BUILD-A-BEAR WORKSHOP INC

The objective of the Company’s long-term incentive program is to provide a long-term retention incentive for the NEOs and to align their interests directly with those of our stockholders by way of stock ownership and payouts based on the Company’s financial performance.

In February and March 2024, the Committee reviewed a report of updated market data and industry compensation trends developed by Meridian. The Committee also reviewed the Company’s recent financial and share price performance and the availability of shares to grant under our 2020 Omnibus Incentive Plan.

In April 2024, utilizing this market data and other information, the Committee determined the market value of the total long-term incentive program awards (“LTI Market Value”) for each NEO (except for Mr. Henderson) and approved a grant of annual long-term incentive awards consisting of three-year performance-based awards and time-based restricted stock for NEOs. The awards for the Chief Executive Officer were split between performance-based restricted stock (70% weighting) and time-based restricted stock (30% weighting). The awards for the other NEOs were split evenly between performance-based restricted stock and time-based restricted stock. The performance-based restricted stock awards will be earned if pre-established profitability and revenue goals are attained in fiscal 2024-2026. The Company made 2024 long-term incentive awards in the form of restricted stock as a reward and retention mechanism. The design and mix of time- and performance-based awards were structured to maintain a strong emphasis on performance and to align with peer practices.

In April 2024, the Committee approved the following 2024 long-term incentive awards to the NEOs:

When Mr. Henderson was appointed Chief Revenue Officer, effective September 16, 2024, the Committee approved the following 2024 long-term incentive awards:

The target number of shares of three-year performance-based restricted stock awarded to the Chief Executive Officer was derived by dividing 70% of the Chief Executive Officer’s LTI Market Value by the closing sale price of the Company’s common stock on the NYSE on April 16, 2024 and rounding the resulting number to the closest whole number. The target number of shares of three-year performance-based restricted stock awarded to the other NEOs (except for Mr. Henderson) was derived by dividing 50% of his LTI Market Value by the closing sale price of the Company’s common stock on the NYSE on April 16, 2024 and rounding the resulting number to the closest whole number.

When Mr. Henderson was appointed Chief Revenue Officer, effective September 16, 2024, the Committee determined the LTI Market Value for his position and approved a grant of an annual long-term incentive award consisting of three-year performance-based awards and time-based restricted stock, each prorated for the portion of the fiscal year in which he served as an executive. The target number of shares of three-year performance-based restricted stock awarded to Mr. Henderson was derived by dividing 50% of his prorated LTI Market Value by the closing sale price of the Company’s common stock on the NYSE on September 16, 2024 and rounding the resulting number to the closest whole number.

The number of three-year performance-based restricted stock shares, if any, that will be earned by the NEOs will be calculated by multiplying the Target Number of Shares of Three-Year Performance-Based Restricted Stock noted in the tables above by the Total Earned Percentage (defined below) based on the Company’s achievement of profitability and revenue goals for fiscal 2024, fiscal 2025 and fiscal 2026. The three-year performance-based restricted stock that is earned, if any, will vest on April 30, 2027.

The Committee established specific profitability and revenue objectives for fiscal 2024, 2025 and 2026 and assigned a weighting to each objective. Profitability will be measured by the Company’s achievement of established cumulative consolidated EBITDA goals (the “Profitability Objective”). Revenue will be measured by the Company’s achievement of cumulative consolidated total revenues (the “Revenue Objective”). The Total Earned Percentage (“Total Earned Percentage”) of the performance-based stock awards will be determined by adding the percent of target number of shares for each performance objective based on the Company’s achievement level of each performance objective over the three-year period multiplied by the weighting assigned to each objective.

For the three-year performance period, the Profitability Objective will be weighted 65% and the Revenue Objective will be weighted 35%. Consolidated financial results that fall between any of the established achievement levels will be interpolated between the applicable achievement levels.