Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
At the Annual Meeting of Stockholders of Big 5 Sporting Goods Corporation (the “Company”) held on June 7, 2019 (the “Annual Meeting”), the Company’s stockholders approved the adoption of the Company’s 2019 Equity Incentive Plan (“2019 Equity Plan”).
Up to an aggregate of 3,848,803 shares of common stock of the Company are authorized for issuance under the 2019 Equity Plan, plus the number of shares which were subject to awards granted under prior equity plans and which awards are or were forfeited, expired or cancelled without the issuance of shares after the April 11, 2019 effective date of the 2019 Equity Plan. Shares that are subject to awards of options or stock appreciation rights granted under the 2019 Equity Plan shall be counted against the 2019 Equity Plan’s aggregate share limit as one share for every one share granted. Shares that are subject to awards granted under the 2019 Equity Plan other than stock options or stock appreciation rights are counted against the 2019 Equity Plan’s aggregate share limit as 2.5 shares for every one share granted. If any shares subject to an award under the 2019 Equity Plan or to an award under any prior plans are forfeited, expire or are cancelled without issuance of such shares, the shares shall again be available for awards under the 2019 Equity Plan. Any shares that again become available for grant shall be added back as one share if such shares were subject to options or stock appreciation rights granted under the 2019 Equity Plan or options or stock appreciation rights granted under the prior plans and as 2.5 shares if such shares were subject to awards other than options or stock appreciation rights granted under the 2019 Equity Plan or the prior plans.
The 2019 Equity Plan authorizes the issuance of stock options, stock appreciation rights, restricted stock and other stock unit awards. Awards (other than stock options and stock appreciation rights) may include the right to receive currently or on a deferred basis, cash, stock or other property dividends, or cash payments in amounts equivalent to stock or other property dividends on shares with respect to the number of shares covered by the award.
Awards under the 2019 Equity Plan may be issued to employees, officers, directors and consultants of the Company or any subsidiary. The 2019 Equity Plan is administered by the Compensation Committee of the Company’s Board of Directors (“Committee”). The Committee shall determine when and under what conditions any option or stock appreciation right shall become exercisable and when restricted stock and other stock unit awards shall become vested.
Generally, the purchase price for shares covered by each option shall not be less than 100% of the fair market value of such shares on the date of grant, but if an incentive stock option (“ISO”) is granted to a more than 10% stockholder of the Company or its subsidiaries (measured by ownership of voting power), the purchase price of an ISO shall not be less than 110% of the fair market value of such shares on the date of grant. The base price for a stock appreciation right shall not be less than 100% of the fair market value of shares as of the date of grant. The Committee, in its discretion, may determine the purchase price, if any, for restricted stock and other stock unit awards.
Each option or stock appreciation right shall expire on the date specified by the Committee, but all options and stock appreciation rights shall expire within 10 years of the date of grant. ISOs granted to more than 10% stockholders of the Company shall expire within five years from the date of grant.
The Committee has no authority to reprice any option, to reduce the base price of any stock appreciation right, or cancel any option or stock appreciation right and replace it with another award available under the 2019 Equity Plan, including cash, when the fair market value of the underlying shares is less than the award’s exercise or base price per share.
If a participant ceases to be employed by the Company or any of its subsidiaries for any reason (including death or permanent disability) other than termination for cause, the participant’s options and stock appreciation rights that were vested and exercisable shall remain exercisable until the end of the original term or for the period determined by the Committee in the individual award agreement or otherwise, whichever expires earlier. After a participant’s death, options and stock appreciation rights may be exercised by the person or persons to whom the participant’s rights pass by will or the laws of descent and distribution. The treatment of each award of restricted stock or other stock unit award on the termination of employment, death, or disability of the participant shall be determined by the Committee in its discretion. If a participant’s employment is terminated for cause, all of his awards may be immediately terminated and canceled, in the Committee’s discretion.
Upon the happening of a merger, reorganization or sale of substantially all of the assets of the Company or other change of control events specified in the 2019 Equity Plan, the Committee, may, in its sole discretion, do one or more of the following: (i) shorten the period during which options and stock appreciation rights are exercisable (provided they remain exercisable for at least 30 days after the date notice of such shortening is given to the participants); (ii) accelerate in whole or in part any vesting schedule to which an option, stock appreciation right, restricted stock or other stock unit award is subject; (iii) arrange to have the surviving or successor entity or any parent entity thereof assume the restricted stock, other stock unit awards, stock appreciation rights or options or grant replacement options or stock appreciation rights with appropriate adjustments in the option prices and adjustments in the number and kind of securities issuable upon exercise; (iv) cancel options upon payment to the participants in cash of an amount that is the equivalent of the excess of the fair market value of the common stock of the Company (at the effective time of the merger,
