| ● | Restricted stock awards have been granted to NEOs since 2003 to further align the interests of executive officers and stockholders. In 2015 the Compensation Committee granted awards of restricted stock in the form of restricted stock units. The Compensation Committee decides each year whether to include performance objectives in the awards and, if so, the appropriate targets. The Compensation Committee believes restricted stock grants, including awards without performance criteria, provide value to NEOs during periods of stock market volatility (encouraging executive retention) and facilitate the most direct long-term share ownership by our NEOs. These awards have been structured to be earned, or vest, over a three-year period. |
| ● | Performance-Based Restricted Stock Units were granted to NEOs beginning in 20142013 in the form of a relative TSR restricted stock unit. Taking into consideration input from our stockholders, along with the compensation practices of our peer group, the Compensation Committee elected to include these performance-based restricted stock units to further enhance linkage between the performance of our Company and the compensation of NEOs. The TSR awards measure our Company’s share performance relative to a peer group of companies over a three-year period. These awards have been structured to be earned at the completion of a three-year period. |
Our practice of regular annual grants provides for multi-year, overlapping grant periods, enhancing alignment with stockholders and encouraging stability and retention of our core leadership team. In determining appropriate awards, the Compensation Committee periodically reviews competitive market data, each NEOsNEO’s past performance, ability to contribute to our future success and growth and time in the current job. The Compensation Committee also considers recommendations of the compensation consultants and CEO. The Compensation Committee also takes into account the risk of losing the NEO to other employment opportunities. The Compensation Committee considers the foregoing factors together and makes a subjective determination with respect to awarding equity compensation. The Compensation Committee believes that market competitive grants, along with three-year vesting requirements, are the most effective method of reinforcing the long-term nature of the incentive. The Compensation Committee considers the value of previous awards and grants (whether vested or not) as well as the likelihood of achieving performance goals in previous awards and grants in determining the current year’s awards and grants. For 2014,2015, the Compensation Committee chose to allocate 50% of the target long-term incentive to time-based restricted stock units, 25% allocated to time-based stock options and the remaining 25% to performance-based restricted stock units. The Compensation Committee considered the following in reaching this conclusion: | ●
| ● | While we maintain that stock options, by their nature, are “performance-based” and aligned with our stockholders’ interests by requiring an increase in the stock price from the date of grant before any value is received by the NEO, for 2014,2015, the Compensation Committee again felt that a performance-based long-term incentive grant of restricted stock units containing performance-based goals would further enhance the link between executive pay and stockholder interests. |
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| ● | A review of our compensation structure showed that our program for 20142015 was closely aligned with the compensation programs of the companies in our peer group. |
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| ● | Providing a program with a balanced mix of performance incentive, retention and stockholder alignment will achieve the desired results of continued success. |
Individual equity incentives (as a multiple of base salary) are generally based on a range around the median of the equity incentives reflected in the market data. The individual total direct compensation (target total cash, plus all long-term incentive awards) for the current NEOs for 20142015 were between 85%79% and 107%103% of the median for the compensation reflected in the combined market data for all named executives and the peer group. Equity Incentive Compensation Decisions. The following grants were made on May 21, 2014:22, 2015: Executive | | May 2014 Annual Restricted Stock Grant (# of shares) | | | May 2014 Annual Stock Option Grant (# of options) | | | May 2014 TSR Grant (# of shares at maximum payout) | | | May 2015 Annual Restricted Stock Unit Grant (# of shares) | | | May 2015 Annual Stock Option Grant (# of options) | | | May 2015 TSR Grant (# of shares at maximum payout) | | Paul L. Howes | | | 110,491 | | | | 124,496 | | | | 73,953 | | | | 136,138 | | | | 156,514 | | | | 91,350 | | Gregg S. Piontek | | | 29,611 | | | | 33,365 | | | | 19,819 | | | | 36,485 | | | | 41,945 | | | | 24,481 | | Bruce C. Smith | | | 36,214 | | | | 40,804 | | | | 24,238 | | | | 44,620 | | | | 51,298 | | | | 29,940 | | Mark J. Airola | | | 32,656 | | | | 36,795 | | | | 21,856 | | | | 40,236 | | | | 46,258 | | | | 26,998 | | Jeffery L. Juergens | | | 24,910 | | | | 28,068 | | | | 16,672 | | | | 30,693 | | | | 35,286 | | | | 20,595 | |
In administering the long-term incentive plan, the Compensation Committee is sensitive to the potential for dilution of future earnings per share. In 2014, 554,6412015, 695,698 stock options and 1,009,9591,251,819 restricted stock awards, restricted stock units, and performance-based restricted stock units were granted to 191215 executive officers and employees, or about 7.5%9.8% of total employees. The awards were approximately 1.8%2.3% of our outstanding shares at the time of grant. For further information regarding the awards to the named executive officers, see the 20142015 Grants of Plan-Based Awards Table. As a general proposition, the higher-level positions have greater emphasis on longer-term incentives. The size of long-term incentive awards will vary from year to year to reflect current year performance of our Company and/or the individual and current market trends. The Compensation Committee determines the award level for executive officers, if any, on an annual basis usually in the first or second quarter each year. All equity awards to our employees, including executive officers, that have been granted, are reflected in our consolidated financial statements at fair value on the grant date in compliance with Accounting Standards Codification (ASC) Topic 718, “Stock Compensation,” which we refer to as ASC Topic 718.
Indirect Compensation
Employee benefits are designed to be competitive and to attract and retain employees. From time to time, the Compensation Committee reviews our benefit plans and recommends that the Board implement certain changes to existing plans or adopt new benefit plans. Health and Welfare Benefits. We offer a standard range of health and welfare benefits to all employees, including executive officers. These benefit plans provide the same terms to all similarly situated employees. These benefits include: medical, prescription drug, vision and dental coverage, life, accidental death and dismemberment and travel accident insurance, short and long-term disability insurance, an employee assistance plan, health savings accounts and flexible spending accounts. In addition, we pay the cost of an annual physical for each executive officer and executive officers have excess life insurance for which we pay the premiums. These costs are disclosed in the Summary Compensation Table. Employee Stock Purchase Plan.We offer an employee stock purchase plan allowing employees to purchase our common stock through payroll deductions under the 2008 Employee Stock Purchase Plan. Employees, including executive officers, can set aside up to 10% of their annual salary to purchase stock at 85% of the fair market value of the stock on the first or last day of each six month offering period, whichever is lower. In 2013, our stockholders approved an amendment to the 2008 Employee Stock Purchase Plan which increasedwas amended to increase the percentage discount ofat which an employee could purchase under this plan from 5% to 15%. Executive officers may not set aside more than $25,000 of their salary to purchase shares under this plan in any year. None of our NEO’s participated in this plan in 2014.2015. 401(k) Plan. We offer a defined contribution 401(k) plan to our employees, including executive officers. The plan helps employees save for retirement, reduce current income taxes and defer income taxes on savings and investment income until retirement. The participants may contribute from 1% up to 50% of their base and cash incentive compensation. Our 401(k) plan allows us to make matching contributions and, until March 30, 2016, we made matching contributions under this plan of 100% on the first 3% of the employee’s compensation and 50% of the next 3% of the participant’s compensation. As a result of deteriorating business conditions, we suspended our matching contributions under the 401(k) plan effective March 30, 2016. Employees are fully vested in employer contributions immediately. During 2014,2015, an employee could contribute up to $17,500,$18,000, and employees age 50 or older were allowed to make additional catch-up contributions to the plan up to $5,500. Other Perquisites and Personal Benefits.We do not offer any perquisites or other personal benefits with a value over $10,000 beyond those outlined below to any NEO. Paul L. Howes receives an annual stipend of $20,000 for car allowance and memberships. Mark J. Airola is eligible for reimbursement of 50% of the initiation fee for a personal country club membership up to a maximum of $30,000, but has not accessed that benefit to date. Mr. Airola, Jeffery L. Juergens, and Gregg S. Piontek each receive a car allowance of $1,300 per month. Mr. Smith is provided a company vehicle, the personal use portion of which is included in the Summary Compensation Table.
Employment Agreements
Each NEO’s employment agreement was amended on February 16, 2016 to reflect a reduction in the NEOs base salary by 10% effective March 1, 2016 through December 31, 2016. Employment Agreement with Paul L. Howes. On March 22, 2006, Mr. Howes entered into an employment agreement with us under which he serves as CEO. This agreement was amended on June 7, 2006 to add a definition for Change in Control. The agreement was amended again on December 31, 2008 to extend the term until March 31, 2011 and make certain changes to the Change in Control provisions to comply with Section 409A of the Internal Revenue Code. As amended, the term of the employment agreement was through March 31, 2011, with automatic renewal thereafter for successive one-year periods ending on each March 31, unless Mr. Howes’ employment is terminated by either party giving 60 days written notice. Under this employment agreement, Mr. Howes is entitled to receive the following compensation and benefits: | ●
| ● | Annual base salary of $750,000 (as adjusted effective April 1, 2014); |
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| ● | An opportunity (as adjusted for 2014)2015) under our executive incentive compensation plan to earn a cash bonus of between 30%25% and 200% of his annual base salary based on the satisfaction of performance criteria specified by the Compensation Committee; |
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| ● | Eligibility to receive annual stock options, restricted stock, and performance-based awards under our long-term incentive plans as determined in the discretion of the Compensation Committee; |
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| ● | Payment of one-half the initiation fee for membership in the country club of Mr. Howes’ choice and an annual stipend of $20,000 to be used by Mr. Howes in his discretion for monthly club dues, automobile costs, and similar expenses; |
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| ● | Reimbursement for all reasonable and necessary business, entertainment and travel expenses incurred or expended by Mr. Howes in the performance of his duties; |
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| ● | Four weeks of paid vacation; |
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| ● | Participation in the life and health insurance plans, 401(k) plan and other employee benefit plans and programs generally made available to executive personnel; and |
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| ● | An annual medical examination. |
Mr. Howes’ employment with us will terminate (a) automatically upon his death or disability, (b) at Mr. Howes’ election upon 30 days’ notice to us for “Good Reason” (as defined below) or Mr. Howes’ voluntary resignation at his election and without Good Reason, (c) by us for “Cause” (as defined below), (d) by us without Cause or (e) with 60 days’ notice given by us or Mr. Howes in advance of the expiration of the initial or any successive employment terms under Mr. Howes’ employment agreement. As used in this agreement, “Good Reason” means (i) our unreasonable interference with Mr. Howes’ performance of his duties, (ii) a detrimental change in Mr. Howes’ duties, responsibilities or status, (iii) our failure to comply with our obligations under our agreements with Mr. Howes, (iv) diminution of Mr. Howes’ salary or benefits, (v) our failure to obtain the assumption of Mr. Howes’ employment agreement by any successor or assignee of ours or (vi) the relocation of Mr. Howes’ principal place of employment by more than 50 miles (other than to Houston, Texas). As used in this agreement, “Cause” means (i) conviction by a court of competent jurisdiction of, or entry of a plea of guilty or nolo contendere for an act constituting a felony; (ii) dishonesty, willful misconduct or gross neglect by Mr. Howes of his obligations under his employment agreement that results in material injury to us; (iii) appropriation (or an overt act attempting appropriation) of a material business opportunity of ours; (iv) theft, embezzlement or other similar misappropriation of our funds or property; or (v) failure to follow our reasonable and lawful written instructions or policy with respect to the services to be rendered and the manner of rendering services by Mr. Howes. In the event Mr. Howes terminates his employment with us for Good Reason or is terminated by us without Cause, Mr. Howes will be entitled to (i) an amount equal to two times the amount of his then current base salary; (ii) an amount equal to two times the target bonus under the 2010 Annual Cash Incentive Plan; (iii) full vesting of all time-based restricted stock and options granted as an inducement to employment; (iv) continuation of medical and dental health benefits for him and any eligible dependents until the earlier of (A) eligibility under another group health insurance plan or (B) 18 months following the date of termination; and (v) payment of outplacement services within the two-year period after termination not to exceed $20,000. Mr. Howes’ Employment Agreement includes a change in control provision which is discussed in the “Executive Compensation”section of this proxy under the heading “Employment Agreements and Change in Control Agreements.” Employment Agreement with Gregg S. Piontek. On October 18, 2011, Mr. Piontek entered into an employment agreement with us under which he serves as Vice President and Chief Financial Officer. The term of the employment agreement is from November 1, 2011 through October 31, 2014, with automatic renewal thereafter for successive one-year periods, unless Mr. Piontek’s employment is terminated by either party giving 60 days written notice. Under this employment agreement, Mr. Piontek is entitled to receive the following compensation and benefits: | ●
| ● | Annual base salary of $368,500 (as adjusted effective April 1, 2014); |
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| ● | An opportunity (as adjusted for 2014)2015) under our executive incentive compensation plan to earn a cash bonus of between 19.5%16.25% and 130% of his annual base salary based on the satisfaction of performance criteria specified by the Compensation Committee; |
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| ● | Eligibility to receive annual stock options, restricted stock, and performance-based awards under our long-term incentive plans as determined in the discretion of the Compensation Committee; |
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| ● | Reimbursement for all reasonable and necessary business, entertainment and travel expenses incurred or expended by Mr. Piontek; |
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| ● | Four weeks of paid vacation; |
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| ● | Life insurance equal to three times the executive’s base salary; and |
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| ● | Participation in the health insurance plans, 401(k) plan and other employee benefit plans and programs generally made available to executive personnel. |
Mr. Piontek’s employment with us will terminate (a) automatically upon his death or disability, (b) at Mr. Piontek’s election upon 30 days’ notice to us for “Good Reason” (as defined below) or Mr. Piontek’s voluntary resignation at his election and without Good Reason, (c) by us for “Cause” (as defined below), (d) by us without Cause or (e) with 60 days’ notice given by us or Mr. Piontek in advance of the expiration of the initial or any successive employment terms under Mr. Piontek’s employment agreement. As used in this agreement, “Good Reason” means (i) a detrimental change in Mr. Piontek’s duties, responsibilities or status, (ii) our failure to comply with our obligations under our agreements with Mr. Piontek, (iii) diminution of Mr. Piontek’s salary or benefits, (iv) our failure to obtain the assumption of Mr. Piontek’s employment agreement by any successor or assignee of ours or (vi)(v) the relocation of Mr. Piontek’s principal place of employment by more than 50 miles from The Woodlands, Texas. As used in this agreement, “Cause” has the same meaning as in Mr. Howes’ agreement. In the event Mr. Piontek terminates his employment with us for Good Reason or is terminated by us without Cause, Mr. Piontek will be entitled to a lump sum payment equal to his then current base salary plus target level annual bonus for the greater of the remaining initial term of the agreement or one year. In addition, Mr. Piontek would receive (i) full vesting of all options and restricted stock granted as an inducement to employment, (ii) continuation of medical and dental health benefits, and disability benefits for the greater of the initial term of the employment agreement or 12 months (with a maximum benefit of 18 months) and (iii) payment of outplacement fees, within one year after termination, of up to $20,000. Employment Agreement with Bruce C. Smith. On April 20, 2007, Mr. Smith entered into an employment agreement with us under which he serves as our Executive Vice President and President of Fluids Systems. The original term of the employment agreement was from April 20, 2007 through April 20, 2010, with automatic renewal thereafter for successive one-year periods, unless Mr. Smith’s employment is terminated by either party giving 60 daysdays’ written notice. This agreement was amended on December 31, 2012 to address compliance with IRC Section 409A. Under this employment agreement, Mr. Smith is entitled to receive the following compensation and benefits: | ●
| ● | Annual base salary of $416,000 (as adjusted effective April 1, 2014); |
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| ● | An opportunity (as adjusted in 2014)2015) under our executive incentive compensation plan to earn a cash bonus of between 19.5%16.25% and 130% of his annual base salary based on the satisfaction of performance criteria specified by the Compensation Committee; |
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| ● | Eligibility to receive annual stock options, restricted stock, and performance-based awards under our long-term incentive plans as determined in the discretion of the Compensation Committee; |
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| ● | Reimbursement for all reasonable and necessary business, entertainment and travel expenses incurred or expended by Mr. Smith in the performance of his duties; |
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| ● | Four weeks of paid vacation; and |
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| ● | Participation in the life and health insurance plans, 401(k) plan and other employee benefit plans and programs generally made available to executive personnel. |
Mr. Smith’s employment with us will terminate (a) automatically upon his death or disability, (b) at Mr. Smith’s election upon 30 days’ notice to us for “Good Reason” (as defined below) or Mr. Smith’s voluntary resignation at his election and without Good Reason, (c) by us for “Cause” (as defined below), (d) by us without Cause or (e) with 60 days’ notice given by us or Mr. Smith in advance of the expiration of the initial or any successive employment terms under Mr. Smith’s employment agreement. As used in this agreement, “Good Reason” means (i) a detrimental change in Mr. Smith’s duties, responsibilities or status, (ii) our failure to comply with our obligations under our agreements with Mr. Smith, (iii) diminution of Mr. Smith’s salary or benefits, or (iv) requiring Mr. Smith to relocate more than 50 miles from Houston, Texas. As used in this agreement, “Cause” has the same meaning as in Mr. Howes’ agreement. In the event Mr. Smith terminates his employment with us for Good Reason or is terminated by us without Cause, Mr. Smith will be entitled to a lump sum payment equal to his then current base salary plus target level annual bonus for the greater of the remaining initial term of the agreement or one year. In addition, Mr. Smith will receive (i) full vesting of all options and restricted stock granted as an inducement to employment, (ii) continuation of medical and dental health benefits, and disability benefits for the greater of the initial term of the employment agreement or 12 months (with a maximum benefit of 18 months) and (iii) payment of outplacement fees, within one year after termination, of up to $20,000. Employment Agreement with Mark J. Airola. On September 18, 2006, Mr. Airola entered into an employment agreement with us under which he serves as Senior Vice President, General Counsel and Chief Administrative Officer. The original term of the employment agreement was from October 2, 2006 through October 2, 2009, with automatic renewal thereafter for successive one-year periods, unless Mr. Airola’s employment is terminated by either party giving 60 days’ written notice. This agreement was amended on December 31, 2012 to address compliance with IRC Section 409A. Under this employment agreement, Mr. Airola is entitled to receive the following compensation and benefits: | ●
| ● | Annual base salary of $385,000 (as adjusted effective April 1, 2014); |
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| ● | An opportunity (as adjusted in 2014)2015) under our executive incentive compensation plan to earn a cash bonus of between 19.5%16.25% and 130% of his annual base salary based on the satisfaction of performance criteria specified by the Compensation Committee; |
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| ● | Eligibility to receive annual stock options, restricted stock and performance-based awards under our long-term incentive plans as determined in the discretion of the Compensation Committee; |
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| ● | Reimbursement for all reasonable and necessary business, entertainment and travel expenses incurred or expended by Mr. Airola in the performance of his duties; |
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| ● | Eligibility for reimbursement of country club membership initiation fee of 50% up to $30,000; |
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| ● | Relocation expenses up to $50,000; |
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| ● | Four weeks of paid vacation; and |
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| ● | Participation in the life and health insurance plans, 401(k) plan and other employee benefit plans and programs generally made available to executive personnel. |
Mr. Airola’s employment with us will terminate (a) automatically upon his death or disability, (b) at Mr. Airola’s election upon 30 days’ notice to us for “Good Reason” (as defined below) or Mr. Airola’s voluntary resignation at his election and without Good Reason, (c) by us for “Cause” (as defined below), (d) by us without Cause or (e) with 60 days’ notice given by us or Mr. Airola in advance of the expiration of the initial or any successive employment terms under Mr. Airola’s employment agreement. As used in this agreement, “Good Reason” means (i) our unreasonable interference with Mr. Airola’s performance of his duties, (ii) a detrimental change in Mr. Airola’s duties, responsibilities or status, (iii) our failure to comply with our obligations under our agreements with Mr. Airola, (iv) diminution of Mr. Airola’s salary or benefits, (v) our failure to obtain the assumption of Mr. Airola’s employment agreement by any successor or assignee of ours or (vi) the relocation of Mr. Airola’s principal place of employment by more than 50 miles (other than to Houston, Texas). As used in this agreement, “Cause” has the same meaning as in Mr. Howes’ agreement. In the event Mr. Airola terminates his employment with us for Good Reason or is terminated by us without Cause, Mr. Airola will be entitled to a lump sum payment equal to his then current base salary plus target level annual bonus for the greater of the remaining initial term of the agreement or one year. In addition, Mr. Airola will receive (i) full vesting of all options and restricted stock granted as an inducement to employment, (ii) continuation of medical and dental health benefits, and disability benefits for the greater of the initial term of the employment agreement or 12 months (with a maximum benefit of 18 months) and (iii) payment of outplacement fees, within one year after termination, of up to $20,000. Employment Agreement with Jeffery L. Juergens. On October 15, 2010, Mr. Juergens entered into an employment agreement with us under which he serves as Vice President and President of Mats and Integrated Services. The initial term of the employment agreement is from October 18, 2010 through October 17, 2013, with automatic renewal thereafter for successive one-year periods, unless Mr. Juergens’ employment is terminated by either party giving 60 days written notice. Under this employment agreement, Mr. Juergens is entitled to receive the following compensation and benefits: | ●
| ● | Annual base salary of $360,000 (as adjusted effective April 1, 2014); |
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| ● | An opportunity (as adjusted in 2014)2015) under our executive incentive compensation plan to earn a cash bonus of between 19.5%16.25% and 130% of his annual base salary based on the satisfaction of performance criteria specified by the Compensation Committee; |
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| ● | As an inducement to accept employment with us, an award of 50,000 shares of time-based restricted stock, which vest over a four year period, 50% on the second anniversary of the Employment Agreement and the remaining 50% on the fourth anniversary of the Employment Agreement; |
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| ● | Eligibility to receive annual stock options, restricted stock, and performance-based awards under our long-term incentive plans as determined in the discretion of the Compensation Committee; |
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| ● | Reimbursement for all reasonable and necessary business, entertainment and travel expenses incurred or expended by Mr. Juergens; |
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| ● | Four weeks of paid vacation; |
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| ● | Life insurance equal to three times the executive’s base salary; and |
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| ● | Participation in the health insurance plans, 401(k) plan and other employee benefit plans and programs generally made available to executive personnel. |
Mr. Juergens’ employment with us will terminate (a) automatically upon his death or disability, (b) at Mr. Juergens’ election upon 30 days’ notice to us for “Good Reason” (as defined below) or Mr. Juergens’ voluntary resignation at his election and without Good Reason, (c) by us for “Cause” (as defined below), (d) by us without Cause or (e) with 60 days’ notice given by us or Mr. Juergens in advance of the expiration of the initial or any successive employment terms under Mr. Juergens’ employment agreement. As used in this agreement, “Good Reason” means (i) a detrimental change in Mr. Juergens’ duties, responsibilities or status, (ii) our failure to comply with our obligations under our agreements with Mr. Juergens, (iii) diminution of Mr. Juergens’ salary or benefits, (iv) our failure to obtain the assumption of Mr. Juergens’ employment agreement by any successor or assignee of us or (v) requiring Mr. Juergens to relocate more than 50 miles from Lafayette, Louisiana. As used in this agreement, “Cause” has the same meaning as in Mr. Howes’ agreement. In the event Mr. Juergens terminates his employment with us for Good Reason or is terminated by us without Cause, Mr. Juergens will be entitled to a lump sum payment equal to his then current base salary plus target level annual bonus for the greater of the remaining initial term of the agreement or one year. In addition, Mr. Juergens will receive (i) full vesting of all options and restricted stock granted as an inducement to employment, (ii) continuation of medical and dental health benefits, and disability benefits for the greater of the initial term of the employment agreement or 12 months (with a maximum benefit of 18 months) and (iii) payment of outplacement fees, within one year after termination, of up to $20,000. Tax and Accounting Implications
Taxand Accounting Implications |
Accounting. We account for equity compensation expenses for our employees under the rules of ASC Topic 718 which requires us to estimate and record an expense for each award of long-term incentive compensation over the life of its vesting period. Tax Deductibility of Pay. In conducting the compensation programs applicable to our executive officers, the Compensation Committee considers the effects of Section 162(m) of the Internal Revenue Code, which denies publicly held companies a tax deduction for annual compensation in excess of $1 million paid to their chief executive officer or generally their three other most highly compensated corporate officers who are employed on the last day of a given year, unless that compensation is based on performance criteria that are established by a committee of outside directors and approved, as to their material terms, by that company’s stockholders. Based on current interpretive authority, our ability to deduct compensation expense generated in connection with the exercise of options and performance-based restricted stock units granted under our stock incentive plan should qualify as performance-based compensation and should not be limited by Section 162(m). Our time-based restricted stock awards and units would not qualify as performance-based compensation under Section 162(m) and, therefore, will be subject to the deduction limit. To the extent the total of salary and other compensation for any of our applicable executive officers exceeds one million dollars in any year and does not qualify as performance-based compensation, the limitation on deductibility under Section 162(m) will apply. As a result, we have in the past and may from time to time in the future, pay compensation amounts to our executive officers that are not deductible. Other Tax Implications
Section 409A of the Internal Revenue Code governs the taxation of certain types of “nonqualified deferred compensation.” Failure to comply with the requirements of Section 409A can result in adverse income tax consequences to our executives, including the accelerated income taxation of noncompliant compensation, the imposition of an additional 20% tax on such noncompliant compensation, and the imposition of interest on those taxes. We have taken precautions in the design of our employment agreements (including the severance and change in control provisions), as well as our 20062015 Employee Equity Incentive Plan and 2010 Annual Cash Incentive Plan and all equity and incentive award agreements, to help ensure compliance with Section 409A and the regulations promulgated thereunder.
Compensation Committee Interlocks and Insider Participation
Compensation Committee Interlocks and Insider Participation |
The members of the Compensation Committee in 20142015 were Dr. McFarlandMr. Best (Chairman), Mr. Best, Mr. Finley, Mr. Larson, Dr. McFarland and Mr. Warren. No member of the Compensation Committee is a current or former officer or employee of ours or any of our subsidiaries or had any relationship requiring disclosure under applicable SEC rules. Additionally, none of our executive officers served as a director or member of the compensation committee of another entity, one of whose executive officers served as a director or member of our Compensation Committee. COMPENSATION COMMITTEE REPORT The Compensation Committee has reviewed and discussed with our management the Compensation Discussion and Analysis included in this Proxy Statement. Based on this review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Proxy Statement and incorporated by reference in our Annual Report on Form 10-K for the year ended December 31, 2014.2015. Compensation Committee of the Board of Directors James W. McFarland, PhD (Chairman)
Anthony J. Best (Chairman) G. Stephen Finley Roderick A. Larson James W. McFarland, PhD Gary L. Warren EXECUTIVECOMPENSATION Summary Compensation Table
SUMMARY COMPENSATION TABLE |
The following table shows the compensation for our Chief Executive Officer, Chief Financial Officer and our three other most highly compensated executive officers for the fiscal years ended December 31, 2012, 2013, 2014 and 2014.2015. Name and Principal Position | | Year | | Salary | | | Stock Awards (1) | | | Option Awards (1) | | | Non-Equity Incentive Plan Compensation (2) | | | All Other Compensation (3) | | | Total | | Paul L. Howes | | 2014 | | $ | 741,250 | | | $ | 1,856,239 | | | $ | 618,982 | | | $ | 960,515 | | | $ | 34,022 | | | $ | 4,211,008 | | President and Chief | | 2013 | | $ | 698,750 | | | $ | 4,293,602 | | | $ | 583,124 | | | $ | 684,038 | | | $ | 33,797 | | | $ | 6,293,311 | | Executive Officer | | 2012 | | $ | 638,750 | | | $ | 557,000 | | | $ | 577,100 | | | $ | 307,516 | | | $ | 33,572 | | | $ | 2,113,938 | | Gregg S. Piontek | | 2014 | | $ | 360,125 | | | $ | 497,466 | | | $ | 165,887 | | | $ | 303,323 | | | $ | 29,070 | | | $ | 1,355,871 | | Vice President, | | 2013 | | $ | 326,250 | | | $ | 461,099 | | | $ | 153,680 | | | $ | 207,598 | | | $ | 30,145 | | | $ | 1,178,772 | | Chief Financial Officer | | 2012 | | $ | 300,000 | | | $ | 239,995 | | | $ | 239,990 | | | $ | 88,263 | | | $ | 30,000 | | | $ | 898,248 | | Bruce C. Smith | | 2014 | | $ | 412,000 | | | $ | 608,392 | | | $ | 202,873 | | | $ | 346,394 | | | $ | 33,917 | | | $ | 1,603,576 | | Executive VicePresident and | | 2013 | | $ | 397,500 | | | $ | 596,450 | | | $ | 198,793 | | | $ | 233,597 | | | $ | 32,740 | | | $ | 1,459,080 | | President of Fluids Systems | | 2012 | | $ | 386,250 | | | $ | 380,247 | | | $ | 380,234 | | | $ | 119,591 | | | $ | 32,883 | | | $ | 1,299,205 | | Mark J. Airola | | 2014 | | $ | 376,250 | | | $ | 548,613 | | | $ | 182,941 | | | $ | 316,905 | | | $ | 30,372 | | | $ | 1,455,081 | | Senior VicePresident, General | | 2013 | | $ | 346,250 | | | $ | 508,511 | | | $ | 169,484 | | | $ | 203,376 | | | $ | 31,447 | | | $ | 1,259,068 | | Counsel, Chief Administrative Officer & Secretary | | 2012 | | $ | 331,250 | | | $ | 259,623 | | | $ | 259,614 | | | $ | 106,317 | | | $ | 28,842 | | | $ | 985,646 | | Jeffery L. Juergens | | 2014 | | $ | 351,250 | | | $ | 418,485 | | | $ | 139,551 | | | $ | 440,685 | (4) | | $ | 32,126 | | | $ | 1,382,097 | | Vice President and | | 2013 | | $ | 317,500 | | | $ | 733,273 | | | $ | 128,385 | | | $ | 211,514 | | | $ | 31,901 | | | $ | 1,422,573 | | President of Mats and Integrated Services | | 2012 | | $ | 291,250 | | | $ | 705,135 | | | $ | 169,615 | | | $ | 194,373 | | | $ | 33,268 | | | $ | 1,393,641 | |
Name and Principal Position | | Year | | Salary | | | Stock Awards (1) | | | Option Awards (1) | | | Non-Equity Incentive Plan Compensation (2) | | | All Other Compensation (3) | | | Total | | Paul L. Howes | | 2015 | | $ | 750,000 | | | $ | 1,838,018 | | | $ | 612,408 | | | $ | 105,000 | | | $ | 35,547 | | | $ | 3,340,973 | | President and Chief | | 2014 | | $ | 741,250 | | | $ | 1,856,239 | | | $ | 618,982 | | | $ | 960,515 | | | $ | 34,022 | | | $ | 4,211,008 | | Executive Officer | | 2013 | | $ | 698,750 | | | $ | 4,293,602 | | | $ | 583,124 | | | $ | 684,038 | | | $ | 33,797 | | | $ | 6,293,311 | | Gregg S. Piontek | | 2015 | | $ | 368,500 | | | $ | 492,587 | | | $ | 164,122 | | | $ | 33,534 | | | $ | 31,605 | | | $ | 1,090,348 | | Vice President, | | 2014 | | $ | 360,125 | | | $ | 497,466 | | | $ | 165,887 | | | $ | 303,323 | | | $ | 29,070 | | | $ | 1,355,871 | | Chief Financial Officer | | 2013 | | $ | 326,250 | | | $ | 461,099 | | | $ | 153,680 | | | $ | 207,598 | | | $ | 30,145 | | | $ | 1,178,772 | | Bruce C. Smith | | 2015 | | $ | 416,000 | | | $ | 602,418 | | | $ | 200,719 | | | $ | 58,195 | | | $ | 34,392 | | | $ | 1,311,724 | | Executive Vice President and | | 2014 | | $ | 412,000 | | | $ | 608,392 | | | $ | 202,873 | | | $ | 346,394 | | | $ | 33,917 | | | $ | 1,603,576 | | President of Fluids Systems | | 2013 | | $ | 397,500 | | | $ | 596,450 | | | $ | 198,793 | | | $ | 233,597 | | | $ | 32,740 | | | $ | 1,459,080 | | Mark J. Airola | | 2015 | | $ | 385,000 | | | $ | 543,230 | | | $ | 180,998 | | | $ | 35,035 | | | $ | 31,097 | | | $ | 1,175,360 | | Senior Vice President, General | | 2014 | | $ | 376,250 | | | $ | 548,613 | | | $ | 182,941 | | | $ | 316,905 | | | $ | 30,372 | | | $ | 1,455,081 | | Counsel, Chief Administrative Officer & Secretary | | 2013 | | $ | 346,250 | | | $ | 508,511 | | | $ | 169,484 | | | $ | 203,376 | | | $ | 31,447 | | | $ | 1,259,068 | | Jeffery L. Juergens | | 2015 | | $ | 360,000 | | | $ | 414,388 | | | $ | 138,067 | | | $ | 94,991 | | | $ | 34,151 | | | $ | 1,041,597 | | Vice President and | | 2014 | | $ | 351,250 | | | $ | 418,485 | | | $ | 139,551 | | | $ | 440,685 | (4) | | $ | 32,126 | | | $ | 1,382,097 | | President of Mats and Integrated Services | | 2013 | | $ | 317,500 | | | $ | 733,273 | | | $ | 128,385 | | | $ | 211,514 | | | $ | 31,901 | | | $ | 1,422,573 | |
(1) | Dollar amount reported reflects the aggregate fair value determined as of the date of award or grant, in each case calculated in accordance with ASC Topic 718. See Note 12,11, “Stock Based Compensation and Other Benefit Plans,” in the Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K for the fiscal year ended 2014,2015, for the relevant assumptions used in the calculation of these amounts. The amount listed includes grant date fair value for the performance-based restricted stock units based on probable outcome of the underlying performance conditions. The maximum fair values of such awards at the grant date, assuming achievement of the highest level of performance are as follows: Mr. Howes - $928,110;$919,164; Mr. Piontek - $248,728;$246,328; Mr. Smith - $304,187;$301,256; Mr. Airola - $274,293$271,654 and Mr. Juergens - $209,234.$207,227. |
(2) | Reflects amounts earned under our 2010 Annual Cash Incentive Plan which were awarded in 2012, 2013, 2014 and 2014.2015. |
(3) | The amount for “All Other Compensation” includes the following for 2014:2015: |
| | Paul L. Howes | | | Gregg S. Piontek | | | Bruce C. Smith | | | Mark J. Airola | | | Jeffery L. Juergens | | Physical | | $ | ― | | | $ | ― | | | $ | ― | | | $ | ― | | | $ | ― | | Life Insurance | | $ | 2,322 | | | $ | 1,020 | | | $ | 3,564 | | | $ | 2,322 | | | $ | 4,076 | | Car Allowance/Personal Use of Company Car | | $ | ― | | | $ | 15,600 | | | $ | 18,153 | | | $ | 15,600 | | | $ | 15,600 | | Annual Stipend in accordance with Employment Agreement | | $ | 20,000 | | | $ | ― | | | $ | ― | | | $ | ― | | | $ | ― | | Matching Contributions under 401(k) | | $ | 11,700 | | | $ | 11,700 | | | $ | 11,700 | | | $ | 11,700 | | | $ | 11,700 | | Matching Contribution for Health Savings Account | | $ | ― | | | $ | 750 | | | $ | 500 | | | $ | 750 | | | $ | 750 | |
| | Paul L. Howes | | | Gregg S. Piontek | | | Bruce C. Smith | | | Mark J. Airola | | | Jeffery L. Juergens | | Physical | | $ | 1,300 | | | $ | 1,300 | | | $ | — | | | $ | — | | | $ | 1,300 | | Life Insurance | | $ | 2,322 | | | $ | 1,530 | | | $ | 3,564 | | | $ | 2,322 | | | $ | 4,076 | | Car Allowance/Personal Use of Company Car | | $ | — | | | $ | 15,600 | | | $ | 18,153 | | | $ | 15,600 | | | $ | 15,600 | | Annual Stipend in accordance with Employment Agreement | | $ | 20,000 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | Matching Contributions under 401(k) | | $ | 11,925 | | | $ | 11,925 | | | $ | 11,925 | | | $ | 11,925 | | | $ | 11,925 | | Matching Contribution for Health Savings Account | | $ | — | | | $ | 1,250 | | | $ | 750 | | | $ | 1,250 | | | $ | 1,250 | |
(4) | Includes $30,675 in incentive attributable to performance in 2014 at the super –overachievement level under the 2010 Annual Cash Incentive Plan, which is deferred for two years, half of which will be paid in March 2016 and the remainder to be paid in March 2017. |
GRANTS OF PLAN-BASED AWARDS IN 2014
GRANTSOF PLAN-BASED AWARDS IN 2015 |
The following table sets forth certain information with respect to plan-based awards granted to the named executive officers identified in the Summary Compensation Table during 2014.2015. | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares of | | | All Other Option Awards: Number of Securities | | | Exercise or Base Price of | | | Grant Date Fair Value of Stock and | | Name | Grant Date | | Threshold | | | Target | | | Maximum | | | Threshold | | | Target | | | Maximum | | | Stock or Units | | | Underlying Options | | | Option Awards | | | Option Awards(3) | | Paul L. Howes | 2/20/2014 | | $ | 225,000 | | | $ | 750,000 | | | $ | 1,500,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 5/22/2014 | | | — | | | | — | | | | — | | | | 14,791 | | | | 49,302 | | | | 73,953 | | | | — | | | | — | | | | — | | | $ | 618,740 | | | 5/22/2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 110,491 | (4) | | | — | | | | — | | | $ | 1,237,499 | | | 5/22/2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 124,496 | | | $ | 11.20 | | | $ | 618,982 | | Gregg S. Piontek | 2/20/2014 | | $ | 71,858 | | | $ | 239,525 | | | $ | 479,050 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 5/22/2014 | | | — | | | | — | | | | — | | | | 3,964 | | | | 13,213 | | | | 19,819 | | | | — | | | | — | | | | — | | | $ | 165,823 | | | 5/22/2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 29,611 | (4) | | | — | | | | — | | | $ | 331,643 | | | 5/22/2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 33,365 | | | $ | 11.20 | | | $ | 165,887 | | Bruce C. Smith | 2/20/2014 | | $ | 81,120 | | | $ | 270,400 | | | $ | 540,800 | | | | | | | | | | | | | | | | — | | | | — | | | | — | | | | — | | | 5/22/2014 | | | — | | | | — | | | | — | | | | 4,848 | | | | 16,159 | | | | 24,238 | | | | — | | | | — | | | | — | | | $ | 202,795 | | | 5/22/2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 36,214 | (4) | | | — | | | | — | | | $ | 405,597 | | | 5/22/2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 40,804 | | | $ | 11.20 | | | $ | 202,873 | | Mark J. Airola | 2/20/2014 | | $ | 75,075 | | | $ | 250,250 | | | $ | 500,500 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 5/22/2014 | | | — | | | | — | | | | — | | | | 4,371 | | | | 14,571 | | | | 21,856 | | | | — | | | | — | | | | — | | | $ | 182,866 | | | 5/22/2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 32,656 | (4) | | | — | | | | — | | | $ | 365,747 | | | 5/22/2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 36,795 | | | $ | 11.20 | | | $ | 182,941 | | Jeffery L. Juergens | 2/20/2014 | | $ | 70,200 | | | $ | 234,000 | | | $ | 468,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 5/22/2014 | | | — | | | | — | | | | — | | | | 3,334 | | | | 11,115 | | | | 16,672 | | | | — | | | | — | | | | — | | | $ | 139,493 | | | 5/22/2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 24,910 | (4) | | | — | | | | — | | | $ | 278,992 | | | 5/22/2014 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 28,068 | | | $ | 11.20 | | | $ | 139,551 | |
| | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of | | | All Other Option Awards: Number of | | | Exercise or Base Price | | | Grant Date Fair Value of Stock and | | Name | | Grant Date | | Threshold | | | Target | | | Maximum | | | Threshold | | | Target | | | Maximum | | | Shares of Stock or Units | | | Securities Underlying Options | | | of Option Awards | | | Option Awards (3) | | Paul L. Howes | | 2/25/2015 | | $ | 187,500 | | | $ | 750,000 | | | $ | 1,500,000 | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 5/22/2015 | | | − | | | | − | | | | − | | | | 18,270 | | | | 60,900 | | | | 91,350 | | | | − | | | | − | | | | − | | | $ | 612,776 | | | | 5/22/2015 | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 136,138 | (4) | | | − | | | | − | | | $ | 1,225,242 | | | | 5/22/2015 | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 156,514 | | | $ | 9.00 | | | $ | 612,408 | | Gregg S. Piontek | | 2/25/2015 | | $ | 59,881 | | | $ | 239,525 | | | $ | 479,050 | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 5/22/2015 | | | − | | | | − | | | | − | | | | 4,896 | | | | 16,321 | | | | 24,481 | | | | − | | | | − | | | | − | | | $ | 164,222 | | | | 5/22/2015 | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 36,485 | (4) | | | − | | | | − | | | $ | 328,365 | | | | 5/22/2015 | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 41,945 | | | $ | 9.00 | | | $ | 164,122 | | Bruce C. Smith | | 2/25/2015 | | $ | 67,600 | | | $ | 270,400 | | | $ | 540,800 | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 5/22/2015 | | | − | | | | − | | | | − | | | | 5,988 | | | | 19,960 | | | | 29,940 | | | | − | | | | − | | | | − | | | $ | 200,838 | | | | 5/22/2015 | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 44,620 | (4) | | | − | | | | − | | | $ | 401,580 | | | | 5/22/2015 | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 51,298 | | | $ | 9.00 | | | $ | 200,719 | | Mark J. Airola | | 2/25/2015 | | $ | 62,563 | | | $ | 250,250 | | | $ | 500,500 | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 5/22/2015 | | | − | | | | − | | | | − | | | | 5,399 | | | | 17,999 | | | | 26,998 | | | | − | | | | − | | | | − | | | $ | 181,106 | | | | 5/22/2015 | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 40,236 | (4) | | | − | | | | − | | | $ | 362,124 | | | | 5/22/2015 | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 46,258 | | | $ | 9.00 | | | $ | 180,998 | | Jeffery L. Juergens | | 2/25/2015 | | $ | 58,500 | | | $ | 234,000 | | | $ | 468,000 | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 5/22/2015 | | | − | | | | − | | | | − | | | | 4,119 | | | | 13,730 | | | | 20,595 | | | | − | | | | − | | | | − | | | $ | 138,151 | | | | 5/22/2015 | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 30,693 | (4) | | | − | | | | − | | | $ | 276,237 | | | | 5/22/2015 | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 35,286 | | | $ | 9.00 | | | $ | 138,067 | |
(1) | Represents threshold, target and over-achievement payout levels under our 2010 Annual Cash Incentive Plan for 20142015 performance-based on annualized salary as of April 1, 2014. Bonuses may be earned beyond the “Maximum” pursuant to the terms of the 2010 Plan referenced above; however any awards in excess of the “Maximum” (to the extent it exceeds $20,000 for an individual) are deferred and paid over the following two years.2015. See “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table for the amount actually earned by each named executive officer for 20142015 performance. Note that performance is assessed separately for each metric included in the 2010 Annual Cash Incentive Plan for 2015, |
(2) | The awards reflected in this column represent our relative performance-based restricted stock units which may be earned in an amount equal to 0% to 150% of target based on our relative TSR performance against a specified peer group over the three-year performance period of 2014, 2015, 2016 and 2016.2017. |
(3) | Dollar amount reported reflects the fair value as of the date of award or grant, in each case calculated in accordance with FASB ASC Topic 718. The amount listed includes grant date fair value of the performance-based restricted stock units based on probable outcome of the underlying performance conditions. See Note 12,11, “Stock Based Compensation and Other Benefit Plans,” in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended 20142015 for the relevant assumptions used to determine the valuation of our stock awards. |
(4) | Represents shares of time-based restricted stock units granted under the 20062015 Plan. These awards vest one-third annually over three years. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
| | Option Awards | | Stock Awards | | | | | | | | | Option Awards | | | Stock Awards | | | | | | | | | Name | | Number of Securities Underlying Unexercised Options Exercisable (#) | | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | | Option Exercise Price ($/Sh) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested($) (1) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | | Number of Securities Underlying Unexercised Options Exercisable (#) | | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | | Option Exercise Price ($/Sh) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested($) (1) | | | Equity Incentive PlanAwards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Paul L. Howes | | | 80,000 | | | | — | | | $ | 7.82 | | 6/11/2017 | | ― | | | ― | | | ― | | | ― | | | | 80,000 | | | | − | | | $ | 7.82 | | | 6/11/2017 | | | | − | | | | − | | | | − | | | | − | | | | | | 150,000 | | | | − | | | $ | 7.89 | | | 6/9/2018 | | | | − | | | | − | | | | − | | | | − | | | | | | 200,000 | | | | − | | | $ | 3.31 | | | 6/10/2019 | | | | − | | | | − | | | | − | | | | − | | | | | 150,000 | | | | — | | | $ | 7.89 | | 6/9/2018 | | ― | | | ― | | | ― | | | ― | | | | 139,225 | | | | − | | | $ | 9.13 | | | 6/8/2021 | | | | − | | | | − | | | | − | | | | − | | | | | 200,000 | | | | — | | | $ | 3.31 | | 6/10/2019 | | ― | | | ― | | | ― | | | ― | | | | 200,000 | | | | − | | | $ | 5.57 | | | 6/5/2022 | | | | − | | | | − | | | | − | | | | − | | | | | 139,225 | | | | — | | | $ | 9.13 | | 6/8/2021 | | ― | | | ― | | | ― | | | ― | | | | 71,679 | | | | 35,839 | (2) | | $ | 11.43 | | | 6/5/2023 | | | | − | | | | − | | | | − | | | | − | | | | | 133,334 | | | | 66,666 | (2) | | $ | 5.57 | | 6/5/2022 | | ― | | | ― | | | ― | | | ― | | | | 41,499 | | | | 82,997 | (3) | | $ | 11.20 | | | 5/21/2024 | | | | − | | | | − | | | | − | | | | − | | | | | 35,840 | | | | 71,678 | (3) | | $ | 11.43 | | 6/5/2023 | | ― | | | ― | | | ― | | | ― | | | | − | | | | 156,514 | (4) | | $ | 9.00 | | | 5/22/2025 | | | | − | | | | − | | | | − | | | | − | | | | ― | | | | 124,496 | (4) | | $ | 11.20 | | 5/21/2024 | | ― | | | ― | | | ― | | | ― | | | | − | | | | − | | | | − | | | | − | | | | 34,017 | (5) | | $ | 179,610 | | | | − | | | | − | | | | ― | | | ― | | | ― | | ― | | | 33,333 | (5) | | $ | 317,997 | | | ― | | | ― | | | | − | | | | − | | | | − | | | | − | | | | 100,000 | (6) | | $ | 528,000 | | | | − | | | | − | | | | ― | | | ― | | | ― | | ― | | | 68,034 | (6) | | $ | 649,044 | | | ― | | | ― | | | | − | | | | − | | | | − | | | | − | | | | 73,660 | (7) | | $ | 388,925 | | | | − | | | | − | | | | ― | | | ― | | | ― | | ― | | | 200,000 | (7) | | $ | 1,908,000 | | | ― | | | ― | | | | − | | | | − | | | | − | | | | − | | | | 136,138 | (8) | | $ | 718,809 | | | | − | | | | − | | | | ― | | | ― | | | ― | | ― | | | 110,491 | (8) | | $ | 1,054,084 | | | ― | | | ― | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 44,482 | (9) | | $ | 234,865 | | | | ― | | | ― | | | ― | | ― | | ― | | | ― | | | | 44,482 | (9) | | $ | 424,358 | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 49,302 | (9) | | $ | 260,315 | | | | ― | | | ― | | | ― | | ― | | ― | | | ― | | | | 49,302 | (9) | | $ | 470,341 | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 60,900 | (9) | | $ | 321,552 | | Gregg S. Piontek | | | 20,000 | | | ― | | | $ | 7.82 | | 6/11/2017 | | ― | | | ― | | | ― | | | ― | | | | 20,000 | | | | − | | | $ | 7.82 | | | 6/11/2017 | | | | − | | | | − | | | | − | | | | − | | | | | 28,100 | | | ― | | | $ | 7.89 | | 6/9/2018 | | ― | | | ― | | | ― | | | ― | | | | 28,100 | | | | − | | | $ | 7.89 | | | 6/9/2018 | | | | − | | | | − | | | | − | | | | − | | | | | 23,390 | | | ― | | | $ | 3.31 | | 6/10/2019 | | ― | | | ― | | | ― | | | ― | | | | 23,390 | | | | − | | | $ | 3.31 | | | 6/10/2019 | | | | − | | | | − | | | | − | | | | − | | | | | 19,246 | | | ― | | | $ | 9.13 | | 6/8/2021 | | ― | | | ― | | | ― | | | ― | | | | 19,246 | | | | − | | | $ | 9.13 | | | 6/8/2021 | | | | − | | | | − | | | | − | | | | − | | | | | 55,448 | | | | 27,723 | (10) | | $ | 5.57 | | 6/5/2022 | | ― | | | ― | | | ― | | | ― | | | | 83,171 | | | | − | | | $ | 5.57 | | | 6/5/2022 | | | | − | | | | − | | | | − | | | | − | | | | | 9,446 | | | | 18,890 | (11) | | $ | 11.43 | | 6/5/2023 | | ― | | | ― | | | ― | | | ― | | | | 18,891 | | | | 9,445 | (10) | | $ | 11.43 | | | 6/5/2023 | | | | − | | | | − | | | | − | | | | − | | | | ― | | | | 33,365 | (12) | | $ | 11.20 | | 5/21/2024 | | ― | | | ― | | | ― | | | ― | | | | 11,122 | | | | 22,243 | (11) | | $ | 11.20 | | | 5/21/2024 | | | | − | | | | − | | | | − | | | | − | | | | ― | | | ― | | | ― | | ― | | | 10,000 | (13) | | $ | 95,400 | | | ― | | | ― | | | | − | | | | 41,945 | (12) | | $ | 9.00 | | | 5/22/2025 | | | | − | | | | − | | | | − | | | | − | | | | ― | | | ― | | | ― | | ― | | | 14,362 | (14) | | $ | 137,013 | | | ― | | | ― | | | | − | | | | − | | | | − | | | | − | | | | 8,965 | (13) | | $ | 47,335 | | | | − | | | | − | | | | ― | | | ― | | | ― | | ― | | | 17,930 | (15) | | $ | 171,052 | | | ― | | | ― | | | | − | | | | − | | | | − | | | | − | | | | 19,740 | (14) | | $ | 104,227 | | | | − | | | | − | | | | ― | | | ― | | | ― | | ― | | | 29,611 | (16) | | $ | 282,489 | | | ― | | | ― | | | | − | | | | − | | | | − | | | | − | | | | 36,485 | (15) | | $ | 192,641 | | | | − | | | | − | | | | ― | | | ― | | | ― | | ― | | ― | | | ― | | | | 11,723 | (9) | | $ | 111,837 | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 11,723 | (9) | | $ | 61,897 | | | | ― | | | ― | | | ― | | ― | | ― | | | ― | | | | 13,213 | (9) | | $ | 126,488 | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 13,213 | (9) | | $ | 69,765 | | | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 16,321 | (9) | | $ | 86,175 | | Bruce C. Smith | | | 50,000 | | | ― | | | $ | 7.82 | | 6/11/2017 | | ― | | | ― | | | ― | | | ― | | | | 50,000 | | | | − | | | $ | 7.82 | | | 6/11/2017 | | | | − | | | | − | | | | − | | | | − | | | | | | 87,500 | | | | − | | | $ | 7.89 | | | 6/9/2018 | | | | − | | | | − | | | | − | | | | − | | | | | 87,500 | | | ― | | | $ | 7.89 | | 6/9/2018 | | ― | | | ― | | | ― | | | ― | | | | 41,562 | | | | − | | | $ | 3.31 | | | 6/10/2019 | | | | − | | | | − | | | | − | | | | − | | | | | 41,562 | | | ― | | | $ | 3.31 | | 6/10/2019 | | ― | | | ― | | | ― | | | ― | | | | 47,071 | | | | − | | | $ | 9.13 | | | 6/8/2021 | | | | − | | | | − | | | | − | | | | − | | | | | 47,071 | | | ― | | | $ | 9.13 | | 6/8/2021 | | ― | | | ― | | | ― | | | ― | | | | 131,774 | | | | − | | | $ | 5.57 | | | 6/5/2022 | | | | − | | | | − | | | | − | | | | − | | | | | 87,850 | | | | 43,924 | (17) | | $ | 5.57 | | 6/5/2022 | | ― | | | ― | | | ― | | | ― | | | | 24,436 | | | | 12,218 | (16) | | $ | 11.43 | | | 6/5/2023 | | | | − | | | | − | | | | − | | | | − | | | | | 12,218 | | | | 24,436 | (18) | | $ | 11.43 | | 6/5/2023 | | ― | | | ― | | | ― | | | ― | | | | 13,602 | | | | 27,202 | (17) | | $ | 11.20 | | | 5/21/2024 | | | | − | | | | − | | | | − | | | | − | | | | ― | | | | 40,804 | (19) | | $ | 11.20 | | 5/21/2024 | | ― | | | ― | | | ― | | | ― | | | | − | | | | 51,298 | (18) | | $ | 9.00 | | | 5/22/2025 | | | | − | | | | − | | | | − | | | | − | | | | ― | | | ― | | | ― | | ― | | | 37,000 | (20) | | $ | 352,980 | | | ― | | | ― | | | | − | | | | − | | | | − | | | | − | | | | 11,596 | (19) | | $ | 61,227 | | | | − | | | | − | | | | ― | | | ― | | | ― | | ― | | | 22,755 | (21) | | $ | 217,083 | | | ― | | | ― | | | | − | | | | − | | | | − | | | | − | | | | 24,142 | (20) | | $ | 127,470 | | | | − | | | | − | | | | ― | | | ― | | | ― | | ― | | | 23,193 | (22) | | $ | 221,261 | | | ― | | | ― | | | | − | | | | − | | | | − | | | | − | | | | 44,620 | (21) | | $ | 235,594 | | | | − | | | | − | | | | ― | | | ― | | | ― | | ― | | | 36,214 | (23) | | $ | 345,482 | | | ― | | | ― | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 15,164 | (9) | | $ | 80,066 | | | | ― | | | ― | | | ― | | ― | | ― | | | ― | | | | 15,164 | (9) | | $ | 144,665 | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 16,159 | (9) | | $ | 85,320 | | | | ― | | | ― | | | ― | | ― | | ― | | | ― | | | | 16,159 | (9) | | $ | 154,157 | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 19,960 | (9) | | $ | 105,389 | | Mark J. Airola | | | 127,250 | | | ― | | | $ | 3.31 | | 6/10/2019 | | ― | | | ― | | | ― | | | ― | | | | 127,250 | | | | − | | | $ | 3.31 | | | 6/10/2019 | | | | − | | | | − | | | | − | | | | − | | | | | 36,820 | | | ― | | | $ | 9.13 | | 6/8/2021 | | ― | | | ― | | | ― | | | ― | | | | 36,820 | | | | − | | | $ | 9.13 | | | 6/8/2021 | | | | − | | | | − | | | | − | | | | − | | | | | 59,982 | | | | 29,990 | (24) | | $ | 5.57 | | 6/5/2022 | | ― | | | ― | | | ― | | | ― | | | | 89,972 | | | | − | | | $ | 5.57 | | | 6/5/2022 | | | | − | | | | − | | | | − | | | | − | | | | | 10,417 | | | | 20,833 | (25) | | $ | 11.43 | | 6/5/2023 | | ― | | | ― | | | ― | | | ― | | | | 20,834 | | | | 10,416 | (22) | | $ | 11.43 | | | 6/5/2023 | | | | − | | | | − | | | | − | | | | − | | | | ― | | | | 36,795 | (26) | | $ | 11.20 | | 5/21/2024 | | ― | | | ― | | | ― | | | ― | | | | 12,265 | | | | 24,530 | (23) | | $ | 11.20 | | | 5/21/2024 | | | | − | | | | − | | | | − | | | | − | | | | ― | | | ― | | | ― | | ― | | | 37,000 | (27) | | $ | 352,980 | | | ― | | | ― | | | | − | | | | 46,258 | (24) | | $ | 9.00 | | | 5/22/2025 | | | | − | | | | − | | | | − | | | | − | | | | ― | | | ― | | | ― | | ― | | | 15,537 | (28) | | $ | 148,223 | | | ― | | | ― | | | | − | | | | − | | | | − | | | | − | | | | 9,887 | (25) | | $ | 52,203 | | | | − | | | | − | | | | ― | | | ― | | | ― | | ― | | | 19,774 | (29) | | $ | 188,644 | | | ― | | | ― | | | | − | | | | − | | | | − | | | | − | | | | 21,770 | (26) | | $ | 114,946 | | | | − | | | | − | | | | ― | | | ― | | | ― | | ― | | | 32,656 | (30) | | $ | 311,538 | | | ― | | | ― | | | | − | | | | − | | | | − | | | | − | | | | 40,236 | (27) | | $ | 212,446 | | | | − | | | | − | | | | ― | | | ― | | | ― | | ― | | ― | | | ― | | | | 12,928 | (9) | | $ | 123,333 | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 12,928 | (9) | | $ | 68,260 | | | | ― | | | ― | | | ― | | ― | | ― | | | ― | | | | 14,571 | (9) | | $ | 139,007 | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 14,571 | (9) | | $ | 76,935 | | | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 17,999 | (9) | | $ | 95,035 | |
| | Option Awards | | Stock Awards | | | | | | | | Name | | Number of Securities Underlying Unexercised Options Exercisable (#) | | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | | Option Exercise Price ($/Sh) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested($) (1) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Jeffery L. Juergens | | | 32,217 | | | ― | | | $ | 9.13 | | 6/8/2021 | | ― | | | ― | | | ― | | | ― | | | | | 39,188 | | | | 19,594 | (31) | | $ | 5.57 | | 6/5/2022 | | ― | | | ― | | | ― | | | ― | | | | | 7,891 | | | | 15,781 | (32) | | $ | 11.43 | | 6/5/2023 | | ― | | | ― | | | ― | | | ― | | | | ― | | | | 28,068 | (33) | | $ | 11.20 | | 5/21/2024 | | ― | | | ― | | | ― | | | ― | | | | ― | | | ― | | | ― | | ― | | | 25,000 | (34) | | $ | 238,500 | | | ― | | | ― | | | | ― | | | ― | | | ― | | ― | | | 10,151 | (35) | | $ | 96,841 | | | ― | | | ― | | | | ― | | | ― | | | ― | | ― | | | 34,773 | (36) | | $ | 331,734 | | | ― | | | ― | | | | ― | | | ― | | | ― | | ― | | | 30,453 | (37) | | $ | 290,522 | | | ― | | | ― | | | | ― | | | ― | | | ― | | ― | | | 14,978 | (38) | | $ | 142,890 | | | ― | | | ― | | | | ― | | | ― | | | ― | | ― | | | 24,910 | (39) | | $ | 237,641 | | | ― | | | ― | | | | ― | | | ― | | | ― | | ― | | ― | | | ― | | | | 9,793 | (9) | | $ | 93,425 | | | | ― | | | ― | | | ― | | ― | | ― | | | ― | | | | 11,115 | (9) | | $ | 106,037 | |
| | Option Awards | | | Stock Awards | | | | | | | | | Name | | Number of Securities Underlying Unexercised Options Exercisable (#) | | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | | Option Exercise Price ($/Sh) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested($) (1) | | | Equity Incentive PlanAwards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Jeffery L. Juergens | | | 32,217 | | | | − | | | $ | 9.13 | | | 6/8/2021 | | | | − | | | | − | | | | − | | | | − | | | | | 58,782 | | | | − | | | $ | 5.57 | | | 6/5/2022 | | | | − | | | | − | | | | − | | | | − | | | | | 15,782 | | | | 7,890 | (28) | | $ | 11.43 | | | 6/5/2023 | | | | − | | | | − | | | | − | | | | − | | | | | 9,356 | | | | 18,712 | (29) | | $ | 11.20 | | | 5/21/2024 | | | | − | | | | − | | | | − | | | | − | | | | | − | | | | 35,286 | (30) | | $ | 9.00 | | | 5/22/2025 | | | | − | | | | − | | | | − | | | | − | | | | | − | | | | − | | | | − | | | | − | | | | 34,773 | (31) | | $ | 183,601 | | | | − | | | | − | | | | | − | | | | − | | | | − | | | | − | | | | 7,489 | (32) | | $ | 39,542 | | | | − | | | | − | | | | | − | | | | − | | | | − | | | | − | | | | 15,226 | (33) | | $ | 80,393 | | | | − | | | | − | | | | | − | | | | − | | | | − | | | | − | | | | 16,606 | (34) | | $ | 87,680 | | | | − | | | | − | | | | | − | | | | − | | | | − | | | | − | | | | 30,693 | (35) | | $ | 162,059 | | | | − | | | | − | | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 9,793 | (9) | | $ | 51,707 | | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 11,115 | (9) | | $ | 58,687 | | | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | | | 13,730 | (9) | | $ | 72,494 | |
(1) | The market value is based upon the closing stock price of $9.54$5.28 as reported on December31, 2014.December 31, 2015. |
(2) | The 66,66635,839 options vest on June9, 2015.June 9, 2016. |
(3) | The 71,67882,997 options vest as follows: 35,839 on June 9, 2015 and 35,839 on June 9, 2016. |
(4)
| The 124,496 options vest as follows: 41,499 on June 1, 2015, 41,499 on June 1, 2016 and 41,498 on June 1, 2017.
