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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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Filed by the Registrant
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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))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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IMPAC MORTGAGE HOLDINGS, INC.
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(Name of registrant as specified in its charter)
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(Name of person(s) filing proxy statement, if other than the registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which the transaction applies:
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(2)
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Aggregate number of securities to which the transaction applies:
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(3)
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Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of the transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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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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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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IMPAC MORTGAGE HOLDINGS, INC.
19500 Jamboree Road
Irvine, California 92612
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on
July 25, 2017
9:00 A.M. (Pacific Daylight Time)
To
Our Stockholders:
You
are cordially invited to attend the Annual Meeting of Stockholders (the "Meeting") of IMPAC MORTGAGE HOLDINGS, INC. ("IMH," "we," "our," "us," or the "Company"), a Maryland
corporation, to be held at 19500 Jamboree Road, Irvine, California 92612 on July 25, 2017, at 9:00 a.m. (Pacific Daylight Time).
The
annual meeting of stockholders is being held for the following purposes:
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1.
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To
elect a Board of Directors to serve for the ensuing year;
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2.
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To
consider and approve an amendment to the Company's 2010 Omnibus Incentive Plan to increase the number of shares of common stock subject to the plan by 500,000
shares;
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3.
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To
ratify the appointment of Squar Milner LLP as the independent registered public accounting firm of the Company for the year ending December 31, 2017;
and
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4.
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To
transact such other business as may properly come before the Meeting or any adjournments or postponements thereof.
Only
holders of our common stock of record at the close of business on April 27, 2017 will be entitled to vote and participate at the Meeting and any postponements, adjournments or
continuations thereof.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on July 25, 2017. The 2016 Proxy Statement and the Annual Report to
Stockholders for the year ended December 31, 2017 are also available at http://www.viewproxy.com/impaccompanies/2017
In
accordance with the rules of the Securities and Exchange Commission, we are sending a Notice of Internet Availability of Proxy Materials to the holders of record and beneficial owners of our
capital stock as of the close of business on the record date. The Notice of Internet Availability
contains instructions on how to access our materials on the Internet, as well as instructions on obtaining a paper copy of the proxy materials.
You
are cordially invited to attend the Meeting. However, if you do not expect to attend or if you plan to attend but desire the proxy holders to vote your shares, please promptly date and sign your
proxy card and return it in the enclosed postage paid envelope or you may also instruct the voting of your shares over the Internet or by telephone by following the instructions on your proxy card.
Voting by written proxy, over the Internet, or by telephone will not affect your right to vote in person in the event you find it convenient to attend.
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By order of the Board of Directors
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Ronald M. Morrison, Secretary
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Dated:
June 2, 2017
IMPAC MORTGAGE HOLDINGS, INC.
19500 Jamboree Road, Irvine, CA. 92612
(949) 475-3722
PROXY STATEMENT
FOR ANNUAL STOCKHOLDERS MEETING TO BE HELD ON
JULY 25, 2017 AT 9:00 A.M. (PACIFIC DAYLIGHT TIME)
This proxy statement is being furnished by Impac Mortgage Holdings, Inc., a Maryland corporation (the "Company"), in connection with the annual meeting
of stockholders to be held on July 25, 2017 at 9:00 a.m. (Pacific Daylight Time) at 19500 Jamboree Road, Irvine, California 92612 (the "Meeting"). We anticipate that the Notice of
Internet Availability of Proxy Materials will be sent, and this proxy statement and the form of proxy relating to our Meeting will be made available, to our stockholders commencing on or about
June 8, 2017.
The
purpose of the Meeting is to seek stockholder approval of the following proposals: (1) electing a Board of Directors to serve for the ensuing year; (2) approving an amendment to the
Company's 2010 Omnibus Incentive Plan to increase the number of shares of common stock subject to the plan by 500,000 shares; and (3) ratifying the appointment of Squar Milner LLP as the
Company's independent registered public accounting firm for the year ending December 31, 2017.
Notice of Internet Availability of Proxy Materials
Pursuant to rules adopted by the Securities and Exchange Commission ("SEC"), we are providing access to our proxy materials over the Internet. We are sending
a Notice of Internet Availability of Proxy Materials to our stockholders of record and our beneficial owners. All stockholders will have the option to access the proxy materials on the website
referred to in the Notice of Internet Availability or to request a printed set of the proxy materials. The Notice of Internet Availability will provide you with instructions on how to access the proxy
materials over the Internet or to request printed copies of the proxy materials and on how to vote on the proposals.
