The 2017 Plan contains a number of provisions that the Board believes are consistent with the interests of stockholders and sound corporate governance practices, including:
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Minimum vesting period of one year from the date of grant for options and stock appreciation rights, subject to certain limited exceptions;
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Minimum 100% fair market value exercise price for options and stock appreciation rights;
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No repricing of options or stock appreciation rights and no cash buyout of underwater options and stock appreciation rights without shareholder approval;
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No “liberal” share recycling provisions;
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No dividends or dividend equivalents on unearned performance awards;
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No dividend equivalents on options or stock appreciation rights and no payment of dividends or dividend equivalent rights on awards that do not vest;
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No evergreen provision;
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No “liberal” change in control definition;
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“Double-trigger” vesting for change in control benefits;
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No excise tax gross-up on change in control benefits; and
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Awards are subject to the Company’s clawback policies.
Administration
The 2017 Plan is administered by the Committee. The Committee has the authority to determine recipients, timing of awards, type of award, number of shares, and the other terms, conditions, restrictions and, if applicable, performance goals relating to any award. The Board may delegate to one or more officers the authority to grant awards to employees who are not executive officers of the Company. Awards made to the Chairman of the Board must also be ratified by the full Board.
Eligibility and Limitation on Awards
Awards may be granted to officers, non-employee directors, employees and independent contractors of the Company or any of its subsidiaries or other affiliates, provided that incentive stock options within the meaning of Section 422 of the Internal Revenue Code (“ISOs”) may be granted only to employees of the Company, or any parent or subsidiaries. Additionally, ISO awards may not be granted to employees if the employee owns, immediately before the grant of the ISO, stock representing more than ten percent of the voting power or more than ten percent of the value of all classes of stock of the Company or a parent or a subsidiary, unless the purchase price for the stock under such ISO is at least 110% of its fair market value at the time of grant and the ISO cannot be exercised more than five years from the date it is granted. As of February 28, 2017, the Company had approximately 6,918 employees of which 9 are officers, 7 non-employee directors, and 14 independent contractors.
A non-employee director may not, in any calendar year, be granted awards that have a grant date value, when combined with cash fees paid for board services during the same calendar year, exceeding $600,000.
Subject to adjustment pursuant to the anti-dilution provisions of the 2017 Plan, to the extent an award is intended to qualify as performance-based compensation under section 162(m): (i) the maximum number of shares with respect to which stock options or SARs may be granted to any participant in any calendar year is 2,000,000 shares, (ii) the maximum number of shares of restricted stock, RSUs or other stock-based award that may be granted to any participant in any calendar year is 1,000,000 shares; (iii) the maximum amount of compensation that may be granted with respect to other cash-based awards to any participant in any calendar year is $8,000,000; and (iv) the maximum dividend or dividend equivalent that may be paid to any one participant in any one calendar year is $250,000.
Future grants under the 2017 Plan will be made at the discretion of the Committee or its delegate and, accordingly, are not yet determinable. In addition, benefits under the 2017 Plan will depend on a number of factors, including the fair market value of stock on future dates and any exercise decisions made by award holders. Consequently, it is not possible to determine the benefits that might be received by participants under the 2017 Plan.
Awards under the 2017 Plan
Awards under the 2017 Plan may include: