Board Structure and Risk Oversight

Leadership Structure of the Board

        Under our bylaws, the Board is not required to appoint our Chief Executive Officer as the Chairman of the Board, and the Board does not have a policy on whether or not the roles of Chief Executive Officer and Chairman of the Board should be separate. Currently, two different individuals serve in these two positions. Our Chairperson, Kristine F. Hughes, is responsible for chairing Board meetings and meetings of shareholders, setting the agendas for Board meetings and providing information to the Board members in advance of meetings and between meetings. In addition, our Chief Executive Officer, Michael Dean, also serves as a Director on our Board. The Board believes that Mr. Dean's membership as a Director provides the Board with in-depth understanding of our business operations because of his extensive experiences and knowledge in the day-to-day management of all aspects of our operations.

        All of our Directors are independent under applicable NASDAQ corporate governance rules, except for Ms. Hughes and Mr. Dean. The Board believes that the independent Directors provide effective oversight of management. Moreover, in addition to feedback provided during the course of Board meetings, the independent Directors have regular executive sessions without any members of management. We believe that our leadership structure of the Board is appropriate given the nature and size our businesses, as it provides both effective independent oversight and expertise in the complexity and management of our operations as a consumer product and direct-selling company.

Board's Role in the Oversight of Risk Management

        The Board of Directors is primarily responsible for assessing risks associated with the Company's business. However, the Board delegates certain of such responsibilities to other groups. The Audit Committee is responsible for reviewing with management the Company's policies and procedures with respect to risk assessment and risk management, including reviewing certain risks associated with our financial and accounting systems, accounting policies, investment strategies, regulatory compliance, insurance programs, and other matters. Under the direction of the Audit Committee, the Company's internal audit department assists the Company in the evaluation and improvement of the effectiveness of risk management. In addition, under the direction of the Board and certain of its committees, the Company's legal department, which includes the Company's Chief Compliance Officer, assists the Board in the development and oversight of corporate compliance activities. As discussed under "Risk Assessment of Compensation Programs," the Compensation Committee also reviews certain risks associated with our overall compensation program for employees to help ensure that the program does not encourage employees to take excessive risks. On a regular basis and from time to time as necessary or appropriate, updates are provided by these groups to the Board of Directors regarding their risk assessment and risk management activities and other risk-related matters.

Board Meetings in Fiscal Year 2010

        During fiscal year 2010, there were four formal regular meetings and one formal special meeting of the Board of Directors, as well as numerous informal informational sessions. Each member of the Board of Directors during fiscal year 2010 attended or participated in 75 percent or more of the aggregate of (i) the total number of regular and special meetings of the Board of Directors held during the fiscal year or the portion thereof following such person's appointment to the Board and (ii) the total number of meetings held by all committees of the Board on which such Director served during the fiscal year or the portion thereof following such person's appointment to one or more of those committees.

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        During fiscal year 2010, the Audit Committee held four formal meetings, as well as numerous informal informational sessions, the Compensation Committee held two formal meetings, as well as numerous informal meetings, and the Nominations Committee held two formal meetings.

Annual Meeting Attendance

        Although the Company does not have a formal policy regarding attendance by members of the Board of Directors at the annual meetings of shareholders, Directors are encouraged to attend such meetings. At the annual meeting of shareholders held in fiscal year 2010 six of our seven Directors were in attendance.

Communications with Directors

        We have not in the past adopted a formal process for shareholder communications with the Board of Directors. Nevertheless, the Directors have endeavored to ensure that the views of shareholders are heard by the Board or individual Directors, as applicable, and that appropriate responses are provided to shareholders in a timely manner. Communications to the Board of Directors may be submitted in writing to our Corporate Secretary at our principal executive offices at 75 East 1700 South, Provo, Utah 84606. The Board of Directors relies upon the Corporate Secretary to forward written questions or comments to named Directors or committees thereof, as appropriate. General comments or inquiries from shareholders are forwarded to the appropriate individual within the Company, including the President, as appropriate.

Code of Ethics

        We adopted a revised Code of Conduct on March 4, 2011 that applies to all of our employees, including our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Chief Compliance Officer, and senior financial and accounting officers. Among other matters, the Code of Conduct establishes policies to deter wrongdoing and to promote (i) both honest and ethical conduct, including ethical handling of actual or apparent conflicts of interest, (ii) compliance with applicable laws, rules and regulations, (iii) full, fair, accurate, timely and understandable disclosure in reports and documents that we file with or submit to the SEC and in public communications and (iv) prompt internal reporting of violations of the Code of Conduct and accountability for adherence to the Code of Conduct. In addition, we provide an ethics line for reporting any violations of the Code of Conduct on a confidential basis. A copy of our Code of Conduct is available on our website at www.natr.com or by writing to our Corporate Secretary at our principal executive offices at 75 East 1700 South, Provo, Utah 84606. We will post on our internet website all amendments to, or waivers from, our Code of Conduct that are required to be disclosed by applicable law.

