| |
(1) | The market value of units of stock that have not vested is equal to the product of the number of units of stock that have not vested and the closing price of our Class A Common Stock on December 31, 2013.2014. |
| |
(2) | The market value of unearned units of stock is equal to the product of the number of unearned units and the closing price of our Class A Common Stock on December 31, 2013.2014. |
STOCK VESTED
Set out below are restricted stock units that vested during the fiscal year ended December 31, 2014. No restricted stock units held by either Michael Del Nin or Christoph Mainusch vested during the year ended December 31, 2014. No Named Executive Officer holds any options to purchase shares of Class A Common Stock.
|
| | | | | | | |
| Stock Vested |
| Grant Date | | Number of Shares of Stock Acquired upon Vesting of Units | | Market Value of Units of Stock that have Vested (US$)(1) |
David Sturgeon | June 14, 2012 | | 3,750 |
| | 10,125 |
|
| June 12, 2013 | | 5,000 |
| | 13,600 |
|
| June 25, 2013 | | 6,494 |
| | 17,599 |
|
| | | | | |
Daniel Penn | June 14, 2012 | | 12,500 |
| | 33,750 |
|
| June 12, 2013 | | 10,000 |
| | 27,200 |
|
| June 25, 2013 | | 9,972 |
| | 27,024 |
|
Option Exercises and Stock Vested
None of our Named Executive Officers exercised any stock options during the fiscal year ended December 31, 2013 and all options held by Named Executive Officers were exchanged for restricted stock units in connection with the employee option exchange program. Set out below are restricted stock units that vested during the fiscal year ended December 31, 2013. Neither Michael Del Nin nor Christoph Mainusch held any restricted stock units at December 31, 2013.
| Stock Vested | |
| Grant Date | | Number of Shares of Stock Acquired upon Vesting of Units | | | Market Value of Units of Stock that have Vested (1) | |
| | | | | | | |
David Sturgeon | June 14, 2012 | | | 3,750 | | | | 12,113 | |
| | | | | | | | | |
Daniel Penn | June 14, 2012 | | | 12,500 | | | | 38,375 | |
| | | | | | | | | |
Adrian Sarbu | June 13, 2013 | | | 120,000 | | | | 448,800 | |
| June 25, 2013 | | | 151,425 | | | | 566,330 | |
| | | | | | | | | |
David Sach | June 14, 2012 | | | 15,000 | | | | 48,450 | |
| June 14, 2012 | | | 45,000 | | | | 107,550 | |
| June 13, 2013 | | | 80,000 | | | | 191,200 | |
| June 25, 2013 | | | 79,998 | | | | 191,195 | |
| | | | | | | | | |
Anthony Chhoy | June 14, 2012 | | | 15,000 | | | | 48,450 | |
| June 14, 2012 | | | 45,000 | | | | 107,550 | |
| June 13, 2013 | | | 52,500 | | | | 125,475 | |
| June 25, 2013 | | | 26,634 | | | | 63,655 | |
| |
(1) | The market value of units of stock that have vested was determined by multiplying the number of units of stock that vested by the closing price of our Class A Common Stock on the date such stock was vested. |
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE OF CONTROL
Set out below is information reflecting compensation that may be payable to each of the Named Executive Officers in the event of the termination of such Named Executive Officer’s employment. The amount of compensation payable upon voluntary termination, involuntary termination (other than for cause) or termination for cause is described below. We do not have any severance agreement or any agreement providing for any specific payments (commonly referred to as “parachute payments”) upon a change of control with any Named Executive Officer. However, equity incentive awards granted to employees and directors automatically become vested on a change of control pursuant to the Stock Incentive Plan. Except as set out below, a “change of control” for purposes hereof refers to certain corporate transactions (including a sale of substantially all of the assets of the Company and a merger or consolidation where the Company is not the surviving entity) as set forth in the Company’s award agreements that are customarily regarded as a change of control.
The amounts shown below assume that such termination or change of control was effective as of December 31, 2014. The amounts do not include salary earned through such period (which is reflected in the Summary Compensation Table) or accrued vacation days. The amounts below also do not include non-equity incentive plan compensation for any Named Executive Officers actually awarded in respect of the year ended December 31, 2014 (which is reflected in the Summary Compensation Table). Restricted stock unit values represent the closing price of shares of our Class A Common Stock on December 31, 2014. The numbers presented below are for illustrative purposes. Actual amounts that may be payable or will be paid can only be determined at the time of separation of a Named Executive Officer from the Company. Foreign currency amounts set out below have been translated using the exchange rate prevailing at December 31, 2014.
Michael Del Nin
Payments under employment agreement
Mr. Del Nin has an employment agreement for an indefinite term. Pursuant to Mr. Del Nin’s employment agreement, we may terminate his employment agreement at any time without cause. Mr. Del Nin may terminate his employment agreement in the event of uncured material breaches by us (“Good Reason”). If we give notice of termination to Mr. Del Nin (other than for cause) or if he terminates for Good Reason, his employment agreement shall terminate with immediate effect and the Company will make a payment equal to two times his annual salary and an amount equal to his target non-equity incentive plan award, pro rated to the termination date. Assuming a termination date of December 31, 2014, Mr. Del Nin would be entitled to receive US$ 1.6 million, subject to deductions for social insurance and other withholdings. Mr. Del Nin is also entitled to medical and dental insurance for a period of 12 months following termination.
Mr. Del Nin may also terminate his employment agreement at any time on 12 months’ notice. We may elect to make payment in lieu of notice, and pay him the portion of his annual salary for the portion of the notice period remaining at the time the Company makes this election. Assuming we elect to make payment in lieu of notice for the entire notice period and a termination date of December 31, 2014, Mr. Del Nin would be entitled to receive US$ 800,000, subject to deductions for social insurance and other withholdings.
In the event we terminate Mr. Del Nin’s employment agreement due to cause, he is not entitled to receive any additional remuneration.
Equity
The terms of Mr. Del Nin’s restricted stock unit agreements do not provide for the vesting of any restricted stock units on termination although the Compensation Committee has agreed to consider in good faith whether to vest any awards on termination without cause. In the event his employment agreement is terminated and the Compensation Committee does not agree to vest any restricted stock units, the restricted stock units awarded to Mr. Del Nin shall immediately terminate on the date of such termination.
Pursuant to Mr. Del Nin’s restricted stock unit agreements, in the event of a change of control, all restricted stock units granted to Mr. Del Nin would vest and become immediately exercisable. On December 31, 2014, the value of all restricted stock units granted to Mr. Del Nin was US$ 876,677.
Christoph Mainusch
Payments under employment agreement
Mr. Mainusch has an employment agreement for an indefinite term. Pursuant to Mr. Mainusch’s employment agreement, we may terminate his employment agreement at any time without cause. Mr. Mainusch may terminate his employment agreement for Good Reason. If we give notice of termination to Mr. Mainusch (other than for cause) or if he terminates for Good Reason, his employment agreement shall terminate with immediate effect and the Company will make a payment equal to two times his annual salary and an amount equal to his target non-equity incentive plan award, pro rated to the termination date. Assuming a termination date of December 31, 2014, Mr. Mainusch would be entitled to receive US$ 1.6 million, subject to deductions for social insurance and other withholdings.
Mr. Mainusch may also terminate his employment agreement at any time on 12 months’ notice. We may elect to make payment in lieu of notice, and pay him the portion of his annual salary for the portion of the notice period remaining at the time the Company makes this election. Assuming we elect to make payment in lieu of notice for the entire notice period and a termination date of December 31, 2014, Mr. Mainusch would be entitled to receive US$ 800,000, subject to deductions for social insurance and other withholdings.
In the event we terminate Mr. Mainusch’s employment agreement due to cause, he is not entitled to receive any additional remuneration.
Equity
The terms of Mr. Mainusch’s restricted stock unit agreements do not provide for the vesting of any restricted stock units on termination although the Compensation Committee has agreed to consider in good faith whether to vest any awards on termination without cause. In the event his employment agreement is terminated and the Compensation Committee does not agree to vest any restricted stock units, the restricted stock units awarded to Mr. Mainusch shall immediately terminate on the date of such termination.
Pursuant to Mr. Mainusch’s restricted stock unit agreements, in the event of a change of control, all restricted stock units granted to Mr. Mainusch would vest and become immediately exercisable. On December 31, 2014, the value of all restricted stock units granted to Mr. Mainusch was US$ 876,677.
David Sturgeon
Payments under employment agreement
Mr. Sturgeon has an employment agreement for an indefinite term. We may terminate Mr. Sturgeon’s employment agreement without cause on 12 months’ notice. Mr. Sturgeon may terminate his employment agreement for Good Reason. If we give notice of termination to Mr. Sturgeon (other than for cause) or Mr. Sturgeon terminates for Good Reason, his employment agreement will terminate with immediate effect and the Company will make payment in lieu of notice equal to 12 months of salary. Mr. Sturgeon is also entitled to an amount equal to (i) his annual target bonus and (ii) a target non-equity incentive plan award, pro rated to the termination date. Assuming a termination date of December 31, 2014, Mr. Sturgeon would be entitled to US$ 1.0 million, subject to deductions for social insurance and other withholdings. Mr. Sturgeon is also entitled to medical and dental insurance for a period of 12 months following termination.
Mr. Sturgeon may also terminate his employment agreement at any time on 12 months’ notice. We may elect to make payment in lieu of notice, and pay him the portion of his annual salary for the portion of the notice period remaining at the time the Company makes this election. Mr. Sturgeon is also entitled to any earned but unpaid non-equity incentive plan awards. Assuming we elect to make payment in lieu of notice for the entire notice period and a termination date of December 31, 2014, Mr. Sturgeon would be entitled to receive US$ 500,000, subject to deductions for social security and other withholdings.
In the event we terminate Mr. Sturgeon’s employment agreement due to cause, he is not entitled to receive any additional remuneration.
Equity
The terms of Mr. Sturgeon’s restricted stock unit agreements do not provide for the vesting of any restricted stock units on termination. In the event his employment agreement is terminated, any restricted stock units awarded to Mr. Sturgeon shall immediately terminate on the date of such termination.
Pursuant to Mr. Sturgeon’s restricted stock unit agreements, in the event of a change of control, all restricted stock units granted to Mr. Sturgeon would become immediately exercisable. On December 31, 2014, the value of all restricted stock units granted to Mr. Sturgeon was US$ 460,699.
Daniel Penn
Payments under employment agreement
Mr. Penn has an employment agreement for an indefinite term. Pursuant to Mr. Penn’s employment agreement, we may terminate Mr. Penn’s employment agreement without cause on 12 months’ notice. Mr. Penn may terminate his employment agreement for Good Reason. If we give notice of termination to Mr. Penn (other than for cause) or if Mr. Penn terminates for Good Reason, his employment agreement shall terminate with immediate effect and the Company will make payment in lieu of notice equal to 12 months of salary. In the event we terminate Mr. Penn’s employment, he is also entitled to an amount equal to (i) his annual target bonus, (ii) his vacation days in respect of the notice period and (iii) a target non-equity incentive plan award, pro rated to the termination date. Assuming a termination date of December 31, 2014, Mr. Penn would be entitled to receive approximately US$ 1.1 million, subject to deductions for social insurance and other withholdings. Mr. Penn is also entitled to medical and dental insurance for a period of 12 months following termination.
Mr. Penn may also terminate his employment agreement at any time on 12 months’ notice. We may elect to make payment in lieu of notice, and pay him the portion of his annual salary for the portion of the notice period remaining at the time the Company makes this election. Assuming we elect to make payment in lieu of notice for the entire notice period and a termination date of December 31, 2014, Mr. Penn would be entitled to receive approximately US$ 520,348, subject to deductions for social insurance and other withholdings.
In the event we terminate Mr. Penn’s employment agreement due to cause, he is not entitled to receive any additional remuneration.
Equity
The terms of Mr. Penn’s restricted stock unit agreements do not provide for the vesting of any restricted stock units on termination. In the event his employment agreement is terminated, any restricted stock units awarded to Mr. Penn shall immediately terminate on the date of such termination.
Pursuant to Mr. Penn’s restricted stock unit agreements, in the event of a change of control, all outstanding restricted stock units granted to Mr. Penn would become immediately exercisable. On December 31, 2014, the value of all restricted stock units granted to Mr. Penn was US$ 679,801.
DIRECTOR COMPENSATION
We use a combination of cash and equity to compensate non-employee directors. Each non-employee director is entitled to receive a cash fee of US$ 65,000 per annum ($50,000 prior to July 1, 2014). In addition, Mr. Billock receives a cash fee of US$ 25,000 per annum as Chairman; and with effect from July 1, 2014, the chair of each of our standing committees receives an additional cash fee US$ 5,000 per annum. Members of the Audit Committee are paid a cash fee of US$ 12,000 per annum. Members of the Compensation Committee and members of the Corporate Governance/Nominating Committee are paid a cash fee of US$ 5,000 per annum. See the Corporate Governance and Board of Director Matters section of this proxy statement for additional information on committee membership.
The following table sets forth information in respect of compensation paid to directors for the year ended December 31, 2014 including grants of restricted stock units. We do not have any non-equity incentive compensation plans or non-qualified deferred compensation earnings and directors received no other compensation. Messrs. Cappuccio, Shapiro, Zeiler and Ms. Knobloch declined any director compensation.
|
| | | | | | | | |
| Fees Earned or Paid in Cash (US$) | | Stock Awards (US$)(1) | | Total Compensation (US$) |
John K. Billock (2) | 67,500 |
| | 65,000 |
| | 132,500 |
|
Charles Frank | 69,500 |
| | 65,000 |
| | 134,500 |
|
Herbert Granath (3) | 21,250 |
| | — |
| | 21,250 |
|
Alfred Langer | 97,000 |
| | 65,000 |
| | 162,000 |
|
Fred Langhammer (4) | 15,000 |
| | — |
| | 15,000 |
|
Bruce Maggin | 70,000 |
| | 65,000 |
| | 135,000 |
|
Parm Sandhu | 97,000 |
| | 65,000 |
| | 162,000 |
|
Duco Sickinghe (5) | 84,250 |
| | 65,000 |
| | 149,250 |
|
Kelli Turner | 71,500 |
| | 65,000 |
| | 136,500 |
|
In connection with the Sarbu Separation Agreement, the Compensation Committee agreed to vest all 271,425 unvested restricted stock units granted to Mr. Sarbu following the final date of his employment on December 31, 2013. In accordance with the terms of Mr. Sach’s employment agreement, all 204,998 unvested restricted stock units granted to him vested following the termination of his employment agreement on October 29, 2013. In connection with the Chhoy Separation Agreement, the Compensation Committee agreed to vest 124,134 unvested restricted stock units granted to Mr. Chhoy following the termination of his employment agreement on November 15, 2013.
Potential Payments upon Termination or Change of Control
Set out below is information reflecting compensation that may be payable to each of the Named Executive Officers in the event of the termination of such Named Executive Officer’s employment. The amount of compensation payable upon voluntary termination, involuntary termination (other than for cause) or termination for cause is described below. We do not have any severance agreement or any agreement providing for any specific payments (commonly referred to as “parachute payments”) upon a change of control with any Named Executive Officer. However, equity incentive awards granted to employees and directors automatically become vested on a change of control pursuant to the Stock Incentive Plan. Except as set out below, a “change of control” for purposes hereof refers to certain corporate transactions (including a sale of substantially all of the assets of the Company and a merger or consolidation where the Company is not the surviving entity) as set forth in the Company’s option agreements that are customarily regarded as a change of control.
