Exhibit 10.1


 


B. RILEY FINANCIAL, INC. MANAGEMENT
BONUS PLAN


 


SECTION 1

BACKGROUND, PURPOSE AND DURATION


 


1.1 Effective Date.  The
Plan is effective as of June 16, 2015, subject to approval by an affirmative vote of the holders of a majority of the Shares that
are present in person or by proxy and entitled to vote at the 2015 Annual Meeting of Stockholders of the Company.


 


1.2 Purpose of the Plan.  The
Plan is intended to increase stockholder value and the success of the Company by motivating key employees (1) to perform to
the best of their abilities, and (2) to achieve the Company’s objectives. The Plan’s goals are to be achieved
by providing such employees with incentive awards based on the achievement of goals relating to the performance of the Company
and its individual business units. The Plan is intended to permit the payment of bonuses that qualify as performance-based compensation
under section 162(m) of the Code.


 


SECTION 2

DEFINITIONS


 


The following words and phrases shall
have the following meanings unless a different meaning is plainly required by the context:


 


2.1 “Actual Award”
means, as to any Performance Period, the actual award (if any) payable to a Participant for the Performance Period. Each Actual
Award is determined by the Payout Formula for the Performance Period, subject to the Committee’s authority under Section 3.6
to eliminate or reduce the award otherwise determined by the Payout Formula.


 


2.2 “Affiliate”
means any corporation or other entity (including, but not limited to, partnerships and joint ventures) controlled by the Company.


 


2.3 “Base Salary”
means, as to any Performance Period, the Participant’s annualized salary rate on the last day of the Performance Period.
Such Base Salary shall be before both (a) deductions for taxes or benefits, and (b) deferrals of compensation pursuant
to any Company or Affiliate sponsored plans.


 


2.4 “Board” means
the Board of Directors of the Company.


 


2.5 “Code” means
the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder shall include
such section or regulation, any valid regulation promulgated thereunder, and any comparable provision of any future legislation
or regulation amending, supplementing or superseding such section or regulation.


 


2.6 “Committee”
means the Compensation Committee of the Board, or any other committee appointed by the Board (pursuant to Section 5.1)
to administer the Plan.


 


2.7 “Company”
means B. Riley Financial, Inc., a Delaware corporation, or any successor thereto.


 


2.8 “Determination Date”
means the latest possible date that will not jeopardize a Target Award or Actual Award’s qualification as performance-based
compensation under section 162(m) of the Code.


 


2.9 “Disability”
means “disability” as defined under the long-term disability policy of the Company or the Company affiliate to
which the Participant provides services regardless of whether the Participant is covered by such policy.  If the Company or
the Company affiliate to which the Participant provides service does not have a long-term disability plan in place, “Disability”
means that a Participant is unable to carry out the responsibilities and functions of the position held by the Participant by reason
of any medically determinable physical or mental impairment for a period of not less than ninety (90) consecutive days.


 






    

     

    

  


2.10 “Employee”
means any employee of the Company or of an Affiliate, whether such employee is so employed at the time the Plan is adopted
or becomes so employed subsequent to the adoption of the Plan.


 


2.11 “Fiscal Year”
means the fiscal year of the Company.


 


2.12 “Individual Objectives”
means quantifiable objectively determinable goals set by the Committee that will measure the individual’s performance
of his or her overall duties to the Company which may include, without limitation, any enumerated Performance Goal, measures related
to long-term strategic plans, and measures related to succession plans.


 


2.13 “Maximum Award”
means, as to any Participant, for any 12-month period within or constituting a Performance Period, $6 million.  The
Maximum Award shall be prorated for any Performance Period consisting of fewer than twelve (12) months.


 


2.14 “Participant”
means, as to any Performance Period, an Employee who has been selected by the Committee for participation in the Plan for that
Performance Period.


 


2.15 “Payout Formula”
means, as to any Performance Period, the formula or payout matrix established by the Committee pursuant to Section 3.4
in order to determine the Actual Awards (if any) to be paid to Participants. The formula or matrix may differ from Participant
to Participant.


