85 shares. B Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below Note:Directors: For Against Abstain Please sign exactly as ~~your name~~name(s) appears ~~on this proxy card. If shares are held jointly,~~hereon. Joint owners should each ~~holder should~~ sign. ~~Executors, administrators, trustees, guardians, attorneys andagents should~~When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give ~~their~~ full ~~titles. If the shareholder is a corporation, sign in full corporate name of the authorized office.~~title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. ~~1UPX 3262122 + 02L90B~~

~~.NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS: The Notice of Meeting~~B Authorized Signatures — This section must be completed for your vote to count. Please date and proxy statement are available at www.gentherm.com and at www.edocumentview.com/THRM; however, the only means by which you are able to deliver your proxy is by dating and signing this proxy card and returning it prior to the Annual Meeting of Shareholders. • PLEASE FOLD ALONG THE PERFORATION,sign below. qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ~~ENVELOPE. •~~ENVELOPE.q 2019 Annual Meeting Proxy Card For Against Abstain 000004 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 ENDORSEMENT_LINE______________ SACKPACK_____________ 1234 5678 9012 345 MMMMMMMMM MMMMMMMMMMMMMMM 4 1 0 0 7 9 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND C 1234567890 J N T C123456789 MMMMMMMMMMMM MMMMMMM 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext If no electronic voting, delete QR code and control # Δ ≈ You may vote online or by phone instead of mailing this card. Online Go to www.investorvote.com/THRM or scan the QR code — ~~GENTHERM INCORPORATED 21680 HAGGERTY ROAD NORTHVILLE, MICHIGAN 48167 The undersigned, revoking all prior proxies, hereby appoints Daniel R. Coker~~login details are located in the shaded bar below. Save paper, time and ~~Barry G. Steele as Proxies,~~money! Sign up for electronic delivery at www.investorvote.com/THRM Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Votes submitted electronically must be received by 1:00am, (Eastern Time), on May 16, 2019. Your vote matters – here’s how to vote!

Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/THRM Notice of 2019 Annual Meeting of Shareholders Proxy Solicited by Board of Directors for Annual Meeting — May 16, 2019 Phillip Eyler and Matteo Anversa, or either of them, each with the power ~~to appoint his or her substitute, and~~of substitution, are hereby ~~authorizes them~~authorized to represent and to vote ~~as designated below, all~~ the shares of ~~common stock of Gentherm Incorporated held of record by~~ the undersigned ~~on April 3, 2017~~as proxies, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of ~~shareholders~~Shareholders of Gentherm Incorporated to be held on ~~Friday,~~ May ~~19, 2017~~16, 2019 or at any postponement or adjournment thereof. ~~THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED~~Shares represented by this proxy will be voted as directed by the shareholder. If no such directions are indicated, this proxy will be voted FOR the election of the nominees in Proposal 1 and FOR Proposals 2 and 3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side) GENTHERM INCORPORATED qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE DIRECTOR NOMINEES, FOR THE ADOPTION OF THE PROPOSAL TO RATIFY THE APPOINTMENT OF GRANT THORNTON LLP TO ACT AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDED DECEMBER 31, 2017, FOR THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPANY’S EXECUTIVE COMPENSATION, EVERY YEAR AS THE FREQUENCY, ON AN ADVISORY BASIS, OF HOW OFTEN AN ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS SHOULD OCCUR, AND FOR THE APPROVAL OF AN AMENDMENT TO THE GENTHERM INCORPORATED 2013 EQUITY INCENTIVE PLAN (1) INCREASING BY 2,000,000 THE MAXIMUM NUMBER OF SHARES OF COMMON STOCK THAT MAY BE ISSUED PURSUANT TO AWARDS GRANTED UNDER THE PLAN AND (2) INCREASING THE RATIO USED TO COUNT FULL VALUE AWARDS ISSUED UNDER THE PLAN AGAINST THE MAXIMUM NUMBER OF SHARES ISSUABLE UNDER THE PLAN FROM 1.58 SHARES TO 1.85 SHARES. WITH RESPECT TO ANY OTHER BUSINESS PROPERLY BROUGHT BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENTS THEREOF, THIS PROXY WILL BE VOTED IN THE DISCRETION OF DANIEL R. COKER AND BARRY G. STEELE IN ACCORDANCE WITH THEIR BEST JUDGMENT.ENCLOSED ENVELOPE.q Change of Address — Please print new address below. Comments — Please print your comments below. C Non-Voting Items + + Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders. The material is available at: www.investorvote.com/THRM

