EXHIBIT 99.4
DESCRIPTION OF CALAMOS ASSET MANAGEMENT, INC. INCENTIVE COMPENSATION PLAN.
EMPLOYEE BENEFIT PLANS
CALAMOS ASSET MANAGEMENT, INC. INCENTIVE COMPENSATION PLAN
We will adopt the Calamos Asset Management, Inc. Incentive Compensation
Plan. Our incentive compensation plan will be administered by our Compensation
Committee. The plan provides for the granting of incentive and nonqualified
stock options, stock appreciation rights, stock awards, stock units, dividend
equivalents, cash awards and other awards not inconsistent with the plan.
Employees, nonemployee directors and consultants are eligible to receive awards
under the plan. The Compensation Committee has discretion to select the
employees to whom awards will be granted, to determine the type, size and terms
and conditions applicable to each award and the authority to interpret, construe
and implement the provisions of the plan. The Compensation Committee's decisions
are binding on the participants in the plan. It is presently anticipated that
approximately 120 individuals will initially participate in the plan.
A total of 10,000,000 shares may be subject to awards under our incentive
compensation plan, subject to adjustment in accordance with the terms of the
plan. This amount represents approximately 10% of our Class A common stock on a
fully diluted basis, assuming Calamos Family Partners, Inc. exchanged all of its
membership units in Calamos Holdings LLC for, and converted all outstanding
shares of our Class B common stock into, shares of our Class A common stock as
of the date of this offering. Common stock issued under the plan may be either
authorized but unissued shares, treasury shares or any combination of authorized
but unissued shares and treasury shares.
To the extent that shares of common stock subject to an award are not
issued by reason of expiration, forfeiture or cancellation of the award, by
reason of the tendering or withholding of shares to pay the exercise price or
satisfy tax withholding obligations, by reason of being settled in cash in lieu
of shares or in a manner that shares covered by the award are not issued, then
such shares may be available for new awards. Shares of common stock issued in
connection with awards that are assumed, converted or substituted pursuant to a
merger, acquisition or similar transaction will not reduce the number of shares
available for awards. All of the shares available may be issued under incentive
stock options. The maximum number of shares of our Class A common stock that may
be subject to awards made to any one individual in any one calendar year is
1,000,000.
Awards under the plan are determined by the Compensation Committee in its
discretion. For this reason, except for the awards of restricted stock granted
in connection with termination of our EAU plan as described below, and for the
option and restricted stock unit grants expected to be made after the pricing of
this offering as described below, it is not possible to determine the benefits
and amounts that will be received by any individual participant or group of
participants in the future.
Set forth below is a description of the types of awards that may be
granted under our incentive compensation plan.
Stock Options. Options to purchase shares of our Class A common stock,
which may be nonqualified or incentive stock options, may be granted under the
plan at an exercise price determined by the Compensation Committee in its
discretion, provided that the option price may be no less than the fair market
value of the underlying common stock on the date of grant (110% of fair market
value in the case of an incentive stock option granted to a ten percent
shareholder).
Stock Appreciation Rights. A stock appreciation right ("SAR") is an award
entitling an employee to receive an amount equal to (or less than, if the
Compensation Committee so determines at the time of grant) the excess of the
fair market value of a share of our Class A common stock on the date of exercise
over the exercise price per share specified for the SAR, multiplied by the
number of shares of common stock with respect to which the SAR was exercised.
Restricted Stock. An award of restricted stock is an award of our Class A
common stock which is subject to such restrictions as the Compensation Committee
deems appropriate, including forfeiture conditions and restrictions against
transfer for a period specified by the Compensation Committee.
Stock Unit Equivalents. A stock unit award is a grant of a number of units
valued, in whole or in part by reference to, or otherwise based on, shares of
common stock. At the discretion of the Compensation Committee, stock unit awards
may relate in whole or in part to the attainment by the grantee of certain
specified performance criteria.
Dividend Equivalents. A dividend equivalent award is an award that
entitles an employee to receive from us cash payments, in the same amount that
the holder of record of a share of our Class A common stock on the dividend
record date would be entitled to receive as cash dividends on such share of our
Class A common stock. Grants of options, SARs and stock units awards may, in the
discretion of the Compensation Committee, earn dividend equivalents. The
Compensation Committee will establish such rules and procedures governing the
crediting of dividend equivalents, including any timing and payment
contingencies of such dividend equivalents, as it deems appropriate or
necessary.