Solicitation of Proxies
Our Board of Directors is soliciting the enclosed proxy. We will bear the cost of this solicitation of proxies. Solicitations will be made by mail and over
the Internet based on our Notice of Internet Availability of Proxy Materials. We may also solicit proxies personally or by telephone. We will reimburse banks, brokerage firms, other custodians,
nominees and fiduciaries for reasonable expenses incurred in sending proxy materials to beneficial owners of our common stock.
Annual Report
Our annual report to stockholders for the year ended December 31, 2016 will be concurrently provided to each stockholder at the time we send this proxy
statement and the enclosed proxy and is not to be considered a part of the proxy-soliciting material.
Stockholders
may also request a free copy of our Form 10-K for the year ended December 31, 2016 by writing to Corporate Secretary, Impac Mortgage Holdings, Inc., 19500 Jamboree
Road, Irvine, California 92612. Alternatively, stockholders may access our 2016 Form 10-K on the Company's website located at www.impaccompanies.com. We will also furnish any exhibit to our
2016 Form 10-K if specifically requested.
Voting Requirements & Procedures
Your vote is important. If you hold your shares as a record holder, your shares can be voted at the Meeting only if you are present in person at the Meeting
or your shares are represented by proxy. Even if you plan to attend the Meeting, we urge you to vote by proxy in advance. You may vote your shares when you view the proxy materials on the Internet
following the instructions in the Notice of Internet Availability, or if you request a paper copy of the proxy materials as instructed on the Notice of Internet Availability, by using one of the
following three methods:
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(1)
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you
may vote by mail, by marking your proxy card, and then date, sign and return it in the postage-paid envelope provided;
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(2)
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you
may direct your vote electronically by accessing the website located at www.cesvote.com and following the on-screen instructions; or
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(3)
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you
may vote by calling the toll-free number listed on your proxy card.
Please
have your Notice of Internet Availability or proxy card in hand when going online or calling. If you instruct the voting of your shares electronically or telephonically, you do not need to
return your proxy card.
If
you hold your shares beneficially in "street name" through a nominee (such as a bank or stock broker), then the proxy materials are being forwarded to you by the nominee and you may be able to vote
by telephone or the Internet as well as by mail based on the instructions you receive from your nominee. You should follow the instructions you receive from your nominee to vote these shares in
accordance with the voting instructions you receive from your broker, bank or other nominee. If you are a stockholder who owns shares through a broker and you intend to vote at the Meeting, you must
obtain a legal proxy from the bank, broker or other holder of record of your shares to be entitled to vote those shares in person at the Meeting.
Quorum; Voting Rights
Holders of our common stock of record at the close of business on April 27, 2017 (the "Record Date") will be entitled to vote at the Meeting or any
adjournment or postponement of the Meeting. There were 20,448,947 shares of common stock, $0.01 par value per share, outstanding as of the Record Date. Each share of our common stock is entitled to
one vote and the presence, in person or by proxy, of holders of a majority of the outstanding shares of our common stock is necessary to constitute a quorum for the Meeting. Abstentions and broker
non-votes will be considered present and entitled to vote for the purpose of determining the presence of a quorum. Stockholders may not cumulate their votes.
Counting of Votes
If a proxy in the accompanying form is duly executed and returned, the shares represented by the proxy will be voted as directed. All properly executed
proxies delivered pursuant to this solicitation, and not revoked, will be voted at the Meeting in accordance with the directions given. If you sign and return your proxy card without giving specific
voting instructions, your shares will be voted as follows:
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(1)
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FOR
the nominees to our Board of Directors;
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(2)
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FOR
the approval of an amendment to the Company's 2010 Omnibus Incentive Plan to increase the number of shares of common stock subject to the plan by 500,000 shares;
and
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(3)
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FOR
the ratification of Squar Milner LLP as the Company's independent registered public accounting firm for the year ending December 31, 2017.
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Representatives
of our transfer agent will assist us in the tabulation of the votes.
Abstentions and Broker Non-Votes
An abstention is the voluntary act of not voting by a stockholder who is present at a meeting and entitled to vote.
A
broker "non-vote" is a proxy submitted by a broker that does not indicate a vote for some or all of the proposals because the broker does not have discretionary voting authority on certain types of
proposals that are non-routine matters and has not received instructions from its customer regarding how to vote on a particular proposal. Brokers that hold shares of common stock in "street name" for
customers that are the beneficial owners of those shares may generally vote on routine matters. However, brokers generally do not have discretionary voting power (i.e., they cannot vote) on
non-routine matters without specific instructions from their customers. Proposals are determined to be routine or non-routine matters based on the rules of the various regional and national exchanges
of which the brokerage firm is a member.
Refer
to each proposal for a discussion of the effect of abstentions and broker non-votes.