|
|
(18) The 51,298 options vest as follows: 17,100 on June 1, 2016, 17,099 on June 1, 2017 and 17,099 on June 1, 2018. | (19) | The 11,596 shares of restricted stock vest on June 9, 2016. | (20) | The 37,00024,142 shares of restricted stock will vest on December 21, 2015. |
(21)
| The 22,755 shares of restricted stock will vest on June9, 2015.
|
(22)
| The 23,193 shares of restricted stock will vest as follows: 11,597 on June 9, 2015 and 11,596 on June 9, 2016.
|
(23)
| The 36,214 shares of restricted stock will vest as follows: 12,072 on June 1, 2015, 12,071 on June 1, 2016 and 12,071 on June 1, 2017.
|
(24)(21)
| The 29,990 options will44,620 shares of restricted stock units vest as follows: 14,874 on June 9, 2015.1, 2016, 14,873 on June 1, 2017 and 14,873 on June 1, 2018. |
(25)(22)
| The 20,83310,416 options will vest as follows: 10,417 on June 9, 2015 and 10,416 on June 9, 2016. |
(26)(23)
| The 36,79524,530 options will vest as follows: 12,265 on June 1, 2015, 12,265 on June 1, 2016 and 12,265 on June 1, 2017. |
(27)(24)
| The 37,00046,258 options vest as follows: 15,420 on June 1, 2016, 15,419 on June 1, 2017 and 15,419 on June 1, 2018. | (25) | The 9,887 shares of restricted stock will vest on December 21, 2015. |
(28)
| The 15,537 shares of restricted stock will vest on June 9, 2015.
|
(29)
| The 19,774 shares of restricted stock will vest as follows: 9,887 on June 9, 2015 and 9,887 on June 9, 2016.
|
(30)(26)
| The 32,65621,770 shares of restricted stock will vest as follows: 10,886 on June 1, 2015, 10,885 on June 1, 2016 and 10,885 on June1,June 1, 2017. |
(31)(27)
| The 19,594 options will40,236 shares of restricted stock units vest as follows: 13,412 on June 9, 2015.1, 2016, 13,412 on June 1, 2017 and 13,412 on June 1, 2018. |
(32)(28)
| The 15,7817,890 options will vest as follows: 7,891 on June 9, 2015 and 7,890 on June 9, 2016. |
(33)(29)
| The 28,06818,712 options will vest as follows: 9,356 on June 1, 2015, 9,356 on June 1, 2016 and 9,356 on June 1, 2017. |
(34)(30)
| The 25,000 shares of restricted stock will35,286 options vest on December 21, 2015. |
(35)
| The 10,151 shares of restricted stock will vestas follows: 11,762 on June 9, 2015.1, 2016, 11,762 on June 1, 2017 and 11,762 on June 1, 2018.
|
(36)(31)
| The 34,773 shares of restricted stock will vest on December 5, 2016. |
(37)(32)
| The 30,4537,489 shares of restricted stock will vest as follows: 15,227 on June 6, 2015 and9, 2016. | (33) | The 15,226 shares of restricted stock vest on June 6, 2017. |
(38)(34)
| The 14,97816,606 shares of restricted stock will vest as follows: 7,489 on June 9, 2015 and 7,489 on June 9, 2016. |
(39)
| The 24,910 shares of restricted stock will vest as follows: 8,304 on June 1, 2015, 8,303 on June 1, 2016 and 8,303 on June 1, 2017.
| (35) | The 30,693 shares of restricted stock units vest as follows: 10,231 on June 1, 2016, 10,231 on June 1, 2017 and 10,231 on June 1, 2018. |
OPTION EXERCISES AND STOCK VESTED
OPTIONEXERCISES AND STOCK VESTED |
The following table sets forth information for the NEOs identified in the Summary Compensation Table with respect to stock options exercised and vesting on time-based restricted shares for the fiscal year ended December 31, 2014.2015. | | Option Awards | | | Stock Awards | | Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized upon Exercise(1) | | | Number of Shares Acquired on Vesting | | | Value Realized on Vesting(2) | | Paul L. Howes | | | — | | | | — | | | | 92,789 | | | $ | 1,112,540 | | Gregg S. Piontek | | | — | | | | — | | | | 33,509 | | | $ | 392,774 | | Bruce C. Smith | | | — | | | | — | | | | 42,953 | | | $ | 515,006 | | Mark J. Airola | | | 147,500 | | | $ | 771,847 | | | | 32,151 | | | $ | 385,490 | | Jeffery L. Juergens | | | — | | | | — | | | | 83,301 | | | $ | 880,528 | |
| | Option Awards | | | Stock Awards | | Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized upon Exercise | | | Number of Shares Acquired on Vesting | | | Value Realized on Vesting(1) | | Paul L. Howes | | | — | | | | — | | | | 204,181 | | | $ | 1,525,681 | | Gregg S. Piontek | | | — | | | | — | | | | 43,198 | | | $ | 341,190 | | Bruce C. Smith | | | — | | | | — | | | | 83,424 | | | $ | 599,725 | | Mark J. Airola | | | — | | | | — | | | | 73,310 | | | $ | 512,090 | | Jeffery L. Juergens | | | — | | | | — | | | | 66,171 | | | $ | 489,209 | |
(1) | The value realized on the exercise of stock options is the difference between the market price of our common stock at the time of exercise and the exercise price of the option.
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(2)
| Dollar values are calculated by multiplying the market price of our common stock on the vesting date by the number of shares vested and does not necessarily reflect the proceeds actually received by the named executive officer. |
Risk Assessment of Compensation Programs
Risk Assessment of Compensation Programs |
The Compensation Committee considers, in establishing and reviewing the employee compensation programs, whether the programs encourage unnecessary or excessive risk taking. As discussed in the Compensation Discussion and Analysis of this proxy statement, the Compensation Committee, with the assistance of management and its consultant, undertook a risk assessment of our compensation programs in 2014.2015. After reviewing and discussing the compensation programs with the Compensation Committee and reviewing the results of those discussions with the Audit Committee of the Board, we believe that the programs are balanced and do not motivate or encourage unnecessary or excessive risk taking. While some performance-based awards focus on achievement of short-term or annual goals, and short-term goals may encourage the taking of short-term risks at the expense of long-term results, these award programs represent a modest percentage of the executive employees’ total compensation opportunities and are balanced by other long-term incentives. We believe that these programs appropriately balance risk and the desire to focus employees on specific short-term goals important to our success, and that it does not encourage unnecessary or excessive risk taking. A significant part of the compensation provided to employees is in the form of long-term equity awards that are important to help further align employees’ interests with those of our stockholders. We do not believe that these awards encourage unnecessary or excessive risk taking since the ultimate value of the awards is tied to our stock price, and since awards are staggered and subject to long-term vesting schedules to help ensure that executives have significant value tied to long-term stock price performance.
Employment Agreements and Change in Control Agreements
Employment Agreements and Change in Control Agreements |
We have entered into employment agreements with each of our NEOs. See “Employment Agreements” within the Compensation Discussion and Analysis for a summary of these employment agreements and descriptions of compensation elements pursuant to which the amounts listed under the Summary Compensation Table and Grants of Plan-Based Awards in 20142015 Table were paid or awarded and the criteria for such payment, including targets for payments of annual incentives, as well as performance criteria on which such payments were based. We have also adopted a change in control benefits policy applicable to our NEOs and have entered into change in control agreements with our NEOs other than Mr. Howes, who receives his benefits under his employment agreement. See “Potential Payments upon Change in Control” below for a summary of these benefits and agreements. Potential Payments upon Change in Control
On March 7, 2007, the Board, upon recommendation of the Compensation Committee, approved a change in control benefits policy applicable to all of our NEOs and other key executives and employees not to exceed a total of 30.30, which was subsequently expanded to 40. Each of our NEOs are entitled to receive change in control benefits. Receipt of the benefits by the executives and employees is conditioned on a change in control of our Company and the termination of employment under certain circumstances described below (often referred to as a “double-trigger”). Benefits to the executives and other employees under the policy are described below: | ●
| ● | Payment of accrued but unpaid salary and a prorated annual bonus (at the target level) through the date of termination. |
| ● | A lump sum payment in an amount equal to a multiple of that executive’s (i) base salary, plus (ii) in the case of Mr. Howes, a bonus equal to the highest bonus he received under the 2010 Annual Cash Incentive Plan, and in the case of the other executives, a target bonus which will equal the higher of the bonus to which the executive would be entitled under the 2010 Annual Cash Incentive Plan for the fiscal year preceding the termination or the highest bonus received by the executive under the incentive plan in the two fiscal years immediately preceding the change of control event. The multiples established under the policy are: three times for the CEO (which has subsequently been modified to 2.99 times in the Amended and Restated Employment Agreement of Mr. Howes), two times for the other executive officers and divisional presidents, and one time for the remaining designated key executives and employees. |
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| ● | Full vesting of all options, restricted stock (whether time or performance-based), and deferred compensation. |
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| ● | Payment of outplacement fees up to $20,000 for the CEO and from $5,000 to $10,000$20,000 for other executive officers, divisional presidents and remaining employees. |
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| ● | Continuation of life insurance, medical and dental health benefits, and disability benefits for a period ranging from one year to three years. |
A change in control will be deemed to occur if: | ●
| ● | there is a merger or consolidation of our Company with, or an acquisition by us of the equity interests or all or substantially all of our assets of, any other corporation or entity other than any transaction in which members of our Board immediately prior to the transaction constitute a majority of the board of the resulting entity for a period of twelve months following the transaction; |
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| ● | any person or group becomes the direct or indirect beneficial owner of 30% or more of our outstanding voting securities; |
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| ● | any election of directors occurs and a majority of the directors elected are individuals who were not nominated by a vote of two-thirds of the members of the Board or the Nominating and Corporate Governance Committee; or |
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| ● | we effect a complete liquidation of our Company or a sale of all or substantially all of our assets unless immediately following any such sale or disposition members of our Board immediately prior to the transaction constitute a majority of the resulting entity for a period of twelve months following the transaction. |
Under the policy, an executive or employee shall not be entitled to those benefits unless his employment is terminated, during the period commencing upon the date when we first have knowledge that any person or group has become a beneficial owner of 30% or more of our voting securities or the date we execute an agreement contemplating a change in control and ending two years after the change in control, for any reason other than: | ● | resignation without good reason. |
We have entered into change in control agreements with the designated executive officers and employees other than Paul L. Howes (whose change in control benefits are included in his employment agreement). The tables below also reflect potential payments to the NEOs upon the termination of their employment under their respective employment agreements. The tables below reflect the amount of compensation to each of the NEOs as a result of a change in control and termination of that executive’s employment under the terms of the above-described policy or, with respect to Mr. Howes, under his employment agreement. The amount of compensation payable to each NEO upon voluntary termination, voluntary termination for good reason or involuntary not-for-cause termination, termination following a change in control, for cause termination, and termination in the event of death or disability of the executive is shown below. The amounts shown assume that the termination was effective on December 31, 20142015 and thus includes amounts earned through that time and are estimates of the amounts which would have been paid to the executives upon their termination on such date. The amounts do not include compensation to which the NEO was otherwise entitled such as previously vested equity awards. The value of the equity compensation awards was based on the closing price of our common stock of $9.54$5.28 on December 31, 2014.2015. The actual amounts to be paid out can only be determined at the time of the executive’s separation from us. In the event of death or disability before the annual cash (short-term incentive) is paid, the Compensation Committee has the authority to pay (in full or on a prorated basis) the amount the employee would have received. We have assumed that the Compensation Committee would have authorized the payment of the full award for purposes of the tables below. As of December 31, 2014,2015, none of the executives were eligible for retirement. Paul L. Howes Executive Compensation and Benefits | | Voluntary Termination on 12/31/14 | | | Voluntary Termination for Good Reason or Termination without Cause on 12/31/14 | | | Termination due to Change in Control on 12/31/14 | | | Termination for Cause on 12/31/14 | | | Termination due to Disability on 12/31/14 | | | Termination due to Death on 12/31/14 | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | − | | | $ | 1,500,000 | | | $ | 2,242,500 | | | | − | | | $ | 375,000 | | | | − | | Short-term Incentive (100% of Base Salary) | | | − | | | $ | 1,500,000 | | | $ | 4,190,802 | | | | − | | | $ | 750,000 | | | $ | 750,000 | | Long-term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | | Annual Stock Options | | | − | | | | − | | | $ | 264,664 | | | | − | | | | − | | | | − | | Performance-based Restricted Shares | | | − | | | | − | | | $ | 894,699 | | | | − | | | | − | | | | − | | Time Based Restricted Shares | | | − | | | | − | | | $ | 3,929,125 | | | | − | | | | − | | | | − | | Benefits and Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | Outplacement | | | − | | | $ | 20,000 | | | $ | 20,000 | | | | − | | | | − | | | | − | | Health & Welfare Benefits | | | − | | | $ | 21,722 | | | $ | 43,443 | | | | − | | | | − | | | | − | | Life Insurance | | | − | | | | − | | | $ | 6,699 | | | | − | | | | − | | | | − | | Life Insurance Proceeds | | | − | | | | − | | | | − | | | | − | | | | − | | | $ | 500,000 | | Disability Benefits per year(1) | | | − | | | | − | | | | − | | | | − | | | $ | 120,000 | | | | − | | 401(k) Employer Contribution | | | − | | | | − | | | $ | 35,100 | | | | − | | | | − | | | | − | | Total | | $ | − | | | $ | 3,041,722 | | | $ | 11,627,032 | | | $ | − | | | $ | 1,245,000 | | | $ | 1,250,000 | |
Executive Compensation and Benefits | | Voluntary Termination on 12/31/15 | | | Voluntary Termination for Good Reason or Termination without Cause on 12/31/15 | | | Termination due to Change in Control on 12/31/15 | | | Termination for Cause on 12/31/15 | | | Termination due to Disability on 12/31/15 | | | Termination due to Death on 12/31/15 | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | − | | | $ | 1,500,000 | | | $ | 2,242,500 | | | | − | | | $ | 375,000 | | | | − | | Short-term Incentive (100% of Base Salary) | | | − | | | $ | 1,500,000 | | | $ | 4,190,802 | | | | − | | | $ | 750,000 | | | $ | 750,000 | | Long-term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | | Annual Stock Options | | | − | | | | − | | | $ | − | | | | − | | | | − | | | | − | | Performance-based Restricted Shares | | | − | | | | − | | | $ | 816,732 | | | | − | | | | − | | | | − | | Time Based Restricted Shares | | | − | | | | − | | | $ | 1,815,343 | | | | − | | | | − | | | | − | | Benefits and Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | Outplacement | | | − | | | $ | 20,000 | | | $ | 20,000 | | | | − | | | | − | | | | − | | Health & Welfare Benefits | | | − | | | $ | 19,002 | | | $ | 38,004 | | | | − | | | | − | | | | − | | Life Insurance | | | − | | | | − | | | $ | 6,699 | | | | − | | | | − | | | | − | | Life Insurance Proceeds | | | − | | | | − | | | | − | | | | − | | | | − | | | $ | 500,000 | | Disability Benefits per year(1) | | | − | | | | − | | | | − | | | | − | | | $ | 120,000 | | | | − | | 401(k) Employer Contribution | | | − | | | | − | | | $ | 35,775 | | | | − | | | | − | | | | − | | Total | | $ | − | | | $ | 3,039,002 | | | $ | 9,174,258 | | | $ | − | | | $ | 1,245,000 | | | $ | 1,250,000 | |
(1)Until no longer disabled or Social Security retirement age. | Until no longer disabled or Social Security Retirement age.
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Gregg S. Piontek Executive Compensationand Benefits | | Voluntary Termination on 12/31/14 | | | Voluntary Termination for Good Reason or Termination without Cause on 12/31/14 | | | Termination due to Change in Control on 12/31/14 | | | Termination for Cause on 12/31/14 | | | Termination due to Disability on 12/31/14 | | | Termination due to Death on 12/31/14 | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | − | | | $ | 368,500 | | | $ | 737,000 | | | | − | | | $ | 184,250 | | | | − | | Short-term Incentive (65% of Base Salary) | | | − | | | $ | 239,525 | | | $ | 479,050 | | | | − | | | $ | 239,525 | | | $ | 239,525 | | Long-term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | | Annual Stock Options | | | − | | | | − | | | $ | 110,060 | | | | − | | | | − | | | | − | | Performance-based Restricted Shares | | | − | | | | − | | | $ | 237,889 | | | | − | | | | − | | | | − | | Time Based Restricted Shares | | | − | | | | − | | | $ | 685,955 | | | | − | | | | − | | | | − | | Benefits and Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | Outplacement | | | − | | | $ | 20,000 | | | $ | 10,000 | | | | − | | | | − | | | | − | | Health & Welfare Benefits | | | − | | | $ | 20,071 | | | $ | 26,762 | | | | − | | | | − | | | | − | | Life Insurance | | | − | | | | − | | | $ | 6,509 | | | | − | | | | − | | | | − | | Life Insurance Proceeds | | | − | | | | − | | | | − | | | | − | | | | − | | | $ | 900,000 | | Disability Benefits per year(1) | | | − | | | | − | | | | − | | | | − | | | $ | 120,000 | | | | − | | Total | | $ | − | | | $ | 648,096 | | | $ | 2,293,225 | | | $ | − | | | $ | 543,775 | | | $ | 1,139,525 | |
Executive Compensation and Benefits | | Voluntary Termination on 12/31/15 | | | Voluntary Termination for Good Reason or Termination without Cause on 12/31/15 | | | Termination due to Change in Control on 12/31/15 | | | Termination for Cause on 12/31/15 | | | Termination due to Disability on 12/31/15 | | | Termination due to Death on 12/31/15 | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | − | | | $ | 368,500 | | | $ | 737,000 | | | | − | | | $ | 184,250 | | | | − | | Short-term Incentive (65% of Base Salary) | | | − | | | $ | 239,525 | | | $ | 606,646 | | | | − | | | $ | 239,525 | | | $ | 239,525 | | Long-term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | | Annual Stock Options | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | Performance-based Restricted Shares | | | − | | | | − | | | $ | 217,837 | | | | − | | | | − | | | | − | | Time Based Restricted Shares | | | − | | | | − | | | $ | 344,203 | | | | − | | | | − | | | | − | | Benefits and Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | Outplacement | | | − | | | $ | 20,000 | | | $ | 5,000 | | | | − | | | | − | | | | − | | Health & Welfare Benefits | | | − | | | $ | 23,205 | | | $ | 30,940 | | | | − | | | | − | | | | − | | Life Insurance | | | − | | | | − | | | $ | 6,510 | | | | − | | | | − | | | | − | | Life Insurance Proceeds | | | − | | | | − | | | | − | | | | − | | | | − | | | $ | 900,000 | | Disability Benefits per year(1) | | | − | | | | − | | | | − | | | | − | | | $ | 120,000 | | | | − | | Total | | $ | − | | | $ | 651,230 | | | $ | 1,948,136 | | | $ | − | | | $ | 543,775 | | | $ | 1,139,525 | |
(1) Until no longer disabled or Social Security retirement age. | Until no longer disabled or Social Security Retirement age.
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Bruce C. Smith Executive Compensationand Benefits | | Voluntary Termination on 12/31/14 | | | Voluntary Termination for Good Reason or Termination without Cause on 12/31/14 | | | Termination due to Change in Control on 12/31/14 | | | Termination for Cause on 12/31/14 | | | Termination due to Disability on 12/31/14 | | | Termination due to Death on 12/31/14 | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | − | | | $ | 416,000 | | | $ | 832,000 | | | | − | | | $ | 208,000 | | | | − | | Short-term Incentive (65% of Base Salary) | | | − | | | $ | 270,400 | | | $ | 540,800 | | | | − | | | $ | 270,400 | | | $ | 270,400 | | Long-term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | | Annual Stock Options | | | − | | | | − | | | $ | 174,378 | | | | − | | | | − | | | | − | | Performance-based Restricted Shares | | | − | | | | − | | | $ | 298,821 | | | | − | | | | − | | | | − | | Time Based Restricted Shares | | | − | | | | − | | | $ | 1,136,805 | | | | − | | | | − | | | | − | | Benefits and Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | Outplacement | | | − | | | $ | 20,000 | | | $ | 10,000 | | | | − | | | | − | | | | − | | Health & Welfare Benefits | | | − | | | $ | 7,970 | | | $ | 10,627 | | | | − | | | | − | | | | − | | Life Insurance | | | − | | | | − | | | $ | 4,466 | | | | − | | | | − | | | | − | | Life Insurance Proceeds | | | − | | | | − | | | | − | | | | − | | | | − | | | $ | 500,000 | | Disability Benefits per year(1) | | | − | | | | − | | | | − | | | | − | | | $ | 120,000 | | | | − | | Total | | $ | − | | | $ | 714,370 | | | $ | 3,007,897 | | | $ | − | | | $ | 598,400 | | | $ | 770,400 | |
(1)
| Until no longer disabled or Social Security Retirement
Executive Compensation and Benefits | | Voluntary Termination on 12/31/15 | | | Voluntary Termination for Good Reason or Termination without Cause on 12/31/15 | | | Termination due to Change in Control on 12/31/15 | | | Termination for Cause on 12/31/15 | | | Termination due to Disability on 12/31/15 | | | Termination due to Death on 12/31/15 | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | − | | | $ | 416,000 | | | $ | 832,000 | | | | − | | | $ | 208,000 | | | | − | | Short-term Incentive (65% of Base Salary) | | | − | | | $ | 270,400 | | | $ | 692,788 | | | | − | | | $ | 270,400 | | | $ | 270,400 | | Long-term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | | Annual Stock Options | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | Performance-based Restricted Shares | | | − | | | | − | | | $ | 270,774 | | | | − | | | | − | | | | − | | Time Based Restricted Shares | | | − | | | | − | | | $ | 424,290 | | | | − | | | | − | | | | − | | Benefits and Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | Outplacement | | | − | | | $ | 20,000 | | | $ | 10,000 | | | | − | | | | − | | | | − | | Health & Welfare Benefits | | | − | | | $ | 8,156 | | | $ | 10,874 | | | | − | | | | − | | | | − | | Life Insurance | | | − | | | | − | | | $ | 4,466 | | | | − | | | | − | | | | − | | Life Insurance Proceeds | | | − | | | | − | | | | − | | | | − | | | | − | | | $ | 500,000 | | Disability Benefits per year(1) | | | − | | | | − | | | | − | | | | − | | | $ | 120,000 | | | | − | | Total | | $ | − | | | $ | 714,556 | | | $ | 2,245,192 | | | $ | − | | | $ | 598,400 | | | $ | 770,400 | |
(1) Until no longer disabled or Social Security retirement age. |
Mark J. Airola Executive Compensationand Benefits | | Voluntary Termination on 12/31/14 | | | Voluntary Termination for Good Reason or Termination without Cause on 12/31/14 | | | Termination due to Change in Control on 12/31/14 | | | Termination for Cause on 12/31/14 | | | Termination due to Disability on 12/31/14 | | | Termination due to Death on 12/31/14 | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | − | | | $ | 385,000 | | | $ | 770,000 | | | | − | | | $ | 192,500 | | | | − | | Short-term Incentive (65% of Base Salary) | | | − | | | $ | 250,250 | | | $ | 500,500 | | | | − | | | $ | 250,250 | | | $ | 250,250 | | Long-term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | | Annual Stock Options | | | − | | | | − | | | $ | 119,060 | | | | − | | | | − | | | | − | | Performance-based Restricted Shares | | | − | | | | − | | | $ | 262,340 | | | | − | | | | − | | | | − | | Time Based Restricted Shares | | | − | | | | − | | | $ | 1,001,385 | | | | − | | | | − | | | | − | | Benefits and Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | Outplacement | | | − | | | $ | 20,000 | | | $ | 10,000 | | | | − | | | | − | | | | − | | Health & Welfare Benefits | | | − | | | $ | 20,072 | | | $ | 26,762 | | | | − | | | | − | | | | − | | Life Insurance | | | − | | | | − | | | $ | 4,466 | | | | − | | | | − | | | | − | | Life Insurance Proceeds | | | − | | | | − | | | | − | | | | − | | | | − | | | $ | 500,000 | | Disability Benefits per year(1) | | | − | | | | − | | | | − | | | | − | | | $ | 120,000 | | | | − | | Total | | $ | − | | | $ | 675,322 | | | $ | 2,694,513 | | | $ | − | | | $ | 562,750 | | | $ | 750,250 | |
Executive Compensation and Benefits | | Voluntary Termination on 12/31/15 | | | Voluntary Termination for Good Reason or Termination without Cause on 12/31/15 | | | Termination due to Change in Control on 12/31/15 | | | Termination for Cause on 12/31/15 | | | Termination due to Disability on 12/31/15 | | | Termination due to Death on 12/31/15 | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | − | | | $ | 385,000 | | | $ | 770,000 | | | | − | | | $ | 192,500 | | | | − | | Short-term Incentive (65% of Base Salary) | | | − | | | $ | 250,250 | | | $ | 633,810 | | | | − | | | $ | 250,250 | | | $ | 250,250 | | Long-term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | | Annual Stock Options | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | Performance-based Restricted Shares | | | − | | | | − | | | $ | 240,229 | | | | − | | | | − | | | | − | | Time Based Restricted Shares | | | − | | | | − | | | $ | 379,595 | | | | − | | | | − | | | | − | | Benefits and Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | Outplacement | | | − | | | $ | 20,000 | | | $ | 10,000 | | | | − | | | | − | | | | − | | Health & Welfare Benefits | | | − | | | $ | 23,205 | | | $ | 30,940 | | | | − | | | | − | | | | − | | Life Insurance | | | − | | | | − | | | $ | 4,466 | | | | − | | | | − | | | | − | | Life Insurance Proceeds | | | − | | | | − | | | | − | | | | − | | | | − | | | $ | 500,000 | | Disability Benefits per year(1) | | | − | | | | − | | | | − | | | | − | | | $ | 120,000 | | | | − | | Total | | $ | − | | | $ | 678,455 | | | $ | 2,069,040 | | | $ | − | | | $ | 562,750 | | | $ | 750,250 | |
(1) Until no longer disabled or Social Security retirement age.
| Until no longer disabled or Social Security Retirement age.
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Jeffery L. Juergens Executive Compensationand Benefits | | Voluntary Termination on 12/31/14 | | | Voluntary Termination for Good Reason or Termination without Cause on 12/31/14 | | | Termination due to Change in Control on 12/31/14 | | | Termination for Cause on 12/31/14 | | | Termination due to Disability on 12/31/14 | | | Termination due to Death on 12/31/14 | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | − | | | $ | 360,000 | | | $ | 720,000 | | | | − | | | $ | 180,000 | | | | − | | Short-term Incentive (55% of Base Salary) | | | − | | | $ | 234,000 | | | $ | 468,000 | | | | − | | | $ | 234,000 | | | $ | 234,000 | | Long-term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | | Employment Stock Options | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | Annual Stock Options | | | − | | | | − | | | $ | 77,788 | | | | − | | | | − | | | | − | | Performance-based Restricted Shares | | | − | | | | − | | | $ | 199,462 | | | | − | | | | − | | | | − | | Time Based Restricted Shares | | | − | | | | − | | | $ | 1,338,128 | | | | − | | | | − | | | | − | | Benefits and Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | Outplacement | | | − | | | $ | 20,000 | | | $ | 10,000 | | | | − | | | | − | | | | − | | Health & Welfare Benefits | | | − | | | $ | 16,077 | | | $ | 21,436 | | | | − | | | | − | | | | − | | Life Insurance | | | − | | | | − | | | $ | 6,201 | | | | − | | | | − | | | | − | | Life Insurance Proceeds | | | − | | | | − | | | | − | | | | − | | | | − | | | $ | 840,000 | | Disability Benefits per year(1) | | | − | | | | − | | | | − | | | | − | | | $ | 120,000 | | | | − | | Total | | $ | − | | | $ | 630,077 | | | $ | 2,841,015 | | | $ | − | | | $ | 534,000 | | | $ | 1,074,000 | |
(1)
| Until no longer disabled or Social Security Retirement
Executive Compensation and Benefits | | Voluntary Termination on 12/31/15 | | | Voluntary Termination for Good Reason or Termination without Cause on 12/31/15 | | | Termination due to Change in Control on 12/31/15 | | | Termination for Cause on 12/31/15 | | | Termination due to Disability on 12/31/15 | | | Termination due to Death on 12/31/15 | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | − | | | $ | 360,000 | | | $ | 720,000 | | | | − | | | $ | 180,000 | | | | − | | Short-term Incentive (65% of Base Salary) | | | − | | | $ | 234,000 | | | $ | 881,370 | | | | − | | | $ | 234,000 | | | $ | 234,000 | | Long-term Incentives: | | | | | | | | | | | | | | | | | | | | | | | | | Annual Stock Options | | | − | | | | − | | | | − | | | | − | | | | − | | | | − | | Performance-based Restricted Shares | | | − | | | | − | | | $ | 182,889 | | | | − | | | | − | | | | − | | Time Based Restricted Shares | | | − | | | | − | | | $ | 553,275 | | | | − | | | | − | | | | − | | Benefits and Perquisites: | | | | | | | | | | | | | | | | | | | | | | | | | Outplacement | | | − | | | $ | 20,000 | | | $ | 10,000 | | | | − | | | | − | | | | − | | Health & Welfare Benefits | | | − | | | $ | 17,361 | | | $ | 23,148 | | | | − | | | | − | | | | − | | Life Insurance | | | − | | | | − | | | $ | 6,202 | | | | − | | | | − | | | | − | | Life Insurance Proceeds | | | − | | | | − | | | | − | | | | − | | | | − | | | $ | 840,000 | | Disability Benefits per year(1) | | | − | | | | − | | | | − | | | | − | | | $ | 120,000 | | | | − | | Total | | $ | − | | | $ | 631,361 | | | $ | 2,376,884 | | | $ | − | | | $ | 534,000 | | | $ | 1,074,000 | |
(1) Until no longer disabled or Social Security retirement age. |
Retirement, Disability and Death
An executive officer who retires will be entitled to pay through the last day worked and 401(k) distributions. An executive officer who becomes disabled will be entitled to pay through the last day worked, disability benefits, 401(k) distributions and accidental dismemberment benefits, if applicable. The beneficiary of an executive officer who dies will be entitled to pay through the executive’s last day worked, 401(k) distributions and life insurance proceeds. The impact of an employee’s retirement, disability or death on outstanding options can vary depending on the stock option plan under which the grants were made. Under our 2006 Plan as well as the proposed 2015 Employee Equity Incentive Plan, upon termination of employment by reason of death or permanent disability, all vested options outstanding may be exercised in full at any time during the period of one year following termination of employment. Upon termination of employment by reason of retirement, all vested options may be exercised in full at any time during the period of 90 days following termination of employment. Except as otherwise provided by the Compensation Committee in accordance with the 2006 Plan, any unvested restricted stock awards will forfeit if the employee’s employment is terminated due to death or a disability that entitles the employee to receive benefits under our long-term disability plan.
