Options intending to qualify as “incentive stock options” (“ISOs”) within the meaning of Section 422 of the Code may only be granted to employees of the Company or of any parent or any subsidiary corporation.
Approximately 69,500 employees (including our executive officers), 10 non-employee directors, and 2,000 consultants are technically eligible to participate in the 2022 Plan; however, we would not expect all eligible consultants and employees to receive equity awards under the 2022 Plan (based on historic practices, approximately 525 employees have typically received equity-based awards), and the Human Capital and Compensation Committee will have discretion as to which consultants, employees and non-employee directors will receive awards under the plan.
Shares Subject to the 2022 Plan and to Awards
As of the Effective Date, and subject to adjustments for changes in capitalization and the share counting provisions, a total of 17,900,000 shares would be authorized for issuance for new awards under the 2022 Plan, reduced by new grants made under the 2005 Plan after December 31, 2021 and before the Effective Date. This reflects a decrease of 2,180,472 shares to the 20,080,472 shares available for issuance under the 2005 Plan as of December 31, 2021. The shares available for issuance under the 2022 Plan may consist of authorized but unissued shares or treasury shares. Shares of common stock covered by an award will only be counted as used to the extent they are actually issued. Any shares related to awards (including, after December 31, 2021, awards granted under the 2005 Plan) which (i) terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such shares of common stock, (ii) are settled in cash in lieu of shares of common stock, or (iii) are exchanged with the Human Capital and Compensation Committee’s permission, prior to the issuance of shares of common stock, for awards not involving shares of common stock, will be added (or added back, as applicable) to the 2022 Plan’s share authorization. Moreover, if the option exercise price of any option granted under the 2022 Plan (or, after December 31, 2021, any option granted under the 2005 Plan) or the tax withholding requirements with respect to any award granted under the 2022 Plan (or, after December 31, 2021, any award granted under the 2005 Plan) are satisfied by tendering shares to the Company (by either actual delivery or by attestation), or if a SAR (including, after December 31, 2021, a SAR granted under the 2005 Plan) is exercised, only the number of shares issued, net of the shares tendered, if any, will be deemed delivered for purposes of determining the 2022 Plan’s share authorization. Notwithstanding the foregoing, the maximum aggregate number of shares that may be issued pursuant to ISOs granted under the 2022 Plan will be 17,900,000 shares, subject to adjustment for changes in capitalization.
If the proposed 2022 Plan is adopted, the aggregate dollar value of equity-based (based on the grant date fair market value of equity-based awards) and cash compensation granted under the 2022 Plan or otherwise to any non-employee director for service on the Board may not exceed $750,000 during any calendar year, or $1,000,000 during any calendar year in which a non-employee director first joins the Board or during any calendar year in which a non-employee director is serving as Chair of the Board or Lead Director
Options and SARs granted under the 2022 plan will not become exercisable or vested prior to the two-year anniversary of the date of grant; provided, however, that, such restriction will not apply to options and SARs granted with respect to the number of shares which, in the aggregate, does not exceed 5% of the 2022 Plan’s share authorization.
Option Awards
Stock options may be granted alone or together with SARs. Each option will be evidenced by an award agreement that will specify the exercise price, maximum duration of the option, number of shares to which the option pertains, conditions upon which the option will become vested and exercisable, and such other provisions as the Human Capital and Compensation Committee determines. The option exercise price may not be less than the fair market value of a share of common stock on the date the stock option is granted subject to a limited exception for awards that are assumed or substituted in corporate transactions. The Human Capital and Compensation Committee may establish the term of each option, but no stock option will be exercisable after 10 years from the grant date. A stock option may be granted in the form of a non-qualified stock option (“NQSO”) or an ISO. An option granted under the 2022 Plan will not be considered an ISO to the extent that it, together with any other ISOs under the 2022 Plan and any other plans, are exercisable for the first time by any participant during any calendar year with respect to shares having an aggregate fair market value in excess of $100,000 as of the date of grant.