UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

Filed by the Registrant  ☒                            Filed by a Party other than the Registrant  ☐

Check the appropriate box:

Gentherm Incorporated

(Name of registrant as specified in its charter)

(Name of person(s) filing proxy statement, if other than the registrant)

Payment of Filing Fee (Check the appropriate box):

April 21, 2020

Dear Gentherm Shareholders:

I am pleased to invite you to attend our 2020 Annual Meeting of Shareholders on Thursday, May 21, 2020, at 8:30 a.m., Eastern Daylight Time. We intend to hold the annual meeting at our Corporate Headquarters located at 21680 Haggerty Road, Northville, Michigan. However, we are actively monitoring developments related to the novel coronavirus (COVID-19), and we may announce alternative arrangements, which may include holding the meeting virtually solely by means of remote communication. We encourage you to check our website prior to the annual meeting if you are planning to attend in person.

Looking back on 2019, although Gentherm faced significant market and industry headwinds, we made significant progress in executing our Focused Growth strategy. We effectively executed against our strategic growth plans, building and extending our core business. We also completed the repositioning of our portfolio by divesting and/or exiting non-core businesses and product lines. Finally, we anticipated the challenging headwinds facing our industry and our company, and proactively repositioned our cost base. These initiatives combined enabled us to remain well positioned to drive earnings growth and shareholder value.

We achieved near record automotive awards, expanded operating margins, and generated record free cash flow. Achieving this in such a challenging environment demonstrated strong operational execution across our enterprise.    To highlight the point, our Operating Income increased $11.5 million from 2018 to 2019, or nearly 16% even though revenue decreased 7.3% due to automotive market headwinds and divested business revenue loss. Finally, even though we faced difficult automotive demand decreases around the world, we outperformed the market significantly. Excluding the impact of foreign currency translation and the GM strike, we declined 0.6% in full organic Automotive revenue compared to a decline of nearly 6% in global vehicle production.

Let me give a little more color on our businesses:

AUTOMOTIVE

Further strengthening our market position, the Gentherm team gained significant momentum by securing $1.5 billion in new automotive awards in 2019. We are building stronger relationships with our current customers and developing new relationships with additional automotive original equipment manufacturers to sustain future growth. Concurrently, we are delivering new solutions to the automotive market across our Climate and Comfort, Battery Thermal Management and Cell Connecting and Electronic Controls businesses.

MEDICAL

Patient thermal management is a significant differentiator for us, and our medical business continues to improve with double digit revenue growth in 2019. This was achieved through strong organic growth driven by the increased demand of the existing product portfolio and the impact of the acquisition of Stihler. Stihler compliments our medical portfolio with a unique solution for patient warming in the operating room utilizing a resistive technology.

THE FUTURE

The vehicle is transforming from a transportation utility to a product of luxury and lifestyle. This shift toward connected, intelligent vehicles brings strong momentum toward personalization. We believe this creates increased adoption of our climate and comfort portfolio and our ClimateSense^TM solution that is the anchor to our future. We are at the nexus of thermal health, wellness and comfort and are well positioned to provide solutions to our customers. Our development projects with luxury German, Asian and U.S. automakers, serves as evidence that ClimateSense^TM is a compelling solution that can help automakers improve thermal comfort AND greatly improve energy efficiency in the vehicles of the future.

The COVID-19 pandemic has presented unprecedented challenges for the global economy. The health and safety of our employees, customers and communities remains our top priority. Our dedicated teams across the globe are operating in a highly dynamic situation where we are focused on moving with agility, speed and decisiveness. We have implemented several measures to protect the future of Gentherm, including additional borrowing under our revolving credit facility and prudently addressing operating expenses, inventory levels and capital spending in order to increase our cash position and provide additional financial flexibility. Our global teams are operating in this highly dynamic situation by managing our supply chain and manufacturing to the best of our ability to meet customers’ expectations while adapting our business model to the post-COVID-19 economy.

I am extremely proud of our global team’s agility, dedicated effort and perseverance to thrive in the challenging market we are facing, enabling us to deliver on our strategy. Together, we remain focused on our mission to create and deliver extraordinary thermal solutions that make meaningful differences in everyday life, by improving health, wellness, comfort and energy efficiency.

Sincerely,

Phillip M. Eyler

President and Chief Executive Officer

April 21, 2020

Dear Fellow Shareholders:

On behalf of the Board, I want to thank you for your investment in Gentherm. The Board represents you as shareholders, and we take this role very seriously. We appreciate the trust you place in us.

CHAIR SUCCESSION

In January, I informed the Company’s Board of my intention to retire at the end of my current term, and I will not be standing for re-election at the 2020 Annual Meeting of Shareholders. It has been a great privilege to serve Gentherm for the past 19 years. I am very proud of what we have accomplished and to have been part of Gentherm’s history. The Board unanimously agreed to appoint Ronald Hundzinski as the new Chair of the Board effective as of the annual meeting, subject to his re-election. I have tremendous confidence in Ron, the Board and the Company’s leadership.

BOARD COMPOSITION

Since becoming Chair in 2016, it has been one of my priorities to ensure that our Board is comprised of members with diverse experiences, skills, backgrounds and perspectives.

Our Board refreshment efforts have been very successful, with five of seven directors following the annual meeting newly appointed since 2016. At my retirement, I am delighted with our highly qualified and diverse Board.

As our business moves forward, I am confident that our Board will continue its critical oversight of the Company’s long-term business strategy. The directors are actively engaged in Gentherm’s mission and delivering long-term shareholder value. I believe that Gentherm’s best days are yet to come.

Francois Castaing

Non-executive Chair of the Board

Dear Fellow Shareholders:

We are grateful to Francois for the significant and lasting impact he has made on the automotive industry, our community and to Gentherm, where he has served our Company with great distinction. It has been a privilege to serve on the Board with Francois, and I am honored to have been chosen to succeed him as Board Chair.

Driven by our vision to create and deliver extraordinary thermal solutions, Gentherm is well-positioned for success and to deliver shareholder value over the years ahead. As our 2020 annual meeting approaches, our Board would like to highlight our focus on the following areas:

SUSTAINABILITY AND SOCIAL RESPONSIBILITY

The Company and the Board are focused on corporate social responsibility. In 2020, we are making major strides to demonstrate our commitment with our first Gentherm Sustainability Report, the creation of a multidisciplinary steering committee and focused Board oversight by the Corporate Governance Committee.

HUMAN CAPITAL MANAGEMENT

We remain very active in the oversight and implementation of Gentherm’s talent development, leadership and succession planning initiatives. Our culture is rooted in four Winning Culture Behaviors: Customer Focus, Employee Engagement and Inclusion, Global Mindset, and Performance and Accountability.

We are investing in and empowering our teams and provide a diverse working environment that values and harnesses the power of our employees’ varied backgrounds, cultures and experiences. Our culture fosters a passion to challenge status quo and be innovators of creative solutions for customers.

On behalf of the Board of Directors, thank you for your continued investment and support of Gentherm. We respectfully request you to vote in accordance with our recommendations at the annual meeting.

Ronald Hundzinski

Non-executive Chair-Elect of the Board

GENTHERM INCORPORATED

NOTICE OF 2020 ANNUAL MEETING OF SHAREHOLDERS

Our 2020 Annual Meeting of Shareholders will be held on Thursday, May 21, 2020, at 8:30 a.m., Eastern Daylight Time, at our Corporate Headquarters located at 21680 Haggerty Road, Northville, Michigan* to conduct the following items of business:

Only holders of our common stock at the close of business on April 6, 2020, the record date, are entitled to receive this notice and to attend and vote at the annual meeting.

We have elected to furnish proxy materials to you primarily through the Internet. On or about April 21, 2020, we intend to mail to our shareholders of record a Notice of Internet Availability of Proxy Materials containing instructions on how to access the accompanying proxy statement and our 2019 annual report to shareholders through the Internet and how to vote.

