UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14A
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Proxy Statement Pursuant
to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
x
Filed by a Party
other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of
the Commission Only (as permitted by Rule 14a-6(e)(2))
x
Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under Rule 14a-12
IDT Corporation
(Name of
Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act
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Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
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Form, Schedule or Registration Statement
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Date Filed:
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IDT
CORPORATION
520 Broad Street
Newark, New Jersey 07102
(973) 438-1000
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
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TIME
AND DATE:
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10:30 a.m., local time, on Wednesday, December
14, 2016
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PLACE:
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Offices of IDT Corporation, 520 Broad Street,
Newark, New Jersey 07102
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ITEMS
OF BUSINESS:
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1. To elect five directors, each for a
term of one year.
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2. To approve an amendment to the IDT
Corporation 2015 Stock Option and Incentive Plan that will increase
the number of shares of the Company’s Class B Common Stock
available for the grant of awards thereunder by an additional
100,000 shares.
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3. To transact other business as may
properly come before the Annual Meeting and any adjournment or
postponement thereof.
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RECORD DATE:
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You can vote if you were a stockholder of record
as of the close of business on October 19, 2016.
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PROXY
VOTING:
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You can vote either in person at the Annual
Meeting or by proxy without attending the meeting. See details
under the heading “How do I Vote?”
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ANNUAL MEETING ADMISSION:
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If you are a stockholder of record, a form of
personal photo identification must be presented in order to be
admitted to the Annual Meeting. If your shares are held in the name
of a bank, broker or other holder of record, you must bring a
brokerage statement or other written proof of ownership as of
October 19, 2016 with you to the Annual Meeting, as well as a form
of personal photo identification.
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ANNUAL MEETING DIRECTIONS:
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You may request directions to the annual meeting
via email at invest@idt.net or by calling IDT Investor Relations at
(973) 438-3838.
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Important Notice Regarding the
Availability of Proxy Materials for the IDT Corporation
Stockholders Meeting to be Held on December 14,
2016
: The Notice of Annual
Meeting and Proxy Statement and the 2016 Annual Report are
available at:
www.idt.net/ir
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BY ORDER OF THE BOARD OF DIRECTORS
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Joyce Mason
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Executive Vice President, General Counsel
and
Corporate Secretary
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Newark, New Jersey
November 8, 2016
IDT
CORPORATION
520 Broad Street
Newark, New Jersey 07102
(973) 438-1000
____________________
PROXY
STATEMENT
____________________
GENERAL
INFORMATION
Introduction
This Proxy Statement is furnished to the stockholders of record of
IDT Corporation, a Delaware corporation (the “Company”
or “IDT”) as of the close of business on October 19,
2016, in connection with the solicitation by the Company’s
Board of Directors (the “Board of Directors”) of
proxies for use in voting at the Company’s Annual Meeting of
Stockholders (the “Annual Meeting”). The Annual Meeting
will be held on Wednesday, December 14, 2016 at 10:30 a.m., local
time, at the Offices of IDT Corporation, 520 Broad Street, Newark,
New Jersey 07102. The shares of the Company’s Class A common
stock, par value $0.01 per share (“Class A Common
Stock”) and Class B common stock, par value $0.01 per share
(“Class B Common Stock”), present at the Annual Meeting
or represented by the proxies received by Internet or mail
(properly marked, dated and executed) and not revoked, will be
voted at the Annual Meeting. This Proxy Statement is being mailed
to the Company’s stockholders starting on November 15,
2016.
Solicitation and Voting
Procedures
This solicitation of proxies is being made by the Company. The
solicitation is being conducted by mail and by e-mail, and the
Company will bear all attendant costs. These costs will include the
expense of preparing and mailing proxy materials for the Annual
Meeting and any reimbursements paid to brokerage firms and others
for their expenses incurred in forwarding the solicitation
materials regarding the Annual Meeting to the beneficial owners of
the Company’s Class A Common Stock and Class B Common Stock.
The Company may conduct further solicitations personally, by
telephone or by facsimile through its officers, directors and
employees, none of whom will receive additional compensation for
assisting with the solicitation.
The close of business on October 19, 2016 has been fixed as the
record date (the “Record Date”) for determining the
holders of shares of Class A Common Stock and Class B Common Stock
entitled to notice of, and to vote at, the Annual Meeting. As of
the close of business on the Record Date, the Company had
23,061,271 shares outstanding and entitled to vote at the Annual
Meeting, consisting of 1,574,326 shares of Class A Common Stock and
21,486,945 shares of Class B Common Stock. The remaining shares
issued, consisting of 1,698,000 shares of Class A Common Stock and
3,932,461 shares of Class B Common Stock, are beneficially owned by
the Company, and are not entitled to vote or to be counted as
present at the Annual Meeting for purposes of determining whether a
quorum is present. The shares of stock owned by the Company will
not be deemed to be outstanding for determining whether a majority
of the votes cast have voted in favor of any proposal.
Stockholders are entitled to three votes for each share of Class A
Common Stock held by them and one-tenth of one vote for each share
of Class B Common Stock held by them. The holders of Class A Common
Stock and Class B Common Stock will vote as a single body on all
matters presented to the stockholders. There are no
dissenters’ rights of appraisal in connection with any
proposal.
How do I
Vote?
You can vote either in person at the Annual Meeting or by proxy
without attending the meeting.
Beneficial holders of the Company’s Class A Common Stock and
Class B Common Stock as of the Record Date whose stock is held of
record by another party should receive voting instructions from
their bank, broker or other holder of record. If a
stockholder’s shares are held through a nominee and the
stockholder wants to vote at the meeting, such stockholder must
obtain a proxy from the nominee record holder authorizing such
stockholder to vote at the Annual Meeting.
1
Stockholders of record should receive a paper copy of our proxy
materials and may vote by following the instructions on the proxy
card that is included with the proxy materials. As set forth on the
proxy card, there are two convenient methods for holders of record
to direct their vote by proxy without attending the Annual Meeting:
on the Internet or by mail. To vote by Internet, visit
www.voteproxy.com
.
To vote by mail, mark, date and sign the enclosed proxy card and
return it in the postage-paid envelope provided. Holders of record
may also vote by attending the Annual Meeting and voting by
ballot.
All shares for which a proxy has been duly executed and delivered
(by Internet or mail) and not properly revoked prior to the meeting
will be voted at the Annual Meeting. If a stockholder of record
signs and returns a proxy card but does not give voting
instructions, the shares represented by that proxy will be voted as
recommended by the Board of Directors. If any other matters are
properly presented at the Annual Meeting for consideration and if
you have voted your shares by Internet or mail, the persons named
as proxies will have the discretion to vote on those matters for
you. On the date of filing this Proxy Statement with the SEC, the
Board of Directors did not know of any other matter to be raised at
the Annual Meeting.
How Can I Change My
Vote?
A stockholder of record can revoke his, her or its proxy at any
time before it is voted at the Annual Meeting by delivering to the
Company (to the attention of Joyce J. Mason, Esq., Executive Vice
President, General Counsel and Corporate Secretary) a written
notice of revocation or by executing a later-dated proxy by
Internet or mail, or by attending the Annual Meeting and voting in
person.
If your shares are held in the name of a bank, broker, or other
nominee, you must obtain a proxy executed in your favor from the
holder of record (that is, your bank, broker, or nominee) to be
able to vote at the Annual Meeting.
Quorum and Vote
Required
The presence at the Annual Meeting of a majority of the voting
power of the Company’s outstanding Class A Common Stock and
Class B Common Stock (voting together), either in person or by
proxy, will constitute a quorum for the transaction of business at
the Annual Meeting. Abstention votes and any broker non-votes
(i.e., votes withheld by brokers on non-routine proposals in the
absence of instructions from beneficial owners) will be counted as
present or represented at the Annual Meeting for purposes of
determining whether a quorum exists.
The affirmative vote of a majority of the voting power present (in
person or by proxy) at the Annual Meeting and casting a vote on a
Proposal will be required for the approval of the election of any
director (Proposal No. 1) and the amendment to the 2015 Stock
Option and Incentive Plan (the “2015 Plan”) (Proposal
No. 2). This means that the number of votes cast “for”
a director nominee must exceed the number of votes cast
“against” that nominee. Abstentions are not counted as
votes “for” or “against” a nominee or any
of these proposals.
If you are a beneficial owner whose shares are held of record by a
broker, you must instruct the broker how to vote your shares. If
you do not provide voting instructions, your shares will not be
voted on any proposal on which the broker does not have
discretionary authority to vote. This is called a “broker
non-vote.” In these cases, the broker can register your
shares as being present at the Annual Meeting for purposes of
determining the presence of a quorum but will not be able to vote
on those matters for which specific authorization is required under
the rules of the New York Stock Exchange. In the event of a broker
non-vote or an abstention with respect to any proposal coming
before the Annual Meeting, the shares represented by the relevant
proxy will not be deemed to be present and entitled to vote on
those proposals for the purpose of determining the total number of
shares of which a majority is required for adoption, having the
practical effect of reducing the number of affirmative votes
required to achieve a majority vote for such matters by reducing
the total number of shares from which a majority is calculated.
If you are a beneficial owner whose shares are held of record by a
broker, your broker does not have discretionary authority to vote
on the election of directors (Proposal No. 1), the adoption of an
amendment to the 2015 Stock Option and Incentive Plan (Proposal No.
2), or any stockholder proposal or other matter raised at the
Annual Meeting without instructions from you, in which case a
broker non-vote will occur and your shares will not be voted on
these matters.
2
How Many Votes Are
Required to Approve Other Matters?
Unless otherwise required by law or the Company’s Bylaws, the
affirmative vote of a majority of the voting power represented at
the Annual Meeting and entitled to vote will be required for other
matters that may properly come before the meeting.
Stockholders Sharing the
Same Address
We are sending only one copy of the Annual Report and Proxy
Statement to stockholders of record who share the same last name
and address, unless they have notified the Company that they want
to continue to receive multiple copies. This practice, known as
“householding,” is designed to reduce duplicate
mailings and printings and postage costs. However, if any
stockholder residing at such address wishes to receive a separate
Annual Report or Proxy Statement in the future, he or she may
contact Joyce J. Mason, Esq., Corporate Secretary, IDT Corporation,
520 Broad Street, Newark, New Jersey 07102, or by phone at (973)
438-1000, and we will promptly forward to such stockholder a
separate Annual Report and/or Proxy Statement. The contact
information above may also be used by members of the same household
currently receiving multiple copies of the Annual Report and Proxy
Statement in order to request that only one set of materials be
sent in the future.
References to Fiscal
Years
The Company’s fiscal year ends on July 31 of each calendar
year. Each reference to a fiscal year refers to the fiscal year
ending in the calendar year indicated (e.g., Fiscal 2016 refers to
the Fiscal Year ended July 31, 2016).
3
CORPORATE
GOVERNANCE
Introduction
The Company has in place a comprehensive corporate governance
framework that reflects the corporate governance requirements and
the rules and regulations promulgated under the Securities Exchange
Act of 1934, as amended, and the corporate governance-related
listing requirements of the New York Stock Exchange. Consistent
with the Company’s commitment to strong corporate governance,
the Company does not rely on the exceptions from the New York Stock
Exchange’s corporate governance listing requirements
available to it because it is a “controlled company,”
except as described below with regard to (i) the composition of the
Nominating Committee and (ii) the Company not having a single
Nominating/Corporate Governance Committee.
In accordance with Sections 303A.09 and 303A.10 of the New York
Stock Exchange Listed Company Manual, the Company has adopted a set
of Corporate Governance Guidelines and a Code of Business Conduct
and Ethics, the full texts of which are available for your review
in the Governance section of our website at
http://ir.idt.net/Governance
and which also are available in print to any stockholder upon
written request to the Corporate Secretary.
The Company qualifies as a “controlled company” as
defined in Section 303A of the New York Stock Exchange Listed
Company Manual, because more than 50% of the voting power of the
Company is controlled by one individual, Howard S. Jonas, who
serves as Chairman of the Board of Directors. Notwithstanding that
being a “controlled company” entitles the Company to
exempt itself from the requirement that a majority of its directors
be independent directors and that the Compensation Committee and
Corporate Governance Committee be comprised entirely of independent
directors, the Board of Directors has determined affirmatively that
a majority of the members of the Board of Directors and the
director nominees are independent in accordance with Section
303A.02 of the New York Stock Exchange Listed Company Manual and
that the Compensation Committee and the Corporate Governance
Committee are in fact comprised entirely of independent directors.
As a “controlled company,” the Company may, and has
chosen to, exempt itself from the New York Stock Exchange
requirement that it have a single Nominating/Corporate Governance
Committee composed entirely of independent directors. As noted
above, and discussed in greater detail below, the Board of
Directors maintains a separate Corporate Governance Committee
comprised entirely of independent directors, and a Nominating
Committee comprised of the Chairman of the Board of Directors and
one independent director.
Director
Independence
The Corporate Governance Guidelines adopted by the Board of
Directors provide that a majority of the members of the Board of
Directors, and each member of the Audit, Compensation and Corporate
Governance Committees, must meet the independence requirements set
forth therein. The full text of the Corporate Governance
Guidelines, including the independence requirements, is available
for your review in the Governance section of our website at
http://ir.idt.net/Governance
.
For a director to be considered independent, the Board of Directors
must determine that a director meets the Independent Director
Qualification Standards set forth in the Corporate Governance
Guidelines, which comply with the New York Stock Exchange
definitions of independent, and is free from any material
relationship with the Company and its executive officers. The Board
of Directors considers all relevant facts and circumstances known
to it in making an independence determination, and not merely from
the standpoint of the director, but also from that of persons or
organizations with which the director has an affiliation or
significant financial interest. In addition to considering all
relevant information available to it, the Board of Directors uses
the following categorical Independent Director Qualification
Standards in determining the “independence” of its
directors:
1.
During the past three years, the Company shall not have employed
the director, or, except in a non-officer capacity, any of the
director’s immediate family members;
2.
During the past three years, the director shall not have received,
and shall not have an immediate family member who has received,
during any twelve-month period within the last three years, more
than $120,000 in direct compensation from the Company, other than
director and committee fees and pension or other forms of deferred
compensation for prior service (provided such compensation is not
contingent in any way on continued service);
4
3.
(a)
The director shall not be a current partner or employee of a firm
that is the Company’s internal or external auditor, (b) the
director shall not have an immediate family member who is a current
partner of such firm, (c) the director shall not have an immediate
family member who is a current employee of such firm and personally
works on the Company’s audit, and (d) neither the director
nor any of his or her immediate family members shall have been,
within the last three years, a partner or employee of such firm and
personally worked on the Company’s audit within that
time;
4.
Neither the director, nor any of his or her immediate family
members, shall be, or shall have been within the last three years,
employed as an executive officer of another company where any of
the Company’s present executive officers at the same time
serves or served on that company’s compensation (or
equivalent) committee; and
5.
The
director shall not be a current employee and shall not have an
immediate family member who is a current executive officer of a
company (excluding tax exempt organizations) that has made payments
to, or received payments from, the Company for property or services
in an amount which, in any of the last three Fiscal Years, exceeds
the greater of (a) $1 million or (b) two percent of the
consolidated gross revenues of such other company. The Corporate
Governance Committee will review the materiality of such
relationship to tax exempt organizations to determine if such
director qualifies as independent.
In addition, all members of the Company’s Audit Committee
must meet the independence requirements of Section 2014.10A-3 of
the Securities Exchange Act of 1934, which are set forth in the
Audit Committee Charter.
Based on the review and recommendation of the Corporate Governance
Committee, the Board of Directors has determined that each of
Michael Chenkin, Eric Cosentino, and Judah Schorr is independent in
accordance with the Corporate Governance Guidelines and the Audit
Committee Charter and, thus, that a majority of the current Board
of Directors, a majority of the director nominees, and each member
or nominee intended to become a member of the Audit, Compensation
and Corporate Governance Committees is independent. As used herein,
the term “non-employee director” shall mean any
director who is not an employee or consultant of the Company, and
who is deemed to be independent by the Board of Directors.
Therefore, neither Howard S. Jonas nor Bill Pereira is a
non-employee director. With the exception of Judah Schorr’s
$100,000 investment in Cornerstone Pharmaceutical, none of the
non-employee directors had any relationships with the Company that
the Corporate Governance Committee was required to consider when
reviewing independence.
Director Selection
Process
The Nominating Committee will consider director candidates
recommended by the Company’s stockholders. Stockholders may
recommend director candidates by contacting the Chairman of the
Board as provided under the heading “Director
Communications.” The Nominating Committee considers
candidates suggested by its members, other directors, senior
management and stockholders in anticipation of upcoming elections
and actual or expected board vacancies. All candidates, including
those recommended by stockholders, are evaluated on the same basis
in light of the entirety of their credentials and the needs of the
Board of Directors and the Company. Of particular importance is the
candidate’s wisdom, integrity, ability to make independent
analytical inquiries, understanding of the business environment in
which the Company operates, as well as his or her potential
contribution to the diversity of the Board of Directors and his or
her willingness to devote adequate time to fulfill duties as a
director. Under “Proposal No. 1 — Election of
Directors” below, we provide an overview of each
nominee’s experience, qualifications, attributes and skills
that led the Nominating Committee and the Board of Directors to
determine that each nominee should serve as a Director.
Director
Communications
Stockholders and other interested parties may communicate with: (i)
the Board of Directors, by contacting the Chairman of the Board;
(ii) the non-employee directors, by contacting the Lead Independent
Director (currently Eric Cosentino); and (iii) the Audit,
Compensation, Corporate Governance or Nominating Committees of the
Board of Directors, by contacting the respective chairmen of such
committees. All communications should be in writing, should
indicate in the address whether the communication is intended for
the Lead Independent Director, the Chairman of the Board, or a
Committee Chairman, and should be directed care of IDT
Corporation’s Corporate Secretary, Joyce J. Mason, Esq.,
Stockholder Communications, IDT Corporation, 520 Broad Street,
Newark, New Jersey 07102.
5
The Corporate Secretary will relay correspondence (i) intended for
the Board of Directors, to the Chairman of the Board, who will, in
turn, relay such correspondence to the entire Board of Directors,
(ii) intended for the non-employee directors, to the Lead
Independent Director, and (iii) intended for the Audit,
Compensation, and Corporate Governance Committees, to the Chairmen
of such committees.
The Corporate Secretary may filter out and disregard or re-direct
(without providing a copy to the directors or advising them of the
communication), or may otherwise handle at his or her discretion,
any director communication that falls into any of the following
categories:
•
Obscene materials;
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Unsolicited marketing or advertising material or mass mailings;
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Unsolicited newsletters, newspapers, magazines, books and
publications;
•
Surveys and questionnaires;
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Resumes and other forms of job inquiries;
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Requests for business contacts or referrals;
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Material that is threatening or illegal; or
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Any communications or materials that are not in writing.
In addition, the Corporate Secretary may handle in her discretion
any director communication that can be described as an
“ordinary business matter.” Such matters include the
following:
•
Routine questions, service and product complaints and comments that
can be appropriately addressed by management; and
•
Routine invoices, bills, account statements and related
communications that can be appropriately addressed by
management.
6
BOARD OF DIRECTORS AND
COMMITTEES
Board of
Directors
The Board of Directors held sixteen meetings in Fiscal 2016. In
Fiscal 2016, each of the Company’s directors attended or
participated in 75% or more of the aggregate of (i) the total
number of regularly scheduled meetings of the Board of Directors
held during the period in which each such director served as a
director and (ii) the total number of meetings held by all
committees of the Board of Directors during the period in which
each such director served on such committees.
Directors are encouraged to attend the Company’s annual
meeting of stockholders, and the Company generally schedules a
meeting of the Board of Directors on the same date and at the same
place as the annual meeting of stockholders to encourage director
attendance. All of the members constituting the current Board of
Directors attended the 2015 annual meeting of stockholders.
Board of Directors
Leadership Structure and Risk Oversight Role
Howard S. Jonas has served as Chairman of the Board since the
Company’s inception. From October 2009 through December 2013,
he also served as Chief Executive Officer. The Board of
Directors’ decision to retain Howard S. Jonas as Chief
Executive Officer was based on Howard S. Jonas’ leadership
skills and his knowledge of the Company’s businesses since
its inception and the value he brought to the Company in serving in
both capacities. As Chairman of the Board, Howard S. Jonas provides
overall leadership to the Board of Directors in its oversight
function while, as Chief Executive Officer, he provided leadership
in respect to the day-to-day management and operation of the
Company’s businesses. On January 1, 2014, Shmuel Jonas, who
was the Company’s Chief Operating Officer from June 2010
through December 2013, was elected as Chief Executive Officer of
the Company. Howard S. Jonas remains Chairman of the Board and
continues to provide overall leadership to the Board of Directors
in its oversight function. The risk management oversight roles of
the Audit, Compensation and Corporate Governance Committees
discussed below, which are comprised solely of independent
directors, provide an appropriate and effective balance to the
Chairman of the Board role.
Section 303A.03 of the New York Stock Exchange Listed Company
Manual and the Company’s Corporate Governance Guidelines
require that the non-employee directors of the Company meet without
management at regularly scheduled executive sessions. These
executive sessions are held at every regularly scheduled meeting of
the Board of Directors. Eric F. Cosentino, an independent director
and the “Lead Independent Director,” serves as the
presiding director of these executive sessions and has served in
that capacity since December 17, 2009. The Board of Directors
determined that the role of Lead Independent Director is important
to maintain a well-functioning Board of Directors that objectively
assesses management’s proposals.
The Board of Directors and each of its committees conduct annual
self-assessments in executive sessions to review and monitor their
respective continued effectiveness.
The Board of Directors as a whole, and through its committees, has
responsibility for the oversight of risk management, including the
review of the policies with respect to risk management and risk
assessment. With the oversight of the full Board of Directors, the
Company’s senior management is responsible for the day-to-day
management of the material risks the Company faces. The Board of
Directors is required to satisfy itself that the risk management
process implemented by management is adequate and functioning as
designed.
Each of the Audit, Compensation and Corporate Governance Committees
oversees certain aspects of risk management and reports its
respective findings to the full Board of Directors on a quarterly
basis, and as is otherwise needed. The Audit Committee is
responsible for overseeing risk management of financial matters,
financial reporting, the adequacy of the risk-related internal
controls, internal investigations, and security risks, generally.
The Compensation Committee oversees risks related to compensation
policies and practices. The Corporate Governance Committee oversees
our Corporate Governance Guidelines and governance-related risks,
such as board independence, as well as senior management succession
planning.
7
Board
Committees
The Board of Directors has established an Audit Committee, a
Compensation Committee, a Corporate Governance Committee and a
Nominating Committee.
The Audit
Committee
The Audit Committee is responsible for, among other things, the
appointment, compensation, removal and oversight of the work of the
Company’s independent registered public accounting firm. The
Audit Committee also oversees management’s performance of its
responsibility for the integrity of the Company’s accounting
and financial reporting and its systems of internal controls, the
performance of the Company’s internal audit function and the
Company’s compliance with legal and regulatory requirements.