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Director Compensation

        The following table sets forth certain information regarding the compensation of each individual other than Mr. Dean who served as a non-employee member of our Board of Directors during the 2010 fiscal year. Mr. Dean's compensation during the 2010 fiscal year, including compensation earned in his role as a non-employee director, is included in the Summary Compensation Table below.

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        Meeting Fees.    Our Directors do not receive fees for attendance at Board or Committee meetings.

        Expenses.    Board members were reimbursed for travel and other expenses incurred in connection with their duties as Directors to the extent such expenses were submitted to the Company for reimbursement.

        Nonqualified Deferred Compensation.    None of our non-employee directors participated in the Supplemental Elective Deferral Plan (the "SEDP").

        Equity Grants and Cash Retainer.    On September 1, 2009, the Board of Directors adopted a new compensation plan for non-employee Directors of the Company. As a general rule, each newly elected non-employee Director receives a one-time fully vested option grant to purchase 25,000 shares of Common Stock following his or her initial election to the Board. All non-employee Directors receive an annual retainer of $50,000 for their service on the Board and receive no additional fees for attendance at meetings of the Board or Company events at which a Director's attendance is required. Our Chairperson receives an additional annual retainer of $50,000. Each Director serving on the Audit Committee receives an additional annual retainer as follows: chairperson—$15,000; other committee members—$10,000. Each non-employee Director serving on the Compensation Committee receives an additional annual retainer as follows: chairperson—$10,000; other committee members—$5,000. The chairperson of the Nominations Committee receives an additional annual retainer of $10,000. All cash compensation is paid on a monthly basis and is pro rated for any partial year of service.

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Recommendation of the Board of Directors

        The Board of Directors unanimously recommends a vote FOR the election of each of the foregoing nominees to the Board of Directors.

PROPOSAL TWO:

RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

        Our Board of Directors has, subject to shareholder approval, retained Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2011. Deloitte & Touche LLP also served as our independent registered public accounting firm for fiscal year 2010. A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting. He or she will have an opportunity to make a statement at the Annual Meeting and will be available to respond to appropriate questions.

Fees Paid to Independent Registered Public Accounting Firm

        We engaged Deloitte & Touche LLP as our independent registered public accounting firm on February 2, 2007. The table below presents the aggregate fees incurred by the Company during the fiscal years ended December 31, 2010 and 2009 for professional services rendered by Deloitte & Touche LLP. All of the fees listed below were approved by the Audit Committee. The Audit Committee has considered, and concluded that, the provision of non-audit services is compatible with maintaining the principal accountant's independence.

Pre-Approval Policies and Procedures

        The Company pre-approves a schedule of audit and non-audit services expected to be performed by the Company's independent registered public accounting firm in a given fiscal year. In addition, the Audit Committee delegates authority to its Chairperson to pre-approve certain additional audit and non-audit services rendered by the Company's independent registered public accounting firm (other than services that have been generally pre-approved by the Audit Committee) during the period between meetings of the Audit Committee. The Chairperson must report any such pre-approval decisions to the Audit Committee at its next scheduled meeting. During the year ended December 31, 2010, 100 percent of the aggregate amounts set forth above under the captions "Audit-Related Fees," "Tax Fees," and "All Other Fees" were either pre-approved by the Chairperson of the Audit Committee and subsequently reported to the Audit Committee in accordance with the procedures set forth above, or directly approved by the Audit Committee.

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Recommendation of the Board of Directors

        The Board of Directors unanimously recommends a vote FOR the ratification of Deloitte & Touche LLP

AUDIT COMMITTEE REPORT

        In connection with the audited financial statements as of and for the year ended December 31, 2010, the Audit Committee (i) has reviewed and discussed the audited financial statements with management, (ii) has discussed with the independent registered public accounting firm the matters required to be discussed by the Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T and (iii) has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm's communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm the firm's independence. Based on the foregoing review and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2010 for filing with the SEC.

Submitted by:
Willem Mesdag
Albert R. Dowden
Robert B. Mercer

PROPOSAL THREE:

ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION

        Under the Dodd-Frank Wall Street Reform and Consumer Protection Act enacted in July 2010 (the "Dodd-Frank Act"), the Company's shareholders are entitled to vote at the annual meeting to approve the compensation of our named executive officers, as disclosed in this proxy statement in accordance with the standards established under Item 402 of Regulation S-K under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). However, the shareholder vote on executive compensation is an advisory vote only, and it is not binding on the Company or our Board or the Compensation Committee.

        As described in the section titled "Compensation Discussion and Analysis," the Company's executive compensation programs are designed to attract, retain and reward executives whose contributions support the Company's long-term success by linking Company performance to executive compensation. These programs have been designed to ensure alignment of management's action with shareholder interests. Shareholders are urged to read the "Compensation Discussion and Analysis" section of this proxy statement, which more thoroughly discusses how we believe our compensation policies and procedures complement our compensation philosophy. The Board and our Compensation Committee believe that these policies and procedures are effective in implementing our compensation philosophy and in achieving its goals.

        Although the vote is an advisory, non-binding vote, the Board and the Compensation Committee value the opinions of the shareholders and will take into account the outcome of the vote when considering future compensation decisions affecting the Company's executive officers.

        The vote on this resolution is not intended to address any specific element of compensation; rather, the vote relates to the compensation of our named executive officers, as described in this proxy statement.

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        We are asking our shareholders to vote for the following resolution:

        "RESOLVED, that the Company's shareholders approve, in a non-binding vote, the compensation of the Company's named executive officers as disclosed in the proxy statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the various compensation tables and the accompanying narrative discussion."

This vote is only advisory, and will therefore not be binding upon the Company or our Board. However, the Board encourages input from the Company's shareholders and encourages all shareholders to vote their shares on this matter.

Recommendation of the Board of Directors

        The Board of Directors unanimously recommends a vote FOR the approval, on an advisory (non-binding) basis, of the compensation of our named executive officers as disclosed in this proxy statement pursuant to the SEC's compensation disclosure rules.

PROPOSAL FOUR:

ADVISORY VOTE ON THE FREQUENCY OF FUTURE SHAREHOLDER ADVISORY VOTES ON
EXECUTIVE COMPENSATION

        Under the Dodd-Frank Act, the Company's shareholders are also entitled to vote at the annual meeting regarding whether the shareholder vote to approve the compensation of our named executive officers as required by Section 14A(a)(2) of the Exchange Act (and as presented in Proposal Three of this proxy statement) should occur every year, every two years or every three years. Shareholders will also have the option to abstain from voting on the matter. The shareholder vote on the frequency of the say-on-pay vote to approve executive compensation is an advisory vote only, and it is not binding on the Company or our Board. Such an advisory vote will be provided to shareholders every six years. Although the vote is an advisory, non-binding vote, both the Board and our Compensation Committee will take into account the outcome of the vote when determining the frequency of the shareholder vote on executive compensation.

        After careful consideration of this Proposal, our Board has determined that an advisory vote on executive compensation that occurs every year is the most appropriate alternative for the Company, and therefore our Board recommends that you vote for a one-year interval for the advisory vote on executive compensation. While the Company's executive compensation programs are designed to promote a long-term connection between pay and performance, the Board recognizes that compensation disclosures are made annually. Holding an annual advisory vote on executive compensation would provide the Company with more direct and immediate feedback on those compensation disclosures. However, shareholders should note that because the advisory vote on executive compensation occurs well after the beginning of the compensation year, and because the different elements of our executive compensation programs are designed to operate in an integrated manner and to complement one another, in many cases it may not be appropriate or feasible to change our executive compensation by the time of the following year's annual meeting.

        The proxy card provides shareholders four choices with respect to the frequency of the shareholder vote for the approval of the compensation of the Company's named executive officers. The four choices are as follows:

•

Every three years;



•

Every two years;



•

Every year; or



•

Abstain.

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        The Board recommends that the shareholders choose on an advisory basis a one year frequency (or vote for every year) with respect to how frequently a non-binding shareholder vote to approve the compensation of our named executive officers should occur. However, the shareholder vote under this Proposal Four is not to approve or disapprove the Board's recommendation but is instead a direct advisory vote on the particular frequency at which each shareholder would like the advisory vote on executive officer compensation to be conducted.

Recommendation of the Board of Directors

        The Board unanimously recommends that you vote "One Year" with respect to how frequently a non-binding shareholder vote to approve the compensation of our named executive officers should occur.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The following table sets forth information regarding beneficial ownership of our Common Stock as of March 31, 2011, except as otherwise stated, by (1) each person who is known by us to beneficially own more than five percent of the outstanding shares of our Common Stock, (2) each of our Directors, (3) each of our named executive officers in the Summary Compensation Table, and (4) all Directors and executive officers of the Company as a group. As of March 31, 2011, there were 15,532,909 shares of Common Stock issued and outstanding. Each share of Common Stock entitles the holder thereof to one vote on each matter presented at a meeting of the shareholders. To our knowledge and except as otherwise indicated, the persons named in the table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to community property laws where

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applicable. Unless we indicate otherwise, each holder's address is c/o Nature's Sunshine Products, Inc., 75 East 1700 South, Provo, Utah 84606.