Proposal	Board Recommendation	Required Vote
No. 1 - Election of Directors (page 5)4)	FOR each nominee	Plurality*
No. 2 - Ratification of Appointment of Independent Registered Public Accounting Firm for ~~2017~~2019 (page ~~39)~~50)	FOR	Majority of votes cast
No. 3 - Advisory Vote on Named Executive Officer Compensation (page ~~40)~~	~~FOR~~	~~Majority of votes cast~~
~~No. 4 - Approval (on an advisory basis) whether an advisory vote on the compensation of our named executive officers should occur once every one, two or three years (page 41)~~	~~EVERY YEAR~~	~~Plurality~~
No. 5 – Approval of an amendment to the Gentherm Incorporated 2013 Equity Incentive Plan (1) increasing by 2,000,000 the maximum number of shares of common stock that may be issued pursuant to awards granted under the plan an d (2) increasing the ratio used to count full value awards issued under the plan against the maximum number of shares issuable under the plan from 1.58 shares to 1.85 shares (page 42)51)	FOR	Majority of votes cast


Element	What We Heard	What We Did
Long-Term Incentive Program	Strengthen alignment between pay outcomes and performance; should consider including an element of performance-based equity awards	Introduced new long-term incentive program of 60% performance-vested restricted stock units (“PSUs”) and 40% time-vested restricted stock units (“RSUs”) for executive officers and other senior managers; replaced the previous long-term incentive program consisting of only time-vested restricted stock and time-vested stock options
Annual Bonus Plan	Add more rigor and transparency regarding the impact of individual performance on the annual bonus payout	For CEO, removed individual performance modifier in bonus plan, with annual bonus only subject to Company performance measures. For non-CEO executive officers, enhanced individual performance modifier methodology in bonus plan to ensure targets are objective, measurable, and tied to strategic plan
Stock Ownership Guidelines	Strengthen stock ownership guidelines so that CEO and executive officers have more stake in the company	Enhanced stock ownership guidelines for directors and management
CEO Retirement Program	Program overall should have more pay at risk	Established a performance-based defined contribution program; employer discretionary contributions are made only if rigorous financial goals are achieved
Tax Gross-Up	Remove tax gross ups	Removed tax gross-up provision in CEO employment agreement
Disclosure	Enhance disclosure so that shareholders can better understand the rationale underlying pay decisions	Committed to provide more disclosure on pay decisions

About the Annual Meeting	1
Proposal No. 1—Election of Directors	54
Board of Directors	54
Specific Qualifications, Attributes, Skills and Experience to be Represented on the Board	54
Director Background and Qualifications	6
Director Independence	810
Board Matters	810
The Board of Directors	810
Committees of the Board	913
Corporate Governance	1215
Director Compensation	1417
Shareholder Communication with the Board	1519
Compensation Discussion and Analysis	1720
Compensation Committee Report	2533
Compensation Committee Interlocks and Insider Participation	2533
Named Executive Officer Compensation Tables	2634
Summary Compensation Table for ~~2016~~2018	2634
Grants of Plan-Based Awards in ~~2016~~2018	2837
Outstanding Equity Awards at December 31, ~~2016~~2018	2938
Option Exercises and Stock Vested in ~~2016~~2018	3039
Pension Benefits in ~~2016~~2018	3140
Potential Payments ~~Upon~~upon Termination or Change in Control	3240
CEO Pay Ratio	43
Related Person Transactions	3445
Policies and Procedures	3445
~~2016~~2018 Related Person Transactions	3445
Security Ownership of Certain Beneficial Owners and Management	3546
Audit Committee Report	3748
Audit Committee Matters	3849
Pre-Approval Policies and Procedures	3849
Grant Thornton Fees	3849
Proposal No. 2—Ratification of Appointment of Independent Registered Public Accounting Firm for ~~2017~~2019	3950
Proposal No. 3—Advisory Vote on Named Executive Officer Compensation	40
~~Proposal No. 4—Advisory Vote on the Frequency of an Advisory Vote on Named Executive Officer Compensation~~	41
~~Proposal No. 5—Approval of an Amendment to the Gentherm Incorporated 2013 Equity Incentive Plan~~	4251
Additional Information	4852
Equity Compensation Plans	52
Section 16(a) Beneficial Ownership Reporting Compliance	4852
Solicitation by Board; Expenses	4852
Requirements for Submission of Shareholder Proposals and Nominations for ~~2018~~2020 Annual Meeting	4852
Householding	4853
Availability of ~~2016~~2018 Annual Report to Shareholders	4953
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on May ~~19, 2017~~16, 2019	49
~~Appendix A –Amendment to Gentherm Incorporated 2013 Equity Incentive Plan~~	~~A-1~~
~~Appendix B –Gentherm Incorporated 2013 Equity Incentive Plan~~	~~B-1~~53

		How Do Votes Impact Approval of Proposal?
Proposal	Required Approval	For	Withhold/Against	Abstention	Broker Non-Votes
No. 1 – Election of Directors	Plurality of votes cast*	For the proposal	Against the proposal	—	Not a vote cast
No. 2 – Ratification of Appointment of Independent Registered Public Accounting Firm for ~~2017~~2019	Majority of votes cast	For the proposal	Against the proposal	~~Against the proposal~~Not a vote cast	—
No. 3 – Advisory Vote on Named Executive Officer Compensation	Majority of votes cast	For the proposal	Against the proposal	~~Against the proposal~~	Not a vote cast
~~No. 4 – Advisory Vote on Whether an Advisory Vote on Named Executive Officer Compensation Should Occur Once Every One, Two or Three Years~~	~~The option that receives the highest number of votes cast will be considered the advisory vote by the shareholders~~	—	—	~~Not a vote cast~~	~~Not a vote cast~~
No. 5 – Approval of Amendment to the Gentherm Incorporated 2013 Equity Incentive Plan (1) Increasing by 2,000,000 the Maximum Number of Shares of Common Stock that May Be Issued Pursuant to Awards Granted Under the Plan and (2) Increasing the Ratio Used to Count Full Value Awards Issued Under the Plan Against the Maximum Number of Shares Issuable Under the Plan from 1.58 Shares to 1.85 Shares	~~Majority of votes cast~~	~~For the proposal~~	~~Against the proposal~~	~~Against the proposal~~	Not a vote cast


~~What We Do~~Name	~~What We Prohibit~~Title
•Phillip M. Eyler	~~100% independent committee members (page 10)~~	•	~~Hedging~~President and ~~use of derivatives (page 23)~~Chief Executive Officer
•Barry G. Steele (1)	~~No special grants or timing based on the release~~Vice-President of ~~material, non-public information (page 23)~~	•	~~Guaranteed bonuses or equity grants~~Finance, Chief Financial Officer and Treasurer
•Frithjof R. Oldorff	~~Maintain equity plan without an evergreen provision~~	•	~~Extensive perquisites (page 22)~~President of Automotive Climate and Comfort
•Kenneth J. Phillips	~~Maintain alignment with shareholders, as equity awards represent a significant portion of NEO compensation (page 22)~~	•	~~Repricing/replacement of underwater stock options~~Senior Vice President, General Counsel and ~~SARs~~Secretary
•Yijing Brentano	~~Compensation Committee oversight to confirm no undue risk in compensation programs (page 20)~~	•	~~Golden parachute change-in-control payments (other than vesting~~Senior Vice President, Investor Relations and ~~exercisability of equity awards in accordance with the terms of our equity compensation plans) (page 32)~~Corporate Communications