Cash and Other Awards. Other types of awards which may be granted include
awards payable in cash, shares of common stock or a combination of cash and
shares. The maximum annual amount a single participant may earn under any
cash-based award is $10.0 million. An award earned over a period greater than
one year is treated as earned over the full and partial calendar years in such
period.
Performance Awards. The Compensation Committee may establish performance
or other criteria applicable to the determination of the amounts earned under an
award. The performance goals may be based on one or more of the following
performance criteria: total shareholder return, earnings, earnings per share,
net income, revenues, expenses, market shares, return on assets, return on
equity, assets under management, investment performance of assets under
management, market value of the common stock, regulatory compliance,
satisfactory internal or external audits, achievement of balance sheet or income
statement objectives, or other financial, accounting, quantitative or other
objectives. Performance criteria and objectives may provide for adjustment for
extraordinary items, accounting changes and other special circumstances. The
performance measures may relate to a line of business, subsidiary or other unit,
and may, but need not be, based upon a change or an increase or positive result
of assets under management. At the end of each performance period, the
Compensation Committee will determine and certify the extent to which the
performance goal established for the performance period has been achieved and
determine the amount to be paid, vested or delivered under the award, and may
reduce or eliminate such amount.
Additional Information. Under our incentive compensation plan, if there is
any change in the outstanding shares of common stock by reason of any stock
dividend, recapitalization, merger, consolidation, stock split, combination or
exchange of shares or other form of reorganization, or any other change
involving our common stock, such proportionate adjustments as may be necessary
(in the form determined by the Compensation Committee) to reflect such change
will be made to prevent dilution or enlargement of the rights with respect to
the aggregate number of shares of our common stock for which awards may be
granted under the plan, the number of shares of our Class A common stock covered
by each outstanding award, and the price per share in respect thereof.
Generally, an individual's rights under the plan may not be assigned or
transferred (except in the event of death).
In the event of a change in control and except as the Compensation
Committee may expressly provide otherwise: (1) stock based awards (including
stock options, SARs, restricted stock and restricted stock units) become 100%
vested and (2) all performance based awards (including performance units and
performance shares) will be paid out at the higher of the extent to which the
performance goals have been met through the date of the change in control and
100% of the value of the performance based awards on the date of grant. For
purposes of the plan, a "change in control" shall have occurred when any person
(other than the Calamos family), alone or together with its affiliates and
associates shall become the beneficial owner of more than 50% of the combined
voting power of our then outstanding voting securities.
The plan will remain in effect until terminated by our Board of Directors
and thereafter until all awards granted thereunder are satisfied by the issuance
of shares of our Class A common stock or the payment of cash or otherwise
terminated pursuant to the terms of the plan or under any award agreements.
Notwithstanding the foregoing, no awards may be granted under the plan after the
tenth anniversary of the effective date of the plan. Our Board of Directors may
at any time terminate, modify or amend the plan; provided, however, that no such
amendment, modification or termination may adversely affect an optionee's or
grantee's rights under any award theretofore granted under the plan, except with
the consent of such optionee or grantee, and no such amendment or modification
will be effective unless it is approved by our shareholders where such amendment
or modification is determined to be a "material amendment" under the rules of
the Nasdaq National Market or other applicable stock exchange rule.
No amendment to any outstanding option which would be a "repricing" under
applicable rules may be made without approval of our shareholders.
Certain Federal Income Tax Consequences of Options. Certain of the federal
income tax consequences to us and to optionees of options granted under the plan
should generally be as set forth in the following summary.
An employee to whom an incentive stock option ("ISO") which qualifies
under Section 422 of the Internal Revenue Code is granted will not recognize
income at the time of grant or exercise of such option. No federal income tax
deduction will be allowable to the employee's employer upon the grant or
exercise of such ISO. However, upon the exercise of an ISO, any excess in the
fair market price of our Class A common stock over the option price constitutes
a tax preference item which may have alternative minimum tax consequences for
the employee. When the employee sells such shares more than one year after the
date of transfer of such shares and more than two years after the date of grant
of such ISO, the employee will normally recognize a long-term capital gain or
loss equal to the difference, if any, between the sale prices of such shares and
the option price. If the employee does not hold such shares for the required
period, when the employee sells such shares, the employee will recognize
ordinary compensation income and possibly capital gain or loss in such amounts
as are prescribed by the Internal Revenue Code and the regulations thereunder
and we will generally be entitled to a federal income tax deduction in the
amount of such ordinary compensation income.