To help us attract more experienced, mid to late career talent, in April 2015 the Compensation Committee of the Board adopted a Retirement Policy applicable to all U.S. employees, excluding NEOs (the Policy is expected to be modified over time to include employees of other countries) to provide for a retirement treatment that is more advantageous for longer tenured employees, who are nearing retirement. Eligibility for retirement under this Policy is determined based on a combination of metrics, including duration of incumbency and age. These changes are effective withwere reflected in the awards granted in 2015.2015, but are not applicable to awards issued before that date. In addition, these changes will help us better manage our succession planning and to provide career advancement opportunities for developing talent. Currently, grantees forfeit all unvested awards and stock options upon retirement, and have 90 days to exercise vested stock options. In accordance with this newUnder the Retirement Policy, time-based restricted stock or restricted stock units outstanding at the time of retirement will continue to vest according to the vesting schedule. To mitigate the accelerated income tax impact to the grantee upon becoming retirement eligible, we intend to grant restricted stock units in lieu of restricted stock awards. Stock options granted will also continue to vest according to the original vesting schedule and will allow retirees to exercise through the full original term of the awards. During the continued vesting period, the Company maintains the right to claw back unvested awards in the event of a violation of a non-compete or non-solicit provisionsnon-solicitation agreement or other restrictive covenants. For performance-based restricted stock units, the award will be based on actual performance determined at the end of the performance period, but the number of units vesting will be prorated based on the number of full months in which the granteeretiree was employed.employed during the performance period.
Retirement eligibility under the Retirement Policy is defined as accumulating 70 or more “points”, calculated by adding the age of the employee to his/her full years of service. The minimum age for retirement eligibility under the Retirement Policy is 60 years. This same definition of retirement eligibility will be applied to the 2010 Annual Cash Incentive Plan, which refers to retirement benefits, but did not include, prior to the adoption of the Retirement Policy, a definition of retirement eligibility.
DIRECTORCOMPENSATION The Compensation Committee regularly reviews the compensation of non-employee directors. The compensation consultant provides the Compensation Committee with industry trends in board compensation and recommends retainers and/or fees based on the peer company proxy information as well as national board market data. The Compensation Committee then makes recommendations to the Board of Directors on the setting of Board compensation. The following table describes the current compensation arrangements with our non-employee directors: | | | Prior to March 1, 2016 | | | After March 1, 2016 | | Annual Cash Retainer Fee (Chairman of the Board) | | $ | 130,000 | | | $ | 130,000 | | | $ | 117,000 | | Annual Cash Retainer Fee (other than the Chairman of the Board) | | $ | 55,000 | | | $ | 55,000 | | | $ | 49,500 | | Additional Annual Cash Retainer Fee for Audit Committee Chair | | $ | 30,000 | | | $ | 30,000 | | | $ | 27,000 | | Additional Annual Cash Retainer Fee for Audit Committee Members | | $ | 15,000 | | | $ | 15,000 | | | $ | 13,500 | | Additional Annual Cash Retainer Fee for Other Committee Chairs | | $ | 20,000 | | | $ | 20,000 | | | $ | 18,000 | | Additional Annual Cash Retainer Fee for Other Committee Members | | $ | 10,000 | | | $ | 10,000 | | | $ | 9,000 | |
TheEffective March 1, 2016, the Board of Directors approved a reduction to the cash fees payable to our non-employee directors are for the fiscal year endedending December 31, 2014.2016. The Board has approved this reduction in consideration of our numerous cost reduction initiatives, which included significant headcount reductions, a 10% reduction in the base salaries of our NEOs, and pay-cuts throughout the organization. All of the non-employee directors’ fees are paid on a quarterly basis (excluding the Chairman of the Board), and all directors (including the Chairman of the Board) are reimbursed for travel expenses incurred in attending Board and committee meetings. Employee directors receive no additional cash consideration for serving as directors or committee members.
Grants under Non-Employee Directors’ Restricted Stock Plan
Grants under Non-Employee Directors’ Restricted Stock Plan |
In June 2014, the stockholders approvedUnder the 2014 Non-Employee Director’s Restricted Stock Plan (“2014 Plan”) to replace the Amended and Restated Non-Employee Directors’ Restricted Stock Plan (the “2004 Plan”). The 2014 Plan, similar to the 2004 Plan (as amended), provides that the number of shares granted to each Director upon initial and annual election to the Board is based on a pre-determined dollar value (as defined in the 2014 Plan). For 2014,2015, the pre-determined dollar value for determining the numbers of restricted shares granted was set at $150,000, except for the Chairman of the Board who received an annual grant of restricted shares equal to $170,000, the same level as in 2013.2014. The vesting of the restricted stock remains at one year.
COMPENSATION OF DIRECTORS
Name | | Fees Earned or Paid in Cash ($) | | Stock Awards ($)(1) | | | Option Awards ($)(2) | | | Total | | David C. Anderson | | $ | 125,833 | (3) | | $ | 169,994 | | | | — | | | $ | 270,827 | | Anthony J. Best | | $ | 78,971 | | | $ | 149,998 | | | | — | | | $ | 228,969 | | Jerry W. Box | | $ | 54,167 | | | | — | | | | — | | | $ | 54,167 | | G. Stephen Finley | | $ | 105,000 | | | $ | 149,998 | | | | — | | | $ | 254,998 | | Roderick A. Larson | | $ | 78,971 | | | $ | 149,998 | | | | — | | | $ | 228,969 | | James W. McFarland, Ph.D. | | $ | 97,500 | | | $ | 149,998 | | | | — | | | $ | 247,498 | | Gary L. Warren | | $ | 100,000 | | | $ | 149,998 | | | | — | | | $ | 249,998 | |
Name | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($)(1) | | | Option Awards ($)(2) | | | Total | | David C. Anderson | | $ | 130,000 | (3) | | $ | 169,992 | | | | — | | | $ | 270,827 | | Anthony J. Best | | $ | 97,500 | | | $ | 149,994 | | | | — | | | $ | 228,969 | | G. Stephen Finley | | $ | 105,000 | | | $ | 149,994 | | | | — | | | $ | 254,998 | | Roderick A. Larson | | $ | 90,000 | | | $ | 149,994 | | | | — | | | $ | 228,969 | | James W. McFarland, Ph.D. | | $ | 92,500 | | | $ | 149,994 | | | | — | | | $ | 247,498 | | Gary L. Warren | | $ | 100,000 | | | $ | 149,994 | | | | — | | | $ | 249,998 | |
(1) | Represents the aggregate grant date fair value for restricted stock awards granted to the non-employee directors in 2014.2015. The grant date fair value of the restricted stock awarded in 2014,2015, as determined pursuant to ASC Topic 718, was $11.24$9.00 per share. See Note 12,11, “Stock Based Compensation and Other Benefit Plans,” in the Notes to Consolidated Financial Statements included in the Annual Report on Form 10-K for fiscal year ended 2014,2015, for the relevant assumptions used to determine the valuation of our stock and option awards. |
| | (2) | The following are the aggregate number of options outstanding under the 2004Amended and Restated Non-Employee Directors’ Restricted Stock Plan that have been granted to each of our non-employee directors as of December 31, 2014:2015: Dr. McFarland — 20,000 options and Mr. Warren — 20,000.10,000 options. Messrs. Best, Finley, Larson and Warren and Dr. McFarland each have 13,34516,666 shares of restricted stock outstanding which will fully vest May 22, 201518, 2016 and Mr. Anderson currently has 15,12418,888 shares of restricted stock outstanding which will fully vest May 22, 2015.18, 2016. |
| | (3) | Amount shown includes a payment of $25,000$10,833 to Mr. Anderson in December 20132014 earned for his service to the Board for the first quarter of 2014.January 2015. |
EQUITYCOMPENSATION PLAN INFORMATION The following table sets forth certain information with respect to the equity compensation plans maintained by us as of December 31, 2014,2015, under which our equity securities may be issued in the future, and with respect to individual compensation arrangements as of December 31, 2014.2015. Plan Category | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) | | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) | | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) | | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) | | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) | | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c) | | Equity compensation plans approved by stockholders | | | 3,415,838 | (1) | | $ | 7.70 | | | | 3,832,974 | (2) | | | 4,012,265 | (1) | | $ | 7.61 | | | | 4,334,238 | (2) | Equity compensation plans not approved by stockholders | | | — | | | $ | — | | | | — | | | | — | | | $ | — | | | | — | | Total | | | 3,415,838 | | | $ | 7.70 | | | | 3,832,974 | | | | 4,012,265 | | | $ | 7.61 | | | | 4,334,238 | |
(1) | Includes options issued under the 2008 Employee Stock Purchase Plan, the Amended and Restated Non-Employee Directors’ Restricted Stock Plan, 2006 Plan, and the 20062015 Plan. | | |
(2) | Includes 667,212542,780 shares available for issuance under the 2008 Employee Stock Purchase Plan, 918,151815,933 shares available for issuance under the 2014 Non-Employee Directors’ Restricted Stock Plan and 2,247,6112,975,525 shares available for issuance under the 20062015 Plan. IfThe table does not include information regarding the proposed amendment to the 2015 Employee Equity Incentive Plan is approved by our stockholders, no further awards willto be made underconsidered at the 2006 Plan.2016 Annual Meeting. |
PROPOSAL PROPOSAL NO. 2 ADVISORY VOTE ON EXECUTIVE COMPENSATION The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) allows our stockholders to vote to approve, on an advisory or non-binding basis, the compensation of our NEOs as disclosed in this proxy statement in accordance with SEC rules. Based on the stockholder advisory vote on the frequency of conducting an advisory vote on the compensation of our NEOs that took place at our 2011 Annual Meeting, the Board determined to hold the advisory vote on the compensation of our NEOs annually until the next stockholder vote on the frequency of such advisory vote. Thus, our stockholder advisory vote to approve the compensation of our NEOs occurs annually. As discussed in the Compensation Discussion and Analysis, our compensation philosophy and objectives are designed to attract, motivate and retain key executives needed to implement our business strategy. We believe that aligning the Company’s short-term and long-term performance with executive compensation is crucial to the Company’s long-term success. We encourage you to read the Compensation Discussion and Analysis, along with the compensation tables and related narrative discussion contained in this proxy statement. The Compensation Discussion and Analysis discusses our executive compensation philosophy and programs and explains the compensation decisions relating to the NEOs. In particular, stockholders should note the following: | ●
| ● | Our compensation program places a significant portion of each NEO’s compensation at risk through the use of performance-based pay; |
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| ● | The Compensation Committee established stock ownership guidelines for NEOs in order to link the interests of management and our stockholders; and |
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| ● | We have further aligned the interests of our stockholders and NEOs by providing a significant portion of their compensation in the form of equity awards thereby ensuring that a portion of our executive compensation is directly determined by appreciation in our stock price and earnings per share growth. |
The Compensation Committee and the Board of Directors believe that the policies and programs are effective in implementing our compensation philosophy and are commensurate with the performance and strategic position of the Company. This advisory vote is not intended to address any specific element of compensation but rather relates to the overall compensation of our NEOs, as described in this proxy statement. Although this vote is advisory and therefore the outcome of this vote is non-binding on the Company or the Board of Directors, the Compensation Committee of the Board of Directors will consider your decision when setting future compensation for our NEOs. This advisory stockholder vote, commonly known as “say-on-pay,” gives our stockholders the opportunity to approve or not approve our compensation policies and programs for our NEOs through the following resolution: “RESOLVED, that the stockholders of Newpark Resources, Inc. APPROVE, on an advisory basis, the compensation of the named executive officers as disclosed in the proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and related narrative discussions.” The Board of Directors unanimously recommends a vote “FOR” approving the executive officer compensation, as disclosed in this proxy statement. PROPOSALPROPOSAL NO. 3 APPROVAL OF AN AMENDMENT TO THE ADOPTION OF 2015 EMPLOYEE EQUITY INCENTIVE PLAN Introduction
The 2015 Employee Equity Incentive Plan (the “2015 Plan”) was initially adopted by the Board of Directors on April 6, 2015, subject to approvaland approved by the stockholders at the 2015 Annual Meeting. The 2015 Plan enables the Compensation Committee to grant to key employees, including executive officers and other corporate and divisional executives, of the Company and its subsidiaries a variety of forms of equity-based compensation, including grants of options to purchase shares of common stock, shares of restricted common stock, restricted stock units, stock appreciation rights, other stock-based awards, and performance-based awards. The maximum number of shares of common stock currently authorized for issuance under the 2015 Plan is set at 6,000,000 shares. As of December 31, 2015, approximately 2,975,525 shares of common stock remained available for grants under the 2015 Plan. The Board of Directors believes that the 2015 Plan and the equity awards available under the plan are important to key elements of our compensation philosophy: pay-for-performance including tying our executive’s and employee’s pay opportunities to variable compensation whose long-term value depends upon our stock price; and, stockholder alignment by closely aligning our executives’ and employees’ compensation opportunities with the interests of our stockholders. The 2015 Plan enables the Compensation Committee to grant to key employees, including executive officers and other corporate and divisional executives,recent decline in our industry has provided significant challenges with employee retention. As we implement cost reduction measures, equity compensation becomes an even more important component of the Company and its subsidiaries a variety of forms of equity-based compensation, including grants of options to purchase shares of common stock, shares of restricted common stock, restricted stock units, stock appreciation rights, other stock-based awards, and performance-based awards.employee compensation. TheOn March 22, 2016 our Board of Directors recommends that stockholders vote “FOR” the adoption ofauthorized, subject to stockholder approval, an amendment to the 2015 Plan in order to assure that(i) increase the Company will continue to have the ability to attract, retain and motivate individuals of exception ability.
Summary of Sound Governance Features of the 2015 Plan
The Board of Directors and Compensation Committee believe the 2015 Plan contains several features that are consistent with the interests of our stockholders and sound corporate governance practices, including the following:
No “evergreen” provision. The number of shares of our common stock available for issuance under the 2015 Plan by 1,800,000 shares, (ii) to decrease the fungible share counting ratio for awards to be granted in stock (other than an award that is fixeda stock option or similar award) from 1.85 to 1.78, and (iii) add a “double trigger” vesting provision to apply if outstanding awards under the 2015 Plan are assumed or replaced in connection with a change in control of the Company. The change to the fungible share counting ratio means that, for each share of stock that is granted pursuant to a full value award, such as restricted stock awards, restricted stock units and performance shares settled in stock, it will not adjust based upongenerally be counted against the numbersaggregate share limit as 1.78 shares, instead of 1.85 shares as currently provided under the 2015 Plan.
If approved by the stockholders, the request to increase the number of shares outstanding.for future issuance under the 2015 Plan will contribute to an additional potential dilution of approximately 1.9%. This additional potential dilution was calculated by dividing the requested increase to the share reserve of 1,800,000 by: (i) the total number of shares available for issuance under the 2015 Plan prior to its amendment, (ii) all unvested shares and unexercised stock options previously awarded and outstanding under the 2015 Plan and any prior plan, and (iii) the total number of shares of outstanding common stock of the Company as of March 18, 2016.1 FungibleIn considering this proposal, the stockholders should also be aware that the average number of shares granted under all long-term incentive plans over the last 3 fiscal years, divided by the number of shares outstanding, is approximately 2.1%. Given market volatility and challenging industry conditions, it is difficult to estimate how many years of grants will be provided by the shares remaining after plan approval. We believe that the requested allocation is critical over the next twelve months to ensuring our ability to attract and retain key talent and to provide competitive reward opportunities that are aligned with our shareholders’ interests.
1 The share counting. The 2015 Plan includesamounts set forth above represents the actual number of shares and do not reflect the fungible share counting withmethodology referenced above and in the effect that“Shares Available for Awards” section. Additionally, unvested shares and unexercised stock options were counted assuming such shares will become vested and such stock appreciation rightsoptions will reducebecome exercised. Summaryof the Proposed Amendments to the 2015 Plan |
If approved by our stockholders, the number of available shares on a2015 Plan, as amended by the proposed amendments (the “Amended 2015 Plan”), will be set forth in Amendment No. 1 to 1 basis, while full value awards will reduce the numberNewpark Resources, Inc. 2015 Employee Equity Incentive Plan (the “Amendment”) attached hereto asAppendix A. The following is a summary of available shares on a 1.85the proposed amendments to 1 basis.the 2015 Plan. No liberal change in control definition. The change in control definition in the 2015 Plan is not a “liberal” definition and, for example, would not be achieved merely upon stockholder approval of a transaction. A change in control must actually occur in order for the change in control provisions in the 2015 Plan to be triggered.
Stock option exercise prices and SAR grant prices will not be lower than the fair market value of the grant date. The 2015 Plan prohibits granting stock options with exercise prices and SARs with grant prices lower than the fair market value of a share of our common stock on the grant date, except in connection with the issuance or assumption of awards in connection with certain mergers, consolidations, acquisitions of property or stock or reorganizations.
No repricing or exchange without stockholder approval. The 2015 Plan prohibits the repricing of outstanding stock options or stock appreciation rights, or the cancellation of outstanding stock options or stock appreciation rights for cash or awards with an exercise price less than the cancelled award.
Minimum Vesting for Awards to Employees. The 2015 Plan provides that awards are generally subject to a minimum one-year vesting requirement.
“Clawback” provisions. The 2015 Plan contains “clawback” provisions, which provide that to the extent required by applicable law (including without limitation Section 954 of the Dodd-Frank Act), awards shall be subject to clawback, forfeiture or similar requirement.
Summary of the 2015 Plan
Summary of the Amended 2015 Plan |
The following description of the Amended 2015 Plan is only a summary of certain provisions thereof and is qualified in its entirety by reference to its full text, a copy of which is attached asAnnex AAppendix B to this Proxy Statement and the Amendment is set forth inAppendixA hereto, and should be read in conjunction with the following summary. In the event the proposed Amendment is not approved, the 2015 Plan as it currently exists will remain in effect. Purpose. The purpose of the Amended 2015 Plan is to assist the Company in attracting, retaining and motivating designated employees of the Company and its subsidiaries, and to increase their interest in the success of the Company in order to promote the creation of long-term value for our stockholders by closely aligning the interests of such employees with those of our stockholders. Administration. The Amended 2015 Plan is administered by the Compensation Committee, all of whose members are “non-employee directors” as that term is defined in Rule 16b-3 promulgated under the Exchange Act, “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code and “independent directors” under the corporate governance rules of the NYSE. The members of the Compensation Committee, as of the date of this Proxy Statement are James W. McFarland (Chairman), Anthony J. Best (Chairman), G. Stephen Finley, Roderick A. Larson, James W. McFarland, PhD and Gary L. Warren. Members of the Compensation Committee are not eligible to receive awards under the Amended 2015 Plan. The Compensation Committee has complete authority, subject to the express provisions of the Amended 2015 Plan, to, among other things, (i) approve granting awards to our employees and the employees of our subsidiaries, (ii) determine the number of shares subject to awards to be granted to employees, (iii) set the terms and conditions of the awards, (iv) grant waivers of conditions and remove or adjust any restrictions and conditions upon the awards or otherwise amend or terminate an outstanding award, subject, in certain circumstances, to the award holder’s consent, (v) interpret and administer the Amended 2015 Plan, (vi) adopt, amend, modify or rescind rules, regulations, procedures and forms related to the Amended 2015 Plan, (vii) interpret, administer, correct any defect, supply any omission or reconcile any inconsistency in the Amended 2015 Plan or any award agreement or related instrument or agreement thereunder, (viii) determine whether an award has been earned, (ix) authorize any person to execute, on behalf of the company, any agreement or document required to carry out the purposes of the plan, and (x) make all other determinations, deemed necessary or desirable for the administration of the Amended 2015 Plan. Any of the powers and responsibilities of the Compensation Committee may be delegated to a subcommittee. These powers and responsibilities also may be delegated, subject to the provisions of the Amended 2015 Plan and to the extent permitted by applicable law, to a committee consisting of one or more members of the Board of Directors or one or more officers of the Company, subject to terms that the Compensation Committee shall determine in any delegating resolutions. The Compensation Committee will maintain ultimate responsibility for, and control of the operation of the Amended 2015 Plan. At least annually, the Compensation Committee, in conjunction with the Audit Committee, will conduct or cause the conduct of an audit of the operation of the Amended 2015 Plan to verify that it has been operated and awards have been documented and maintained by our officers in accordance with the directions of the Compensation Committee. Eligibility. Only our employees and the employees of our subsidiaries are eligible to participate in the Amended 2015 Plan. Non-employee directors and consultants are not eligible to receive awards under the Amended 2015 Plan. In selecting participants in the Amended 2015 Plan, consideration is given to factors such as employment position, duties and responsibilities, ability, productivity, length of service, morale, interest in the company and supervisor recommendations, for both existing and future employees as applicable. Awards may be granted to the same employee on more than one occasion. Each award will be evidenced by an agreement in a form (which may be written or electronic) approved by the Compensation Committee. Shares Available for Awards. Subject to certain adjustments set forth in the Amended 2015 Plan, the maximum number of shares of common stock that may be issued or awarded under the Amended 2015 Plan will be 6,000,0007,800,000 if the 2015 PlanAmendment proposed herein is approved by the stockholders. As of March 18, 2016, grants totaling 1,933,784 shares were outstanding under the 2015 Plan. For purposes of implementing the limitation on the maximum number of shares of common stock that may be covered by awards granted under the Amended 2015 Plan, an award of an option or a stock appreciation right in respect of one share of common stock is deemed to be an award of one share of common stock on the date of grant. Any other award granted under the Amended 2015 Plan that is settled by the issuance of common stock is considered a “full value award” under the provisions of the Amended 2015 Plan and is counted against the number of shares available for awards under the plan as follows. An award of one share of restricted stock, a restricted stock unit or other stock-based award is deemed to be an award of the 1.85 shares of common stock for every one share granted on the date of the grant. With respect to a performance award that is to be settled in shares of common stock, the value of the maximum benefits that may be paid under the performance awards is divided by the fair market value per share of common stock as of the date of grant of the performance award, and each share resulting from such computation is deemed to be an award of 1.85 shares of common stock on the date of grant. follows: | ● | An award of one share of restricted stock, a restricted stock unit or other stock-based award is deemed to be an award of the 1.78 shares of common stock for every one share granted on the date of the grant. |
| ● | With respect to a performance award that is to be settled in shares of common stock, the value of the maximum benefits that may be paid under the performance awards is divided by the fair market value per share of common stock as of the date of grant of the performance award, and each share resulting from such computation is deemed to be an award of 1.78 shares of common stock on the date of grant. |
To the extent shares cease to be issuable under an award made under the Amended 2015 Plan other than because of the exercise of the award or the vesting of a restricted stock award or similar award, such shares become available under the Amended 2015 Plan for the grant of additional awards in the same amount as they were counted against the limit on the date of grant. Shares that are issued or delivered upon the exercise or settlement of an award or that cease to be restricted stock upon the vesting of an award of restricted stock, shall no longer be subject to any further grant under the Amended 2015 Plan. As provided in the Amended 2015 Plan, the following shares shall be considered to have been issued under the Amended 2015 Plan and may not again be made available for issuance as awards under the Amended 2015 Plan: (a) shares not issued or delivered as a result of the net settlement of an outstanding stock option or stock appreciation right; (b) shares withheld in satisfaction of the grant or exercise price or tax withholding requirements, from shares that would otherwise have been delivered pursuant to a stock option or stock appreciation right; or (c) shares repurchased on the open market with the proceeds of the stock option exercise price. All shares subject to a stock appreciation right, to the extent exercised, are considered issued regardless of the actual number of shares issued to the participant. In addition, shares subject to awards issued in assumption of, or in substitution for, any outstanding awards of any entity acquired in any form of business combination of the company or any of our subsidiaries do not reduce the number of shares available for issuance under the Amended 2015 Plan. Shares issued under the Amended 2015 Plan may be either authorized and unissued shares or treasury shares. Amendment and Termination. Except with respect to awards then outstanding, if not sooner terminated, the Amended 2015 Plan will terminate on, and no further awards may be made, after April 6, 2025. The Board of Directors may at any time suspend, amend or terminate the Amended 2015 Plan. Stockholder approval is required, however, to increase the number of shares of common stock which may be issued (except for adjustments under anti-dilution clauses) or to effectuate a change for which stockholder approval is required: (i) for the Amended 2015 Plan to continue to qualify under Section 422 of the Internal Revenue Code; (ii) under the corporate governance standards of any national securities exchange or automated quotation system applicable to the Company; or (c)(iii) for awards to be eligible for the performance-based compensation exception under Section 162(m) of the Internal Revenue Code. The Amended 2015 Plan authorizes the Compensation Committee to include in awards provisions which permit the acceleration of vesting under certain circumstances. Repricing. Except in connection with a corporate transaction (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding awards may not be amended to reduce the exercise price of outstanding stock options or stock appreciation rights or cancel outstanding stock options or stock appreciation rights in exchange for cash, other awards or stock options or stock appreciation rights with an exercise price that is less than the exercise price of the original stock options or stock appreciation rights without stockholder approval. Delivery and Execution of Electronic Documents. To the extent permitted by applicable law, the Company may: (a) deliver by email or other electronic means (including posting on a Web site maintained by the Company or by a third party under contract with the Company) all documents relating to the Amended 2015 Plan or any award thereunder (including prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including annual reports and proxy statements), and (b) permit participants to electronically execute applicable plan documents (including award agreements and any required notices under the Amended 2015 Plan) in a manner prescribed by the Committee. Types and Maximum Number of Awards
Typesand Maximum Number of Awards |
Awards under the Amended 2015 Plan may be in the form of stock options (which may be incentive stock options or non-qualified stock options), restricted stock, restricted stock units, stock appreciation rights, and other stock-based awards. The Amended 2015 Plan imposes individual limitations on the number of shares that may be covered by awards in order to comply with Section 162(m) of the Internal Revenue Code. The maximum number of shares that may be granted in the form of stock options and stock appreciation rights under the Amended 2015 Plan to any one participant in any calendar year is 1,000,000 shares. In addition, the terms of awards (other than options and stock appreciation rights) that are intended to qualify for the performance-based compensation exception under Section 162(m) of the Internal Revenue Code shall be such that the maximum amount of compensation that may be recognized under such awards by any participant in any calendar year, ignoring for this purpose any acceleration resulting from the participant’s death or disability or from a change in control, may not exceed 1,000,000 shares, if such awards are settled in shares, or the fair market value of that same number of shares if such awards are settled in cash. Stock Options. Stock options granted under the Amended 2015 Plan may be either incentive stock options or non-qualified stock options. The exercise price of each stock option must be at least equal to the fair market value of the common stock on the date the stock option is granted. The determination of fair market value of the common stock is based on the closing price for our common stock on the principal exchange or over-the-counter market on which such shares are trading. The stock option term is for a period of 10 years from the date of grant or such shorter period as is determined by the Compensation Committee. Each stock option may provide that it is exercisable in full or in periodic installments or upon the satisfaction of such performance criteria as the Compensation Committee may determine, and each stock option is exercisable from the date of grant or any later date specified in the option, all as determined by the Compensation Committee. The Compensation Committee’s authority to take certain actions under the Amended 2015 Plan includes authority to accelerate vesting schedules and to otherwise waive or adjust restrictions applicable to the exercise of stock options. Each stock option may be exercised in whole or in part (but not as to fractional shares) by delivering a notice of exercise to us, together with payment of the exercise price. The exercise price may be paid in cash, by cashier’s or certified check or, if the Compensation Committee permits, by surrender of shares of common stock owned by the holder of the option, by cashless exercise, or by a combination thereof. Except as otherwise disclosed below or determined by the Compensation Committee either at the time of grant or thereafter, an optionee may not exercise a stock option unless from the grant date to the exercise date the optionee remains continuously in our employ. If the optionee’s employment terminates by reason of death or disability, the stock options then currently exercisable remain exercisable for 12 months after termination of employment, subject to earlier expiration at the end of their fixed term. If the optionee’s employment terminates by reason other than death or disability, or a termination for cause, the stock options then currently exercisable remain exercisable for 90 days after termination of employment (except that the 90-day period is extended to 12 months if the optionee dies during this 90-day period), subject to earlier expiration at the end of their fixed term. If the optionee’s employment is terminated for cause, the stock options held by the optionee, whether vested or not, will terminate concurrently with the first discovery by us of any reason for the optionee’s termination for cause and will not be exercisable thereafter. An employee may receive incentive stock options covering shares of common stock of any value, provided that the value of all such option shares subject to one or more incentive stock options which are first exercisable in any one calendar year may not exceed the maximum amount permitted under Section 422 of the Internal Revenue Code (currently $100,000). In addition, in the case of incentive stock options granted to employees owning more than ten percent (10%) of the total combined voting power of the company and its affiliates, the exercise price at which such option shares may be purchased upon the exercise of such incentive stock options shall be equal to one hundred ten percent (110%) of the fair market value per share of common stock at the time of grant, and such incentive stock option may not be exercised later than five years after the date of grant. Restricted Stock. The Compensation Committee may grant to any participant common stock, which we refer to as restricted stock, subject to forfeiture and vesting restrictions, restrictions on transferability and other restrictions that will apply to the award of restricted stock. Each participant who is awarded restricted stock will be required to enter into an agreement with us, in a form specified by the Compensation Committee, agreeing to the terms, conditions and restrictions of the grant and other matters consistent with the Amended 2015 Plan as the Compensation Committee determines appropriate. Generally, the restrictions on restricted stock will lapse over a period of time, which we refer to as the restriction period, as specified by the Compensation Committee and set forth in the award agreement. The Compensation Committee’s authority to take certain actions under the Amended 2015 Plan includes authority to accelerate vesting and to otherwise waive or adjust restrictions applicable to awards of restricted stock. The Compensation Committee will determine the manner in which the restricted stock granted under the Amended 2015 Plan will be evidenced. If certificates representing restricted stock are registered in the name of the participant, the Compensation Committee may require that those certificates bear an appropriate legend referring to the terms, conditions and restrictions applicable to the restricted stock, that we retain physical possession of the certificates, and that the participant deliver a stock power to us, endorsed in blank, relating to the restricted stock. Any uncertificated shares of restricted stock will be held at the Company’s transfer agent in book entry form or held for the benefit of the participant by a broker engaged by the Company to provide such services for the Amended 2015 Plan. Unless otherwise set forth in the award agreement, a participant holding restricted stock shall be entitled to receive (i) any regular cash distributions declared and paid with respect to shares subject to an award of restricted stock, and (ii) any shares distributed in connection with a stock split or stock dividend, and any other cash and property (including our securities and securities of other issuers) distributed as a dividend, with respect to shares subject to a restricted stock award. In the case of restricted stock, the vesting of which is conditioned only upon the continuous employment of, or provision of services by, the participant for a specified future period, such dividends and distributions shall be paid to the participant at the same time they are paid to our stockholders unless otherwise provided in the award agreement; provided that, if any such dividends or distributions are paid in shares or other securities, such shares or other securities shall be subject to the same restrictions and forfeiture conditions to the same extent as the restricted stock with respect to which such shares or other securities have been distributed. In the case of restricted stock, the vesting of which is conditioned on the achievement of performance criteria, such dividends and distributions shall be withheld by us and shall vest and be paid only if and to the extent, and at the time, the underlying shares of restricted stock shall vest. To the extent dividends or distributions are withheld with respect to shares of restricted stock that are forfeited, the dividends and distributions shall also be forfeited. The Compensation Committee generally may provide any other terms, conditions and restrictions with regard to the restricted stock that it deems appropriate and that are not inconsistent with the terms of the Amended 2015 Plan. Restricted Stock Units. The Compensation Committee may make awards of restricted stock units in amounts, at times and to such designated employees as the Compensation Committee may determine. A participant granted restricted stock units shall not have any of the rights of a stockholder with respect to the shares subject to the award of restricted stock units, including any right to vote or to receive other distributions on the shares, until the shares subject to the award are issued in the participant’s name in accordance with the terms of the applicable award agreement. At the time of grant of each award of restricted stock units, the Compensation Committee will determine the restriction period that will apply to the award and will specify the maturity date applicable to each grant of restricted stock units. During the restriction period, restricted stock units will be subject to restrictions on transferability, risk of forfeiture and other restrictions as the Compensation Committee may impose, which restrictions may lapse separately or in combination at such times, under such circumstances (including based on achievement of performance criteria or future service requirements or both), in installments or otherwise as the Compensation Committee may determine in its discretion. If the terms and conditions specified in the award agreement have not been satisfied by the end of the restriction period, the restricted stock units subject to the restriction period will become null and void, and the participant will forfeit all rights with respect to the award. Subject to the terms of the Amended 2015 Plan and award agreement, on the maturity date, we will deliver to the participant one share of common stock for each restricted stock unit scheduled to be issued on that date and not previously forfeited. If the award agreement so provides, a participant holding