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Changes in Control

        We are not aware of any other arrangement or event, the occurrence of which would result in a change in control of the Company.

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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

        Section 16(a) of the Exchange Act requires the Company's directors, officers and persons who beneficially own more than 10 percent of a registered class of the Company's equity securities, to file initial reports of ownership on Form 3 and changes in ownership on Forms 4 or 5 with the SEC. Such directors, officers and 10 percent shareholders also are required by SEC rules to furnish the Company with copies of all Section 16(a) reports they file. Based solely on its review of the copies of such forms furnished or available to the Company, the Company believes that its directors, officers and 10 percent shareholders complied with all Section 16(a) filing requirements for the fiscal year ended December 31, 2010.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

        This Compensation Discussion and Analysis provides disclosure about the policies and objectives underlying the compensation programs for our executive officers. Accordingly, we will address and analyze each element of the compensation provided to our Chief Executive Officers, our Chief Financial Officer and the other executive officers named in the Summary Compensation Table which follows this discussion; these individuals are referred to as the named executive officers. The Compensation Committee of our Board of Directors administers the compensation programs for our executive officers.

Compensation Policy for Named Executive Officers.

        Our compensation philosophy for named executive officers is to maintain a pay-for-performance approach that ties a significant portion of each named executive officer's compensation to the Company's performance. We have designed the various elements comprising the compensation packages of our named executive officers to achieve the following objectives:

•

attract and retain qualified executives who will help the Company meets its goals;



•

reflect individual accomplishments and contributions to the Company as well as overall Company performance; and



•

align each named executive officer's interests with those of the Company's shareholders.

        Each named executive officer's compensation package consists of three elements: (i) a base salary, (ii) a cash bonus based upon Company financial performance and the individual officer's personal performance, and (iii) participation in long-term, stock-based incentive awards, in the form of stock options, designed to align and strengthen the mutuality of interests between our named executive officers and our shareholders. In addition, the named executive officers are provided with certain benefits and perquisites and are entitled to certain severance benefits in the event their employment terminates under certain specified circumstances, as more fully described below.

        When establishing the compensation levels for the named executive officers, the Compensation Committee takes into account the Company's overall financial performance and an evaluation of each named executive officer's individual performance level and his or her potential contribution to the Company's future growth.

Setting Executive Compensation

        In setting named executive officer compensation, the Compensation Committee reviews a report (the "Executive Compensation Report") prepared by our Director of Human Resources in order to assess the competitiveness of the Company's compensation programs in comparison to market averages. The Executive Compensation Report examined the data contained in Watson Wyatt's Top Management

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Compensation Survey and Mercer's Executive Compensation Survey, in each instance for 2009-10. These surveys provide information on compensation paid by surveyed companies nationally, crossing multiple industries and sizes. These two surveys are among the largest executive compensation surveys in the U.S. with hundreds of companies participating from all industries, both public and private. The Executive Compensation Report compared the Company's executive cash compensation practices, including base pay and short-term and long-term incentives, to such survey data. In addition, we perform regression analysis on the raw data from the surveys to provide appropriate comparisons based on company size. The regression analysis provides an expected level of each type of cash compensation based on our sales revenue; the data from such analysis is used as the "market" data. The Executive Compensation Report also compared the base pay, cash bonus and total compensation of officers on an individual basis to the market data.

        The Compensation Committee does not engage in "benchmarking" against a specific group of companies. The Compensation Committee believes that the Company has few truly comparable publicly traded companies to provide an accurate data set against which to benchmark and the data for the Executive Compensation Report provides a broader range of comparative data.

        As previously disclosed, Douglas Faggioli served as our Chief Executive Officer and as a Director until June 30, 2010. Prior to the start of fiscal year 2010, Mr. Faggioli presented to the Compensation Committee his recommendations for 2010 base salaries for the named executive officers (other than himself), taking into consideration the expected total cash compensation for such officers for 2010 (including base salary and expected bonus payable in 2010 for 2009 performance) and the comparative market data for total cash compensation for such officers. These recommendations were based on his review of the Company's performance measured in terms of the operating income and sales revenue levels attained by the division, for which the executive was primarily responsible, as well as the executive's performance and the comparative analysis of the Company's compensation practice to market for each such officer. The Compensation Committee discussed these recommendations with Mr. Faggioli and our Director of Human Resources and made the final determination on the bonuses for these officers based on these recommendations, with such adjustments as it deemed appropriate. The Compensation Committee directly determined Mr. Faggioli's compensation package with input and market data from our Director of Human Resources. The Compensation Committee made decisions with respect to Mr. Faggioli's compensation without his input. The Compensation Committee recommended, and the Board approved, Mr. Faggioli's compensation package for 2010, as well as the amendment to Mr. Faggioli's employment agreement. The compensation package for Mr. Dean, who became our President and Chief Executive Officer in July 2010, was determined pursuant to his employment agreement in connection with his planned assumption of the position of President and Chief Executive Officer for 2010, as described more fully in "President and Chief Executive Officer Employment Agreement." Mr. Dean's agreement was recommended by the Compensation Committee and approved by the Board.

        Elements of Compensation.    Each of the major elements comprising the compensation package for named executive officers (salary, bonus and equity) is designed to achieve one or more of the Company's overall objectives in fashioning a competitive level of compensation, tying compensation to performance and establishing a meaningful and substantial link between each named executive officer's compensation and our long-term financial success.

        There is no pre-established policy for the allocation of compensation between cash and non-cash components or between short-term and long-term components, nor are there any pre-established ratios between the Chief Executive Officer's compensation and that of the other named executive officers. Instead, the mix of compensation for each named executive officer is based on a review of the market data and a subjective analysis of that individual's performance and contribution to the Company's financial performance. Our mix of compensation elements is designed to reward recent results and motivate long-term performance through a combination of cash and equity incentive awards.

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        Base Salary.    Base salary is intended to attract and retain qualified executives and to provide a level of security and stability from year to year and is not dependent to any material extent on the Company's financial performance. The base salary level of each named executive officer is reviewed in the last quarter of each year, with any salary adjustments for the upcoming year to be effective on or about January 1 of that year. We target base salaries to be in the range of 80 percent to 90 percent of market. However, the Company may also consider the performance of each executive, contributions by the executive towards the Company's mission/goals and tenure at the Company. Based upon the Compensation Committee's review, Mr. Faggioli's base salary was not adjusted for 2010. The salary levels for Messrs. Bunker, DeWyze, Jarvis and Yates increased approximately 6.2 percent, 2.0 percent, 6.6 percent and 3.6 percent, respectively for 2010. These increases were to bring these executives' salaries within an acceptable range of market rates. After examining the market data, the Company found that, on average, our officers' base salaries for 2010 were approximately 15-18 percent below market.

        In light of a Companywide freeze on base compensation, the Compensation Committee did not approve salary adjustments for 2011 for our named executive officers, with the exception of Mr. Jarvis, whose base salary was increased by 5.2 percent effective January 1, 2011, to reflect increased responsibilities.

        Cash Bonus.    The cash bonus program is designed to advance a pay-for-performance policy by bringing the total cash compensation for our executives up to market in a typical year and to exceed market when justified by Company performance. For 2010, the bonuses were determined by the Compensation Committee at its sole discretion based on overall Company performance measured in terms of operating income and sales revenue and each executive's individual performance. Although no portion of the bonuses is tied to the attainment of any specific pre-established performance goals, the Committee utilized revenue and operating income targets to determine at least a portion of each executive officer's bonus. The remaining portion was based upon each executive officer's individual performance to take into account accomplishments not directly accounted for by an analysis of the Company's financial performance.

        On December 9, 2010, the Compensation Committee awarded Mr. Dean a bonus in the amount of $200,000. In exercising its discretion, the Compensation Committee reviewed the Company's performance measured in terms of the average operating income and sales revenue levels attained by its United States business segment ("NSP United States"), its international business segment ("NSP International") and its Synergy Worldwide division for 2010. In determining the amount of Mr. Dean's bonus, the Compensation Committee also noted that Mr. Dean had been effective in the transition into his new role and had been successful in developing relationships with the Company's field of independent managers and distributors, and in contributing to the restructuring of the Company.

