Company: ELSE
Filing Date: 2025-03-19
Form Type: DEF 14A
Source: 0000897101-25-000161
Chunk: 21

Company: ELECTRO SENSORS INC
Filing Date: 2025-03-19
Form: DEF 14A
Chunk 21
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rank Act and Section 14A of the Exchange Act require that shareholders have
the opportunity, at least once every six years, to vote on how often they believe Say-on-Pay votes should be held in the future.
Shareholders may indicate whether they prefer that a Say-on-Pay vote be held every year, every two years or every three years,
or they may abstain from this vote.

After careful consideration
of the various arguments supporting each frequency level, the Board of Directors has determined that an advisory vote on executive
compensation every three years is the best approach for the Company. Our executive compensation program is intended to incentivize
and reward performance over a multi-year period, and a three-year cycle is consistent with these time horizons. A three-year cycle
is an appropriate frequency to provide the Board of Directors and the Compensation Committee sufficient time to consider shareholder
input and implement any appropriate changes to our executive compensation strategies. Shareholders who have concerns about executive
compensation during the interval between Say-on-Pay votes are welcome to bring their concerns to the attention of the Board.

The vote on this proposal
is an advisory vote and is not binding on the Company. The outcome of this vote will not require the Board to take any action regarding
the frequency of future Say-on-Pay votes. However, the Board will take into consideration the outcome of the vote when considering
the frequency of future Say-on-Pay votes.

The proxy card provides
shareholders with four choices (every 1 YEAR, 2 YEARS, 3 YEARS, or ABSTAIN).

Vote Required for Approval

The frequency option that receives the most
votes from the holders of the shares of Common Stock represented at the Annual Meeting in person or proxy and entitled to vote
will be approved.

The Board of Directors recommends that shareholders vote for the option of “3 YEARS” as the preferred frequency of future Say-on-Pay votes.

<div align='center'>18

REPORT OF THE AUDIT COMMITTEE</div>

The Audit Committee
of the Board of Directors is comprised of three directors who are independent of the Company and management as required by the
Nasdaq corporate governance listing standards and by SEC rules. The Audit Committee operates under a written charter adopted by
the Board of Directors.

The Audit Committee
oversees the Company’s financial reporting process on behalf of the Board of Directors. Management is responsible for the
Company’s financial statements and the financial reporting process, including implementing and maintaining effective internal
control over financial reporting and for the