 


2.16 “Performance Goals”
means the goal(s) (or combined goal(s)) determined by the Committee (in its discretion) to be applicable to a Participant
for a Target Award for a Performance Period. As determined by the Committee, the Performance Goals for any Target Award applicable
to a Participant may provide for a targeted level or levels of achievement using one or more of the following measures: (1) share
price, (2) earnings per share, (3) total stockholder return, (4) revenue, (5) expenses, (6) gross margin, (7)
profit margins, (8) operating margin, (9) operating income, (10) net operating income, (11) pre-tax profit, (12)
net income, (13) earnings before interest, taxes and depreciation, (14) earnings before interest, taxes, depreciation and
amortization, (15) earnings before interest, taxes, depreciation, amortization and share based compensation, (16) cash flow, operating
cash flow, or cash flow or operating cash flow per share, (17) return on equity, (18) return on assets, (19) return
on investment, (20) return on capital, (21) economic value added, (22) market share, (23) personal goals, (24) improvements
in capital structure, (25) improvements in working capital, (26) improvement in or attainment of expense levels or working
capital level, (27) budget comparisons, (28) expense management, (29) profitability of an identifiable business unit or product,
(30) reduction in costs, (31) trading profits, and (32) Individual Objectives.  The performance criteria may be
applicable to the Company or an Affiliate as a whole or a segment or a division of the Company or an Affiliate.  In addition,
the performance criteria shall be calculated in accordance with generally accepted accounting principles, but excluding the effect
(whether positive or negative) of any change in accounting standards and any extraordinary, unusual or nonrecurring item, as determined
by the Committee, occurring after the establishment of the Performance Goals for the Performance Period.  Each such adjustment,
if any, shall be made solely for the purpose of providing a consistent basis from period to period for the calculation of the Performance
Goals in order to prevent the dilution or enlargement of a Participant’s rights with respect to an award.  The Performance
Goals may differ from Participant to Participant and from award to award.


 


2.17 “Performance Period”
means any period of time which does not exceed three Fiscal Years, as determined by the Committee in its sole discretion. With
respect to any Participant, there shall exist no more than three Performance Periods at any one time.


 


2.18 “Plan” means
the B. Riley Financial, Inc. Management Bonus Plan, as set forth in this instrument and as hereafter amended from time to time.


 


2.19 “Shares”
means shares of the Company’s common stock.


 


2.20 “Target Award”
means the target award payable under the Plan to a Participant for the Performance Period, expressed as a percentage of his
or her Base Salary or a specific dollar amount, as determined by the Committee in accordance with Section 3.3.


 






    

     

    

  


2.22 “Termination of Employment”
means a cessation of the employee-employer relationship between an Employee and the Company or an Affiliate for any reason,
including, but not by way of limitation, a termination by resignation, discharge, death, Disability, retirement, or the disaffiliation
of an Affiliate, but excluding any such termination where there is a simultaneous reemployment by the Company or an Affiliate.


 


SECTION 3


SELECTION OF PARTICIPANTS AND DETERMINATION
OF AWARDS


 


3.1 Selection of Participants.  The
Committee, in its sole discretion, shall select the Employees who shall be Participants for any Performance Period. The Committee,
in its sole discretion, may also designate as Participants one or more individuals (by name or position) who are expected to become
Employees during a Performance Period.  Participation in the Plan is in the sole discretion of the Committee, and on a Performance
Period by Performance Period basis. Accordingly, an Employee who is a Participant for a given Performance Period in no way is guaranteed
or assured of being selected for participation in any subsequent Performance Period.


 


3.2 Determination of Performance
Goals.  The Committee, in its sole discretion, shall establish the Performance Goals for each Participant for
the Performance Period. Such Performance Goals shall be set forth in writing.


 


3.3 Determination of Target
Awards.  The Committee, in its sole discretion, shall establish a Target Award for each Participant. Each Participant’s
Target Award shall be determined by the Committee in its sole discretion, and each Target Award shall be set forth in writing.


 


3.4 Determination of Payout
Formula or Formulae.  On or prior to the Determination Date, the Committee, in its sole discretion, shall establish
a Payout Formula or Formulae for purposes of determining the Actual Award (if any) payable to each Participant. Each Payout Formula
shall (a) be in writing, (b) be based on a comparison of actual performance to the Performance Goals, (c) provide
for the payment of a Participant’s Target Award if the Performance Goals for the Performance Period are achieved, and (d) provide
for an Actual Award greater than or less than the Participant’s Target Award, depending upon the extent to which actual performance
exceeds or falls below the Performance Goals. Notwithstanding the preceding, in no event shall a Participant’s Actual Award
for any Performance Period exceed his or her Maximum Award.


 


3.5 Date for Determinations.  The
Committee shall make all determinations under Section 3.1 through 3.4 on or before the Determination Date.


 


3.6 Determination of Actual
Awards.  After the end of each Performance Period, the Committee shall certify in writing the extent to which
the Performance Goals applicable to each Participant for the Performance Period were achieved or exceeded. The Actual Award for
each Participant shall be determined by applying the Payout Formula to the level of actual performance that has been certified
by the Committee. Notwithstanding any contrary provision of the Plan, the Committee, in its sole discretion, may (a) eliminate
or reduce the Actual Award payable to any Participant below that which otherwise would be payable under the Payout Formula, and
(b) determine whether or not a Participant will receive an Actual Award in the event the Participant incurs a Termination
of Employment prior to the date the Actual Award is to be paid pursuant Section 4.2 below.


 


SECTION 4


PAYMENT OF AWARDS


 


4.1 Right to Receive Payment.  Each
Actual Award that may become payable under the Plan shall be paid solely from the general assets of the Company or the Affiliate
that employs the Participant (as the case may be), as determined by the Committee. Nothing in this Plan shall be construed to create
a trust or to establish or evidence any Participant’s claim of any right to payment of an Actual Award other than as an unsecured
general creditor with respect to any payment to which he or she may be entitled.


 


4.2 Timing of Payment.  Subject
to Section 3.6, payment of each Actual Award shall be made as soon as administratively practicable, but in no event later
than two and one-half months after the end of the applicable Performance Period.


 






    

     

    

  


4.3 Form of Payment.  Each
Actual Award normally shall be paid in cash (or its equivalent) in a single lump sum. However, the Committee, in its sole discretion,
may declare any Actual Award, in whole or in part, payable in Shares of restricted stock, restricted stock units, options and/or
other stock awards granted under one of the Company’s stock plans. The number of Shares of restricted stock, restricted stock
units, options and/or other stock awards granted shall be determined in the sole and absolute discretion of the Committee and generally
shall be determined by dividing the cash amount foregone by either (i) an average of the fair market value of a Share over
a period of time prior to the date of grant of the restricted stock, restricted stock units, options and/or other stock awards,
(ii) the fair market value of a Share on the date that the cash payment otherwise would have been made, or (iii) an option
pricing model determined by the Committee (e.g., Black-Scholes), rounded up to the nearest whole number of Shares. For this purpose,
“fair market value” shall have the same meaning as provided by the applicable Company stock plan under which the award
shall be granted. Any restricted stock, restricted stock units, options or other stock awards so awarded may be subject to such
additional vesting conditions, including specifically additional Performance Goals, as determined by the Committee. The number
of Shares of restricted stock and/or restricted stock units granted pursuant to this Section 4.3 may be increased or decreased
if such new award is granted by the Committee subject to Performance Goals and such increase or decrease otherwise meets all the
performance-based compensation requirements of section 162(m) of the Code.


 


4.4 Payment in the Event of Death
or Disability.  If a Participant dies, or is determined to have a Disability, prior to the payment of an Actual
Award that was scheduled to be paid to him or her prior to death, or the determination of a Disability, for a prior Performance
Period, the award shall be paid, in the case of death, to his or her designated beneficiary (in accordance with Section 6.6)
or, if no such beneficiary has been designated, to his or her estate, and in the case of Disability, to the Participant or any
other person authorized under applicable law.


 


 


SECTION 5


ADMINISTRATION


 


5.1 Committee is the Administrator.  The
Plan shall be administered by the Committee. The Committee shall consist of not less than two (2) members of the Board. The
members of the Committee shall be appointed from time to time by, and serve at the pleasure of, the Board. Each member of the Committee
shall qualify as an “outside director” under section 162(m) of the Code. If it is later determined that one
or more members of the Committee do not so qualify, actions taken by the Committee prior to such determination shall be valid despite
such failure to qualify.


 


5.2 Committee Authority.  It
shall be the duty of the Committee to administer the Plan in accordance with the Plan’s provisions. The Committee shall have
all powers and discretion necessary or appropriate to administer the Plan and to control its operation, including, but not limited
to, the power to (a) determine which Employees shall be granted awards, (b) prescribe the terms and conditions of awards,
(c) interpret the Plan and the awards, (d) adopt such procedures and subplans as are necessary or appropriate to permit
participation in the Plan by Employees who are foreign nationals or employed outside of the United States, (e) bifurcate the
Plan and treat Participants differently as provided by Section 8.1, (f) adopt rules for the administration, interpretation
and application of the Plan as are consistent therewith, and (g) interpret, amend or revoke any such rules.


 


5.3 Decisions Binding.  All
determinations and decisions made by the Committee, the Board, and any delegate of the Committee pursuant to the provisions of
the Plan shall be final, conclusive, and binding on all persons, and shall be given the maximum deference permitted by law.


 


5.4 Delegation by the Committee.  The
Committee, in its sole discretion and on such terms and conditions as it may provide, may delegate all or part of its authority
and powers under the Plan to one or more directors and/or officers of the Company; provided, however, that the Committee may delegate
its authority and powers only with respect to awards that are not intended to qualify as performance-based compensation under section 162(m) of
the Code and only to the extent consistent with the rules and regulations of the principal securities market on which the
Company’s securities are listed or qualified for trading.