Revocability of Proxy
Any proxy given may be revoked at any time prior to its exercise by notifying the Secretary of Impac Mortgage Holdings, Inc. in writing of such
revocation, by duly executing and delivering another proxy bearing a later date (including an Internet or telephone vote), or by attending the Meeting and voting in person.
Interest of Executive Officers and Directors
None of the Company's executive officers or directors has any interest in any of the matters to be acted upon at the Annual Meeting, except to the extent that
the executive officers and directors are eligible to receive awards under the 2010 Omnibus Incentive Plan, the incentive compensation that may be earned by Joseph R. Tomkinson and William S. Ashmore,
who are executive officers and directors, and, with respect to each director, to the extent that a director is named as a nominee for election to the Board of Directors.
Householding
"Householding" is a program, approved by the SEC, which allows companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for
proxy statements and annual reports by delivering only one package of stockholder proxy materials to any household at which two or more stockholders reside. If you and other residents at your mailing
address own shares of our common stock in street name, your broker or bank may have notified you that your household will receive only one copy of our proxy materials. Once you have received notice
from your broker that they will be "householding" materials to your address, "householding" will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no
longer wish to participate in "householding" and would prefer to receive a separate proxy statement, or if you are receiving multiple copies of the proxy statement and wish to receive only one, please
notify your broker if your shares are held in a brokerage account. If you hold shares of our common stock in your own name as a holder of record, "householding" will not apply to your shares.
Postponement or Adjournment of Meeting
If a quorum is not present or represented, our bylaws permit the stockholders entitled to vote at the Meeting, present in person or represented by proxy, to
adjourn the Meeting from time to time to a date not more than 120 days after the original record date without notice other than the announcement at the Meeting.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
Our directors are elected annually to serve until the next annual meeting of stockholders and thereafter until their successors are elected
and qualify. Accordingly, a Board of seven directors is to be elected at the Meeting, all of whom have been recommended for nomination by the members of the Corporate Governance and Nomination
Committee of the Board. Our charter and bylaws currently provide for a variable number of directors with a range of between one and fifteen members. The size of our Board of Directors is set at seven.
No proxy may vote for more than seven nominees for director.
Unless
otherwise directed by stockholders within the limits set forth in the bylaws, the proxy holders will vote all shares represented by proxies held by them for the election of the maximum number
of the following nominees, all of whom are now members of and constitute our Board of Directors, Joseph R. Tomkinson, William S. Ashmore, James Walsh, Frank P. Filipps, Stephan R.
Peers, Leigh J. Abrams and Thomas B. Akin. We have been advised that all of the nominees have indicated their availability and willingness to serve if elected. If elected, each such nominee will serve
for a term expiring at our annual meeting of stockholders in 2018. You can find information about Messrs. Tomkinson, Ashmore, Walsh, Filipps, Peers, Abrams and Akin below under the section
"Board of Directors and Executive Officers."
In
the event that any nominee becomes unavailable or unable to serve as a director, prior to the voting, the proxy holders will refrain from voting for the unavailable nominee, will vote for a
substitute nominee in the exercise of their best judgment or the Board may determine to reduce the size of the Board.
Vote Required
You may vote in favor of any or all of the nominees or you may also withhold your vote as to any or all of the nominees. In order to elect a nominee, the
affirmative vote of a plurality of all of the votes cast at the Meeting is necessary for the election of the nominee for director assuming a quorum is present. "Plurality" means that the nominees
receiving the largest number of votes cast are elected as directors up to the maximum number of directors to be elected at the meeting. If stockholders do not specify the manner in which their shares
represented by a validly executed proxy solicited by the Board of Directors are to be voted on this proposal, such shares will be voted in favor of the nominees. If you hold your shares in "street
name" and you do not instruct your broker how to vote in the election of directors a broker non-vote will occur and, no votes will be cast on your behalf. It is therefore critical that you cast your
vote if you want it to count in the election of directors. Abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote although they will be
considered present for the purpose of determining the presence of a quorum.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES.