restricted stock units shall be entitled to receive, but only if, to the extent, and at the time that the restricted stock units vest and are settled, (i) any regular cash distributions declared and paid with respect to shares subject to a restricted stock unit, and (ii) any shares distributed in connection with a stock split or stock dividend, and any other cash and property (including our securities and securities of other issuers) distributed as a dividend, with respect to shares subject to an award of restricted stock. In the case of restricted stock units, the vesting of which is conditioned on the achievement of performance criteria, any such dividends or distributions shall be withheld and shall vest and be paid, without interest, only if and to the extent, and at the time, the restricted stock units shall vest. Dividends or distributions relating to any forfeited restricted stock units shall also be forfeited. The Compensation Committee generally may provide any other terms, conditions and restrictions with regard to the restricted stock units that it deems appropriate and that are not inconsistent with the terms of the Amended 2015 Plan. Stock Appreciation Rights. The Compensation Committee may make awards of stock appreciation rights in amounts, at times and to such designated employees as the Compensation Committee may determine. A stock appreciation right confers on the participant the right to receive in shares of common stock, cash or a combination thereof the value equal to the excess of the fair market value of one share of common stock on the date of exercise over the exercise price for the stock appreciation right, with respect to every share for which the stock appreciation right is granted. We refer to this value as the SAR settlement value. At the time of grant, the stock appreciation right must be designated by the Compensation Committee as either a tandem stock appreciation right or a stand-alone stock appreciation right. If not so designated, it will be deemed to be a stand-alone stock appreciation right. A tandem stock appreciation right is a stock appreciation right that is granted in tandem with a stock option and only may be granted at the same time as the stock option to which it relates. The exercise of a tandem stock appreciation right will cancel the related stock option for a like number of shares, and the exercise of the related stock option similarly will cancel the tandem stock appreciation right for a like number of shares. Except as specifically set forth in the Amended 2015 Plan or in the applicable award agreement, tandem stock appreciation rights will be subject to the same terms and conditions as apply to the related stock option. Except as specifically set forth in the Amended 2015 Plan or in the applicable award agreement, stand-alone stock appreciation rights will be subject to the same terms and conditions generally applicable to non-qualified stock options as set forth in the Amended 2015 Plan. The exercise price of each stock appreciation right will be determined by the Compensation Committee, but will not be less than the fair market value of the common stock on the date of grant. The term of each stock appreciation right is for a period of 10 years from the date of grant or such shorter period as is determined by the Compensation Committee. The Compensation Committee also determines the circumstances under which a stock appreciation right may be exercised, the method of exercise and settlement, and the form of consideration payable in settlement. Each stock appreciation right may be exercised in whole or in part (but not as to fractional shares) by delivering an executed notice of exercise (which maybe in electronic format) to us. The Compensation Committee may provide for stock appreciation rights to become exercisable at one time or from time to time, periodically or otherwise (including, without limitation, upon the satisfaction of performance criteria), as to such number of shares or percentage of the shares subject to the stock appreciation right as the Compensation Committee determines. Upon exercise, the participant will be entitled to receive the SAR settlement value for each share as to which the stock appreciation right has been exercised. We will pay the SAR settlement value in shares, in cash or a combination thereof, as determined by the Compensation Committee and the terms of the award. The Compensation Committee generally may provide any other terms, conditions and restrictions with regard to the stock appreciation rights that it deems appropriate and that are not inconsistent with the terms of the Amended 2015 Plan. Other Stock-Based Awards. The Compensation Committee may grant to eligible employees equity-based or equity-related awards not otherwise described in the Amended 2015 Plan, alone or in tandem with other awards, in such amounts and subject to such terms and conditions as the Compensation Committee shall determine. These other stock-based awards may (i) involve the transfer of restricted or unrestricted shares of common stock to participants, either at the time of grant or thereafter, or payment in cash or otherwise of amounts based on the value of shares of common stock, (ii) be subject to performance-based or service-based vesting requirements, (iii) be granted as, or in payment of, a bonus, or to provide incentives or recognize special achievements or contributions, (iv) be designed to comply with applicable laws of jurisdictions other than the United States, and (v) be designed to qualify for the performance-based compensation exception under Section 162(m) of the Internal Revenue Code; provided, that each such stock-based award must be denominated in, or have a value determined by reference to, a number of shares of common stock that is specified in the award agreement. In the case of other stock-based awards, the vesting of which is conditioned on the achievement of performance criteria, if the award agreement provides participants with dividend rights, any dividends or distributions shall be withheld and shall vest and be paid, without interest, only if and to the extent, and at the time, the other stock-based awards shall vest. Dividends or distributions relating to any forfeited other stock-based awards shall also be forfeited. Performance-Based Awards. The Compensation Committee may make an award pursuant to the Amended 2015 Plan conditioned upon the attainment of performance goals relating to one or more business criteria. At the beginning of the award period, the Compensation Committee will set forth the performance criteria based upon our business and financial objectives during the award period and a schedule describing the relationship between the achievement of such performance goals and the awards granted to participants. For purposes of awards that are intended to qualify for the performance-based compensation exception under Section 162(m) of the Internal Revenue Code, the performance criteria will (i) be objective business criteria and otherwise meet the requirements of Section 162(m), including the requirement that the level or levels of performance targeted by the Compensation Committee result in the achievement of performance goals being “substantially uncertain” as of the date of the grant, and (ii) relate to one or more of the following performance measures: | ●
| ● | earnings before or after deduction for all or any portion of interest, taxes, depreciation, amortization or other items, whether or not on a continuing operations or an aggregate or per share basis; |
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| ● | return on equity, investment, capital or assets; |
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| ● | one or more operating ratios; |
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| ● | borrowing levels, leverage ratios or credit ratings; |
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| stock price, growth in stockholder value relative to one or more stock indices or total stockholder return; |
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| ● | budget and expense management; |
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| ● | working capital turnover and targets; |
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| ● | sales of particular products or services, market penetration, geographic expansion or new concept development; |
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| ● | customer acquisition, expansion and retention; |
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| ● | acquisitions and divestitures (in whole or in part), joint ventures, strategic alliances, spin-offs, split-ups and the like; |
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| ● | reorganizations, recapitalizations, restructurings and financings (debt or equity); |
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| ● | transactions that would constitute a “change in control”; or |
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| | | ● | any combination of the foregoing. |
Performance criteria measures, and targets with respect thereto, determined by the Compensation Committee need not be based upon an increase, a positive or improved result or avoidance of loss. Any performance criteria may be used to measure the performance of the Company as a whole or with respect to any business unit, subsidiary or business segment of the company, either individually, alternatively or in any combination, and may be measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous period results or to a designated comparison group, in each case as specified by the Compensation Committee in the award. During the award period, the Compensation Committee may adjust the performance goals as it deems appropriate to compensate for, or reflect, certain situations which are set forth in the Amended 2015 Plan. Adjustments Upon Certain Events. In the event the Compensation Committee determines that any stock dividend, stock split, combination of shares, extraordinary dividend of cash or assets, merger, consolidation, spin-off, recapitalization (other than the conversion of convertible securities according to their terms), reorganization, liquidation, dissolution or other similar corporate change, or any other increase, decrease or change in our common stock without receipt or payment of consideration, affects the common stock, then the Compensation Committee will adjust, as it deems to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits made available under the Amended 2015 Plan, any or all of (i) the number and kind of shares of common stock, or other securities, with respect to which an award may be granted under the Amended 2015 Plan; (ii) the number and kind of shares of common stock subject to outstanding awards; (iii) the grant, exercise or other purchase price per share under any outstanding awards; and (iv) the terms and conditions of any outstanding awards. No such adjustments may change the value of the benefits available under a previously granted award (i) if the effect would be to increase the value of the benefits available under such award, without the approval of the stockholders if such is required by the Amended 2015 Plan or applicable laws, or (ii) if the effect would be to materially and adversely affect the value of the benefits available under such awards, without the participant’s consent to that adjustment. If a change in control occurs, unless otherwise provided in the award agreement or other employment, severance or change in control agreement approved by the Compensation Committee to which the a participant is a party, in which case such agreement shall control, the outstanding awards under the Amended 2015 Plan must be assumed or replaced by the successor entity in connection with the change in control. If the outstanding awards are assumed or replaced, then the vesting schedule will remain the same, subject to full acceleration if the employee’s employment after the change in control is terminated by the successor entity without “cause” or by the employee for “good reason” within 24 months from consummation of the change in control. However, if the outstanding awards under the Plan are not assumed or replaced by the successor entity in the change in control, then the Compensation Committee may provide for onehas the discretion to either partially or morewholly accelerate the vesting of the following actions or combination of actions with respect to some or all of the outstanding awards: (i) acceleration of the vesting and the time at which awards may be exercised; (ii) the assumption of awards or portion ofcancel the awards by any successor or survivor corporation, orin exchange for a parent or subsidiary thereof, or the substitution of awards covering the stock of any successor or survivor corporation, for then outstanding awards, with appropriate adjustmentscash payment to the number and kind of shares and grant; (iii) the mandatory surrender for cancellation of any outstanding awards and the purchase of the surrendered awards for any amount of cash, securities or other propertyemployee equal to the excess of thethen fair market value of the vested shares of common stock immediately prioraward, less any purchase or exercise price, except that for performance-based awards the Compensation Committee only has discretion to accelerate vesting to the change in control;extent the performance criteria are actually achieved, and (iv) the termination of any award, or portion thereof, concurrently with the closing or other consummation of the change in control transaction.if achievement is not determinable, then at target. A change in control in the Amended 2015 Plan is defined to include any of the following: | ●
| ● | any election of directors takes place and a majority of the directors in office following such election are individuals who were not nominated by a vote of two-thirds of the members of the Board of Directors or its nominating committee immediately preceding such election; |
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| ● | the Company effectuates a complete liquidation or a sale or disposition of all or substantially all of its assets unless immediately following any such sale or disposition of all or substantially all of its assets the individuals who were members of the Board of Directors of the Company immediately prior to such transaction continue to constitute a majority of the Board of Directors or other governing body of the surviving corporation or entity (or, in the case of an acquisition involving a holding company, constitute a majority of the Board of Directors or other governing body of the holding company) for a period of not less than twelve (12) months following the closing of such transaction; |
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| ● | one or more occurrences or events as a result of which any “person” becomes the beneficial owner, directly or indirectly, of 30% or more of the combined voting power of our then outstanding securities; or |
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| ● | a merger or consolidation of the Company with, or an acquisition by the Company of the equity interests or all or substantially all of the assets of, any other corporation or entity, other than a merger, consolidation or acquisition in which the individuals who were members of the Board of Directors of the Company immediately prior to such transaction continue to constitute a majority of the Board of Directors or other governing body of the surviving corporation or entity (or, in the case of an acquisition involving a holding company, constitute a majority of the Board of Directors or other governing body of the holding company) for a period of not less than twelve (12) months following the closing of such transaction. |
Notwithstanding the foregoing, with respect to any award subject to Section 409A of the Internal Revenue Code and payable upon a change in control, the term “change in control” shall mean any such event described above but only if it also constitutes a “change in control event” within the meaning of the applicable Treasury Regulations promulgated under Section 409A. For purposes of the above change in control discussion, and pursuant to Amendment No. 1 to the Amended 2015 Plan, the terms: | ● | “Cause" generally means any of the following: (i) the employee’s conviction by a court of competent jurisdiction of, or entry of a plea of guilty or nolo contendere for, an act on the employee’s part constituting a felony, dishonesty, willful misconduct or material neglect by the employee of his or her employment obligations to the Company that results in material injury to the Company; (ii) appropriation (or an overt act attempting to appropriate) of a material business opportunity of the Company by the employee; (iii) theft, embezzlement or other similar misappropriation of funds or property of the Company by the employee; or (iv) the failure of the employee to follow the reasonable and lawful written instructions or policy of the Company with respect to the services to be rendered and the manner of rendering such services by the employee, provided the employee has been given reasonable and specific written notice of such failure and opportunity to cure and no cure has been effected or initiated within a reasonable period of time, but not less than 90 days, after such notice. |
| ● | “Good reason” generally means any of the following: (i) the Company (or its successor) adversely changes the employee’s title or changes in any material respect the responsibilities, authority or status of the employee without prior notice and acceptance; (ii) the substantial or material failure of the Company (or its successor) to comply with its obligations under the Amended 2015 Plan or any other agreement that may be in effect that is not remedied within a reasonable time after specific written notice thereof by the employee to the Company; (iii) the diminution of the employee’s base salary; and (iv) requiring the employee to relocate more than 50 miles from his or her location of employment immediately prior to the change in control. However, “good reason” shall only exist in the prior (i) through (iv) if the employee has given reasonable and specific written notice to the Chief Executive Officer of such failure, the Company has been given a reasonable opportunity to cure, and no cure has been effected or initiated within a reasonable time after such notice. |
Transferability. Except as otherwise provided in the Amended 2015 Plan, no award and no right under the Amended 2015 Plan may be transferred other than by will or by the laws of descent and distribution, and during a participant’s lifetime, an award requiring exercise may be exercised only by such participant (or in the event of a disability, on behalf of such participant). Awards, other than incentive stock options and stock appreciation rights granted in tandem therewith, may be transferred to one or more transferees during the lifetime of the participant, and may be exercised by such transferee, only if and to the extent the transfers are permitted by the Compensation Committee in its sole discretion. Any attempted transfer of an award in violation of the Amended 2015 Plan is prohibited and will be ineffective. Effect of Adoption of 2015 Plan on Other Plans. If the 2015 Plan is approved by our stockholders, no further awards will be granted under the Company’s Amended and Restated 2006 Equity Incentive Plan (the “2006 Plan”); provided that all awards granted by the Company prior to the stockholder approval of the 2015 Plan shall remain in full force and effect and shall continue to be governed by the 2006 Plan.
New Plan Benefits
The actual amount of awards to be granted under the 2015 PlanAmendment is not determinable in advance because the size and type of awards to be made in any year is determined at the discretion of the Compensation Committee. In addition, the specific performance criteria and targets are selected each year by the Compensation Committee. Summary of Federal Income Tax Consequences
Summary of Federal Income Tax Consequences |
The following summary is intended as a general guide to the U.S. federal income tax consequences under current law for certain awards under the Amended 2015 Plan, and does not attempt to describe all possible federal or other tax consequences of participation in the Amended 2015 Plan or tax consequences based on particular circumstances. Tax Consequences to Participants
Tax Consequences to Participants |
Incentive Stock Options. Stock options granted under the Amended 2015 Plan are intended to qualify as incentive stock options within the meaning of Section 422 of the Internal Revenue Code, if so designated on the date of grant. Stock options that are not designated or do not qualify as incentive stock options are non-qualified stock options and are not eligible for the tax benefits applicable to incentive stock options. An optionee recognizes no gross income for federal income tax purposes (“taxable income”) upon the grant of an incentive stock option. In addition, the optionee will not recognize taxable income at the time of exercise of an incentive stock option if the optionee has been in our employ at all times during the period beginning on the date of grant and ending on the date three months before the date of exercise (longer if the optionee dies or becomes disabled), unless the alternative minimum tax rules apply. Upon the exercise of an incentive stock option, an amount equal to the excess of the fair market value of the option shares at the exercise date over the exercise price may be treated as alternative minimum taxable income for purposes of the alternative minimum tax. Gain recognized upon a disposition of the option shares generally will be treated as long-term capital gain as long as the shares are not disposed of within (i) two years after the date of grant of the incentive stock option and (ii) one year after the exercise date. If both of these conditions are not satisfied, the disposition is a “disqualifying disposition.” In that event, gain equal to the excess of the fair market value of the option shares at the exercise date over the exercise price generally will be taxed as ordinary income and any further gain will be taxed as long-term capital gain if the shares are held more than 12 months. Different rules apply if an optionee exercises an incentive stock option by surrendering shares of common stock which were previously acquired upon the exercise of an incentive stock option and with respect to which the optionee did not satisfy certain holding periods. Shares of common stock acquired upon the exercise of an incentive stock option by the payment of cash will have a basis equal to the exercise price of the stock option, plus any amount the participant is required to include as ordinary income from a disqualifying disposition of stock. Different rules apply if an optionee exercises an incentive stock option by surrendering previously owned shares of common stock. Incentive stock options exercised by an optionee who has not satisfied the applicable requirements as to continuous employment do not qualify for the tax treatment discussed above. Instead, the exercise of such options will be subject to the rules which apply to the exercise of non-qualified stock options. Non-QualifiedStock Options. An optionee recognizes no taxable income upon the grant of a non-qualified stock option. In general, upon the exercise of a non-qualified stock option, the optionee will recognize ordinary income in an amount equal to the excess of the fair market value of the option shares on the exercise date over the exercise price. Shares of common stock acquired upon the exercise of a non-qualified stock option by the payment of cash will have a basis equal to the exercise price of the stock option. Different rules apply if an optionee exercises a non-qualified stock option by surrendering previously owned shares of common stock. The optionee will be subject to income tax withholding at the time the optionee recognizes ordinary income (i.e., the exercise date). Generally, we will be entitled to a tax deduction at the same time the optionee recognizes income and in the same amount. Restricted Stock. The tax consequences of a grant of restricted stock depend upon whether or not the participant elects under Section 83(b) of the Internal Revenue Code to be taxed at the time of the grant. If no election is made under Section 83(b), the participant will not recognize taxable income at the time of the grant of the restricted stock. Instead, if the restrictions on the restricted stock lapse, the participant will recognize compensation taxable as ordinary income on the date the restrictions lapse in an amount equal to the fair market value of the underlying stock as of the same date, less the purchase price, if any, paid by the participant. If an election is made under Section 83(b), the participant will recognize compensation taxable as ordinary income at the time of the grant in an amount equal to the fair market value of the underlying stock (determined without regard to any of the restrictions) on the date of the grant, less the purchase price, if any, paid by the participant. If the restricted stock is forfeited before the restrictions lapse, the participant will generally not be entitled to a deduction. Restricted stock granted under the Amended 2015 Plan may or may not include rights to dividends payable on the underlying shares. In the case of restricted stock that includes this right, dividends are generally treated as ordinary income recognized at the time of their receipt. The participant will be subject to income tax withholding at the time when ordinary income (including any dividends taxed as ordinary income, other than dividends on restricted stock with respect to which an election was made under Section 83(b)) is recognized. Subject to the restrictions under Section 162(m)of the Internal Revenue Code, discussed below, generally we will be entitled to a tax deduction at the same time the participant recognizes ordinary income and in the same amount (excluding any dividends on restricted stock with respect to which an election was made under Section 83(b)). Gain or loss recognized on a disposition of the shares of common stock generally will qualify as long-term capital gain or loss if the shares have a holding period of more than 12 months. In the case of restricted stock, the holding period begins when the restrictions lapse if the participant did not make an election under Section 83(b) or, if the participant did make such an election, on the date of the grant of restricted stock. Restricted Stock Units. A participant will not recognize taxable income upon the grant of a restricted stock unit. Instead, if the restrictions under the restricted stock unit lapse, the participant will recognize compensation taxable as ordinary income on the date the underlying shares of stock are issued in settlement of the vested award, and the amount of such ordinary income will be equal to the fair market value of the underlying shares as of the same date The participant will be subject to income tax withholding at the time when the ordinary income is recognized. Subject to the Section 162(m) restrictions discussed below, generally the Company will be entitled to a tax deduction at the same time the participant recognizes ordinary income and in the same amount. Gain or loss recognized on a disposition of the shares of common stock generally will qualify as long-term capital gain or loss if the shares have a holding period of more than 12 months. The holding period for shares from restricted stock units begins upon receipt of the shares after the restrictions on the restricted stock units have lapsed. Stock Appreciation Rights. A participant does not recognize taxable income upon the grant of a stock appreciation right. When a stock appreciation right is exercised, in general, the participant will recognize compensation taxable as 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. The participant will be subject to income tax withholding at the time when ordinary income is recognized. Generally, we will be entitled to a tax deduction at the same time the participant recognizes ordinary income and in the same amount. Other Stock-Based Awards. The timing of taxable income to a participant who is granted other stock-based awards depends on the individual award and whether any restrictions or conditions are placed upon the award when granted. Performance Based Awards. A participant will not recognize taxable income upon the grant of a performance based award. Rather, taxation will be postponed until the performance based award becomes payable, generally upon the participant’s attainment of performance criteria. At that time, the participant will recognize compensation taxable as ordinary income in an amount equal to the value of the amount payable. The participant will be subject to income tax withholding when ordinary income is recognized and, generally, we will be entitled to a tax deduction at the same time and in the amount of the income recognized. Withholding. A participant will be required to pay to us, or make arrangements satisfactory to us, to satisfy all federal, state and other withholding tax requirements related to awards under the Amended 2015 Plan. We may permit or require a participant to satisfy tax withholding obligation by paying cash, by withholding an amount from the participant’s cash compensation, by withholding shares from shares of common stock issued or that vest under the award, or by any other method deemed appropriate by the Compensation Committee. The use of our shares of common stock to satisfy any withholding requirement will be treated, for federal income tax purposes, as a sale of those shares for an amount equal to the fair market value of the stock on the date when the amount of taxes to be withheld is determined. Section 409A. Section 409A of the Internal Revenue Code governs the taxation of certain types of compensation, including compensation from certain awards authorized under the Amended 2015 Plan. Failure to comply with the requirements of Section 409A can result in adverse income tax consequences to a participant in the Amended 2015 Plan, including the accelerated recognition and taxation of noncompliant compensation, the imposition of an additional 20 percent tax on such noncompliant compensation, and the imposition of interest on those taxes. The Compensation Committee and Board of Directors have taken steps to help ensure compliance with Section 409A and the regulations thereunder. Minimum Vesting for Awards to Employees.Except as otherwise provided in an award agreement in connection with a change in control or a participant’s death or disability, (i) no performance-based vesting condition shall be based on performance over a period of less than one year, and (ii) no service-based vesting condition shall lapse more quickly than one year from the date of grant of the award (which vesting period may lapse on a pro-rated, graded, or cliff basis as specified in the award agreement). Excess Parachute Payments. If any award under the Amended 2015 Plan is granted or modified in connection with a change in control, or if the vesting or payment of an award under the Amended 2015 Plan is accelerated, directly or indirectly, by or in connection with a change in control, the award may be deemed to give rise to an “excess parachute payment” within the meaning of Section 280G of the Internal Revenue Code, which would result in the imposition of a 20 percent nondeductible excise tax on the participant. Tax Consequences to the Company
TaxConsequences to the Company |
In general, under Section 162(m) of the Internal Revenue Code, compensation paid by a public corporation to its chief executive officer or generally any of its three most highly compensated executive officers (excluding the chief executive officer and chief financial officer) who are employed on the last day of any given year is not deductible to the extent it exceeds one million dollars for any year. Compensation resulting from awards under the Amended 2015 Plan may be subject to this deduction limit. Under Section 162(m), however, qualifying performance-based compensation, including income from stock options and other performance-based awards that are made under stockholder approved plans and that meet certain other requirements, is exempt from the deduction limitation. Based on current interpretive authority, we believegenerally intend for compensation generated in connection with the exercise of options and stock appreciation rights, as well as lapse of restrictions by the attainment of performance goals for performance based awards granted under the Amended 2015 Plan should qualify as performance-based compensation and should not be limited by Section 162(m). To the extent the total salary, other compensation and compensation recognized from awards under the Amended 2015 Plan to any applicable executive officers exceed one million dollars in any year and do not qualify as performance-based compensation, the limitation on deductibility under Section 162(m) will apply. As a result, we may from time to time in the future, make award payments under the Amended 2015 Plan to executive officers that are not deductible. In addition, if any award is granted under the Amended 2015 Plan or modified in connection with a change in control, or if the vesting or payment of an award under the Amended 2015 Plan is accelerated, directly or indirectly, by a change in control, all or a portion of the compensation from that award may be treated as an “excess parachute payment” under Section 280G of the Internal Revenue Code, which would cause that compensation to be non-deductible by us. Interests of Certain Persons in the Proposal
To the extent our executive officers may in the future receive awards under the Amended 2015 Plan, they may be deemed to have an interest in the Amended 2015 Plan. The Board of Directors unanimously recommends that you vote “FOR” approval of the adoption ofAmendment No. 1 to the 2015 Employee Equity Incentive Plan.
PROPOSAL NO. 4 AMENDMENT TO THE NEWPARK RESOURCES, INC. RESTATED CERTIFICATE OF INCORPORATION Introduction On March 22, 2016, our Board of Directors adopted resolutions (i) approving an amendment to our Restated Certificate of Incorporation, as amended, to allow for the removal of any director, with or without cause, by the stockholders, and (ii) directing that a proposal to approve the amendment be submitted to our stockholders. Assuming the resolution is approved by our stockholders, the change to Article SEVENTH will become effective upon the filing of an amendment to our Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware. The form of the proposed amendment to our Restated Certificate of Incorporation, as amended, is attached to this proxy statement asAppendix C. Addition of new text is indicated by underlining and deletion of existing text is indicated by a strikethrough. We currently plan to file the amendment as soon as reasonably practicable after receiving approval from our stockholders at the 2016 Annual Meeting. Reasons for the Amendment Article SEVENTH of our Restated Certificate of Incorporation, as amended, provides that the Company’s stockholders may remove directors from office only for cause. Section 141(k) of the Delaware General Corporation Law, as applicable to corporations without a classified board of directors (such as the Company at this time), requires that stockholders be afforded the right to remove directors from office with or without cause. The Delaware Chancery Court recently ruled (in a case not involving the Company) that a provision similar to Article SEVENTH of our Restated Certificate of Incorporation was invalid because it was not consistent with Section 141(k) of the Delaware General Code. The proposed amendment to the Restated Certificate of Incorporation, as amended, is intended to conform the Restated Certificate of Incorporation, as amended, to the applicable requirements under Delaware law. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THIS PROPOSAL TO AMEND OUR RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED, TOALLOW FOR REMOVAL OF A DIRECTOR FROM OFFICE, WITH OR WITHOUT CAUSE. PROPOSALNO. 5 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected the accounting firm of Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu Limited and their respective affiliates (collectively, the “Deloitte Entities”) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2015.2016. One or more representatives of the Deloitte Entities are expected to be present at the Annual Meeting and will have the opportunity to make a statement if they desire to do so and to respond to appropriate questions from the stockholders. The Audit Committee is directly responsible for selecting and retaining our independent registered public accounting firm. Although action by the stockholders is not required for the appointment, given the critical role played by the independent registered public accounting firm, we are providing stockholders the opportunity to express their views on this matter. If the stockholders fail to ratify the appointment of the Deloitte Entities, the Audit Committee will reconsider the appointment, but the Audit Committee may elect to retain the firm. Even if the appointment is ratified, the Audit Committee in its discretion may appoint a different independent auditing firm at any time during the year if the Audit Committee determines that a change in auditors would be in the best interests of our Company and our stockholders. The Board of Directors recommends that the stockholders vote “FOR” the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2015.2016. Independent Registered Public Accounting Firm Fees
Independent Registered Public Accounting Firm Fees |
The Deloitte Entities were appointed to serve as our independent registered public accounting firm for the fiscal years ended December 31, 20132014 and 2014.2015. The following table sets forth the fees billed to us for professional audit services rendered by the Deloitte Entities for the years ended December 31, 20132014 and December 31, 2014.2015. | | 2013 | | | 2014 | | | 2014 | | | 2015 | | Audit Fees(1) | | $ | 1,566,000 | | | $ | 1,591,000 | | | $ | 1,591,000 | | | $ | 1,474,000 | | Audit-Related Fees(2) | | $ | 94,000 | | | $ | 94,000 | | | $ | 94,000 | | | $ | 21,000 | | Tax Fees(3) | | $ | 62,000 | | | $ | 50,000 | | | $ | 50,000 | | | $ | 3,000 | | All Other Fees(4) | | $ | − | | | $ | − | | | $ | − | | | $ | − | | Total | | $ | 1,722,000 | | | $ | 1,735,000 | | | $ | 1,735,000 | | | $ | 1,498,000 | |
(1) | Audit fees consist primarily of fees for (i) the audit of our annual financial statements, (ii) review of financial statements in our quarterly reports on Form 10-Qs, (iii) the audit of the effectiveness of our internal control over financial reporting, and (iv) for services that are provided by the independent registered public accounting firm in connection with statutory and regulatory filings. |
| | (2) | Audit-related fees consist primarily of fees for professional services rendered in connection with the application of financial accounting and reporting standards, review of registration statement and proxy related materials and access to an online research tool. |
| | (3) | Tax fees consist of fees for tax compliance, tax planning and tax advice. |
| | (4) | All Other Fees are fees for any service not included in the first three categories. Indicates fees for services related to the quality assurance review of our internal audit department and certain acquisition related matters. All services were approved by the Audit Committee. |
Pre-Approval Policies Regarding Audit and Non-Audit Fees
Pre-Approval Policies Regarding Audit and Non-Audit Fees |
The Audit Committee’s policy is to pre-approve all audit and non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Prior to performing any audit services, the independent registered public accounting firm will provide the Audit Committee with an engagement letter outlining the scope of the audit services proposed to be performed during the fiscal year and the expected fees for those services. If the engagement letter is approved, the Audit Committee will engage the independent registered public accounting firm to perform the audit. For non-audit services, our management will submit to the Audit Committee for approval the list of non-audit services recommended by management which the Audit Committee should engage the independent registered public accounting firm to provide for the fiscal year. Prior to the performance of any of these services, our management and the independent registered public accounting firm each will confirm to the Audit Committee that each non-audit service on the list is permissible under all applicable legal requirements. Pre-approval generally is provided for up to one year and any pre-approval is detailed as to the particular service or category of service and generally is subject to a specific budget. The Audit Committee also may pre-approve particular services on a case-by-case basis. The independent registered public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval process and the fees for services performed to date. As permitted by statute, the Audit Committee has delegated pre-approval authority to the Chairman of the Audit Committee to provide for the prompt handling of unexpected matters. The Chairman will report any action taken pursuant to this delegated authority to the Audit Committee at or before the next Audit Committee meeting. All services performed by our independent registered public accounting firm in 20132014 and 20142015 were approved in accordance with the Audit Committee’s pre-approval policies.