	By Order of the Board of Directors

	Kenneth J. Phillips
	Senior Vice-President, General Counsel and Secretary


Base Salary	Bonus	Final Sign-on Make Whole Payment	Equity Awards (1)	Other Compensation (perquisites)	Total
$750,000	$639,000	$1,000,000	$0 (no equity award granted to CEO in 2018)	$12,825	$2,401,825

	2016 ($)		2015 ($)
Audit Fees		1,936,000		1,607,000
Audit-Related Fees		24,000		77,000
Tax Fees		43,000		5,000
All Other Fees		3,000		20,000
Total Fees		2,006,000		1,709,000


Name		Age	Current Company Title
~~Lewis Booth~~		68	~~Director~~
Francois J. Castaing		7173	Lead Independent Director*Chairman of the Board
~~Daniel R. Coker~~Sophie Desormière		6452	Director
Phillip M. Eyler		47	President, Chief Executive Officer and Director
~~Sophie Desormière~~		50	~~Director~~
Maurice E.P. Gunderson		6567	Director
Yvonne Hao		4244	Director
Ronald Hundzinski		60	Director
Charles Kummeth		58	Director
Byron T. Shaw II		4951	Director
John Stacey	* At the time Mr. Marx announced his decision to retire from the Board of Directors as of the 2017 annual meeting and not stand for re-election, the other members of the Board of Directors publicly announced their unanimous decision to appoint Mr. Castaing as the new Chairman of the Board of Directors, effective as of Mr. Marx’s retirement, subject to Mr. Castaing’s re-election to the Board.	54	Director

	•		the Compensation Consultants may not provide other services to ~~oversee~~ the ~~development of strong~~ ~~leadership~~Company without prior Compensation Committee approval;
	•		the Compensation Committee has the sole authority to retain and terminate the Compensation Consultants;
	•		the Compensation Consultants are given direct access to the Compensation Committee; and
	•		the Compensation Committee evaluates the quality and executive bench strength. On at least an annual basis, the Board meets with the Chief Executive Officer and in executive session without management to discuss succession planning and strategies to strengthen and supplement the skills and qualifications of internal succession candidates. Key executives have ongoing exposure to the Board to assist in the Board's oversight. Further, the Chief Executive Officer, other executive officers and Human Resources periodically provide the Board with an assessment of key executives for potential succession and discuss potential sources of external candidates. ~~Shareholder Engagement~~ The Company and/or Board engages periodically with the Company's shareholders to discuss performance, strategy, governance practices and compensation programs. Each year, the Company interacts with its shareholders through various engagement activities. D~~irector Compensation~~ ~~Non-employee directors~~objectivity of the ~~Board receive both cash and equity compensation. Such compensation is intended to encourage non-employee directors to continue Board service, further align~~services provided by the interests of the Board and shareholders, and attract new non-employee directors with outstanding qualifications. Directors who are employees or officers of the Company do not receive any additional compensation for Board service. ~~2016~~ Compensation ~~Program~~Consultants.

Name	Fees Earned or Paid in Cash ($)(1)		Restricted Stock ($)(2)		Total ($)
Lewis Booth (3)		—		—		—
Francois J. Castaing		105,000		100,000		205,000
Sophie Desormière		61,000		100,000		161,000
Maurice E.P. Gunderson		71,000		100,000		171,000
Yvonne Hao		66,000		100,000		166,000
Ronald Hundzinski		61,000		100,000		161,000
Charles Kummeth		61,000		75,000		136,000
Byron T. Shaw II		66,000		100,000		166,000
John Stacey		56,000		100,000		156,000
Total		547,000		775,000		1,322,000

•	~~Discourage pledging and require consent (page 23)~~
•(1)	~~Annual say-on-pay shareholder vote (page 18)~~		Mr. Steele resigned from the positions of Vice-President Finance, CFO and Treasurer on January 1, 2019 and ceased to be an employee of the Company on February 15, 2019. Matteo Anversa was appointed Executive Vice-President, Chief Financial Officer and Treasurer on January 1, 2019.


~~Component~~	~~Primary Purpose(s)~~	~~Key Features~~
~~Base Salary~~	~~• Retains and attracts employees in a competitive market~~ ~~• Preserves an employee’s commitment during downturns in our industry and/or equity markets generally~~	~~• Initial base salaries of U.S. NEOs negotiated in connection with hiring~~ ~~• Initial base salary of Mr. Oldorff set forth in Employment Agreements~~ ~~• Based on experience, responsibilities, anticipated individual growth, internal equity pay and other subjective factors~~ ~~• Subject to annual review and increase~~
~~Bonus~~	~~• Motivates and rewards achievement of individual performance and Company financial and operational goals~~ ~~• Retains and attracts employees for short term~~	~~• Bonus plan provides for a cash bonus up to a predetermined amount, as a percentage of base salary; bonus potential tied to base salary adjustments~~ • Initial percentages of base salary for bonus purposes are negotiated in connection with hiring; these percentages are subject to periodic review based on experience, responsibilities, anticipated individual growth, internal equity pay and other subjective factors ~~• Earned bonus is based on the Compensation Committee’s subjective evaluation of individual performance and conditioned on the satisfaction of applicable threshold Company financial metrics~~ ~~• Bonuses are computated and paid bi-annually based on half-year results~~
~~Equity Awards~~	~~• Provide incentives to increase long-term shareholder value~~ ~~• Retain and attract employees for long term due to vesting requirements~~	~~• Consist of restricted stock and stock options~~ ~~• Based on the executive’s position, current salary, and competitiveness in the market~~ ~~• Exercise/ base price of option awards fixed at fair market value of our common stock on the grant date~~ ~~• Generally vest pro rata over 3-4 years from the grant date~~
~~Defined Benefit Plans~~	~~• Maintains stability and competency at the executive level~~	• U.S. Defined Benefit Plan (as defined below, for Mr. Coker only) vested over a six-year period, beginning April 1, 2011; now fully vested, the plan provides for 15 annual benefit payments to Mr. Coker • German Defined Benefit Plan (as defined below) is funded, in significant part, by participants’ contributions; current and former members of Gentherm GmbH management are eligible to participate
~~Other Benefits and Perquisites~~	~~• Retain and attract employees in a competitive market~~	~~• Vacation pay~~ ~~• Eligibility for participation in 401(k) plan~~ ~~• Use of company-owned vehicles~~ ~~• Club memberships, in the case of Mr. Coker~~


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•Standard Motor Products, Inc. (SMP)	•Stoneridge, Inc. (SRI)
•Superior Industries International, Inc. (SUP)


Metric	Rationale	2018 Target (in millions)	Previous Year’s Actuals (in millions)
Adjusted EBITDA¹	Appropriate supplemental measure of the Company’s overall operational performance	$160	2017: $148; 2016: $146; 2015: $152; 2014: $134; 2013: $81.5
Revenue	Measures management’s ability to grow the top line	$1,074	2017: $986; 2016: $917; 2015: $856; 2014: $811; 2013: $662

Financial Metric		Target (in thousands)	Actual, After Adjustments (in thousands)		Achievement Percentage
Adjusted EBITDA	$	160,000	$	148,700		92.9%
Revenue	$	1,074,000	$	1,054,300		98.1%
Combined (weighted equally)						95.5%

Financial Achievement	Degree of Achievement	Percentage Applied
85% of the Target	Threshold	50%
100% of Target	Target	100%
120% or more of Target	Maximum	150%


Name	Base Salary	X	Bonus Target as % of Base Salary	X	Company Financial Performance Factor	X	Individual Performance Modifier	=	Payout
Phillip M. Eyler	$750,000		100%		85.16%		CEO bonus is based solely on financial performance		$639,000
Barry G. Steele(1)	$401,700		60%		85.16%		78%		$160,000
Frithjof R. Oldorff	$464,409		50%		85.16%		105%		$208,000
Kenneth J. Phillips	$404,330		50%		85.16%		135%		$232,000
Yijing Brentano(2)	$335,000		50%		85.16%		115%		$137,000


	Relative TSR		Fiscal Year 2020 ROIC
	Percent Rank	Payout (as a % of Target)	Performance Level	Payout (as a % of Target)
Below Threshold	<25^th	0%	<16%	0%
Threshold	25^th	50%	16%	50%
Target	50^th	100%	20%	100%
Max	>=75^th	200%	>=22%	200%


Adient plc	American Axle & Manufacturing Holdings, Inc.	Aptiv PLC
BorgWarner Inc.	Cooper Tire & Rubber Company	Cooper-Standard Holdings Inc.
Dana Incorporated	Delphi Technologies PLC	Dorman Products, Inc.
Ford Motor Company	Fox Factory Holding Corp.	General Motors Company
Gentex Corporation	LCI Industries	Lear Corporation
Magna International Inc.	Modine Manufacturing Company	Motorcar Parts of America, Inc.
Sensata Technologies Holding PLC	Standard Motor Products, Inc.	Stoneridge, Inc.
Superior Industries International, Inc.	Tenneco Inc.	The Goodyear Tire & Rubber Company
Thor Industries, Inc.	Tower International, Inc.	Visteon Corporation
Winnebago Industries, Inc.


Name	Target PSUs ($)	RSUs ($)	Total Equity Award ($)
Phillip M. Eyler	Did not receive an equity award in 2018
Barry G. Steele	$390,000	$260,000	$650,000
Frithjof R. Oldorff	$450,000	$300,000	$750,000
Kenneth J. Phillips	$390,000	$260,000	$650,000
Yijing Brentano	$240,000	$160,000	$400,000


Name	Target PSUs (#)	RSUs (#)	Total Equity Award (#)
Phillip M. Eyler	Did not receive an equity award in 2018
Barry G. Steele	10,733	7,156	17,889
Frithjof R. Oldorff	12,385	8,257	20,642
Kenneth J. Phillips	10,733	7,156	17,889
Yijing Brentano	6,605	4,403	11,008


	February 19,	April 1,	February 18,		February 24,
Name	2017	2017	2017	2018	2017	2018	2019
Daniel R. Coker…………………	6,000	—	6,000	6,000	6,000	6,000	6,000
Barry G. Steele…………………	4,000	2,000	3,333	3,333	3,334	3,333	3,333
Frithjof Oldorff…………………	—	—	3,333	3,333	3,334	3,333	3,333
Darren Schumacher……………	4,000	1,000	3,333	3,333	3,334	3,333	3,333
Kenneth J. Phillips………………	4,000	2,000	3,333	3,333	3,334	3,333	3,333

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)			Weighted-average exercise price of outstanding options, warrants and rights (b)			Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)			Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)			Weighted-average exercise price of outstanding options, warrants and rights (b)			Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	2,103,470		(1)	$32.72		(2)	835,700		(3)		1,998,546	(1)	$	38.53	(2)		1,567,594	(3)
Equity compensation plans not approved by security holders		—			—			—			—			—			—
Total		2,103,470		$	32.72			835,700			1,998,546		$	38.53			1,567,594