        The Compensation Committee also awarded bonuses for the other named executive officers on December 9, 2010 as follows: Mr. Bunker—$80,000; Mr. DeWyze—$55,000; Mr. Jarvis—$70,000 and Mr. Yates—$45,000. In determining the bonus for each named executive officer, the Compensation Committee reviewed the Company's performance measured in terms of the operating income and sales revenue levels attained by the divisions for which the executive was primarily responsible against planned performance, as well as the executive's individual performance. Due to the performance of the relevant divisions of the Company, the bonuses for our named executives in 2010 remained at the same level or decreased compared to the prior year, with the exception of Mr. Yates's bonus, which increased due to improvements in operating income and sales revenue for NSP International, of which Mr. Yates is President. On average, cash bonuses for our named executive officers, including Mr. Dean, were approximately 8 percent below market. Including cash bonuses and base compensation average total cash compensation paid was approximately 11 percent below market.

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        For 2011, the Compensation Committee has developed a more structured approach for determining appropriate bonuses for the executive officers based on achievement of specified levels of divisional and corporate financial targets as well as a discretionary portion based on achievement of individual performance goals. With respect to the portion of the bonus based on achievement of divisional and corporate financial goals, the Compensation Committee will develop target bonus amounts that are appropriate for each executive officer. The Compensation Committee will also develop key individual objectives for each executive officer that will be measurable, but the bonus payable with respect to these objectives will be determined at the discretion of the Compensation Committee based on its subjective assessment of individual performance.

        Long-Term Incentives.    We provide long-term incentives in the form of common stock option grants. The Compensation Committee believes that option grants align the interests of the named executive officer with those of the shareholders and provide the officer with a significant incentive to manage the Company from the perspective of an owner with an equity stake in the business. While the Compensation Committee has the ability to award option grants under the 2009 Stock Incentive Plan (the "2009 Plan") that vest based on continued service, the Committee generally deems it more appropriate to make these grants in the form of performance-based stock option grants that vest based upon achievement of the Company's operating metrics as well as continued service. The Committee believes that performance-based options further reward long-term decision making and value creation and align shareholders' and managements' interests.

        On March 12, 2010, the Compensation Committee granted two stock options under the 2009 Plan to Mr. Dean as part of his employment agreement as follows: an option to purchase 150,000 shares of Common Stock of the Company which vests in three equal annual installments over each year of service measured from March 12, 2010, and an option to purchase 50,000 shares of Common Stock of the Company which vests in three equal installments upon the achievement of 6%, 8% and 10% operating income margins as reported in local currencies during four of five consecutive fiscal quarters over the term of the option provided Mr. Dean remains in employment with the Company through the end of the last quarter in which the performance goal is achieved. The operating income margin goals were not achieved in 2010 and therefore the option did not vest in 2010. Each option granted to Mr. Dean has a term of ten years.

        On May 10, 2010, the Compensation Committee granted options to purchase shares of Common Stock of the Company under the 2009 Plan to the other named executives as follows: Mr. Bunker—44,000 shares, Mr. DeWyze—40,000 shares, Mr. Jarvis—42,000 shares, and Mr. Yates—44,000 shares. The awards were granted to retain and re-incentivize the officers and to align their interests with those of the shareholders. In determining the size of the awards, the Compensation Committee took into account the fact that some of our named executive officers had not received any equity awards in recent years and some of the options previously granted to the officers had expired during the period that the Company's stock was not trading, as well as their individual contributions to the Company's performance in 2009. The size of the awards was at the discretion of the Compensation Committee. Each option grant vests in three equal installments upon the achievement of 6%, 8% and 10% operating income margins as reported in local currencies during four of five consecutive fiscal quarters over the term of the options provided the executive remains in employment with the Company through the end of the last quarter in which the performance goal is achieved. The operating income margin goals were not achieved in 2010 and therefore the option did not vest in 2010. Each option has a term of ten years.

        On January 3, 2011, the Compensation Committee granted options to purchase shares of Common Stock of the Company under the 2009 Plan to the named executives as follows: Mr. Dean—150,000 shares, Mr. Bunker—30,000 shares, Mr. DeWyze—30,000 shares, Mr. Jarvis—30,000 shares, and Mr. Yates—30,000 shares. The awards are designed to act as retention tools and to continue to incentivize the officers and align their interests with those of the shareholders. In determining the size

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of the awards, the Compensation Committee took into account the Company's overall performance in 2010 and general expectations for the Company in 2011 and 2012. Each option grant vests in ¹/3 increments subject to achieving certain earnings metrics of 6%, 8% or 10% operating income margin as reported in the Company's financial results for four of five consecutive fiscal quarters over the term of the options provided the executive remains in employment with the Company through the end of the last quarter in which the performance goal is achieved. Each option has a term of ten years.

        The Compensation Committee expects to make future grants on a discretionary basis. The Compensation Committee does not have any policy or practice of timing awards to the release of the Company's financial reports.

