PROPOSAL NO. 1 – APPROVAL OF MIP OPTION EXCHANGE PROGRAMIntroduction
We are seeking stockholder approval of a stock option exchange program (the “MIP Option Exchange Program”) that would allow us to cancel out-of-the-money stock options, meaning outstanding stock options that have an exercise price that is equal to or greater than the market price for our Class A Common Stock (as further described below)owned by ASOF Holdings I, L.P., currently held by certain of our employees, including certain of our executive officers, in exchange for new restricted stock units (“New RSUs”). It is the Company’s intent to implement the MIP Option Exchange Program by a tender offer (the “Tender Offer”)ASOF II A (DE) Holdings I, L.P. and ASOF II Holdings I, L.P., pursuant to a tender offer statement on Schedule TO that will be filed with the SEC, the consummation of which will be subject to a condition that the Company’s stockholders approve the MIP Option Exchange Program.
The Company maintains the Company Management Incentive Plan, as amended and restated (the “MIP”) pursuant to which GBT JerseyCo Limited, a subsidiaryrespectively. Each of the Company (“GBT JerseyCo”)Ares Entities (other than ASOF Holdings I, L.P., has granted optionsASOF II A (DE) Holdings I, L.P. and ASOF II Holdings I, L.P., each with respect to certain executives and employees of the Company and its subsidiaries to purchase shares of GBT JerseyCo, which upon the assumption of the MIP by the Company on May 27, 2022 were converted into stock options (“Options”) to purchase shares of our Class A Common Stock including Options granted prior to December 2, 2021 (“Legacy Options”)owned by it) and Options granted on December 2, 2021 (“BCA Options”).
For purposesthe equity holders, partners, members and managers of the MIP Option Exchange Program, only out-of-the-money Legacy Options (the “Eligible Legacy Options”) and out-of-the-money BCA Options (the “Eligible BCA Options”) will be eligible to be cancelled and exchanged for new RSUs (collectively, the “Eligible Options”). For purposesAres Entities expressly disclaims beneficial ownership of these shares of Class A common stock. The address of each Ares Entity is 2000 Avenue of the MIP OptionStars, 12th Floor, Los Angeles, CA 90067.
(8)
Based solely on the Schedule 13G/A filed by HG Vora Capital Management, LLC with the SEC on February 14, 2023. HG Vora Capital Management, LLC is the investment adviser to and may be deemed to have voting and dispositive power of the securities held by HG Vora Special Opportunities Master Fund, Ltd. Parag Vora is the manager of HG Vora Capital Management, LLC. The mailing address for each of these entities and the individual discussed in this footnote is 330 Madison Avenue, 20th Floor, New York, NY 10017.
(9)
Based solely on the Schedule 13G filed by Sabre Corporation with the SEC on March 3, 2023. Marlins Acquisition Corp. is an indirect, wholly-owned subsidiary of Sabre Corporation. Sabre Corporation may be deemed to have voting and dispositive power of the securities held by Marlins Acquisition Corp. The business address of Sabre Corporation is 3150 Sabre Drive, Southlake, TX 76092.
(10)
Based solely on the Schedule 13G filed by Zoom Video Communications, Inc. with the SEC on February 14, 2023. The business address of Zoom Video Communications, Inc. is 55 Almaden Boulevard, 6th Floor, San Jose, CA 95113.
(11)
Includes 1,148,331 stock options that are exercisable within 60 days of the Record Date.
(12)
Includes 371,303 stock options that are exercisable within 60 days of the Record Date.
(13)
Includes 331,503 stock options that are exercisable within 60 days of the Record Date.
(14)
Includes 3,330,797 stock options that are exercisable within 60 days of the Record Date.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Program, “out-of-the-money” refersAct requires the Company’s directors and executive officers and persons who beneficially own more than 10% of a registered class of the Company’s equity securities (“Reporting Persons”) to Optionsfile with an exercise price that is equalthe SEC reports on Forms 3, 4 and 5 concerning their ownership of and transactions in the Class A Common Stock and other equity securities of the Company, generally within two business days of a reportable transaction. As a practical matter, the Company seeks to assist its directors and executives by monitoring transactions and completing and filing reports on their behalf.
To our knowledge, based solely on review of the copies of such reports and any amendments thereto furnished to us during or greaterwith respect to our most recent fiscal year, all Section 16(a) filing requirements applicable to the Reporting Persons were satisfied, with the exception of the following reports, which were filed late: (i) a Form 3 for Marlins Acquisition Corp., which became a beneficial owner of more than the closing price10% of our Class A Common Stock on the expiration dateMay 27, 2022; (ii) a Form 3 for Ares Partners Holdco LLC and its affiliated entities, which became beneficial owners of the Tender Offer (the “Closing Date”). Eligible participants in the MIP Option Exchange Program include (i) all active employees asmore than 10% of the expiration of the Tender Offer (the “Closing”), except for employees who have given or received notice of termination as of the Closing, who hold outstanding Eligible Legacy Options (the “Eligible Legacy Optionholders”), and (ii) all active employees as of the Closing, except for employees who have given or received notice of termination as of the Closing, who hold outstanding Eligible BCA Options (the “Eligible BCA Optionholders”, together with the Eligible Legacy Optionholders, the “Eligible Optionholders”). As of November 16, 2022, 87% of the Legacy Options are vested and all are out-of-the-money. One third of the BCA Options will vest on December 2, 2022, and as of November 16, 2022 all are also out-of-the-money. Legacy Options have exercise prices ranging from $5.74 to $14.58 and BCA Options have an exercise price of $10.03.
If approved by our stockholders and implemented by our Board of Directors, the MIP Option Exchange Program will permit Eligible Optionholders to (i) surrender all, but not less than all, of their out-of-the-money Legacy Options for cancellation in exchange for New RSUs (the “Legacy Option Exchange”) and (ii) surrender all, but not less than all, of their out-of-the-money BCA Options for cancellation in exchange for New RSUs (the “BCA Option Exchange”), in each case, subject to the terms and conditions described below. We believe as a result of Options being out-of-the-money, that Options fail to provide appropriate incentive and retentive value to the Eligible Optionholders. We are proposing the MIP Option Exchange Program because we believe that, by granting New RSUs, we will provide a better incentive and motivation to, and will contribute to the retention of, our key contributors than the out-of-the-money Options that they currently hold. We believe the MIP Option Exchange Program will restore the incentive and retentive benefit of our equity program, and reduce the need to grant separate replacement equity incentives, which would deplete the available share reserve under the Company’s 2022 Equity Incentive Plan (the “2022 Plan”). Moreover, the MIP Option Exchange Program will allow us to devote more of our cash resources toward advancing our business, as the MIP Option Exchange Program is an alternative to increased cash compensation for the Eligible Optionholders.
Overview of the Proposed MIP Option Exchange Program
The Company’s Compensation Committee of its Board of Directors (the “Compensation Committee”) and our Board of Directors have approved the MIP Option Exchange Program, subject to stockholder approval as required by the MIP. The opportunity to participate in the MIP Option Exchange Program will be offered to the Eligible Optionholders who hold Eligible Options. As of November 16, 2022, there were 30 Eligible Optionholders and 100% of the Eligible Optionholders’ outstanding Options constitute Eligible Options.
If an Eligible Legacy Optionholder elects the Legacy Option Exchange, then all, but no less than all, of their Legacy Options will be cancelled and exchanged for New RSUs to be granted under the 2022 Plan upon the Closing