The Audit Committee operates under a written Audit Committee
charter adopted by the Board of Directors, which can be found in
the Governance section of our web site,
http://ir.idt.net/Governance
,
and is also available in print to any stockholder upon request to
the Corporate Secretary. The Audit Committee consists of Messrs.
Chenkin (Chairman), Cosentino and Schorr. The Audit Committee held
eight meetings during Fiscal 2016. The Board of Directors has
determined that (i) all of the members of the Audit Committee are
independent within the meaning of the Section 303A.07(b) and
Section 303A.02 of the New York Stock Exchange Listed Company
Manual and Rule 10A-3(b) under the Securities Exchange Act of 1934,
(ii) all of the members of the Audit Committee are financially
literate and (iii) that Mr. Chenkin qualifies as an “audit
committee financial expert” within the meaning of Item
407(d)(5) of Regulation S-K.
The Compensation
Committee
The Compensation Committee is responsible for, among other things,
reviewing, evaluating and approving all compensation arrangements
for the executive officers of the Company, evaluating the
performance of executive officers, administering the
Company’s 2015 Stock Option and Incentive Plan, as amended
and restated (the “2015 Plan”), and its predecessor,
the 2005 Stock Option and Incentive Plan, as amended and restated
(the “2005 Plan”), and recommending to the Board of
Directors the compensation for Board members, such as retainers,
committee and other fees, stock option, restricted stock and other
stock awards, and other similar compensation as deemed appropriate.
The Compensation Committee confers with the Company’s
executive officers when making the above determinations. The
Compensation Committee currently consists of Messrs. Cosentino
(Chairman), Chenkin and Schorr. The Compensation Committee held
nine meetings during Fiscal 2016. The Compensation Committee
operates under a written charter adopted by the Board of Directors,
which can be found in the Governance section of our web site,
http://ir.idt.net/Governance
,
and which is also available in print to any stockholder upon
request to the Corporate Secretary. The Board of Directors has
determined that all of the members of the Compensation Committee
are independent within the meaning of Section 303A.02 of the New
York Stock Exchange Listed Company Manual and the categorical
standards set forth above.
The Compensation Committee adopts Company-wide goals and objectives
for the fiscal year to be used as a guide when determining annual
bonus payments to executive officers after the end of the fiscal
year. The Compensation Committee reviews the performance of the
Company relative to those goals and objectives, and the
contribution of each executive officer to such performance at the
end of the fiscal year and considers them as some of the factors
when determining the amounts of annual bonuses to be awarded to
executive officers.
Compensation Committee
Interlocks and Insider Participation
None of the members of the Compensation Committee have served as an
officer or employee of the Company or have any relationship with
the Company that is required to be disclosed under the heading
“Related Person Transactions.” No executive officer of
the Company served or serves on the compensation committee or board
of any company that employed or employs any member of the
Company’s Compensation Committee or Board of Directors.
The Corporate Governance
Committee
The Corporate Governance Committee is responsible for, among other
things, reviewing and reporting to the Board of Directors on
matters involving relationships among the Board of Directors, the
stockholders and senior management. The Corporate Governance
Committee (i) reviews the Corporate Governance Guidelines and other
policies and governing documents of the Company and recommends
revisions as appropriate, (ii) reviews any potential conflicts of
interest of independent directors, (iii) reviews and monitors
related person transactions,
8
(iv) oversees the self-evaluations of the Board of Directors, the
Audit Committee and the Compensation Committee and (v) reviews and
determines director independence, and makes recommendations to the
Board of Directors regarding director independence. The Corporate
Governance Committee currently consists of Messrs. Cosentino
(Chairman), Chenkin and Schorr. The Corporate Governance Committee
held five meetings in Fiscal 2016. The Corporate Governance
Committee operates under a written charter adopted by the Board of
Directors, which can be found in the Governance section of our web
site,
http://ir.idt.net/Governance
,
and which is also available in print to any stockholder upon
request to the Corporate Secretary. The Board of Directors has
determined that all of the members of the Corporate Governance
Committee are independent within the meaning of Section 303A.02 of
the New York Stock Exchange Listed Company Manual and the
categorical standards set forth above.
The Nominating
Committee
The Nominating Committee is responsible for overseeing nominations
to the Board of Directors, including: (i) developing the criteria
and qualifications for membership on the Board of Directors, (ii)
recommending candidates to fill new or vacant positions on the
Board of Directors, and (iii) conducting appropriate inquiries into
the backgrounds of potential candidates. A summary of new director
qualifications can be found under the heading “Director
Selection Process.” The Nominating Committee currently
consists of Howard S. Jonas (Chairman) and Eric Cosentino. The
Board of Directors has determined that Eric Cosentino is
independent in accordance with Section 303A.04 of the New York
Stock Exchange Listed Company Manual. Howard S. Jonas is not
independent. The Company, as a “controlled company,” is
exempt from the requirement to maintain an independent nominating
committee pursuant to Section 303A.00 of the New York Stock
Exchange Listed Company Manual. The Nominating Committee operates
under a written charter adopted by the Board of Directors, which
can be found in the Governance section of our web site,
http://ir.idt.net/Governance
,
and which is also available in print to any stockholder upon
request to the Corporate Secretary. The Nominating Committee held
one meeting in Fiscal 2016.
9
2016 COMPENSATION FOR
NON-EMPLOYEE DIRECTORS
Annual compensation for non-employee directors for Fiscal 2016 was
comprised of equity compensation, consisting of awards of
restricted shares of Class B Common Stock, and cash
compensation.
Director Equity
Grants
During Fiscal 2016, pursuant to the 2015 Plan, each non-employee
director of the Company who was determined to be independent
received, on January 5, 2016, an automatic grant of 4,000
restricted shares of the Company’s Class B Common Stock,
which vested immediately upon grant. A new non-employee director
who becomes a member of the Board of Directors during the course of
the calendar year receives an automatic grant on the date that he
or she becomes a director in the amounts specified above, pro rated
based on the calendar quarter of the year in which such person
became a director. The stock is granted on a going-forward basis,
before the director completes his or her service for the calendar
year. All such grants of stock to non-employee directors are
subject to certain terms and conditions described in the 2015 Plan.
On September 24, 2015, the Compensation Committee adopted a change
to the Non-Employee Director Compensation Policy so that each
non-employee director who serves simultaneously on the board of one
of the Company’s subsidiaries shall receive a biennial grant
of $18,000 worth of restricted shares of the Company’s Class
B Common Stock on September 28
th
,
or the first business day thereafter, as compensation for his or
her subsidiary board service, commencing on September 28, 2015. On
September 21, 2016, the Compensation Committee amended, effective
immediately, the Non-Employee Director Compensation Policy to
remove the above-described biennial grant of $18,000 worth of
restricted shares of the Company’s Class B Common Stock.
Director Board
Retainers
Each non-employee director of the Company receives an annual cash
retainer of $50,000. Such retainer is paid in equal quarterly
payments provided the non-employee director attended at least 75%
of the regularly-scheduled meetings of the Board of Directors that
quarter. The annual cash retainer is pro-rated (by calendar quarter
based on the calendar quarter when service on the Board of
Directors began or ended) for non-employee directors who join the
Board of Directors or depart from the Board of Directors during the
calendar year, if such director attended 75% of the applicable
board meetings for such quarter. The Company’s Chief
Executive Officer may, in his discretion, waive the requirement of
75% attendance by a director to receive the retainer in the case of
mitigating circumstances.
Committee
Fees
Non-employee directors do not receive fees for committee
service.
Lead Independent
Director
The Lead Independent Director receives an additional annual cash
retainer of $50,000, paid in equal quarterly amounts upon the
completion of each quarter of service. Eric Cosentino has served as
the Lead Independent Director since December 17, 2009.
10
2016 Director
Compensation Table
The following table lists Fiscal 2016 compensation for any person
who served as a non-employee director during Fiscal 2016. This
table does not include compensation to Howard S. Jonas or Bill
Pereira, as they are not non-employee directors and do not receive
any compensation for their service as directors.
|
|
|
Dates
of Board
Service During
Fiscal 2016
|
|
Fees
Earned or Paid in Cash ($)
|
|
|
|
All
Other Compensation
($)
(5)
|
|
|
|
Michael Chenkin
|
|
08/01/2015–07/31/2016
|
|
$
|
50,000
|
(1)
|
|
$
|
46,080
|
(3)
|
|
$
|
1,520
|
|
$
|
97,600
|
|
Eric F. Cosentino
|
|
08/01/2015–07/31/2016
|
|
$
|
100,000
|
(2)
|
|
$
|
64,079
|
(4)
|
|
$
|
1,140
|
|
$
|
165,219
|
|
Judah Schorr
|
|
08/01/2015–07/31/2016
|
|
$
|
50,000
|
(1)
|
|
$
|
46,080
|
(3)
|
|
$
|
1,520
|
|
$
|
97,600
|
As of July 31, 2016, non-employee directors held the following
shares of the Company’s Class B Common Stock granted for
their service as directors. Non-employee directors did not hold any
options to purchase shares of the Company’s capital stock as
of July 31, 2016.
|
|
|
|
|
Michael Chenkin
|
|
14,083
|
|
Eric F. Cosentino
|
|
449
|
|
Judah Schorr
|
|
59,287
|
11
RELATED PERSON
TRANSACTIONS
Review of Related Person
Transactions
The Board of Directors has adopted a Statement of Policy with
respect to Related Person Transactions, which is administered by
the Corporate Governance Committee. This policy covers any
transaction or series of transactions in which the Company or a
subsidiary is a participant, the amount involved exceeds $120,000
and a Related Person has a direct or indirect material interest.
Related Persons include directors, director nominees, executive
officers, any beneficial holder of more than 5% of any class of the
Company’s voting securities, and any immediate family member
of any of the foregoing persons. The policy also covers
transactions which, despite not meeting all of the criteria set
forth above, would otherwise be considered material to investors
based on qualitative factors, as determined by the Corporate
Governance Committee with input from the Company’s management
and advisors. Transactions that fall within the definition are
considered by the Corporate Governance Committee for approval,
ratification or other action. Based on its consideration of all of
the relevant facts and circumstances, the Corporate Governance
Committee will decide whether or not to approve such transactions
and will approve only those transactions that are in the best
interests of the Company and its stockholders. If the Company
becomes aware of an existing Related Person Transaction that has
not been approved under this policy, the matter will be referred to
the Corporate Governance Committee. The Corporate Governance
Committee will evaluate all options available, including
ratification, revision or termination of such transaction.
Transactions with
Related Persons, Promoters and Certain Control Persons
All of the following ongoing Related Person Transactions were
approved in accordance with the policy described above:
There is a father/son relationship between Howard S. Jonas,
Chairman of the Board and controlling stockholder, and Shmuel
Jonas, Chief Executive Officer. Howard S. Jonas’ and Shmuel
Jonas’ total compensation during Fiscal 2016 are set forth in
the Summary Compensation Table.
There is a brother/sister relationship between Howard S. Jonas,
Chairman of the Board and controlling stockholder, and Joyce J.
Mason, General Counsel, Corporate Secretary and Executive Vice
President. Howard S. Jonas’ total compensation during Fiscal
2016 is set forth in the Summary Compensation Table. Joyce
Mason’s total compensation during Fiscal 2016 was
$410,592.
On October 28, 2011, the Company spun off its subsidiary, Genie
Energy Ltd. (“Genie”). In connection with the spin-off,
the Company and Genie entered into a Transition Services Agreement,
dated October 28, 2011 (the “Genie TSA”), pursuant to
which the Company provides certain services to Genie, which is
controlled by Howard S. Jonas and for which Howard S. Jonas serves
as the Chief Executive Officer. The services include, but are not
limited to, services relating to human resources, employee benefits
administration, finance, accounting, tax, facilities, investor
relations and legal. Furthermore, the Company granted Genie a
license to use the IDT name for its Retail Energy Provider
business. Genie paid the Company a total of $2,200,413 for services
provided by the Company pursuant to the Genie TSA during Fiscal
2016. As of July 31, 2016, Genie owed the Company $376,581.
Additionally, Genie provided human resource services to the Company
pursuant to the Genie TSA. The Company paid Genie a total of
$546,561 for services provided by Genie pursuant to the Genie TSA
during Fiscal 2016. As of July 31, 2016, the Company owed Genie
$95,206.
On December 7, 2015, the Company approved an investment of up to
$10 million in Cornerstone Pharmaceuticals (“Cornerstone),
$500,000 of which was funded by the Company upon signing on January
21, 2016, $50,000 which was funded by the Company on March 23,
2016, $1.45 million which was funded by the Company on April 14,
2016 and $8 million which would be funded, in the discretion of
management, after the Company completed and is satisfied with its
due diligence pertaining to this investment. The due diligence was
completed in June of 2016. As of July 31, 2016, the Company had
funded $2 million of its potential $10 million investment in
Cornerstone Pharmaceuticals. Howard S. Jonas has been a director of
Cornerstone since April 2013 and was appointed Chairman of the
Board in April 2016. At the time of the Company’s investment,
Howard and Debbie Jonas jointly owned $525,000 of Series C
Convertible Notes of Cornerstone, and the Jonas Foundation owned an
additional $525,000 of Series C Notes. The Series C Notes are
convertible into capital stock of Cornerstone and, depending on the
valuation at the time of conversion, the combined interests of the
Jonases and the Jonas Foundation represented between 1% and 2% of
the total capital stock of Cornerstone. On September 19, 2016, the
Company
12
funded the balance of $7,619,657, which was net of deductions for
interim advances to Cornerstone as well as certain due diligence
expenses related to the investment.
On June 1, 2016, the Company spun off its subsidiary, Zedge, Inc.
(“Zedge”). Zedge and the Company entered a Transition
Services Agreement (the “Zedge TSA”), effective June 1,
2016. Howard S. Jonas is a director and Chairman of the board of
directors of Zedge. Both Zedge and the Company were controlled by
Howard S. Jonas until October 2016, at which time Howard S. Jonas
transferred, via a series of transactions, his controlling
ownership of Zedge to his adult son, Michael Jonas, and therefore
no longer controlled Zedge. Pursuant to the Zedge TSA, the Company
provides certain services to Zedge. The services include, but are
not limited to, services relating to human resources,
administrative, finance, accounting, tax, investor relations,
regulatory, consulting and legal. Zedge paid the Company a total of
$39,290 for services provided by the Company pursuant to the Zedge
TSA during Fiscal 2016. As of July 31, 2016, Zedge owed the Company
$54,476.
IDT Domestic Telecom, Inc., a subsidiary of the Company, leases
space at 3220 Arlington Avenue, Bronx NY. The property is owned by
Arlington Suites, LLC, a company jointly owned by Shmuel Jonas and
Howard S. Jonas. The parties entered into a lease, which became
effective November 1, 2012 and had a one-year term, with a one-year
renewal option for IDT Domestic Telecom. Since expiration of this
lease, the parties have continued IDT Domestic Telecom’s
occupancy of the space on the same terms. IDT Domestic Telecom
utilizes 1,465 square feet of office space, at an annual rental
rate of $25 per square foot, 1,240 square feet of storage space, at
an annual rental rate of $15 per square foot, and five parking
spaces, at a monthly rental rate of $230 per space, for a total
annual rent of $69,025. The Company has determined that the space
is well suited and located to meet the needs of IDT Domestic
Telecom, and that the terms of the lease, including the rental
price, are in accord with the terms for comparable commercial space
in the area
.
13
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company’s Class A Common Stock
and Class B Common Stock by (i) each person known by the Company to
be the beneficial owner of more than 5% of the outstanding shares
of the Class A Common Stock or the Class B Common Stock of the
Company, (ii) each of the Company’s directors, director
nominees, and the Named Executive Officers (who are listed under
Executive Compensation below), and (iii) all directors, Named
Executive Officers and executive officers of the Company as a
group. Unless otherwise noted in the footnotes to the table, to the
best of the Company’s knowledge, the persons named in the
table have sole voting and investing power with respect to all
shares indicated as being beneficially owned by them.
Unless otherwise noted, the security ownership information provided
below is given as of the close of business on October 22, 2016 and
all shares are owned directly. Percentage ownership information is
based on the following amount of outstanding shares: 1,574,326
shares of Class A Common Stock and 21,486,945 shares of Class B
Common Stock. The ownership numbers reported for Howard S. Jonas
assume the conversion of all 1,574,326 currently outstanding shares
of Class A Common Stock into shares of Class B Common Stock.
|
|
|
Number of Shares of Class B Common Stock
|
|
Percentage of Ownership of Class B Common
Stock
|
|
Percentage of Aggregate Voting
Power
d
|
|
Howard S. Jonas
|
|
2,606,678
|
(1)
|
|
11.3
|
%
|
|
70.2
|
%
|
|
520 Broad Street
Newark, NJ 07102
|
|
|
|
|
|
|
|
|
|
|
The Vanguard Group Inc.
|
|
2,380,498
|
(2)
|
|
11.1
|
%
|
|
3.5
|
%
|
|
100 Vanguard Blvd.
Malvern, PA 19355
|
|
|
|
|
|
|
|
|
|
|
Blackrock, Inc.
|
|
1,130,964
|
(2)
|
|
5.5
|
%
|
|
1.7
|
%
|
|
55 East 52
nd
Street
New York, NY 10055
|
|
|
|
|
|
|
|
|
|
|
Renaissance Technologies, LLC
|
|
1,209,406
|
(2)
|
|
5.6
|
%
|
|
1.8
|
%
|
|
800 Third Avenue
New York, NY 10022
|
|
|
|
|
|
|
|
|
|
|
Shmuel Jonas
|
|
101,661
|
(3)
|
|
|
*
|
|
|
*
|
|
Marcelo Fischer
|
|
26,660
|
(4)
|
|
|
*
|
|
|
*
|
|
Bill Pereira
|
|
47,774
|
(5)
|
|
|
*
|
|
|
*
|
|
Menachem Ash
|
|
21,545
|
(6)
|
|
|
*
|
|
|
*
|
|
Joyce J. Mason
|
|
53,123
|
(7)
|
|
|
*
|
|
|
*
|
|
Michael Chenkin
|
|
14,083
|
|
|
|
*
|
|
|
*
|
|
Eric F. Cosentino
|
|
49
|
|
|
|
*
|
|
|
*
|
|
Judah Schorr
|
|
59,287
|
|
|
|
*
|
|
|
*
|
|
All directors, Named Executive Officers and
other executive officers as a group (11) persons)
|
|
2,957,087
|
(8)
|
|
12.8
|
%
(9)
|
|
70.7
|
%
|
14
SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company’s
directors, executive officers, and any persons holding more than
ten percent or more of a registered class of the Company’s
equity securities are required to file reports of ownership and
changes in ownership, on a timely basis, with the SEC and the New
York Stock Exchange. Based on material provided to the Company, the
Company believes that all such required reports were filed on a
timely basis in Fiscal 2016.
15
EXECUTIVE
COMPENSATION
COMPENSATION COMMITTEE
REPORT
The Compensation Committee has reviewed and discussed with
management the following Compensation Discussion and Analysis
section of the Company’s 2016 Proxy Statement. Based on our
review and discussions, we have recommended to the Board of
Directors that the Compensation Discussion and Analysis be included
in IDT’s 2016 Proxy Statement.
Eric Cosentino, Chairman
Michael Chenkin
Judah Schorr
Notwithstanding
anything to the contrary set forth in any of the Company’s
previous filings under the Securities Act of 1933, as amended (the
“Act”), or the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), that might incorporate
future filings, including this Proxy Statement, in whole or in
part, the foregoing report shall not be incorporated by reference
into any such filings, nor shall it be deemed to be soliciting
material or deemed filed with the Securities and Exchange
Commission (the “SEC”) under the Act or under the
Exchange Act.
COMPENSATION DISCUSSION
AND ANALYSIS
The following discussion and analysis of our compensation practices
and related compensation information should be read in conjunction
with the Summary Compensation table and other tables included in
this proxy statement, as well as our financial statements and
management’s discussion and analysis of our financial
condition and results of operations included in our Annual Report
on Form 10-K for the fiscal year ended July 31, 2016, which we
refer to as the Form 10-K. The following discussion includes
statements of judgment and forward-looking statements that involve
risks and uncertainties. These forward-looking statements are based
on our current expectations, estimates and projections about our
industry, our business, compensation, management’s beliefs,
and certain assumptions made by us, all of which are subject to
change. Forward-looking statements can often be identified by words
such as “anticipates,” “expects,”
“intends,” “plans,” “predicts,”
“believes,” “seeks,”
“estimates,” “may,” “will,”
“should,” “would,” “could,”
“potential,” “continue,”
“ongoing,” similar expressions, and variations or
negatives of these words and include, but are not limited to,
statements regarding projected performance and compensation. Actual
results could differ significantly from those projected in the
forward-looking statements as a result of certain factors,
including, but not limited to, the risk factors discussed in the
Form 10-K. We assume no obligation to update the forward-looking
statements or such risk factors.
Introduction
It is the responsibility of the Compensation Committee of our board
of directors to: (i) oversee our general compensation policies;
(ii) determine the base salary and bonus to be paid each year to
each of our executive officers; (iii) oversee our compensation
policies and practices as they relate to our risk management; and
(iv) determine the compensation to be paid each year to our
non-employee directors for service on our board of directors and
the various committees of our board of directors. In addition, the
Compensation Committee administers our Stock Option and Incentive
Plans with respect to restricted stock and stock option grants or
other equity-based awards made to our executive officers. Further,
certain individuals have received grants of equity in certain of
our subsidiaries. Shares of restricted stock are granted to our
non-employee directors automatically on an annual basis under our
2015 Stock Option and Incentive Plan, and under other policies
adopted by the Board and Compensation Committee.
Elements of
Compensation
The three broad components of our executive officer compensation
are base salary, annual cash incentive bonus awards, and long term
equity-based incentive awards. The Compensation Committee
periodically reviews total compensation levels and the allocation
of compensation among these three components for each of the
executive officers, as well as for the Company as a whole, in the
context of our overall compensation policy. Additionally, the
Compensation Committee, in conjunction with our board, reviews the
relationship of executive compensation to corporate performance
generally and with respect to specific enumerated goals that are
approved by the Compensation Committee in each fiscal year. The
Compensation Committee believes that our current compensation
16
plans are serving their intended purposes and are functioning
reasonably. Below is a description of the general policies and
processes that govern the compensation paid to our executive
officers, as reflected in the accompanying compensation tables.