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PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO 2010 OMNIBUS INCENTIVE PLAN
TO INCREASE THE SHARES SUBJECT TO THE PLAN BY 500,000 SHARES
On April 25, 2017, our Board of Directors approved an amendment to the Company's 2010 Omnibus Incentive Plan, as amended (the "2010
Plan"), subject to stockholder approval, to increase the number of shares available under the Plan by 500,000 shares. As of May 30, 2017, there were 1,361,828 outstanding shares underlying
options and 85,750 deferred stock units, which are counted two times against the share reserve, and the total number of shares of common stock available for future awards under the 2010 Plan was
41,963 shares, which the Board believes is inadequate for the purpose of providing future equity incentives. Set forth below are the outstanding options and related exercise prices:
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Outstanding
Options
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Exercise Price
Per Share
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21,321
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$
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0.53
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90,000
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$
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2.73
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11,642
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$
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2.80
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249,150
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$
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5.39
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35,000
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$
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10.00
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123,666
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$
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10.65
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148,499
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$
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13.81
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2,000
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$
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16.43
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337,750
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$
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17.40
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329,800
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$
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20.50
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8,000
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$
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20.75
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5,000
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$
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21.50
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The
2010 Plan addresses the development of innovative compensation practices involving several alternative forms of equity-based incentives by permitting the grant of stock appreciation rights,
restricted stock units, performance shares and other stock- and cash-based incentive awards. The Board believes the 2010 Plan provides the Company with a flexible and dynamic long-term incentive
compensation structure and is in the best interests of the Company. This amendment is designed to enhance the flexibility of the Compensation Committee in granting stock options and other awards to
our officers, employees, non-employee directors and other key persons and to ensure that the Company can continue to grant stock options and other awards to such persons at levels determined to be
appropriate by the Compensation Committee.
In
approving the amendment to the 2010 Plan that is the subject of this Proposal No. 2, the Board noted the number of shares currently available under the 2010 Plan, the number of shares
available under the 2010 Plan upon its adoption in 2010, and the increase in the number of shares available under the 2010 Plan approved by stockholders in 2013, 2014, 2015 and 2016. The Company did
not engage a consultant to assist in the determination of the proposed increase in the number of shares available under the 2010 Plan in this Proposal No. 2.
Certain
material features of the plan are discussed below, however, the description is subject to, and qualified by the full text of the 2010 Plan attached as
Appendix A
, and is incorporated herein by
reference, which includes the proposed amendment to Section 4.01 as underlined. The closing
price for our common stock on June 1, 2017, as reported on the NYSE MKT, was $16.76 per share. If this
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proposal
is approved, we anticipate filing a Form S-8 registration statement with the SEC shortly after the annual meeting to register the additional shares.
Administration
The 2010 Plan is administered by the Compensation Committee of the Company's Board of Directors, with participation and approval of the Board of Directors.
The Committee has the authority to determine, within the limits of the express provisions of the 2010 Plan, the individuals to whom awards will be granted, the nature, amount and terms of such awards
and the objectives and conditions for earning such awards. The Committee generally has discretion to delegate its authority under the 2010 Plan to another committee of the Board or a subcommittee, or
to such other party or parties, including officers of the Company, as the Committee deems appropriate. In addition, the Board of Directors may exercise any of the powers and authority of the
Committee.
Types of Awards
Awards under the 2010 Plan may include incentive stock options, nonqualified stock options, stock appreciation rights ("SARs"), restricted shares of common
stock, restricted stock units, performance share or unit awards, other stock-based awards and cash-based incentive awards.
Stock Options.
The Committee may grant to a participant options to purchase Company common stock that qualify as incentive stock options ("incentive stock
options") for purposes of Section 422 of the Internal Revenue Code (the "Code"), options that do not qualify as incentive stock options ("non-qualified stock options") or a combination thereof.
The terms and conditions of stock option grants, including the quantity, price, vesting periods, and other conditions on exercise will be determined by the Committee.
The
exercise price for stock options are determined by the Committee in its discretion, but may not be less than 100% of the fair market value of one share of the Company's common stock on the date
when the stock option is granted. Additionally, in the case of incentive stock options granted to a holder of more than 10% of the total combined voting power of all classes of stock of the Company on
the date of grant, the exercise price may not be less than 110% of the fair market value of one share of common stock on the date the stock option is granted.
Stock
options must be exercised within a period fixed by the Committee that may not exceed ten years from the date of grant, except that in the case of incentive stock options granted to a holder
of more than 10% of the total combined voting power of all classes of stock of the Company on the date of grant, the exercise period may not exceed five years. The 2010 Plan provides for earlier
termination of stock options upon the participant's termination of service, unless extended by the Committee, but in no event may the options be exercised after the scheduled expiration date of the
options.
At
the Committee's discretion, payment for shares of common stock on the exercise of stock options may be made in cash, shares of the Company's common stock held by the participant or in any other
form of consideration acceptable to the Committee (including one or more forms of "cashless" or "net" exercise). The holder is responsible for the payment and withholdings of any federal, state, or
local taxes that may arise in connection with the exercise of stock options.
Stock Appreciation Rights.
The Committee may grant to a participant an award of SARs, which entitles the participant to receive, upon its exercise, a payment equal
to (i) the excess of the fair market value of a share of common stock on the exercise date over the SAR exercise price, times (ii) the number of shares of common stock with respect to
which the SAR is exercised.