AUDITCOMMITTEE REPORT This report is submitted by the Audit Committee of the Board of Directors. The Audit Committee is composed of five independent directors who satisfy the requirements of independence established by NYSE listing standards and the SEC. The Board of Directors has determined that all of the members of the Audit Committee are “financially literate” under applicable SEC rules and NYSE listing rules, and that each of Mr. Finley and Dr. McFarland is an “audit committee financial expert” as defined by applicable SEC rules. The Audit Committee operates under a written charter adopted by the Board of Directors, a copy of which is available in the “Board Committees & Charters” section under “Corporate Governance” on our website at www.newpark.com and is also available in print upon request from our Corporate Secretary. Management has primary responsibility for our financial statements and financial reporting processes and for the maintenance of internal controls and procedures designed to ensure compliance with applicable accounting standards, laws and regulations and ethical business standards. Our independent registered public accounting firm, the Deloitte Entities, is responsible for expressing an opinion on whether the Company’s consolidated financial statements present fairly, in all material respects, the financial position of the Company in accordance with accounting principles generally accepted in the United States. Additionally, the Deloitte Entities are responsible for expressing an opinion regarding the effectiveness of the Company’s internal controls over financial reporting. The Audit Committee’s responsibility is to monitor and oversee these processes on behalf of the Board of Directors. The Audit Committee also is responsible for the engagement, compensation and oversight of the independent registered public accounting firm. In keeping with that responsibility, the Audit Committee meets regularly with management and the independent registered public accounting firm. Meetings with the independent registered public accounting firm are held both with and without management present, and the independent registered public accounting firm has direct access to the Audit Committee to discuss the scope and results of its work and its comments on the adequacy of internal controls and the quality of financial reporting. The Audit Committee met eight (8)nine (9) times during the year ended December 31, 2014.2015. The Audit Committee reviewed, with the independent registered public accounting firm, the overall scope and plans for its audits. The Audit Committee has also reviewed and discussed the Company’s audited consolidated financial statements as of and for the year ended 20142015 and internal controls over financial reporting with management and the independent registered public accounting firm. The Audit Committee also has discussed with the independent registered public accounting firm the matters required to be discussed in accordance with professional standards. In addition, the Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm pursuant to the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm their independence from our Company and our management. The Audit Committee also reviewed the non-audit services provided by the independent registered public accounting firm and concluded that the provision of those services is compatible with its independence. We filed our Annual Report on Form 10-K for the fiscal year ended December 31, 2014,2015, which we refer to as the 20142015 Annual Report, in a timely fashion with the SEC in 2015.2016. Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the 20142015 Annual Report. The Audit Committee also engaged the Deloitte Entities as our independent registered public accounting firm for the 20152016 fiscal year. See above under the heading “Ratification of Appointment of Registered Public Accounting Firm” for additional information on the decision to again appoint the Deloitte Entities as our independent registered public accounting firm. Audit Committee: G. Stephen Finley, Chairman Anthony J. Best Roderick A. Larson James W. McFarland, Ph.D. Gary L. Warren
STOCKHOLDERPROPOSALS Stockholder proposals intended to be considered for inclusion in our proxy materials for the 20162017 Annual Meeting of Stockholders must be received by us by December 12, 2015.6, 2016. Proposals should be directed to the attention of the Corporate Secretary, Newpark Resources, Inc., 9320 Lakeside Boulevard, Suite 100, The Woodlands, Texas 77381. Any proposals will be subject to the requirements of the proxy rules adopted under the Exchange Act as well as the procedures in our bylaws, and must include a brief description and text of the proposal, the name and address of the stockholder submitting the proposal, the class and number of shares of stock owned by that stockholder, and any material interest of the stockholder in the proposal. For proposals not intended to be submitted in next year’s proxy statement, but sought to be presented at our 20152017 Annual Meeting of Stockholders, our bylaws provide that stockholder proposals, including director nominations, must be received at our principal executive offices no later than ninety (90) days prior to the date of our annual meeting; provided, that if the date of the annual meeting was not publicly announced more than one hundred (100) days prior to the date of the annual meeting, the notice by the stockholder will be timely if delivered to our principal executive offices no later than the close of business on the tenth (10th) day following the day on which such notice of the date of the meeting was communicated to the stockholders. In addition, proxies to be solicited by the Board for the 20152017 Annual Meeting of Stockholders will confer discretionary authority to vote on any stockholder proposal presented at that meeting, unless we received notice of such proposal not later than March 2, 2015.February 20, 2017. A copy of our bylaws may be obtained upon written request to our Corporate Secretary at our principal executive offices, 9320 Lakeside Boulevard, Suite 100, The Woodlands, Texas 77381. SEC rules and regulations provide that if the date of our 20162017 Annual Meeting is advanced or delayed more than 30 days from the anniversary date of the 20152016 Annual Meeting, stockholder proposals intended to be included in the proxy materials for the 20162017 Annual Meeting must be received by us within a reasonable time before we begin to print and mail the proxy materials for the 20162017 Annual Meeting. Upon determination by us that the date of the 20162017 Annual Meeting will be advanced or delayed by more than 30 days from the anniversary date of the 20152016 Annual Meeting, we will disclose that change in the earliest possible Quarterly Report on Form 10-Q or as otherwise permitted by the Exchange Act. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC and the NYSE. Officers, directors and greater than 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file. Based solely on a review of the copies of those reports furnished to us and written representations from our executive officers and directors, we believe that our officers, directors and greater than 10% beneficial owners complied with all applicable Section 16(a) filing requirements in 2014,2015, except that Lee Ann KendrickMessrs. Howes, Piontek, Airola, Juergens, Smith and White had one delinquent filing on Form 4 related to shares withheld for payment of taxes upon the vesting of restricted stock, which filing was due on June 3, 2015 and subsequently filed on January 22, 2014.June 9, 2015.
DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS All stockholders of record as of the record date will receive a copy of our Notice of Internet Availability of Proxy Materials. Stockholders residing in the same household who hold their shares in the name of a bank, broker or other holder of record may receive only one Notice of Internet Availability of Proxy Materials. This process, by which only one Notice of Internet Availability of Proxy Materials is delivered to multiple security holders sharing an address, unless contrary instructions are received from one or more of the security holders, is called “householding.” Householding may provide convenience for stockholders and cost savings for companies. Once begun, householding may continue unless instructions to the contrary are received from one or more of the stockholders within the household. Street name stockholders in a single household who received only one copy of the Notice of Internet Availability of Proxy Materials may request to receive separate copies in the future by following the instructions provided on the voting instruction form sent to them by their bank, broker or other holder of record. Similarly, street name stockholders who are receiving multiple copies may request that only a single set of materials be sent to them in the future by checking the appropriate box on the voting instruction form. Otherwise, street name stockholders should contact their bank, broker, or other holder. COPIES OF THIS PROXY STATEMENT AND THE 20142015 ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES AND EXHIBITS, ARE AVAILABLE PROMPTLY WITHOUT CHARGE BY CALLING (281) 362-6800, OR BY WRITING TO CORPORATE SECRETARY, NEWPARK RESOURCES, INC., 9320 LAKESIDE BOULEVARD, SUITE 100, THE WOODLANDS, TEXAS 77381. If you are receiving multiple copies of the Notice of Internet Availability of Proxy Materials, you also may request orally or in writing to receive a single copy by calling (281) 362-6800, or writing to Corporate Secretary, Newpark Resources, Inc., 9320 Lakeside Boulevard, Suite 100, The Woodlands, Texas 77381. However, if you wish to receive a paper proxy and voting instruction form or other proxy materials for participation and voting in this year’s annual meeting, follow the instructions included in the Notice of Internet Availability of Proxy Materials sent to you.
OTHER MATTERS We do not presently know of any matters other than those described above that may be presented for stockholder action at the Annual Meeting. However, if any other matters are properly presented at the Annual Meeting, it is the intention of the persons named as proxies to vote in accordance with their judgment on these matters, subject to direction by the Board of Directors. APPENDIX A ANNEXNEWPARK RESOURCES, INC.
2015 EMPLOYEE EQUITY INCENTIVE PLAN Amendment No. 1 THIS AMENDMENT NO. 1 (this "Amendment") to the 2015 Employee Equity Incentive Plan (the "Plan") is made by Newpark Resources, Inc. (the "Company") pursuant to the Plan, as follows: WHEREAS, the Company previously adopted the Plan for the benefit of its eligible participants; WHEREAS, pursuant to Section 17 of the Plan, the Board of Directors (the "Board") has the power and authority to amend the terms of the Plan; and WHEREAS, the Board desires to increase the maximum number of shares of common stock that may be issued in connection with awards granted under the Plan, and to effectuate such other amendments the Board deems to be in the best interests of the Company’s stockholders. NOW, THEREFORE,pursuant to the Plan, the Board hereby amends the Plan in the following respects: | 1. | Shares Subject to the Plan. Section 4.1 of the Plan is hereby amended to increase the number of Shares that may be issued in connection with awards under the Plan from 6,000,000 to 7,800,000. |
| 2. | Fungible ShareCountingRatio. Applicable for grants of equity made on or after May 19, 2016, the fungible share counting ratio (i.e., the ratio that limits the amount of full-value equity awards that may be granted from the share reserve) shall be downward adjusted to 1.78. To that end, Sections 4.1(b) and (c) of the Plan are hereby amended by deleting "1.85" each place it appears and replacing it with "1.78". |
| 3. | Change in Control. Section 15.2 of the Plan is hereby deleted in its entirety and shall be replaced with the following: |
15.2 Change in Control. Effective upon the consummation of a Change in Control of the Company, and except as otherwise provided in an individual Award Agreement, all outstanding Awards under the Plan shall terminate to the extent they are not assumed or replaced in connection with the Change in Control. (a) For each portion of an Award that is assumed or replaced, then such portion shall become fully vested, exercisable and payable, and be released from any forfeiture rights, immediately upon termination of the Participant’s employment with the Company (or its successor) within 24 months after the Change in Control, but only if such termination of employment is triggered by the Company (or its successor) without Cause or by the Participant for Good Reason. (b) For each portion of an Award that is neither assumed nor replaced, the Compensation Committee has the discretion to effectuate either of the following immediately prior to consummation of the Change in Control, provided that the Participant’s employment has not terminated prior to such date: (x) such outstanding Awards (or portion thereof) shall become partially or fully vested and exercisable (and partially or fully released from any forfeiture rights), with performance-based Awards under Section 12 of the Plan vesting based upon actual performance or, if the Compensation Committee determines that actual performance is not determinable, then at target; or (y) such outstanding Awards (or portion thereof) shall be cancelled and terminated for an amount of cash, securities or other property equal to the excess, if any, of the Fair Market Value of the vested and/or unvested (as determined by the Committee in its sole discretion) shares of Common Stock subject to any such Award immediately prior to the occurrence of the Change in Control over the aggregate exercise or other purchase price (if any) of such shares. For performance-based Awards under Section 12 of the Plan, the number of shares of Common Stock subject to subsection 15.2(b)(y) shall be calculated based upon actual performance or, if the Compensation Committee determines that actual performance is not determinable, then at target. For avoidance of doubt, if an Award is an Option or Stock Appreciation Right and no positive spread exists pursuant to the foregoing, then (y) may be unilaterally effectuated by the Company with no cash payment to the Participant holding such an Award. Notwithstanding anything herein to the contrary, an Award that vests, is earned, or is paid-out upon the satisfaction of one or more performance goals shall not be considered "assumed" or "replaced" if the Company (or its successor) modifies any of the performance goals without the Participant’s consent; provided, however, that a modification to the performance goals only to reflect the successor corporation’s post-Change in Control corporate structure shall not be deemed to invalidate an otherwise valid assumption or replacement of an Award. This Section 15.2 of the Plan was amended effective May 19, 2016. As a result, the terms of Award Agreements that were in effect prior to such date shall prevail to the extent such terms are more favorable to a Participant. | 4. | Defining the Term Cause. The definition of Cause in Exhibit A to the Plan shall be deleted in its entirety and replaced with the following: |
"Cause" means, with respect to any Participant, any of the following: (i) the Participant’s conviction by a court of competent jurisdiction of, or entry of a plea of guilty or nolo contendere for, an act on the Participant’s part constituting a felony, dishonesty, willful misconduct or material neglect by the Participant of his or her employment obligations to the Company that results in material injury to the Company; (ii) appropriation (or an overt act attempting to appropriate) of a material business opportunity of the Company by the Participant; (iii) theft, embezzlement or other similar misappropriation of funds or property of the Company by the Participant; or (iv) the failure of the Participant to follow the reasonable and lawful written instructions or policy of the Company with respect to the services to be rendered and the manner of rendering such services by the Participant, provided the Participant has been given reasonable and specific written notice of such failure and opportunity to cure and no cure has been effected or initiated within a reasonable period of time, but not less than 90 days, after such notice. | 5. | Defining the Term Good Reason. Exhibit A to the Plan shall be amended to add a defined term for Good Reason as follows: |
"Good Reason" means any of the following: (i) the Company (or its successor) adversely changes the Participant’s title or changes in any material respect the responsibilities, authority or status of the Participant without prior notice and acceptance; (ii) the substantial or material failure of the Company (or its successor) to comply with its obligations under the Plan or any other agreement that may be in effect that is not remedied within a reasonable time after specific written notice thereof by the Participant to the Company; (iii) the diminution of the Participant’s base salary; and (iv) requiring the Participant to relocate more than 50 miles from his or her location of employment immediately prior to the Change in Control. However, Good Reason shall only exist in the prior (i) through (iv) if the Participant has given reasonable and specific written notice to the Chief Executive Officer of such failure, the Company has been given a reasonable opportunity to cure, and no cure has been effected or initiated within a reasonable time after such notice. | 6. | Full Force and Effect. Except as otherwise set forth in this Amendment, the Plan shall remain in full force and effect. |
| 7. | Effectiveness Subject to Stockholder Approval. This Amendment shall not become effective unless the stockholders of the Company approve the increase to the share reserve of the Plan, as set forth in 1, above, and if approved, then this Amendment shall become effective as of such meeting. |
[SIGNATURE ON NEXT PAGE] IN WITNESS WHEREOF, the Company, by its duly authorized officer, has executed this Amendment on this __ day of __ 2016. | NEWPARK RESOURCES, INC. | | | | | | | | | By: | | | | | | Its: | |
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APPENDIX B NEWPARK RESOURCES, INC.
2015 EMPLOYEE EQUITY INCENTIVE PLAN
TABLE OF CONTENTS 1. | Purpose. | 1 | Purpose. | 1 | | | | | | 2. | Definitions. | 1 | Definitions. | 1 | | | | | | 3. | Administration of the Plan. | 1 | Administration of the Plan. | 1 | | | | | | 4. | Number of Shares Issuable in Connection with Awards. | 4 | Number of Shares Issuable in Connection with Awards. | 4 | | | | | | 5. | Eligibility and Participation. | 5 | Eligibility and Participation. | 5 | | | | | | 6. | Award Agreements. | 6 | Award Agreements. | 6 | | | | | | 7. | Options. | 6 | Options. | 6 | | | | | | 8. | Restricted Stock. | 9 | Restricted Stock. | 9 | | | | | | 9. | Restricted Stock Units. | 11 | Restricted Stock Units. | 11 | | | | | | 10. | Stock Appreciation Rights. | 12 | Stock Appreciation Rights. | 12 | | | | | | 11. | Other Stock-Based Awards. | 13 | Other Stock-Based Awards. | 14 | | | | | | 12. | Performance Based Awards. | 14 | Performance Based Awards. | 14 | | | | | | 13. | Restrictions on Transfer. | 16 | Restrictions on Transfer. | 16 | | | | | | 14. | Withholding and Other Tax Provisions. | 17 | Withholding and Other Tax Provisions. | 17 | | | | | | 15. | Effect of Certain Corporate Changes and Changes in Control. | 18 | Effect of Certain Corporate Changes and Changes in Control. | 18 | | | | | | 16. | Regulatory Compliance. | 20 | Regulatory Compliance. | 20 | | | | | | 17. | Amendment or Termination of the Plan. | 21 | Amendment or Termination of the Plan. | 21 | | | | | | 18. | Term of the Plan. | 22 | Term of the Plan. | 22 | | | | | | 19. | No Right to Awards or Continued Employment. | 22 | No Right to Awards or Continued Employment. | 22 | | | | | | 20. | Effect of Plan Upon Other Awards and Compensation Plans. | 22 | Effect of Plan Upon Other Awards and Compensation Plans. | 22 | | | | | | 21. | General Provisions. | 22 | General Provisions. | 22 |
NEWPARK RESOURCES, INC. 2015 EMPLOYEE EQUITY INCENTIVE PLAN This Newpark Resources, Inc. 2015 Employee Equity Incentive Plan is intended to assist Newpark Resources, Inc., a Delaware corporation (the “Company”), in attracting, retaining and motivating designated Employees of the Company and its Subsidiaries and to increase their interest in the success of the Company in order to promote the creation of long-term value for the Company’s stockholders by closely aligning the interests of Employees with those of the Company’s stockholders. The Plan is designed to meet this intent by providing eligible Employees with a proprietary interest in pursuing the long-term growth, profitability and financial success of the Company. 2.Definitions. | Definitions. |
In addition to the terms defined elsewhere in the Plan,Exhibit A, which is incorporated by reference, defined terms used in the Plan and sets forth certain operational rules related to those terms. 3.Administration of the Plan. | Administration of the Plan. |
3.1 General. The Plan shall be administered by the Compensation Committee. Each member of the Compensation Committee shall be a “non-employee director” as that term is defined in Rule 16b-3, an “outside director” within the meaning of Section 162(m) and an “independent director” under the corporate governance rules of any stock exchange or similar regulatory authority on which the Common Stock is then listed, but no action of the Compensation Committee shall be invalid if this requirement is not met. The Compensation Committee shall select one of its members as chairman and shall act by vote of a majority of the members present at a meeting at which a quorum is present or by unanimous written consent. A majority of the members of the Compensation Committee shall constitute a quorum. The Compensation Committee shall be governed by the provisions of the Company’s bylaws and of Delaware law applicable to the Board of Directors, except as otherwise provided herein or determined by the Board of Directors. The Compensation Committee’s decisions and determinations under the Plan need not be uniform and may be made selectively among Participants, whether or not the Participants are similarly situated. 3.2 Authority of the Compensation Committee. The Compensation Committee shall have full discretionary power and authority, subject to the general purposes, terms and conditions of the Plan, to implement, carry out and administer the Plan. Without limiting the generality of the foregoing, the Compensation Committee shall have the authority to: (a) interpret and administrator the Plan, any Award Agreement and any other agreement or document executed pursuant to the Plan; (b) adopt, amend, modify or rescind rules, procedures and forms relating to the Plan; (c) select, subject to the limitations set forth in this Plan, persons to receive Awards; (d) determine the number of Shares subject to Awards, the Fair Market Value of a Share of Common Stock and the other terms and conditions of each Award (which need not be uniform), including, without limitation, the type of Award to be granted, vesting requirements, forfeiture restrictions and other terms and conditions relating to the exercisability of Awards, and all other provisions of each Award Agreement; (e) determine whether Awards will be granted singly, in combination, or in tandem with, in replacement of, or as alternatives to, other Awards under the Plan or any other incentive or compensation plan of the Company or any Subsidiary; (f) grant waivers of Plan or Award conditions and remove or adjust any restrictions or conditions upon Awards, including accelerating or otherwise modifying the date or conditions upon which any Award becomes vested, exercisable or transferable and extending the term of any Award (subject to the maximum term limitations set forth in the Plan), including extending the period following the termination of a Participant’s employment during which any Award may continue to vest, remain outstanding or be exercised (but not beyond the original maximum term of such Award); (g) amend any outstanding Award Agreement, including for the purpose of modifying the time, manner or conditions of vesting, exercise or settlement; provided, however, that if any provision of any such amendment would materially and adversely affect the rights of the Participant under the affected Award, the amendment shall not be effective without the Participant's consent to that provision; and provided further that no Option or Stock Appreciation Right may be amended or terminated to reduce the exercise price of such Option or Stock Appreciation Right except in accordance with Section 21.4; (h) interpret, administer, correct any defect, supply any omission and reconcile any inconsistency in the Plan, any Award, any Award Agreement or any related instrument or agreement; (i) determine whether an Award has been earned; (j) to authorize any person to execute, on behalf of the Company, any agreement or document required to carry out the purposes of the Plan; and (k) make any other determination and take any other action that the Compensation Committee deems necessary or desirable for administration of the Plan. All decisions, determinations and other actions of the Compensation Committee made or taken in accordance with the terms of the Plan shall be final and conclusive and binding upon all parties having an interest therein. 3.3 Delegation of Authority. Any of the powers and responsibilities of the Compensation Committee may be delegated to any subcommittee, in which case the acts of the subcommittee shall be deemed to be acts of the Compensation Committee hereunder. In addition, the Compensation Committee may, subject to the following provisions and to the extent permitted by Applicable Law, delegate some or all of its authority and powers under the Plan, including the authority to grant Awards under the Plan, to a committee consisting of one or more members of the Board of Directors or one or more officers of the Company; provided, however, that (a) the Committee may not delegate its authority to (i) make awards to any Employee (A) who is, or is expected to become a Section 16 Insider, or (B) whose compensation for such fiscal year may be subject to the limit on deductible compensation pursuant to Section 162(m), (ii) interpret the Plan or any Award, or (iii) amend any Award or accelerate the vesting or lapse of any restrictions on any Award, and (b) any delegation of authority to an officer of the Company shall be subject to the provisions of Section 157 of the Delaware General Corporation Law. Any action taken by any such subcommittee, committee of the Board of Directors or officer within the scope of the authority delegated by the Compensation Committee shall be deemed for all purposes to have been taken by the Compensation Committee, and, to the extent consistent with the terms and limitations of such delegation, references in the Plan to the Compensation Committee shall include any such officer or Employee. In addition, the Compensation Committee may delegate to one or more officers or Employees, subject to such terms as the Compensation Committee may determine, the authority to perform such administrative functions as determined necessary or appropriate by the Compensation Committee. Any delegation hereunder shall be subject to such other restrictions and limitations that the Compensation Committee specifies at the time of such delegation or thereafter. Nothing in the Plan shall be construed as obligating the Compensation Committee to delegate authority as herein provided and the Compensation Committee may at any time rescind the authority delegated hereunder. 3.4 Monitoring Awards. Notwithstanding any delegation of authority by the Compensation Committee pursuant to Section 3.3, it shall maintain ultimate responsibility for, and control of, the operation of the Plan. At least annually, the Compensation Committee, in conjunction with the Audit Committee of the Board of Directors of the Company, shall conduct or cause the conduct of an audit of the operation of the Plan to verify that the Plan has been operated and Awards have been documented and maintained by the officers of the Company in accordance with the directions of the Compensation Committee. Without limiting the generality of the foregoing, one of the purposes of such an audit will be to determine that the final Award Agreements are consistent with the Awards made by the Compensation Committee and properly reflect the names of the Participants to whom such Awards were granted, the applicable Dates of Grant, vesting provisions and expiration dates, the type and quantity of Awards granted to each Participant and, if applicable, the applicable exercise prices. 3.5 Limitation on Liability. 3.5.1 The Compensation Committee may employ attorneys, consultants, accountants, agents and other persons, and the Compensation Committee shall be entitled, in good faith, to rely and act upon the advice, opinions and valuations of any such persons. In addition, the Compensation Committee shall be entitled, in good faith, to rely and act upon any report or other information furnished to it by any officer, director or Employee of the Company. 3.5.2 No member of the Compensation Committee, nor any person acting pursuant to authority delegated by the Compensation Committee, nor any officer, director or Employee of the Company acting at the direction or on behalf of the Compensation Committee, shall be liable for any action, omission or determination relating to the Plan, and the Company shall, to the fullest extent permitted by law, indemnify and hold harmless each member of the Compensation Committee, each person acting pursuant to authority delegated by the Compensation Committee, and each other officer, director or Employee of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been delegated against any cost, expense (including counsel fees), liability or other pecuniary loss (including any sum paid in settlement of a claim with the approval of the Compensation Committee) arising out of any action, omission or determination relating to the Plan. 4.Number of Shares Issuable in Connection with Awards. | Number of Shares Issuable in Connection with Awards. |
4.1 Shares Subject to the Plan. The maximum number of Shares that may be issued in connection with Awards granted under the Plan is 6,000,000, and the number of Shares that are subject to Awards outstanding at any one time under the Plan may not exceed the number of Shares that then remain available for issuance under the Plan. The maximum number of Shares that may be issued in connection with Incentive Stock Options granted under the Plan is 6,000,000. The Company at all times shall reserve and keep available sufficient Shares to satisfy the requirements of the Plan. Shares issued under the Plan may be either authorized and unissued shares or treasury shares. Solely for the purposes of implementing the limitations on the number of Shares that may be issued under the Plan as set forth in this Section 4.1: (a) an Award of an Option or a Stock Appreciation Right in respect of one Share shall be deemed to be an Award of, and shall count against the Share limit set forth in this Section 4.1 as, one Share on the Date of Grant; (b) an Award of a share of Restricted Stock or a Restricted Stock Unit or an Other Stock-Based Award shall be deemed to be an Award of, and shall count against the share limit set forth in this Section 4.1 as, 1.85 Shares for every one Share granted on the Date of Grant; and (c) with respect to any performance-based Award granted pursuant to Section 12 that is to be settled in Shares, the value of the maximum benefit that may be paid under such Award shall be divided by the Fair Market Value of one Share as of the Date of Grant of such Award and each Share resulting from such computation shall be deemed to be an Award of 1.85 Shares for purposes of implementing the limitations on the number of Shares that may be issued in this Section 4.1. 4.2 Share Counting Rules. For purposes of Section 4.1, if any Shares subject to an Award granted under the Plan are forfeited or such Award is settled in cash or otherwise terminates without the delivery of such Shares, the Shares subject to such Award, to the extent of such forfeiture, settlement or termination, shall again be available for the grant of additional Awards under the Plan in the same amount as such Shares were counted against the limit set forth in Section 4.1. Shares that are issued or delivered upon the settlement of an Award or that ceased to be Restricted Stock upon the vesting of an Award of Restricted Stock, shall no longer be subject to any further grant under the Plan. Notwithstanding the immediately preceding sentence, the following Shares shall be considered to have been issued under the Plan and may not again be made available for issuance as Awards under the Plan: (a) Shares not issued or delivered as a result of the net settlement of an outstanding Option or Stock Appreciation Right; (b) Shares withheld by the Company, in satisfaction of the grant or exercise price or tax withholding requirements, from Shares that would otherwise have been delivered pursuant to an Option or Stock Appreciation Right; or (c) Shares repurchased on the open market with the proceeds of the Option exercise price. With respect to Stock Appreciation Rights, when a Stock Appreciation Right is exercised, the Shares subject to such Stock Appreciation Right shall be counted against the Shares available for issuance under the Plan as one Share for every Share subject to such Stock Appreciation Right, even if the number of Shares used to settle the Stock Appreciation Right upon exercise is less than the number of Shares subject to such Stock Appreciation Right upon its grant. To the extent permitted by Applicable Laws, Shares subject to Awards issued in assumption of, or in substitution for, any outstanding awards of any entity acquired in any form of business combination by the Company or any of its Subsidiaries shall not be counted against the Shares available for issuance pursuant to the Plan. 4.3 Individual Award Limits. The maximum number of Shares that may be covered by Options and Stock Appreciation Rights (in the aggregate) granted under the Plan to any single Participant in any calendar year shall not exceed 1,000,000, and the maximum number of Shares that may be covered by all other Awards (in the aggregate) granted under the Plan to any single Participant in any calendar year shall not exceed 1,000,000. These limitations shall be applied and construed consistently with Section 162(m). 4.4 Adjustments. The limits provided for in this Section 4 shall be subject to adjustment as provided in Section 15. 5.Eligibility and Participation. | Eligibility and Participation. |
The Compensation Committee will select Participants from among those Employees who, in the opinion of the Compensation Committee, are in a position to make significant contributions to the long-term performance and growth of the Company and its Subsidiaries. In addition, the Compensation Committee may grant Awards in connection with the engagement of an Employee who is expected to make significant contributions to the long-term performance and growth of the Company, provided that a prospective Employee may not receive any payment or exercise any right relating to an Award until such person’s employment with the Company has commenced. An Employee on leave of absence may be considered as still in the employ of the Company for purposes of eligibility for participation in the Plan, if so determined by the Compensation Committee. Directors of the Company and its Subsidiaries who are not also Employees of the Company or a Subsidiary shall not be eligible to receive Awards under the Plan. 6.Award Agreements. | Award Agreements. |