Company
Performance
In Fiscal 2016, IDT Telecom faced significant challenges to revenue
and profitability, in particular on the U.S. to Mexico corridor,
which was one of the key routes for telecommunications traffic. As
previously disclosed, when the cost of terminating calls to Mexico
dropped almost to zero, competitors began offering unlimited
calling for flat monthly fees. The Company maintained its price
constant for a period of time and absorbed the resulting customer
attrition. Eventually, the Company lowered its price and offered
its own unlimited calling plans, absorbing the consequential impact
on profitability. The Company made significant cuts to SG&A
expenses in order to right size and maintain bottom line results
despite the top line and margin pressures. As a result, after
eliminating the impact of the sale of Fabrix on Fiscal 2015
results, the Company was able to deliver consistent or improved
income from operations and net income. Other than on the U.S. to
Mexico corridor, revenues from the Company’s flagship Boss
Revolution voice service were relatively stable, as growth has
slowed. Additionally, the Company continued to invest in newer
initiatives and saw positive growth in several offerings, including
Boss Revolution’s international money transfer business,
Net2Phone’s unified communications as a service offerings and
the National Retail Solutions, Inc. (“NRS”) point of
sale initiative. The Company also invested in efforts behind the
scenes that improve its operating efficiencies and allow for
development on yet-to-be-launched growth initiatives.
Compensation
Structure, Philosophy and Process
Our executive compensation structure is designed to attract and
retain qualified and motivated personnel and align their interests
with the short-term and long-term goals of the Company and with the
best interests of our stockholders. Our compensation philosophy is
to provide sufficient compensation to attract the individuals
necessary for our current needs and planned organic growth and
changes in operations, as well as for the business units that
represent longer-term growth initiatives, and provide them with the
proper incentives to motivate those individuals to achieve our
long-term plans.
The base salary levels we pay to each of our Named Executive
Officers are based on the responsibilities undertaken by the
respective individuals, if applicable, the business unit managed
and its complexity and role within the Company, and the market
place for employment of people of similar skills and backgrounds.
The base salaries paid are determined by discussions with the
covered individual and his or her manager, as well as budgetary
considerations. Such base salaries are approved by the relevant
members of our senior management and, in the case of executive
officers and certain other key, highly compensated individuals, our
Compensation Committee.
Incentive compensation is designed to reward contributions towards
achieving the Company’s goals for the current period, as well
as for the longer term. The Compensation Committee, with
recommendations from the Company’s management, sets goals for
executive compensation in each fiscal year. These goals are set for
the Company and for specific operating divisions, and are designed
to set forth achievable goals for the current performance of the
Company and its business units and for current contributions to
long-term initiatives. The Compensation Committee’s decision
regarding bonuses is primarily subjective and specific to each
Named Executive Officer and is made by the Committee in its
discretion after an overall assessment of all of the factors it
deems appropriate, which includes, but is not limited to, the
specific Company-wide goals, the individual’s role in
achieving those goals, if relevant, the performance of the business
unit over which the individual exercised management, and other
accomplishments during the fiscal year that were deemed relevant in
specific instances. Following the end of a fiscal year, our
management sets Company-wide bonus amounts for the fiscal year
then-ended, based on Company performance and available resources.
The proposed bonuses are then presented to the Compensation
Committee. The bonus amounts awarded to executive officers are the
result of subjective determinations made by the relevant members of
management and the Compensation Committee with respect to each
subject individual, based on Company and individual performance,
particularly relative to the performance goals set by the
Compensation Committee for the fiscal year, and levels relative to
the bonuses of other personnel and officers. Individual bonus
amounts are not determined based on previously established
formulae, targets or ranges, though prior year amounts, performance
versus budgets and similar figures may serve as guidelines for
bonuses for certain executives, and individuals and their direct
supervisors may use target figures in initiating discussions of
bonus levels.
17
Executive officers are eligible to receive cash bonuses of up to
100% of base salary (or up to 120% or higher upon extraordinary
performance) based upon performance, including the specific
financial and other goals set by the Compensation Committee, which
goals are Company-wide, specific to a business unit or specific to
an executive and his or her area of responsibility, as well as
specific extraordinary accomplishments by such officers during the
relevant period. Specific bonuses will depend on the individual
achievements of executives and their contribution to achievement of
the enumerated goals. These goals are approved by the Compensation
Committee.
Equity grants are made in order to provide longer term incentive
compensation and to better align the interests of our executives
with our stockholders. Executives have been granted equity
interests in the Company and, in limited circumstances, with regard
to individuals whose areas of responsibility focus on specific
operations or who have contributed in significant ways to specific
subsidiaries, in those subsidiaries, so as to better incentivize
and reward the executives for the results of their efforts.
Compensation
Decisions Made in Fiscal 2016
Goals and
Performance
At a meeting held on September 24, 2015, our Compensation Committee
approved the following goals for Fiscal 2016: (i) meet or exceed
(A) budgeted Revenue and/or (B) budgeted direct cost of revenue as
a percentage of revenue (“Relevant Margin”); (ii) meet
or exceed budgeted EBITDA less Capital Expenditures; (iii) achieve
positive cash flow; (iv) reorganize the Company into three separate
entities, with goal to spin-off two business units to stockholders;
(v) continue to enhance Boss Revolution product platform including
the introduction of new functionality and products; (vi) get closer
to consumers by updating the Boss Revolution Calling App, providing
for greater flexibility and expanding options for customers to
access our systems and their accounts; (vii) significantly grow the
Money Remittance business unit’s number of transactions
processed via the retailer portal and website and advance payment
functionality; (viii) grow the IDT Retail point of sale offering;
(ix) grow Net2Phone Office seats and other Net2Phone initiatives;
(x) operate South American retail operations at break even or
positive; (xi) continue to improve IDT Telecom technology
infrastructure by reducing duplicate platforms when possible,
improving internal systems and platforms, and moving a significant
number of applications to the Cloud; (xii) maintain PCI Level 1
compliance; and (xiii) grow Zedge revenues by 25% while having it
remain cash flow positive.
At a meeting held on September 21, 2016, management reported to the
Compensation Committee on the Company’s performance relative
to the above goals as follows:
•
The Company missed its internal revenue target by 2.2% and Relevant
Margin target by 4.9%, as the pressures in the U.S. to Mexico
corridor negatively impacted performance.
•
The Company exceeded its internal EBITDA less Capital Expenditures
target by 7.6%, and generated $30.7 million in cash flow from
operations less capital expenditures.
•
The Zedge spin-off was successfully completed and the spin-off of
other non-telecom operations was deferred as management focused on
alternative strategic initiatives.
•
While advances were made, management did not believe it met its
goal with respect to enhancements of the Boss Revolution product
and platform.
•
The Boss Revolution calling app was not launched, but other
advances were made.
•
Money remittance transactions increased but fell short of internal
targets.
•
IDT Retail Solutions grew
installations, but missed its internal target for store count.
Investment exceeded budget.
•
Net2Phone Office grew beyond internal targets. PICUP launched and
spent far less than was budgeted.
•
South American Retail operations were profitable.
•
Significant progress was made in the multi-year plan to improve IDT
Telecom infrastructure.
•
The Company maintained PCI Level 1 compliance.
•
Zedge revenues grew 23% and it achieved record operational
profitability.
18
Bonus Awards for
Fiscal 2016 Performance
In connection with performance and accomplishments, management
recommended, and the Compensation Committee approved, in general,
to maintain bonuses for executive officers and other key employees
at the prior year level, with some increases and decreases in
specific circumstances. The following individual bonus levels were
determined and paid in Fiscal 2017 in respect of Fiscal 2016:
Shmuel Jonas did not receive a cash bonus for Fiscal 2016, compared
to the $330,000 cash bonus he received in Fiscal 2015, but the
Compensation Committee did approve the transfer of equity in NRS to
him discussed below in respect of his performance during Fiscal
2016 and contribution to the achievement of the stated goals.
Shmuel was instrumental in providing overall strategic guidance,
support of new initiatives and the cost cutting efforts that
enabled the Company to operate profitably despite revenue and
margin pressure. In light of the steps undertaken by the Company,
Shmuel Jonas refused a cash bonus.
Marcelo Fischer was paid a cash bonus of $120,000, unchanged from
the prior fiscal year’s bonus. As the principal financial
officer of the Company and the Chief Financial officer of IDT
Telecom, Mr. Fischer was involved in all decisions on budgeting,
new initiatives, spending and otherwise related to IDT Telecom
operations and execution of the initiatives that produced the
Company’s results. He was an essential participant in the
spin-off of Zedge and driving the growth of new initiatives. He
helped to craft and implement the responses to the challenges from
the changes on the U.S. to Mexico route, and played a significant
role in the internal controls and other matters necessary to
achieve and maintain PCI compliance.
Bill Pereira was paid a cash bonus of $600,000, consistent with his
employment agreement with IDT Telecom, and unchanged from the prior
year. As Chief Executive Officer of IDT Telecom, Mr. Pereira was
the principal executive responsible for IDT Telecom’s
performance and for implementing all initiatives related to new
products and growth of sales of existing products. He played a
leading role in all strategic initiatives involving IDT Telecom.
Mr. Pereira was the principal decision maker on the launch of new
products, customer relations initiatives and relations with
strategic partners, as well as on allocation of resources to
developing operations. He provided the strategic guidance in
balancing current performance and investment in future growth.
Finally, he was integral to the changes implemented in IDT Telecom
infrastructure and internal compliance efforts.
Menachem Ash was paid a cash bonus of $100,000, an increase of
$15,000 from the bonus he received for Fiscal 2015 performance. Mr.
Ash served as Executive Vice President of Strategy and Legal
Affairs, and was actively involved in the legal aspects of many
matters and dealing with third parties, including commercial
relationships, strategic partnerships and disputes. Mr. Ash was
instrumental in creating the infrastructure that houses and
supports many of the new initiatives and consummated certain
strategic investments advanced by the Company during Fiscal 2016.
He played a major role in implementing the Zedge spin-off.
Joyce Mason received a bonus of $60,000, a $5,000 reduction from
the level of the prior fiscal year. As General Counsel, Ms. Mason
guides corporate legal, disclosure and compliance policy, and plays
an active role in major transactions and all aspects of corporate
governance. She serves as Corporate Secretary for the Company and
its subsidiaries and ensures ongoing compliance with corporate and
regulatory requirements. As Corporate Secretary, Ms. Mason plays a
major role in structuring new initiative and strategic investments,
and leads internal compliance efforts.
Howard S. Jonas did not receive a cash bonus for Fiscal 2016
performance, but the Compensation Committee did approve the
transfer of equity in NRS discussed below in respect of his
performance during Fiscal 2016 and contribution to the achievement
of the stated goals. Howard S. Jonas provides strategic guidance to
the Company and is actively involved in all major decisions and in
the implementation of key initiatives for the Company.
Base
Salaries
The Company pays base salaries to its executives intended to meet
the goals and purposes outlined above. The base salaries of certain
executives are set forth in written agreements with the Company,
which agreements are described below. Subject to those written
agreements, the base salaries are set by the Compensation Committee
on an annual basis, based on presentations made by management. No
changes were made to the base compensation of any executive
officers for Fiscal 2017, and all such salaries remain at the
Fiscal 2016 level.
19
Howard S. Jonas receives a cash base salary of $250,000 per annum,
pursuant to the Third Amended and Restated Employment Agreement
between him and the Company. Pursuant to the Third Amended
Agreement, on January 6, 2014, the Company granted Mr. Jonas 63,320
shares of Class B Common Stock, with a grant date value of
$1,349,982, that vested in January 2014, 2015 and 2016 as a portion
of his base salary for the three-year term of that agreement, which
expires on December 31, 2016. The Company and Mr. Jonas are
negotiating the terms of a new employment agreement that is
expected to take effect upon expiration of the existing
agreement.
Shmuel Jonas receives a base salary of $495,000 per annum. Marcelo
Fischer receives a base salary of $395,000 per annum. Bill Pereira
receives a base salary of $500,000 per annum, in accordance with
his employment agreement with IDT Telecom. Mr. Ash receives a base
salary of $370,000 per annum. Ms. Mason receives a base salary of
$315,000 per annum.
Equity Grants in
respect of Fiscal 2016 Performance
At a meeting held on September 21, 2016, the Compensation Committee
approved the transfer of equity interests in NRS to Shmuel Jonas
and Howard S. Jonas. Shmuel Jonas is to receive common stock
representing 7.5%, and Howard S. Jonas is to receive common stock
representing 2.5%, of the total equity in NRS. The grants were made
on November 2, 2016, after a valuation of NRS was completed, and
will vest in equal portions on the first, second and third
anniversaries of the grant date, and are entitled to protection
against dilution.
Compensation
Decisions Made in Fiscal 2015
Bonuses Paid for
Fiscal 2014 Performance
In Fiscal 2015, the Company paid bonuses to its named executive
officers based on performance in Fiscal 2014 and the goals for that
fiscal year that were set out by the Compensation Committee.
Shmuel Jonas was paid a cash bonus of $155,000, and was granted
restricted shares of Class B Common Stock with a value of $200,000
that are to vest in equal amounts over three years from grant.
Marcelo Fischer was paid a cash bonus of $143,000. Bill Pereira was
paid a cash bonus of $600,000. Menachem Ash was paid a cash bonus
of $85,000. Joyce Mason was paid a cash bonus of $75,000.
Employment
Agreement
Bill Pereira was party to an employment agreement with IDT Telecom
that expired on December 31, 2014. IDT Telecom and Mr. Pereira
entered into an Amended and Restated Employment Agreement on
January 12, 2015. The amended agreement, which is described in more
detail below, has a three-year term, began on the scheduled
expiration of the then existing Employment Agreement with Mr.
Pereira, and provides for annual compensation and the one-time
grant of 25,000 shares of Class B Common Stock which vests over
three years from grant. Such grant was made on January 12, 2015. In
light of Mr. Pereira’s performance as CEO of IDT Telecom, the
Company and IDT Telecom determined that it was in their best
interests to retain Mr. Pereira’s services for an additional
three-year period.
On November 29, 2013, the Company announced that Howard S. Jonas
would step down as Chief Executive Officer of the Company on
December 31, 2013, but would remain Chairman of the Board. On
December 20, 2013, the Company and Howard S. Jonas entered into the
Third Amended and Restated Employment Agreement, the terms of which
are described below.
Goals and
Performance
At a meeting held on October 28, 2014, our Compensation Committee
approved the following goals for Fiscal 2015: (i) meet or exceed
(A) budgeted Revenue and/or (B) budgeted Relevant Margin; (ii) meet
or exceed budgeted EBITDA less Capital Expenditures; (iii) achieve
positive cash flow; (iv) continue to improve IDT Telecom’s
technology infrastructure by merging duplicate platforms when
possible, improving back-end support systems for Boss Revolution
including Retailer Settlement, and begin the process of moving
viable parts of the network to the Cloud; (v) continue to enhance
the Boss Revolution product suite including the launch of Unlimited
Plans and the re-launch of Call Me and domestic closed loop cards
and nationwide GPR cards; (vi) get closer to consumers by updating
the Calling App, launching Web/Mobile site (including remittance),
expanding distribution through
20
e-kiosks and kicking-off a payments app and a CRM initiative; (vii)
grow Money Remittance active retail agent base to over 1,000 agents
and or 400,000 transactions; (viii) restructure IDT Retail Europe
business to be break-even; (ix) maintain PCI Level 1 compliance;
(x) fully execute the move of all IDT Newark employees to 520 Broad
Street; and (xi) effectuate the sale of Fabrix, in a tax efficient
form.
On September 24, 2015, management reported to the Compensation
Committee on the Company’s performance relative to the above
goals as follows:
•
Fiscal 2014 revenue missed the Company’s internal budget by
3% and Fiscal 2014 Relevant Margin missed the Company’s
internal budget by 1%.
•
Fiscal 2014 EBITDA less Capital Expenditures exceeded the
Company’s internal budget by 39%.
•
The Company generated positive cash flow from operations.
•
IDT Telecom improved its technology infrastructure, including
moving several on-line and mobile portals and functions to unified
platforms, consolidation of back-end functions, and transitioning
to proprietary switched from third party suppliers, while lagging
behind target for migrating functions to the Cloud.
•
The Company significantly enhanced the Boss Revolution suite of
products, including introducing Boss Revolution Unlimited
(unlimited calling for a flat monthly fee) to dozens of countries,
re-launching Call-Me, and introducing domestic and international
closed loop cards, but failed to launch a GPR card.
•
The Company launched a web/mobile site with extensive
functionality, but did not release an update of the Boss Revolution
calling app or a payments app.
•
The Company did not grow its money remittance agent base to 1,000
agents, but processed in excess of 400,000 transactions during
Fiscal 2015.
•
The Company completed the restructuring of IDT Europe Retail and,
other than a one-time write-off related to a specific product, the
business unit operated at break-even.
•
The Company maintained PCI Level 1 compliance. All Newark, NJ
employees were relocated back to the Company’s owned 520
Broad Street headquarters, and the Company completed its sale of
Fabrix, and all proceeds received in a tax efficient manner.
Bonus Awards for
Fiscal 2015 Performance
In connection with such performance and accomplishments, management
determined, in general, to modestly reduce the bonuses paid to some
executive officers and other key employees from the levels paid in
respect of Fiscal 2014. The following individual bonus levels were
determined and paid in Fiscal 2016 in respect of Fiscal 2015:
Shmuel Jonas was paid a cash bonus of $330,000, a reduction from
Fiscal 2014’s bonus that was paid via a $155,000 cash bonus
plus $200,000 in shares of Class B Common Stock. Shmuel Jonas
served as Chief Executive Officer of the Company for the entire
Fiscal 2015 and was integrally involved in all strategic decisions
and initiatives undertaken by the Company. He spearheaded the
cost-cutting measures instituted during the fiscal year quarters
that were instrumental in the bottom line performance of the
Company. Shmuel Jonas was an active participant in the sale process
for Fabrix, from initiation to completion.
Marcelo Fischer was paid a cash bonus of $120,000, a reduction of
$23,000 from the prior fiscal year’s bonus. As the principal
financial officer of the Company, Mr. Fischer was involved in all
decisions on budgeting, new initiatives, spending and otherwise
related to IDT Telecom operations and execution of the initiatives
that produced the Company’s operating and bottom line
results. Mr. Fischer was a lead participant in implementing changes
to the internal systems and in maintaining the financial discipline
and implementing cost cutting that generated the Company’s
cash flows and bottom line results. Mr. Fischer was a driver of the
IDT Retail Europe restructuring, provided the financial analysis
necessary for all such enterprises and played a significant role in
the internal controls and other matters necessary to achieve and
maintain PCI compliance.
Bill Pereira was paid a cash bonus of $600,000, unchanged from the
prior year. As Chief Executive Officer of IDT Telecom, Mr. Pereira
was the principal executive responsible for IDT Telecom’s
performance and for
21
implementing all initiatives related to new products and growth of
sales of existing products. He oversaw the launch of new products
and customer relationship initiatives, as well as changes to IDT
Telecom infrastructure and internal compliance efforts. Mr. Pereira
provided the strategic guidance in balancing current performance
and investment in future growth and ensuring that the Company will
have the offerings to drive performance in future periods.
Menachem Ash was paid a cash bonus of $85,000, the same bonus as he
received for Fiscal 2014 performance. He also received a mid-year
bonus of $25,000 upon completion of the Fabrix sale. Mr. Ash served
as Executive Vice President of Strategy and Legal Affairs, and was
actively involved in the legal aspects of many matters and dealing
with third parties, including commercial relationships, strategic
partnerships and disputes. In that capacity, he participated in
implementing many of the initiatives that produced the
Company’s results and growth potential. Mr. Ash was one of
the principal individuals tasked with implementing the sale of
Fabrix that was completed during Fiscal 2015.
Joyce Mason received a bonus of $65,000, a $10,000 reduction from
the level of the prior fiscal year. As General Counsel, Ms. Mason
guides corporate legal, disclosure and compliance policy, and plays
an active role in major transactions and all aspects of corporate
governance. She serves as Corporate Secretary for the Company and
its subsidiaries and ensures ongoing compliance with corporate and
regulatory requirements.
Howard S. Jonas did not receive a bonus for his Fiscal 2015
performance.
Base
Salaries
The Company pays base salaries to its executives intended to meet
the goals and purposes outlined above. The base salaries of certain
executives are set forth in written agreements with the Company,
which agreements are described below. Subject to those written
agreements, the base salaries are set by the Compensation Committee
on an annual basis, based on presentations made by management. No
changes were made to the base compensation of any executive
officers for Fiscal 2016, and all such salaries remain at the
Fiscal 2015 level.
Howard S. Jonas receives a cash base salary of $250,000 per annum,
pursuant to the Third Amended and Restated Employment Agreement
discussed below, that was entered into during Fiscal 2014. Pursuant
to the Third Amended Agreement, on January 6, 2014, the Company
granted Mr. Jonas 63,320 shares of Class B Common Stock, with a
grant date value of $1,349,982, that vested in January 2014, 2015
and 2016 as a portion of his base salary for the three-year term of
that agreement, which expires on December 31, 2016.
Shmuel Jonas receives a base salary of $495,000 per annum. Marcelo
Fischer receives a base salary of $395,000 per annum. Bill Pereira
receives a base salary of $500,000 per annum, in accordance with
his employment agreement with IDT Telecom. Mr. Ash receives a base
salary of $370,000 per annum. Ms. Mason receives a base salary of
$315,000 per annum.
Equity Grants during
Fiscal 2015
On March 11, 2015, the Compensation Committee approved the
following grants of restricted shares of Class B Common Stock, with
one half vesting on each of January 16, 2017 and July 16, 2018:
Shmuel Jonas — 18,000 shares, Marcelo Fischer — 15,000
shares, Bill Pereira — 18,000 shares, Menachem Ash —
7,500 shares and Joyce Mason — 7,500 shares. The above grants
are in addition to the grant to Shmuel Jonas on September 17, 2014
in connection with his bonus and the grant to Bill Pereira on
January 12, 2015 in connection with his entry into the Amended and
Restated Employment Agreement. The March 11, 2015 grants of
restricted shares of Class B Common Stock to Named Executive
Officers were part of a broader Company-wide grant of 316,500
restricted shares of Class B Common Stock to incentivize certain
employees over a three-year period.
Goals for Fiscal Year
2017
At a meeting held on September 21, 2016, our Compensation Committee
approved the following goals for Fiscal 2017:
•
Meet or exceed (i) budgeted Revenue and/or (ii) budgeted Relevant
Margin.
•
Meet or exceed budgeted EBITDA less Capital Expenditures (excluding
capital expenditures made by entities in which IDT has a minority
interest).
22
•
Achieve positive cash flow (excluding results of entities included
in IDT’s consolidated financial results in which IDT owns a
minority equity interest).
•
Launch MVNO beta in the marketplace.
•
Release version 3.0 of Boss Revolution calling app (including
messaging and peer-to-peer calling) along with various version
enhancements including introduction of Boss Share.
•
Grow Net2Phone Office seats, expand into Brazil, and launch PICUP
premium features including an app for outbound service.
•
Continue growing money remittance via geographic expansion, release
of a payments app for Money Remittance, while launching initial
version of new payment mechanism.
•
Grow National Retail Solutions and enhance functionality.
•
Release new version of Boss Revolution Retailer portal nationwide
and expand its functionality to include Money Remittance, Bill Pay
and deeper integration with NRS.
•
Continue to upgrade IDT Telecom technology infrastructure by
improving back-end systems, automating processes, expanding
deployment of Birst initiative, and moving a significant amount of
applications to the cloud.
•
Develop Beta version of next generation communications app as well
as MagicWords 2.0.
•
Maintain PCI Level 1 compliance.
•
Diversify current revenue stream to more destinations both for
calling and remittance by targeting a more diverse immigrant
population.
•
Complete NCT customer and network migration.
23
EXECUTIVE COMPENSATION
TABLES
Summary Compensation
Table
The table below summarizes the total compensation paid or awarded
for performance during Fiscal 2016 and Fiscal 2015 and, where
required, Fiscal 2014, to each of the Chief Executive Officer, the
principal financial officer, the three other highest paid executive
officers of the Company during Fiscal 2016, and Howard S. Jonas,
the Chairman of the Board (the “Named Executive
Officers”).
Name
and Principal Position
|
|
|
|
|
|
|
|
|
|
|
|
All
Other Compensation
($)
|
|
|
|
Shmuel
Jonas
|
|
2016
|
|
$
|
495,000
|
|
$
|
—
|
|
$
|
93,450
|
(4)
|
|
$
|
—
|
|
|
$
|
37,226
|
(5)
|
|
$
|
625,676
|
|
Chief
Executive Officer
(3)
|
|
2015
|
|
$
|
497,288
|
|
$
|
330,000
|
|
$
|
293,400
|
(6)
|
|
$
|
—
|
|
|
$
|
141,175
|
(5)
|
|
$
|
1,261,863
|
|
|
|
2014
|
|
$
|
395,000
|
|
$
|
155,000
|
|
$
|
1,099,145
|
(7)
|
|
$
|
—
|
|
|
$
|
29,178
|
(5)
|
|
$
|
1,678,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcelo
Fischer
|
|
2016
|
|
$
|
395,000
|
|
$
|
120,000
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,250
|
(9)
|
|
$
|
528,250
|
|
Senior
Vice President – Finance
|
|
2015
|
|
$
|
396,546
|
|
$
|
120,000
|
|
$
|
244,500
|
(10)
|
|
$
|
—
|
|
|
$
|
37,850
|
(11)
|
|
$
|
798,896
|
|
(Principal
Financial Officer)
(8)
|
|
2014
|
|
$
|
388,000
|
|
$
|
143,000
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,850
|
(12)
|
|
$
|
541,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bill
Pereira
|
|
2016
|
|
$
|
500,000
|
|
$
|
600,000
|
|
$
|
—
|
|
|
$
|
22,263
|
(14)
|
|
$
|
31,083
|
(15)
|
|
$
|
1,153,346
|
|
Chief
Executive Officer and
|
|
2015
|
|
$
|
501,923
|
|
$
|
600,000
|
|
$
|
809,150
|
(16)
|
|
$
|
—
|
|
|
$
|
40,563
|
(17)
|
|
$
|
1,951,636
|
|
President
of IDT Telecom,
Current Board Member
(13)
|
|
2014
|
|
$
|
500,000
|
|
$
|
600,000
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,083
|
(18)
|
|
$
|
1,112,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Menachem
Ash
|
|
2016
|
|
$
|
370,000
|
|
$
|
100,000
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,625
|
(20)
|
|
$
|
477,625
|
|
Executive
Vice President of
|
|
2015
|
|
$
|
371,423
|
|
$
|
110,000
|
|
$
|
122,250
|
(21)
|
|
$
|
—
|
|
|
$
|
33,120
|
(22)
|
|
$
|
636,793
|
|
Strategy
and Legal Affairs
(19)
|
|
2014
|
|
$
|
370,000
|
|
$
|
85,000
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,677
|
(23)
|
|
$
|
465,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joyce
J. Mason
|
|
2016
|
|
$
|
315,000
|
|
$
|
60,000
|
|
$
|
—
|
|
|
$
|
27,967
|
(25)
|
|
$
|
7,625
|
(26)
|
|
$
|
410,592
|
|
Executive
Vice President,
General Counsel and
Corporate Secretary
(24)
|
|
2015
|
|
$
|
316,229
|
|
$
|
65,000
|
|
$
|
122,250
|
(27)
|
|
$
|
—
|
|
|
$
|
14,850
|
(28)
|
|
$
|
518,329
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Howard
S. Jonas
|
|
2016
|
|
$
|
250,000
|
|
$
|
—
|
|
$
|
31,150
|
(30)
|
|
$
|
—
|
|
|
$
|
7,810
|
(31)
|
|
$
|
288,960
|
|
Chairman
of the Board
(29)
|
|
2015
|
|
$
|
250,961
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
64,587
|
(31)
|
|
$
|
315,549
|
|
|
|
2014
|
|
$
|
152,308
|
|
$
|
—
|
|
$
|
1,349,982
|
(32)
|
|
$
|
—
|
|
|
$
|
389,248
|
(33)
|
|
$
|
1,891,538
|
24
25
Employment
Agreements
Howard S.
Jonas
: On October 28, 2011, the Company and Howard S. Jonas
entered into the Second Amended and Restated Employment Agreement
(the “Second Revised Jonas Agreement”) with a term from
October 28, 2011 to December 31, 2013. Pursuant to the Second
Revised Jonas Agreement, Howard S. Jonas was entitled to receive an
annual cash base salary of $50,000 and 883,333 restricted shares of
Common Stock (which were later converted to shares of Class B
Common Stock) and 1,176,427 restricted shares of Class B Common
Stock in lieu of a cash base salary from January 1, 2009 through
December 31, 2013.
On October 28, 2011, the Company spun off its subsidiary, Genie
Energy Ltd. Since the spin-off, Howard S. Jonas has served as the
Chairman of the Board of Genie Energy and, since January 1, 2014,
also as Chief Executive Officer of Genie Energy.
On November 29, 2013, the Company announced that Howard S. Jonas
would step down as Chief Executive Officer of the Company on
December 31, 2013, but would remain Chairman of the Board. On
December 20, 2013, the Company and Howard S. Jonas entered into the
Third Amended and Restated Employment Agreement (the “Third
Revised Jonas Agreement”) with a term from January 1, 2014 to
December 31, 2016. The Third Revised Jonas Agreement is
automatically extendable for additional one-year periods unless the
Company or Howard S. Jonas notifies the other within ninety days of
the end of the term that the agreement will not be extended.
Pursuant to the Third Revised Jonas Agreement, Howard S. Jonas (i)
will serve as Chairman of the Board of Directors of the Company,
(ii) will receive an annual cash base salary of $250,000 and (iii)
received a grant of 63,320 restricted shares of Class B Common
Stock that vested in equal amounts on January 5
th
of 2014, 2015 and 2016. The Company and Howard S. Jonas are
negotiating the terms of a new employment agreement to commence
January 1, 2017.
Bill Pereira
:
On April 29, 2009, the Company and Mr. Pereira entered into an
Employment Agreement (the “Original Pereira
Agreement”), pursuant to which Mr. Pereira received an annual
base salary of $435,000 from January 2, 2009 through January 1,
2012 (the term of the Original Pereira Agreement). In addition, Mr.
Pereira was entitled to participate in any established bonus
program for senior executive management.
On October 31, 2011, Mr. Pereira was appointed as the Chief
Executive Officer of IDT Telecom, the Company’s subsidiary.
On November 22, 2011, Mr. Pereira and IDT Telecom entered into an
Employment Agreement (the “Pereira Agreement”) pursuant
to which Mr. Pereira received an annual base salary of $500,000
from November 22, 2011 to December 31, 2014 (the term of the
Pereira Agreement). In addition, Mr. Pereira was entitled to
participate in any established bonus program for senior executive
management as approved by the Compensation Committee. Mr. Pereira
also received, on November 22, 2011, (i) a grant of options to
purchase 7,750 shares of the Company’s Class B Common Stock
with an exercise price equal to the fair market value on the date
of grant ($12.67) and an expiration date of November 21, 2021 and
(ii) a grant of 25,000 restricted shares of the Company’s
Class B Common Stock. Such options and restricted stock were
granted pursuant to the Company’s 2005 Plan, and vest in
equal annual installments on the first through the third
anniversaries of November 22, 2011. Among other things, the Revised
Pereira Agreement provided that Mr. Pereira would serve as Chief
Executive Officer of IDT
26
Telecom. The Revised Pereira Agreement was automatically extendable
for additional one-year periods unless IDT Telecom or Mr. Pereira
notified the other within ninety days of the end of the term that
the agreement would not be extended.
On January 12, 2015, Mr. Pereira and IDT Telecom entered into an
Amended and Restated Employment Agreement (the “Revised
Pereira Agreement”), which amended and restated the Pereira
Agreement, pursuant to which Mr. Pereira receives an annual base
salary of $500,000 from January 1, 2015 to December 31, 2017 (the
term of the Revised Pereira Agreement). In addition, Mr. Pereira is
entitled to participate in any established bonus program for senior
executive management as approved by the Compensation Committee. Mr.
Pereira also received, on January 12, 2015, a grant of 25,000
restricted shares of the Company’s Class B Common Stock,
which was granted pursuant to the Company’s 2015 Plan, and
vest in three equal annual installments commencing on January 5,
2016. Among other things, the Revised Pereira Agreement provides
that Mr. Pereira will serve as Chief Executive Officer of IDT
Telecom. The Revised Pereira Agreement is automatically extendable
for additional one-year periods unless IDT Telecom or Mr. Pereira
notifies the other within ninety days of the end of the term that
the agreement will not be extended.
In addition, including pursuant to their employment agreements,
executives are eligible to receive bonuses based upon performance,
including the specific financial and other goals set by the
Compensation Committee of the Board of Directors.
Menachem Ash, Shmuel Jonas and Joyce Mason do not have employment
agreements with the Company or any of its subsidiaries. On November
13, 2008, Mr. Fischer and the Company entered into a Confidential
Release and Retention Agreement, which is described below under
“Potential Payments Upon Termination or
Change-in-Control.”
Grants of Plan-Based
Awards
The following table sets forth information concerning the number of
shares of Class B Common Stock underlying stock options under the
Company’s 2015 Stock Option and Incentive Plan, as amended
and restated, granted to the Named Executive Officers in Fiscal
2016. There are no estimated future payouts in connection with such
awards. There were no restricted stock awards to Named Executive
Officers in Fiscal 2016.
|
|
|
Compensation Committee Approval
|
|
|
|
All
Other Option
Awards:
Number of Securities underlying Options (#)
|
|
Exercise of Base Price of Option Awards
($/Sh)
|
|
Grant
Date
Fair Value
of Option
Awards ($)
(1)
|
|
Bill Pereira
|
|
06/07/2016
|
|
06/07/2016
|
|
10,222
|
(2)(3)
|
|
$
|
13.93
|
|
$
|
22,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joyce J. Mason
|
|
06/07/2016
|
|
06/07/2016
|
|
5,555
|
(2)(4)
|
|
$
|
16.24
|
|
$
|
6,187
|
|
|
|
06/07/2016
|
|
06/07/2016
|
|
10,000
|
(2)(3)
|
|
$
|
13.93
|
|
$
|
21,780
|
27
Outstanding Equity
Awards at Fiscal Year-End
The following table sets forth all equity awards made to each of
the Named Executive Officers that were outstanding at the end of
Fiscal 2016.
|
|
|
|
|
|
|
|
|
Number of Securities Underlying Unexercised Options (#)
Exercisable
|
|
Number of Securities Underlying Unexercised Options (#)
Unexercisable
|
|
Option Exercise Price ($)
|
|
|
|
Number of Shares or Units of Stock That Have
Not Vested (#)
|
|
Market Value of Shares or Units of Stock That Have
Not Vested($)
(1)
|
|
Shmuel Jonas
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
42,693
|
(2)
|
|
$
|
651,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcelo Fischer
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
15,000
|
(3)
|
|
$
|
228,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bill Pereira
|
|
10,222
|
|
—
|
|
$
|
13.93
|
|
04/22/2020
|
|
34,666
|
(4)
|
|
$
|
529,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Menachem Ash
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
7,500
|
(5)
|
|
$
|
114,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joyce J. Mason
|
|
10,000
|
|
—
|
|
$
|
13.93
|
|
04/22/2020
|
|
7,500
|
(5)
|
|
$
|
114,450
|
|
|
|
5,555
|
|
—
|
|
$
|
16.24
|
|
07/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Howard S. Jonas
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Exercises and
Stock Vested
The following table sets forth information regarding the restricted
shares of Class B Common Stock that vested for each of the Named
Executive Officers in Fiscal 2016. There were no stock options
exercised by Named Executive Officers in Fiscal 2016.
|
|
|
|
|
|
|
Number of Shares Acquired Upon Vesting
(#)
|
|
Number of Shares
Withheld to Cover Taxes (#)
|
|
Value
Realized on Vesting
($)
(1)
|
|
Shmuel Jonas
|
|
18,209
|
|
7,251
|
|
$
|
199,164
|
|
Marcelo Fischer
|
|
—
|
|
—
|
|
$
|
—
|
|
Bill Pereira
|
|
8,334
|
|
3,504
|
|
$
|
86,174
|
|
Menachem Ash
|
|
—
|
|
—
|
|
$
|
—
|
|
Joyce J. Mason
|
|
—
|
|
—
|
|
$
|
—
|
|
Howard S. Jonas
|
|
21,107
|
|
—
|
|
$
|
218,246
|
28
POTENTIAL PAYMENTS UPON
TERMINATION OR CHANGE-IN-CONTROL
Marcelo
Fischer
: On November 13, 2008, Mr. Fischer and the
Company entered into a Confidential Release and Retention Agreement
(the “Fischer Agreement”), pursuant to which the
Company shall pay Mr. Fischer (or his estate) a severance payment
of $550,000 in the event he is terminated without
“cause,” as defined in the Fischer Agreement, or in the
event of Mr. Fischer’s death or disability. Mr. Fischer has
agreed not to compete with the Company for a period of one year
following the termination of his employment.
Howard S.
Jonas
: Under the terms of the Third Revised Jonas
Agreement, in the event of Howard S. Jonas’ death or
disability, or in the event the Company terminates Howard S.
Jonas’ employment without “cause” or Howard S.
Jonas voluntarily terminates his employment with “good
reason,” which includes a “change in control,”
any unvested restricted stock or other equity grant granted in
connection with Howard S. Jonas’ service to the Company shall
vest. In the event of Howard S. Jonas’ death, or in the event
the Company terminates Howard S. Jonas’ employment without
“cause” or Howard S. Jonas voluntarily terminates his
employment with “good reason,” which includes a
“change in control,” the Company shall pay Howard S.
Jonas’ estate a lump sum payment equal to twelve (12) months
of Howard S. Jonas’ annual base salary (at the rate in effect
on the date of his death). Howard S. Jonas has agreed not to
compete with the Company for a period of one year following the
termination of his agreement (other than termination of his
employment for “good reason” or by the Company other
than for “cause”). In the event that Howard S. Jonas is
terminated for “cause,” the restrictions shall lapse on
the pro-rata portion of the unvested restricted stock for the time
served between January of that year and the date of
termination.
Bill
Pereira
: Under the terms of the Revised Pereira
Agreement, in the event of Mr. Pereira’s death or disability,
the Company shall pay Mr. Pereira or his estate a death/disability
benefit equal to $1,225,000, one-half to be paid within sixty (60)
days of termination, and one-half to be paid monthly in equal
installments over the six month period following the date of the
initial payment. If Mr. Pereira is terminated without
“cause,” if he voluntarily terminates his employment
with “good reason,” each as defined in the Revised
Pereira Agreement, or if IDT Telecom does not extend the term of
the agreement upon its expiration, (i) he is entitled to a payment
equal to the greater of (a) his annual base salary at the rate in
effect on the termination date and (b) $1,225,000; one-half paid
upon the effective date of a release agreement and one-half paid
monthly over the following six month period and (ii) all awards
granted under the Company’s incentive plan shall vest (and
the restrictions thereon lapse). A “change in control”
is deemed to be “good reason” under the Revised Pereira
Agreement. Mr. Pereira has agreed not to compete with the Company
for a period of one year following the termination of his
agreement.
All Named Executive
Officers
: The Named Executive Officers have all been
granted stock options and/or restricted stock pursuant to the
Company’s 2005 Plan and the 2015 Plan. Under the 2005 Plan
and the 2015 Plan, in the event of “change in control”
(other than a “change in control” which is also a
“corporate transaction”), each as defined in the 2005 Plan and the 2015 Plan, (i) each option award which is
outstanding at the time of the change in control automatically
becomes fully vested and exercisable, and (ii) each share of
restricted stock is released from any restrictions on transfer and
repurchase or forfeiture rights. All severance payments are
contingent on Named Executive Officers executing the
Company’s standard release agreement.
The Named Executive Officers are subject to the Company’s
Severance Pay and Plan Document (the “Severance Plan”),
which was adopted by the Board on October 14, 2015. Under the
Severance Plan, U.S. employees who are terminated without cause are
entitled, in specific instances as set forth in the Severance Plan,
to severance payments as follows: (i) employees who started on our
before August 1, 2009 shall receive four weeks for each completed
year of service and two weeks for each completed period of service
that is less than one year of service but greater than six months
of service or (ii) employees who started after August 1, 2009 shall
receive two weeks for each completed year of service and one week
for each completed period of service that is less than one year of
service but greater than six months of service. Such severance
payments are capped at 52 weeks. If a Named Executive Officer is
entitled to a greater severance payment pursuant to an agreement,
the greater severance payment shall control.
The following table sets forth quantitative information with
respect to potential payments to be made to each of the Named
Executive Officers upon termination in various circumstances and/or
a change in control of the Company (each an “Event”),
assuming the Event took place on July 31, 2016, using the closing
price of the Company’s Class B Common Stock on July 29, 2016,
the last trading day in Fiscal 2016 ($15.26). The potential
payments are based on agreements entered into by Named Executive
Officers with the Company, discussed above, the 2005 Plan and the
2015 Plan. The value of each restricted share is computed by
multiplying the closing market
29
price per share of the Company’s Class B Common Stock on July
29, 2016, the last trading day in Fiscal 2016 ($15.26), by the
number of unvested restricted shares of Class B Common Stock held
by the Named Executive Officer on that date.
|
|
|
Event
of
Death or Disability
($)
|
|
|
|
Termination For Cause
($)
|
|
Voluntary Termination for Good Reason
($)
|
|
Termination Without Cause
($)
|
|
Shmuel Jonas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
—
|
|
|
$
|
651,495
|
(1)
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
Severance
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
$
|
323,654
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcelo Fischer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
—
|
|
|
$
|
228,900
|
(3)
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
Severance
|
|
$
|
550,000
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
$
|
550,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bill
Pereira
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
—
|
|
|
$
|
529,003
|
(4)
|
|
|
—
|
|
$
|
529,003
|
(4)
|
|
$
|
529,003
|
(4)
|
|
Severance
|
|
$
|
1,225,000
|
|
|
$
|
1,225,000
|
|
|
|
—
|
|
$
|
1,225,000
|
(5)
|
|
$
|
1,225,000
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Menachem Ash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
—
|
|
|
$
|
114,450
|
(6)
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
Severance
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
$
|
341,538
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joyce
J. Mason
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
$
|
—
|
|
|
$
|
114,450
|
(6)
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
Severance
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
—
|
|
|
$
|
315,000
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Howard S. Jonas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
Severance
|
|
$
|
250,000
|
(7)
|
|
$
|
250,000
|
|
|
|
—
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|
30
PROPOSAL REQUIRING YOUR
VOTE
PROPOSAL NO.
1
ELECTION OF
DIRECTORS
Pursuant to the Company’s Third Restated Certificate of
Incorporation, the authorized number of members of the Board of
Directors is between three and seventeen, with the actual number to
be set, within that range, by the Board of Directors from time to
time. The Board of Directors has set the number of directors on the
Board of Directors at five. There are currently five directors on
the Board of Directors. The current terms of all of the serving
directors expire at the Annual Meeting. All five of the directors
are standing for re-election at the Annual Meeting.
The nominees to the Board of Directors are Michael Chenkin, Eric F.
Cosentino, Howard S. Jonas, Bill Pereira and Judah Schorr, each of
whom has consented to be named in this proxy statement and to serve
if elected. Each of the nominees is currently serving as a director
of the Company. Brief biographical information about the nominees
for directors is furnished below.
Each of these director nominees is standing for election for a term
of one year until the 2017 Annual Meeting, or until his successor
is duly elected and qualified or until his earlier resignation or
removal. A majority of the votes cast for or against a director
nominee at the Annual Meeting shall elect each director.
Stockholders may not vote for more than five persons, which is the
number of nominees identified herein. The following pages contain
biographical information and other information about the nominees.
Following each nominee’s biographical information, we have
provided information concerning particular experience,
qualifications, attributes and/or skills that the Nominating
Committee and the Board of Directors considered when determining
that each nominee should serve as a director.
Michael Chenkin
has been a director of the Company since
October 16, 2013. Mr. Chenkin is a Certified Public Accountant and
worked in the Audit Department of Coopers and Lybrand from 1974 to
1993 and as a consultant to the securities industry from 1993 to
2008 with an emphasis on business implementation, internal
controls, compliance and regulatory matters for large financial
institutions. Mr. Chenkin received a Bachelor of Science degree
from Cornell University and a Master of Business Administration
from Columbia University.
Key Attributes,
Experience and Skills:
Mr. Chenkin’s diverse business experiences as a Certified
Public Accountant — working as an auditor for a large
multi-national accounting firm for close to 20 years — and
consulting for large financial institutions for 15 years, offer
valuable insights to the Board of Directors, particularly given the
enhanced accounting rules and regulations affecting public
companies. Mr. Chenkin’s strong accounting background, as
well as his M.B.A. from Columbia University, provides financial and
audit-related expertise to the Board of Directors.
Eric F. Cosentino
has been a director of the Company since
February 2007. Rev. Cosentino was a director of Zedge, Inc., a
former subsidiary of the Company that was spun off to stockholders
in June 2016, from September 2008 until May 2016. Rev. Cosentino
has been a member of the National Association of Corporate
Directors (NACD) since March 2009. Rev. Cosentino has been an NACD
Governance Fellow since 2014, when he completed NACD’s
comprehensive program study for corporate directors. He supplements
his skill sets through ongoing engagement with the director
community and access to leading practices. Rev. Cosentino served on
the Board of Directors of a Company subsidiary, IDT Entertainment,
until it was sold to Liberty Media in 2006. Rev. Cosentino was the
Rector of the Episcopal Church of the Divine Love in Montrose, New
York, from 1987 until his retirement in 2014. He remains
canonically resident in the Episcopal Diocese of New York. He began
his ordained ministry in 1984 as curate (assistant) at St.
Elizabeth’s Episcopal Church in Ridgewood, Bergen County, New
Jersey. He has also served on the Board of Directors of the
Evangelical Fellowship Anglican Communion of New York. Rev.