The amounts shown below assume that such termination or change of control was effective as of December 31, 2013. The amounts do not include salary earned through such period (which is reflected in the Summary Compensation Table) or accrued vacation days. The amounts below also do not include non-equity incentive plan compensation or discretionary bonuses for any Named Executive Officers actually awarded in respect of the year ended December 31, 2013 (which is reflected in the Summary Compensation Table). Restricted stock unit values represent the closing price of shares of our Class A Common Stock on December 31, 2013. The numbers presented below are for illustrative purposes. Actual amounts that may be payable or will be paid can only be determined at the time of separation of a Named Executive Officer from the Company. Foreign currency amounts set out below have been translated using the exchange rate prevailing at December 31, 2013.
Michael Del Nin
Payments under employment agreement
Mr. Del Nin has an employment agreement for an indefinite term. Pursuant to Mr. Del Nin’s employment agreement, we may terminate his employment agreement at any time. If we give notice of termination to Mr. Del Nin, his employment agreement shall terminate with immediate effect and the Company will make a payment equal to two times his annual salary. In the event we terminate Mr. Del Nin’s employment after January 1, 2014, he is also entitled to an amount equal to his target non-equity incentive plan award, pro rated to the termination date. Assuming a termination date of December 31, 2013, Mr. Del Nin would be entitled to receive US$ 1,600,000, subject to deductions for social insurance and other withholdings. Mr. Del Nin is also entitled to medical and dental insurance for a period of 12 months following termination.
Mr. Del Nin may terminate his employment agreement at any time on 12 months’ notice. We may elect to make payment in lieu of notice, and pay him the portion of his annual salary for the portion of the notice period remaining at the time the Company makes this election. Assuming a termination date of December 31, 2013, Mr. Del Nin would be entitled to receive US$ 800,000, subject to deductions for social insurance and other withholdings.
In the event we terminate Mr. Del Nin’s employment agreement due to cause, he is not entitled to receive any additional remuneration.
Equity
Mr. Del Nin had not received any grants of equity incentives as of December 31, 2013.
Christoph Mainusch
Payments under employment agreement
Mr. Mainusch has an employment agreement for an indefinite term. Pursuant to Mr. Mainusch’s employment agreement, we may terminate his employment agreement at any time. If we give notice of termination to Mr. Mainusch, his employment agreement shall terminate with immediate effect and the Company will make a payment equal to two times his annual salary. In the event we terminate Mr. Mainusch’s employment after January 1, 2014, he is also entitled to an amount equal to his target non-equity incentive plan award, pro rated to the termination date. Assuming a termination date of December 31, 2013, Mr. Mainusch would be entitled to receive US$ 1,600,000, subject to deductions for social insurance and other withholdings.
Mr. Mainusch may terminate his employment agreement at any time on 12 months’ notice. We may elect to make payment in lieu of notice, and pay him the portion of his annual salary for the portion of the notice period remaining at the time the Company makes this election. Assuming a termination date of December 31, 2013, Mr. Mainusch would be entitled to receive US$ 800,000, subject to deductions for social insurance and other withholdings.
In the event we terminate Mr. Mainusch’s employment agreement due to cause, he is not entitled to receive any additional remuneration.
Equity
Mr. Mainusch had not received any grants of equity incentives as of December 31, 2013.
David Sturgeon
Payments under employment agreement
Mr. Sturgeon has an employment agreement for an indefinite term. We may terminate Mr. Sturgeon’s employment agreement on 12 months’ notice. If we give notice of termination to Mr. Sturgeon, his employment agreement will terminate with immediate effect and the Company will make payment in lieu of notice equal to 12 months of salary. Mr. Sturgeon is also entitled to an amount equal to (i) his annual target bonus, (ii) his monthly rental allowance for a period of the lesser of the number of months he is entitled to receive the allowance pursuant to his employment agreement and 12 months, (iii) any non-equity incentive plan awards accrued as of the termination date and (iv) any earned but unpaid non-equity incentive plan awards as of the notice date. Assuming a termination date of December 31, 2013, Mr. Sturgeon would be entitled to approximately US$ 652,367, subject to deductions for social insurance and other withholdings. Mr. Sturgeon is also entitled to medical and dental insurance for a period of 12 months following termination.
Mr. Sturgeon may terminate his employment agreement at any time on 12 months’ notice. We may elect to make payment in lieu of notice, and pay him the portion of his annual salary for the portion of the notice period remaining at the time the Company makes this election. Mr. Sturgeon is also entitled to any earned but unpaid non-equity incentive plan awards. Assuming a termination date of December 31, 2013, if we were to elect to make payment in lieu of notice Mr. Sturgeon would be entitled to receive approximately US$ 391,541, subject to deductions for social security and other withholdings.
In the event we terminate Mr. Sturgeon’s employment agreement due to cause, he is not entitled to receive any additional remuneration.
Equity
The terms of Mr. Sturgeon’s restricted stock unit agreements do not provide for the vesting of any restricted stock units on termination. In the event his employment agreement is terminated, any restricted stock units awarded to Mr. Sturgeon shall immediately terminate on the date of such termination.
Pursuant to Mr. Sturgeon’s restricted stock unit agreements, in the event of a change of control, all restricted stock units granted to Mr. Sturgeon would become immediately exercisable. On December 31, 2013, the value of all restricted stock units granted to Mr. Sturgeon was US$ 271,611.
Daniel Penn
Payments under employment agreement
Mr. Penn has an employment agreement for an indefinite term. Pursuant to Mr. Penn’s current employment agreement, we may terminate Mr. Penn’s employment agreement on 12 months’ notice. If we give notice of termination to Mr. Penn his employment agreement shall terminate with immediate effect and the Company will make payment in lieu of notice equal to 12 months of salary. In the event we terminate Mr. Penn’s employment, he is also entitled to an amount equal to (i) his annual target bonus, (ii) his vacation days in respect of the notice period, (iii) any non-equity incentive plan awards accrued as of the termination date and (iv) any earned but unpaid non-equity incentive plan awards as of the notice date. Assuming a termination date of December 31, 2013, Mr. Penn would be entitled to receive approximately US$ 1,054,858, subject to deductions for social insurance and other withholdings. Mr. Penn is also entitled to medical and dental insurance for a period of 12 months following termination.
Mr. Penn may terminate his employment agreement at any time on 12 months’ notice. We may elect to make payment in lieu of notice, and pay him the portion of his annual salary for the portion of the notice period remaining at the time the Company makes this election. Mr. Penn is also entitled to any earned but unpaid non-equity incentive plan awards. Assuming a termination date of December 31, 2013, Mr. Penn would be entitled to receive approximately US$ 498,660, subject to deductions for social insurance and other withholdings.
In the event we terminate Mr. Penn’s employment agreement due to cause, he is not entitled to receive any additional remuneration.
Equity
The terms of Mr. Penn’s restricted stock unit agreements do not provide for the vesting of any restricted stock units on termination. In the event his employment agreement is terminated, any restricted stock units awarded to Mr. Penn shall immediately terminate on the date of such termination.
Pursuant to Mr. Penn’s restricted stock unit agreements, in the event of a change of control, all outstanding restricted stock units granted to Mr. Penn would become immediately exercisable. On December 31, 2013, the value of all restricted stock units granted to Mr. Penn was US$ 566,077.
Adrian Sarbu
Mr. Sarbu’s service as President and CEO terminated on August 21, 2013 and his employment terminated with effect from December 31, 2013. See footnote (10) to the Summary Compensation Table for payment made to him in connection with the termination of his employment.
David Sach
Because Mr. Sach’s employment terminated on October 29, 2013 pursuant to the Sach Separation Agreement, he was not entitled to any termination payments on December 31, 2013. See footnote (13) to the Summary Compensation Table for payment made to him in connection with the termination of his employment.
Anthony Chhoy
Because Mr. Chhoy’s employment terminated on November 15, 2013 pursuant to the Chhoy Separation Agreement, he was not be entitled to any termination payments on December 31, 2013. See footnote (16) to the Summary Compensation Table for payment made to him in connection with the termination of his employment.
Director Compensation
We use a combination of cash and equity to compensate non-employee directors. The following table sets forth information in respect of compensation paid to non-employee directors for the year ended December 31, 2013 including restricted stock units. We do not have any non-equity incentive compensation plans or non-qualified deferred compensation earnings and directors received no other compensation. Mr. Sarbu did not receive any compensation for his service as a director and details of his compensation may be found under the Summary Compensation Table above.
Name of Director | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($)(1) | | | Total Compensation ($) | |
Ronald Lauder(2) | | | - | | | | 46,110 | | | | 46,110 | |
Herbert Granath(3) | | | 87,500 | | | | 46,110 | | | | 133,610 | |
Paul Cappuccio | | | - | | | | - | | | | - | |
Michael Del Nin(4) | | | - | | | | - | | | | - | |
Charles Frank | | | 57,500 | | | | 46,110 | | | | 103,610 | |
Alfred Langer | | | 69,500 | | | | 46,110 | | | | 115,610 | |
Fred Langhammer(5) | | | 60,000 | | | | 46,110 | | | | 106,110 | |
Bruce Maggin | | | 60,000 | | | | 46,110 | | | | 106,110 | |
Parm Sandhu | | | 67,000 | | | | 46,110 | | | | 113,110 | |
Duco Sickinghe | | | 64,500 | | | | 46,110 | | | | 110,610 | |
Kelli Turner | | | - | | | | 46,110 | | | | 46,110 | |
Eric Zinterhofer(6) | | | - | | | | - | | | | - | |
| |
(1) | These amounts reflect aggregate grant date fair value of restricted stock unit awards granted during the fiscal year ended December 31, 20132014 in accordance with ASC 718 of awards pursuant to the Stock Incentive Plan. Assumptions used in the calculation of this amount are included in Part II, Item 8, Note 17 to our Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2013.2014. All directors elected at the 20132014 Annual General Meeting were awarded 14,500 restricted stock units having a value of US$ 65,000 on the date of grant, other than Messrs. Cappuccio and Del Nin,those who each declined director compensation. |
| |
(2) | Mr. Billock was appointed to the option award.(2) Mr. Lauder resigned as a directorBoard on March 14,April 15, 2014.
|
| |
(3) | Mr. Granath resigned as a director on March 20, 2014. |
| |
(4) Mr. Del Nin resigned as a director on September 15, 2013 in connection with his appointment as co-CEO.(5)
| Mr. Langhammer resigned as a director on March 14, 2014. (6)
|
| |
(5) | Mr. ZinterhoferSickinghe resigned as a director on July 18, 2013.
Directors’ Fees
We pay a cash fee to each of our independent directors of US$ 50,000 per annum. We reimburse each director for expenses in connection with attending meetings of the Board of Directors. Members of the Audit Committee are paid an additional annual cash fee of US$ 12,000. The members of the Audit Committee in 2013 were Messrs. Langer, Sandhu and Sickinghe. Members of the Compensation Committee are paid an additional annual cash fee of US$ 5,000. The members of the Compensation Committee in 2013 were Messrs. Granath, Maggin and Langhammer. Members of the Corporate Governance/Nominating Committee are paid an additional annual cash fee of US$ 5,000. Members of the Corporate Governance/Nominating Committee in 2013 were Messrs. Granath, Langer, Langhammer and Maggin. In addition, members of the Related Party Transactions Committee (until its activities were assumed by the Corporate Governance/Nominating Committee in June 2013) and the Treasury/Finance Committee (whose activities were assumed by the Audit Committee in April 2014) were entitled to receive an additional annual cash fee of US$ 5,000 (other than Mr. Del Nin and Ms. Turner, who declined the fee). The members of the Related Party Transactions Committee in 2013 were Messrs. Frank, Granath, Langer and Sickinghe. The members of the Treasury/Finance Committee in 2013 were Messrs. Del Nin (until September 2013), Frank and Sandhu and Ms. Turner. In addition, Mr. Granath received US$ 25,000 as Vice Chairman.
January 1, 2015. |
Annual Equity Grant
Pursuant to our Stock Incentive Plan, on the date of each annual general meeting, each non-employee director who has served as a director since the last annual general meeting or who has been otherwise approved by the Board although having served a shorter term shall receive either non-incentive stock options to purchase shares of Class A Common Stock, restricted stock or restricted stock units (or a combination thereof), as determined in the sole discretion of the Compensation Committee.
The Stock Incentive Plan provides the Compensation Committee with the authority to stipulate the vesting period for all automatic awards, whether options, restricted stock or restricted stock units. The Compensation Committee determined that the automatic grant for 2014 should consist solely of restricted stock units with a vesting period of one year.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of April 24, 2015 with respect to the beneficial ownership of shares of our outstanding voting securities of (i) each Named Executive Officer, (ii) each director, (iii) all directors and executive officers as a group and (iv) each shareholder known by us to beneficially own more than 5% of any class of our outstanding voting securities. Our outstanding voting securities are comprised of 135,381,285 shares of Class A Common Stock and a share of Series A Convertible Preferred Stock (the “Series A Preferred Share”). Our other authorized classes of capital stock include (i) the Series B Convertible Redeemable Preferred Stock (the “Series B Preferred Stock”), of which there are 200,000 shares outstanding and which does not have voting rights except in certain limited circumstances and (ii) Class B Common Stock, of which there are no shares outstanding. See Note 10 below for additional information about the Series A Preferred Share and Series B Preferred Stock.