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The
exercise price for a SAR will be determined by the Committee in its discretion, but may not be less than 100% of the fair market value of one share of the Company's common stock on the date when
the SAR is granted. Upon exercise of a SAR, payment may be made in cash, shares of the Company's common stock held by the participant or in any other form of consideration acceptable to the Committee
(including one or more forms of "cashless" exercise). SARs must be exercised within a period fixed by the Committee that may not exceed ten years from the date of grant.
Restricted Shares and Restricted Units.
The Committee may award to a participant shares of common stock subject to specified restrictions ("restricted shares").
Restricted shares are subject to forfeiture if the participant does not meet certain conditions such as continued employment over a specified forfeiture period and/or the attainment of specified
performance targets over the forfeiture period.
The
Committee also may award to a participant units representing the right to receive shares of common stock in the future subject to the achievement of one or more goals relating to the completion of
service by the participant and/or the achievement of performance or other objectives
("restricted units"). The terms and conditions of restricted share and restricted unit awards are determined by the Committee.
For
participants who are subject to Section 162(m) of the Code, as further described under "Tax Deductibility of Certain Performance-Based Awards Under the 2010 Plan," the performance targets
described in the preceding two paragraphs may be established by the Committee, in its discretion, based on one or more of the following measures (the "Performance
Goals"):
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operating income
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operating profit (earnings from continuing operations before interest and taxes)
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earnings per share
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return on investment or working capital
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return on stockholders' equity
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economic value added (the amount, if any, by which net operating profit after tax
exceeds a reference cost of capital)
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Adjusted Net Earnings (as defined below)
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Net earnings (loss) attributable to common
stockholders
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stock price
"Adjusted
Net Earnings" means net earnings (loss) attributable to common stockholders as reported in the Company's periodic reports filed with the Securities and Exchange Commission, provided that
such amount shall be adjusted by reversing the following, to the extent such adjustments were made in calculating such net earnings (loss) attributable to common stockholders:
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(a)
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any accrual already made with respect to the annual bonus, special bonus, or incentive bonus applicable to such
person;
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(b)
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any adjustment relating to change in fair value of net trust assets;
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(c)
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any adjustment relating to change
in fair value of long-term debt;
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(d)
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any adjustment relating to noncash level yield long-term debt;
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(e)
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any charge
relating to amortization of deferred charges; and
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(f)
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any adjustment relating to the following items within earnings of discontinued operations: (1) lower of cost
or market and (2) repurchase liability provision.
The
Performance Goals may be measured with respect to the Company or any one or more of its subsidiaries, divisions, units or affiliates, either in absolute terms or as compared to another company or
companies, or an index established or designated by the Committee. The above terms generally have the same meaning as in the Company's financial statements, or if the terms are not used in the
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Company's
financial statements, as applied pursuant to generally accepted accounting principles, or as used in the industry, as applicable.
Since
the adoption of the 2010 Plan, the Committee has not granted any awards based upon such Performance Goals.
Performance Awards.
The Committee may grant performance awards to participants under such terms and conditions as the Committee deems appropriate. A performance
award entitles a participant to receive a payment from the Company, the amount of which is based upon the attainment of predetermined performance targets over a specified award period. Performance
awards may be paid in cash, shares of common stock or a combination thereof, as determined by the Committee.
Award
periods will be established at the discretion of the Committee. The performance targets will also be determined by the Committee. With respect to participants subject to Section 162(m) of
the Code, the applicable performance targets will be established, in the Committee's discretion, based on one or more of the Performance Goals described under the section titled
"
Restricted Shares and Restricted Units
." To the extent that a participant is not subject to Section 162(m) of the Code, when circumstances occur
that cause predetermined performance targets to be an inappropriate measure of achievement, the Committee, at its discretion, may adjust the performance targets or the amount or value of the
performance award.
Other Stock-Based Awards.
The Committee may grant equity-based or equity-related awards, referred to as "other stock-based awards," other than options, SARs,
restricted shares, restricted units, or performance awards. The terms and conditions of each other stock-based award will be determined by the Committee. Payment under any other stock-based awards
will be made in common stock or cash, as determined by the Committee.
Cash-Based Incentive Awards.
The Committee may grant cash-based incentive compensation awards, which would include performance-based annual cash incentive
compensation to be paid to covered employees subject to Section 162(m) of the Code. The terms and conditions of each
cash-based award will be determined by the Committee, provided that for performance-based cash awards granted to covered executives subject to Section 162(m). The targets must consist only of
one or more of the Performance Goals discussed under the section titled "
Restricted Shares and Restricted Units
"above and the Committee cannot elect to
pay more than the incentive amount indicated by the level of attainment of the performance target. The Committee does have the flexibility, based on its business judgment, to reduce this amount.