Each Award granted under the Plan shall be evidenced by an Award Agreement in a form approved by the Compensation Committee. Each Award Agreement shall be subject to all applicable terms and conditions of the Plan, shall include such terms and conditions as the Compensation Committee deems appropriate, consistent with the provisions of the Plan, and shall be executed or approved by the Participant and an officer of the Company or other person designated by the Compensation Committee. An Award Agreement and any required signatures thereon or authorization or acceptance thereof may be in electronic format. 7.1 Grant of Options. The Compensation Committee may grant Options in such amounts, at such times and to such Employees as the Compensation Committee, in its discretion, may determine in accordance with the eligibility criteria set forth in Section 5. The Compensation Committee shall designate at the time of grant whether the Option is intended to constitute an Incentive Stock Option or a Non-Qualified Option. 7.2 Option Price. The Option Price of the Shares subject to each Option shall be determined by the Compensation Committee, but shall not be less than the Fair Market Value of the Common Stock on the Date of Grant, except in the case of replacement or substitute Options issued by the Company in connection with an acquisition or other corporate transaction. 7.3 Option Period. The Award Agreement shall specify the term of each Option. The term shall commence on the Date of Grant and shall be ten (10) years or such shorter period as is determined by the Compensation Committee. Each Option shall provide that it is exercisable over its term from the Date of Grant or over time in such periodic installments, or based on the satisfaction of such criteria (including, without limitation, upon the satisfaction of Performance Criteria), as the Compensation Committee in its discretion may determine. The vesting provisions for Options granted under the Plan need not be uniform. Unless the Compensation Committee specifies otherwise in the applicable Award Agreement, if an Option is subject to vesting and becomes exercisable in periodic installments and a Participant shall not in any period purchase all of the Shares that the Participant is entitled to purchase in such period, the Participant may purchase all or any part of such Shares as to which the Option has become exercisable at any time prior to the expiration or other termination of the Option. 7.4 Exercise of Options. Each Option may be exercised in whole or in part (but not as to fractional shares) by the delivery of an executed notice (“Notice of Exercise”) in the form prescribed from time to time by the Compensation Committee, which may be in written or electronic form, accompanied by payment of the Option Price and any amounts required to be withheld for tax purposes under Section 14. If an Option is exercised by any person other than the Participant, the Compensation Committee may require satisfactory evidence that the person exercising the Option has the right to do so. The Compensation Committee may require any partial exercise of an Option to equal or exceed a specified minimum number of Shares. 7.5 Payment of Exercise Price. The Option Price shall be paid in full in cash or by check acceptable to the Compensation Committee or, if and to the extent permitted by the Compensation Committee, (a) through the delivery of Shares which have been outstanding for at least six months or such other minimum period as may be required by applicable accounting rules to avoid a charge to the Company’s earnings for financial reporting purposes (unless the Compensation Committee approves a shorter period) and which have a Fair Market Value on the date the Option is exercised equal to the Option Price due for the number of Shares being acquired, (b) to the extent permitted by Applicable Laws, by a Cashless Exercise, or (c) by any combination of the foregoing permissible forms of payment. 7.6 Employment Requirements. Unless otherwise provided by the Compensation Committee, either at the time of the grant of the Award or thereafter, and except as otherwise provided in Section 7.7, an Option may not be exercised unless from the Date of Grant to the date of exercise the Participant remains continuously in the employ of the Company. The Compensation Committee shall determine, in its discretion in the particular case and subject to any requirements of Applicable Laws, whether and to what the extent the period of continuous employment shall be deemed to include any period in which the Participant is on leave of absence with the consent of the Company. Unless the Compensation Committee expressly provides otherwise, a Participant’s service as an Employee with the Company will be deemed to have ceased upon termination of the Participant’s employment with the Company and its Subsidiaries (whether or not the Participant continues in the service of the Company or its Subsidiaries in some capacity other than that of an Employee). 7.7 Exercise of Options on Termination of Employment. 7.7.1 Unless otherwise provided by the Compensation Committee, either at the time of the grant of the Award or thereafter, upon the termination of a Participant’s employment with the Company and its Subsidiaries by reason of death or Disability, (a) all Options then held by the Participant, to the extent exercisable on the date of termination of employment, shall remain in full force and effect and may be exercised pursuant to the provisions thereof at any time until the earlier of the end of the fixed term thereof and the expiration of 12 months following termination of the Participant’s employment, and (b) all Options then held by the Participant, to the extent not then presently exercisable, shall terminate as of the date of such termination of employment and shall not be exercisable thereafter. 7.7.2 Unless otherwise provided by the Compensation Committee, either at the time of the grant of the Award or thereafter, upon the termination of the Participant’s employment with the Company and its Subsidiaries for any reason other than the reasons set forth in Section 7.7.1 or a termination for Cause, (a) all Options then held by the Participant, to the extent exercisable on the date of termination of employment, shall remain in full force and effect and may be exercised pursuant to the provisions thereof at any time until the earlier of the end of the fixed term thereof and the expiration of 90 days following termination of the Participant’s employment (except that the 90-day period shall be extended to 12 months from the date of termination if the Participant shall die during such 90-day period), and (b) all Options then held by the Participant, to the extent not then presently exercisable, shall terminate as of the date of such termination of employment and shall not be exercisable thereafter. 7.7.3 Unless otherwise provided by the Compensation Committee, either at the time of the grant of the Award or thereafter, in the event of a Participant’s termination for Cause, all Options held by the Participant, whether vested or not, shall terminate concurrently with the first discovery by the Company of any reason for the Participant’s termination for Cause and shall not be exercisable thereafter. If an Participant’s employment with the Company or any Subsidiary is suspended pending an investigation of whether there shall be a termination for Cause, all of the Participant’s rights under any Options then held by the Participant, including, without limitation, the right to exercise such Options, shall likewise be suspended during such period of investigation. 7.8 Incentive Stock Options. Incentive Stock Options shall be subject to the following additional provisions: 7.8.1 The aggregate Fair Market Value (determined as of the Date of Grant) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any individual Participant during any one calendar year (under all plans of the Company and any parent or Subsidiary) may not exceed the maximum amount permitted under Section 422 of the Code (currently $100,000). To the extent any Incentive Stock Option would exceed this limit, the portion of the Option in excess of such limit shall be treated as a Non-Qualified Stock Option for all purposes. The provisions of this Section 7.8.1 shall be construed and applied in accordance with Section 422(d) of the Code and the regulations promulgated thereunder. 7.8.2 No Incentive Stock Option may be granted to a Participant if, at the time of the proposed grant, the Participant owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of any parent or Subsidiary of the Company, unless (a) the Option Price is at least 110% of the Fair Market Value of a share of Common Stock on the Date of Grant, and (b) the Incentive Stock Option is not exercisable after the expiration of five (5) years from the Date of Grant. 7.8.3 If a Participant sells or otherwise disposes of any Shares acquired pursuant to the exercise of an Incentive Stock Option on or before the later of (a) the date two (2) years after the Date of Grant of the Incentive Stock Option, and (b) the date one (1) year after the exercise of the Incentive Stock Option (in either case, a “Disqualifying Disposition”), the Participant shall notify the Company, either in writing or electronically, of the Disqualifying Disposition within ten (10) days of the date thereof. In the event of a Disqualifying Disposition, the Option will not qualify for incentive stock option treatment. 7.8.4 If the Compensation Committee exercises its discretion to permit an Incentive Stock Option to be exercised by a Participant more than three months after the termination of a Participant’s employment for any reason other than death or Disability, the Incentive Stock Option will thereafter be treated as a Non-Qualified Stock Option for all purposes. For purposes of this Section 7.8.4, a Participant’s employment will be treated as continuing uninterrupted during any period that the Participant is on military leave, sick leave or another approved leave of absence if the period of leave does not exceed 90 consecutive days, unless reemployment on the expiration of such leave is guaranteed by statute or by contract. 7.8.5 Any Option which is designated by the Compensation Committee as an Incentive Stock Option but fails, for any reason, to meet the requirements for Incentive Stock Option treatment shall be treated for tax purposes as a Non-Qualified Stock Option. 7.9 Additional Terms and Conditions. Each Option, and any Shares of Common Stock issued in connection with an Option, shall be subject to such additional terms and conditions not inconsistent with the Plan as are determined by the Compensation Committee and set forth in the applicable Award Agreement or other agreement, plan or policy approved by the Compensation Committee. 8.Restricted Stock. | Restricted Stock. |
8.1 Grant of Restricted Stock. The Compensation Committee may grant Awards of Restricted Stock in such amounts, at such times and to such Employees as the Compensation Committee, in its discretion, may determine in accordance with the eligibility criteria set forth in Section 5. 8.2 Award Agreement; Acceptance by Participant. Promptly following the grant of each Award of Restricted Stock, the Compensation Committee shall cause to be delivered to the applicable Participant an Award Agreement that evidences the Award. The Participant shall accept the Award by signing and delivering to the Company his or her Award Agreement (which may be in electronic format). 8.3 Restrictions. At the time of grant of each Award of Restricted Stock, the Compensation Committee shall determine the Restriction Period that will apply to the Award and the forfeiture and vesting restrictions, restrictions on transferability and other restrictions (including, without limitation, limitations on the right to vote Restricted Stock or the right to receive dividends on Restricted Stock) that will apply to the Award during the Restriction Period. These restrictions may lapse separately or in combination at such times, under such circumstances (including based on achievement of Performance Criteria or future service requirements or both), in such installments or otherwise, as the Compensation Committee may determine in its discretion. 8.4 Forfeiture. Except as otherwise determined by the Compensation Committee, either at the time of the grant of the Award or thereafter, upon termination of the Participant’s employment during the applicable Restriction Period, Restricted Stock that is at that time subject to restrictions shall be forfeited to and reacquired by the Company for no consideration to the Participant, unless otherwise specified in the Award Agreement; provided, however, that, the Compensation Committee, in its discretion, may (a) provide in any Award Agreement that restrictions or forfeiture conditions relating to Restricted Stock will be waived in whole or in part in the event of terminations resulting from specified causes, and (b) in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock. 8.5 Evidence of Stock Ownership. Unless otherwise determined by the Compensation Committee, until such time as all conditions or restrictions applicable to Shares of Restricted Stock have been satisfied or lapse, (a) all certificates representing Shares of Restricted Stock, together with duly endorsed stock powers in blank, will be held in custody by the Company or its transfer agent, (b) any uncertificated Shares of Restricted Stock will be held at the Company’s transfer agent in book entry form in the name of the Participant or (c) such Shares of Restricted Stock will be held for the benefit of the Participant in nominee name by the broker engaged by the Company to provide such services for the Plan, in each case with appropriate restrictions relating to the transfer of such Shares of Restricted Stock. 8.6 Dividend Rights. Unless otherwise set forth in the Award Agreement, a Participant holding Restricted Stock shall be entitled to receive (a) any regular cash distributions declared and paid with respect to Shares subject to an Award of Restricted Stock, and (b) any Shares distributed in connection with a stock split or stock dividend, and any other cash and property (including securities of the Company and other issuers) distributed as a dividend, with respect to Shares subject to an Award of Restricted Stock. In the case of Restricted Stock, the vesting of which is conditioned only upon the continuous employment of, or provision of services by, Participant for a specified future period, such dividends and distributions shall be paid to the Participant at the same time they are paid to all other stockholders of the Company unless otherwise provided in the Award Agreement; provided that, if any such dividends or distributions are paid in Shares or other securities, such Shares or other securities shall be subject to the same restrictions and forfeiture conditions to the same extent as the Restricted Stock with respect to which such Shares or other securities have been distributed, and all references to Restricted Stock in the Plan or the applicable Award Agreement shall be deemed to include such Shares or other securities. In the case of Restricted Stock, the vesting of which is conditioned on the achievement of Performance Criteria, such dividends and distributions shall be withheld by the Company and shall vest and be paid, without interest, only if and to the extent, and at the time, the underlying Shares of Restricted Stock shall vest. To the extent dividends or distributions are withheld with respect to Shares of Restricted Stock that are forfeited, the dividends and distributions shall also be forfeited. 8.7 Voting Rights. Unless otherwise set forth in the Award Agreement, all voting rights appurtenant to the Shares subject to an Award of Restricted Stock shall be exercised by the Participant. 8.8 Termination of the Restriction Period. Upon satisfaction of the terms and conditions specified in the Award Agreement that apply to a Restriction Period, (a) the Participant shall be entitled to have the legend referred to in Section 8.5 removed from his or her Shares of Restricted Stock after the last day of the Restriction Period, and (b) if the Shares of Restricted Stock are evidenced by physical certificates and the Company has retained possession of the certificates representing the Shares of Restricted Stock, the Company shall promptly deliver such certificates to the Participant. If the terms and conditions specified in the Award Agreement that apply to a Restriction Period have not been satisfied, the Restricted Stock subject to the Award shall be forfeited to and reacquired by the Company for no consideration to the Participant, unless otherwise specified in the Award Agreement. 8.9 Additional Terms and Conditions. Each Award of Restricted Stock, and all Shares of Restricted Stock granted or offered for sale hereunder, shall be subject to such additional terms and conditions not inconsistent with the Plan as are prescribed by the Compensation Committee and set forth in the applicable Award Agreement or other agreement, plan or policy as approved by the Compensation Committee. 9.Restricted Stock Units. | Restricted Stock Units. |
9.1 Grant of Restricted Stock Units. The Compensation Committee may make Awards of Restricted Stock Units in such amounts, at such times and to such Employees as the Compensation Committee, in its discretion, may determine in accordance with the eligibility criteria set forth in Section 5. Unless the Award Agreement provides otherwise with respect to the right to receive dividends or other distributions, a Participant granted Restricted Stock Units shall not have any of the rights of a stockholder with respect to the Shares subject to an Award of Restricted Stock Units, including any right to vote, until the Shares subject to the Award shall have been issued in the Participant’s name in accordance with the terms of the applicable Award Agreement. 9.2 Vesting and Other Terms. At the time of grant of each Award of Restricted Stock Units, the Compensation Committee shall determine the Restriction Period that will apply to the Award. During the Restriction Period, Restricted Stock Units shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions as the Compensation Committee may impose, which restrictions may lapse separately or in combination at such times, under such circumstances (including based on achievement of Performance Criteria or future service requirements or both), in such installments or otherwise as the Compensation Committee may determine in its discretion. If the terms and conditions specified in the Award Agreement have not been satisfied by the end of the Restriction Period, the Restricted Stock Units subject to the Restriction Period shall become null and void, and the Participant shall forfeit all rights with respect to such Award. 9.3 Termination of Employment. Except as otherwise determined by the Compensation Committee, either at the time of the grant of the Award or thereafter, upon termination of the Participant’s employment during the applicable Restriction Period, Restricted Stock Units that are at that time subject to restrictions shall be null and void, and the Participant shall forfeit all rights with respect to such Awards. 9.4 Settlement. On the vesting date or dates of the Award, the Company shall, subject to the terms of the Plan and the Award Agreement, transfer to the Participant one Share for each Restricted Stock Unit scheduled to be issued on such date and not previously forfeited. 9.5 Additional Terms and Conditions. Each Award of Restricted Stock Units, and all Shares issued in settlement of Restricted Stock Units, shall be subject to such additional terms and conditions not inconsistent with the Plan as are prescribed by the Compensation Committee and set forth in the applicable Award Agreement or other agreement, plan or policy as approved by the Compensation Committee. 9.6 Dividend Rights. If the Award Agreement so provides, a Participant holding Restricted Stock Units shall be entitled to receive, but only if, to the extent, and at the time that the Restricted Stock Units vest and are settled, (i) any regular cash distributions declared and paid with respect to Shares subject to a Restricted Stock Unit, and (ii) any Shares distributed in connection with a stock split or stock dividend, and any other cash and property (including securities of the Company and other issuers) distributed as a dividend, with respect to Shares subject to an Award of Restricted Stock. In the case of Restricted Stock Units, the vesting of which is conditioned on the achievement of Performance Criteria, any such dividends or distributions (if provided for in the Award Agreement) shall be withheld by the Company and shall vest and be paid, without interest, only if and to the extent, and at the time, the Restricted Stock Units shall vest. Dividends or distributions relating to any forfeited Restricted Stock Units shall also be forfeited. 10.Stock Appreciation Rights. | Stock Appreciation Rights. |
10.1 Grant of Stock Appreciation Rights. The Compensation Committee may make Awards of Stock Appreciation Rights in such amounts, at such times and to such Employees as the Compensation Committee, in its discretion, may determine in accordance with the eligibility criteria set forth in Section 5. If a Stock Appreciation Right is granted to a Section 16(b) Insider, the Award Agreement shall incorporate all the terms and conditions at the time necessary to assure that the subsequent exercise of the Stock Appreciation Right shall qualify for the safe-harbor exemption from short-swing profit liability provided by Rule 16b-3. 10.2 General Terms. A Stock Appreciation Right shall confer on the Participant the right to receive in Shares, cash or a combination thereof (as may be determined by the Compensation Committee in its discretion) the value equal to the excess of the Fair Market Value of one Share on the date of exercise over the exercise price for the Stock Appreciation Right, with respect to every Share for which the Stock Appreciation Right is granted (the “SAR Settlement Value”). At the time of grant, the Stock Appreciation Right must be designated by the Compensation Committee as either a tandem Stock Appreciation Right or a stand-alone Stock Appreciation Right and, if not so designated, shall be deemed to be a stand-alone Stock Appreciation Right. A tandem Stock Appreciation Right is a Stock Appreciation Right that is granted in tandem with an Option and only may be granted at the same time as the Option to which it relates. The exercise of a tandem Stock Appreciation Right shall cancel the related Option for a like number of Shares, and the exercise of the related Option similarly shall cancel the tandem Stock Appreciation Right for a like number of Shares. Tandem Stock Appreciation Rights shall, except as specifically set forth in this Section 10 or in the applicable Award Agreement, be subject to the same terms and conditions as apply to the related Option. Stand-alone Stock Appreciation Rights shall, except as specifically set forth in this Section 10 or in the applicable Award Agreement, be subject to the same terms and conditions generally applicable to Non-Qualified Stock Options as set forth in Section 7. 10.3 Exercise Price. The exercise price of each Stock Appreciation Right shall be determined by the Compensation Committee, but shall not be less than the Fair Market Value of the Common Stock on the Date of Grant. 10.4 Other Terms. The Compensation Committee shall determine the term of each Stock Appreciation Right. The term shall commence on the Date of Grant and shall be ten (10) years or such shorter period as is determined by the Compensation Committee. The Compensation Committee also shall determine the time or times at which and the circumstances under which a Stock Appreciation Right may be exercised in whole or in part, the method of exercise, the method of settlement and the form of consideration payable in settlement. The Compensation Committee may provide for Stock Appreciation Rights to become exercisable at one time or from time to time, periodically or otherwise (including, without limitation, upon the satisfaction of Performance Criteria), as to such number of Shares or percentage of the Shares subject to the Stock Appreciation Right as the Compensation Committee determines. 10.5 Exercise. Each Stock Appreciation Right may be exercised in whole or in part (but not as to fractional shares) by the delivery of an executed Notice of Exercise (which may be in electronic format) in the form prescribed from time to time by the Compensation Committee, accompanied by payment of any amounts required to be withheld for tax purposes under Section 14. If a Stock Appreciation Right is exercised by any person other than the Participant, the Compensation Committee may require satisfactory evidence that the person exercising the Stock Appreciation Right has the right to do so. Upon the exercise of a Stock Appreciation Right, the Participant shall be entitled to receive the SAR Settlement Value from the Company for each Share as to which the Stock Appreciation Right has been exercised. The Company shall pay the SAR Settlement Value in Shares valued at Fair Market Value on the exercise date, in cash or any combination thereof, as determined by the Compensation Committee. The Compensation Committee may permit a Participant to elect to defer receipt of payment of all or part of the SAR Settlement Value pursuant to such rules and regulations as may be adopted by the Compensation Committee or as may be specified in the applicable Award Agreement. 10.6 Additional Terms and Conditions. Each Award of Stock Appreciation Rights, and all Shares issued in settlement of Stock Appreciation Rights, shall be subject to such additional terms and conditions not inconsistent with the Plan as are prescribed by the Compensation Committee and set forth in the applicable Award Agreement. 11.Other Stock-Based Awards. | Other Stock-Based Awards. |
The Compensation Committee may grant to Employees equity-based or equity-related Awards not otherwise described herein, alone or in tandem with other Awards, in such amounts and subject to such terms and conditions as the Compensation Committee shall determine from time to time in its sole discretion (“Other Stock-Based Awards”). Without limiting the generality of the foregoing, Other Stock-Based Awards may (a) involve the transfer of restricted or unrestricted Shares of Common Stock to Participants, either at the time of grant or thereafter, or payment in cash or otherwise of amounts based on the value of Shares of Common Stock, (b) be subject to performance-based or service-based vesting requirements, (c) be granted as, or in payment of, a bonus, or to provide incentives or recognize special achievements or contributions, (d) be designed to comply with Applicable Laws of jurisdictions other than the United States, and (e) be designed to qualify for the performance-based compensation exception under Section 162(m); provided, that each Other Stock-Based Award shall be denominated in, or shall have a value determined by reference to, a number of Shares that is specified in the Award Agreement. In the case of Other Stock-Based Awards, the vesting of which is conditioned on the achievement of Performance Criteria, if the Award Agreement provides Participants with dividend rights, any dividends or distributions shall be withheld by the Company and shall vest and be paid, without interest, only if and to the extent, and at the time, the Other Stock-Based Awards shall vest. Dividends or distributions relating to any forfeited Other Stock-Based Awards shall also be forfeited. 12.Performance Based Awards. | Performance Based Awards. |
12.1 Performance Criteria. Awards made pursuant to the Plan may be made subject to the attainment of performance goals relating to one or more business criteria (“Performance Criteria”). For purposes of Awards that are intended to qualify for the performance-based compensation exception under Section 162(m), the Performance Criteria shall (a) be objective business criteria and otherwise meet the requirements of Section 162(m), including the requirement that the level or levels of performance targeted by the Compensation Committee result in the achievement of performance goals being “substantially uncertain” as of the Date of Grant, and (b) relate to one or more of the following performance measures: (i) revenues or net sales; (ii) earnings before or after deduction for all or any portion of interest, taxes, depreciation, amortization or other items, whether or not on a continuing operations or an aggregate or per share basis; (iii) return on equity, investment, capital or assets; (iv) margins; (v) one or more operating ratios; (vi) borrowing levels, leverage ratios or credit ratings; (vii) market share; (viii) capital expenditures; (ix) cash flow; (x) stock price, growth in stockholder value relative to one or more stock indices or total stockholder return; (xi) budget and expense management; (xii) working capital turnover and targets; (xiii) sales of particular products or services, market penetration, geographic expansion or new concept development; (xiv) customer acquisition, expansion and retention; (xv) acquisitions and divestitures (in whole or in part), joint ventures, strategic alliances, spin-offs, split-ups and the like; (xvi) reorganizations, recapitalizations, restructurings and financings (debt or equity); (xvii) transactions that would constitute a Change in Control; or (xviii) any combination of the foregoing. Performance Criteria measures, and targets with respect thereto, determined by the Compensation Committee need not be based upon an increase, a positive or improved result or avoidance of loss. 12.2 Additional Provisions Applicable to Performance Criteria. Any Performance Criteria may be used to measure the performance of the Company as a whole or with respect to any business unit, Subsidiary or business segment of the Company, either individually, alternatively or in any combination, and may be measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous period results or to a designated comparison group, in each case as specified by the Compensation Committee in the Award. To the extent required by Section 162(m), prior to the payment of any compensation under an Award intended to qualify as performance-based compensation under Section 162(m), the Compensation Committee shall certify the extent to which any such Performance Criteria and any other material terms under such Award have been satisfied (other than in cases where such Performance Criteria relate solely to the increase in the value of the Common Stock). To the extent Section 162(m) is applicable, the Compensation Committee may not in any event increase the amount of compensation payable to a Participant subject to Section 162(m) upon the satisfaction of any Performance Criteria. 12.3 Adjustments to Performance Criteria. The Compensation Committee may, with respect to any Performance Period, make such adjustments to Performance Criteria as it may deem appropriate to compensate for, or reflect, (a) asset write-downs or write-ups; (b) litigation, claims, judgments or settlements; (c) the effect of changes in tax law, accounting principles or other laws or provisions affecting reported results; (d) discontinued operations and divestitures; (e) mergers, acquisitions and accruals for reorganization and restructuring programs; and (f) extraordinary or other unusual or non-recurring item; provided, however, with respect to Awards intended to qualify as performance-based compensation under Section 162(m), such adjustments shall be made only to the extent that the Compensation Committee determines that such adjustments may be made without a loss of deductibility of the compensation includible with respect to the Awards under Section 162(m). 12.4 Performance Periods. The attainment of Performance Criteria shall be measured over performance periods of one (1) year or more (“Performance Periods”), as may be established by the Compensation Committee. Performance Criteria for any Performance Period shall be established not later than the earlier of (a) 90 days after the beginning of the Performance Period, or (b) the time 25% of the Performance Period has elapsed. 12.5 Right of Recapture. If, at any time after the date on which a Participant has been granted or becomes vested in or paid an Award pursuant to the achievement of Performance Criteria, the Compensation Committee determines that the earlier determination as to the achievement of the Performance Criteria was based on incorrect data and that in fact the Performance Criteria had not been achieved or had been achieved to a lesser extent than originally determined and a portion of the Award would not have been granted, vested or paid given the correct data, then (a) any portion of the Award that was so granted shall be forfeited and any related Shares (or, if such Shares were disposed of, the cash equivalent) shall be returned to the Company, (b) any portion of the Award that became so vested shall be deemed to be not vested and any related Shares (or, if such Shares were disposed of, the cash equivalent) shall be returned to the Company, and (c) any portion of the Award so paid to the Participant shall be repaid by the Participant to the Company upon notice from the Company, in each case as and to the extent provided by the Compensation Committee. 12.6 Section 162(m). Notwithstanding any provision contained in this Plan to the contrary, the terms of Awards (excluding any Options and Stock Appreciation Rights) that are intended to qualify for the performance-based compensation exception under Section 162(m) granted to any one Participant shall be such that the maximum amount of compensation recognized under such Awards by such Participant in any calendar year, ignoring for this purpose any acceleration resulting from the Participant’s death or Disability or from a Change in Control, may not exceed 1,000,000 Shares, if such Awards are settled in Shares, or the Fair Market Value of that same number of Shares if such Awards are settled in cash. Furthermore, in the case of an Award intended to be eligible for the performance-based compensation exception under Section 162(m), the Plan and such Award shall be construed to the maximum extent permitted by law in a manner consistent with qualifying the Award for such exception. 13.Restrictions on Transfer. | Restrictions on Transfer. |
13.1 Restrictions on Transfer. Subject to the further provisions of this Section 13.1, Awards may not be transferred other than by will or by the laws of descent and distribution, and during a Participant’s lifetime an Award requiring exercise may be exercised only by the Participant (or in the event of the Participant’s incapacity, the person or persons legally appointed to act on the Participant’s behalf). No Award or any interest therein shall be subject to attachment, execution, garnishment, sequestration, the laws of bankruptcy or any other legal or equitable process. The foregoing notwithstanding, Awards (other than Incentive Stock Options and Stock Appreciation Rights granted in tandem therewith) may be transferred to one or more transferees during the lifetime of the Participant, and may be exercised by such transferees in accordance with the terms of such Award, but only if and to the extent such transfers are permitted by the Compensation Committee in its discretion, subject to any terms and conditions which the Compensation Committee may impose thereon. If a transfer is approved by the Compensation Committee, the transfer shall only be effective upon notice in writing or electronically to the Company given in such form and manner as may be prescribed by the Compensation Committee. Anything herein to the contrary notwithstanding, transfers of an Award by a Participant for consideration are prohibited. 13.2 Designation and Change of Beneficiary. Each Participant may file in writing or electronically with the Compensation Committee a designation of one or more persons as the beneficiary who shall be entitled to receive the rights or amounts payable with respect to an Award due under the Plan upon the Participant’s death. A Participant may, from time to time, revoke or change his or her beneficiary designation without the consent of any prior beneficiary by filing a new designation with the Compensation Committee. The last such designation received by the Compensation Committee shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Compensation Committee prior to the Participant’s death, and in no event shall it be effective as of a date prior to such receipt. If no beneficiary designation is filed by the Participant, the beneficiary shall be deemed to be the Participant’s estate. 13.3 Provisions Applicable to Transferees. A beneficiary, transferee or other person claiming any rights under the Plan from or through any Participant shall be subject to all terms and conditions of the Plan and any Award Agreement or other document applicable to the Participant, except as otherwise determined by the Compensation Committee, and to any additional terms and conditions deemed necessary or appropriate by the Compensation Committee. The Compensation Committee shall have full and exclusive authority to interpret and apply the provisions of the Plan to transferees to the extent not specifically addressed herein. 14.Withholding and Other Tax Provisions. | Withholding and Other Tax Provisions. |
14.1 Withholding. The Company may require the Participant to pay to the Company the amount of any taxes that the Company is required by applicable federal, state, foreign, local or other law to withhold with respect to the grant, vesting, exercise or settlement of an Award and, where applicable, the payment of dividends or other distributions with respect to Shares subject to an Award. The Company shall not be required to issue any Shares under the Plan until such obligations are satisfied in full. The Compensation Committee may, in its sole and absolute discretion in the particular case, permit or require a Participant to satisfy his or her tax withholding obligations by any of the following means (or a combination of any of the following means): (a) by paying cash to the Company, (b) by having the Company withhold a number of Shares that would otherwise be issued to the Participant (or become vested in the case of Restricted Shares) having a Fair Market Value equal to the tax withholding obligations, (c) surrendering a number of Shares the Participant already owns having a Fair Market Value equal to the tax withholding obligations, or (d) entering into such other arrangement as is acceptable to the Compensation Committee in its sole discretion. The value of any Shares withheld or surrendered may not exceed the employer’s minimum tax withholding obligation and, to the extent such Shares were acquired by the Participant from the Company as compensation, the Shares must have been held for the minimum period required by applicable accounting rules to avoid a charge to the Company’s earnings for financial reporting purposes. The Company shall also have the right to deduct from any and all cash payments otherwise owed to a Participant any federal, state, foreign, local or other taxes required to be withheld with respect to the Participant’s participation in the Plan. 14.2 Required Consent to and Notification of Section 83(b) Election. No election under Section 83(b) of the Code (to include in gross income in the year of transfer the amounts specified in Section 83(b) of the Code) or under a similar provision of the laws of a jurisdiction outside the United States may be made in connection with an Award unless expressly permitted by the terms of the Award Agreement or by action of the Compensation Committee in writing prior to the making of such election. In any case in which a Participant is so permitted to make such an election, the Participant shall notify the Company of such election within ten (10) days of filing notice of the election with the Internal Revenue Service or other governmental authority, in addition to any filing and notification required pursuant to regulations issued under Section 83(b) of the Code or other applicable provisions of any tax law. 14.3 No Guarantee of Tax Consequences. None of the Board of Directors, the Company nor the Compensation Committee makes any commitment or guarantee that any federal, state or local tax treatment will apply or be available to any person participating or eligible to participate hereunder. 15.Effect of Certain Corporate Changes and Changes in Control. | Effect of Certain Corporate Changes and Changes in Control. |
15.1 Basic Adjustment Provisions. In the event the Compensation Committee determines that any stock dividend, stock split, combination of shares, extraordinary dividend of cash or assets, merger, consolidation, spin-off, recapitalization (other than the conversion of convertible securities according to their terms), reorganization, liquidation, dissolution or other similar corporate change, or any other increase, decrease or change in the Common Stock without receipt or payment of consideration by the Company, in the Compensation Committee’s sole discretion, affects the Common Stock such that an adjustment to the Awards or the Plan is determined by the Compensation Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to an Award, then the Compensation Committee shall, in such manner as it may deem equitable, adjust any or all of: (a) The number and kind of Shares of Common Stock (or other securities or property) with respect to which an Award may be granted under the Plan (including, but not limited to, adjustments of the limitations in Section 4.1 on the maximum number and kind of Shares which may be issued under the Plan, the ratio set forth in Section 4.1 for the purpose of determining the number of Shares issued under the Plan, and the limitations in Section 4.3 on the maximum number of Shares that may be covered by Awards granted under the Plan to any single Participant in any calendar year); (b) The number and kind of Shares of Common Stock (or other securities or property) subject to outstanding Awards; (c) The grant, exercise or other purchase price per Share under any outstanding Awards; and (d) The terms and conditions of any outstanding Awards (including, without limitation, any applicable Performance Criteria specified in an Award Agreement). Notwithstanding the foregoing, (x) with respect to Incentive Stock Options, any such adjustments shall be made in accordance with Section 424(h) of the Code, (y) the Compensation Committee shall consider the impact of Section 409A of the Code on any such adjustments, and (z) no such adjustments may change the value of benefits available to a Participant under a previously granted Award, (i) if the effect would be to increase the value of the benefits available under such Award, without the approval of the stockholders if such is required by the Plan or Applicable Laws, or (ii) if the effect would be to materially and adversely affect the value of the benefits available under such Award, without the Participant's consent to that adjustment. 15.2 Change in Control. Unless otherwise provided in the Award Agreement or other employment, severance or change in control agreement approved by the Compensation Committee to which a Participant is a party, in which case such agreement shall control, the Compensation Committee may provide with respect to any transaction that results in a Change in Control, either at the time an Award is granted or by action taken prior to the occurrence of the Change in Control, that a Change in Control shall have such effect as is specified by the Compensation Committee, or no effect, as the Compensation Committee in its sole discretion may provide. Without limiting the foregoing, the Compensation Committee may provide, either at the time an Award is granted or by action taken prior to the occurrence of the Change in Control, and without the consent or approval of any Participant, for one or more of the following actions or combination of actions with respect to some or all outstanding Awards (which actions may vary among individual Participants and may be subject to such terms and conditions as the Compensation Committee deems appropriate): (a) Acceleration of the time at which Awards then outstanding vest and (as applicable) may be exercised in full for a limited period of time on or before a specified date fixed by the Compensation Committee (which will permit the Participant to participate with the Common Stock received upon exercise of an Award in the Change in Control transaction), after which specified date all unexercised Awards and all rights of Participants thereunder shall terminate; (b) Acceleration of the time at which Awards then outstanding vest (and, in the case of Options, Stock Appreciation Rights and other applicable Awards, may be exercised so that such Options, Stock Appreciation Rights and other applicable Awards may be exercised in full for their then remaining term); (c) The assumption of Awards (or any portion thereof) by the successor or survivor corporation, or a parent or Subsidiary thereof, or the substitution of awards covering the stock of the successor or survivor corporation, or a parent or Subsidiary thereof, for then outstanding Awards that have been issued under the Plan, with appropriate adjustments as to the number and kind of shares and grant, exercise or other purchase prices; (d) The mandatory surrender to the Company for cancellation of any outstanding Awards and the purchase of the surrendered Awards for an amount of cash, securities or other property equal to the excess of the Fair Market Value of the vested shares of Common Stock subject to any such Award immediately prior to the occurrence of the Change in Control (and such additional portion of the Award as the Compensation Committee may determine) over the aggregate exercise or other purchase price (if any) of such shares; and (e) The termination of any Award (or any portion thereof) concurrently with the closing or other consummation of the Change in Control transaction. If the Compensation Committee provides that an Award shall terminate concurrently with the closing or other consummation of the Change in Control transaction, each Participant shall have the right up to the closing or other consummation of the transaction to exercise all or any part of the Participant’s vested Awards. 15.3 Determination of Adjustments. All determinations of the Compensation Committee pursuant to this Section 15 shall be conclusive and binding on all persons for all purposes of the Plan. 15.4 No Restriction on Right of Company to Effect Corporate Changes. The Plan shall not affect in any way the right or power of the Company to make or authorize any adjustments, recapitalizations, reorganizations or other changes in the Company’s capital structure or its business, any merger or consolidation, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or that are convertible into or exchangeable for Common Stock, the dissolution or liquidation of the Company, any sale or transfer of all or any part of the assets or business of the Company or any of its Subsidiaries, or any other corporate act or proceeding, whether of a similar character or otherwise. Except as specifically provided in this Section 15 and authorized by the Compensation Committee, a Participant shall have no rights by reason of any such corporate act or proceeding, and no adjustment by reason thereof shall be made with respect to any outstanding Award or the Plan. 16.Regulatory Compliance. | Regulatory Compliance. |
16.1 Conditions to Obligations of the Company. The Company may, to the extent deemed necessary or advisable by the Compensation Committee, postpone the issuance or delivery of Shares or the payment of other benefits under any Award until: (a) The completion of any registration or other qualification of such Shares under any state or federal securities law or under the rules and regulations of the Securities and Exchange Commission or any other governmental regulatory body, which the Compensation Committee shall, in its sole discretion, deem necessary or advisable; (b) The admission to listing of, or other required action with respect to, such Shares on any and all stock exchanges or automated quotation systems upon which the Common Stock or other securities of the Company are then listed or quoted; and (c) The compliance with all other requirements of Applicable Laws, as the Compensation Committee shall, in its sole discretion, deem necessary or advisable; The Compensation Committee also may require any Participant to make such representations, furnish such information and comply with or be subject to such other conditions as the Compensation Committee shall, in its sole discretion, deem necessary or advisable to comply with any requirements of Applicable Laws in connection with the grant of any Award or the issuance or delivery of Shares or the payment of other benefits under any Award. Without limiting the generality of the foregoing, if the Shares offered for sale or sold under the Plan are offered or sold pursuant to an exemption from registration under federal, state or foreign securities laws, (x) the Company may require the Participant to represent and agree at the time of grant or exercise, as the case may be, that such Shares are being acquired for investment, and not with a view to the sale or distribution thereof, and to make such other representations as are deemed necessary or appropriate by the Company and its counsel, and (y) the Company may restrict the transfer of such Shares, issue stop-transfer instructions and legend the certificates representing such Shares, in each case in such manner as it deems advisable to ensure the availability of any such exemption. 16.2 Limitation on Company Obligations. The inability of the Company (after reasonable efforts) to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance or sale of any Awards or Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Awards or Shares as to which such requisite authority shall not have been obtained. Nothing contained herein shall be construed to impose on the Company any obligation to register for offering or resale under the Securities Act, or to register or qualify under any other state, federal or foreign securities laws, any Shares, securities or interests in a security paid or issued under, or created by, the Plan, or to continue in effect any such registrations or qualifications if made, and the Company shall have no liability for any inability or failure to do so. 16.3 Provisions Applicable to a Change in Control. Anything in this Section 16 to the contrary notwithstanding, in connection with a Change in Control, the Company shall not take or cause to be taken any action, and shall not undertake or permit to arise any legal or contractual obligation, that results or would result in any postponement of the issuance or delivery of Shares or the payment of benefits under any Award or the imposition of any other conditions on such issuance, delivery or payment, to the extent that such postponement or other condition would represent a greater burden on a Participant than existed on the 90th day preceding the effective date of the Change in Control. 16.4 Exchange Act. Notwithstanding anything contained in the Plan or any Award Agreement to the contrary, if the consummation of any transaction under the Plan would result in the possible imposition of liability on a Participant pursuant to Section 16(b) of the Exchange Act, the Compensation Committee shall have the right, in its sole discretion, but shall not be obligated, to defer such transaction to the extent necessary to avoid such liability. 17.Amendment or Termination of the Plan. | Amendment or Termination of the Plan. |
The Board of Directors may at any time and from time to time amend, suspend or terminate the Plan in whole or in part; provided that no such amendment may, without the approval of the stockholders of the Company, increase the number of Shares that may be issued under the Plan (except for adjustments pursuant to Section 15) or effectuate a change for which stockholder approval is required: (a) in order for the Plan to continue to qualify under Section 422 of the Code; (b) under the corporate governance standards of any national securities exchange or automated quotation system applicable to the Company; or (c) for Awards to be eligible for the performance-based compensation exception under Section 162(m). In addition, no termination or amendment of the Plan shall materially and adversely affect the rights of any Participant in any outstanding Awards, without the consent of the Participant to whom the Awards have been granted. 18.Term of the Plan. | Term of the Plan. |
The Plan shall continue until terminated by the Board of Directors pursuant to Section 17 or as otherwise set forth in the Plan, and no further Awards shall be made hereunder after the date of such termination. Unless earlier terminated, the Plan shall terminate ten (10) years after the initial approval of the 2015 Employee Equity Incentive Plan by the Board of Directors (provided that Awards granted before termination shall continue in accordance with their terms). 19.No Right to Awards or Continued Employment. | No Right to Awards or Continued Employment. |
No person shall have any claim or right to receive grants of Awards under the Plan, and neither the Plan nor any action taken or omitted to be taken hereunder shall create or confer on any Participant the right to continued employment with the Company or its Subsidiaries or interfere with or to limit in any way the right of the Company or its Subsidiaries to terminate the employment of any Participant at any time or for any reason. The loss of any existing or potential profit in Awards shall not constitute an element of damages in the event of the termination of the employment of any Participant for any reason, even if the termination is in violation of an obligation of the Company or its Subsidiaries to the Participant. No Participant shall have any rights as a stockholder with respect to any Shares covered by or relating to any Award until the date of the issuance of a stock certificate with respect to such Shares. 20.Effect of Plan Upon Other Awards and Compensation Plans. | Effect of Plan Upon Other Awards and Compensation Plans. |
Nothing in the Plan shall be construed to limit the right of the Company or any of its Subsidiaries (a) to establish any other forms of incentives or compensation for Employees, or (b) to grant or assume options, restricted stock or other equity-based awards otherwise than under the Plan in connection with any proper corporate purpose, including, but not by way of limitation, the grant or assumption of options, restricted stock or other awards in connection with the acquisition of the business, securities or assets of any corporation, firm or business. Except as provided below, the adoption of the Plan shall not affect any other compensation or incentive plans in effect for the Company or any of its Subsidiaries, and no payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, profit sharing, group insurance or other benefit plan of the Company except as otherwise specifically provided in such other plan. Upon stockholder approval of the Plan, no further awards may be granted under the Company’s Amended and Restated 2006 Equity Incentive Plan (the “Prior Plan”); provided that all awards granted by the Company prior to the stockholder approval of the Plan shall remain in full force and effect and shall continue to be governed by the terms of the Prior Plan and related award agreement. 21.General Provisions. | General Provisions. |
21.1 Other Documents. All documents prepared, executed or delivered in connection with the Plan shall be, in substance and form, as established and modified by the Compensation Committee or by persons under its direction and supervision; provided, however, that all such documents shall be subject in every respect to the provisions of the Plan, and in the event of any conflict between the terms of any such document and the Plan, the provisions of the Plan shall prevail. 21.2 No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Compensation Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares of Common Stock or whether such fractional shares of Common Stock and any rights thereto shall be forfeited or otherwise eliminated (including by rounding to the nearest whole Share). 21.3 Payments in the Event of Forfeitures. Unless otherwise determined by the Compensation Committee or otherwise specified in the applicable Award Agreement, in the event of the forfeiture of an Award with respect to which a Participant paid cash consideration, the Participant shall be repaid the amount of such cash consideration within ten (10) days of the date of forfeiture or as soon thereafter as practicable. 21.4 Limitation on Repricing. The Compensation Committee shall not, without the approval of the stockholders of the Company, amend or replace previously granted Options or Stock Appreciation Rights in a transaction that constitutes a “repricing,” as such term is defined in Section 303A.08 of the Listed Company Manual of the New York Stock Exchange or the rules and regulations of the Securities and Exchange Commission. Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding Awards may not be amended to reduce the exercise price of outstanding Options or Stock Appreciation Rights or cancel outstanding Options or Stock Appreciation Rights in exchange for cash, other awards or Options or Stock Appreciation Rights with an exercise price that is less than the exercise price of the original Options or Stock Appreciation Rights without stockholder approval. 21.5 Minimum Vesting for Awards to Employees. Subject to Sections 3.2(f) and 15.2 of the Plan, or as otherwise provided in the related Award Agreement in connection with a Change in Control or a Participant’s death or disability, (i) no condition on vesting of an Award granted to an Employee that is based solely upon the achievement of Performance Criteria shall be based on performance over a period of less than one year, and (ii) no condition on vesting of an Award granted to an Employee that is based solely upon continued employment or service shall provide for vesting in full of such Award more quickly than one year from the Date of Grant of the Award (which vesting period may lapse on a pro-rated, graded, or cliff basis as specified in the Award Agreement). 21.6 Misconduct of a Participant. Notwithstanding any other provision of the Plan or an Award Agreement, if a Participant commits fraud or dishonesty toward the Company or wrongfully uses or discloses any trade secret, confidential data or other information proprietary to the Company, or intentionally takes any other action materially inimical to the best interests of the Company, as determined by the Compensation Committee, in its sole and absolute discretion, such Participant shall forfeit all rights and benefits under the Plan and any outstanding Awards. 21.7 Restrictive Legends. Any certificates for Shares, any uncertificated Shares issued in book entry form, and any Shares deposited with any broker that the Company has engaged to provide services for the Plan on behalf of a Participant may be subject to such restrictions, legends and stop-transfer instructions as the Compensation Committee deems appropriate to reflect any restrictions on the Shares. 21.8 Uncertificated Shares. To the extent that this Plan provides for the issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a noncertificated or book entry basis or in nominee name, to the extent permitted by Applicable Law or the rules of any applicable stock exchange. 21.9 Successors in Interest. The provisions of the Plan, the terms and conditions of any Award and the actions of the Compensation Committee shall be binding upon the successors and assigns of the Company and permitted successors and assigns, heirs, executors, administrators and other legal representatives of Participants. 21.10 Severability. If any provision of the Plan or any Award is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any person, or would disqualify the Plan or any Award under any law deemed applicable by the Compensation Committee, such provision shall be construed or deemed amended to conform to Applicable Laws, or, if it cannot be so construed or deemed amended without, in the Compensation Committee’s determination, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award, and the remainder of the Plan and any such Award shall remain in full force and effect. 21.11 Headings. The headings of sections and subsections herein are included solely for convenience of reference and shall not affect the meaning of any of the provisions of the Plan. 21.12 Governing Law. To the extent not preempted by federal law, the Plan and all rights hereunder shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to rules relating to conflicts of law. 21.13 Compliance With Section 162(m). If any provision of the Plan or any Award Agreement relating to an Award that is designated as intended to comply with Section 162(m) does not comply or is inconsistent with the requirements of Section 162(m), such provision shall be construed or deemed amended to the extent necessary to conform to such requirements. 21.14 Compliance With Section 409A. Awards under the Plan are intended either to provide compensation that is exempt from Section 409A of the Code, or that satisfies the requirements of Section 409A of the Code so that Participants will not be liable for the payment of additional tax or interest thereunder, and the Plan and all Awards shall be construed accordingly. If and to the extent any amount of compensation under an Award is determined by the Compensation Committee to constitute deferred compensation that is not exempt from Section 409A of the Code and that is to be paid, settled or provided by reason of a Participant’s termination of employment, then (a) such compensation shall be paid, settled or provided by reason of a Participant’s termination of employment only if that termination also constitutes a “separation from service” within the meaning of that term under Section 409A of the Code, and (b) if the Participant is determined by the Compensation Committee to be a “specified employee” within the meaning of Section 409A of Code, all payments or provisions compensation that would otherwise be paid, settled or provided before the first day of the seventh calendar month beginning after the date the Participant’s separation from service (or, if earlier, the Participant’s date of death) shall be withheld and accumulated and paid or provided without interest on or as soon as practicable after the first day of the seventh calendar month beginning after the date the Participant’s separation from service (or, if earlier, the Participant’s date of death). Each payment or provision of compensation under an Award shall be treated as a separate payment for purposes of Section 409A of the Code. References to termination of employment and similar concepts in the Plan and Awards Agreements shall be interpreted and applied in accordance with the foregoing provisions. To the extent necessary to comply with Section 409A of the Code, no Award that is a Non-Qualified Option or a Stock Appreciation Right shall contain or be amended to contain a “deferral feature” or an “additional deferral feature” within the meaning and usage of those terms under Section 409A of the Code and the administrative guidance thereunder. 21.15 Delivery and Execution of Electronic Documents. To the extent permitted by Applicable Law, the Company may: (a) deliver by email or other electronic means (including posting on a Web site maintained by the Company or by a third party under contract with the Company) all documents relating to the Plan or any Award thereunder (including prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including annual reports and proxy statements), and (b) permit Participants to electronically execute applicable Plan documents (including Award Agreements and any required notices under the Plan) in a manner prescribed by the Committee. 21.16 Administration of the Plan in Foreign Countries. The Compensation Committee may take any action consistent with the terms of the Plan, either before or after an Award has been granted, which the Compensation Committee deems necessary or advisable in order for the administration of the Plan and the grant of Awards thereunder to comply with the Applicable Laws of any foreign country, including but not limited to, modifying or amending the terms and conditions governing any Awards, modifying exercise procedures and other terms and procedures and establishing local country plans as sub-plans to the Plan. 21.17 Effective Date. The Plan shall become effective as of the Effective Date, but only if it has been approved by the stockholders of the Company within twelve (12) months before or after the date the on which it is adopted by the Board of Directors. 21.18 Clawback/Recoupment Policy. Notwithstanding any provisions in the Plan or any Award Agreement to the contrary, all Awards and/or amounts payable thereunder, whether in the form of cash or otherwise, shall be subject to potential cancellation, rescission, clawback and recoupment (i) to the extent necessary to comply with the requirements of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and any regulations or listing requirements promulgated thereunder, and/or (ii) as may be required in accordance with the terms of any clawback/recoupment policy as may be adopted by the Company to comply with Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and any regulations or listing requirements promulgated thereunder, as such policy may be amended from time to time. Exhibit A DEFINITIONS The following terms, when used in the Plan, shall have the meanings, and shall be subject to the provisions, set forth below: “Audit Committee” means the Audit Committee of the Board of Directors. “Award” means an award containing any one or more of the following: Option(s), Restricted Stock, Restricted Stock Unit(s) or Stock Appreciation Right(s) granted to a Participant pursuant to the Plan. “Award Agreement” means either: (a) a written or electronic agreement entered into by the Company and a Participant setting forth the terms and provisions applicable to an Award granted under the Plan, including any amendment or modification thereof, or (b) a written or electronic statement issued by the Company to a Participant describing the terms and provisions of such Award, including any amendment or modification thereof. The Committee may provide for the use of electronic, Internet, or other non-paper Award Agreements, and the use of electronic, Internet, or other non-paper means for the acceptance thereof and actions thereunder by a Participant. “Applicable Laws” means the requirements relating to the administration, enforcement and taxation of Awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any other country, as determined in accordance with Section 21.12. “Board of Directors” means the Board of Directors of the Company. “Cashless Exercise” means the exercise of an Option through (a) the delivery of irrevocable instructions to a broker (i) to make a sale of a number of Shares issuable upon the exercise of the Option that results in proceeds in the amount required to pay the aggregate Option Price for all the shares as to which the Option is being exercised (and any required withholding tax, if authorized by the Compensation Committee) and (ii) to deliver such proceeds to the Company in satisfaction of such aggregate Option Price (and withholding tax obligation, if applicable), or (b) any other surrender to the Company of Shares issuable upon the exercise of the Option or vested Options in satisfaction of such aggregate Option Price (and withholding tax obligation, if applicable). “Cause” means, with respect to any Participant, (a) “cause” as defined in an employment or consulting agreement applicable to the Participant, or (b) in the case of a Participant who does not have an employment or consulting agreement that defines “cause”: (i) any act or omission that constitutes a material breach by the Participant of any of his or her obligations under any agreement with the Company or any of its Subsidiaries; (ii) the willful and continued failure or refusal of the Participant substantially to perform the duties required of him or her as an Employee, or performance significantly below the level required or expected of the Participant, as determined by the Compensation Committee; (iii) the Participant’s willful misconduct, gross negligence or breach of fiduciary duty that, in each case or in the aggregate, results in material harm to the Company or any of its Subsidiaries; (iv) any willful violation by the Participant of any federal, state or foreign law or regulation applicable to the business of the Company or any of its Subsidiaries, or the Participant’s commission of any felony or other crime involving moral turpitude, or the Participant’s commission of an act of fraud, embezzlement or misappropriation; or (iv) any other misconduct by the Participant that is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company or any of its Subsidiaries. The Compensation Committee shall determine whether there has been a termination of employment for Cause, and each Participant shall agree, by acceptance of the grant of an Award and the execution of an Award Agreement, that the Compensation Committee’s determination is conclusive and binding on all persons for all purposes of the Plan. “Change in Control” shall mean the occurrence of any one of the following: (i) a “Takeover Transaction” (as defined below); or (ii) any election of directors of the Company takes place (whether by the directors then in office or by the stockholders at a meeting or by written consent) and a majority of the directors in the office following such election are individuals who were not nominated by a vote of two-thirds of the members of the Board of Directors or its nominating committee immediately preceding such election; or (iii) the Company effectuates a complete liquidation or a sale or disposition of all or substantially all of its assets unless immediately following any such sale or disposition of all or substantially all of its assets the individuals who were members of the Board of Directors of the Company immediately prior to such transaction continue to constitute a majority of the Board of Directors or other governing body of the surviving corporation or entity (or, in the case of an acquisition involving a holding company, constitute a majority of the Board of Directors or other governing body of the holding company) for a period of not less than twelve (12) months following the closing of such transaction. A “Takeover Transaction” shall mean (i) a merger or consolidation of the Company with, or an acquisition by the Company of the equity interests or all or substantially all of the assets of, any other corporation or entity, other than a merger, consolidation or acquisition in which the individuals who were members of the Board of Directors of the Company immediately prior to such transaction continue to constitute a majority of the Board of Directors or other governing body of the surviving corporation or entity (or, in the case of an acquisition involving a holding company, constitute a majority of the Board of Directors or other governing body of the holding company) for a period of not less than twelve (12) months following the closing of such transaction, or (ii) one or more occurrences or events as a result of which any individual, entity or group (as such term is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) becomes the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities. Notwithstanding the foregoing, solely with respect to any Award that is subject to Section 409A of the Code and payable upon a Change in Control, the term “Change in Control” shall mean an event described in one or more of the foregoing provisions of this definition, but only if it also constitutes a “change in control event” within the meaning of Treas. Reg. 1.409A-3(i)(5). “Code” means the Internal Revenue Code of 1986, as amended, including the rules and regulations promulgated thereunder. “Common Stock” means shares of Common Stock, par value $0.01 per share, of the Company and any other equity securities of the Company that may be substituted or resubstituted for such Common Stock pursuant to Section 15. “Company” means Newpark Resources, Inc., a Delaware corporation, and any successor. “Compensation Committee” means the Compensation Committee of the Board of Directors. “Date of Grant” means the date of grant of an Award as set forth in the applicable Award Agreement. “Disqualifying Disposition” has the meaning set forth in Section 7.8.3. “Disability” means, with respect to any Participant who has an employment or consulting agreement that defines such term or a similar term, “disability” as defined in such agreement or, in the case of a Participant who does not have an employment or consulting agreement that defines such term or a similar term, the inability of the Participant to perform substantially all his duties as an Employee by reason of illness or incapacity for a period of more than six months, or six months in the aggregate during any 12-month period, established by medical evidence reasonably satisfactory to the Compensation Committee; provided, however, that in the case of any Award that provides for compensation that is exempt from, or compliant with, Section 409A of the Code, or would be so exempt or compliant if the term “Disability” met the requirements of Treas. Reg. §1.409A-3(i)(4), the term “Disability” shall mean a condition in which the Participant, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, is: (a) unable to engage in any substantial gainful activity; or (b) is receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company and its Subsidiaries. “Effective Date” shall mean April 6, 2015, the date on which this Plan was adopted by the Board of Directors. “Employee” means any person who is employed by the Company or one of its Subsidiaries, provided, however, that the term “Employee” does not include a non-employee director of the Company or an individual performing services for the Company or a Subsidiary who is treated for tax purposes as an independent contractor at the time of performance of the services, whether such person is so employed at the time this Plan is adopted or becomes so employed subsequent to the adoption of this Plan. For purposes of awards of Incentive Stock Options, “Employee” means any person, including an officer, who is so employed by the Company or any “parent corporation” or “subsidiary corporation” of the Company as defined in Sections 424(e) and 424(f) of the Code, respectively. An Employee shall not cease to be an Employee in the case of (a) any leave of absence approved by the Company, or (b) transfers between locations of the Company or between the Company, any of its Subsidiaries or any successor. “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. “���Fair Market Value” means, as of any given date, the value of a share of Common Stock determined as follows:
(a) If the Common Stock is listed on an established stock exchange or a national market system, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported), as quoted on the principal exchange or system on which the Common Stock is then traded and as reported in The Wall Street Journal or such other source as the Compensation Committee deems reliable, on such date or, if such date is not a trading day, on the trading day immediately preceding such date; (b) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock, as reported in The Wall Street Journal or such other source as the Compensation Committee deems reliable, on such date or, if such date is not a trading day, on the trading day immediately preceding such date; or (c) In all other cases, the “fair market value” as determined by the Compensation Committee in good faith and using such financial sources as it deems relevant and reliable (but in any event not less than fair market value within the meaning of Section 409A of the Code). “Incentive Stock Option” means an Option which qualifies as an “incentive stock option” under Section 422 of the Code and is designated as an Incentive Stock Option by the Compensation Committee. For avoidance of doubt, no Option awarded under the Plan will be an Incentive Stock Option unless the Compensation Committee expressly provides for Incentive Stock Option treatment in the applicable Award Agreement. “Non-Qualified Stock Option” means an Option which is not an “incentive stock option” under Section 422 of the Code and includes any Option which is not designated as an Incentive Stock Option by the Compensation Committee. “Option” means a right to purchase Shares upon payment of the Option Price. “Option Price” means the purchase price per Share deliverable upon the exercise of an Option in order for the Option (or applicable portion thereof) to be exchanged for Shares. “Other Stock-Based Awards” has the meaning set forth in Section 11. “Participant” means any Employee who has been granted an Award. “Performance Criteria” has the meaning set forth in Section 12.1 of the Plan. “Performance Period” has the meaning set forth in Section 12.4 of the Plan. “Plan” means the Newpark Resources, Inc. 2015 Employee Equity Incentive Plan. “Restricted Stock” means Shares awarded to a Participant under Section 8, the rights of ownership of which are subject to restrictions prescribed by the Compensation Committee. “Restricted Stock Unit” means a right granted to a Participant under Section 9 to receive Shares upon the satisfaction of Performance Criteria or other criteria specified by the Compensation Committee, such as continuous service, at the end of a specified Restriction Period. “Restriction Period” means the period or periods during which any forfeiture or vesting restrictions, restrictions on transferability or other restrictions shall apply to any Award, as determined by the Compensation Committee in its discretion, consistent with the provisions of the Plan. “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan. “SAR Settlement Value” has the meaning set forth in Section 10.2. “Section 16(b) Insider” means an officer or director of the Company or any other person whose transactions in the Company’s Common Stock are subject to Section 16 of the Exchange Act. “Section 162(m)” means Section 162(m) of the Code and the regulations promulgated thereunder. “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. “Shares” means shares of the Company’s Common Stock reserved for issuance under the Plan, as adjusted pursuant to Section 15, and any successor security. “Stock Appreciation Right” means a right granted to a Participant under Section 10 that entitles the Participant to receive a payment in Shares, cash or a combination thereof measured by the increase in the Fair Market Value of a Share over the exercise price of the Stock Appreciation Right, as established by the Compensation Committee on the Date of Grant. “Subsidiary” means any “subsidiary” within the meaning of Rule 405 under the Securities Act; provided, however, for purposes of Awards of Incentive Stock Options, “Subsidiary” means any entity that is a subsidiary of the Company within the meaning of Section 424(f) of the Code, and for purposes of Awards of Non-Qualified Options, “Subsidiary” means a corporation or other entity in an chain of corporations and/or other entities in which the Company has a “controlling interest” within the meaning of Treas. Reg. 1.414(c)-2(b)(2)(i), but using the threshold of 50% ownership wherever 80% appears. A-5
APPENDIX C CERTIFICATE OF AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION OF NEWPARK RESOURCES, INC. Newpark Resources, Inc. (the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “DGCL”), hereby certifies as follows: FIRST: The name of the Corporation is Newpark Resources, Inc. The Restated Certificate of Incorporation of the Corporation was filed with the Delaware Secretary of State’s Office on November 5, 1998. SECOND:This Certificate of Amendment to the Restated Certificate of Incorporation of the Corporation was duly adopted in accordance with Section 242 of the DGCL. The Board of Directors duly adopted resolutions setting forth and declaring advisable this Certificate of Amendment to the Restated Certificate of Incorporation of the Corporation and directed that the proposed amendment be considered by the stockholders of the Corporation. The proposed amendment was considered at the annual meeting of stockholders duly called upon notice in accordance with Section 222 of the DGCL and held on May 19, 2016, at which meeting the necessary number of shares were voted in favor of the proposed amendment. The stockholders of the Corporation duly adopted this Certificate of Amendment to the Restated Certificate of Incorporation of the Corporation. THIRD: Article SEVENTH of the Restated Certificate of Incorporation is hereby amended by deleting all of Paragraph B of Article SEVENTH and replacing it with the following in substitution therefor: “B. NoAny director may be removed from officeexcept for cause, and except,with or without cause, only upon the vote or written consent of stockholders representing not less than two-thirds (2/3) of the issued and outstanding capital stock of each class then entitled to vote in elections of directors.” FOURTH: This Certificate of Amendment to the Restated Certificate of Incorporation shall become effective on the date this Certificate of Amendment to the Restated Certificate of Incorporation is filed with the Secretary of State of the State of Delaware. IN WITNESS WHEREOF, this Certificate of Amendment to the Restated Certificate of Incorporation has been executed for and on behalf of the Corporation by an officer thereunto duly authorized and attested to as of______________, 2016. | NEWPARK RESOURCES, INC. | | | | | | | | By: | | | Name: | | | Title: | | | | |
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