APPROVAL OF AN AMENDMENT TO THE COMPANY’S AMENDED AND RESTATED 2013 EQUITY INCENTIVE PLAN
Our stockholders are being asked to approve thean amendment to our Amended and Restated 2013 Equity Incentive Plan (the “Plan”), including, among other things, an increase in the number of shares reserved under the Plan by 1,000,000 shares of our common stock (the “Additional Shares”) (as amended, the “Amended and Restated 2013 Plan”). The Amended and Restated 2013 Plan is an amendment and restatement of our 2013 Equity Incentive Plan that was amended and restated most recently by our Board and approved by our stockholders in April 2021 (such plan, the “Prior Plan”). The Prior
Amended Plan expired on March 29, 2023. No further awards will be made under the Prior Plan, but
Our Board has approved the Amended Plan, subject to the approval of our stockholders at the Annual Meeting and Restated 2013 Plan will govern awards granted under it. Our Board adoptedrecommends that our stockholders approve the Amended and Restated 2013 Plan on April 10, 2023 (the “Restatement Date”). Plan.
If our stockholders approve the Amended and Restated 2013 Plan, at the 2023 Annual Meeting of Stockholders, the Amended Plan will replace the current version of the Plan and Restated 2013 Planit will become effective uponas of the date of stockholder approval. Our Board has determined thatThe Amended Plan will continue in effect until it is terminated by the Administrator (as defined in our best interest to adopt the Amended and Restated 2013 Plan and is askingPlan).
If our stockholders todo not approve this proposal, the Plan will not be replaced with the Amended Plan. In that case, the existing shares reserved for issuance under the Plan may be insufficient to achieve our personnel incentive, recruiting and Restated 2013 Plan. retention objectives, making it more difficult to meet these objectives. This ultimately may undermine our success as a company.
Our named executive officers directors and director nomineesdirectors have an interest in this proposal asthe approval of the Amended Plan because they are eligible to receive equityfor awards under the Plan, as proposed to be amended by the Amended and Restated 2013 Plan.
Proposal
We have historically provided stock options, restricted stock units and other types of equity awards as an incentive to our employees, directors and consultants to promote increased stockholder value. Our Board and management believe that stock options, restricted stock units and other types of equity awards are one of the primary ways to attract and retain key personnel responsible for the continued development and growth of our business, and to motivate all employees to increase stockholder value.
Our Board believes that we must offer a competitive equity incentive program if we are to continue to successfully attract and retain the best possible candidates for positions of substantial responsibility within the Company. The Board expects that the Amended and Restated 2013 Plan will be an important factor in attracting, retaining and rewarding high caliber employees who are essential to our success and in providing incentive to these individuals to promote the success of the Company.
Key FeaturesA copy of the Amended Plan is included as Appendix A to this Proxy Statement. Except as noted, all share numbers used in this proposal reflect the 1-for-20 reverse stock split approved by our stockholders on October 24, 2023, that became effective as of October 25, 2023 (the “Reverse Stock Split”) and Restated 2013 Equity Incentive Plan:are shown on a post-Reverse Stock Split basis.
Subject toMaterial Differences between the adjustment provisions inPlan and the Amended and Restated 2013Plan
The Amended Plan the maximum aggregate number ofreserves an additional 1,000,000 shares of our common stock that may be issuedfor issuance under the Amended and Restated 2013 Plan, after approval of the stockholders, is 3,500,000 shares.
The Amended and Restated 2013 Plan permits the grant of options, stock appreciation rights, restricted stock, restricted stock units, performance units or performance shares.
A committee of independent directors administers the Amended and Restated 2013 Plan.
The Amended and Restated 2013 Plan prohibits us from implementing a program to reduceadjusts the exercise price of outstanding awards or surrender or cancel outstanding awards for new awards and/or cash.
Upon exercise of a stock appreciation right settled in our common stock, the gross number of shares covered by the portion of the exercised award will cease to be available under the Amended and Restated 2013 Plan.
Shares used to pay the exercise price of an award or to satisfy the tax withholding obligations related to an award and shares repurchased by the Company using option exercise proceeds will not become available for future grant or sale under the Amended and Restated 2013 Plan.
The Amended and Restated 2013 Plan containsshare limits on the number of shares of our common stock that may be granted to any employee in any year.fiscal year to 50,000.
Non-employee membersThe Amended Plan adjusts the share limit on the number of shares that may be granted to a non-employee Board member in any fiscal year to 50,000.
Why We Are Seeking Approval of the Amended Plan
The Plan Will No Longer Have Enough Shares Available for Grant
As of March 31, 2024, a total of 97,031 shares were available for issuance under the Plan. When we asked our stockholders to approve the Plan at the 2023 Annual Meeting, we anticipated that the shares initially reserved for issuance under the Plan at the 2023 Annual Meeting would be sufficient to meet our needs for three years. However, under our current forecasts and taking into account our historical forfeiture rates, we expect that the number of shares still available for grant under the Plan will not provide a sufficient number of shares to meet the needs of our Boardequity compensation program through 2026. The shares that we initially reserved for issuance at the 2023 Annual Meeting are insufficient due to staffing strategies, the addition of a new director and future business developments, and did not anticipate the reverse share split or share price decline experienced in 2023, all of which were unknowable at the time of the 2023 Annual Meeting. As a result, we may not be granted,able to issue equity to our employees, directors and consultants in any year, awards in excess of limits contained inamounts that we believe are necessary to attract, retain and motivate them unless our stockholders approve the Amended and Restated 2013 Plan.
This proposal seeks an authorization of an increase of 1,000,000 shares. The Amended and Restated 2013 Plan is substantively similar to the Prior Plan in most respects, but there are some material differences betweennumber of shares under the Amended and Restated 2013 Plan and the Prior Plan, including:for which we are seeking authorization represents approximately 27% of our outstanding shares as
○ | the removal from the Prior Plan of certain provisions relating to performance-based compensation in light of amendments to Section 162(m) of the Code; |