By Order of the Board of Directors

Wayne Kauffman

Vice President, General Counsel and Secretary

Northville, Michigan

April 21, 2020

Your vote is very important. Whether or not you plan to attend the meeting, we urge you to vote promptly and save us the expense of additional solicitation. If you attend the annual meeting, you may revoke your proxy in accordance with the procedures set forth in the proxy statement and vote in person.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD MAY 21, 2020

The Notice of 2020 Annual Meeting of Shareholders, the accompanying Proxy Statement, and the 2019 annual report to shareholders are available at www.edocumentview.com/THRM.    

Table of Contents

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

MAY 21, 2020

Proxy Summary

This proxy summary does not contain all of the information that you should consider. You should read the entire proxy statement before voting. For more complete information regarding the 2019 performance of Gentherm Incorporated (the “Company” or “Gentherm”), review our 2019 annual report to shareholders. The notice of annual meeting, this proxy statement and the form of proxy were first mailed to shareholders of record of our common stock on or about April 21, 2020.

PLEASE VOTE TODAY

Your vote is important. Whether or not you plan to attend the 2020 annual meeting of shareholders (the “annual meeting”), we urge you to vote promptly to save us the expense of additional solicitation. Please carefully review the proxy materials and follow the instructions below to cast your vote on all of the proposals.

PROPOSALS, BOARD RECOMMENDATIONS AND REQUIRED VOTE

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VOTING METHODS IN ADVANCE OF ANNUAL MEETING

Even if you plan to attend the annual meeting, please vote in advance. Make sure to have your notice, proxy card or voting instruction card and follow the instructions. If you are a record holder, you may vote using one of the following methods. If you are a beneficial owner, you may vote using one of the methods listed on your voting instruction card.

Online		By Phone		By Mail
www.investorvote.com/THRM		1-800-652-VOTE (8683)		Request a printed copy of the proxy materials and complete, sign and return your proxy card

On or about April 21, 2020, we intend to mail to our shareholders of record a Notice of Internet Availability of Proxy Materials (the “notice”). The notice will contain instructions on how to access this proxy statement and our 2019 annual report to shareholders, which includes our annual report on Form 10-K for the year ended December 31, 2019, through the Internet and how to vote through the Internet. The notice also will include instructions on how to receive such materials, at no charge, by paper delivery (along with a proxy card) or by e-mail. Beneficial owners will receive a similar notice from their broker, bank, or other nominee. Please do not mail in the notice, as it is not intended to serve as a voting instrument. Notwithstanding anything to the contrary, we may send certain shareholders of record a full set of proxy materials by paper delivery instead of the notice or in addition to sending the notice.

Attend and Vote at Annual Meeting

INDEX OF FREQUENTLY REQUESTED INFORMATION     

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BUSINESS OVERVIEW

Gentherm is a global developer and marketer of innovative thermal management technologies for a broad range of heating and cooling and temperature control applications. Our mission is to create and deliver extraordinary thermal solutions that make meaningful differences in everyday life, by improving health, wellness, comfort and energy efficiency. Our products provide solutions for automotive passenger climate comfort and convenience, battery thermal management and cell connecting systems, as well as patient temperature management within the health care industry. Our automotive products can be found on the vehicles of nearly all major automotive manufacturers operating in North America and Europe, and several major automotive manufacturers in Asia. We operate in locations aligned with our major customers’ product strategies to provide locally enhanced design, integration and production capabilities. The Company is also developing a number of new technologies and products that will help enable improvements to existing products and to create new product applications for existing and new markets that will positively impact people’s lives around the world.

2019 COMPANY PERFORMANCE HIGHLIGHTS

Highlights of Gentherm’s 2019 performance include⁽¹⁾:

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DIRECTOR NOMINEES – HIGHLY SKILLED, EXPERIENCED AND DIVERSE BOARD

The Board of Directors of the Company (the “Board”) currently consists of nine directors. Francois Castaing, the non-executive Chair of the Board, and Maurice E.P. Gunderson are retiring from the Board effective prior to the annual meeting. As of the annual meeting, the Board size will be seven directors. The Board has re-nominated the remaining seven directors. The Nominating Committee has engaged the outside national consulting firm Egon Zehnder to assist in conducting a search process to identify two new directors in connection with the retirement of Messrs. Castaing and Gunderson, and the Board intends to increase its size concurrent with the appointment of new directors.

All directors are elected annually and serve one-year terms until a successor has been duly elected and qualified or until such director’s earlier resignation, retirement or other termination of service. The following table provides summary information about such director nominees.

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2019 NAMED EXECUTIVE OFFICER COMPENSATION – CONTINUATION OF SIGNIFICANT 2018 CHANGES

At the annual meeting, shareholders are being asked to provide advisory (non-binding) approval of the compensation of our named executive officers (“NEOs”) in 2019, as disclosed in this proxy statement in accordance with the rules of the Securities and Exchange Commission (the “SEC”), commonly known as a “say-on-pay” proposal. See “Compensation Discussion and Analysis” beginning on page 30 for information regarding our compensation philosophy, objectives and design, our compensation-setting process and our executive compensation program components, as well as the decisions made for 2019 with respect to each of our NEOs.

COMPENSATION GOVERNANCE

2019 COMPENSATION PROGRAM KEY TAKEAWAYS

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A COMMITMENT TO REASONABLE GOVERNANCE FOR THE BENEFIT OF THE COMPANY AND ITS SHAREHOLDERS

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Proposal No. 1—Election of Directors

The Board currently consists of nine directors. Francois Castaing, the non-executive Chair of the Board, and Maurice E.P. Gunderson are retiring from the Board effective prior to the annual meeting. As of the annual meeting, the Board size will be seven directors. The Board has re-nominated the remaining seven directors, listed below.

We believe each of the Board’s nominees meets the qualifications, skills and expertise established by the Board for continuing service on the Board, including regarding areas that are critical to the Company’s strategy and operations, and will continue to collectively serve in the best interests of the shareholders and Company.

All directors are elected annually and will serve one-year terms until the 2021 annual meeting of shareholders or until a successor has been duly elected and qualified, or until such director’s earlier resignation, retirement or other termination of service. The Board has affirmatively determined that the director nominees, except Mr. Eyler, are independent under the applicable rules of the Nasdaq Global Select Market (“Nasdaq”).

Each nominee has consented to be listed in this proxy statement and agreed to serve as a director if elected by the shareholders. If any nominee becomes unable or unwilling to serve between the date of this proxy statement and the annual meeting, which we do not anticipate, the Board may designate a new nominee and the persons named as proxies in the attached proxy card will vote for that substitute nominee (unless the proxies were previously instructed to withhold votes for the nominee who has become unable or unwilling to serve). Alternatively, the Board may reduce the size of the Board.

The Board recommends that you vote FOR the election of each of the director nominees.

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SPECIFIC QUALIFICATIONS, ATTRIBUTES, SKILLS AND EXPERIENCE TO BE REPRESENTED ON THE BOARD

The Nominating Committee is responsible for reviewing and assessing with the Board the appropriate skills, experience and background sought of Board members. The Nominating Committee and the Board review and assess the continued relevance of and emphasis on these factors as part of the Board’s self-assessment process and in connection with candidate searches to determine if they are effective in helping to satisfy the Board’s goal of creating and sustaining a Board that can appropriately support and oversee the Company’s activities and strategy.

We believe our directors have an appropriate balance of knowledge, experience, attributes, skills and expertise as a group to ensure that the Board appropriately fulfills its oversight responsibilities and acts in the best interests of shareholders and the Company. To complement the skills and experience represented by our continuing directors and in connection with the retirements of Messrs. Castaing and Gunderson, the Nominating Committee has engaged the outside national consulting firm Egon Zehnder to assist in conducting a search process to identify two new directors. The Board intends to increase its size concurrent with the appointment of new directors.