An employee to whom a nonqualified stock option ("NSO") is granted will
not recognize income at the time of grant of such option. When such employee
exercises such NSO, the employee will recognize ordinary compensation income
equal to the difference, if any, between the option price paid and the fair
market value, as of the date of option exercise, of the shares the employee
receives. The tax basis of such shares to such employee will be equal to the
option price paid plus the amount includible in the employee's gross income, and
the employee's holding period for such shares will commence on the date on which
the employee recognized taxable income in respect of such shares. Subject to the
applicable provisions of the Internal Revenue Code and regulations thereunder,
we will generally be entitled to a federal income tax deduction in respect of a
NSO in an amount equal to the ordinary compensation income recognized by the
employee.
Initial Awards. After the pricing of this offering, we expect to grant
options under our incentive compensation plan to purchase 727,727 shares of our
Class A common stock, including grants to individuals listed in the table below.
The exercise price of these options is the initial public offering price in the
offering. In addition, we also expect to grant 394,626 restricted stock units
under the same plan. With respect to 242,576 of the restricted stock units and
all of the options, one-third will vest four years from the date of grant, an
additional one-third will vest five years following the date of grant, and the
remainder will vest six years following the date of grant. The remaining 152,050
restricted stock units that we expect to grant will vest one-third per year each
year beginning one year after the date of grant. Vesting of the options and
restricted stock units will accelerate in part in the event of death,
disability, and certain other involuntary termination of employment and in full
upon a change in control, as defined in the plan.
DOLLAR VALUE OF
NUMBER OF RESTRICTED RESTRICTED STOCK
NAME AND POSITION NUMBER OF OPTIONS STOCK UNITS UNITS
----------------- ----------------- -------------------- ----------------
John P. Calamos, Sr 177,273 59,091 $ 1,063,638
Chairman, Chief Executive Officer and Co-Chief
Investment Officer
Nick P. Calamos 113,636 37,879 $ 681,822
Senior Executive Vice President and Co-Chief
Investment Officer
James Greenawalt 0 0 0
Executive Vice President
Patrick H. Dudasik 63,636 21,212 $ 381,816
Executive Vice President, Chief Financial Officer and
Treasurer
James S. Hamman, Jr. 58,182 19,394 $ 349,092
Executive Vice President, General Counsel and Secretary
All current executive officers, as a group 465,818 155,273 $ 2,794,914
CALAMOS FAMILY PARTNERS, INC. EAU PLAN
Prior to this offering, the named executive officers participated in the
Calamos Family Partners, Inc. EAU Plan. Under this EAU Plan, employees were
granted equity appreciation units in Calamos Holdings Inc. that vested over a
period of time.
After the pricing of this offering, we will terminate our EAU plan and cash
out a portion of each EAU participant's appreciation. The payments to the named
executive officers are estimated to be as follows, based on the initial public
offering price of $18.00 per share: John P. Calamos, $0; Nick P. Calamos, $0;
Patrick H. Dudasik, $468,121; and James S. Hamman, Jr., $1,189,024. The
remainder of each participant's appreciation under the EAU plan will be
converted into an aggregate of 950,827 restricted stock units granted under our
incentive compensation plan. These restricted stock units will vest 20% per year
each year beginning on January 1, 2006 and ending on January 1, 2010, subject to
partial acceleration of vesting in the event of death, disability or certain
other involuntary termination of employment and to full vesting upon a change in
control as defined in the plan. The value of restricted stock units to be
granted to the named executive officers are estimated to be as follows, based on
the initial public offering price of $18.00: John P. Calamos, $0; Nick P.
Calamos, $0; Patrick H. Dudasik, $1,989,453; and James S. Hamman, Jr.,
$2,746,432.
All current directors who are not executive officers, as a
group 7,273 2,424 $ 43,632
All employees, including current officers, but excluding
directors and executive officers, as a group 254,636 236,929 $ 4,264,722