In computing the number and percentage of shares owned by each shareholder, we have included any shares of Class A Common Stock that could be acquired within 60 days of April 24, 2015 by the exercise of stock options, the vesting of restricted stock units or the exercise of warrants. These shares, however, are not counted in computing the percentage ownership of any other shareholder. Except as otherwise noted, each of the shareholders identified in the table has sole voting and investment power over the shares beneficially owned by such shareholder.
|
| | | | | | | | | | | |
| Beneficial Ownership |
Name of Beneficial Owner | Class A Common Stock | | Options and RSUs (1) | | Other Securities (2) | | % Ownership |
John K. Billock | — |
| | 22,887 |
| | — |
| | * |
|
Paul Cappuccio | — |
| | — |
| | — |
| | -- |
|
Charles Frank (3) | 27,700 |
| | 54,887 |
| | — |
| | * |
|
Iris Knobloch | — |
| | — |
| | — |
| | -- |
|
Alfred Langer | 24,500 |
| | 54,887 |
| | — |
| | * |
|
Bruce Maggin (4) | 24,500 |
| | 54,887 |
| | — |
| | * |
|
Parm Sandhu (5) | 74,500 |
| | 42,887 |
| | — |
| | * |
|
Douglas Shapiro | — |
| | — |
| | — |
| | -- |
|
Kelli Turner | 24,500 |
| | 27,887 |
| | — |
| | * |
|
Gerhard Zeiler | — |
| | — |
| | — |
| | -- |
|
| | | | | | | |
Michael Del Nin (6) | 10,689 |
| | 50,462 |
| | — |
| | * |
|
Christoph Mainusch (7) | 25,000 |
| | 68,277 |
| | — |
| | * |
|
David Sturgeon (8) | 18,994 |
| | 30,758 |
| | — |
| | * |
|
Daniel Penn (9) | 44,972 |
| | 46,708 |
| | — |
| | * |
|
| | | | | | | |
All directors and executive officers as a group (14 persons) | 275,355 |
| | 454,527 |
| | — |
| | * |
|
| | | | | | | |
Time Warner Inc. (10) | 61,407,775 |
| | — |
| | 12,270,400 |
| | 49.90 | % |
TW Media Holdings LLC (10) | 61,407,775 |
| | — |
| | 12,270,400 |
| | 49.90 | % |
Time Warner Media Holdings B.V. (10) | 61,407,775 |
| | — |
| | 12,270,400 |
| | 49.90 | % |
Federated Investors, Inc. (11) | 10,285,328 |
| | — |
| | — |
| | 7.60 | % |
| |
1. | Includes shares of Class A Common Stock underlying vested stock options or restricted stock units that will vest within 60 days of April 24, 2015. |
| |
2. | Includes exercisable warrants to purchase shares of Class A Common Stock. |
| |
3. | Does not include warrants to purchase an aggregate of 4,452 shares of Class A Common Stock which are not currently exercisable. |
| |
4. | Does not include warrants to purchase an aggregate of 3,381 shares of Class A Common Stock which are not currently exercisable. |
| |
5. | Does not include warrants to purchase an aggregate of 20,307 shares of Class A Common Stock which are not currently exercisable. |
| |
6. | Does not include 579,367 shares of Class A Common Stock underlying unvested restricted stock orunits. |
| |
7. | Does not include 579,367 shares of Class A Common Stock underlying unvested restricted stock units. |
| |
8. | Does not include (i) 262,578 shares of Class A Common Stock underlying unvested restricted stock units (or a combination thereof), as determined in the sole discretionand (ii) warrants to purchase an aggregate of the Compensation Committee.
The1,260 shares of Class A Common Stock Incentive Plan provides the Compensation Committee with the authority to stipulate the vesting period for all automatic awards, whether options, restricted stock or restricted stock units. The Compensation Committee determined that the automatic grant for 2013 should consist solelywhich are not currently exercisable.
|
| |
9. | Does not include (i) 352,340 shares of Class A Common Stock underlying unvested restricted stock units with a vesting periodand (ii) warrants to purchase an aggregate of one year.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as4,221 shares of May 8, 2014 withClass A Common Stock which are not currently exercisable.
|
| |
10. | Information in respect toof the beneficial ownership of Time Warner Inc. (“Time Warner”), TW Media Holdings LLC (“TWMH”) and Time Warner Media Holdings B.V. (“TWBV”) is based upon a statement on Schedule 13D/A filed jointly by them on November 20, 2014. The address of each of Time Warner, a Delaware corporation, and TWMH, a Delaware limited liability company, is One Time Warner Center, New York, New York 10019. The address of TWBV, a private limited liability company organized under the laws of The Netherlands, is Naritaweg 237, 1043CB Amsterdam, The Netherlands. Time Warner owns directly and indirectly all of the equity interests of TWMH and TWMH owns directly all of the equity interests of TWBV. Time Warner, TWBV and TWMH beneficially own the Series A Preferred Share and 200,000 shares of our outstanding voting securities, consistingSeries B Preferred Stock. The holder of ourthe Series A Preferred Share is entitled to one vote per each 11,211,449 shares of Class A Common Stock andinto which it is convertible. Pursuant to the terms of the conversion of the Series A Convertible Preferred Stock, and also sets forth certain information with respect to voting power and percentage of ownership as of May 8, 2014, by (i) each shareholder known by us to beneficially own more than 5% of any class of our outstanding voting securities, (ii) each director, (iii)Share, the named executive officers, and (iv) all directors and named executive officers as a group. Except as otherwise noted below, each of the shareholders identified in the table has sole voting and investment power over the shares beneficially owned by such person. None of the shares held by the directors or executive officers are pledged, except as provided in Note 4 and Note 12.
Name of Beneficial Owner | | Beneficial Ownership of Shares of Class A Common Stock | | | % of Voting Power (a) | | | % Ownership (a) | | John Billock | | -- | | | | -- | | | | -- | | | | -- | | | | -- | | | | -- | | Charles Frank. | | 81,700 | (4) | | | * | | | | * | | Iris Knobloch | | -- | | | | -- | | | | -- | | Alfred Langer | | 82,500 | (5) | | | * | | | | * | | Bruce Maggin | | 74,500 | (6) | | | * | | | | * | | Parm Sandhu | | 99,500 | (7) | | | * | | | | * | | Douglas Saphiro | | -- | | | | -- | | | | -- | | Duco Sickinghe | | 54,500 | (8) | | | * | | | | * | | Kelli Turner | | 29,500 | (9) | | | * | | | | * | | Gerhard Zeiler | | -- | | | | -- | | | | -- | | | | | | | | | | | | | | Michael Del Nin (1) | | -- | | | | -- | | | | -- | | Christoph Mainusch (2) | | -- | | | | -- | | | | -- | | David Sturgeon | | 23,994 | (10) | | | * | | | | * | | Daniel Penn | | 52,479 | (11) | | | * | | | | * | | Adrian Sarbu | | 3,463,292 | (12) | | | 2.17 | % | | | 2.34 | % | David Sach | | 299,998 | (13) | | | * | | | | * | | Anthony Chhoy | | 139,134 | (14) | | | * | | | | * | | | | | | | | | | | | | | All directors and executive officers as a group (18 persons) | | 4,401,097 | (15) | | | 2.76 | % | | | 2.97 | % | | | | | | | | | | | | | Time Warner Inc. (3) | | 73,439,246 | | | | 53.45 | %(16) | | | 49.90 | % | TW Media Holdings LLC (3) | | 73,439,246 | | | | 53.45 | %(16) | | | 49.90 | % | Time Warner Media Holdings B.V. (3) | | 73,439,246 | | | | 53.45 | %(16) | | | 49.90 | % |
*Less than 1.0%
| (a) | Represents the percentage of total voting power and the percentage ownership of theunderlying shares of Class A Common Stock, the share of Series A Convertible Preferred Stock (the “Series A Preferred Share”), currently exercisable (or exercisable within 60 days as of May 8, 2014) options for shares of Class A and Class B Common Stock, vested but unissued (or vesting within 60 days as of May 8, 2014) restricted stock units beneficially owned by each identified shareholder and all directors and named executive officers as a group and 12,031,471 shares of Class A Common Stock issuable to Time Warner Media Holdings B.V. (“TWBV”) under the warrants as described in Note 3. Our other authorized class of capital stock outstanding, the Series B Convertible Redeemable Preferred Stock (the “Series B Preferred Stock”), does not have voting rights except in certain limited circumstances. At May 8, 2014, there were (i) 135,141,367 shares of Class A Common Stock, (ii) one Series A Preferred Share and (iii) 200,000 shares of Series B Preferred Stock outstanding. See Note 3 for information relating to voting rights attached to the Series A Preferred Share. |
| 1. | Does not include 71,260 shares of Class A Common Stock underlying restricted stock units which represent a contingent right to receive such shares and which are currently not vested, nor will they become vested within 60 days. |
| 2. | Does not include 71,260 shares of Class A Common Stock underlying restricted stock units which represent a contingent right to receive such shares and which are currently not vested, nor will they become vested within 60 days. |
| 3. | Information in respect of the beneficial ownership of Time Warner Inc (“Time Warner”), TW Media Holdings LLC (“TWMH”) and TWBV (other than percentages) is based upon a Form 4 filed jointly by them on May 5, 2014 and upon a statement on Schedule 13D/A filed jointly by them on May 7, 2014. The address of each of Time Warner, a Delaware corporation, and TWMH, a Delaware limited liability company, is One Time Warner Center, New York, New York 10019. The address of TWBV, a private limited liability company organized under the laws of The Netherlands, is Naritaweg 237, 1043CB Amsterdam, The Netherlands. Time Warner owns directly and indirectly all of the equity interests of TWMH and TWMH owns directly all of the equity interests of TWBV. Time Warner, TWBV and TWMH reported that they beneficially own (i) 61,407,775 shares of Class A Common Stock, (ii) the Series A Preferred Share, (iii) 200,000 shares of Series B Preferred Stock which are non-voting, except in certain limited circumstances, and (iv) 12,031,471 shares of Class A Common Stock issuable under the warrants issued to TWBV on May 2, 2014 (pursuant to the limited right of TWBV to exercise such warrants in order to maintain the TW Ownership Threshold (as defined below)). The Series A Preferred Share is convertible into 11,211,449 shares of Class A Common Stock on the date that is 61 days after the date on which the number of outstanding shares of Class A Common Stock owned by TWBV (assuming the conversion of the Series A Preferred Share into shares of Class A Common Stock in accordance with the terms thereof), when aggregated with any outstanding shares of Class A Common Stock held by any group (as this term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that includes TWBV and any of its affiliates, would not result in the TWBV being a beneficial owner of more than 49.9% of the outstanding shares of Class A Common Stock of the Company. The Series A Preferred Share is entitled to one vote per each share of Class A Common Stock into which it is convertible. The Series B Preferred Stock accretes at the rate of 7.5% per annum, compounded quarterly, for the first three years from issuance (June 25, 2013) and 3.75% per annum, compounded quarterly, for the fourth and fifth year from issuance. The Series B Preferred Stock is convertible into shares of Class A Common Stock from June 25, 2016 at the option of TWBV at a conversion price of $2.42, subject to adjustment under customary anti-dilution provisions. Assuming conversion on that date and no adjustments to the conversion price, TVBV would be issued approximately 103,142,539 shares of Class A Common Stock on conversion. Does not include (i) warrants to purchase an aggregate of 65,195,525 shares of Class A Common Stock held by TWBV and (ii) warrants to purchase an aggregate of 23,700,000 shares of Class A Common Stock held by Time Warner. All such warrants are exercisable from May 2 , 2016 until May 2, 2018 at an exercise price of $1.00 per share, provided such warrants may be exercised by Time Warner or TWBV prior to May 2, 2016, if and at such time and in such amounts, as would allow Time Warner to own up to 49.9% of the outstanding shares of Class A Common Stock (including any shares attributed to Time Warner as part of a group under Section 13(d)(3) of the Exchange Act (the “TW Ownership Threshold”)). |
| 4. | Consists of (i) 13,200 shares of Class A Common Stock; (ii) 54,000 shares of Class A Common Stock underlying options which are currently exercisable, or will become exercisable within 60 days; and (iii) 14,500 shares of Class A Common Stock underlying restricted stock units which represent a contingent right to receive such shares and which will become vested within 60 days. Mr. Frank holds a brokerage account which he uses as a cash management account in which he maintains various securities, including 3,200 shares of Class A Common Stock of the Company. Whenever such account is overdrawn, the amount of such overdraft is loaned to Mr. Frank on a margin secured by all of the securities in the account, which may be deemed to constitute a “pledge” of Mr. Frank’s shares in the Company. Does not include warrants to purchase an aggregate of 4,452 shares of Class A Common Stock, which are not currently exercisable and will not become exercisable within 60 days . |
| 5. | Consists of (i) 58,000 shares of Class A Common Stock underlying options which are currently exercisable, or will become exercisable within 60 days; (ii) 10,000 shares of Class A Common Stock underlying restricted stock units which represent a contingent right to receive such shares and which have vested; and (iii) 14,500 shares of Class A Common Stock underlying restricted stock units which represent a contingent right to receive such shares and which will become vested within 60 days. |
| 6. | Consists of (i) 10,000 shares of Class A Common Stock; (ii) 50,000 shares of Class A Common Stock underlying options which are currently exercisable, or will become exercisable within 60 days; and (iii) 14,500 shares of Class A Common Stock underlying restricted stock units which represent a contingent right to receive such shares and which will become vested within 60 days. Does not include warrants to purchase an aggregate of 3,381 shares of Class A Common Stock, which are not currently exercisable and will not become exercisable within 60 days. |
| 7. | Consists of (i) 60,000 shares of Class A Common Stock; (ii) 25,000 shares of Class A Common Stock underlying options which are currently exercisable, or will become exercisable within 60 days; and (iii) 14,500 shares of Class A Common Stock underlying restricted stock units which represent a contingent right to receive such shares and which will become vested within 60 days. Does not include warrants to purchase an aggregate of 20,307 shares of Class A Common Stock, which are not currently exercisable and will not become exercisable within 60 days. |
| 8. | Consists of (i) 10,000 shares of Class A Common Stock; (ii) 30,000 shares of Class A Common Stock underlying options which are currently exercisable, or will become exercisable within 60 days; and (iii) 14,500 shares of Class A Common Stock underlying restricted stock units which represent a contingent right to receive such shares and which will become vested within 60 days. Does not include warrants to purchase an aggregate of 3,381 shares of Class A Common Stock, which are not currently exercisable and will not become exercisable within 60 days. |
| 9. | Consists of (i) 10,000 shares of Class A Common Stock; (ii) 5,000 shares of Class A Common Stock underlying options which are currently exercisable, or will become exercisable within 60 days; and (iii) 14,500 shares of Class A Common Stock underlying restricted stock units which represent a contingent right to receive such shares and which will become vested within 60 days. |
| 10. | Consists of (i) 3,750 shares of Class A Common Stock; and (ii) 20,244 shares of Class A Common Stock underlying restricted stock units which represent a contingent right to receive such shares and which will become vested within 60 days. Does not include (i) 50,488 shares of Class A Common Stock underlying restricted stock units which represent a contingent right to receive such shares and which are currently not vested, nor will they become vested within 60 days; and (ii) warrants to purchase an aggregate of 1,260 shares of Class A Common Stock, which are not currently exercisable and will not become exercisable within 60 days. |
| 11. | Consists of (i) 12,500 shares of Class A Common Stock; and (ii) 39,979 shares of Class A Common Stock underlying restricted stock units which represent a contingent right to receive such shares and which will become vested within 60 days. Does not include (i) 107,437 shares of Class A Common Stock underlying restricted stock units which represent a contingent right to receive such shares and which are currently not vested, nor will they become vested within 60 days; and (ii) warrants to purchase an aggregate of 4,221 shares of Class A Common Stock, which are not currently exercisable and will not become exercisable within 60 days. |
| 12. | Mr. Sarbu resigned as the President and Chief Executive Officer of the Company effective August 21, 2013 and continued to be employed by the Company through the end of the year. The information in respect of beneficial ownership by Mr. Sarbu assumes Mr. Sarbu’s beneficial holdings reported herein as of May 8, 2014 were unchanged from the date of his separation from the Company. Consists of (i) a currently exercisable warrant to purchase 600,000 shares of Class A Common Stock beneficially owned by Mr. Sarbu and Alerria Management Company S.A. (“Alerria”); (ii) a currently exercisable warrant to purchase 250,000 shares of Class A Common Stock beneficially owned by Mr. Sarbu and Metrodome B.V. (“Metrodome”); (iii) 771,425 shares of Class A Common Stock beneficially owned solely by Mr. Sarbu; (iv) 1,241,867 shares of Class A Common Stock beneficially owned jointly by Mr. Sarbu and Alerria; and (v) 600,000 shares of Class A Common Stock beneficially owned jointly by Mr. Sarbu and Metrodome. Mr. Sarbu beneficially owns, directly or indirectly, substantially all the outstanding shares of Alerria, a joint stock company organized under the laws of Romania, and Metrodome, a company organized under the laws of The Netherlands. Alerria has pledged 1,200,000 shares of Class A Common Stock, and Mr. Sarbu has pledged 200,000 shares of Class A Common Stock, each in favor of ING Bank N.V. Amsterdam – Bucharest Branch pursuant to security agreements dated May 20, 2010 and September 30, 2011. |
| 13. | Mr. Sach entered into a separation agreement with the Company’s affiliate, CME Media Services Limited, on October 14, 2013, pursuant to which his employment and service as Chief Financial Officer were terminated as of October 29, 2013. The information in respect of beneficial ownership by Mr. Sach is based on information provided to the Company by Mr. Sach as of May 1, 2014. Consists of 299,998 shares of Class A Common Stock and does not include warrants to purchase an aggregate of 101,577 shares of Class A Common Stock, which are not currently exercisable and will not become exercisable within 60 days. |
| 14. | Mr. Chhoy entered into a separation agreement with the Company’s affiliate, CME Media Services Limited, on October 17, 2013, pursuant to which his employment and service as Executive Vice President, Strategic Planning and Operations were terminated as of November 15, 2013. The information in respect of beneficial ownership by Mr. Chhoy is based on information provided to the Company by Mr. Chhoy as of May 2, 2014. Consists of 139,134 shares of Class A Common Stock. |
| 15. | Consists of (i) 3,171,874 shares of Class A Common Stock; (ii) 1,072,000 shares of Class A Common Stock underlying options which are currently exercisable or will become exercisable within 60 days and currently exercisable warrants to purchase shares of Class A Common Stock; (iii) 10,000 shares of Class A Common Stock underlying restricted stock units which represent a contingent right to receive such shares and which have vested; and (iv) 147,223 shares of Class A Common Stock underlying restricted stock units which represent a contingent right to receive such shares and which will become vested within 60 days. Does not include (i) 300,445 shares of Class A Common Stock underlying restricted stock units which represent a contingent right to receive such shares and which are currently not vested, nor will they become vested within 60 days; and (ii) warrants to purchase an aggregate of 138,579 shares of Class A Common Stock, which are not currently exercisable and will not become exercisable within 60 days. |
| 16. | Consists of voting rights with respect to the 61,407,775 shares of Class A Common Stock and the Series A Preferred Share held by TWBV. For the purposes of this table only, the voting percentages of Time Warner, TWMH and TWBV were calculated as if TWBV had received (i) 11,211,449 shares of Class A Common Stock upon the conversion of the Series A Preferred Share, and (ii) 12,031,471 shares of Class A Common Stock under the warrants in order to maintain the TW Ownership Threshold as described in Note 3. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers, directors and persons who beneficially own greater than 10% of a registered class of our equity securities to file certain reports (“Section 16 Reports”) with the SEC with respect to ownership and changes in ownership of shares of our common stock and other equity securities. Based solely on our review of the Section 16 Reports furnished to us and written representations from certain reporting persons, we believe that, during the fiscal year ended December 31, 2013, all filing requirements under Section 16(a) applicable to our officers, directors and greater than 10% beneficial owners were complied with on a timely basis, except that Fred Langhammer did not file until November 1, 2013 a Statement of Beneficial Ownership on Form 4 with respect to a purchase of shares of our Class A Common Stock were not included in the calculations of ownership percentages set forth in the table above. In addition, Time Warner, TWBV and TWMH beneficially own 12,270,400 shares of Class A Common Stock underlying exercisable warrants issued to TWBV on May 3, 2013.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Review and Approval2, 2014. The number of Related Party Transactions
All transactions in which we and our directors and executive officers or membersshares of their immediate families are participantsClass A Common Stock that are subject to review, ratification or approvalexercisable under such warrants has been adjusted by us under relevant SEC regulations and NASDAQ Marketplace Rules are reviewed to determine whether such persons have a direct or indirect material interest. Management is primarily responsible for the development and implementationreflect additional issuances of processes and controls to obtainClass A Common Stock since November 20, 2014. For additional information from the directors and executive officers in respect of such related party transactions and for determining, based on the factsSeries A Preferred Share, the Series B Preferred Stock, the warrants referenced above and circumstances, whether we or a related party has a direct or indirect material interest in the transaction. Pursuant to relevant SEC regulations, transactions that are determined to be directly or indirectly material to us or a related person are disclosed in our proxy statement.
Our Corporate Governance/Nominating Committee reviews, approves or ratifies relevant related party transactions in accordance with a written procedure. In the course of its review, approval or ratification of related party transactions, the Corporate Governance/Nominating Committee considers: the nature of the related party’s interest in the transaction; the material terms of the transaction; the nature of our participation in the transaction; whether the transaction would impair the judgment of the related party to act in our best interests; and such other matters as are considered appropriate.
Any member of the Corporate Governance/Nominating Committee who is a related party in respect of a transaction under review may not participate in the deliberations or vote for an approval or ratification of such transaction.
Related Party Transactions
Time Warner Inc.
For the year ended December 31, 2013, we made purchases from controlled subsidiaries that are 100% owned, directly or indirectly,additional warrants held by Time Warner Inc., a shareholder that has representatives onand TWBV which are not currently exercisable, see Notes 12 and 13 to our Board of Directors, with a value of approximately US$ 61.5 million. The purchases were mainly for programming rights. For the year ended December 31, 2013, the total sales to such controlled subsidiaries were approximately US$ 0.1 million. At December 31, 2013, such controlled subsidiaries had an outstanding balance due to us of US$ 0.2 million. At December 31, 2013, such controlled subsidiaries had an outstanding balance due to them of US$ 70.5 million.
Adrian Sarbu
For the year ended December 31, 2013, we made purchases from companies related to or connected with Mr. Sarbu, who was President and Chief Executive Officer of the Company until August 21, 2013, with a value of approximately US$ 3.9 million, of which Mr. Sarbu’s economic interest represents approximately US$ 2.4 million. The purchases were mainly for various technical, production and administrative related services. For the year ended December 31, 2013, the total sales to companies related to or connected with Mr. Sarbu were approximately US$ 1.7 million, of which Mr. Sarbu’s economic interest represents approximately US$1.0 million. At December 31, 2013, companies related to or connected with Mr. Sarbu had an outstanding balance due to us of US$1.3 million, which we deducted from the monies paid by us to Mr. Sarbu under the Sarbu Separation Agreement in January 2014. At December 31, 2013, companies related to or connected with Mr. Sarbu had an outstanding balance due to them of US$ 0.5 million.
AUDIT COMMITTEE REPORT
To Our Shareholders:
The Audit Committee has reviewed and discussed with management the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2013.
The Audit Committee has discussed with Deloitte LLP, our independent registered public accounting firm, the matters required to be discussed by the Statements on Auditing Standards No. 61, as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T.
The Audit Committee has also received the written disclosures and the letter from Deloitte LLP required by the applicable requirements of the Public Company Accounting Oversight Board regarding Deloitte LLP’s communications with the Audit Committee concerning independence, and have discussed with Deloitte LLP its independence.
Based on the reviews and discussions referred to above, the Audit Committee has recommended to the Board of Directors that the audited financial statements referred to above be included in the Company’sour Annual Report on Form 10-K for the fiscal year ended December 31, 20132014 accompanying this proxy statement.
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11. | Information in respect of beneficial ownership of Federated Investors, Inc. (other than percentage ownership) is based upon a statement on Schedule 13G (Amendment no. 1) filed withjointly by Federated Investors, Inc., Voting Shares Irrevocable Trust, John F. Donahue, Rhodora J. Donahue and J. Christopher Donahue on February 11, 2015, each reporting sole voting and dispositive power over 10,285,328 shares of Class A Common Stock. Federated Investors, Inc. (the “Parent”) is the Securitiesparent holding company of Federated Equity Management Company of Pennsylvania and Exchange Commission.Federated Global Investment Management Corp. (the “Investment Advisers”), which act as investment advisers to registered investment companies and separate accounts that own the reported securities. The Investment Advisers are wholly owned subsidiaries of FII Holdings, Inc. which is a wholly owned subsidiary of Parent. All of Parent’s outstanding voting stock is held in the Voting Shares Irrevocable Trust (the “Trust”) for which John F. Donahue, Rhodora J. Donahue and J. Christopher Donahue act as trustees (collectively, the “Trustees”). Parent, the Trust, and each of the Trustees declare that the Schedule 13G should not be construed as an admission that they are the beneficial owners of the reported securities, and each expressly disclaims beneficial ownership of the reported securities. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers, directors and persons who beneficially own greater than 10% of a registered class of our equity securities to file certain reports (“Section 16 Reports”) with the SEC with respect to ownership and changes in ownership of shares of our common stock and other equity securities. Based solely on our review of the Section 16 Reports furnished to us and written representations from certain reporting persons, we believe that, during the fiscal year ended December 31, 2014, all filing requirements under Section 16(a) applicable to our officers, directors and greater than 10% beneficial owners were complied with on a timely basis.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Review and Approval of Related Party Transactions
All transactions in which we and our directors and executive officers or members of their immediate families are participants that are subject to review, ratification or approval by us under relevant SEC regulations and NASDAQ Marketplace Rules are reviewed to determine whether such persons have a direct or indirect material interest. Management is primarily responsible for the development and implementation of processes and controls to obtain information from the directors and executive officers in respect of such related party transactions and for determining, based on the facts and circumstances, whether we or a related party has a direct or indirect material interest in the transaction. Pursuant to relevant SEC regulations, transactions that are determined to be directly or indirectly material to us or a related person are disclosed in our proxy statement.
Our Corporate Governance/Nominating Committee reviews, approves or ratifies relevant related party transactions in accordance with a written procedure. In the course of its review, approval or ratification of related party transactions, the Corporate Governance/Nominating Committee considers: the nature of the related party’s interest in the transaction; the material terms of the transaction; the nature of our participation in the transaction; whether the transaction would impair the judgment of the related party to act in our best interests; and such other matters as are considered appropriate.
Any member of the Corporate Governance/Nominating Committee who is a related party in respect of a transaction under review may not participate in the deliberations or vote for an approval or ratification of such transaction.
Related Party Transactions
We consider our related parties to be those shareholders who have direct control and/or influence and other parties that can significantly influence management as well as our officers and directors; a “connected” party is one in relation to whom we are aware of the existence of a family or business connection to a shareholder, director or officer. We have identified transactions with individuals or entities associated with Time Warner Inc., who is represented on our Board of Directors and holds a 49.6% voting interest in the Company as at December 31, 2014, as material related party transactions.
Time Warner Inc.
In addition to the transactions set forth in the table below, an affiliate of Time Warner Inc. owns 200,000 shares of our Series B Preferred Stock. Pursuant to the terms of the Certificate of Designations for the Series B Preferred Stock, in connection with the closing of the Company’s rights offering on May 2, 2014 the conversion price of the Series B Preferred Stock was adjusted to US$ 2.42 as a result of the additional shares of Class A Common Stock issued to participants in the rights offering.
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| | | |
| For The Year Ending December 31, 2014 |
| (US$ in 000's) |
Purchases of programming | $ | 20,713 |
|
Sales | 59 |
|
Interest expense | 61,887 |
|
|
| | | |
| December 31, 2014 |
| (US$ in 000's) |
Programming liabilities | $ | 24,980 |
|
Other accounts payable and accrued liabilities | 150 |
|
Accounts receivable, gross | 197 |
|
Long-term debt and other financing arrangements (1) | 269,862 |
|
Accrued interest payable (2) | 4,763 |
|
Other non-current liabilities (3) | 10,299 |
|
| Submitted by: |
| |
| Alfred W. Langer |
| Charles Frank |
| Kelli Turner |
| Parm Sandhu |
| |
| |
| Members of the Audit Committee |
(1) |
PROPOSAL 2
SELECTION OF AUDITORS
AtAmount represents the recommendation(i) aggregate principal amount held by Time Warner Inc. of the Audit Committee,Company's outstanding 15.0% senior secured notes due 2017 (the "2017 PIK Notes"), (ii) the Boardamounts drawn on the Company's 15.0% term loan due 2017 funded by Time Warner Inc. (the "2017 Term Loan") and (iii) the amounts drawn under the Company's senior secured floating rate revolving credit facility due 2017 funded by Time Warner Inc. (the "2017 Revolving Credit Facility"), less respective issuance discounts, plus interest for which we made an election to pay in kind. The weighted average interest rate of Directors recommendsour long-term debt and other financing arrangements with Time Warner Inc. was 14.7%. There were no principal repayments during the year ended December 31, 2014.
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| |
(2) | Amount represents the accrued interest on the principal amount of the outstanding 2017 PIK Notes held by Time Warner Inc., which is payable in kind in arrears until November 15, 2015, and on the outstanding balance of the 2017 Term Loan and the 2017 Revolving Credit Facility. |
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(3) | Amount represents the commitment fee payable to Time Warner Inc. in connection with their agreement to provide or assist with arranging a loan facility to refinance the outstanding principal amount of the Company's 5.0% senior convertible notes due 2015 at or immediately prior to their maturity in November 2015, as well as the accrued fee payable to Time Warner Inc. for unconditionally guaranteeing the Company's floating rate senior unsecured term credit facility with BNP Paribas as administrative agent. For additional information on the Company's long-term debt and senior credit facilities see Part II, Item 8, Note 5 to the shareholders that Deloitte LLP be appointedfinancial statements included in our Annual Report on Form 10-K for the year ended December 31, 2014 accompanying this proxy statement. |
AUDIT COMMITTEE REPORT
To Our Shareholders:
The Audit Committee has reviewed and discussed with management the Company’s audited consolidated financial statements for the fiscal year ended December 31, 2014.
The Audit Committee has discussed with Deloitte LLP, our independent registered public accounting firm, the matters required to be discussed by the Statements on Auditing Standards No. 61, as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T.
The Audit Committee has also received the written disclosures and the letter from Deloitte LLP required by the applicable requirements of the Public Company Accounting Oversight Board regarding Deloitte LLP’s communications with the Audit Committee concerning independence, and have discussed with Deloitte LLP its independence.
Based on the reviews and discussions referred to above, the Audit Committee has recommended to the Board of Directors that the audited financial statements referred to above be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014 filed with the Securities and Exchange Commission.
Submitted by:
ALFRED W. LANGER
CHARLES FRANK
PARM SANDHU
KELLI TURNER
MEMBERS OF THE AUDIT COMMITTEE
PROPOSAL 2
APPROVAL OF 2015 STOCK INCENTIVE PLAN
On April 20, 2015, the Board of Directors adopted, subject to approval by shareholders, the 2015 Stock Incentive Plan (the “2015 Plan”).