Cosentino has published articles and book reviews for The Episcopal
New Yorker, Care & Community, and Evangelical Journal. Rev.
Cosentino received a B.A. from Queens College and a M.Div. from
General Theological Seminary, New York.
Key Attributes,
Experience and Skills:
Rev. Cosentino has strong leadership skills, having served as the
Rector of the Episcopal Church of the Divine Love in Montrose, New
York, from 1987 until 2014. As Chairman of the Company’s
Corporate Governance Committee, Rev. Cosentino has become
well-versed in corporate governance issues by attending seminars
and
31
joining the National Association of Corporate Directors in March
2009. Rev. Cosentino’s long tenure as a director of the
Company, as well as prior tenures with former subsidiaries Zedge
and IDT Entertainment, brings extensive knowledge of our Company to
the Board.
Howard S. Jonas
founded IDT in August 1990, and has served
as Chairman of the Board of Directors since its inception. Mr.
Jonas served as Chief Executive Officer of the Company from October
2009 through December 2013 and from December 1991 until July 2001.
Mr. Jonas is also the founder and has been President of Jonas Media
Group (formerly Jonas Publishing) since its inception in 1979.
Since January 2014, Mr. Jonas has served as the Chief Executive
Officer of Genie Energy Ltd, a former subsidiary of IDT that was
spun off to stockholders in October 2011, and has served as
Chairman of the board of directors of Genie Energy since the
spin-off. Since May 2016, Mr. Jonas has served as the Chairman of
the Board of Zedge, Inc., a former subsidiary of the Company that
was spun off to stockholders in June 2016. Mr. Jonas also serves as
the Chairman of the Board of IDW Media Holdings, Inc., a former
subsidiary of IDT that was spun off to stockholders in September
2009. Mr. Jonas has been a director of Cornerstone Pharmaceuticals
since April 2013 and was appointed Chairman of the Board in April
2016. Mr. Jonas received a B.A. in Economics from Harvard
University.
Key Attributes,
Experience and Skills:
As founder of the Company and Chairman of the Board since its
inception, Howard S. Jonas brings tremendous knowledge of all
aspects of our Company and each industry in which it is involved to
the Board. Howard S. Jonas’ service as Chairman of the Board
creates a critical link between management and the Board, enabling
the Board to perform its oversight function with the benefits of
management’s perspectives on the businesses of the Company.
In addition, having Howard S. Jonas on the Board provides our
Company with effective leadership.
Bill Pereira
has served as a member of the Company’s
Board of Directors and as the Chief Executive Officer, President
and Co-Chairman of IDT Telecom since October 31, 2011. Mr. Pereira
served as Chief Financial Officer of the Company from January 2009
until October 2011, and served as the Treasurer from January 2009
to December 2010. Previously, he served as Executive Vice President
of Finance for the Company from January 2008 to January 2009. Mr.
Pereira initially joined the Company in December 2001 when the
Company bought Horizon Global Trading, a financial software firm
where he was a managing partner. In February 2002, Mr. Pereira
joined Winstar Communications, a subsidiary of the Company, as a
Senior Vice President of Finance. Mr. Pereira was promoted to CFO
of Winstar Communications, a position he held until 2006 when he
was named a Senior Vice President of the Company responsible for
financial reporting, budgeting and planning. Prior to joining the
Company, Mr. Pereira worked for a number of companies in the
financial sector, including Prudential Financial, SBC Warburg and
UBS. Mr. Pereira received a B.S. from Rutgers University and an
M.B.A. from the New York University Stern School of Business.
Key Attributes,
Experience and Skills:
Mr. Pereira’s history with the Company, particularly his
nearly three-year tenure as Chief Financial Officer of the Company,
brings extensive knowledge of the Company’s business
divisions. Mr. Pereira’s financial background, coupled with
his first-hand knowledge of the Company’s financial reporting
and internal audit process, provides financial expertise to the
Board. Mr. Pereira’s successful leadership of the
Company’s turn-around plan provides valuable insight to the
Board.
Judah Schorr
has been a director of the Company since
December 2006. Dr. Schorr founded Judah Schorr MD PC in 1994, an
anesthesia provider to hospitals, ambulatory surgery centers and
medical offices, and has been its President and owner since its
inception, as well as the President of its subsidiary, Tutto
Anesthesia. Dr. Schorr is an attending physician at Anesthesia
Services at Bergen Regional Medical Center, the largest hospital in
the state of New Jersey, and the Managing Partner of Chavrusa
Realty Corp., a commercial real-estate company in Long Island, New
York. Dr. Schorr received his B.S. in Psychology from Brooklyn
College and his M.D. from the University of Trieste Faculty of
Medicine and Surgery in Italy.
Key Attributes,
Experience and Skills:
Through Dr. Schorr’s career as an entrepreneur driving the
growth of Judah Schorr MD PC and Chavrusa Realty Corp., he has
obtained valuable business and management experience and brings
important perspectives
32
on the issues facing the Company. Dr. Schorr’s tenure as a
member of the Board and its Compensation, Corporate Governance and
Audit Committees brings useful compliance insights to the
Board.
The Board of Directors has no reason to believe that any of the
persons named above will be unable or unwilling to serve as a
director, if elected.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE
FOR
THE ELECTION OF THE NOMINEES NAMED ABOVE.
Directors, Director
Nominees and Executive Officers
The executive officers, directors, director nominees and Named
Executive Officers of the Company are as follows:
|
|
|
|
|
|
|
Shmuel Jonas
|
|
35
|
|
Chief Executive Officer and Named Executive
Officer
|
|
Howard S. Jonas
|
|
60
|
|
Chairman of the Board of Directors, Director and
Director Nominee and Named Executive Officer
|
|
Marcelo Fischer
|
|
49
|
|
Senior Vice President – Finance and Named
Executive Officer
|
|
Bill Pereira
|
|
51
|
|
Director, Director Nominee, Chief Executive
Officer and President of IDT Telecom and Named Executive
Officer
|
|
Joyce J. Mason
|
|
57
|
|
Executive Vice President, General Counsel,
Corporate Secretary and Named Executive Officer
|
|
Mitch Silberman
|
|
48
|
|
Chief Accounting Officer and
Controller
|
|
Menachem Ash
|
|
44
|
|
Executive Vice President of Strategy and Legal
Affairs and Named Executive Officer
|
|
Anthony S. Davidson
|
|
48
|
|
Senior Vice President –
Technology
|
|
Michael Chenkin
|
|
65
|
|
Director and Director Nominee
|
|
Eric F. Cosentino
|
|
59
|
|
Director and Director Nominee
|
|
Judah Schorr
|
|
64
|
|
Director and Director Nominee
|
Set forth below is biographical information with respect to the
Company’s current executive officers and named executive
officers, except Howard S. Jonas and Bill Pereira, whose
information is set forth above in Proposal No. 1:
Shmuel Jonas
has served as Chief Executive Officer of the
Company since January 2014. Mr. Shmuel Jonas served as Chief
Operating Officer of the Company from June 2010 through December
2013. Mr. Shmuel Jonas joined the Company in June 2008 and served
as a Vice President until June 2009 when he was elected to serve as
the Company’s Vice President of Operations. Since 2004, Mr.
Shmuel Jonas has been the managing member of Arlington Suites, LLC,
manager of a thirty million dollar mixed-use ground up development
project in Bronx, New York. In addition, from October 2010 until
May 2016, Mr. Shmuel Jonas was a director of Zedge, Inc., a former
subsidiary of the Company that was spun off to stockholders in June
2016. From 2006 through 2008, Mr. Shmuel Jonas was a partner in a
160‑unit garden apartment complex in Memphis, Tennessee.
Between 2004 and 2005, Mr. Shmuel Jonas owned and operated various
businesses in the food industry, including BID Distribution, a
distributor and marketer of frozen desserts to grocery stores and
food service operations.
Marcelo Fischer
has served as the Company’s Senior
Vice President–Finance (the Company’s principal
financial officer position) since October 31, 2011 and as Chief
Financial Officer of IDT Telecom since June 2007. Mr. Fischer also
served as the Company’s Senior Vice President of Finance from
March 2007 to June 2007. Mr. Fischer served as the Company’s
Chief Financial Officer and Treasurer from June 2006 to March 2007,
as the Company’s Controller from May 2001 until June 2006 and
as Chief Accounting Officer from December 2001 until June 2006.
Prior to joining the Company, Mr. Fischer was the Corporate
Controller of Viatel, Inc. from 1999 until 2001. From 1998 through
1999, Mr. Fischer was the Controller of the Consumer International
Division of Revlon, Inc. From 1991 through 1998, Mr. Fischer held
various accounting and finance positions at Colgate-Palmolive
Corporation. Mr. Fischer, a Certified Public Accountant, received a
B.A. from the University of Maryland and an M.B.A. from the New
York University Stern School of Business.
33
Joyce J. Mason
has served as an Executive Vice President of
the Company since December 1998 and as General Counsel and
Corporate Secretary of the Company from its inception. Ms. Mason
also served as a director of the Company from its inception until
December 2006. In addition, from September 2008 until May 2016, Ms.
Mason was a director of Zedge, Inc., a former subsidiary of the
Company that was spun off to stockholders in June 2016, and she
also served as a director of IDT Telecom from December 1999 until
May 2001 and as a director of Net2Phone from October 2001 until
October 2004. Prior to joining the Company, Ms. Mason had been in
private legal practice. Ms. Mason received a B.A. from the City
University of New York and a J.D. from New York Law School.
Mitch Silberman
has served as the Company’s Chief
Accounting Officer and Controller since June 2006. Mr. Silberman
joined the Company in October 2002 as Director of Financial
Reporting until his promotion to Assistant Controller in October
2003. Prior to joining the Company, Mr. Silberman was a senior
manager at KPMG LLP, where he served in the firm’s
Biotechnology and Pharmaceutical practice. Prior to KPMG, Mr.
Silberman worked for Grant Thornton LLP, serving in the
firm’s Telecommunications, Service and Technology practice.
Mr. Silberman, a Certified Public Accountant, received a Bachelor
of Science in Accounting from Brooklyn College.
Menachem Ash
has served as the Company’s Executive
Vice President of Strategy and Legal Affairs since October 2012.
Mr. Ash served as the managing attorney of the Company’s
legal department from June 2011 to October 2012. Mr. Ash has served
as senior counsel to several IDT divisions since he joined the
Company in July 2004, including IDT Telecom and IDT Carmel. Prior
to joining the Company, Mr. Ash served as General Counsel to
Telstar International, Inc., a telecommunications services
provider. Mr. Ash also worked at KPMG as a senior associate in its
tax group focusing on financial services and technology companies.
He is a graduate of Brooklyn College and the Benjamin N. Cardozo
School of Law.
Anthony S. Davidson
has served as Senior Vice President
— Technology of the Company since December 2014. Mr. Davidson
has also served as Executive Vice President — Carrier
Operations of IDT Telecom since 2003 and in several different
senior management positions in finance, technology and commercial
operations and corporate development at IDT Investments and IDT
Telecom since January 2000. Prior to joining IDT, Mr. Davidson
served as Director of Finance at a small, privately held satellite
television programming company in New Jersey and was previously a
middle market relationship manager at Fleet Bank in Albany, NY. He
holds a B.A. from Williams College and an M.B.A. from Cornell
University.
Relationships among
Directors or Executive Officers
Howard S. Jonas and Joyce J. Mason are brother and sister. Howard
S. Jonas and Shmuel Jonas are father and son. Joyce J. Mason and
Shmuel Jonas are aunt and nephew. There are no other familial
relationships among any of the directors or executive officers of
the Company.
34
PROPOSAL NO.
2
APPROVAL OF AMENDMENT TO
THE COMPANY’S
2015 STOCK OPTION AND INCENTIVE PLAN
The Company’s stockholders are being asked to approve an
amendment to the Company’s 2015 Stock Option and Incentive
Plan (the “2015 Plan”) that will increase the number of
shares of the Company’s Class B Common Stock available for
the grant of awards thereunder by an additional 100,000 shares. The
Board of Directors adopted the proposed amendment to the 2015 Plan
on October 13, 2016, subject to stockholder approval at the Annual
Meeting.
The Board of Directors believes that the proposed amendment to
increase the number of shares of the Company’s Class B Common
Stock available for the grant of awards thereunder by an additional
100,000 shares is necessary in order to provide the Company with a
sufficient reserve of shares of Class B Common Stock for future
grants needed to attract and retain the services of key employees,
directors and consultants of the Company essential to the
Company’s long-term success.
The proposed amendment is being submitted for a stockholder vote in
order to enable the Company to grant, among other equity grants
permitted pursuant to the 2015 Plan, options which are incentive
stock options (“ISOs”) within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the
“Code”); and because such approval may be required or
advisable in connection with (i) the provisions set forth in
Section 162(m) of the Code relating to the deductibility of certain
compensation (ii) the provisions set forth in Rule 16b-3
promulgated under the Exchange Act and (iii) the rules and
regulations applicable to New York Stock Exchange-listed
companies.
The following description of the 2015 Plan, as proposed to be
amended by this Proposal, is a summary, does not purport to be
complete and is qualified in its entirety by the full text of the
2015 Plan, as proposed to be amended. A copy of the 2015 Plan, as
proposed to be amended, is attached hereto as Exhibit A and has
been filed with the SEC with this Proxy Statement.
DESCRIPTION OF THE 2015
PLAN
Pursuant to the 2015 Plan, officers, employees, directors and
consultants of the Company and certain of its subsidiaries are
eligible to receive awards of stock options, stock appreciation
rights, limited stock appreciation rights, restricted stock and
deferred stock units. There are approximately 1,162 employees and
directors eligible for grants under the Plan. Options granted under
the 2015 Plan may be ISOs or non-qualified stock options
(“NQSOs”). Stock appreciation rights
(“SARs”) and limited stock appreciation rights
(“LSARs”) may be granted either alone or simultaneously
with the grant of an option. Restricted stock and deferred stock
units may be granted in addition to or in lieu of any other award
made under the 2015 Plan.
The maximum number of shares reserved for the grant of awards under
the 2015 Plan is 700,000 shares of Class B Common Stock (including
the 100,000 shares of Class B Common Stock reserved subject to
approval of the stockholders). Such share reserves are subject to
further adjustment in the event of specified changes to the capital
structure of the Company. The shares may be made available either
from the Company’s authorized but unissued capital stock or
from capital stock reacquired by the Company.
The Compensation Committee of the Board of Directors administers
the 2015 Plan. Subject to the provisions of the 2015 Plan, the
Compensation Committee determines the type of awards, when and to
whom awards will be granted, the number and class of shares covered
by each award and the terms, provisions and kind of consideration
payable (if any), with respect to awards. The Compensation
Committee may interpret the 2015 Plan and may at any time adopt
such rules and regulations for the 2015 Plan as it deems advisable,
including the delegation of certain of its authority. In
determining the persons to whom awards shall be granted and the
number of shares covered by each award, the Compensation Committee
takes into account the duties of the respective persons, their
present and potential contributions to the success of the Company
and such other factors as the Compensation Committee deems
relevant.
An option may be granted on such terms and conditions as the
Compensation Committee may approve, and generally may be exercised
for a period of up to ten years from the date of grant. Generally,
ISOs will be granted with an exercise price equal to the
“Fair Market Value” (as defined in the 2015 Plan) on
the date of grant. In the
35
case of ISOs, certain limitations will apply with respect to the
aggregate value of option shares which can become exercisable for
the first time during any one calendar year, and certain additional
limitations will apply to ISOs granted to “Ten Percent
Stockholders” of the Company (as defined in the 2015 Plan).
The Compensation Committee may provide for the payment of the
option price in cash, by delivery of Class B Common Stock having a
Fair Market Value equal to such option price, by a combination
thereof or by any other method. Options granted under the 2015 Plan
will become exercisable at such times and under such conditions as
the Compensation Committee shall determine, subject to acceleration
of the exercisability of options in the event of, among other
things, a “Change in Control,” a “Corporate
Transaction” or a “Related Entity Disposition”
(in each case, as defined in the 2015 Plan).
Each non-employee director will receive 4,000 shares of Class B
Common Stock annually. New non-employee directors will receive a
pro-rata amount (based on projected quarters of service for such
calendar year following the grant date) of such annual grant on
their date of initial election and qualification as a non-employee
director. The grant date for incumbent annual non-employee director
grants will be each January 5
th
(or the next business day).
The 2015 Plan also provides for the granting of restricted stock
awards, which are awards of Class B Common Stock that may not be
disposed of, except by will or the laws of descent and
distribution, for such period as the Compensation Committee
determines (the “restricted period”). The Compensation
Committee may also impose such other conditions and restrictions,
if any, on the shares as it deems appropriate, including the
satisfaction of performance criteria. All restrictions affecting
the awarded shares lapse in the event of a Change in Control, a
Corporate Transaction or a Related Entity Disposition.
During the restricted period for a restricted stock award, the
grantee will be entitled to receive dividends with respect to, and
to vote, the shares of restricted stock awarded to him or her. If,
during the restricted period, the grantee’s service with the
Company terminates, any shares remaining subject to restrictions
will be forfeited. The Compensation Committee has the authority to
cancel any or all outstanding restrictions prior to the end of the
restricted period, including cancellation of restrictions in
connection with certain types of termination of service.
The 2015 Plan also permits the Compensation Committee to grant SARs
and/or LSARS. Generally, SARs may be exercised at such time or
times and only to the extent determined by the Compensation
Committee and LSARs may be exercised only (i) during the 90 days
immediately following a Change in Control or (ii) immediately prior
to the effective date of a Corporate Transaction (as defined in the
2015 Plan). LSARs will be exercisable at such time or times and
only to the extent determined by the Compensation Committee. An
LSAR granted in connection with an ISO is exercisable only if the
Fair Market Value per share of Class B Common Stock on the date of
grant exceeds the purchase price specified in the related ISO.
Upon exercise of an SAR, a grantee will receive for each share for
which an SAR is exercised, an amount in cash or shares of Class B
Common Stock, as determined by the Compensation Committee, equal to
the excess, if any, of (i) the Fair Market Value of a share of
Class B Common Stock on the date the SAR is exercised, over (ii)
the exercise or other base price of the SAR or, if applicable, the
exercise price per share of the option to which the SAR
relates.
Upon exercise of an LSAR, a grantee will receive for each share for
which an LSAR is exercised, an amount in cash equal to the excess,
if any, of (i) the greater of (x) the highest Fair Market Value of
a share of Class B Common Stock, during the 90-day period ending on
the date the LSAR is exercised, and (y) whichever of the following
is applicable: (1) the highest per share price paid in any tender
or exchange offer which is in effect at any time during the 90 days
ending on the date of exercise of the LSAR; (2) the fixed or
formula price for the acquisition of shares of Class B Common Stock
in a merger in which the Company will not continue as the surviving
corporation, or upon a consolidation, or a sale, exchange or
disposition of all or substantially all of the Company’s
assets, approved by the Company’s stockholders (if such price
is determinable on the date of exercise); and (3) the highest price
per share of Class B Common Stock shown on Schedule 13D, or any
amendment thereto, filed by the holder of the specified percentage
of Class B Common Stock, the acquisition of which gives rise to the
exercisability of the LSAR over (ii) the exercise or other base
price of the LSAR or, if applicable, the exercise price per share
of the option to which the LSAR relates. In no event, however, may
the holder of an LSAR granted in connection with an ISO receive an
amount in excess of the maximum amount which will enable the option
to continue to qualify as an ISO.
When an SAR or LSAR is exercised, the option to which it relates,
if any, will cease to be exercisable to the extent of the number of
shares with respect to which the SAR or LSAR is exercised, but will
be deemed to have been exercised for purposes of determining the
number of shares available for the future grant of awards under the
2015 Plan.
36
The 2015 Plan further provides for the granting of deferred stock
units, which are awards providing a right to receive shares of
Class B Common Stock on a deferred basis, subject to such
restrictions and a restricted period as the Compensation Committee
determines. The Compensation Committee may also impose such other
conditions and restrictions, if any, on the payment of shares as it
deems appropriate, including the satisfaction of performance
criteria. All deferred stock awards become fully vested in the
event of a Change in Control, a Corporate Transaction or a Related
Entity Disposition.
The grantee of a deferred stock unit will not be entitled to
receive dividends or vote the underlying shares until the
underlying shares are delivered to the grantee. The Compensation
Committee has the authority to cancel any or all outstanding
restrictions prior to the end of the restricted period, including
cancellation of restrictions in connection with certain types of
termination of service.
The Board of Directors may at any time and from time to time
suspend, amend, modify or terminate the 2015 Plan; provided,
however, that, to the extent required by any other law, regulation
or stock exchange rule, no such change shall be effective without
the requisite approval of the Company’s stockholders. In
addition, no such change may adversely affect an award previously
granted, except with the written consent of the grantee.
No awards may be granted under the 2015 Plan after September 16,
2024, ten years from the Board’s approval of the 2015
Plan.
ISOs (and any related SARs) are not assignable or transferable
except by the laws of descent and distribution. Non-qualified stock
options (and any SARs or LSARs related thereto) may be transferred
to the extent permitted by the Compensation Committee. Holders of
NQSOs (and any SARs or LSARs related thereto) are permitted to
transfer such NQSOs for no consideration to such holder’s
“family members” (as defined in Form S-8) with the
prior approval of the Compensation Committee.
Except as set forth in the table below, the Company cannot now
determine the number of options or other awards to be granted in
the future under the 2015 Plan to officers, directors, employees
and consultants. Actual awards under the 2015 Plan to Named
Executive Officers for Fiscal 2016 are reported under the heading
“Grant of Plan-Based Awards.”
New Plan
Benefits
Name
and Principal Position
|
|
Number of Shares of Stock
|
|
Non-Employee Director Group
|
|
12,000
|
(1)
|
Federal Income Tax
Consequences of Awards Granted under the 2015 Plan
The Company believes that, under present law, the following are the
U.S. federal income tax consequences generally arising with respect
to awards under the 2015 Plan:
Incentive Stock
Options
. ISOs granted under the 2015 Plan are intended
to meet the definitional requirements of Section 422(b) of the Code
for “incentive stock options.” A participant who
receives an ISO does not recognize any taxable income upon the
grant of such ISO. Similarly, the exercise of an ISO generally does
not give rise to federal taxable income to the participant,
provided that (i) the federal “alternative minimum
tax,” which depends on the participant’s particular tax
situation, does not apply and (ii) the participant is employed by
the Company from the date of grant of the option until three months
prior to the exercise thereof, except where such employment or
service terminates by reason of disability or death (where the
three month period is extended to one year).
Further, if after exercising an ISO, a participant disposes of the
Class B Common Stock so acquired more than two years from the date
of grant and more than one year from the date of transfer of the
Class B Common Stock pursuant to the exercise of such ISO (the
“applicable holding period”), the participant will
normally recognize a long-term capital gain or loss equal to the
difference, if any, between the amount received for the shares and
the exercise price. If, however, the participant does not hold the
shares so acquired for the applicable holding
37
period — thereby making a “disqualifying
disposition” — the participant would realize ordinary
income on the excess of the fair market value of the shares at the
time the ISO was exercised over the exercise price, and the balance
of income, if any, would be long-term capital gain (provided the
holding period for the shares exceeded one year and the participant
held such shares as a capital asset at such time).
A participant who exercises an ISO by delivering Class B Common
Stock previously acquired pursuant to the exercise of another ISO
is treated as making a “disqualifying disposition” of
such Class B Common Stock if such shares are delivered before the
expiration of their applicable holding period. Upon the exercise of
an ISO with previously acquired shares as to which no disqualifying
disposition occurs, the participant would not recognize gain or
loss with respect to such previously acquired shares. The Company
will not be allowed a federal income tax deduction upon the grant
or exercise of an ISO or the disposition, after the applicable
holding period, of the Class B Common Stock acquired upon exercise
of an ISO. In the event of a disqualifying disposition, the Company
generally will be entitled to a deduction in an amount equal to the
ordinary income recognized by the participant, provided that such
amount constitutes an ordinary and necessary business expense to
the Company and is reasonable and the limitations of Sections 280G
and 162(m) of the Code (discussed below) do not apply.
Non-Qualified Stock
Options and Stock Appreciation Rights
. Non-qualified
stock options granted under the 2015 Plan are options that do not
qualify as ISOs. A participant who receives an NQSO or an SAR
(including an LSAR) will not recognize any taxable income upon the
grant of such NQSO or SAR. However, the participant generally will
recognize ordinary income upon exercise of an NQSO in an amount
equal to the excess of (i) the fair market value of the shares of
Class B Common Stock at the time of exercise over (ii) the exercise
price. Similarly, upon the receipt of cash or shares pursuant to
the exercise of an SAR, the individual generally will recognize
ordinary income in an amount equal to the sum of the cash and the
fair market value of the shares received.
The ordinary income recognized with respect to the receipt of
shares or cash upon exercise of a NQSO or an SAR will be subject to
both wage withholding and other employment taxes. In addition to
the customary methods of satisfying the withholding tax liabilities
that arise upon the exercise of an SAR for shares or upon the
exercise of a NQSO, the Company may satisfy the liability in whole
or in part by withholding shares of Class B Common Stock from those
that otherwise would be issuable to the participant or by the
participant tendering other shares owned by him or her, valued at
their fair market value as of the date that the tax withholding
obligation arises.
A federal income tax deduction generally will be allowed to the
Company in an amount equal to the ordinary income recognized by the
individual with respect to his or her NQSO or SAR, provided that
such amount constitutes an ordinary and necessary business expense
to the Company and is reasonable and the limitations of Sections
280G and 162(m) of the Code do not apply.
If a participant exercises an NQSO by delivering shares of Class B
Common Stock to the Company, other than shares previously acquired
pursuant to the exercise of an ISO which is treated as a
“disqualifying disposition” as described above, the
participant will not recognize gain or loss with respect to the
exchange of such shares, even if their then fair market value is
different from the participant’s tax basis. The participant,
however, will be taxed as described above with respect to the
exercise of the NQSO as if he or she had paid the exercise price in
cash, and the Company likewise generally will be entitled to an
equivalent tax deduction.
Other
Awards
. With respect to other awards under the 2015
Plan that are settled either in cash or in shares of Class B Common
Stock that are either transferable or not subject to a substantial
risk of forfeiture (as defined in the Code and the regulations
thereunder), participants generally will recognize ordinary income
equal to the amount of cash or the fair market value of the Class B
Common Stock received. Participants also will not recognize income
upon the grant of a deferred stock unit, and will instead recognize
ordinary income when shares of Class B Common Stock are delivered
in satisfaction of such award.
With respect to restricted stock awards under the 2015 Plan that
are restricted to transferability and subject to a substantial risk
of forfeiture — absent a written election pursuant to Section
83(b) of the Code filed with the Internal Revenue Service within 30
days after the date of transfer of such shares pursuant to the
award (a “Section 83(b) election”) — a
participant will recognize ordinary income at the earlier of the
time at which (i) the shares become transferable or (ii) the
restrictions that impose a substantial risk of forfeiture of such
shares (the “Restrictions”) lapse, in an amount equal
to the excess of the fair market value (on such date) of such
shares over the price paid for the award, if any. If a Section
83(b) election is made, the participant will recognize ordinary
income, as of the
38
transfer date, in an amount equal to the excess of the fair market
value of the Class B Common Stock as of that date over the price
paid for such award, if any.
The ordinary income recognized with respect to the receipt of cash,
shares of Class B Common Stock or other property under the 2015
Plan will be subject to both wage withholding and other employment
taxes. In addition to the customary methods of satisfying
withholding tax liabilities that arise with respect to the delivery
of cash or property (or vesting thereof), the Company may satisfy
the liability in whole or in part by withholding shares of Class B
Common Stock from those that would otherwise be issuable to the
participant or by the participant tendering other shares owned by
him or her, valued at their fair market value as of the date that
the tax withholding obligation arises.
The Company generally will be allowed a deduction for federal
income tax purposes in an amount equal to the ordinary income
recognized by the participant, provided that such amount
constitutes an ordinary and necessary business expense and is
reasonable and the limitations of Sections 280G and 162(m) of the
Code do not apply.
Change in
Control
. In general, if the total amount of payments
to a participant that are contingent upon a “change in
control” of the Company (as defined in Section 280G of the
Code), including awards under the 2015 Plan that vest upon a
“change in control,” equals or exceeds three times the
individual’s “base amount” (generally, such
participant’s average annual compensation for the five
calendar years preceding the change in control), then, subject to
certain exceptions, the payments may be treated as “parachute
payments” under the Code, in which case a portion of such
payments would be non-deductible to the Company and the participant
would be subject to a 20% excise tax on such portion of the
payments.
Certain Limitations
on Deductibility of Executive Compensation
. With
certain exceptions, Section 162(m) of the Code denies a deduction
to publicly held corporations for compensation paid to certain
executive officers in excess of $1 million per executive per
taxable year (including any deduction with respect to the exercise
of an NQSO or SAR or the disqualifying disposition of stock
purchased pursuant to an ISO). One such exception applies to
certain performance-based compensation provided that such
compensation has been approved by stockholders in a separate vote
and certain other requirements are met. The Company believes that
Stock Options, SARs and LSARs granted under the 2015 Plan should
qualify for the performance-based compensation exception to Section
162(m).
On October 19, 2016, the last reported sale price of the
Company’s Class B Common Stock on the New York Stock Exchange
was $17.76 per share.
39
EQUITY COMPENSATION PLAN
INFORMATION
Employee Stock Incentive
Program
The Company adopted the 2015 Plan, pursuant to which options to
purchase Class B Common Stock, restricted shares of Class B Common
Stock and Deferred Stock Units may be awarded. As fully described
in Proposal No. 2, the Company is asking the Stockholders to vote
on an amendment to the 2015 Plan that will increase the number of
shares of the Company’s Class B Common Stock available for
grant of awards thereunder by an additional 100,000 shares. The
Company anticipates awarding options to purchase shares of Class B
Common Stock, restricted shares of Class B Common Stock and
Deferred Stock Units to employees, officers, directors and
consultants under the 2015 Plan.
Equity Compensation
Plans and Individual Compensation Arrangements
The following chart provides aggregate information regarding grants
under all equity compensation plans of the Company through July 31,
2016.
|
|
|
Number of Securities to be Issued upon Exercise of
Outstanding Options
(1)
|
|
Weighted-Average Exercise Price of Outstanding
Options
|
|
Number of Securities Remaining Available for Future
Issuance under Equity Compensation Plans
|
|
Equity
compensation plans approved by security holders
|
|
360,224
|
|
$
|
11.98
|
|
202,961
|
|
Equity compensation plans not approved by
security holders
|
|
—
|
|
$
|
—
|
|
—
|
|
Total
|
|
360,224
|
|
$
|
11.98
|
|
202,961
|
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE
FOR
APPROVAL OF THE 2015 PLAN AS DESCRIBED ABOVE.
40
THE COMPANY’S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL
2017
Grant Thornton LLP was the Company’s independent registered
public accounting firm for Fiscal 2016 and has served the Company
as its independent registered public accounting firm since 2008.
The Audit Committee intends to invite Grant Thornton LLP and other
independent registered public accounting firms to be considered for
the engagement to serve as the Company’s independent
registered public accounting firm for the remainder of Fiscal 2017.
The Company, therefore, is not asking stockholders to ratify at the
Annual Meeting the appointment of Grant Thornton LLP or any other
firm as the Company’s independent registered public
accounting firm for the Fiscal Year ending July 31, 2017.
We expect that representatives for Grant Thornton will be present
at the Annual Meeting, will be available to respond to appropriate
questions and will have the opportunity to make such statements as
they may desire.
Audit and Non-Audit
Fees
The following table presents fees billed for professional services
rendered by Grant Thornton LLP for the Fiscal Years ended July 31,
2016 and July 31, 2015.
Fiscal Year Ended July 31
|
|
|
|
|
|
Audit Fees
(1)
|
|
$
|
1,070,668
|
|
$
|
1,085,685
|
|
Audit Related Fees
(2)
|
|
|
|
|
|
3,785
|
|
Tax Fees
|
|
|
98,306
|
|
|
87,633
|
|
All Other Fees
(3)
|
|
|
2,739
|
|
|
7,804
|
|
Total
|
|
$
|
1,171,713
|
|
$
|
1,184,907
|
The Audit Committee concluded that the provision of the non-audit
services listed above is compatible with maintaining the
independence of Grant Thornton LLP.
Policy on Audit
Committee Pre-Approval of Audit and Permissible Non-Audit Services
of the Independent Registered Public Accounting Firm
The Audit Committee is responsible for appointing, setting
compensation for, and overseeing the work of the Company’s
independent registered public accounting firm. The Audit Committee
has established a policy regarding pre-approval of all audit and
permissible non-audit services provided by the independent
registered public accounting firm, and all such services were
approved by the Audit Committee in Fiscal 2016 and Fiscal 2015.
The Audit Committee assesses requests for services by the
independent registered public accounting firm using several
factors. The Audit Committee will consider whether such services
are consistent with the Public Company Accounting Oversight
Board’s (“PCAOB”) and SEC’s rules on
auditor independence. In addition, the Audit Committee will
determine whether the independent registered public accounting firm
is best positioned to provide the most effective and efficient
service based upon the members’ familiarity with the
Company’s business, people, culture, accounting systems, risk
profile and whether the service might enhance the Company’s
ability to manage or control risk or improve audit quality.
Report of the Audit
Committee
The purpose of the Audit Committee is to assist the Board of
Directors in its general oversight of the Company’s financial
reporting process, internal controls, and audit functions. The
Audit Committee’s purpose is more fully described in its
charter, which can be found on the Company’s website at
http://ir.idt.net/Committees
.
The Audit Committee reviews its charter on an annual basis. The
Board of Directors annually reviews the NYSE listing
standards’ definition of independence for Audit Committee
members and has determined that each member of the
41
Audit Committee meets that standard. The Board of Directors has
also determined that Michael Chenkin qualifies as an “audit
committee financial expert” within the meaning of Item
407(d)(5) of Regulation S-K.
The Company’s management is responsible for the preparation,
presentation, and integrity of the Company’s financial
statements, accounting and financial reporting principles, internal
controls, and procedures designed to reasonably assure compliance
with accounting standards, applicable laws, and regulations. The
Company has a full-time Internal Audit department that reports to
the Audit Committee and to the Company’s management. This
department is responsible for objectively reviewing and evaluating
the adequacy, effectiveness, and quality of the Company’s
system of internal controls related to, for example, the
reliability and integrity of the Company’s financial
information and the safeguarding of the Company’s assets.
The Company’s independent registered public accounting firm
for Fiscal 2016, Grant Thornton LLP, is responsible for performing
an independent audit of the consolidated financial statements in
accordance with generally accepted auditing standards and
expressing an opinion on the conformity of those financial
statements with U.S. generally accepted accounting principles. In
accordance with law, the Audit Committee has ultimate authority and
responsibility for selecting, compensating, evaluating, and, when
appropriate, replacing the Company’s independent audit firm,
and evaluates its independence. The Audit Committee has the
authority to engage its own outside advisors, including experts in
particular areas of accounting, as it determines appropriate, apart
from counsel or advisors hired by the Company’s
management.
Audit Committee members are not professional accountants or
auditors, and their functions are not intended to duplicate or to
certify the activities of the Company’s management and the
independent audit firm; nor can the Audit Committee certify that
the independent audit firm is “independent” under
applicable rules. The Audit Committee serves a Board-level
oversight role in which it provides advice, counsel, and direction
to the Company’s management and to the auditors on the basis
of the information it receives, discussions with the
Company’s management and the auditors, and the experience of
the Audit Committee’s members in business, financial, and
accounting matters.
The Audit Committee’s agenda for the year includes reviewing
the Company’s financial statements, internal controls over
financial reporting, and audit and other matters. The Audit
Committee meets each quarter with Grant Thornton LLP and the
Company’s management to review the Company’s interim
financial results before the publication of the Company’s
quarterly earnings news releases. The Company’s
management’s and the independent audit firm’s
presentations to, and discussions with, the Audit Committee cover
various topics and events that may have significant financial
impact or are the subject of discussions between the
Company’s management and the independent audit firm. The
Audit Committee reviews and discusses with the Company’s
management the Company’s major financial risk exposures and
the steps that the Company’s management has taken to monitor
and control such exposures. In accordance with law, the Audit
Committee is responsible for establishing procedures for the
receipt, retention, and treatment of complaints received by the
Company regarding accounting, internal accounting controls, or
auditing matters, including confidential, anonymous submission by
the Company’s employees, received through established
procedures, of any concerns regarding questionable accounting or
auditing matters.
Among other matters, the Audit Committee monitors the activities
and performance of the Company’s internal auditors and
independent registered public accounting firm, including the audit
scope, external audit fees, auditor independence matters, and the
extent to which the independent audit firm can be retained to
perform non-audit services. The Company’s independent audit
firm has provided the Audit Committee with the written disclosures
and the letter required by the PCAOB regarding the independent
accountant’s communications with the Audit Committee
concerning independence, and the Audit Committee has discussed with
the independent audit firm and the Company’s management that
firm’s independence. In accordance with Audit Committee
policy and the requirements of law, the Audit Committee
pre-approves all services to be provided by Grant Thornton LLP.
Pre-approval includes audit services, audit-related services, tax
services, and other services.
The Committee has reviewed and discussed with the Company’s
management the audited financial statements of the Company for the
Fiscal Year ended July 31, 2016, as well as the effectiveness of
the Company’s internal controls over financial reporting as
of July 31, 2016. The Committee has also reviewed and discussed
with Grant Thornton LLP the matters required to be discussed with
the independent registered public accounting firm by applicable
PCAOB rules regarding “Communication with Audit
Committees.”
42
In reliance on these reviews and discussions, the Audit Committee
recommended to the Board of Directors, and the Board has approved,
that the audited financial statements be included in the
Company’s Annual Report on Form 10-K for the fiscal year
ended July 31, 2016, for filing with the Securities and Exchange
Commission.
|
|
|
THE AUDIT COMMITTEE OF THE BOARD OF
DIRECTORS
|
|
|
|
|
|
|
|
Michael Chenkin, Chairman
Eric Cosentino
Judah Schorr
|
Notwithstanding
anything to the contrary set forth in any of the Company’s
previous filings under the Act, as amended, or the Exchange Act, as
amended, that might incorporate future filings, including this
Proxy Statement, in whole or in part, the foregoing report, as well
as any charters op policies referenced within this Proxy Statement,
shall not be incorporated by reference into any such filings, nor
shall they be deemed to be soliciting material or deemed filed with
the SEC under the Act or under the Exchange Act.
43
OTHER
INFORMATION
Submission of Proposals
for the 2017 Meeting of Stockholders
Stockholders who wish to present proposals for inclusion in the
Company’s proxy materials in connection with the 2017 annual
meeting of stockholders must submit such proposals in writing to
the General Counsel and Corporate Secretary of the Company at 520
Broad Street, Newark, New Jersey 07102, which proposals must be
received at such address no later than July 5, 2017. In addition,
any stockholder proposal submitted with respect to the
Company’s 2017 annual meeting of stockholders, which proposal
is submitted outside the requirements of Rule 14a-8 under the
Exchange Act and, therefore, will not be included in the relevant
proxy materials, will be considered untimely for purposes of Rule
14a-4 and 14a-5 if written notice thereof is received by the
Company’s General Counsel and Corporate Secretary after
September 22, 2017.
Availability of Annual
Report on Form 10-K
Additional copies of the Company’s Annual Report on Form 10-K
may be obtained by contacting Bill Ulrey, Vice
President–Investor Relations and External Affairs, by phone
at (973) 438-3838, by mail addressed to Bill Ulrey, Vice
President–Investor Relations and External Affairs, at 520
Broad Street, Newark, NJ 07102, or may be requested through the
Request Info section of our website:
http://ir.idt.net/Request_Info
.
Other Matters
The Board of Directors knows of no other business that will be
presented at the Annual Meeting. If any other business is properly
brought before the Annual Meeting, it is intended that proxies
granted will be voted in respect thereof in accordance with the
judgments of the persons voting the proxies.
It is important that the proxies be returned promptly and that your
shares be represented. Stockholders are urged to fill in, sign and
promptly return the accompanying form in the enclosed envelope.
|
|
|
BY ORDER OF THE BOARD OF DIRECTORS
|
|
|
|
|
|
November 8, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joyce Mason
Executive Vice President, General Counsel and
Corporate Secretary
|
44
EXHIBIT A
IDT CORPORATION
2015 STOCK OPTION AND INCENTIVE PLAN
Effective January 1,
2015 to September 16, 2024
(Amended and Restated on October 13, 2016)
1.
Purpose; Types of
Awards; Construction.
The purpose of the IDT Corporation 2015 Stock Option and Incentive
Plan (the “Plan”) is to provide incentives to officers,
employees, directors and consultants of IDT Corporation (the
“Company”), or any subsidiary of the Company which now
exists or hereafter is organized or acquired by the Company, to
acquire a proprietary interest in the Company, to continue as
officers, employees, directors or consultants, to increase their
efforts on behalf of the Company and to promote the success of the
Company’s business. The provisions of the Plan are intended
to satisfy the requirements of Section 16(b) of the Securities
Exchange Act of 1934, as amended, and of Section 162(m) of the
Internal Revenue Code of 1986, as amended, and shall be interpreted
in a manner consistent with the requirements thereof.
2.
Definitions.
As used in this Plan, the following words and phrases shall have
the meanings indicated:
(a)
“Agreement” shall mean a written agreement entered into
between the Company and a Grantee in connection with an award under
the Plan.
(b)
“Board” shall mean the Board of Directors of the
Company.
(c)
“Change in Control” means a change in ownership or
control of the Company effected through
(i)
any
“person,” as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than (A) the Company, (B) any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company, (C) any corporation or other entity
owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of common
stock, or (D) any person who, immediately prior to the Initial
Public Offering, owned more than 25% of the combined voting power
of the Company’s then outstanding voting securities), is or
becomes the “beneficial owner” (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such person any securities issued or sold
directly by the Company or any of its affiliates other than in
connection with the acquisition by the Company or its affiliates of
a business) representing 25% or more of the combined voting power
of the Company’s then outstanding voting securities.
(d)
“Class B Common Stock” shall mean shares of Class B
Common Stock, par value $.01 per share, of the Company.
(e)
“Code” shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(f)
“Committee” shall mean the Compensation Committee of
the Board or such other committee as the Board may designate from
time to time to administer the Plan.
(g)
“Company” shall mean IDT Corporation, a corporation
incorporated under the laws of the State of Delaware, or any
successor corporation.
(h)
“Continuous Service” means that the provision of
services to the Company or a Related Entity in any capacity of
officer, employee, director or consultant is not interrupted or
terminated. Continuous Service shall not be considered interrupted
in the case of (i) any approved leave of absence, (ii) transfers
between locations of the Company or among the Company, any Related
Entity or any successor in any capacity of officer, employee,
director or consultant, or (iii) any change in status as long as
the individual remains in the service of the Company or a Related
Entity in any capacity of officer, employee, director or consultant
(except as otherwise provided in the applicable Agreement). An
approved leave of absence shall include, without limitation, sick
leave, temporary disability, maternity leave, military leave
(including, without limitation,
A-1
service in the National Guard or the Army Reserves) or any other
personal leave approved by the Committee. For purposes of Incentive
Stock Options, no such leave may exceed ninety (90) days unless
reemployment upon expiration of such leave is guaranteed by statute
or contract.
(i)
“Corporate Transaction” means any of the following
transactions:
(i)
a
merger or consolidation of the Company with any other corporation
or other entity, other than (A) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving or parent entity) 80% or more of the combined
voting power of the voting securities of the Company or such
surviving or parent entity outstanding immediately after such
merger or consolidation or (B) a merger or consolidation effected
to implement a recapitalization of the Company (or similar
transaction) in which no “person” (as defined in the
Exchange Act) acquired 25% or more of the combined voting power of
the Company’s then outstanding securities; or
(ii)
a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of its
assets (or any transaction having a similar effect).
(j)
“Deferred Stock Units” mean a Grantee’s rights to
receive shares of Class B Common Stock on a deferred basis, subject
to such restrictions, forfeiture provisions and other terms and
conditions as shall be determined by the Committee.
(k)
“Disability” shall mean a Grantee’s inability to
perform his or her duties with the Company or any of its affiliates
by reason of any medically determinable physical or mental
impairment, as determined by a physician selected by the Grantee
and acceptable to the Company.
(l)
“Exchange Act” shall mean the Securities Exchange Act
of 1934, as amended from time to time.
(m)
“Fair Market Value” per share as of a particular date
shall mean (i) the closing sale price per share of Class B Common
Stock on the national securities exchange on which the Class B
Common Stock is principally traded for the last preceding date on
which there was a sale of such Class B Common Stock on such
exchange, or (ii) if the shares of Class B Common Stock are then
traded in an over-the-counter market, the average of the high and
low trades for the shares of Class B Common Stock in such
over-the-counter market for the last preceding date on which there
was a sale of such Class B Common Stock in such market, or (iii) if
the shares of Class B Common Stock are not then listed on a
national securities exchange or traded in an over-the-counter
market, such value as the Committee, in its sole discretion, shall
determine.
(n)
“Grantee” shall mean a person who receives a grant of
Options, Stock Appreciation Rights, Limited Rights, Deferred Stock
Units or Restricted Stock under the Plan.
(o)
“Incentive Stock Option” shall mean any option intended
to be, and designated as, an incentive stock option within the
meaning of Section 422 of the Code.
(p)
“Insider” shall mean a Grantee who is subject to the
reporting requirements of Section 16(a) of the Exchange Act.
