INTERLINK ELECTRONICS INC

Processes and Procedures for Compensation Decisions

The compensation committee of our board of directors is responsible for the executive compensation programs for our executive officers and reports to the board on its discussions, decisions and other actions. Typically, our chief executive officer makes recommendations to our compensation committee, often attends committee meetings and is involved in the determination of compensation for the executive officers that report to him, except that he does not make recommendations as to his own compensation. Our chief executive officer makes recommendations to our compensation committee regarding short-term and long-term compensation for all executive officers, excluding himself, based on our results, an individual executive officer’s contribution toward these results and performance toward individual goal achievement. Our compensation committee then reviews the recommendations and other data and makes decisions as to total compensation for each executive officer other than the chief executive officer, as well as each individual compensation component. The compensation committee makes recommendations to the board regarding compensation for the chief executive officer. The independent members of the board make the final decisions regarding executive compensation for our chief executive officer.

The compensation committee is authorized to retain the services of one or more executive compensation advisors, as it sees fit, in connection with the establishment of our compensation programs and related policies. The compensation committee has not retained the services of a compensation consultant since 2016.

Summary Compensation Table

The following table provides information regarding the compensation of our named executive officers during 2023 and 2022. As a “smaller reporting company,” as such term is defined in the rules promulgated under the Exchange Act, we are required to provide compensation disclosure for our principal executive officer and the two most highly compensated executive officers other than our principal executive officer. Throughout this proxy statement, these three officers are referred to as our “named executive officers.”

Outstanding Equity Awards at Fiscal Year End

None.

Executive Officer Employment Letters

We have entered into employment agreements with each of the named executive officers. With the exception of his own arrangement, each of these employment agreements was negotiated on our behalf by our Chief Executive Officer with the oversight and approval of the compensation committee of the board.

Steven N. Bronson

We entered into an employment agreement with Steven N. Bronson, our Chairman, President and Chief Executive Officer, in 2016. The employment agreement was for an original term of one year and automatically renews for additional one-year periods unless either party elects not to renew or it is otherwise terminated, in either case pursuant to its terms.

Pursuant to his employment agreement, Mr. Bronson receives an annual base salary, currently $300,000, and is entitled to earn and receive bonus compensation based upon the achievement of performance goals, as determined by our compensation committee, in accordance with a bonus plan adopted by us for the applicable year. Mr. Bronson also is entitled to participate in our benefit plans, including health insurance, life insurance, disability insurance, and retirement plans.

If Mr. Bronson’s employment terminates due to his death or disability, Mr. Bronson or his beneficiaries will be entitled to receive his base compensation to the end of the monthly pay period immediately following the date of termination and any accrued bonus payments, and all of Mr. Bronson’s unvested and outstanding equity awards shall immediately vest and become exercisable.

If Mr. Bronson’s employment is terminated by him for “good reason” or by us without “cause”, Mr. Bronson will be entitled to receive his base compensation to the date of termination, severance pay equal to twelve months of his base compensation, any earned bonus compensation, employee benefits for twelve months following the date of termination, and any vested company match 401(k) or other retirement contribution, and all of Mr. Bronson’s unvested and outstanding equity awards shall immediately vest and become exercisable.

Mr. Bronson’s employment agreement also provides that upon a “change of control” of Interlink, Mr. Bronson is entitled to receive an amount in cash equal to twelve months of his base salary then in effect, and all of Mr. Bronson’s unvested and outstanding equity awards shall immediately vest and become exercisable.

Ryan J. Hoffman

We entered into an employment arrangement with Ryan J. Hoffman, our Chief Financial Officer, in November 2020. The employment arrangement provides for an annual base salary, which currently is $245,000 (including compensation received from BKF Capital Group, Inc.), and a discretionary annual bonus. Because Mr. Hoffman also serves as Chief Financial Officer for BKF Capital Group, Inc. (and also previously served as Chief Financial Officer for Qualstar Corporation), a portion of his compensation is charged to BKF Capital Group, Inc. and Qualstar Corporation based on the approximate amount of time Mr. Hoffman devotes to Interlink, BKF Capital Group, Inc., and Qualstar Corporation. Mr. Hoffman’s employment arrangement provides for “at will” employment and may be terminated at any time by either party. Mr. Hoffman is not entitled to any termination or “change of control” payments or benefits under his employment agreement.

Gene Chen, PhD

We entered into an employment arrangement with Dr. Chen, our Vice President of Engineering & Advanced Materials, in May 2021. The employment arrangement provides for an annual base salary, which currently is $165,000 and a discretionary annual bonus. Dr. Chen’s employment arrangement provides for “at will” employment and may be terminated at any time by either party. Dr. Chen is not entitled to any termination or “change of control” payments or benefits under his employment agreement.

Adoption of Compensation Recovery Policy

The Nasdaq Stock Market LLC (“Nasdaq”) recently adopted new listing rules related to the recovery of erroneously awarded compensation, commonly referred to as a “clawback” policy. Pursuant to Nasdaq Rule 5635, companies listed on Nasdaq are required to adopt and disclose a policy for the recovery of incentive-based compensation in the event of a financial restatement due to material noncompliance with financial reporting requirements.

In compliance with Nasdaq rules, our Board of Directors has approved and adopted a compensation clawback policy (the “Compensation Recovery Policy”). The policy is designed to enable us to recover incentive-based compensation, including bonuses, stock awards, and other incentive-based payments, from current and former executive officers in the event of a financial restatement resulting from material noncompliance with financial reporting requirements, as determined by the Board. A copy of the policy is included as Exhibit 97.1 to this Form 10-K.

The policy includes provisions specifying the circumstances under which recovery may be triggered, the types of compensation subject to recovery, the procedures for determining the amount to be recovered, and the mechanisms for implementing the recovery process. The policy is intended to align with Nasdaq’s requirements while also ensuring fairness and consistency in our compensation practices.

We believe that the adoption of the Compensation Recovery Policy enhances transparency and accountability in our executive compensation practices and demonstrates our commitment to upholding strong corporate governance standards. The policy reflects our commitment to maintaining integrity in our financial reporting and ensuring that executive compensation is tied to the achievement of long-term, sustainable performance goals.

Pension Benefits and Nonqualified Deferred Compensation

We do not provide a pension plan for our employees, and none of our named executive officers participated in a nonqualified deferred compensation plan in 2023.

401(k) Plan

We maintain a tax-qualified retirement plan, or the 401(k) plan, that provides eligible employees with an opportunity to save for retirement on a tax-advantaged basis. Eligible employees are able to participate in the 401(k) plan as of the first day of the month following the date they meet the 401(k) plan’s eligibility requirements, and participants are able to defer up to 60% of their eligible compensation subject to applicable annual Code limits. All participants’ interests in their deferrals are 100% vested when contributed. The 401(k) plan permits us to make matching contributions and profit-sharing contributions to eligible participants. The match is limited to 50% of base salary up to $5,000.

Non-Employee Director Compensation

Director Compensation Table

The following table details the total compensation earned by our non-employee directors in fiscal year 2023:

No director held stock options or restricted stock awards as of December 31, 2023.

Outside Director Compensation Policy

Our board of directors has adopted a policy for the compensation for our non-employee directors, or the Outside Directors. Outside Directors will receive compensation in the form of equity and cash, as described below: