BASSETT FURNITURE INDUSTRIES INC

Our executive compensation primarily consists of base salary, annual performance-based bonus awards and retirement benefits designed to promote long-term employment. The Committee also periodically grants long-term equity incentive awards when it feels appropriate, based on advice from its compensation consultant regarding market trends, comparable pay levels at our compensation peer group, retention factors and other considerations; the last equity awards to our executive officers were granted in fiscal 2023. We discuss each of the primary elements of our executive compensation in detail below. While we have identified particular compensation objectives that each element of executive compensation serves, our compensation programs are designed to complement each other and collectively serve all of our executive compensation objectives described above.

Base Salary

Base salaries are intended to provide a level of compensation sufficient to attract and retain an effective management team when considered in combination with other components of our compensation program. The base salary of each executive officer is reviewed annually to determine if it is equitably aligned with our other executive officers and at a sufficient level to attract and retain top talent. Base salaries for two of the named executive officers were increased by 5.3% during the last month of fiscal 2024. Consistent with our emphasis on paying for performance and aligning our executives’ interests with those of our stockholders, our chief executive officer’s base salary has increased only 4.3% in the aggregate from fiscal 2022 to fiscal 2025.

Annual Performance-Based Bonus Awards

The primary objectives of our annual performance-based bonus awards are to provide incentive for superior work, to motivate our executives toward higher achievement and business results, to tie our executives’ goals and interests to our stockholders’ and to enable us to attract and retain highly qualified individuals. Annual incentives are established for each executive based on our attainment of performance goals set by the Committee at threshold, target and maximum levels. When applicable, the bonus earned is calculated ratably from the threshold to the target and from the target to the maximum. No bonus is earned unless and until performance exceeds the threshold performance level. Company operating income had been the single performance measure for the eight fiscal years prior to 2022. In 2022, we added consolidated net sales as an additional performance measure and in 2023 we added division measures. For the purposes of these awards, operating income, consolidated net sales and division measures are defined in the same manner as for financial reporting purposes. Having these performance measures for our executive officers is intended to align our executives’ focus on the Company’s overall improved profitability and sales growth. The performance levels required to earn the target level of bonus are based on the internal financial goals set in connection with our Board of Directors’ consideration and approval of our annual operating plan. Consistent with our emphasis on tying compensation to performance, bonus opportunities for executives are set at a significant percentage of base salary.

For fiscal 2024, at least 75% of the bonus opportunity for each of our named executive officers was based on operating income before bonus expense with the remainder based on consolidated wholesale shipments to licensee and open market accounts for Mr. Cohenour. Threshold, target and maximum performance goals for operating income were set at $2.75 million, $5.5 million and $10.0 million, respectively, of Company operating income. Threshold, target and maximum performance goals for licensee and open market wholesale shipments were set at $79.2 million, $88.0 million and $96.8 million, respectively. The bonus opportunities for the named executive officers expressed as a percentage of salary are shown in the table below. The dollar equivalents of these bonus opportunities are shown in the Grants of Plan-Based Awards table on page 20** **of this proxy statement.