Currently, the Company grants equity awards under its Amended and Restated Stock Incentive Plan (the “2012 Plan”). The 2012 Plan expires on June 1, 2015 and no grants may be made under the 2012 Plan after that date. The 2015 Plan is proposed to replace the 2012 Plan, effective as of the date that the Board adopted the 2015 Plan. All outstanding awards granted under the 2012 Plan will remain subject to the 2012 Plan.
The Board of Directors believes that the 2015 Plan will serve a critical role in attracting and retaining the high caliber employees and directors essential to the Company’s success and in motivating these individuals to strive to meet our goals. Therefore, the Board recommends that you vote to approve the adoption of the 2015 Plan.
Summary of the 2015 Plan
The discussion of the 2015 Plan that follows is qualified in its entirety by the full terms of the 2015 Plan included in Annex A to this proxy statement.
The 2015 Plan allows the Company, under the administration of the Compensation Committee, to make grants of stock options, restricted stock units, restricted stock and stock appreciation rights ("SARs") to employees and non-employee directors. Currently, the Company has 10 directors and approximately 3,200 employees. The purpose of awards under the 2015 Plan is to attract, motivate and retain talented employees and non-employee directors, further align their interests with those of our stockholders and to continue to link employee compensation with the Company's performance. Under the terms of the 2015 Plan, all employees of the Company and certain of its subsidiaries as well as all non-employee directors of the Company are eligible to receive awards.
The number of shares of Class A Common Stock authorized for issuance under the 2015 Plan is 6,000,0007. In addition, any shares that remain available for issuance under the 2012 Plan will be available for issuance under the 2015 Plan. As of April 24, 2015, 212,193 shares were available for issuance under the 2012 Plan. If any award, or portion of an award, granted under the 2012 Plan or the 2015 Plan expires or terminates unexercised, becomes unexercisable, is settled in cash without delivery of shares, or is forfeited or otherwise terminated, surrendered or canceled as to any shares, or if any shares are surrendered to the Company in connection with any award, or if any shares are withheld by the Company, the shares subject to such award and the surrendered and withheld shares will be available for further awards under the 2015 Plan. As of April 24, 2015, options for 135,000 shares of Class A Common Stock and 2,530,124 restricted stock units were outstanding under the 2012 Plan.
The Compensation Committee shall determine, based on a recommendation from management, which employees will participate in grants of awards. In 2014, 13 employees received awards under the 2012 Plan.
___________________________
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7 | As of April 24, 2015, there were 135,381,285 shares of Class A Common Stock outstanding. In addition, Time Warner Inc. ("Time Warner") beneficially owns one share of Series A Preferred Stock and 200,000 shares of Series B Preferred Stock. The one share of Series A Convertible Preferred Stock is convertible into approximately 11.2 million shares of Class A Common Stock. The shares of Series B preferred stock are generally convertible into shares of Class A Common Stock from June 25, 2016 at the option of Time Warner (subject to serve ascertain exceptions). As of December 31, 2014, the 200,000 shares of Series B preferred stock were convertible into approximately 92.4 million shares of Class A Common Stock. In addition, the Company has issued 114.0 million warrants, which are convertible into shares of Class A Common Stock from May 2, 2016 until May 2, 2018 at an exercise price of $1.00 per share, subject to the right of Time Warner to exercise approximately 100.9 million of those warrants held by it prior to May 2, 2016 in certain circumstances. For additional information on the Series A Preferred Stock, Series B Preferred Stock and the warrants, see Part II, Item 8, Notes 12 and 13 to our independent registered public accounting firmfinancial statements included in our Annual Report on Form 10-K for 2014.the year ended December 31, 2014 accompanying this proxy statement. |
32
Types of Awards
Stock Options. The 2015 Plan allows for the granting of non-qualified stock options and incentive stock options (intended to provide the grantee favorable tax treatment under Section 422 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”)), provided that no more than an aggregate of 6,000,000 shares may be issued pursuant to incentive stock options under the 2015 Plan. The exercise price of stock options granted may not be less than the fair market value of the shares of Class A Common Stock on the date of grant. The fair market value is generally the closing price of the Company’s shares of Class A Common Stock on the date of grant. The term of these awards will be determined by the Compensation Committee but may not be longer than ten years. The Compensation Committee will determine at the time of grant when each such award becomes vested or exercisable. Vesting accelerates upon a change in control, as described below. On April 24, 2015, the closing price of the Company’s common stock as reported by the NASDAQ Stock Market was US$ 2.71.
Restricted Stock Unit Awards and Restricted Stock Awards. The Compensation Committee may make a grant, issuance, retention or vesting of restricted stock unit awards and restricted stock awards contingent upon continued employment with the Company or the level of achievement against performance criteria. The vesting schedule will be set by the Compensation Committee at the time of grant. Awards of restricted stock units may be settled in shares of Class A Common Stock or cash, as determined by the Compensation Committee. Vesting of restricted stock awards and restricted stock units may accelerate upon a change in control, as described below.
Performance criteria established by the Compensation Committee may relate to any of the following, as it may apply to an individual, one or more business units, divisions or subsidiaries, or on a Company-wide basis, and in either absolute terms or relative to the performance of one or more comparable companies or an index covering multiple companies: revenue; earnings before interest, taxes, depreciation and amortization (EBITDA); operating income before depreciation and amortization (OIBDA); operating income; pre- or after-tax income; free cash flow; cash flow per share; net earnings; earnings per share; price-to-earnings ratio; return on equity; return on invested capital; return on assets; growth in assets; share price performance; total shareholder return; improvement in or attainment of expense levels; improvement in or attainment of working capital levels; relative performance to a group of companies comparable to the Company, and strategic business criteria consisting of one or more objectives based on the Company’s meeting specified goals relating to revenues, costs, market penetration or share, business expansion, acquisitions, divestitures or other corporate transactions.
Stock Appreciation Rights.The Compensation Committee may grant SARs in tandem with another award, in addition to another award or unrelated to another award. A SAR will entitle the holder to receive an amount equal to the excess of the fair market value of a share on the exercise date over the grant price, which may not be less than the fair market value on the grant date. The Committee shall determine whether a SAR will be settled in cash, shares or a combination of cash and shares.
Amendments and Termination
Our Board of Directors may terminate, amend or modify the 2015 Plan or any portion thereof at any time. However, without further approval of the Company’s shareholders, there will be (i) no increase in the number of shares that may be issued under the 2015 Plan (except by operation of the 2015 Plan's adjustment sections), (ii) no change in the class of persons eligible to receive incentive stock options, and (iii) no other amendment of the 2015 Plan that would require the approval of the Company’s shareholders under any applicable law, regulation or rule, including the rules of any stock exchange or quotation system on which the shares may then be listed or quoted.
Adjustments to Number of Shares
Changes in Capitalization. Pursuant to the 2015 Plan, in the event of a change with respect to the outstanding shares of Class A Common Stock by reason of a share dividend, share split, recapitalization, reclassification, split up, combination of shares, any distribution to holders other than cash dividends, or any reorganization, amalgamation, merger, consolidation or similar corporate transaction affecting the number of shares of Class A Common Stock, the number of shares available for grant of awards and the number and type of shares for which any award is exercisable as well as the exercise price, or any other affected term of an award, will be equitably adjusted by the Compensation Committee.
Change in Control. For purposes of the 2015 Plan, a “change in control” shall be deemed to have occurred upon (i) the consummation of any amalgamation, consolidation or merger of the Company pursuant to which the shareholders of the Company immediately prior to the amalgamation, merger or consolidation do not constitute, immediately after the amalgamation, consolidation or merger, the beneficial owners (within the meaning of Rule 13d-3 under the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act")) of 50% or more of the voting power of the then outstanding securities of the Company (or the surviving entity) generally entitled to vote in the election of directors, provided, that any amalgamation, consolidation, merger or other business combination effected solely to change the domicile of the Company shall not constitute a Change in Control; (ii) the occurrence of an event the result of which is that any “person” or “group” of related persons (as defined in Section 13(d) and 14(d)(2) of the Exchange Act), becomes the beneficial owner, directly or indirectly, of securities representing more than 50% of the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors; (iii) the sale or other disposition (in one transaction or a series of transactions) of all or substantially all of the assets of the Company and its Affiliates to an unaffiliated third party or the liquidation or dissolution of the Company; or (iv) a change in the composition of the Board in any two-year period, such that a majority of the members of the Board are not (A) persons who were directors at the beginning of such period or (B) persons who are elected, or nominated for election, to the Board by an affirmative vote of the majority of such directors (but will not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Board); provided, however, that (I) a change in control will not include a Time Warner Transaction (as described below), and (II) for purposes of any award or subplan that may constitute deferred compensation within the meaning of Code section 409A, the Committee, in its discretion, may specify a different definition of change in control in order to comply with or cause an award to be exempt from the provisions of Code section 409A.
For purposes of the 2015 Plan, a “Time Warner Transaction” is (i) any transaction or event (including the exercise of conversion rights under any convertible security) the result of which is that Time Warner Inc. becomes the beneficial owner, directly or indirectly, of securities (including any securities attributed to it as part of a group under Section 13(d) of the Exchange Act) representing more than 50% of the combined voting power of the then outstanding securities of the Company entitled to vote in the election of directors; or (ii) the consummation of any amalgamation, consolidation or merger of the Company pursuant to which the shareholders of the Company immediately prior to the amalgamation, merger or consolidation do not constitute, immediately after the amalgamation, consolidation or merger, the beneficial owners (within the meaning of Rule 13d-3 under the Exchange Act) of 50% or more of the voting power of the then outstanding securities of the Company (or the surviving entity) generally entitled to vote in the election of directors; provided, that Time Warner Inc. is the beneficial owner of 20% of the voting power of the then outstanding securities of the Company (or the surviving entity) generally entitled to vote in the election of directors following such amalgamation, consolidation or merger. For the avoidance of doubt, in the event Time Warner Inc. is the beneficial owner of less than 20% of the voting power of the then outstanding securities of the Company (or the surviving entity) generally entitled to vote in the election of directors following such amalgamation, consolidation or merger, such transaction shall constitute a Change in Control.
In the event of any transaction resulting in a change in control of the Company, all outstanding awards will terminate unless provision is made for the continuation, assumption or substitution of outstanding awards (as determined by the Compensation Committee) by the surviving entity. In the event awards are terminated as a result of a change in control, the Compensation Committee may, in its discretion, accelerate the vesting or payment of, or cause the restrictions to lapse with respect to such awards with effect on or immediately prior to such change in control (including any performance-based awards, which, if accelerated, shall vest in respect of the target amount of such awards) and may permit the holders of options and other awards under the plan, immediately before the change in control, to exercise or convert all portions of such options or other awards under the plan that are then exercisable or convertible or which become exercisable or convertible upon or prior to the effective time of the change in control. If there is a change of control, the Compensation Committee may in its discretion determine to cancel any outstanding awards in exchange for cash, stock, or other property equal to the fair market value of the consideration in the transaction less the exercise or purchase price per share. The Compensation Committee shall set forth in the applicable award agreements the effect of a Time Warner Transaction on an award.
Unusual or Nonrecurring Events. The Compensation Committee shall be permitted to make, in its discretion, adjustments to the terms of awards as a result of unusual or nonrecurring events affecting the Company or its financial statements, or changes in applicable laws or regulations, when the Compensation Committee determines that such adjustments are appropriate in order to prevent dilution or the enlargement of intended benefits under the 2015 Plan.
Option or SAR Repricing. Repricing of underwater options and SARs requires stockholder approval under the 2015 Plan.
2015 Plan Benefits
No awards have been granted under the 2015 Plan as of the date of this proxy statement. All awards to be granted under the 2015 Plan are at the discretion of the Compensation Committee. Therefore, it is not possible to determine the benefits or amounts to be received under the 2015 Plan, or that would have been received had the 2015 Plan been in effect for the last fiscal year, by our directors, officers or employees. Although not directly comparable to grants that may be awarded under the 2015 Plan, in 2014 all employees as a group (excluding our Named Executive Officers) received total grants of 255,200 restricted stock units with a combined grant date value of US$ 715,045 under the 2012 Plan. Grants in 2014 to Named Executive Officers and Directors under the 2012 Plan are set forth in the compensation-related sections of this proxy statement.
Summary of U.S. Federal Income Tax Consequences
The following summary is intended only as a general guide to the U.S. federal income tax consequences of participation in the 2015 Plan and does not attempt to describe all possible federal or other tax consequences of such participation or tax consequences based on particular circumstances or any other taxing jurisdiction.
Incentive Stock Options. A participant recognizes no taxable income for regular income tax purposes as a result of the grant or exercise of an incentive stock option qualifying under Section 422 of the Code. Participants who neither dispose of their shares within two years following the date the option was granted nor within one year following the exercise of the option will normally recognize a capital gain or loss upon the sale of the shares equal to the difference, if any, between the sale price and the purchase price of the shares. If a participant disposes of shares within two years after the date of grant or within one year after the date of exercise (a “disqualifying disposition”), the difference between the fair market value of the shares on the option exercise date and the exercise price (not to exceed the gain realized on the sale if the disposition is a transaction with respect to which a loss, if sustained, would be recognized) will be taxed as ordinary income at the time of disposition. Any gain in excess of that amount will be a capital gain. If a loss is recognized, there will be no ordinary income, and such loss will be a capital loss. In general, the difference between the option exercise price and the fair market value of the shares on the date of exercise of an incentive stock option is treated as an adjustment in computing the participant’s alternative minimum taxable income and may be subject to an alternative minimum tax which is paid if such tax exceeds the regular tax for the year. Special rules may apply with respect to certain subsequent sales of the shares in a disqualifying disposition, certain basis adjustments for purposes of computing the alternative minimum taxable income on a subsequent sale of the shares and certain tax credits which may arise with respect to participants subject to the alternative minimum tax.
Nonstatutory Stock Options. Options not designated or qualifying as incentive stock options are nonstatutory stock options having no special tax status. A participant generally recognizes no taxable income upon receipt of such an option. Upon exercising a nonstatutory stock option, the participant normally recognizes ordinary income equal to the difference between the exercise price paid and the fair market value of the shares on the date when the option is exercised. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of stock acquired by the exercise of a nonstatutory stock option, any gain or loss, based on the difference between the sale price and the fair market value of the shares on the exercise date, will be taxed as capital gain or loss.
Restricted Stock Unit. A participant generally will recognize no income upon the receipt of a restricted stock unit. Upon the settlement of a unit, participants normally will recognize ordinary income in the year of settlement in an amount equal to the cash received and the fair market value of any substantially vested shares of stock received. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of any shares received, any gain or loss, based on the difference between the sale price and the fair market value of the shares on the determination date (as defined below under “Restricted Stock”), will be taxed as capital gain or loss.
Restricted Stock. A participant acquiring restricted stock generally will recognize ordinary income equal to the excess of the fair market value of the shares on the “determination date” over the price paid, if any, for such shares. The “determination date” is the date on which the participant acquires the shares unless the shares are subject to a substantial risk of forfeiture and are not transferable, in which case the determination date is the earlier of (i) the date on which the shares become transferable or (ii) the date on which the shares are no longer subject to a substantial risk of forfeiture (e.g., when they become vested). If the determination date follows the date on which the participant acquires the shares, the participant may elect, pursuant to Section 83(b) of the Code, to designate the date of acquisition as the determination date by filing an election with the Internal Revenue Service no later than 30 days after the date on which the shares are acquired. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of shares acquired pursuant to a restricted stock award, any gain or loss, based on the difference between the sale price and the fair market value of the shares on the determination date, will be taxed as capital gain or loss.