 






    

     

    

  


SECTION 6

GENERAL PROVISIONS


 


6.1 Tax Withholding.  The
Company or an Affiliate, as determined by the Committee, shall withhold all applicable taxes from any Actual Award, including any
federal, state and local taxes.


 


6.2 No Effect on Employment.  Nothing
in the Plan shall interfere with or limit in any way the right of the Company or an Affiliate, as applicable, to terminate any
Participant’s employment or service at any time, with or without cause. For purposes of the Plan, transfer of employment
of a Participant between the Company and any one of its Affiliates (or between Affiliates) shall not be deemed a Termination of
Employment. Employment with the Company and its Affiliates is on an at-will basis only. Except as may be provided in an employment
contract with the Participant, the Company expressly reserves the right, which may be exercised at any time and without regard
to when during or after a Performance Period such exercise occurs, to terminate any individual’s employment with or without
cause, and to treat him or her without regard to the effect which such treatment might have upon him or her as a Participant.


 


6.3 Participation.  No
Employee shall have the right to be selected to receive an award under this Plan, or, having been so selected, to be selected to
receive a future award. Participation in this Plan shall not give any Employee the right to participate in any other benefit, stock
or deferred compensation plan of the Company or any Affiliate.


 


6.4 Indemnification.  Each
person who is or shall have been a member of the Committee, or of the Board, shall be indemnified and held harmless by the Company
against and from (a) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in
connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she
may be involved by reason of any action taken or failure to act under the Plan or any award, and (b) from any and all amounts
paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment
in any such claim, action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at
its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled
under the Company’s Certificate of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any power
that the Company may have to indemnify them or hold them harmless.


 


6.5 Successors.  All
obligations of the Company under the Plan, with respect to awards granted hereunder, shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of
all or substantially all of the business or assets of the Company.


 


6.6 Beneficiary Designations.  If
permitted by the Committee, a Participant under the Plan may name a beneficiary or beneficiaries to whom any vested but unpaid
award shall be paid in the event of the Participant’s death. Each such designation shall revoke all prior designations by
the Participant and shall be effective only if given in a form and manner acceptable to the Committee. In the absence of any such
designation, any vested benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.


 


6.7 Nontransferability of
Awards.  No award granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will, by the laws of descent and distribution, or to the limited extent provided in Section 6.6.
All rights with respect to an award granted to a Participant shall be available during his or her lifetime only to the Participant.


 


6.8 Deferrals.  The
Committee, in its sole discretion, may permit a Participant to defer receipt of the payment of cash that would otherwise be delivered
to a Participant under the Plan. Any such deferral elections shall be subject to such rules and procedures as shall be determined
by the Committee in its sole discretion.


 






    

     

    

  


SECTION 7


AMENDMENT, TERMINATION AND DURATION


 


7.1 Amendment, Suspension
or Termination.  The Board or the Committee, each in its sole discretion, may amend or terminate the Plan, or
any part thereof, at any time and for any reason. The amendment, suspension or termination of the Plan shall not, without the consent
of the Participant, alter or impair any rights or obligations under any Target Award theretofore granted to such Participant. No
award may be granted during any period of suspension or after termination of the Plan.


 


7.2 Duration of the Plan.  The
Plan shall commence on the date specified herein, and subject to Section 7.1 (regarding the Board’s or the Committee’s
right to amend or terminate the Plan), shall remain in effect thereafter.


 


SECTION 8


LEGAL CONSTRUCTION


 


8.1 Section 162(m) Conditions;
Bifurcation of Plan.  It is the intent of the Company that the Plan and the awards paid under the Plan
to Participants who are or may become persons whose compensation is subject to section 162(m) of the Code, satisfy any
applicable requirements of section 162(m) of the Code. Any provision, application or interpretation of the Plan inconsistent
with this intent shall be disregarded. The provisions of the Plan may be bifurcated by the Board or the Committee at any time so
that certain provisions of the Plan, or any award, required in order to satisfy the requirements of section 162(m) of
the Code are only applicable to Participants whose compensation is subject to section 162(m) of the Code.


 


8.2 Gender and Number.  Except
where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include
the singular and the singular shall include the plural.


 


8.3 Severability.  In
the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been
included.


 


8.4 Requirements of Law.  The
granting of awards under the Plan shall be subject to all applicable laws, rules and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may be required.


 


8.5 Governing Law.  The
Plan and all awards shall be construed in accordance with and governed by the laws of the State of Delaware, but without regard
to its conflict of law provisions.


 


8.6 Captions.  Captions
are provided herein for convenience only, and shall not serve as a basis for interpretation or construction of the Plan.