Although specific qualifications for Board membership may vary from time to time, desired qualities include (A) the highest ethical character, integrity and shared values with the Company, (B) loyalty to the Company and concern for its success and welfare, (C) sound business judgment, and (D) sufficient commitment and availability to effectively carry out a director’s duties. Listed below are additional key skills and experience that we consider important for our directors to have in light of our current business and structure. The biographies of the director nominees set forth their specific experience, qualifications, attributes and skills that led to the Nominating Committee’s conclusion that each director nominee should serve or continue to serve on the Board. Below is a summary of key skills and experience represented by our director nominees.

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BOARD DIVERSITY

The Company does not have a specific diversity policy underlying its nomination process, although it seeks to ensure the Board includes directors with diverse backgrounds, qualifications, skills and experience relevant to the Company’s business. Below is a summary of the breakdown of our director nominees by gender, age and tenure:

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Director Nominee Background and Qualifications

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A BOARD SUBSTANTIALLY CONSISTING OF INDEPENDENT DIRECTORS

The Board believes that there should be at least a majority of independent directors on the Board. The Board recently undertook its annual review of director independence in accordance with the applicable rules of Nasdaq. The independence rules include a series of objective tests, including that the director is not employed by us and has not engaged in various types of business dealings with us. In addition, the Board is required to make a subjective determination as to each independent director that no relationship exists which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Consistent with these considerations, the Board has affirmatively determined that each of Mr. Castaing, Ms. Desormière, Mr. Gunderson, Ms. Hao, Mr. Hundzinski, Mr. Kummeth, Dr. Shaw and Mr. Stacey are independent under the applicable rules of Nasdaq. Mr. Eyler is employed by us and therefore is not an independent director.

Each member of the Audit Committee, the Compensation Committee, the Nominating Committee, the Corporate Governance Committee, the Mergers and Acquisitions Committee and the Technology Committee is independent under Nasdaq rules. In addition, the Board has affirmatively determined that the members of the Audit Committee and Compensation Committee qualify as independent in accordance with the additional independence rules established by the SEC and Nasdaq.

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Board Matters

THE BOARD OF DIRECTORS

GENERAL

The Board has general oversight responsibility for our affairs and, in exercising its fiduciary duties, the Board represents and acts on behalf of the shareholders. Although the Board does not have responsibility for our day-to-day management, it stays regularly informed about our business and provides oversight and guidance to our management through periodic meetings and other communications. The Board provides critical oversight in, among other things, our strategic planning process, leadership development and succession planning, risk management, as well as other functions carried out through the Board committees as described below.

SIGNIFICANT INDEPENDENT BOARD LEADERSHIP

The Company’s current Board leadership is as follows:

The Board believes that, by separating the positions of Chair of the Board and Chief Executive Officer, the Board can provide significant leadership to management and strong oversight of key opportunities and risks impacting the Company. If the Chair of the Board is not independent under the applicable rules of Nasdaq, the Board has adopted a policy of appointing a Lead Independent Director. The Lead Independent Director would act as chairperson of all meetings of the independent directors and would have the authority to call additional meetings of the independent directors at any time. The Lead Independent Director also would act as a liaison both between the Chair of the Board and the Chief Executive Officer, on the one hand, and the independent directors, on the other hand. As Mr. Castaing and his successor, Mr. Hundzinski, are independent, the Board has not appointed a Lead Independent Director at this time.

Further, the committees consist solely of independent directors and provide significant oversight and leadership of key Board functions and considerations.

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BOARD AND COMMITTEES DEEPLY FOCUSED ON THE OVERSIGHT OF RISK MANAGEMENT

The Board oversees the Company’s risk management directly and through its committees:

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BOARD OVERSIGHT OF DEVELOPMENT AND IMPLEMENTATION OF COMPANY STRATEGY

One of the most important activities of the Board and the committees is to provide guidance and oversight to management regarding establishing, revising and implementing the Company’s long-term strategy. The Board and its committees regularly provide guidance and oversight. The Board receives updates from management and discusses various elements of the strategy at each Board meeting, and dedicates meetings periodically to focus solely on strategy. The Board also periodically discusses with members of management below the executive level the Company’s strategy and performance to inform its perspective on progress against the long-term strategy and ensure that it is able to effectively perform its oversight responsibilities. The Company’s senior management team, consisting of the President and CEO and all of his direct reports, holds periodic meetings to review the Company’s strategy and the implementation thereof.

STRONG DIRECTOR ATTENDANCE AT BOARD AND COMMITTEE MEETINGS

The Board and its committees meet throughout the year on a set schedule, and also hold special meetings and act by written consent from time to time as appropriate. The Board met six times in 2019. The independent directors hold regularly scheduled executive sessions to meet without management present. These executive sessions generally occur around regularly scheduled meetings of the Board. The independent directors also hold additional meetings periodically as deemed necessary or appropriate.

All directors are expected to attend all meetings of the Board and of the Board committees on which they serve. Each director serving in 2019 (as of and from the date he or she joined the Board and applicable committees) attended more than 92% of the aggregate of all meetings of the Board and the committees of which he or she was a member in 2019.

The Board has adopted a policy strongly encouraging directors to attend the Company’s annual meeting of shareholders in person or, if necessary, by telephone or similar communication equipment. All current directors attended the 2019 annual meeting of shareholders.

BOARD OVERSIGHT OF MANAGEMENT SHAREHOLDER ENGAGEMENT

Our management regularly engages with shareholders to understand their perspectives on the Company, our business and their concerns. Management held discussions during 2019 with approximately 55% of our shareholders who are active managers (i.e., excluding index funds and others who do not meet with management of similarly situated companies). Management meets with shareholders during scheduled events, as well as in private meetings held throughout the year.

Our directors are available to meet with key shareholders as appropriate. In 2018, the Chair of the Compensation Committee participated during our significant shareholder engagement effort to obtain feedback on our executive compensation program.

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STANDING COMMITTEES OF THE BOARD

The Board has delegated various responsibilities and authority to Board committees. Except as described below for the Nominating Committee, each committee has regularly scheduled meetings and reports on its activities to the full Board. Each committee operates under a written charter approved by the Board, which is reviewed annually by the respective committee and the Board and is available on our website, www.gentherm.com, under the “Investor Relations – Corporate Governance” tab. The table below sets forth the current membership for the Board committees and the number of meetings held for each in 2019.

Director

Audit

Compensation

Corporate Governance

M&A

Nominating

Technology

Francois Castaing

Sophie Desormière

Maurice E.P. Gunderson

Yvonne Hao

Ronald Hundzinski

Charles Kummeth

Byron Shaw II

John Stacey

2019 Meetings

7

4

2

2

0(1)

2

Chair

Member

AUDIT COMMITTEE

The Audit Committee’s responsibilities include:

The responsibilities and activities of the Audit Committee are described in greater detail in “Audit Committee Report” and “Audit Committee Matters,” as well as in its charter.

The Board has determined that each Audit Committee member has sufficient knowledge in reading and understanding financial statements to serve on the Audit Committee. The Board has further determined that three of the Audit Committee members, Mr. Gunderson, Ms. Hao and Mr. Hundzinski, qualify as “audit

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committee financial experts” in accordance with SEC rules. The designation of an “audit committee financial expert” does not impose upon such persons any duties, obligations or liabilities that are greater than those which are generally imposed on each of them as a member of the Audit Committee and the Board, and such designation does not affect the duties, obligations or liabilities of any other member of the Audit Committee or the Board.

COMPENSATION COMMITTEE

The Compensation Committee’s responsibilities include:

The Compensation Committee also has the sole authority to engage outside advisors and establish the terms of such engagement. The Compensation Committee may form and delegate its authority to subcommittees as appropriate. The responsibilities and activities of the Compensation Committee are described further in “Compensation Discussion and Analysis,” as well as in its charter.

Role of Management.    The Compensation Committee regularly receives significant input from management with respect to the Company’s executive compensation program. See “Compensation Discussion and Analysis” for further information.