Stock Appreciation Rights. A Participant recognizes no taxable income upon the receipt of a stock appreciation right. Upon the exercise of a stock appreciation right, the participant generally will recognize ordinary income in an amount equal to the excess of the fair market value of the underlying shares of common stock on the exercise date over the exercise price. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes.
Deduction. We are not a U.S. taxpayer and therefore do not expect to be entitled to any business expense deductions with respect to the foregoing.
Registration with the SEC
We intend to file a registration statement on Form S-8 relating to the issuance of shares of our Class A Common Stock under the 2015 Plan with the SEC pursuant to the Securities Act of 1933, as amended, as soon as practicable following the approval of the 2015 Plan by our shareholders.
Equity Compensation Plan Information
The following table provides information as of December 31, 2014 about common stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans.
|
| | | | | | | |
Equity Compensation Plan Information |
| (a) | | (b) | | (c) |
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | Weighted average exercise price of outstanding options, warrants and rights | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
Equity compensation plans approved by security holders: | | | | | |
Stock options | 155,000 |
| | $29.88 | | (1) |
Restricted stock units | 1,367,234 |
| | n/a | | (1) |
Equity compensation plans not approved by security holders | — |
| | — | | — |
Total | 1,522,234 |
| | $29.88 | | 2,339,056 |
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(1) | There were 2,339,056 shares available for issuance under the 2012 Plan at December 31, 2014 after |
reflecting both stock options and restricted stock units in column (a) above.
As of the date of this proxy statement, 212,193 shares were available for issuance under the 2012 Plan.
NASDAQ Shareholder Approval Requirement
We are seeking shareholder approval of the 2015 Plan in accordance with the NASDAQ Marketplace rules.
NASDAQ Marketplace Rule 5635(c) requires shareholder approval prior to the issuance of securities when a stock option or purchase plan is established or materially amended or other equity compensation agreement made or materially amended, pursuant to which stock may be acquired by officers, directors, employees or consultants. Because officers, directors and employees may receive grants of stock options, restricted stock units, restricted stock and SARs pursuant to the 2015 Plan, we are seeking shareholder approval pursuant to Rule 5635(c).
Vote Required; Recommendation
The adoption of the 2015 Plan requires a majority of the votes cast, in person or by proxy, at the Meeting, provided that a quorum is present. Abstentions and broker non-votes will be included in determining the presence of a quorum, but are not counted as votes cast. Unless otherwise indicated, the accompanying form of Proxy will be voted FOR the adoption of the 2015 Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE ADOPTION OF THE 2015 PLAN.
PROPOSAL 3
SELECTION OF AUDITORS
At the recommendation of the Audit Committee, the Board of Directors recommends to the shareholders that Deloitte LLP be appointed to serve as our independent registered public accounting firm for 2015. In addition, the Board of Directors recommends to the shareholders that the shareholders authorize the Board of Directors, acting through the Audit Committee, to approve the auditors’ fee.
Representatives of Deloitte LLP will be invited to attend the Meeting in order to have an opportunity to make a statement if they so desire and be available to respond to appropriate questions from shareholders.
Audit Fees
Deloitte LLP’s audit fees for auditing our annual consolidated financial statements for the year ended December 31, 20132014 and reviewing our interim financial statements included in our filings on Forms 10-Q were $2,240,000 (2012: $2,255,000)US$ 2,335,000 (2013: US$ 2,240,000).
Audit-Related Fees
Deloitte LLP’s audit-related fees for the year ended December 31, 20132014 were $559,000 (2012: $555,000)US$ 67,000 (2013: US$ 559,000). Audit-related fees were primarily incurred in respect of respect of debt offerings.
Tax Fees
We paid no tax fees to Deloitte LLP during the yearyears ended December 31, 2013. Tax fees for the year ended2014 or December 31, 2012 were $37,000, and were primarily incurred in connection with an application for a grant for research and development subsidies.
2013.
All Other Fees
There were no other fees paid to Deloitte LLP for the year ended December 31, 20132014 or the year ended December 31, 2012.2013.
Policy on Pre-Approval of Services Provided by Deloitte LLP
The Audit Committee of the Board of Directors has considered whether the provision of the services in respect of Audit-Related Fees, Tax Fees and All Other Fees is compatible with maintaining Deloitte LLP’s independence prior to the incurrence of such Fees in accordance with the Charter of the Audit Committee. All engagements of the auditors are approved in advance by the Audit Committee. At the beginning of the fiscal year, management presents for approval by the Audit Committee a range of services to be provided by the auditors and estimated fees for such services for the current year. Any services to be provided by the auditors that are not included within such range of services are approved on a case-by-case basis by the Audit Committee. Management provides reports to the Audit Committee on at least a quarterly basis on the status of the services provided and the level of fees incurred in respect of each service. We did not approve the incurrence of any fees pursuant to the exceptions to the pre-approval requirements set forth in 17 CFR 210.2-01(c)(7)(i)(C).
Vote Required; Recommendation
The appointment of Deloitte LLP to serve as our independent registered public accounting firm in respect of the fiscal year ending December 31, 20142015 and the authorization of the Board of Directors, acting through the Audit Committee, to approve the auditors’ fee requires the affirmative vote of a majority of the votes cast, in person or by proxy, at the Meeting, provided that a quorum is present in person or by proxy. Abstentions will be included in determining the presence of a quorum, but are not counted as votes cast. Unless otherwise indicated, the accompanying form of Proxy will be voted FOR the appointment of Deloitte LLP as the Company’s independent registered public accounting firm in respect of the fiscal year ending December 31, 20142015 and for the Board of Directors, acting through the Audit Committee, to approve the auditors’ fee.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR OF THE APPOINTMENT OF DELOITTE LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM IN RESPECT OF THE FISCAL YEAR ENDING DECEMBER 31, 20142015 AND A VOTE IN FAVOR OF AUTHORIZING THE BOARD OF DIRECTORS, ACTING THROUGH THE AUDIT COMMITTEE, TO APPROVE THE AUDITORS’ FEE.
PROPOSAL 3
ADVISORY VOTE ON THE COMPANY’S EXECUTIVE COMPENSATION
In accordance with Section 14A of the Exchange Act, shareholders have an opportunity to cast an advisory vote on executive compensation as disclosed in the Compensation Discussion and Analysis and executive compensation tabular and narrative disclosure in this Proxy Statement. This proposal, commonly known as a “say-on-pay” proposal, allows shareholders an opportunity to express a view on executive compensation. We are requesting shareholders vote, on an advisory basis, to approve our 2013 executive compensation programs and the compensation paid to the Named Executive Officers as described in this Proxy Statement.
As discussed in the Compensation Discussion and Analysis section of this Proxy Statement, the primary objective of our compensation programs, including our executive compensation program, is to attract and retain qualified executives who can help us to attain our strategic and business objectives and to increase shareholder value through the achievement of annual and long-term objectives. Your advisory vote will serve as an additional tool to assist the Board of Directors and the Compensation Committee in ensuring that the Company’s executive compensation programs align the interests of the Company’s executives with the interests of its shareholders.
Vote Required: Recommendation
Approval of this advisory vote requires a majority of the votes cast, in person or by proxy, at the Meeting, provided that a quorum is present. Abstentions and broker non-votes will be included in determining the presence of a quorum, but are not counted as votes cast. Unless otherwise indicated, the accompanying form of Proxy will be voted FOR the Company’s executive compensation as disclosed in this Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ADVISORY VOTE TO APPROVE THE COMPANY’S EXECUTIVE COMPENSATION AS DISCLOSED IN THIS PROXY STATEMENT.
Because the vote on this proposal is advisory in nature, it will not affect any compensation already paid or awarded to any Named Executive Officers and will not be binding on or overrule any decisions by the Board of Directors. It will not create or imply any additional fiduciary duty on the part of the Board of Directors and it will not restrict or limit the ability of shareholders to make proposals for inclusion in proxy materials related to executive compensation. Although the vote is advisory, the Compensation Committee will take into account the outcome of the vote when considering future compensation arrangements for our named executive officers.
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by us at our principal executive office by January 8,December 31, 2015 in order to be considered for inclusion in proxy materials distributed in connection with the 20152016 Annual General Meeting of Shareholders. The proxy or proxies designated by us will have discretionary authority to vote on any matter properly presented by a shareholder for consideration at the 20152016 Annual General Meeting of Shareholders if notice of the matter is not received by us at our principal executive office by January 8,December 31, 2015.
MISCELLANEOUS
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MISCELLANEOUS
Under Bermuda law, no matter or business other than those set forth in the accompanying Notice of Annual General Meeting of Shareholders is permitted to be presented at the Meeting unless the provisions of the Companies Act 1981 of Bermuda, as amended, are complied with.
We will bear the cost of preparing, assembling and mailing the enclosed form of proxy, this proxy statement and other material which may be sent to shareholders in connection with this solicitation. Officers and regular employees may solicit proxies by mail, telephone, telegraph, electronic mail and personal interview, for which no additional compensation will be paid. In addition, Georgeson Inc. has been engaged by us to act as proxy solicitors and will receive fees of $8,000US$ 8,000 plus expenses. We may reimburse persons holding shares in their names or in the names of nominees for their reasonable expenses in sending proxies and proxy material to their principals.
To obtain directions to be able to attend the meeting and vote in person, please contact the Secretary, Central European Media Enterprises Ltd., in care of Citco (Bermuda) Limited, O’Hara House, 3 Bermudiana Road, Hamilton, HM 08 Bermuda.
Our Annual Report on Form 10-K for the year ended December 31, 20132014 is being delivered to shareholders together with this proxy statement.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on June 2, 2014.1, 2015. Our proxy statement and annual report on Form 10-K are available on our website at www.cme.net.
By order of the Board of Directors,
DANIEL PENN
Secretary
Hamilton, Bermuda
April 29, 2015
| By order of the Board of Directors, |
| |
| Daniel Penn |
| Secretary |
| |
Hamilton, Bermuda | |
| |
May 8, 2014 | |
4039
ANNEX A
ANNUAL GENERAL MEETING OF SHAREHOLDERS OF CENTRAL EUROPEAN MEDIA ENTERPRISES LTD. JUNE 2, 2014 NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
2015 STOCK INCENTIVE PLAN
1.Purpose and Types of Awards
The Notice of Meeting, Proxy Statement, Proxy Card are available at - {Insert web address where material will be hosted} Please sign, date and mail your proxy card in the envelope provided as soon as possible. Signature of Shareholder Date: Signature of Shareholder Date: Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. 1. ELECTION OF DIRECTORS: The election of eleven directors nominated by the Board of Directors to serve until the next Annual General Meeting of Shareholders: O JOHN K. BILLOCK O PAUL T. CAPPUCCIO O CHARLES R. FRANK, JR. O IRIS KNOBLOCH O ALFRED W. LANGER O BRUCE MAGGIN O PARM SANDHU O DOUGLAS S. SHAPIRO O DUCO SICKINGHE O KELLI TURNER O GERHARD ZEILER 2. The appointment of Deloitte LLP as the independent registered public accounting firm for the Company in respectpurpose of the fiscal year ending December 31, 2014 and the authorization of the Board of Directors, acting through the Audit Committee, to approve their fee. 3 An advisory vote to approve the Company’s executive compensation as disclosed in the Proxy Statement. Shares cannot be voted unless this proxy card is signed and returned or shares are voted in person at the Annual General Meeting. The undersigned hereby acknowledges receipt of the Notice of Annual General Meeting of Shareholders to be held on June 2, 2014 and the Proxy Statement dated May 8, 2014, prior to the signing of this proxy. FOR AGAINST ABSTAIN FOR ALL NOMINEES WITHHOLD AUTHORITY FOR ALL NOMINEES FOR ALL EXCEPT (See instructions below) INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: NOMINEES: THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND "FOR" PROPOSALS 2 AND 3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x --------------- Please detach along perforated line and mail in the envelope provided. ---------------- 21130300000000000000 3 060214 GO GREEN e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access. 0 --------------- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ---------------- 14475 CENTRAL EUROPEAN MEDIA ENTERPRISES LTD. PROXY FOR ANNUAL GENERAL MEETING OF SHAREHOLDERS _ JUNE 2, 2014 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby constitutes and appoints Lisa Daniels, Alan Farrell, Denika Davis, Guy Cooper and Kathleen Moniz, or any of them acting singly, with the power of substitution in any of them, the proxies of the undersigned to vote with the same force and effect as the undersigned all shares of Common Stock of Central European Media Enterprises Ltd. (the "Company"2015 Stock Incentive Plan (as amended from time to time, the “Plan”) heldis to promote the long-term growth and profitability of recordthe Company by (i) enabling the Company to recruit and retain employees, and non-employee directors, (ii) providing key people with incentives to contribute to the growth and financial success of the Company through the granting of Awards, and (iii) promoting increased ownership of equity of the Company to better align the interests of employees and directors of the Company with its shareholders.
The Plan permits the granting of Options, Restricted Stock Units, Restricted Stock, SARs, or any combination of the foregoing.
2.Definitions
Under this Plan, except where the context otherwise indicates, the following definitions apply:
(a) “Affiliate” means any entity (including, but not limited to, joint ventures, limited liability companies, and partnerships) which directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the Company; provided, that Time Warner Inc. shall not be an Affiliate of the Company for purposes of this definition. For this purpose, “control” shall mean ownership of 50% or more of the total combined voting power or value of all classes of securities or interests of the entity, or the power to direct the management and policies of the entity, by contract or otherwise.
(b) “Award”means any Option, Restricted Stock Unit Award, Restricted Stock Award, or SAR .
(c) “Award Agreement” means a written or electronic agreement and any amendments thereto (including any amendments effected through a Participant’s employment agreement or amendments thereto), between the Company and a Participant setting out the terms and conditions of an Award granted pursuant to the Plan.
(d) “Board” means the Board of Directors of the Company.
(e) “Change in Control” means:
(i) the consummation of any amalgamation, consolidation or merger of the Company pursuant to which the shareholders of the Company immediately prior to the amalgamation, merger or consolidation do not constitute, immediately after the amalgamation, consolidation or merger, the beneficial owners (within the meaning of Rule 13d-3 under the Exchange Act) of 50% or more of the voting power of the then outstanding securities of the Company (or the surviving entity) generally entitled to vote in the election of directors; provided, that any amalgamation, consolidation, merger or other business combination effected solely to change the domicile of the Company shall not constitute a Change in Control;
(ii) the occurrence of an event the result of which is that any “person” or “group” of related persons (as defined in Section 13(d) and 14(d)(2) of the Exchange Act), becomes the beneficial owner, directly or indirectly, of securities representing more than 50% of the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors;
(iii) the sale or other disposition (in one transaction or a series of transactions) of all or substantially all of the assets of the Company and its Affiliates to an unaffiliated third party or the liquidation or dissolution of the Company; or
(iv) a change in the composition of the Board in any two-year period, such that a majority of the members of the Board are not (A) persons who were directors at the beginning of such period or (B) persons who are elected, or nominated for election, to the Board by an affirmative vote of the majority of the such directors (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Board);
provided, however, that (I) a Change in Control shall not include a Time Warner Transaction, and (II) for purposes of any Award or subplan that may constitute deferred compensation within the meaning of Code section 409A, the Committee, in its discretion, may specify a different definition of Change in Control in order to comply with or cause an Award to be exempt from the provisions of Code section 409A.