(q)
“Insider Trading Policy” shall mean the Insider Trading
Policy of the Company, as may be amended from time to time.
(r)
“Limited Right” shall mean a limited stock appreciation
right granted pursuant to Section 10 of the Plan.
(s)
“Non-Employee Director” means a member of the Board or
the board of directors of any Subsidiary (other than a Subsidiary
that has either (A) a class of “equity securities” (as
defined in Rule 3a11-1 promulgated under the Exchange Act)
registered under the Exchange Act or a similar foreign statute or
(B) adopted any stock option plan, equity compensation plan or
similar employee benefit plan in which non-employee directors of
such Subsidiary are eligible to participate), in each of clause (A)
and (B), who is not an employee of the Company or any
Subsidiary.
A-2
(t)
“Non-Employee Director Annual Grant” shall mean an
award of 4,000 shares of Restricted Stock.
(u)
“Non-Employee Director Grant Date” shall mean January 5
of the applicable year (or the following business day if January 5
is not a business day).
(v)
“Nonqualified Stock Option” shall mean any option not
designated as an Incentive Stock Option.
(w)
“Option” or “Options” shall mean a grant to
a Grantee of an option or options to purchase shares of Class B
Common Stock.
(x)
“Option Agreement” shall have the meaning set forth in
Section 6 of the Plan.
(y)
“Option Price” shall mean the exercise price of the
shares of Class B Common Stock covered by an Option.
(z)
“Parent” shall mean any company (other than the
Company) in an unbroken chain of companies ending with the Company
if, at the time of granting an award under the Plan, each of the
companies other than the Company owns stock possessing fifty
percent (50%) or more of the total combined voting power of all
classes of stock in one of the other companies in such chain.
(aa)
“Plan” means this IDT Corporation 2015 Stock Option and
Incentive Plan, as amended or restated from time to time.
(bb)
“Related Entity” means any Parent, Subsidiary or any
business, corporation, partnership, limited liability company or
other entity in which the Company, a Parent or a Subsidiary holds a
substantial ownership interest, directly or indirectly.
(cc)
“Related Entity Disposition” means the sale,
distribution or other disposition by the Company of all or
substantially all of the Company’s interest in any Related
Entity effected by a sale, merger or consolidation or other
transaction involving such Related Entity or the sale of all or
substantially all of the assets of such Related Entity.
(dd)
“Restricted Period” shall have the meaning set forth in
Section 11(b) of the Plan.
(ee)
“Restricted Stock” means shares of Class B Common Stock
issued under the Plan to a Grantee for such consideration, if any,
and subject to such restrictions on transfer, rights of refusal,
repurchase provisions, forfeiture provisions and other terms and
conditions as shall be determined by the Committee.
(ff)
“Retirement” shall mean a Grantee’s retirement in
accordance with the terms of any tax-qualified retirement plan
maintained by the Company or any of its affiliates in which the
Grantee participates.
(gg)
“Rule
16b-3” shall mean Rule 16b-3, as from time to time in effect,
promulgated under the Exchange Act, including any successor to such
Rule.
(hh)
“Stock Appreciation Right” shall mean the right,
granted to a Grantee under Section 9 of the Plan, to be paid an
amount measured by the appreciation in the Fair Market Value of a
share of Class B Common Stock from the date of grant to the date of
exercise of the right, with payment to be made in cash or Class B
Common Stock as applicable, as specified in the award or determined
by the Committee.
(ii)
“Subsidiary” shall mean any company (other than the
Company) in an unbroken chain of companies beginning with the
Company if each of the companies other than the last company in the
unbroken chain owns stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of
the other companies in such chain.
(jj)
“Tax Event” shall have the meaning set forth in Section
17 of the Plan.
(kk)
“Ten
Percent Stockholder” shall mean a Grantee who at the time an
Incentive Stock Option is granted, owns stock possessing more than
ten percent (10%) of the total combined voting power of all classes
of stock of the Company or any Parent or Subsidiary.
A-3
3.
Administration.
(a)
The Plan
shall be administered by the Committee, the members of which may be
composed of “non-employee directors” under Rule 16b-3
and “outside directors” under Section 162(m) of the
Code.
(b)
The Committee shall have the authority in its discretion, subject
to and not inconsistent with the express provisions of the Plan, to
administer the Plan and to exercise all the powers and authorities
either specifically granted to it under the Plan or necessary or
advisable in the administration of the Plan, including, without
limitation, the authority to grant Options, Stock Appreciation
Rights, Limited Rights, Deferred Stock Units and Restricted Stock;
to determine which Options shall constitute Incentive Stock Options
and which Options shall constitute Nonqualified Stock Options; to
determine which Options (if any) shall be accompanied by Limited
Rights; to determine the Option Price for each Option; to determine
the persons to whom, and the time or times at which awards shall be
granted; to determine the number of shares to be covered by each
award; to interpret the Plan and any award under the Plan; to
reconcile any inconsistent terms in the Plan or any award under the
Plan; to prescribe, amend and rescind rules and regulations
relating to the Plan; to determine the terms and provisions of the
Agreements (which need not be identical) and to cancel or suspend
awards, as necessary; and to make all other determinations deemed
necessary or advisable for the administration of the Plan.
(c)
All
decisions, determination and interpretations of the Committee shall
be final and binding on all Grantees of any awards under this Plan.
No member of the Board or Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan
or any award granted hereunder.
(d)
The Committee may delegate to one or more executive officers of the
Company the authority to (i) grant awards under the Plan to
employees of the Company and its Subsidiaries who are not executive
officers or a member of the Board, (ii) execute and deliver
documents or take such other ministerial actions on behalf of the
Committee with respect to awards and (iii) to make interpretations
of the Plan. The grant of authority in this Section 3(d) shall be
subject to such conditions and limitations as may be determined by
the Committee. If the Committee delegates authority to any such
executive officer or executive officers of the Company pursuant to
this Section 3(d), and such executive officer or executive officers
grant awards pursuant to such delegated authority, references in
this Plan to the “Committee” as they relate to such
awards shall be deemed to refer to such executive officer or
executive officers, as applicable.
4.
Eligibility.
Awards may be granted to officers, employees, members of the Board
and consultants of the Company or of any Subsidiary. In addition to
any other awards granted to Non-Employee Directors hereunder,
awards shall be granted to Non-Employee Directors pursuant to
Section 14 of the Plan. In determining the persons to whom awards
shall be granted and the number of shares to be covered by each
award, the Committee shall take into account the duties of the
respective persons, their present and potential contributions to
the success of the Company and such other factors as the Committee
shall deem relevant in connection with accomplishing the purposes
of the Plan.
5.
Stock.
(a)
The
maximum number of shares of Class B Common Stock reserved for the
grant of awards under the Plan shall be 700,000, all of which may
be granted as Incentive Stock Options, subject to adjustment as
provided in Section 12 of the Plan. Such shares may, in whole or in
part, be authorized but unissued shares or shares that shall have
been or may be reacquired by the Company.
(b)
If any outstanding award under the Plan should, for any reason
expire, be canceled or be forfeited (other than in connection with
the exercise of a Stock Appreciation Right or a Limited Right),
without having been exercised in full, the shares of Class B Common
Stock allocable to the unexercised, canceled or terminated portion
of such award shall (unless the Plan shall have been terminated)
become available for subsequent grants of awards under the Plan,
unless otherwise determined by the Committee.
6.
Terms and Conditions
of Options.
(a)
OPTION
AGREEMENT. Each Option granted pursuant to the Plan shall be
evidenced by a written agreement between the Company and the
Grantee (the “Option Agreement”), in such form and
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containing such terms and conditions as the Committee shall from
time to time approve, which Option Agreement shall comply with and
be subject to the following terms and conditions, unless otherwise
specifically provided in such Option Agreement. For purposes of
interpreting this Section 6, a director’s service as a member
of the Board or a consultant’s service shall be deemed to be
employment with the Company.
(b)
NUMBER OF SHARES. Each Option Agreement shall state the
number of shares of Class B Common Stock to which the Option
relates.
(c)
TYPE OF
OPTION. Each Option Agreement shall specifically state that
the Option constitutes an Incentive Stock Option or a Nonqualified
Stock Option. In the absence of such designation, the Option will
be deemed to be a Nonqualified Stock Option.
(d)
OPTION PRICE. Each Option Agreement shall state the Option
Price, which, in the case of an Incentive Stock Option, shall not
be less than one hundred percent (100%) of the Fair Market Value of
the shares of Class B Common Stock covered by the Option on the
date of grant. The Option Price shall be subject to adjustment as
provided in Section 12 of the Plan.
(e)
MEDIUM
AND TIME OF PAYMENT. The Option Price shall be paid in full,
at the time of exercise, in cash or in shares of Class B Common
Stock having a Fair Market Value equal to such Option Price or in a
combination of cash and Class B Common Stock including a cashless
exercise procedure through a broker-dealer; provided, however, that
in the case of an Incentive Stock Option, the medium of payment
shall be determined at the time of grant and set forth in the
applicable Option Agreement.
(f)
TERM AND
EXERCISABILITY OF OPTIONS. Each Option Agreement shall
provide the exercisability schedule for the Option as determined by
the Committee, provided, that, the Committee shall have the
authority to accelerate the exercisability of any outstanding
Option at such time and under such circumstances as it, in its sole
discretion, deems appropriate. The exercise period will be ten (10)
years from the date of the grant of the Option unless otherwise
determined by the Committee; provided, however, that in the case of
an Incentive Stock Option, such exercise period shall not exceed
ten (10) years from the date of grant of such Option. The exercise
period shall be subject to earlier termination as provided in
Sections 6(g) and 6(h) of the Plan. An Option may be exercised, as
to any or all full shares of Class B Common Stock as to which the
Option has become exercisable, by written notice delivered in
person, by mail, e-mail, fax or overnight delivery to the
Company’s transfer agent or other administrator designated by
the Company, specifying the number of shares of Class B Common
Stock with respect to which the Option is being exercised.
(g)
TERMINATION. Except as provided in this Section 6(g) and in
Section 6(h) of the Plan, an Option may not be exercised unless the
Grantee is then in the employ of or maintaining a director or
consultant relationship with the Company or a Subsidiary thereof
(or a company or a Parent or Subsidiary of such company issuing or
assuming the Option in a transaction to which Section 424(a) of the
Code applies), and unless the Grantee has remained in Continuous
Service with the Company or any Subsidiary since the date of grant
of the Option unless otherwise determined by the Committee. In the
event that the employment or consultant relationship of a Grantee
shall terminate (other than by reason of death, Disability or
Retirement), all Options of such Grantee that are exercisable at
the time of Grantee’s termination may, unless earlier
terminated in accordance with their terms, be exercised within 180
days after the date of termination (or such different period as the
Committee shall prescribe).
(h)
DEATH,
DISABILITY OR RETIREMENT OF GRANTEE. If a Grantee shall die
while employed by, or maintaining a director or consultant
relationship with, the Company or a Subsidiary thereof, or within
thirty (30) days after the date of termination of such
Grantee’s employment, director or consultant relationship (or
within such different period as the Committee may have provided
pursuant to Section 6(g) of the Plan), or if the Grantee’s
employment, director or consultant relationship shall terminate by
reason of Disability, all Options theretofore granted to such
Grantee (to the extent otherwise exercisable) may, unless earlier
terminated in accordance with their terms, be exercised by the
Grantee or by the Grantee’s estate or by a person who
acquired the right to exercise such Options by bequest or
inheritance or otherwise by result of death or Disability of the
Grantee, at any time within 180 days after the death or Disability
of the Grantee (or such different period as the Committee shall
prescribe). In the event that an Option granted hereunder shall
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be exercised by the legal representatives of a deceased or former
Grantee, written notice of such exercise shall be accompanied by a
certified copy of letters testamentary or equivalent proof of the
right of such legal representative to exercise such Option. In the
event that the employment or consultant relationship of a Grantee
shall terminate on account of such Grantee’s Retirement, all
Options of such Grantee that are exercisable at the time of such
Retirement may, unless earlier terminated in accordance with their
terms, be exercised at any time within one hundred eighty (180)
days after the date of such Retirement (or such different period as
the Committee shall prescribe). All unvested Options shall be
terminated upon death, disability or retirement, unless otherwise
determined by the Committee.
(i)
OTHER PROVISIONS. The Option Agreements evidencing awards
under the Plan shall contain such other terms and conditions not
inconsistent with the Plan as the Committee may determine.
7.
Nonqualified Stock
Options.
Options granted pursuant to this Section 7 are intended to
constitute Nonqualified Stock Options and shall be subject only to
the general terms and conditions specified in Section 6 of the
Plan.
8.
Incentive Stock
Options.
Options granted pursuant to this Section 8 are intended to
constitute Incentive Stock Options and shall be subject to the
following special terms and conditions, in addition to the general
terms and conditions specified in Section 6 of the Plan:
(a)
LIMITATION ON VALUE OF SHARES. To the extent that the
aggregate Fair Market Value of shares of Class B Common Stock
subject to Options designated as Incentive Stock Options which
become exercisable for the first time by a Grantee during any
calendar year (under all plans of the Company or any Subsidiary)
exceeds $100,000, such excess Options, to the extent of the shares
covered thereby in excess of the foregoing limitation, shall be
treated as Nonqualified Stock Options. For this purpose, Incentive
Stock Options shall be taken into account in the order in which
they were granted, and the Fair Market Value of the shares of Class
B Common Stock shall be determined as of the date that the Option
with respect to such shares was granted.
(b)
TEN PERCENT STOCKHOLDER. In the case of an Incentive Stock
Option granted to a Ten Percent Stockholder, (i) the Option Price
shall not be less than one hundred ten percent (110%) of the Fair
Market Value of the shares of Class B Common Stock on the date of
grant of such Incentive Stock Option, and (ii) the exercise period
shall not exceed five (5) years from the date of grant of such
Incentive Stock Option.
9.
Stock Appreciation
Rights.
The Committee shall have authority to grant a Stock Appreciation
Right, either alone or in tandem with any Option. A Stock
Appreciation Right granted in tandem with an Option shall, except
as provided in this Section 9 or as may be determined by the
Committee, be subject to the same terms and conditions as the
related Option. Each Stock Appreciation Right granted pursuant to
the Plan shall be evidenced by a written Agreement between the
Company and the Grantee in such form as the Committee shall from
time to time approve, which Agreement shall comply with and be
subject to the following terms and conditions, unless otherwise
specifically provided in such Agreement:
(a)
TIME OF
GRANT. A Stock Appreciation Right may be granted at such time
or times as may be determined by the Committee.
(b)
PAYMENT. A Stock Appreciation Right shall entitle the holder
thereof, upon exercise of the Stock Appreciation Right or any
portion thereof, to receive payment of an amount computed pursuant
to Section 9(d) of the Plan.
(c)
EXERCISE. A Stock Appreciation Right shall be exercisable at
such time or times and only to the extent determined by the
Committee, and will not be transferable. A Stock Appreciation Right
granted in connection with an Incentive Stock Option shall be
exercisable only if the Fair Market Value of a share of Class B
Common Stock on the date of exercise exceeds the purchase price
specified in the related Incentive Stock Option. Unless otherwise
approved by the Committee, no Grantee shall be permitted to
exercise any Stock Appreciation Right during the period beginning
two weeks prior to the end of each of the Company’s
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fiscal quarters and ending on the second business day following the
day on which the Company releases to the public a summary of its
fiscal results for such period.
(d)
AMOUNT PAYABLE. Upon the exercise of a Stock Appreciation
Right, the Optionee shall be entitled to receive an amount
determined by multiplying (i) the excess of the Fair Market Value
of a share of Class B Common Stock on the date of exercise of such
Stock Appreciation Right over the exercise or other base price of
the Stock Appreciation Right or, if applicable, the Option Price of
the related Option, by (ii) the number of shares of Class B Common
Stock as to which such Stock Appreciation Right is being
exercised.
(e)
TREATMENT
OF RELATED OPTIONS AND STOCK APPRECIATION RIGHTS UPON
EXERCISE. Upon the exercise of a Stock Appreciation Right,
the related Option, if any, shall be canceled to the extent of the
number of shares of Class B Common Stock as to which the Stock
Appreciation Right is exercised. Upon the exercise or surrender of
an Option granted in connection with a Stock Appreciation Right,
the Stock Appreciation Right shall be canceled to the extent of the
number of shares of Class B Common Stock as to which the Option is
exercised or surrendered.
(f)
METHOD OF
EXERCISE. Stock Appreciation Rights shall be exercised by a
Grantee only by a written notice delivered to the Company in
accordance with procedures specified by the Company from time to
time. Such notice shall state the number of shares of Class B
Common Stock with respect to which the Stock Appreciation Right is
being exercised. A Grantee may also be required to deliver to the
Company the underlying Agreement evidencing the Stock Appreciation
Right being exercised and any related Option Agreement so that a
notation of such exercise may be made thereon, and such Agreements
shall then be returned to the Grantee.
(g)
FORM OF PAYMENT. Payment of the amount determined under
Section 9(d) of the Plan may be made solely in whole shares of
Class B Common Stock in a number based upon their Fair Market Value
on the date of exercise of the Stock Appreciation Right or,
alternatively, at the sole discretion of the Committee, solely in
cash, or in a combination of cash and shares of Class B Common
Stock as the Committee deems advisable. If the Committee decides to
make full payment in shares of Class B Common Stock and the amount
payable results in a fractional share, payment for the fractional
share will be made in cash.
10.
Limited Stock
Appreciation Rights.
The Committee shall have authority to grant a Limited Right, either
alone or in tandem with any Option. Each Limited Right granted
pursuant to the Plan shall be evidenced by a written Agreement
between the Company and the Grantee in such form as the Committee
shall from time to time approve, which Agreement shall comply with
and be subject to the following terms and conditions, unless
otherwise specifically provided in such Agreement:
(a)
TIME OF
GRANT. A Limited Right may be granted at such time or times
as may be determined by the Committee.
(b)
EXERCISE. A Limited Right may be exercised only (i) during
the ninety-day period following the occurrence of a Change in
Control or (ii) immediately prior to the effective date of a
Corporate Transaction. A Limited Right shall be exercisable at such
time or times and only to the extent determined by the Committee,
and will not be transferable except to the extent any related
Option is transferable or as otherwise determined by the Committee.
A Limited Right granted in connection with an Incentive Stock
Option shall be exercisable only if the Fair Market Value of a
share of Class B Common Stock on the date of exercise exceeds the
purchase price specified in the related Incentive Stock Option.
(c)
AMOUNT
PAYABLE. Upon the exercise of a Limited Right, the Grantee
thereof shall receive in cash whichever of the following amounts is
applicable:
(i)
in
the case of the realization of Limited Rights by reason of an
acquisition of common stock described in clause (i) of the
definition of “Change in Control” (Section 2(c) of this
Plan), an amount equal to the Acquisition Spread as defined in
Section 10(d)(ii) below; or
(ii)
in the
case of the realization of Limited Rights by reason of stockholder
approval of an agreement or plan described in clause (i) of the
definition of “Corporate Transaction” (Section 2(j) of
this Plan), an amount equal to the Merger Spread as defined in
Section 10(d)(iv) below; or
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(iii)
in the case of
the realization of Limited Rights by reason of the change in
composition of the Board described in clause (ii) of the definition
of “Change in Control” or stockholder approval of a
plan or agreement described in clause (ii) of the definition of
Corporate Transaction, an amount equal to the Spread as defined in
Section 10(d)(v) of this Plan.
Notwithstanding the foregoing provisions of this Section 10(c) (or
unless otherwise approved by the Committee), in the case of a
Limited Right granted in respect of an Incentive Stock Option, the
Grantee may not receive an amount in excess of the maximum amount
that will enable such option to continue to qualify under the Code
as an Incentive Stock Option.
(d)
DETERMINATION OF AMOUNTS PAYABLE. The amounts to be paid to a
Grantee pursuant to Section 10(c) of this Plan shall be determined
as follows:
(i)
The
term “Acquisition Price per Share” as used herein shall
mean, with respect to the exercise of any Limited Right by reason
of an acquisition of Class B Common Stock described in clause (i)
of the definition of Change in Control, the greatest of (A) the
highest price per share shown on the Statement on Schedule 13D or
amendment thereto filed by the holder of 25% or more of the voting
power of the Company that gives rise to the exercise of such
Limited Right, (B) the highest price paid in any tender or exchange
offer which is in effect at any time during the ninety-day period
ending on the date of exercise of the Limited Right, or (C) the
highest Fair Market Value per share of Class B Common Stock during
the ninety day period ending on the date the Limited Right is
exercised.
(ii)
The term
“Acquisition Spread” as used herein shall mean an
amount equal to the product computed by multiplying (A) the excess
of (1) the Acquisition Price per Share over (2) the exercise or
other base price of the Limited Right or, if applicable, the Option
Price per share of Class B Common Stock at which the related Option
is exercisable, by (B) the number of shares of Class B Common Stock
with respect to which such Limited Right is being exercised.
(iii)
The term
“Merger Price per Share” as used herein shall mean,
with respect to the exercise of any Limited Right by reason of
stockholder approval of an agreement described in clause (i) of the
definition of Corporate Transaction, the greatest of (A) the fixed
or formula price for the acquisition of shares of Class B Common
Stock specified in such agreement, if such fixed or formula price
is determinable on the date on which such Limited Right is
exercised, (B) the highest price paid in any tender or exchange
offer which is in effect at any time during the ninety-day period
ending on the date of exercise of the Limited Right, (C) the
highest Fair Market Value per share of Class B Common Stock during
the ninety-day period ending on the date on which such Limited
Right is exercised.
(iv)
The term “Merger Spread” as used herein shall mean an
amount equal to the product. computed by multiplying (A) the excess
of (1) the Merger Price per Share over (2) the exercise or other
base price of the Limited Right or, if applicable, the Option Price
per share of Class B Common Stock at which the related Option is
exercisable, by (B) the number of shares of Class B Common Stock
with respect to which such Limited Right is being exercised.
(v)
The term “Spread”
as used herein shall mean, with respect to the exercise of any
Limited Right by reason of a change in the composition of the Board
described in clause (ii) of the definition of Change in Control or
stockholder approval of a plan or agreement described in clause
(ii) of the definition of Corporate Transaction, an amount equal to
the product computed by multiplying (i) the excess of (A) the
greater of (1) the highest price paid in any tender or exchange
offer which is in effect at any time during the ninety-day period
ending on the date of exercise of the Limited Right or (2) the
highest Fair Market Value per share of Class B Common Stock during
the ninety day period ending on the date the Limited Right is
exercised over (B) the exercise or other base price of the Limited
Right or, if applicable, the Option Price per share of Class B
Common Stock at which the related Option is exercisable, by (ii)
the number of shares of Class B Common Stock with respect to which
the Limited Right is being exercised.