Role of Compensation Consultant.    The Compensation Committee has the sole authority to engage outside advisors and establish the terms of such engagement, including compensatory fees. In connection with any such engagement, the Compensation Committee reviews the independence of such outside advisor, based on the factors specified by Nasdaq as well as any other factors it deems appropriate, and any conflicts of interest raised by the work of such outside advisor.

In 2019, the Compensation Committee determined to re-engage the compensation consultant it engaged in 2018, ClearBridge Compensation Group, LLC (“ClearBridge”), to provide advice regarding an appropriate peer group, to benchmark our executive and director compensation programs against peer group and general market survey data, to provide input on our executive compensation plan design and equity usage and allocation, to assist with the Compensation Committee’s compensation risk assessment, and to provide advice regarding the proposed amendment to the 2013 Equity Plan (Proposal No. 4). See “Compensation Discussion and Analysis” for further information.

The Compensation Committee’s determination to engage ClearBridge, and approve the terms of such engagement, was made independently from the Company’s management. Upon engagement, the Compensation Committee worked with management to determine the compensation consultant’s responsibilities and direct its work product, although the Compensation Committee was responsible for the formal approval of the work plan. During 2019, ClearBridge received no other compensation for other

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services provided to the Company, and the Compensation Committee also has determined there are no conflicts of interest raised by the work of ClearBridge.

CORPORATE GOVERNANCE COMMITTEE

The Corporate Governance Committee’s responsibilities include:

The Corporate Governance Committee may form and delegate its authority to subcommittees as appropriate. The responsibilities and activities of the Corporate Governance Committee are described in greater detail in its charter.

NOMINATING COMMITTEE

The Nominating Committee’s responsibilities include:

The responsibilities and activities of the Committee are described in greater detail in its charter.

The Nominating Committee reviews and makes recommendations to the Board, from time to time, regarding the appropriate skills and characteristics required of Board members in the context of the current make-up of the Board, the operations of the Company and the long-term interests of shareholders, as further discussed in this proxy statement. The Nominating Committee does not have a specific diversity policy underlying its nomination process, although it seeks to ensure the Board includes directors with diverse backgrounds, qualifications, skills and experience relevant to the Company’s business and strategy.

Generally, the Nominating Committee will re-nominate incumbent directors who continue to satisfy the Nominating Committee’s criteria for membership on the Board, continue to make important contributions to the Board and consent to continue their service on the Board. If a vacancy on the Board occurs or the Board increases in size, the Nominating Committee will actively seek individuals that satisfy the Nominating Committee’s criteria for membership on the Board and the Nominating Committee may rely on multiple sources for identifying and evaluating potential nominees, including referrals from our current directors and management.

During 2020, the Nominating Committee established a Search Committee chaired by Mr. Stacey and engaged the outside national consulting firm, Egon Zehnder, to assist in conducting a search process to identify two new directors in connection with the retirement of Messrs. Castaing and Gunderson. The Nominating Committee has completed a thorough evaluation of current Board composition to focus the search process on candidates with key skills and experiences to further strengthen our Board. The Board intends to increase the size of the Board concurrent with the appointment of new directors.

The Nominating Committee will evaluate nominees recommended by shareholders against the same criteria that it uses to evaluate other potential nominees. Nominations by shareholders intending to run a director slate in opposition to Company nominees must be sent on a timely basis and otherwise in accordance with our Bylaws and other applicable law and regulations. Please refer to “Additional Information—Requirements for Submission of Shareholder Proposals and Nominations for 2021 Annual

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Meeting.” We did not receive any recommendations for director nominations from shareholders for the 2020 annual meeting.

TECHNOLOGY COMMITTEE

The Technology Committee evaluates and advises management with respect to the development and use of technology by the Company for use in its current and potential future products, including the long-term strategic goals of the Company’s research and development initiatives. The Technology Committee also advises management on its policies and procedures surrounding cybersecurity and data privacy. The responsibilities and activities of the Technology Committee are described in greater detail in its charter.

MERGERS AND ACQUISITION COMMITTEE

The Mergers and Acquisitions Committee’s responsibilities include reviewing the Company’s strategy regarding mergers, acquisitions, investments and dispositions at least annually, reviewing, approving or making recommendations to the Board to approve, as appropriate, proposed mergers, acquisitions, investments or dispositions involving a material amount of assets, a portion of any business or total estimated purchase price or investment (with such threshold of “material” as determined by the Board from time to time) and overseeing the post-closing integration and analyses of such transactions. The responsibilities and activities of the Mergers and Acquisition Committee are described in greater detail in its charter.

CORPORATE GOVERNANCE

The Board, as well as management, is committed to responsible corporate governance to ensure that we are managed for the benefit of our shareholders. To that end, the Board and management periodically review and update our corporate governance policies and practices and make changes to such policies and practices, as appropriate.

A copy of the Board’s committee charters, the Code of Business Conduct and Ethics (the “Code of Conduct”) and the Corporate Governance Guidelines are available on our website, www.gentherm.com, under the “Investor Relations – Corporate Governance” tab and will be sent to any shareholder, without charge, upon written request to Corporate Secretary, Gentherm Incorporated, 21680 Haggerty Road, Northville, MI 48167.

The Board has adopted the Corporate Governance Guidelines, which provide a structure within which our directors and management can effectively pursue the Company’s objectives for the benefit of our shareholders. The Corporate Governance Guidelines address, among other things, Board and committee structure, composition and procedures, director responsibilities, compensation and continuing education, as well as shareholder communications with the Board.

MAJORITY VOTING POLICY FOR DIRECTORS – ENABLING SHAREHOLDER CONCERNS TO BE FORMALLY REVIEWED BY THE BOARD

The Corporate Governance Guidelines provide that if any nominee for director receives a greater number of votes “withheld” from his or her election than votes “for” such election, then the applicable director must promptly tender his or her resignation, conditioned on Board acceptance, following certification of the shareholder vote; provided, however, that this does not apply when the number of individuals nominated for election exceeds the number of directors to be elected, including as a result of a proxy contest. The Board, upon recommendation of the Nominating Committee, will determine whether to accept such resignation offer. The Board will promptly publicly disclose in reasonable detail its decision and rationale regarding the acceptance or rejection of the resignation, as applicable. If a director’s resignation is accepted by the Board, the Board may either fill the resulting vacancy or decrease the size of the Board pursuant to our Bylaws.

MEANINGFUL ANNUAL PERFORMANCE EVALUATIONS OF BOARD AND COMMITTEES IMPACTING BOARD FUNCTIONS

The Corporate Governance Committee oversees the annual performance evaluation process for the Board and its committees. The self-evaluations are used to assist in the determination of whether the Board and its committees are functioning effectively and, as appropriate, the assessment of director performance and contribution levels. The Board may periodically engage a third party independent advisor to facilitate the Board self-evaluation process. The Board and its committees are evaluated across a number of topics,

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with the use of a questionnaire to facilitate the process. Areas of focus include performance, structure, conduct of meetings, quality of information and its timely dissemination, level and robustness of discussion, engagement with management and other key employees, and prioritization of topics for discussion.

The Board reviews and discusses the evaluation results and any actions to be taken as a result of the discussion, and each committee reviews and discusses its own evaluation results. The Board also reviews the Corporate Governance Committee’s periodic recommendations concerning the performance and effectiveness of the Board and its committees.

NO DIRECTOR OVERBOARDING

The Board believes that service on the boards of other public companies provides valuable governance and leadership experience that ultimately benefits the Company. The Board also recognizes that outside public board service requires a significant commitment of time and attention, and therefore limits director participation on other public boards. Under the Corporate Governance Guidelines, directors who are active CEOs of other public companies may sit on no more than two additional outside public boards (including his/her own company board), and other non-employee directors may sit on no more than four additional outside public boards. This practice helps ensure that our directors can give appropriate levels of time and attention to the affairs of the Company. In addition, when nominating a director for service on the Board, the Nominating Committee considers whether the nominee will have adequate time to serve as a director. Each director has demonstrated strong engagement and high attendance and has appropriate time to devote to the affairs of the Company.

CODE OF CONDUCT – ESTABLISHING KEY PRINCIPLES TO GUIDE EMPLOYEES AND DIRECTORS

The Board has adopted the Code of Conduct, which sets out the basic principles to guide the actions and decisions of our employees, directors and officers, including our principal executive officer, principal financial officer and principal accounting officer. The Code of Conduct addresses, among other things, ethical principles, insider trading, conflicts of interest, compliance with laws and confidentiality. Any amendments to the Code of Conduct, or any waivers that are required to be disclosed by the rules of either the SEC or Nasdaq, will be posted on our website, www.gentherm.com, under the “Investor Relations – Corporate Governance” tab within four business days of any such amendment or waiver.

SUCCESSION PLANNING AND TALENT MANAGEMENT PLANNING FOR THE COMPANY’S FUTURE

Our Board engages in an annual succession planning process to understand our readiness and the related transition risks for an unplanned loss of an employee or an imminent planned transition. Additionally the process identifies the company’s high potential talent and strategic workforce plans. The Board regularly reviews CEO succession planning with Mr. Eyler as well as in executive session, and the CEO provides quarterly reviews on each member of senior management. Each Board member has open access to any member of management. Senior management is invited regularly to make presentations at Board and committee meetings as well as meet with directors in an informal setting to allow directors to form a more complete understanding of each executive’s skill and character.

BOARD RECOGNITION OF INTERESTS OF EMPLOYEES AND OTHER KEY STAKEHOLDERS – CORPORATE SUSTAINABILITY AND SOCIAL RESPONSIBILITY 

Our management has initiated a formal, company-wide corporate social responsibility program and identified social responsibility and sustainability as strategic priorities for 2020. A multidisciplinary steering committee has been formed to lead our efforts, with oversight responsibility by the Corporate Governance Committee. Our corporate social responsibility efforts are focused on our people (building a winning culture), planet (having a positive impact on our environment) and places (reflecting our commitment to our communities). We are committed to enhancing the disclosure of our initiatives and outcomes, commencing with our inaugural Gentherm Sustainability Report, which we published in April 2020.

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BOARD OVERSIGHT OF HUMAN CAPITAL MANAGEMENT AND CORPORATE CULTURE 

Gentherm’s mission is to create and deliver extraordinary thermal solutions that make meaningful differences in everyday life, by improving health, wellness, comfort and energy efficiency. Our mission is connected to everything we do in building and developing our people and culture. Our Board plays a critical role in oversight of our culture and talent practices at Gentherm for the benefit of all team members.

The Board is highly focused on the Company’s talent development, leadership and succession planning initiatives and progress, among all levels of leadership. The executive team presents on these and other critical matters through frequent presentations to the Board. The Board also reviews talent assessment and development plans for the executive team on a regular basis and succession plans for the executive team on an annual basis.    

Company Culture

Gentherm’s culture is built on our four Winning Culture Behaviors: Customer Focus, Employee Engagement and Inclusion, Global Mindset, and Performance and Accountability. Every team member is empowered to have a direct impact on the Company by working together to build a strong and inclusive workplace for all employees.

We are a truly global company, and having a global mindset is critical for employees to succeed at Gentherm. We invest in our people and provide a diverse working environment that values and harnesses the power of our employees’ varied backgrounds, cultures and experiences. When we value the diversity of our employees, we are better equipped to meet the demanding and shifting challenges of the global economy.

Diversity and Inclusion

In 2018, we launched the Gentherm Women’s Network. This global network is aimed at making sure that each one of our employees is valued for their contributions and provides the support to grow personally and professionally. Though called the Women’s Network, the program is open to all Gentherm employees, both men and women, and aims to serve our entire team, promoting diversity, openness, and respect. Since launching, more than 12 chapters have opened across our global locations.

Employee Engagement

We recognize that building an inclusive and high-performance culture requires an engaged workforce, where employees are motivated to do their best work every day. Our engagement approach centers on communication at every level of the Company. We communicate with our employees in a variety of ways, including quarterly global town halls with the Chief Executive Officer, executive site visits and employee round tables, Company intranet, and regional team meetings.

We have introduced engagement teams in 2019 to focus on diversity and inclusion, employee health and safety, community efforts and overall employee satisfaction. Hearing directly from our employees is an essential part in understanding what is important to them.

In 2019, we conducted employee engagement and satisfaction surveys at facilities that are the primary work locations for over 93% of our employees. Our sites administer surveys locally, allowing them to focus on the site relevant issues, concerns, and topics. This feedback helps us understand where we need to focus our energy and resources to continue to build the best environment to build a culture of feedback.

Talent Development

With a global reach and an eye towards the future, our goal is to provide our employees with careers that they love. We believe that many of our future leaders are already part of our team today, and we work to develop our people and help them be the best that they can be. Our Performance Management Process utilizes a wide array of tools to evaluate performance, provide growth and learning opportunities and to help plan for each employee’s future.

The key tenet of our performance management process is the principle of everyday coaching and ensuring our leaders have regular discussions with employees about their goals and development. By providing a structured process for our professional level employees, we are better able to ensure solid feedback, coaching and development.

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We have also recently launched a leadership development program, !MPACT Leadership, to develop leadership capability through a two-day training. Attendees learn about communication skills, coaching for performance, cultural awareness and leading others through change.

Health and Safety

At Gentherm, safety is an essential part of how we operate. Vision Zero, our safety mission, is a globally known approach and mindset that aims to eliminate work accidents and injuries. We aim to reduce injuries and accidents through these seven golden principles:

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DIRECTOR COMPENSATION

Non-employee directors of the Board receive both cash and equity compensation. Such compensation is intended to encourage non-employee directors to continue Board service, further align the interests of the Board and shareholders, and attract new non-employee directors with outstanding skills and qualifications. Directors who are employees or officers of the Company do not receive any additional compensation for Board service.

The Board has delegated to the Compensation Committee the responsibility, among other things, to review and make recommendations to the Board regarding any proposed changes to the non-employee director compensation program. The Compensation Committee typically reviews the non-employee director compensation program every other year. In connection with such review, the compensation consultant to the Compensation Committee provides analysis regarding market trends and benchmarking data.

2019 DIRECTOR COMPENSATION PROGRAM – REVISIONS BASED ON MARKET DATA

In November 2018, the Compensation Committee reviewed peer group benchmarking data (using the same peer group used for NEO compensation), general industry data and related information presented by ClearBridge, its compensation consultant. ClearBridge noted that the compensation program aligned with market trends from a design perspective. However, the data indicated that the Company’s total non-employee director compensation in effect for 2018 approximated the 25^th percentile of peers, with the overall cash retainer and Audit Committee cash retainer for 2018 meaningfully below the 50^th percentile. Based on such market information, the Compensation Committee determined to increase compensation to approximate the 50^th percentile. The Compensation Committee revised the non-employee director compensation, effective starting with the 2019 annual meeting of shareholders, only by:

The following table sets forth the compensation program for non-employee directors that was effective starting with the 2019 annual meeting of shareholders.

Consistent with historical practice, the annual cash retainers were paid to all of our directors in advance immediately following the 2019 annual meeting of shareholders.

The annual equity retainer is granted on the date of the annual meeting of shareholders in the form of restricted stock that vests in full on the first anniversary of the grant date. The restricted stock will be forfeited in the event of termination of service as a non-employee director of the Company prior to the first anniversary of the grant date, subject to acceleration of vesting upon retirement, and subject to the Compensation Committee’s right to accelerate the vesting of all or a portion of the restricted stock at any time. During the restricted period, the restricted stock entitles the participant to all of the rights of a shareholder, including the right to vote the shares and the right to receive any dividends thereon. Prior to the end of the restricted period, restricted stock generally may not be sold, assigned, pledged, or otherwise disposed of or hypothecated by participants.

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The Company does not provide any perquisites to directors, but does reimburse directors for out-of-pocket expenses incurred in attending Board and committee meetings.

2019 DIRECTOR COMPENSATION TABLE

The table below sets forth the compensation of each non-employee director in 2019.

At December 31, 2019, each current non-employee director had 2,490 shares of unvested restricted stock relating to the non-employee director compensation program. Mr. Gunderson also had 10,000 vested and unexercised stock option awards (granted to him previously for director service) having an exercise price of $11.08.

ENHANCED DIRECTOR STOCK OWNERSHIP REQUIREMENTS

In February 2019, the Board adopted revised stock ownership requirements for the directors of the Company, executive officers and other designated employees to further the alignment of shareholders and such persons. Non-executive directors are required to own common stock having a value of at least five times the base annual cash retainer (excluding other additional cash retainers). Compliance with the stock ownership requirement is computed on or about March 31 each year and is based on the 30-day average closing price of our common stock on such date. Shares included for compliance include shares held by directors individually, jointly or indirectly with his or her family members, or in a trust for the economic benefit of the director or his or her family members. Further, the value of “in-the-money” vested stock options and unvested restricted stock and RSUs that vest based on the passage of time also are included for purposes of the compliance test. Non-executive directors have five years after the new requirements were adopted, or after such director is first elected or appointed to the Board, to become compliant.

The new stock ownership requirements replace the previous requirements, pursuant to which each director was to hold stock having a value of at least $200,000 within four years of their election or appointment. Directors first elected or appointed prior to February 2019 remain subject to the prior requirement in the interim. As of December 31, 2019, all eligible non-executive directors held common stock having a value in excess of $200,000 and were within the compliance period for the new requirements and making appropriate progress.

The Compensation Committee is responsible for reviewing any non-compliance with the stock ownership requirements and has the discretion to enforce the requirements. Management of the Company is required to provide a report on compliance with these guidelines to the Compensation Committee on an annual basis, or more frequently as requested by the Compensation Committee.

Our CEO, other executive officers and other designated employees are subject to separate stock ownership requirements.

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SHAREHOLDER COMMUNICATION WITH THE BOARD

Shareholders wishing to send communications directly to the Board or to a specific director are asked to send such communications to Corporate Secretary, Gentherm Incorporated, 21680 Haggerty Road, Northville, MI 48167. Shareholders sending such communications should clearly mark them as intended for delivery to the Board or to a specific director. Our corporate secretary has been instructed by the Board to screen each communication so received only for the limited purposes of ascertaining (A) whether such communication is indeed from a shareholder and (B) whether such communication relates to the Company. Our corporate secretary will promptly forward copies of all such communications that pass such limited screening to each director, in the case of communications to the entire Board, or to the particular director addressee.

If a shareholder’s communication to the Board involves or concerns our corporate secretary, or if a shareholder has another appropriate reason for communicating to the Board through a means other than through our corporate secretary, such shareholder is asked to send such communication to the attention of either the Company’s President or the Chair of the Board, in either case at the address above. Any such communication should clearly state that it is a shareholder communication and the reason it was not delivered to our corporate secretary for further delivery to the Board.

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Executive Officers

The executive officers of the Company serve at the pleasure of the Board. The executive officers of the Company as of April 6, 2020 are as follows:

See “Director Nominee Background and Qualifications” for biographical and other information regarding Mr. Eyler.

Matteo Anversa was appointed Executive Vice President of Finance, Chief Financial Officer and Treasurer in January 2019. Prior to joining Gentherm, Mr. Anversa served as Executive Vice President and Chief Financial Officer of Myers Industries beginning in December 2016. At Myers Industries, he was responsible for driving cash flow, improving working capital, managing business restructuring and M&A activities, strengthening corporate controls and developing the Company’s IT strategy. Prior to Myers Industries, Mr. Anversa worked since 2013 at Fiat Chrysler Automobiles where he held executive management positions, including Vice President, Group FP&A Fiat Chrysler and Chief Financial Officer for Ferrari SpA where he helped prepare Ferrari for its initial public offering. Mr. Anversa began his career with General Electric where he held various leadership roles during his 16-year tenure. Mr. Anversa has served as a director of Gabelli Value for Italy (VALU) since March 2018, an Italian company listed on AIM Italia. Mr. Anversa holds a degree in Mechanical Engineering from the University of Parma, Italy.

Rafael Barkas was appointed Senior Vice President, Global Operations and Supply Chain in August 2019. Prior to this role, Mr. Barkas served as Vice President of Battery Thermal Management since October 2018. Mr. Barkas joined Gentherm from Magneti Marelli where he served as the Head of NAFTA Electronics from March 2018 to October 2018. In that role, he was responsible for leading sales, engineering, project management, purchasing, quality and manufacturing for Magneti Marelli’s Electronics Business Line in NAFTA. Prior to Magneti Marelli, Mr. Barkas held various roles of increasing responsibility at Harman International, a subsidiary of Samsung, from September 2004 through March 2018. These roles included responsibility for growth and profitability. He was the Vice President of Operations for the Automotive Audio division, responsible for managing manufacturing and quality across seven sites in North America, China and Europe. Other roles at Harman included Vice President and General Manager of the Automotive Audio division in China, and Director of Business Development and Director of Supply Chain of the Automotive Audio division. Mr. Barkas holds a Bachelor of Science in Mechanical Engineering from New Jersey Institute of Technology and a Master of Business Administration from the Graziadio School of Business and Management at Pepperdine University.

Yijing Brentano was appointed Senior Vice President, Investor Relations and Global Financial Planning and Analysis in June 2019. Prior to this role, Ms. Brentano served as the Senior Vice President of Investor Relations and Communications since February 2018. Before joining Gentherm, Ms. Brentano served as the Vice President of Investor Relations and Corporate Strategy at Harman International, a subsidiary of Samsung, from 2015 to 2017. Prior to that, she spent 17 years at Sprint Corporation in multiple

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executive positions, including Vice President of Strategic Initiatives and Mobile Health, General Manager of International Wholesale, Vice President of Investor Relations and business unit CFO roles. Ms. Brentano started her career at Ernst & Young and is a Certified Treasury Professional. She holds a Bachelor of Science from the University of Kansas and a Master of Business Administration from the University of Chicago Booth School of Business.

Matt Fisch was appointed Senior Vice President, Chief Technology Officer in April 2020. Mr. Fisch came to Gentherm from North American Bancard, a payments technology company, where he served as Executive Vice President and CTO of Hospitality Services since October 2019. Prior to joining North American Bancard, Mr. Fisch came from Verifone, a global leader in payments and commerce solutions, where he served as the Executive Vice President of Global R&D for Verifone from August 2018 to October 2019 and Senior Vice President of Global Engineering for Verifone since May 2016. At Verifone, he led research and development for all product lines, including hardware application and cloud software services. Prior to Verifone, he was the Vice President of R&D for Harman International’s lifestyle division from 2014 to 2016, where he led the global R&D organization that was responsible for developing Harman’s car audio business for North America, Europe, China, Japan and Korea. Prior to joining Harman, Mr. Fisch had a 22 year career at Intel Corporation where he held positions of increasing responsibility in Engineering. Mr. Fisch holds a Master of Engineering in Computer Engineering, and a Bachelor of Science in Electrical Engineering, both from Cornell University.

Paul Giberson was appointed Senior Vice President, Global Sales in November 2018 and more recently Managing Director in Europe in September 2019. Mr. Giberson joined Gentherm in 2006, starting as an account manager and moving to roles of ever-increasing responsibility, including Director of Sales and Marketing for North America in 2011 and Vice President of Automotive Sales in 2015. Mr. Giberson holds a Bachelor of Arts in Political Science from the University of Windsor and completed the Ivey Leadership Program at the Ivey Business School at Western University.

Wayne Kauffman was appointed Vice President, General Counsel and Secretary in July 2019. Prior to this role, Mr. Kauffman served as the Chief Intellectual Property Counsel and Associate General Counsel since 2016. He began his legal career with the national IP law firm of Harness, Dickey & Pierce, P.L.C. where he was responsible for assisting clients in securing patent rights. Mr. Kauffman began his career with General Motors, where he held various positions of increasing responsibility over his 17-year tenure in vehicle manufacturing, product development and vehicle safety and integration in both the U.S. and Canada. Mr. Kauffman holds a Juris Doctor in Law from Wayne State University and a Bachelor of Science in mechanical engineering from Kettering University.

Barbara J. Runyon was appointed Senior Vice President and Chief Human Resources Officer in August 2018. Prior to joining Gentherm, Ms. Runyon worked as Vice President and Chief Human Resources Officer at La-Z-Boy Incorporated since 2015. In that role, she was responsible for leading the overall human resources strategy for 9,000 global employees, including compensation and benefits, talent acquisition and management, employee engagement, employee relations and safety. Prior to La-Z-Boy, Ms. Runyon held roles of increasing responsibility for at PepsiCo/The Pepsi Bottling Group for over 14 years. Ms. Runyon graduated with a Master of Business Administration with emphasis in Organizational Development from Wayne State University and a Bachelor of Science in Human Resources from Michigan State University.

Thomas Stocker was appointed Senior Vice President and General Manager, Global Automotive in September 2019. Prior to joining Gentherm, Mr. Stocker was the Chief Technology Officer and Head of Engineering at HENSOLDT GmbH, a global defense and security electronics company, beginning September 2018. At HENSOLDT, he led the setup of change programs that established agile and platform development to increase efficiency, time to market and quality across all functions. Prior to HENSOLDT, Mr. Stocker held several senior level business unit leadership positions at Harman International, a subsidiary of Samsung, from September 2013 to August 2018. These roles included responsibility for growth, profitability, and technology execution. He was the Senior Vice President and General Manager, BMW focused business unit, responsible for all global Harman and Samsung business related to BMW. Other roles at Harman included Senior Vice President and General Manager, Connected Car Asia Pacific,

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where he was based in Shanghai and had responsibility for China, Korea, India, and Japan for the division. He was also responsible for the Connected Car Division in Europe as Senior Vice President and General Manager, Infotainment Europe. Prior to that, Mr. Stocker held various roles of increasing responsibility at BMW where he led the execution of some of the most advanced technology for the automaker. Mr. Stocker holds a Master’s degree in Electronics from Ravensburg-Weingarten University of Applied Science.

Hui (Helen) Xu was appointed Senior Vice President and General Manager, Global Electronics in November 2019. Prior to joining Gentherm, Ms. Xu was Vice President of China and Head of Automotive Division for China mainland, Hong Kong and Taiwan for Infineon Technologies, a semiconductor solutions company, from April 2012 to November 2019. At Infineon, she was responsible for the overall automotive business in Greater China and she focused on rapidly growing Infineon’s position in China while strengthening local customer relationships. Prior to that role, Ms. Xu was Vice President and China Managing Director, and Vice President of Sales, Marketing and Program Management for China, at International Automotive Components (IAC) Group. Previously, Ms. Xu worked for 8 years at Lear Corporation, holding international roles in China and the United States of increasing responsibility. Ms. Xu holds a Master of Business Administration from Walsh College, a Master of Science in mechanical engineering from Oakland University and a Bachelor of Science in mechanical engineering from Kettering University.

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Compensation Discussion and Analysis

This section of the proxy statement explains our compensation philosophy, objectives and design, our compensation-setting process and our executive compensation program components, as well as the decisions made for 2019 with respect to each of our NEOs. This section also provides certain other information as additional context for the “Named Executive Officer Compensation Tables” that follow.

Our NEOs for 2019 and their titles during such period were:

EXECUTIVE SUMMARY

2019 COMPANY PERFORMANCE HIGHLIGHTS

In 2019, we continued to make significant progress on our mission to transform and reposition Gentherm to be a more lean, efficient and productive company. Our efforts, which began in 2018, have successfully refocused the Company on our core operations in automotive and medical applications. We have divested non-core businesses and product lines, substantially reduced our operating costs, streamlined our manufacturing footprint and made significant progress toward improving both gross and operating margins.

We faced strong macroeconomic and automotive industry headwinds in 2019. Nonetheless, we continued to outperform in Automotive versus the key markets that we serve. Excluding the impact of foreign currency translation and the strike at General Motors, our 0.6% decrease in full-year organic Automotive revenue compares to a decline of nearly 6% in global vehicle production. In support of our long-term growth, the Gentherm team secured $1.5 billion in automotive awards in 2019, bringing total awards over the last two years to over $3.0 billion.⁽¹⁾ We have significantly broadened our customer base across numerous original equipment manufacturers while, simultaneously, expanding our automotive applications across a number of climate and comfort solutions, battery heating and cell connecting technologies in battery thermal management leveraging our proprietary thin foil technology, and expansion into multifunction electronic control units with integrated electronics and software for climate, memory seat and mirror control. In addition, we made great progress on ClimateSense^TM development projects with luxury German, Asian and U.S. automakers.

(1) See definition and explanation of automotive new business awards on page 3.

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In our Medical business, in 2019 we achieved double digit revenue growth through strong organic growth driven by demand for our existing products such as Blanketrol, augmented by the acquisition of Stihler, which enhanced our medical product offering with unique resistive technology for patient warming in operating rooms. We also introduced our UV TREO product, our new cardiovascular heat and cooling system with integrated disinfection technology. Gentherm is a leader in the application of thermo-physiology and we are applying that expertise to both our medical and automotive applications.

Even though total revenue decreased 7.3% as a result of industry headwinds and divested businesses, from 2018 to 2019 operating income increased $11.5 million, or nearly 16%. We achieved this by taking proactive measures to align our cost structure to the market conditions and through continued execution of our Fit For Growth program. Our company continues to be well positioned for profitable, long-term growth.

2019 COMPENSATION PROGRAM KEY TAKEAWAYS

SELECTED COMPANY PERFORMANCE MEASURES THAT ALIGN WITH COMPANY STRATEGY AND SHAREHOLDERS

The 2019 Senior Level Bonus Plan, as defined below, utilized Adjusted EBITDA and revenue, equally weighted. These two measures reflect the Company’s strategic goals of encouraging overall sales growth, strong margins and profitable operations.

The 2019 PSUs are equally weighted between three-year Relative TSR (capturing relative performance) and ROIC (capturing absolute performance) measured in the third year. Relative TSR is effective in aligning our NEOs’ performance with shareholder interests, is objective and rewards participants for

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performance against peer companies. ROIC aligns with our strategy to focus on businesses that have high revenue growth, strong return on investment and significant synergies across the business.

2019 COMPENSATION PROGRAM OVERVIEW

The key elements of our compensation program for 2019 are as follows:

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MAJORITY OF TARGET COMPENSATION AT RISK

2019 CEO Target Compensation. For 2019, the mix of target pay for our CEO (base salary, target bonus and target long-term equity incentive awards)⁽¹⁾:

2019 Other NEO Target Compensation. For 2019, the mix of target pay for our other NEOs (base salary, target bonus and target long-term equity incentive awards)⁽¹⁾:

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COMPENSATION PHILOSOPHY, PROGRAM OBJECTIVES AND KEY FEATURES

The compensation program for NEOs is designed to attract, motivate and retain qualified executives and to provide them incentives to achieve or exceed the Company’s annual operational and financial goals and increase long-term shareholder value. We believe our NEO compensation program is structured appropriately to support our business objectives, as well as our culture. The Compensation Committee regularly reviews the NEO compensation program to ensure the fulfillment of our compensation philosophy and goals.

PROCESS FOR MAKING COMPENSATION DETERMINATIONS

MANAGEMENT PROVIDING RECOMMENDATIONS BASED ON INTERNAL EVALUATION OF PERFORMANCE AND OTHER KEY FACTORS

In determining the compensation of executive officers, the Compensation Committee receives significant input from the Company’s President and Chief Executive Officer and the Company’s Chief Human Resources Officer, who make a compensation recommendation for each executive officer, which is presented to such Committee. These individuals have the most involvement in, and knowledge of, the Company’s business goals, strategies and performance, the overall effectiveness of the management team and each person’s individual contribution to the Company’s performance. No executive officer provides input or participates in the deliberation of the Compensation Committee with respect to their own compensation. Management also provides the Compensation Committee with information regarding the individual’s experience, current performance, potential for advancement and other subjective factors. The Compensation Committee retains the discretion to modify the recommendations of management and reviews such recommendations for their reasonableness based on individual and Company performance, retention and incentive needs, internal pay equity and market information.

The Compensation Committee works with management to set the agenda for Compensation Committee meetings, and Mr. Eyler and Ms. Runyon are invited regularly to attend such meetings. The Compensation Committee also meets regularly in executive session to discuss compensation issues generally outside the presence of management, as well as to review the performance and determine the compensation of Mr. Eyler.

CONTINUING USE OF THIRD-PARTY CONSULTANTS TO ASSIST IN UNDERSTANDING TRENDS IN EXECUTIVE COMPENSATION AND MARKET DATA

For 2019, the Compensation Committee engaged ClearBridge as its independent compensation consultant to provide advice regarding an appropriate peer group, to benchmark our executive and director compensation programs against peer group and survey data, to provide input on our executive compensation plan design and equity usage and allocation, and to provide advice regarding the proposed amendment to the 2013 Equity Plan.

USE OF MARKET DATA AND SUBJECTIVE MARKET KNOWLEDGE TO ENSURE REASONABLE COMPENSATION

The Compensation Committee utilized a combination of peer group benchmarking and general market survey data in setting 2019 compensation for Messrs. Eyler, Anversa and Oldorff and only market survey data for the other NEOs. For each NEO, compensation is individually determined taking into account such peer group and survey data for individuals having similar job responsibilities, together with such NEO’s performance, position, experience and current compensation levels and considering the Company’s financial resources and internal pay equity.

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The Compensation Committee did not make changes to the Company’s peer group for 2019. The Compensation Committee considers the following companies to be comparable to Gentherm based on revenue, market capitalization and industry.

2019 COMPENSATION DETERMINATIONS

BASE SALARY

In 2019, each NEO received an annual base salary paid in cash. Initial base salaries of our NEOs are negotiated in connection with their hiring, and the Compensation Committee reviews the base salaries of the NEOs on an annual basis. Historically, base salary increases have been between 3-6% and represented a combination of a cost of living / inflation adjustment and a merit raise. However, larger base salary increases are considered where market information indicates that an adjustment is appropriate.

For 2019, taking into account benchmarking data and performance, the Compensation Committee increased the base salaries of the NEOs, other than Mr. Anversa and Mr. Giberson, who were recently hired or promoted, effective January 1, 2019, as follows:

CASH BONUS

The Compensation Committee reviews and approves each of the target bonuses for the NEOs. The Compensation Committee also establishes the annual incentive targets for each NEO in a manner consistent with determining base salaries. For NEOs who begin employment with the Company during a year, annual performance bonuses are prorated based on the number of days worked during such year.

2019 Senior Level Bonus Plan – Consistent with 2018 Program. The bonus plan for senior level management, including all executive officers, formulated in 2018 was substantially continued for 2019 (the “Senior Level Bonus Plan”). Pursuant to the Senior Level Bonus Plan, participants earned cash bonuses up to pre-determined amounts as a percentage of their respective base salaries (100% for Mr. Eyler, 60% for Mr. Anversa and 50% for other NEOs), based on the achievement of financial performance metrics and, except in the case of Mr. Eyler, on the achievement of specific individual goals. Mr. Eyler’s bonus is determined solely based on the financial performance of the Company. The maximum bonus is 200% of the target bonus amount.

Company Performance Metrics – Equally Weighted Between Adjusted EBITDA and Revenue, Consistent with Recent Practice. These two measures reflect the Company’s strategic goals of encouraging overall sales growth, strong margins and profitable operations. The achievement multiple for

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both metrics is 50% for threshold performance and 100% for target performance, with maximum performance differentiated for our CEO (200%) and our other NEOs (150%) since the individual performance modifier does not apply to our CEO. The Company’s actual financial results are then applied to determine the percentage of each participant’s target bonus that is earned, prior to the individual adjustments discussed below (and if the Company’s financial achievement falls between two levels, a linear calculation is made to determine the exact percentage applied):

The Senior Level Bonus Plan gives the Compensation Committee authority to apply adjustments for unusual or extraordinary events that significantly impact Company performance. In 2019, the Compensation Committee approved an objective policy for addressing the following unusual or extra-ordinary events, without limiting the Committee’s ability to apply adjustments in its discretion, under the Senior Level Bonus Plan:

In 2019, the Compensation Committee concluded to apply adjustments to actual Adjusted EBITDA and revenue for purposes of the Senior Level Bonus Plan to adjust for two divestitures and the impact of

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foreign currency, as well as exclude the impact of two additional events that were unusual and unforeseeable when establishing the original performance targets.

As a result of these adjustments, the Company’s financial performance (without rounding) resulted in a payout level of 108.1% for our CEO and 91.7% for our other NEOs.

Pre-determined Individual Performance Metrics for NEOs (excluding CEO). For each other NEO, individual performance targets (generally 3-4) were established for 2019, based on CEO recommendation and approval by the Compensation Committee. Achievement payouts were set for threshold performance for a particular goal (60%) to stretch performance (135%), resulting in a composite bonus opportunity, with the Corporate performance metrics of 30% to 200% for the NEOs (compared to 50% to 200% for the CEO).

In 2019, individual goals for certain NEOs included, among other factors, achievement of sales with a particular customer, successful cost cutting measures pertaining to a particular competitive product, achievement of new innovative technologies and other matters that we believe to be proprietary.

2019 Earned Bonus. The 2019 earned bonus and underlying factors for each NEO are set forth below.

Bonuses are paid approximately two months after the end of the applicable performance period. Unless an exception is granted by the Compensation Committee, a participant must be employed on the bonus payment date to be eligible to receive a bonus. Messrs. Gaul and Oldorff were not eligible to receive bonuses for 2019 because they were not employed with the Company at the time of payment.

EQUITY AWARDS – A STRONG PAY-FOR-PERFORMANCE FOCUS (PSUs), WITH OBJECTIVE COMPANY PERFORMANCE MEASURES, BALANCED WITH LONG-TERM TIME-BASED AWARDS (RSUs)

Annual Grants. Equity awards represent a significant portion of our NEO’s compensation, as the Compensation Committee continues to regard increasing long-term shareholder value as senior management’s primary objective. The Compensation Committee approved a new long-term incentive program in 2018 for our senior level participants, including all executive officers, following significant shareholder engagement and a comprehensive review of our overall compensation program. Consistent

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with such program, 2019 equity awards included 60% of target value being delivered via PSUs and 40% being delivered via RSUs. Historically, we had delivered equity awards entirely via time-vested stock options and time-vested restricted stock.

Consistent with prior years, the size of the awards depended on the executive’s position and current salary, as well as management’s recommendations, competitiveness in the market, internal pay equity, and other subjective factors deemed relevant by the Committee.

In 2019, we granted the annual equity awards during the first quarter.

Performance-Based Restricted Stock Units (PSUs). A target number of PSUs was granted to each NEO. PSUs ultimately are earned and vest based on two equally weighted Company performance metrics:

Any PSUs earned on either portion of the award vest three years from the grant date. The payout scale is as follows:

Relative TSR Comparison Group. The following companies were selected by the Compensation Committee, with advice from ClearBridge, for relative TSR comparison purposes. The companies chosen reflect companies that are impacted by the same external economic forces as Gentherm. Specifically, companies were identified based on their industry and the correlation of their stock price movement with Gentherm. Given that this comparison group is used for purposes of measuring relative TSR performance, and not for setting target pay levels, company size was not used as a factor in determining the comparison group.