(f) “Code”means the U.S. Internal Revenue Code of 1986, as amended, and any successor thereto, as well as any regulations promulgated thereunder.
(g) “Committee” means the Compensation Committee of the Board or such other committee appointed by the undersigned on May 8, 2014 atBoard consisting of no fewer than two members that has been delegated authority to administer the Annual General MeetingPlan as provided in Section 3 hereof.
(h) “Company” means Central European Media Enterprises Ltd., a Bermuda company limited by shares.
(i) “Effective Date”means the date the Board approves the Plan.
(j) “Exchange Act”means the U.S. Securities Exchange Act of Shareholders to be held at Citco (Bermuda) Limited, O'Hara House, 3 Bermudiana Road, Hamilton, HM 08, Bermuda, on June 2, 2014, at 10:30 A.M. and at any adjournment or adjournments thereof, hereby revoking any proxy or proxies heretofore given and ratifying and confirming all that said proxies may do or cause to be done by virtue thereof1934, as amended.
(k) “Fair Market Value” means, with respect to the Shares, as of any date:
(i) if there is a public market for the Shares and the Shares are listed on NASDAQ, the closing price per Share for a regular market session on that date on NASDAQ or, if no sale is reported for that date, on the last preceding day on which a sale was reported;
(ii) if the Shares are no longer listed on NASDAQ, the closing price per Share on the principal exchange or market for the Shares (as determined by the Committee if the Shares are listed or admitted to trading on more than one exchange or market) or, if no sale is reported for that date, on the last preceding day on which a sale was reported; or
(iii) if the Shares are neither listed or admitted to trading on a national securities exchange or an established securities market the value determined by the Committee in good faith by the reasonable application of a reasonable valuation method.
(l) “Incentive Stock Option” means any Option granted under Section 6 that is intended to meet the requirements of Section 422 of the Code.
(m) “Non-qualified Stock Option” means any Option granted under Section 6 that is not an Incentive Stock Option.
(n) “Option” means any option granted under Section 6.
(o) “Participant” means an employee, prospective employee, or non-employee director of the Company or an Affiliate who is selected by the Committee to participate in the Plan.
(p) “Performance-Based Award” means an Award that vests on the attainment of one or more Performance Measures established by the Committee.
(q) “Performance Measures” mean criteria established by the Committee relating to any of the following, matters: This proxy, when properly executed, will be voted as directed. If no directionit may apply to an individual, one or more business units, divisions or subsidiaries, or on a Company-wide basis, and in either absolute terms or relative to the performance of one or more comparable companies or an index covering multiple companies: revenue; earnings before interest, taxes, depreciation and amortization (EBITDA); operating income before depreciation and amortization (OIBDA); operating income; pre- or after-tax income; free cash flow; cash flow per Share; net earnings; earnings per Share; price-to-earnings ratio; return on equity; return on invested capital; return on assets; growth in assets; Share price performance; total shareholder return; improvement in or attainment of expense levels; improvement in or attainment of working capital levels; relative performance to a group of companies comparable to the Company, and strategic business criteria consisting of one or more objectives based on the Company’s meeting specified goals relating to revenues, costs, market penetration or share, business expansion, acquisitions, divestitures or other corporate transactions.
(r) “Prior Plan” means the Company’s Amended and Restated Stock Incentive Plan, as amended.
(s) “Restricted Stock” means Shares granted pursuant to Section 8 that are subject to such vesting and transfer restrictions as determined by the Committee and such other restrictions as set forth in the Plan and the applicable Award Agreement.
(t) “Restricted Stock Unit” means a contractual right granted to a Participant who receives an Award pursuant to Section 7 which represents a notional unit interest equal in value to a Share.
(u) “SAR” means a stock appreciate right granted pursuant to Section 9.
(v) “Share” means a share of Class A Common Stock, par value $0.08 per share, of the Company.
(w) “Subsidiary” means any “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.
(x) “Time-Based Award” means an Award that vests in one or more installments over a period of a Participant’s employment or other service to the Company as specified by the Committee.
(y) “Time Warner Transaction” means (i) any transaction or event (including the exercise of conversion rights under any convertible security) the result of which is indicated,that Time Warner Inc. becomes the proxy will be voted (i) FORbeneficial owner, directly or indirectly, of securities (including any securities attributed to it as part of a group under Section 13(d) of the Exchange Act) representing more than 50% of the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors; or (ii) the eleven named individuals asconsummation of any amalgamation, consolidation or merger of the Company pursuant to which the shareholders of the Company immediately prior to the amalgamation, merger or consolidation do not constitute, immediately after the amalgamation, consolidation or merger, the beneficial owners (within the meaning of Rule 13d-3 under the Exchange Act) of 50% or more of the voting power of the then outstanding securities of the Company (or the surviving entity) generally entitled to vote in the election of directors; provided, that Time Warner Inc. is the beneficial owner of 20% of the voting power of the then outstanding securities of the Company (or the surviving entity) generally entitled to vote in the election of directors following such amalgamation, consolidation or merger. For the avoidance of doubt, in the event Time Warner Inc. is the beneficial owner of less than 20% of the voting power of the then outstanding securities of the Company (or the surviving entity) generally entitled to vote in the election of directors following such amalgamation, consolidation or merger, such transaction shall constitute a Change in Control.
3.Administration
(a) Administration of the Plan. The Plan shall be administered by the Committee. It is intended that each member of the Committee shall satisfy the requirements for (i) an “independent director” for purposes of the charter of the Committee and the NASDAQ Marketplace Rules (or rules of such other applicable exchange) and (ii) FORa “nonemployee director” for purposes of Rule 16b-3 of the appointmentExchange Act.
(b) Powers of Deloitte LLPthe Committee. The Committee shall have all the powers vested in it by the terms of the Plan, such powers to include authority, in its sole and absolute discretion, to grant, and establish terms and conditions of, Awards under and consistent with the Plan, prescribe Award Agreements evidencing such Awards and establish programs for granting Awards. Awards may be granted individually or with other types of Awards. All Awards are subject to the terms and conditions provided in the Award Agreement and the Plan.
The Committee shall have full power and authority to take all other actions necessary to carry out the purpose and intent of the Plan, including, but not limited to, the authority to: (i) determine the Participants; (ii) determine the types of Awards to be granted; (iii) determine the number of Shares to be covered by or used for reference purposes for each Award; (iv) establish such terms, limitations, restrictions and conditions upon any such Award consistent with the Plan as the independent registered public accounting firmCommittee shall deem appropriate; (v) modify, amend, extend or renew outstanding Awards, or accept the surrender of outstanding Awards and substitute new Awards (provided, that, except as provided in Sections 6 to 10 of the Plan, any modification that would materially adversely affect any outstanding Award shall not be made without the consent of the holder and no such modification, amendment or substitution that results in repricing the Award, as described in Section 10(e), shall be made without prior shareholder approval); (vi) accelerate or otherwise change the time in which an Award may be exercised or becomes payable and to waive or accelerate the lapse, in whole or in part, of any restriction or condition with respect to such Award, including, but not limited to, any restriction or condition with respect to the vesting or exercisability of an Award following termination of any Participant’s employment or other relationship with the Company; (vii) establish objectives and conditions, if any, for earning Awards and determining whether Awards will be paid with respect to a performance period; and (viii) for any purpose, including but not limited to, qualifying for preferred tax treatment under foreign tax laws or otherwise complying with the regulatory requirements of local or foreign jurisdictions, to establish, amend, modify, administer or terminate sub‑plans, and prescribe, amend and rescind rules and regulations relating to such sub‑plans.
The Committee shall have full power and authority, in its sole and absolute discretion, to administer, construe and interpret the Plan, Award Agreements and all other documents relevant to the Plan and Awards issued thereunder, to establish, amend, rescind and interpret such rules, regulations, agreements, and instruments for the administration of the Plan as the Committee deems necessary or advisable, and to correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award in the manner and to the extent the Committee shall deem it desirable to carry it into effect. All actions taken and decisions and determinations made by the Committee on all matters relating to the Plan pursuant to the powers vested in it hereunder shall be in the Committee’s sole and absolute discretion and shall be conclusive and binding on all parties concerned (including, but not limited to, the Participants and their successors).
(c) Non-Uniform Determinations. The Committee’s determinations under the Plan (including without limitation, determinations of the Participants, the form, amount and timing of Awards; the terms and provisions of such Awards, the Award Agreements evidencing such Awards, and the ramifications of a Change in Control and/or a Time Warner Transaction on outstanding Awards) need not be uniform and may be made by the Committee selectively among Awards or persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated.
4.Shares Available for the Plan
Subject to adjustments as provided inSection 10 of the Plan, the Shares that may be issued with respect to Awards granted under the Plan shall not exceed an aggregate of 6 million Shares plus the number of Shares that remain available for future grants of Awards under the Prior Plan immediately before its termination as of the Effective Date; provided, however, that no more than an aggregate of 6 million Shares may be issued pursuant to Incentive Stock Options. The Company shall reserve such number of Shares for Awards under the Plan, subject to adjustments as provided inSection 10 of the Plan. If any award, or portion of an award, under the Plan or Prior Plan expires or terminates unexercised, becomes unexercisable, is settled in cash without delivery of Shares, or is forfeited or otherwise terminated, surrendered or canceled as to any shares, or if any Shares are surrendered to the Company in connection with any award under this Plan or the Prior Plan, or if any Shares are withheld by the Company, the Shares subject to such award under this Plan or the Prior Plan and the surrendered and withheld Shares shall thereafter be available for further Awards under the Plan.
5.Participation
Participation in the Plan shall be open to all employees, officers, and directors of the Company, or of any Affiliate of the Company, as may be selected by the Committee from time to time. The Committee may also grant Awards to individuals in connection with hiring, recruiting or otherwise, prior to the date the individual first performs services for the Company or an Affiliate, provided, that such Awards shall not become effective, vested or exercisable, and no Shares shall be issued to such individual, prior to the date the individual first commences performance of such services.
6.Options
(a) Stock Options. The Committee may from time to time grant to Participants Awards of Incentive Stock Options or Non-qualified Stock Options.
(b) Exercise Price. The exercise price of an Option shall be determined by the Committee but shall not be less than 100% of the Fair Market Value of a Share on the date the Option is granted.
(c) Vesting of Options. Options granted under the Plan shall vest and become exercisable at such times and on such terms and conditions as determined by the Committee, which will be set out in an Award Agreement. Except as otherwise specified in the Award Agreement or permitted under the Plan, the first installment of an Award of Options shall not vest during the period commencing on the date of grant of such the Award of such Options and ending on the day preceding the first anniversary of such grant date. In no event shall an Option be exercisable for more than ten years after the date it is granted.
(d) Exercise of Options. Except as otherwise provided in the Plan or in an Award Agreement, an Option may be exercised for all or any part of the Shares for which it is then exercisable. The purchase price and any applicable withholding tax for the Shares as to which the Option is exercised shall be paid to the Company pursuant to one or more of the following methods: (i) in cash, (ii) by delivering irrevocable instructions to a broker to sell such number of Shares obtained on the exercise of the Option and to deliver promptly to the Company an amount of proceeds of such sale equal to the purchase price for the Options being exercised and any applicable withholding tax, (iii) such other method as set forth in an Award Agreement, or (iv) a combination of the foregoing.
(e) Incentive Stock Options. Awards of Incentive Stock Options shall be limited to employees of the Company or of any Affiliate and any other individuals who are eligible to receive incentive stock options under the provisions of Code section 422. No Option shall be an Incentive Stock Option unless so designated by the Committee at the time of grant or in the Award Agreement evidencing such Option.
(f) No Rights as Shareholder. A Participant who receives an Award of Options shall not be a shareholder on receipt of such Award and such a Participant shall not have any rights of a shareholder with respect to any Shares in respect of such Award or have any rights to dividends until such Shares are delivered under such Award.
7.Restricted Stock Units
(a)Grants of Restricted Stock Units. The Committee may make Awards of Restricted Stock Units.
(b) Vesting of Restricted Stock Units. The Committee shall determine any vesting requirements with respect to an Award of Restricted Stock Units, which will be set out in the applicable Award Agreement. Awards of Restricted Stock Units may be Time-Based Awards or Performance-Based Awards. In addition, except as otherwise specified in the Award Agreement or permitted under the Plan, the first installment of an Award of Restricted Stock Units shall not vest during the period commencing on the date of grant of the Award of such Restricted Stock Unit and ending on the day preceding the first anniversary of such grant date.
(c) Settlement. Each Restricted Stock Unit may be settled at the time or times determined by the Committee and on such other terms as specified in the Award Agreement, which may be on or following the vesting of an Award. The Committee shall determine at the time of the grant of an Award of Restricted Stock Units whether the Award shall be settled in Shares or in cash.
(d) No Rights as Shareholder. A Participant who receives an Award of Restricted Stock Units shall not be a shareholder on receipt of such Award and such a Participant shall not have any rights of a shareholder with respect to any Shares in respect of such Award or have any rights to dividends until such Shares are delivered under such Award.
8.Restricted Stock
(a)Grants of Restricted Stock. The Committee may make Awards of Restricted Stock.
(b) Vesting of Restricted Stock. The Committee shall determine any vesting requirements with respect to an Award of Restricted Stock, which will be set out in the applicable Award Agreement. The Committee may make Awards of Restricted Stock that are Time-Based Awards or Performance-Based Awards. In addition, except as otherwise specified in the Award Agreement or permitted under the Plan, the first installment of an Award of Restricted Stock shall not vest during the period commencing on the date of grant of the Award of such Restricted Stock and ending on the day preceding the first anniversary of such grant date.
(c) Shares of Restricted Stock. Shares representing an Award of Restricted Stock shall be evidenced in such manner as the Committee may deem appropriate, including book-entry registration or one or more stock certificates (which may bear appropriate legends referring to the terms, conditions and restrictions applicable to such Award). The Committee may require that any stock certificates in respect of an Award of Restricted Stock be held in custody by the Company until any restrictions thereon shall have lapsed and that the Participant deliver a share transfer form, endorsed in blank, relating to the Shares covered by such Award that will permit the transfer to the Company of any or all Shares of Restricted Stock that shall be forfeited in accordance with the corresponding Award Agreement or shall not become vested in accordance with the corresponding Award Agreement or the Plan.
(d) Rights as Shareholder. A Participant who receives an Award of Restricted Stock shall on receipt of such Award be a shareholder of the Company with respect to all shares of Restricted Stock and be entitled to vote such Shares, to receive all cash dividends made in respect of such shares and to exercise all other rights in respect of such Restricted Stock except that during the period when the Shares are unvested (the “Restricted Period”):
(i) for any stock certificates for which the Committee requires that the Company retain custody, a Participant will not be entitled to delivery of the stock certificate or other evidence of such Restricted Stock before the end of such Restricted Period and unless all other vesting requirements shall have been satisfied;
(ii) the Company will not issue any dividends or other distributions (“Retained Distributions”) made or declared with respect to such Restricted Stock until such time as the Shares of Restricted Stock in respect of which such Retained Distributions shall have been made or declared shall have become vested (and such Retained Distributions shall be subject to the same restrictions and other terms and conditions as are applicable to the Shares of Restricted Stock underlying such Restricted Distributions);
(iii) except as permitted by Section 11(b), a Participant who receives an Award of Restricted Stock shall not sell, assign, exchange, transfer, pledge, charge, hypothecate or otherwise dispose of or encumber any of the Shares of Restricted Stock before the end of the Restricted Period and unless all other vesting requirements have been satisfied; and
(iv) any breach of any restrictions or other terms or conditions of such Award of any Restricted Stock or any Retained Distributions in respect thereof will result in such Restricted Stock or Retained Distributions being forfeited by means of repurchase in accordance with the corresponding Award Agreement.
9.Stock Appreciation Rights
The Committee may from time to time grant Awards of SARs to Participants. An SAR entitles the Participant to receive, subject to the provisions of the Plan and the Award Agreement, a payment having an aggregate value equal to the product of (i) the excess of (A) the Fair Market Value on the exercise date of one Share over (B) the base price per Share specified in the Award Agreement, times (ii) the number of Shares specified by the SAR, or portion thereof, which is exercised. The base price per Share specified in the Award Agreement shall not be less than the lower of the Fair Market Value on the grant date or the exercise price of any tandem Option Award to which the SAR is related. No SAR shall have a term longer than ten years’ duration. Payment by the Company of the amount receivable upon any exercise of an SAR may be made by the delivery of Shares or cash, or any combination of Shares and cash, as determined in the sole discretion of the Committee. If upon settlement of the exercise of an SAR, a Participant is to receive a portion of such payment in Shares, the number of Shares shall be determined by dividing such portion by the Fair Market Value of a Share on the exercise date. No fractional Shares shall be used for such payment and the Committee shall determine whether cash shall be given in lieu of such fractional Shares or whether such fractional Shares shall be eliminated.
10.Adjustments Following Certain Events
Except to the extent otherwise provided in an Award Agreement and notwithstanding any other provisions of the Plan to the contrary, the following provisions shall apply to all Awards granted under the Plan:
(a) Changes in Capitalization. In the event there is any change with respect to the outstanding Shares by reason of any share dividend, share split, recapitalization, reclassification, split up, combination of shares, any distribution to holders of Shares other than cash dividends, or any reorganization, amalgamation, merger, consolidation or similar corporate transaction affecting the Shares (other than a transaction described in Section 10(b) or (c)), then (i) the number and type of Shares or other rights or securities available for issuance under the Plan (including such rights or securities issuable in the event the Company is not the surviving entity in such reorganization, amalgamation, merger or consolidation), (ii) the number, class or price per share of any outstanding Awards, or (iii) any other affected term of any Award, shall be equitably adjusted by the Committee
(b) Change in Control. In the event of any transaction resulting in a Change in Control of the Company, outstanding Options and other Awards that are payable in or convertible into Shares under this Plan will terminate upon the effective time of such Change in Control unless provision is made in connection with the transaction for the continuation or assumption of such Awards or for the substitution of equivalent awards by the surviving or successor entity or a parent thereof, as determined in the sole discretion of the Committee. In the event of such termination, the Committee may, in its discretion, accelerate the vesting or payment of, or cause the restrictions to lapse with respect to, the outstanding Options and other Awards that will terminate upon the effective time of the Change in Control, with effect on or immediately before the effective time of the Change in Control (including any Performance-Based Awards, which, if accelerated, shall vest in respect of the fiscal year ending December 31, 2014target amount of such Awards), and may permit the holders of Options and other Awards under the Plan, immediately before the Change in Control, to exercise or convert all portions of such Options or other Awards under the Plan that are then exercisable or convertible or which become exercisable or convertible upon or prior to the effective time of the Change in Control.
The Committee may, in its sole discretion and without the consent of any Award holder, determine that, upon the occurrence of a Change in Control, each or any Award outstanding immediately prior to the Change in Control and not previously exercised or settled shall be canceled in exchange for a payment with respect to each vested Share subject to such canceled Award in (I) cash, (II) stock of the Company or of a corporation or other business entity a party to the Change in Control, or (III) other property which, in any such case, shall be in an amount having a fair market value (as determined by the Committee) equal to the fair market value of the consideration to be paid per Share in the Change in Control, reduced (but not below zero) by the exercise or purchase price per Share, if any, under such Award. In the event such determination is made by the Committee, an Award having an exercise or purchase price per Share equal to or greater than the fair market value (as determined by the Committee) of the consideration to be paid per Share in the Change in Control may be canceled without payment of consideration to the holder thereof.
(c) Time Warner Transaction. The Committee shall set forth in the applicable Award Agreements the effect of a Time Warner Transaction on the Award.
(d) Unusual or Nonrecurring Events. The Committee is authorized to make, in its discretion and without the consent of holders of Awards, adjustments in the terms and conditions of, and the authorizationcriteria included in, Awards in recognition of unusual or nonrecurring events affecting the Company, or the financial statements of the BoardCompany or any Affiliate, or of Directors, acting throughchanges in applicable laws, regulations, or accounting principles, whenever the Audit Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan; provided, that no such adjustment shall be made in contravention of Code section 409A with respect to any Award that constitutes a deferred compensation arrangement within the meaning of Code section 409A.
(e) Option or SAR Repricing. Without the affirmative vote of holders of a majority of the Shares cast in person or by proxy at a meeting of the shareholders of the Company at which a quorum representing a majority of all outstanding Shares is present or represented by proxy, the Committee shall not approve their fee,a program providing for either (a) the cancellation of outstanding Options or SARs having exercise prices per Share greater than the then Fair Market Value of a Share (“Underwater Awards”) and the grant in substitution therefor of new Options or SARs having a lower exercise price, other Awards or payments in cash, or (b) the amendment of outstanding Underwater Awards to reduce the exercise price thereof. This Section shall not be construed to apply to (i) “issuing or assuming a stock option in a transaction to which Section 424(a) applies,” within the meaning of Section 424 of the Code, (ii) adjustments pursuant to the assumption of or substitution for an Option or SAR in a manner that would comply with Section 409A, or (iii) FORan adjustment pursuant to the advisory voteforegoing subsections of this Section 10.
11.Miscellaneous
(a) Withholding of Taxes and Offsets. Participants and holders of Awards shall pay to approvethe Company or its Affiliate, or make provision satisfactory to the Committee for payment of, any taxes required to be withheld in respect of Awards under the Plan no later than the date of the event creating the tax liability. If determined by the Committee, any withholding obligations may be settled with Shares, including Shares that are part of the Award that gives rise to the withholding requirement; and the Committee may establish such procedures as it deems appropriate for the settlement of withholding obligations with Shares. In the event that payment to the Company or its Affiliate of such tax obligations is made in Shares, such Shares shall be valued at Fair Market Value on the applicable date for such purposes and shall not exceed in amount the minimum statutory tax withholding obligation. The Company or its Affiliate may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to a Participant or holder of an Award. Any amounts owed to the Company or an Affiliate by the Participant of whatever nature may be offset by the Company from the value of any Shares, cash or other thing of value under this Plan or an Award Agreement to be transferred to the Participant, and no Shares, cash or other thing of value under this Plan or an Award Agreement shall be transferred unless and until all disputes between the Company and the Participant have been fully and finally resolved and the Participant has waived all claims against the Company and its Affiliates in respect thereof.
(b) Non-Transferability. Except as otherwise determined by the Committee and, in any event in the case of an Incentive Stock Option or a SAR granted with respect to an Incentive Stock Option, no Award granted under the Plan shall be transferable by a Participant otherwise than by will or the laws of descent and distribution. Unless otherwise determined by the Committee in accord with the provisions of the immediately preceding sentence, an Award may be exercised during the lifetime of a Participant, only by the Participant or, during the period the Participant is under a legal disability, by the Participant’s guardian or legal representative. The Committee shall establish such procedures as it deems appropriate for Awards to be exercised following the death of a Participant.
(c) Substitution of Awards in Mergers and Acquisitions. Awards may be granted under the Plan from time to time in substitution for awards held by employees, officers, or directors of entities who become or are about to become employees, officers, or directors of the Company or an Affiliate as the result of a merger or consolidation of the employing entity with the Company or an Affiliate, or the acquisition by the Company or an Affiliate of the assets or stock of the employing entity. The terms and conditions of any substitute Awards so granted may vary from the terms and conditions set forth herein to the extent that the Committee deems appropriate at the time of grant to conform the substitute Awards to the provisions of the awards for which they are substituted.
(d) No Restrictions on Corporate Acts. Neither the existence of the Plan nor any Award shall in any way affect the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company’s executive compensation as disclosedcapital structure or its business, or any amalgamations, merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Shares or the rights thereof, or dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding whether of a similar character or otherwise.
(e) Amendment, Modification and Termination of the Plan. The Board may amend or modify or terminate the Plan at any time. However, without further approval of the Company’s shareholders, there shall be (i) no increase in the Proxy Statement. CONTINUED AND TO BE SIGNED ON REVERSE SIDEnumber of Shares that may be issued under the Plan (except by operation of the Plan’s adjustment sections), (ii) no change in the class of persons eligible to receive Incentive Stock Options, and (c) no other amendment of the Plan that would require the approval of the Company’s shareholders under any applicable law, regulation or rule, including the rules of any stock exchange or quotation system on which the Shares may then be listed or quoted. No amendment, suspension or termination of the Plan shall affect any then outstanding Award unless expressly provided by the Committee. Except as provided in the next sentence, no amendment, suspension or termination of the Plan may have a materially adverse effect on any then outstanding Award without the consent of the Participant. Notwithstanding any other provision of the Plan or any Award Agreement to the contrary, the Committee may, in its sole and absolute discretion and without the consent of any Participant, amend the Plan or any Award Agreement, to take effect retroactively or otherwise, as it deems necessary or advisable for the purpose of conforming the Plan or such Award Agreement to or exempting them from any present or future law, regulation or rule applicable to the Plan, including, but not limited to, Code section 409A.
(f) No Guarantee of Employment or Service. Nothing in the Plan or in any Award Agreement thereunder shall confer any right on an individual to continue in the service of the Company of an Affiliate or shall interfere in any way with the right of the Company or its Affiliates to terminate such service at any time with or without cause or notice and whether or not such termination results in (i) the failure of any Award to vest; (ii) the forfeiture of any unvested or vested portion of any Award; and/or (iii) any other adverse effect on the individual’s interests under the Plan. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting other or additional compensation arrangements, plans or schemes.
(g) Compliance with Securities Laws; Listing and Registration. If at any time the Committee determines that the delivery of Shares under the Plan is or may be unlawful under the laws of any applicable jurisdiction, or Federal, state or foreign securities laws, the right to exercise an Award or receive Shares pursuant to an Award shall be suspended until the Committee determines that such delivery is lawful. If at any time the Committee determines that the delivery of Share under the Plan would or may violate the rules of the national exchange on which the Shares are then listed for trade, the right to exercise an Award or receive Shares pursuant to an Award shall be suspended until the Committee determines that such delivery would not violate such rules. The Company shall have no obligation to effect any registration or qualification of the Shares under Federal, state or foreign laws.
The Company may require that a Participant, as a condition to exercise of an Award, and as a condition to the delivery of any share certificate, make such written representations (including representations to the effect that such person will not dispose of the Shares so acquired in violation of Federal, state or foreign securities laws) and furnish such information as may, in the opinion of counsel for the Company, be appropriate to permit the Company to issue the Shares in compliance with applicable Federal, state or foreign securities laws. The stock certificates for any Shares issued pursuant to this Plan may bear a legend restricting transferability of such Shares unless such shares are registered or an exemption from registration is available under the U.S. Securities Act of 1933, as amended, and applicable state or foreign securities laws.None of the Company, any Affiliate or the Committee shall have any duty or obligation to disclose affirmatively in any manner to a Participant or holder of any Award, and such holder shall have no right to be advised of, any material non-public information regarding the Company or any Affiliate at any time prior to, upon or in connection with, the receipt, exercise or settlement of an Award.
(h) Plan Binding. This Plan shall inure to the benefit of and be binding on each successor and assign of the Company. All obligations imposed on a Participant, and all rights granted to the Company hereunder, shall be binding on the Participant’s heirs, legal representatives, successors and assigns. This Plan and each Award Agreement or certificate granting an Award constitute the entire agreement with respect to the subject matter hereof and thereof.
(i) Governing Law. The validity, construction and effect of the Plan, of Award Agreements, and of any rules, regulations, determinations or decisions made by the Committee relating to the Plan or such Award Agreements, and the rights of any and all persons having or claiming to have any interest therein or thereunder, shall be determined exclusively in accordance with the laws of Bermuda.
(j) Severability. If any provision of this Plan shall for any reason be held to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision hereby, and this Plan shall be construed as if such invalid or unenforceable provision were omitted.
(k) International Participants. To the extent that the Committee determines that the restrictions imposed by the Plan preclude the achievement of the material purposes of the Awards in jurisdictions outside the United States of America, the Committee may in its discretion modify those restrictions as it determines to be necessary or appropriate to conform to applicable requirements or practices of such jurisdictions.
(l) Section 409A. The Plan and all Awards granted hereunder are intended to comply with, or otherwise be exempt from, Code section 409A. The Plan and all Awards granted under the Plan shall be administered, interpreted, and construed in a manner consistent with Code section 409A to the extent necessary to avoid the imposition of additional taxes under Code section 409A(a)(1)(B). Should any provision of the Plan, any Award Agreement, or any other agreement or arrangement contemplated by the Plan be found not to comply with, or otherwise be exempt from, the provisions of Code section 409A, such provision may be modified and given effect (retroactively if necessary), in the sole discretion of the Committee, and without the consent of the holder of the Award, in such manner as the Committee determines to be necessary or appropriate to comply with, or to effectuate an exemption from, Code section 409A. Notwithstanding anything in the Plan to the contrary, in no event shall the Committee exercise its discretion to accelerate the payment or settlement of an Award where such payment or settlement constitutes deferred compensation within the meaning of Code section 409A unless, and solely to the extent that, such accelerated payment or settlement is permissible under Treasury Regulation section 1.409A-3(j)(4) or any successor provision. Notwithstanding any other provision of the Plan, the Company makes no representation that Awards shall be exempt from or comply with Section 409A. Neither the Company nor any Affiliate shall be liable for any tax, penalty or interest imposed on a Participant by Section 409A.
(m) Effective Date; Expiration of the Plan. The Plan is effective as of the date on which the Plan is adopted by the Board, subject to approval of the Company’s shareholders within twelve months after such date. No Award shall be granted under the Plan after the close of business on the day immediately preceding the tenth anniversary of the effective date of the Plan. Subject to other applicable provisions of the Plan, all Awards made under the Plan prior to such termination of the Plan shall remain in effect until such Awards have been satisfied or terminated in accordance with the Plan and the terms of such Awards.
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