Description of the 2016 Plan
The following summary describes the principal features of the 2016 Plan and is qualified in its entirety by reference to the full terms of the 2016 Plan document set forth in Exhibit B. This is the same plan shareholders approved in 2016, with the exception of two amendment as noted in Exhibit B.
Eligibility
The 2016 Plan enables us to grant equity-based and cash incentive awards to our and any of our subsidiaries’ present or future non-employee directors, officers, employees, consultants or advisers and to grant “incentive stock options” (within the meaning of Section 422 of the Code) to our and any of our subsidiaries’ employees. We estimate that the total number of eligible persons currently is approximately 5,400, of which all are employees except our six non-employee directors, and approximately 475 current employees (including executive officers) hold outstanding equity awards under the 2016 Plan. The types of awards that may be granted under the 2016 Plan are described below under the heading “Forms of Awards.”
Shares Issuable Under the 2016 Plan
We currently have 3,700,000 shares of our common stock approved for issuance under the 2016 Plan, subject to the following share-counting requirements:
The total number of shares covered by an award of stock appreciation rights that is settled in shares (and not just the number of shares issued in settlement of the award) are deemed to have been issued.
Shares that are used or withheld to satisfy the exercise price or tax withholding obligations under an award are deemed to have been issued under the 2016 Plan and are not available for issuance under future grants.
Shares purchased by us with cash received from the exercise of an option are not be available for awards made under the 2016 Plan.
All forms of equity-based awards are counted against the 3,700,000 share reserve on a one-for-one basis, whether the award consists of options, restricted stock units or other types of equity awards.
The following shares are deemed not to have been issued and will remain available for issuance under new awards: (a) shares covered by an option or stock appreciation right that is forfeited or otherwise terminated or canceled for any reason other than exercise, (b) shares covered by restricted stock, restricted stock unit or other awards that are forfeited, and (c) shares covered by an award that is settled in cash or that otherwise terminates without shares being issued.
We currently have 170,563 shares remaining in the 2016 that are eligible for issuance. Shareholder approval of the Amendment will increase the number of shares of our common stock that may be issued pursuant to the 2016 Plan by 1,200,000 shares, to a total of 1,370,563.
Individual Award Limitations
No more than 400,000 shares may be issued pursuant to awards granted in a single calendar year to any individual participant (other than a non-employee director), and no more than 50,000 shares may be issued pursuant to awards granted to any non-employee director in any single calendar year. No participant may earn a cash incentive award for any calendar year exceeding the lesser of (a) four times the participant’s base salary, or (b) $5,000,000.
Adjustments for Capital Changes
In the event of a split-up, spin-off, stock dividend, recapitalization, consolidation of shares or similar capital change involving the outstanding shares of our common stock, the aggregate number of shares that may be issued under the 2016 Plan, the annual limitations on individual stock-based awards, and the number, class and exercise price of shares covered by outstanding awards will be subject to equitable adjustment in order to avoid undue dilution or enlargement of the benefits available under the 2016 Plan and any outstanding awards.
Plan Administration
The 2016 Plan is administered by the Compensation Committee of the Board. Subject to the terms of the 2016 Plan, the Compensation Committee, acting in its discretion, may select the persons to whom awards will be made, prescribe the terms and conditions of each award and make amendments thereto, construe, interpret and apply the provisions