(e)
TREATMENT
OF RELATED OPTIONS AND LIMITED RIGHTS UPON EXERCISE. Upon the
exercise of a Limited Right, the related Option, if any, shall
cease to be exercisable to the extent of the shares of Class B
Common Stock with respect to which such Limited Right is exercised
but shall be considered to have been exercised to that extent for
purposes of determining the number of shares of Class B Common
Stock available for the grant of future awards pursuant to this
Plan. Upon the exercise or termination
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of a related Option, if any, the Limited Right with respect to such
related Option shall terminate to the extent of the shares of Class
B Common Stock with respect to which the related Option was
exercised or terminated.
(f)
METHOD OF
EXERCISE. To exercise a Limited Right, the Grantee shall (i)
deliver written notice to the Company specifying the number of
shares of Class B Common Stock with respect to which the Limited
Right is being exercised, and (ii) if requested by the Committee,
deliver to the Company the Agreement evidencing the Limited Rights
being exercised and, if applicable, the Option Agreement evidencing
the related Option; the Company shall endorse thereon a notation of
such exercise and return such Agreements to the Grantee. The date
of exercise of a Limited Right that is validly exercised shall be
deemed to be the date on which there shall have been delivered the
instruments referred to in the first sentence of this Section
10(f).
11.
Restricted
Stock.
The Committee may award shares of Restricted Stock to any eligible
employee, director or consultant of the Company or of any
Subsidiary. Each award of Restricted Stock under the Plan shall be
evidenced by a written Agreement between the Company and the
Grantee, in such form as the Committee shall from time to time
approve, which Agreement shall comply with and be subject to the
following terms and conditions, unless otherwise specifically
provided in such Agreement:
(a)
NUMBER OF
SHARES. Each Agreement shall state the number of shares of
Restricted Stock to be subject to an award.
(b)
RESTRICTIONS. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed
of, except by will or the laws of descent and distribution, for
such period as the Committee shall determine from the date on which
the award is granted (the “Restricted Period”). The
Committee may also impose such additional or alternative
restrictions and conditions on the shares as it deems appropriate
including, but not limited to, the satisfaction of performance
criteria. Such performance criteria may include, without
limitation, sales, earnings before interest and taxes, return on
investment, earnings per share, any combination of the foregoing or
rate of growth of any of the foregoing, as determined by the
Committee. The Company may, at its option, maintain issued shares
in book entry form. Certificates, if any, for shares of stock
issued pursuant to Restricted Stock awards shall bear an
appropriate legend referring to such restrictions, and any attempt
to dispose of any such shares of stock in contravention of such
restrictions shall be null and void and without effect. During the
Restricted Period, any such certificates shall be held in a
restricted account a at the transfer agent appointed by the
Company. In determining the Restricted Period of an award, the
Committee may provide that the foregoing restrictions shall lapse
with respect to specified percentages of the awarded shares on
successive anniversaries or other specified dates of the date of
such award.
(c)
FORFEITURE. Subject to such exceptions as may be determined
by the Committee, if the Grantee’s Continuous Service with
the Company or any Subsidiary shall terminate for any reason prior
to the expiration of the Restricted Period of an award, any shares
remaining subject to restrictions (after taking into account the
provisions of Subsection (e) of this Section 11) shall thereupon be
forfeited by the Grantee and transferred to, and retired by, the
Company without cost to the Company or such Subsidiary, and such
shares shall become available for subsequent grants of awards under
the Plan, unless otherwise determined by the Committee.
(d)
OWNERSHIP. During the Restricted Period, the Grantee shall
possess all incidents of ownership of such shares, subject to
Subsection (b) of this Section 11, including the right to receive
dividends with respect to such shares and to vote such shares.
(e)
ACCELERATED LAPSE OF RESTRICTIONS. Upon the occurrence of any
of the events specified in Section 13 of the Plan (and subject to
the conditions set forth therein), all restrictions then
outstanding on any shares of Restricted Stock awarded under the
Plan shall lapse as of the applicable date set forth in Section 13.
The Committee shall have the authority (and the Agreement may so
provide) to cancel all or any portion of any outstanding
restrictions prior to the expiration of the Restricted Period with
respect to any or all of the shares of Restricted Stock awarded on
such terms and conditions as the Committee shall deem
appropriate.
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11A.
Deferred Stock
Units.
The Committee may award Deferred Stock Units to any outside
director, eligible employee or consultant of the Company or of any
Subsidiary. Each award of Deferred Stock Units under the Plan shall
be evidenced by a written Agreement between the Company and the
Grantee, in such form as the Committee shall from time to time
approve, which Agreement shall comply with and be subject to the
following terms and conditions, unless otherwise specifically
provided in such Agreement:
(a)
NUMBER OF
SHARES. Each Agreement for Deferred Stock Units shall state
the number of shares of Class B Common Stock to be subject to an
award.
(b)
RESTRICTIONS. Deferred Stock Units may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of, except
by will or the laws of descent and distribution, until shares of
Class B Common Stock are payable with respect to an award. The
Committee may impose such vesting restrictions and conditions on
the payment of shares as it deems appropriate including the
satisfaction of performance criteria. Such performance criteria may
include sales, earnings before interest and taxes, return on
investment, earnings per share, any combination of the foregoing or
rate of growth of any of the foregoing, as determined by the
Committee.
(c)
FORFEITURE. Subject to such exceptions as may be determined
by the Committee, if the Grantee’s Continuous Service with
the Company or any Subsidiary shall terminate for any reason prior
to the Grantee becoming fully vested in the award, then the
Grantee’s rights under any unvested Deferred Stock Units
shall be forfeited without cost to the Company or such
Subsidiary.
(d)
OWNERSHIP. Until shares are delivered with respect to Deferred
Stock Units, the Grantee shall not possess any incidents of
ownership of such shares, including the right to receive dividends
with respect to such shares and to vote such shares.
(e)
ACCELERATED LAPSE OF RESTRICTIONS. Upon the occurrence of any
of the events specified in Section 13 of the Plan (and subject to
the conditions set forth therein), all restrictions then
outstanding on any Deferred Stock Units awarded under the Plan
shall lapse as of the applicable date set forth in Section 13. The
Committee shall have the authority (and the Agreement may so
provide) to cancel all or any portion of any outstanding
restrictions prior to the expiration of any restricted period with
respect to any or all of the shares of Deferred Stock Units awarded
on such terms and conditions as the Committee shall deem
appropriate.
12.
Effect of Certain
Changes.
(a)
ADJUSTMENTS UPON CHANGES IN
CAPITALIZATION. In the event of any extraordinary liquidating
dividend, stock dividend, recapitalization, merger, consolidation,
stock split, warrant or rights issuance, or combination or exchange
of such shares, or other similar transactions, the Committee shall
equitably adjust (i) the number of shares of Class B Common Stock
available for awards under the Plan, (ii) the number and/or kind of
shares covered by outstanding awards and (iii) the Option Price per
share of Options or the applicable market value of Stock
Appreciation Rights or Limited Rights, in each such case so as to
reflect such event and preserve the value of such awards; provided,
however, that any fractional shares resulting from such adjustment
shall be eliminated. This provision shall not apply to cash
dividends or returns of capital.
(b)
CHANGE IN CLASS B COMMON STOCK. In the event of a change in
the Class B Common Stock as presently constituted that is limited
to a change of all of its authorized shares of Class B Common Stock
into the same number of shares with a different par value or
without par value, the shares resulting from any such change shall
be deemed to be the Class B Common Stock within the meaning of the
Plan.
13.
Corporate
Transaction; Change in Control; Related Entity
Disposition.
(a)
CORPORATE
TRANSACTION. In the event of a Corporate Transaction, each
award which is at the time outstanding under the Plan shall
automatically become fully vested and exercisable and, in the case
of an award of Restricted Stock or an award of Deferred Stock
Units, shall be released from any restrictions on transfer (except
with regard to the Insider Trading Policy and such other agreements
between the Grantee and the Company) and repurchase or forfeiture
rights, immediately prior to the specified effective date of
such
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Corporate Transaction. Effective upon the consummation of the
Corporate Transaction, all outstanding awards of Options, Stock
Appreciation Rights and Limited Rights under the Plan shall
terminate, unless otherwise determined by the Committee. However,
all such awards shall not terminate if the awards are, in
connection with the Corporate Transaction, assumed by the successor
corporation or Parent thereof.
(b)
CHANGE IN CONTROL. In the event of a Change in Control (other
than a Change in Control which is also a Corporate Transaction),
each award which is at the time outstanding under the Plan
automatically shall become fully vested and exercisable and, in the
case of an award of Restricted Stock or an award of Deferred Stock
Units, shall be released from any restrictions on transfer and
repurchase or forfeiture rights, immediately prior to the specified
effective date of such Change in Control.
(c)
RELATED
ENTITY DISPOSITION. The Continuous Service of each Grantee
(who is primarily engaged in service to a Related Entity at the
time it is involved in a Related Entity Disposition) shall
terminate effective upon the consummation of such Related Entity
Disposition, and each outstanding award of such Grantee under the
Plan shall become fully vested and exercisable and, in the case of
an award of Restricted Stock or an award of Deferred Stock Units,
shall be released from any restrictions on transfer (except with
regard to the Insider Trading Policy and such other agreements
between the Grantee and the Company). Unless otherwise determined
by the Committee, the Continuous Service of a Grantee shall not be
deemed to terminate (and each outstanding award of such Grantee
under the Plan shall not become fully vested and exercisable and,
in the case of an award of Restricted Stock or an award of Deferred
Stock Units, shall not be released from any restrictions on
transfer) if (i) a Related Entity Disposition involves the spin-off
of a Related Entity, for so long as such Grantee continues to
remain in the service of such entity that constituted the Related
Entity immediately prior to the consummation of such Related Entity
Disposition (“SpinCo”) in any capacity of officer,
employee, director or consultant or (ii) an outstanding award is
assumed by the surviving corporation (whether SpinCo or otherwise)
or its parent entity in connection with a Related Entity
Disposition.
(d)
SUBSTITUTE AWARDS. The Committee may grant awards under the
Plan in substitution of stock-based incentive awards held by
employees, consultants or directors of another entity who become
employees, consultants or directors of the Company or any
Subsidiary by reason of a merger or consolidation of such entity
with the Company or any Subsidiary, or the acquisition by the
Company or a Subsidiary of property or equity of such entity, upon
such terms and conditions as the Committee may determine, and such
awards shall not count against the share limitation set forth in
Section 5 of the Plan.
14.
Non-Employee Director
Restricted Stock.
The provisions of this Section 14 shall apply only to certain
grants of Restricted Stock to Non-Employee Directors, as provided
below. Except as set forth in this Section 14, the other provisions
of the Plan shall apply to grants of Restricted Stock to
Non-Employee Directors to the extent not inconsistent with this
Section. For purposes of interpreting Section 6 of the Plan and
this Section 14, a Non-Employee Director’s service as a
member of the Board or the board of directors of any Subsidiary
shall be deemed to be employment with the Company.
(a)
GENERAL. Non-Employee Directors shall receive Restricted
Stock in accordance with this Section 14. Restricted Stock granted
pursuant to this Section 14 shall be subject to the terms of such
section and shall not be subject to discretionary acceleration of
vesting by the Committee. Unless determined otherwise by the
Committee, Non-Employee Directors shall not receive separate and
additional grants hereunder for being a Non-Employee Director of
(i) the Company and a Subsidiary or (ii) more than one
Subsidiary.
(b)
INITIAL GRANTS OF RESTRICTED STOCK. A Non-Employee Director
who first becomes a Non-Employee Director shall receive a pro-rata
amount (based on projected quarters of service to the following
Non-Employee Director Grant Date) of a Non-Employee Director Annual
Grant on his date of appointment as a Non-Employee Director.
(c)
ANNUAL
GRANTS OF RESTRICTED STOCK. On each Non-Employee Director
Grant Date, each Non-Employee Director shall receive a Non-Employee
Director Annual Grant.
(d)
VESTING OF RESTRICTED STOCK. Restricted Stock granted under
this Section 14 shall be fully vested on the date of grant.
A-11
15.
Period During which
Awards May Be Granted.
Awards may be granted pursuant to the Plan from time to time
commencing on January 1, 2015 until September 16, 2024 (ten (10)
years from September 17, 2014, the date the Board initially adopted
the Plan). No awards shall be effective prior to the approval of
the Plan by a majority of the Company’s stockholders.
16.
Transferability of
Awards.
(a)
Incentive
Stock Options and Stock Appreciation Rights may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any
manner other than by the laws of descent and distribution and may
be exercised, during the lifetime of the Grantee, only by the
Grantee or his or her guardian or legal representative.
(b)
Nonqualified Stock Options shall be transferable in the manner and
to the extent acceptable to the Committee, as evidenced by a
writing signed by the Company and the Grantee. Nonqualified Stock
Options (together with any Stock Appreciation Rights or Limited
Rights related thereto) shall be transferable by a Grantee as a
gift to the Grantee’s “family members” (as
defined in Form S-8) under such terms and conditions as may be
established by the Committee; provided that the Grantee receives no
consideration for the transfer. Notwithstanding the transfer by a
Grantee of a Nonqualified Stock Option, the transferred
Nonqualified Stock Option shall continue to be subject to the same
terms and conditions as were applicable to the Nonqualified Stock
Option immediately before the transfer (including, without
limitation, the Insider Trading Policy) and the Grantee will
continue to remain subject to the withholding tax requirements set
forth in Section 17 hereof.
(c)
The terms
of any award granted under the Plan, including the transferability
of any such award, shall be binding upon the executors,
administrators, heirs and successors of the Grantee.
(d)
Restricted Stock shall remain subject to the Insider Trading Policy
after the expiration of the Restricted Period. Deferred Stock Units
shall remain subject to the Insider Trading Policy after payment
thereof.
17.
Agreement by Grantee
regarding Withholding Taxes.
If the Committee shall so require, as a condition of exercise of an
Option, Stock Appreciation Right or Limited Right, the expiration
of a Restricted Period or payment of a Deferred Stock Unit (each, a
“Tax Event”), each Grantee shall agree that no later
than the date of the Tax Event, the Grantee will pay to the Company
or make arrangements satisfactory to the Committee regarding
payment of any federal, state or local taxes of any kind required
by law to be withheld upon the Tax Event. Unless determined
otherwise by the Committee, a Grantee shall permit, to the extent
permitted or required by law, the Company to withhold federal,
state and local taxes of any kind required by law to be withheld
upon the Tax Event from any payment of any kind due to the Grantee.
Unless otherwise determined by the Committee, any such
above-described withholding obligation may, in the discretion of
the Company, be satisfied by the withholding by the Company or
delivery to the Company of Class B Common Stock.
18.
Rights as a
Stockholder.
Except as provided in Section 11(d) of the Plan, a Grantee or a
transferee of an award shall have no rights as a stockholder with
respect to any shares covered by the award until the date of the
issuance of such shares to him or her. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distribution of other rights for
which the record date is prior to the date such shares are issued,
except as provided in Section 12(a) of the Plan.
19.
No Rights to
Employment; Forfeiture of Gains.
Nothing in the Plan or in any award granted or Agreement entered
into pursuant hereto shall confer upon any Grantee the right to
continue as a director of, in the employ of, or in a consultant
relationship with, the Company or any Subsidiary or to be entitled
to any remuneration or benefits not set forth in the Plan or such
Agreement or to interfere with or limit in any way the right of the
Company or any such Subsidiary to terminate such Grantee’s
employment or consulting relationship. Awards granted under the
Plan shall not be affected by any change in duties
A-12
or position of a Grantee as long as such Grantee continues to be
employed by, or in a consultant relationship with, or a director of
the Company or any Subsidiary. The Agreement for any award under
the Plan may require the Grantee to pay to the Company any
financial gain realized from the prior exercise, vesting or payment
of the award in the event that the Grantee engages in conduct that
violates any non-compete, non-solicitation or non-disclosure
obligation of the Grantee under any agreement with the Company or
any Subsidiary, including, without limitation, any such obligations
provided in the Agreement.
20.
Beneficiary.
A Grantee may file with the Committee a written designation of a
beneficiary on such form as may be prescribed by the Committee and
may, from time to time, amend or revoke such designation. If no
designated beneficiary survives the Grantee, the executor or
administrator of the Grantee’s estate shall be deemed to be
the Grantee’s beneficiary.
21.
Authorized Share
Approval; Amendment and Termination of the Plan.
(a)
AUTHORIZED SHARE APPROVAL. The Plan was adopted by the Board
on September 17, 2014. The Plan was ratified by the Company’s
stockholders on December 15, 2014, with 500,000 shares of Class B
Common Stock authorized for awards under the Plan. The Plan shall
become effective on January 1, 2015 and shall terminate on
September 16, 2024. The Board amended the Plan on September 24,
2015 to increase the amount of authorized shares under the Plan to
600,000 shares of Class B Common Stock. The Company’s
stockholders ratified such amendment to the Plan on December 14,
2015. The Board amended the Plan on October 13, 2016 to increase
the amount of authorized shares under the Plan to 700,000 shares of
Class B Common Stock. The Company’s stockholders ratified
such amendment to the Plan on December 14, 2016.
(b)
AMENDMENT AND TERMINATION OF THE PLAN. The Board, or the
Committee if so delegated by the Board, at any time and from time
to time may suspend, terminate, modify or amend the Plan; however,
unless otherwise determined by the Board, or the Committee if
applicable, an amendment that requires stockholder approval in
order for the Plan to continue to comply with any law, regulation
or stock exchange requirement shall not be effective unless
approved by the requisite vote of stockholders. Except as provided
in Section 13(a) of the Plan, no suspension, termination,
modification or amendment of the Plan may adversely affect any
award previously granted, unless the written consent of the Grantee
is obtained.
22.
Governing
Law.
The Plan and all determinations made and actions taken pursuant
hereto shall be governed by the laws of the State of Delaware.
A-13
ANNUAL MEETING OF
STOCKHOLDERS OF
IDT CORPORATION
December 14,
2016
Important
Notice Regarding the Availability of Proxy Materials for the IDT
Corporation
Stockholders Meeting to be Held on December 14,
2016
:
The Notice of Annual Meeting and Proxy Statement and the 2016
Annual Report are available at:
www.idt.net/ir
Please date, sign and
mail
your proxy card in the
envelope provided as soon
as possible.
$
Please detach along perforated line and mail in the envelope provided.
$
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PLEASE SIGN, DATE AND RETURN PROMPTLY IN
THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTES IN BLUE OR BLACK INK AS SHOWN HERE
x
THE BOARD OF DIRECTORS RECOMMENDS
VOTES
“FOR” THE LISTED NOMINEES AND “FOR”
PROPOSAL 2.
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FOR
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1. Election of Directors:
NOMINEES:
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2. To approve an amendment to
the IDT Corporation 2015 Stock Option and Incentive Plan that
will
increase the number of shares of
the Company’s Class B Common
Stock available for the grant of
awards thereunder by an additional
100,000 shares.
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To change the address on your account, please
check the box at right and indicate your new address in the address
space above. Please note that changes to the registered name(s) on
the account may not be submitted via this method.
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MARK “X” HERE IF YOU PLAN TO ATTEND
THE MEETING.
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Signature of
Stockholder
___________________
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Date:
_____________
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Signature of
Stockholder
______________
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Date:
_________
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Note:
Please sign exactly as your name or names appear on this Proxy.
When shares are held jointly, each holder should sign. When signing
as executor, administrator, attorney, trustee or guardian, please
give full title as such. If the signer is a corporation, please
sign full corporate name by a duly authorized officer, giving full
title as such. If signer is a partnership, please sign in
partnership name by an authorized person.
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Electronic Distribution
If you would like to receive future IDT CORPORATION proxy
statements and annual reports electronically, please visit
www.amstock.com
. Click on Shareholder Account Access to
enroll. Please enter your account number and tax identification
number to log in, then select Receive Company Mailings via e-Mail
and provide your e-mail address.
THIS PROXY IS BEING
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
IDT CORPORATION
520 Broad Street, Newark, New Jersey 07102
(973) 438-1000
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held December 14, 2016
The undersigned appoints Howard S. Jonas and Joyce J. Mason, or
either one of them, as the proxy of the undersigned with full power
of substitution to attend and vote at the Annual Meeting of
Stockholders (the “Annual Meeting”) of IDT Corporation
to be held at the Offices of IDT Corporation, 520 Broad Street,
Newark, New Jersey 07102 on December 14, 2016 at 10:30 a.m., and
any adjournment or postponement of the Annual Meeting, according to
the number of votes the undersigned would be entitled to cast if
personally present, for or against any proposal, including the
election of members of the Board of Directors, and any and all
other business that may come before the Annual Meeting, except as
otherwise indicated on the reverse side of this card.
THIS PROXY, WHEN
PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED
STOCKHOLDER. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES FOR THE BOARD OF DIRECTORS
AND FOR PROPOSAL 2, LISTED ON THE REVERSE SIDE.
CONTINUED AND TO BE
SIGNED ON REVERSE SIDE
ANNUAL MEETING OF
STOCKHOLDERS OF
IDT
CORPORATION
December 14,
2016
PROXY VOTING
INSTRUCTIONS
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INTERNET
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Access
“
www.voteproxy.com
”
and follow the on-screen instructions or scan the QR code with your
smartphone. Have your proxy card available when you access the web
page.
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Vote online until 11:59 PM EST the day before
the meeting.
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MAIL
- Date, sign and mail your proxy card in the
envelope provided as soon as possible.
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IN PERSON
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You may vote your
shares in person by attending the Annual Meeting.
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GO GREEN
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e-Consent makes it
easy to go paperless. With e-Consent, you can quickly access your
proxy material, statements and other eligible documents online,
while reducing costs, clutter and paper waste. Enroll today via
www.amstock.com to enjoy online access.
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COMPANY NUMBER
ACCOUNT NUMBER
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$
Please detach along perforated line and mail in the envelope provided
IF
you are not voting via the Internet.
$
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PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTES IN BLUE OR BLACK INK AS
SHOWN HERE
S
THE BOARD OF DIRECTORS RECOMMENDS VOTES
“FOR” THE LISTED NOMINEES AND “FOR”
PROPOSAL 2.
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FOR
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AGAINST
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FOR
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AGAINST
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ABSTAIN
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1. Election of Directors:
NOMINEES:
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2. To approve an amendment to
the IDT Corporation 2015 Stock Option and Incentive Plan that
will
increase the number of shares of
the Company’s Class B Common
Stock available for the grant of
awards thereunder by an additional
100,000 shares.
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Michael Chenkin
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Howard S. Jonas
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Judah
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To change the address on your account, please
check the box at right and indicate your new address in the address
space above. Please note that changes to the registered name(s) on
the account may not be submitted via this method.
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£
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MARK “X” HERE IF YOU PLAN TO ATTEND
THE MEETING.
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Signature of
Stockholder
___________________
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Date:
_____________
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Signature of
Stockholder
______________
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Date:
_________
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Note:
Please
sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give
full title as such. If the signer is a corporation, please sign
full corporate name by a duly authorized officer, giving full title
as such. If signer is a partnership, please sign in partnership
name by an authorized person.
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