        Named Executive Officer Perquisites.    In 2010, we paid premiums on $250,000 life insurance policies for our named executive officers and provided our named executive officers the opportunity to receive up to $2,500 for tuition assistance; however, none of our named executive officers elected to receive tuition assistance. The Company offers these perquisites to enhance its overall ability to recruit talented executives who possess the appropriate experience and skills.

        Other Programs.    Our named executive officers are eligible to participate in our 401(k) employee savings plan and health care plans on the same basis as all other regular U.S. employees.

        Deferred Compensation Programs.    The Company has adopted a deferred compensation plan, the SEDP, for its named executive officers, certain other selected employees and its non-employee Directors to enable them to save for retirement by deferring their income and the associated tax to a future date following termination of employment. Under the SEDP, the named executive officers and other participants have the opportunity to defer compensation to future dates specified by the participant with a return based on investment alternatives selected by the participant. The Company believes that the SEDP is comparable to similar plans offered by its competitors. The amounts deferred under the SEDP for the named executive officers are reported below in the Summary Compensation Table and the Nonqualified Deferred Compensation Table.

        Hedging.    Company policy prohibits executives from entering into hedging transactions that would operate to lock-in the value of their equity compensation awards at specified levels. Because we have adopted policies that prohibit hedging in our common stock by our executives, our executives bear the full risk of loss with respect to their stock and equity award holdings, like our shareholders.

        Employment Agreements.    We have entered into employment agreements with each of our named executive officers. We believe that the employment agreements with our named executive officers achieve two important goals crucial to our long-term financial success: the long-term retention of our senior executives and their commitment to the attainment of our strategic objectives. We believe the agreements allow our named executive officers to continue to focus their attention on our business operations and strategic plans without undue concern over their own financial situations during periods when substantial disruptions and distractions might otherwise prevail. Upon the cessation of a named executive officer's employment due to termination by the Company without cause or by reason of death or incapacity, the named executive officer (other than Mr. Dean whose agreement is described below) will receive continued payment of his or her base and medical insurance coverage for a period of 12 months together with a reimbursement of up to $6,000 of any tax liability incurred by the executive in the event benefits received pursuant to such continued coverage result in taxable income to the executive.

        Mr. Dean's Employment Agreement.    On March 12, 2010, we entered into an employment agreement with Michael Dean who initially served as our President and Chief Executive Officer Elect and became our President and Chief Executive Officer on July 1, 2010. A summary of the material terms of Mr. Dean's agreement are described more fully in "President and Chief Executive Officer

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Employment Agreement" below. Upon the cessation of his employment due to termination by the Company without cause or by him for good reason, or by reason of his death or incapacity, he will receive continued payment of his base salary and medical insurance coverage for a period of 12 months.

        Mr. Faggioli's Employment Agreement.    In connection with the resignation of Mr. Faggioli, the Company amended his employment agreement effective March 12, 2010. The terms of the amended agreement are described below in "Amendment of Mr. Faggioli's Employment Agreement."

        A summary of the material terms of the officer employment agreements, together with a quantification of the severance benefits payable under those agreements to each of the named executive officers named in the Summary Compensation Table may be found in the section below entitled "Employment Agreements and Potential Payments upon Termination or Change in Control."

        Compliance with Internal Revenue Code Section 162(m).    Section 162(m) of the Internal Revenue Code disallows a tax deduction to publicly held companies for compensation paid to certain of their named executive officers to the extent such compensation exceeds $1.0 million per covered officer in any year. The limitation applies only to compensation that is not considered to be performance-based under the terms of Section 162(m). We attempt to structure our compensation arrangements to achieve deductibility under Section 162(m), unless the benefit of such deductibility is outweighed by the need for flexibility or the attainment of other corporate objectives. The compensation paid to our named executive officers for 2010 did not exceed the $1.0 million limit per officer. However, as we continue to increase salaries and bonuses for our named executive officers, together with the amounts recognized from equity awards, it is possible that the non-performance-based compensation payable to our named executive officers will exceed the $1.0 million limit in one or more future years. We believe that in establishing the cash and equity incentive compensation programs for our named executive officers, the potential deductibility of the compensation payable under those programs should be only one of a number of relevant factors taken into consideration, and not the sole governing factor. For that reason, we may deem it appropriate to provide one or more named executive officers with the opportunity to earn incentive compensation, whether through cash bonus programs tied to our financial performance or through equity awards, which together with base salary in the aggregate may be in excess of the amount deductible by reason of Section 162(m) or other provisions of the Internal Revenue Code. We believe it is important to maintain cash and equity incentive compensation at the levels needed to attract and retain the named executive officers essential to our success, even if all or part of that compensation may not be deductible by reason of the Section 162(m) limitation.

Compensation Committee Report

        The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis disclosure with management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

Submitted by:
Jeffrey D. Watkins
Albert R. Dowden
Willem Mesdag

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        Compensation Committee Interlocks and Insider Participation.    On March 12, 2010 and again on October 14, 2010, the members of the Compensation Committee of the Board of Directors were reorganized. Prior to this reorganization, Jeffrey D. Watkins, Michael D. Dean and Pauline Hughes Francis served on the Compensation Committee. On March 12, 2010, Mr. Dean became the Company's President and Chief Executive Officer Elect and at that time removed himself from the Compensation Committee. Subsequent to March 12, 2010, Albert R. Dowden was appointed to the Compensation Committee. On October 11, 2010, Ms. Hughes Francis resigned from the Board of Directors of the Company and from her Committee positions. Following Ms. Hughes Francis's resignation, Mr. Willem Mesdag was appointed to the Compensation Committee. None of Messrs. Dowden, Mesdag and Watkins was an officer or employee of the Company at any time during 2010. Ms. Francis was a founder of the Company and has been at various times an officer or employee of the Company or Hughes Development Corporation, a predecessor of the Company, since 1972. As noted above, Mr. Dean served as the Company's President and Chief Executive Officer during 2010. None of our executive officers, at any time during 2010, served on the Board of Directors or compensation committee of any entity that had one or more executive officers serving as a member of our Board or our Compensation Committee

        Ms. Francis is the sister-in-law of Eugene L. Hughes, a former member of our Board of Directors. Mr. Hughes previously informed the Company of his intention to retire as an employee of the Company effective as of December 22, 2008. The Company and Mr. Hughes subsequently entered into a Retirement and Consulting Agreement, dated as of December 9, 2008, pursuant to which Mr. Hughes provides consulting services to the Company for an initial term of eight years following his retirement. In exchange for such consulting services, Mr. Hughes will receive (i) annual compensation of $215,000 for the first two years of service, (ii) annual compensation of $100,000 for the remainder of the initial term, (iii) annual compensation of $50,000 after the initial term, and (iv) certain medical and life insurance benefits.

        Other than the Retirement and Consulting Agreement with Mr. Hughes, no member of the Compensation Committee at any time during 2010 had any relationship with us to be disclosed as a related person transaction.

Risk Assessment of Compensation Programs

        The Company's compensation programs are designed to maintain an appropriate balance between incentives for long-term and short-term performances by utilizing a combination of compensation components, including base salary, annual cash bonus awards, and long-term equity awards. Although not all employees in the organization have compensation comprised of all three of these components, our compensation programs are generally structured so that any cash bonus awards based on short-term performances are not likely to constitute the predominant element of an employee's total compensation package and that other components will serve to balance the package. For this reason, the Company does not believe that its use of any cash bonus awards based upon short-term performance is reasonably likely to encourage excessive risk-taking by the participants in those compensation programs.

        In addition, a significant portion of the compensation provided to named executive officers and other senior officers is in the form of long-term equity awards that are tied to the value of our common stock: as the stock price appreciates, the amount of compensation increases. Accordingly, these awards further align the interests of management with those of the Company's shareholders. As described previously, the vesting of equity awards granted in 2010 and 2011 to our named executive officers is subject to the attainment of certain performance goals, with such attainment to occur at any time over the 10 year term of the awards. The performance goals are tied to targeted levels of our operating margins and are intended to create and sustain long term performance, thereby creating shareholder value. The long period of time in which the performance goals triggering vesting may be

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achieved discourages unnecessary or excessive risk taking because the ultimate value of the awards is tied to the Company's stock price.

Executive Compensation

        The following table sets forth a summary, for the years ended December 31, 2010, 2009 and 2008, of the compensation of each individual serving as our principal executive officer during fiscal year 2010, the principal financial officer and the three most highly compensated executive officers of the Company (not including the principal executive officer and the principal financial officer) whose total compensation for the 2010 fiscal year was in excess of $100,000 and who were serving as executive officers at the end of 2010. The listed individuals shall be hereinafter referred to as the "named executive officers." No other executive officers who would have otherwise been includable in such table on the basis of total compensation for 2010` have been excluded by reason of their termination of employment or change in executive status during that year.

Summary Compensation Table

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Grants of Plan-Based Awards in Fiscal Year 2010

        The following table provides certain summary information concerning each grant of an award made to named executive officers in 2010 under a compensation plan.

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Outstanding Equity Awards at Fiscal Year-End

        The following table provides certain summary information concerning outstanding equity awards held by the named executive officers as of December 31, 2010: