Bel Fuse Inc

This non-binding advisory proposal asks shareholders to approve the Company’s executive compensation disclosures and program for the named executive officers as presented in the proxy statement. Management and the Compensation Committee designed the program to align pay with corporate performance using a mix of base salary, short-term incentives tied to adjusted net revenue and Adjusted EBITDA margin, and long-term equity awards (restricted shares and performance stock units). The Compensation Committee used peer benchmarking and an independent consultant (Meridian) to set pay levels and determined that pay is positioned to attract and retain talent while tying significant compensation to multi-year performance measures. The committee also uses individual modifiers to adjust payout based on role-specific contributions. Grants are typically made in March, awards include time-based restricted shares and PSUs with relative TSR vesting conditions, and the plan incorporates clawback and anti-hedging/pledging policies. The vote is advisory and not binding on the Board or the Compensation Committee, but the committee will consider voting outcomes when making future decisions. The Board recommends a “FOR” vote, stating that the program incentivizes long-term shareholder value creation and incorporates governance safeguards including independent oversight and consultant input. Given the significant equity components and the use of relative performance measures, the program aims to align executives’ interests with shareholders while seeking to manage dilution and provide reasonable retention incentives. Shareholders should weigh the mix of short- and long-term incentives, the use of non-GAAP metrics, recent grant practices, and potential change-in-control protections when evaluating whether compensation is appropriately aligned with performance.

Proposal 4 requests shareholder approval of the Bel Fuse Inc. 2026 Equity Compensation Plan, which would replace the expiring 2020 Plan and authorize a reserve of 725,000 Class B shares for future grants. The Board and Compensation Committee justify the request as necessary to attract, retain and incentivize employees, directors and consultants by providing equity-based compensation linked to long-term shareholder value. The plan’s design reflects shareholder-friendly features: a fixed share pool (no evergreen automatic increases), prohibitions on repricing without shareholder approval, conservative share-recycling rules (full counting of underlying shares), minimum one-year service vesting (with standard exceptions), and limits on non-employee director compensation (aggregate cap). The Board also disclosed an expected overhang of ~8.8% if the plan is approved and provided historical burn-rate data (three-year average ~0.57%), arguing the reserve should last multiple years based on historical usage and peer benchmarking provided by the independent consultant. The Compensation Committee recommends the plan after considering company size, outstanding shares and headcount and having Meridian assist with share-reserve analysis. Approving the plan enables the company to grant incentive stock options, nonstatutory options, stock appreciation rights, restricted stock/RSUs and other awards under consistent governance controls. Shareholders should evaluate the requested share pool relative to dilution, historical usage, and the protections (anti-repricing, minimum vesting, conservative recycling) offered by the plan. The Board recommends a vote FOR, viewing the plan as aligned with long-term shareholder interests and management retention needs.

The shareholder proposal, submitted by GAMCO, asks the Board to take steps (subject to required approvals) to permit voluntary, share-for-share conversion of Class A Common Stock into Class B Common Stock, with potential safeguards to prevent unintended capital-structure effects. GAMCO’s core argument is that Class A trades at a persistent discount to Class B (cited ~$22 on December 8, 2025), and optional conversion would allow Class A holders to capture that spread, improve liquidity, and let investors elect economic vs. voting rights—thereby promoting fairness and correcting an alleged market inefficiency. GAMCO frames the change as governance-neutral and flexible, leaving mechanics (caps, timing, pro rata) to the Board. The Board’s formal opposition highlights multiple counter-arguments: the two classes have distinct, longstanding economic and voting terms (Class B carries enhanced dividends and undistributed earnings rights), investors knowingly paid different prices for those economics, and a one-for-one conversion would transfer value to Class A holders at the expense of Class B holders and could reduce per-share Class B dividends absent an increase in aggregate dividends. Management also emphasizes implementation complexity, legal and fiduciary risk from setting a conversion ratio, potential concentration of voting power among remaining Class A holders, and prior shareholder rejection of substantially similar proposals in 2018 and 2020. Company-specific context includes a dual-class framework with safeguards (e.g., provisions triggered if Class A ownership concentrates above thresholds) and disclosures that both classes have delivered strong long-term returns; the Board stresses that both classes remain publicly traded and available for investors to choose according to objectives. The issue thus pits a liquidity/value-arbitrage argument from an activist proponent against the Board’s countervailing fairness, dividend-impact, structural, and governance-risk concerns; approval would be advisory and would not by itself change the charter—further legal steps and cross-class approvals would be required to implement any conversion mechanism.