The
cash incentive compensation feature of the 2010 Plan does not preclude the Board or the Committee from approving other incentive compensation arrangements for covered employees.
Dividend Equivalents.
The Committee may provide for the payment of dividends or dividend equivalents with respect to any shares of common stock subject to an award
under the 2010 Plan.
Eligibility and Limitation on Awards
The Committee may grant awards to any employee, director, consultant or other person providing services to the Company or its affiliates. It is presently
contemplated that approximately 615 persons will be eligible to receive awards.
The
maximum awards that can be granted under the 2010 Plan to a single participant in any calendar year is an aggregate number of 450,000 shares of common stock, whether in the form of options, SARs,
restricted shares, restricted units, performance unit or share awards and other stock-based awards, and $5,000,000 in the form of cash-based incentive awards. These amount limitations are solely for
8
purposes
of compliance with Section 162(m) of the Code as further discussed below under "Federal Income Tax Consequences" and are not indicative of the award amounts that would be granted to
any participant.
Future Awards under the 2010 Plan
Because future awards under the 2010 Plan are within the discretion of the Compensation Committee, the Company cannot determine the type, dollar value,
number, participant, or other terms that will in the future be received by or allocated to any participant in the 2010 Plan. Information regarding our recent practices with respect to stock-based
compensation is presented in "Board of Directors and Executive Officers" and "Executive Compensation" including the "Summary Compensation Table" and these related tables: "Option Grants During 2016,"
"Outstanding Equity Awards at December 31, 2016," and in "Compensation of Board Members" and elsewhere in this Proxy Statement, and in our financial statements for the fiscal year ended
December 31, 2016 in the Annual Report that accompanies this Proxy Statement.
While
the Company does not have a specific intention for the use of the currently reserved or additional proposed shares of common stock available for grants under the 2010 Plan, the Compensation
Committee in its discretion, and consistent with the Company's overall compensation program as described in the Proxy Statement, from time to time makes awards to employees, directors, consultants and
other persons providing services to the Company and its affiliates, and the Board has considered the past grants of awards in adopting the proposed increase. In 2014, 2015 and 2016 the Company made
option awards representing a total of 409,250, 405,800 and 342,000 shares, respectively, and DSU awards representing a total of approximately 3,750, 5,000 and 5,000 shares, respectively. The average
rate at which shares were granted over the past three years as a percentage of average shares outstanding in those same years was 3.6%. On that basis, the total number of shares available for grant
following the proposed increase is consistent with prior years' practices and would meet the Company's needs for approximately one year.
Shares Subject to the 2010 Plan
The Board of Directors has reviewed the shares currently available under the 2010 Plan and has determined that it is appropriate to increase the maximum
number of shares authorized for issuance under the 2010 Plan. As of May 30, 2017, the awards granted and the shares reserved under the 2010 Plan are as
follows:
-
-
1,361,828 shares underlying outstanding options, which amount consists of (i) 1,340,507 options that were granted under the 2010 Plan,
and (ii) 21,321 options that were outstanding under prior plans and assumed by the 2010 Plan upon its effectiveness (the "Assumed Options"); to the extent any of the Assumed Options are
forfeited or canceled, shares of common stock underlying those options will not be available for new grants under the 2010 Plan;
-
-
85,750 shares of deferred stock units were outstanding under the 2010 Plan, which amount represents 171,500 shares charged against the number
of shares available for the grant of awards under the 2010 Plan; shares of common stock awarded as restricted shares, restricted units, performance awards or other stock-based awards will be charged
as two shares against the number of shares of common stock available for the grant of awards under the 2010 Plan; and
-
-
41,963 shares reserved for issuance under the 2010 Plan.
As
of May 30, 2017, the total number of shares of common stock available for awards under the 2010 Plan is 41,963, which the Board believes is inadequate for the purpose of providing future
equity
9
incentives.
The Board has determined that increasing the amount of shares of common stock issuable under the 2010 Plan is necessary in order to be able to grant additional equity awards to continue to
attract, retain and motivate key employees. As a result, the Board is asking the stockholders to approve the amendment to the 2010 Plan to increase the number of shares available under the 2010 Plan
by 500,000 shares.
With
respect to awards made under the 2010 Plan (excluding Assumed Options), shares of common stock underlying awards that are forfeited or canceled (as a result, for example, of the lapse of an
option or a forfeiture of restricted stock) will be available for additional grants under the 2010 Plan. Shares to be issued or purchased under the 2010 Plan will be authorized but unissued shares of
common stock.
Anti-Dilution Protection
In the event of any corporate event or transaction that results in a change in the capital structure of the Company, including a change resulting from a stock
dividend or stock split, or combination or reclassification of shares, the Committee is empowered to make such equitable adjustments with respect to awards or any provisions of the 2010 Plan as it
deems necessary and appropriate, including, if necessary, any adjustments in the maximum number of shares of common stock subject to the 2010 Plan, the number of shares of common stock subject to and
the exercise price of an outstanding award, or the maximum number of shares that may be subject to one or more awards granted to any one recipient during a calendar year.
Dilution Analysis
As of May 30, 2017, the Company had outstanding 20,882,544 shares of common stock. If the 500,000 share increase in the number of shares available for
issuance under the 2010 Plan is approved by stockholders as requested, approximately 541,963 shares will be available for issuance under the 2010 Plan. The requested increase represents approximately
2.4% of the issued and outstanding shares of the Company. The total number of shares available for future issuance under the 2010 Plan and the total amount available including shares underlying
outstanding awards would be approximately 2.6% and 9.1%, respectively, of the issued and outstanding shares of the Company.
The
percentage of the issued and outstanding shares of the Company that will be available for award grants under the 2010 Plan following the proposed increase is consistent with the corresponding
percentages at the time of the initial approval of the 2010 Plan and its amendments in 2013through 2016. Stockholders initially approved the 2010 Plan in July 2010, authorizing 450,000 shares,
representing approximately 5.8% of the then issued and outstanding shares of the Company. In each of 2013, 2014, 2015 and 2016, stockholders approved an increase of 500,000 shares under the 2010 Plan.
The number of shares available under the 2010 Plan prior to each increase in 2013, 2014, 2015 and 2016 was 21,033, 113,579, 96,834 and 88,214 shares, respectively. Following each increase in 2013,
2014, 2015 and 2016, the 321,033, 413,579, 396,834 and 388,214 shares available for future issuance under the 2010 Plan represented approximately 3.7%, 4.4%, 3.9%, and 3.1% respectively, of the then
issued and outstanding shares of the Company and the total amount available including shares underlying outstanding awards (using actual shares underlying deferred stock units as opposed to the number
of shares charged against the number of shares available for grant under the plan) represented approximately 11.1%, 13.1%, 13.4%, and 12.5% respectively, of the then issued and outstanding shares of
the Company.
The inclusion of this information in this Proxy Statement should not be regarded as an indication that the assumptions used to determine the number of shares will be predictive
of actual future equity grants. These assumptions are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These
10
statements involve risks and uncertainties that could cause actual outcomes to differ materially from those in the forward-looking statements, including our ability to attract and retain talent,
achievement of performance metrics with respect to certain equity-based awards, the extent of option exercise activity, and others described in our Form 10-K for the year ended
December 31, 2016.
Amendment and Termination
The Board of Directors may at any time amend or terminate the 2010 Plan, provided that the Board may not, without the approval of the Company's shareholders,
make any amendment that requires shareholder approval under the Code or under any other applicable law or rule of any stock exchange or listing service that lists the Company's stock. Additionally, no
such action may be taken that adversely affects any rights or obligations with respect to any awards theretofore made under the 2010 Plan without the consent of the recipient. No awards may be made
under the 2010 Plan after the tenth anniversary of its effective date.
Federal Income Tax Consequences
The federal income tax consequences of the issuance and exercise of awards under the 2010 Plan are as described below. The following information is only a
summary of the tax consequences of the awards, and participants should consult with their own tax advisors with respect to the tax consequences inherent in the ownership or exercise of the awards, and
the ownership and disposition of any underlying securities.
Incentive Stock Options.
A participant who is granted an incentive stock option will not recognize any taxable income for federal income tax purposes either on the
grant or exercise of the incentive stock option. If the participant disposes of the shares purchased pursuant to the incentive stock option more than two years after the date of grant and more than
one year after the exercise of the option (the required statutory "holding period"), (a) the participant will recognize long-term capital gain or loss, as the case may be, equal to the
difference between the selling price and the option price; and (b) the Company will not be entitled to a deduction with respect to the shares of stock so issued. If the holding period
requirements are not met, any gain realized upon disposition will be taxed as ordinary income to the extent of the lesser of (i) the excess of the fair market value of the shares at the time of
exercise over the option price, and (ii) the gain on the sale. Also in that case, the Company will be entitled to a deduction in the year of disposition in an amount equal to the ordinary
income recognized by the participant. Any additional gain will be taxed as short-term or long-term capital gain depending upon the holding period for the stock. A sale for less than the option price
results in a capital loss.
The
excess of the fair market value of the shares on the date of exercise over the option price is, however, includable in the option holder's income for alternative minimum tax purposes.
Nonqualified Stock Options.
A participant who is granted a nonqualified stock option under the 2010 Plan will not recognize any income for federal income tax
purposes on the grant of the option. Generally, on the exercise of the option, the participant will recognize taxable ordinary income equal to the excess of the fair market value of the shares on the
exercise date over the option price for the shares.
The
Company generally will be entitled to a tax deduction on the date of exercise in an amount equal to the ordinary income recognized by the participant. Upon disposition of the shares purchased
pursuant to the stock option, the participant will recognize long-term or short-term capital gain or loss, as the case may be, equal to the difference between the amount realized on such disposition
and the basis for such shares, which basis includes the option price and the amount previously recognized by the participant as ordinary income.
11
Stock Appreciation Rights.
A participant who is granted stock appreciation rights will normally not
recognize any taxable income on the receipt of the SARs. Upon the exercise of a SAR, (a) the participant will recognize ordinary income equal to the amount received (the increase in the fair
market value of one share of the Company's common stock from the date of grant of the SAR to the date of exercise); and (b) the Company will be entitled to a deduction on the date of exercise
in an amount equal to the ordinary income recognized by the participant.
Restricted Shares.
A participant will not be taxed at the date of an award of restricted shares but will be taxed at ordinary income rates on the fair market value
of any restricted shares as of the date that the restrictions lapse, unless the participant within 30 days after transfer of such restricted shares to the participant elects under
Section 83(b) of the Code to include in income the fair market value of the restricted shares as of the date of such transfer. The Company normally will be entitled to a corresponding
deduction. Any disposition of shares after restrictions lapse will be subject to the regular rules governing long-term and short-term capital gains and losses with the basis for this purpose equal to
the fair market value of the shares at the end of the restricted period (or on the date of the transfer of the restricted shares, if the employee elects to be taxed on the fair market value upon such
transfer). To the extent dividends are payable during the restricted period under the applicable award agreement, any such dividends will be taxable to the participant at ordinary income tax rates and
will be deductible by the Company unless the participant has elected to be taxed on the fair market value of the restricted shares upon transfer, in which case they will thereafter be taxable to the
employee as dividends and will not be deductible by the Company.
Restricted Units.
A participant will normally not recognize taxable income upon an award of restricted units, and the Company will not be entitled to a deduction
until the lapse of the applicable restrictions. Upon the lapse of the restrictions and the issuance of the earned shares, the participant will recognize ordinary taxable income in an amount equal to
the fair market value of the common stock received and the Company normally will be entitled to a deduction in the same amount.
Performance Awards, Other Stock-Based Awards and Cash-Based Awards.
Normally, a participant will not recognize taxable income upon the grant of performance awards,
other stock-based awards and cash-based awards. Subsequently, when the conditions and requirements for the grants have been satisfied and the payment determined, any cash received and the fair market
value of any common stock received will constitute ordinary income to the participant. The Company normally will then be entitled to a deduction in the same amount.
Tax Deductibility of Certain Performance-Based Awards Under the 2010 Plan.
Section 162(m) of the Code limits the deductibility for federal income tax
purposes of certain compensation paid to any "covered employee" in excess of $1 million. For purposes of Section 162(m), the term "covered
employee" includes the Company's chief executive officer and the three other most highly compensated executive officers (other than the Company's principal financial officer) who are required to be
disclosed in the Company's proxy statement as "named executive officers" based on the amounts of their total compensation. Certain compensation, including compensation paid based on the achievement of
pre-established performance goals, is excluded from this deduction limit if the material terms under which the compensation is to be paid, including the performance goals to be used, are approved by
our stockholders. Any taxable income from the exercise of stock options granted to covered employees under the 2010 Plan is expected to be performance-based compensation, which may be deducted by the
Company for federal income tax purposes without regard to the Section 162(m) limitation. Income from other types of awards under the 2010 Plan also will be excluded from the
Section 162(m) limitation if based upon Performance Goals in the 2010 Plan. Income from awards under the 2010 Plan other than from exercise of stock options and SARs will not be excluded from
the Section 162(m) limitation if they are not based or attaining Performance Goals.
12
Effective Date
The 2010 Plan initially became effective on July 20, 2010.
Vote Required
You may vote in favor of or against this proposal or you may abstain from voting. Approval of the amendment to the 2010 Plan will require the affirmative vote
of a majority of the votes cast in person or represented by proxy at the Meeting, assuming the presence of a quorum. If stockholders do not specify the manner in which their shares represented by a
validly executed proxy solicited by the Board of Directors are to be voted on this proposal, such shares will be voted in favor of the approval of the 2010 Plan. Abstentions and broker non-votes will
not be counted as votes cast and will have no effect on the result of the vote, although abstentions and broker non-votes will be considered present for the purpose of determining the presence of a
quorum. If the stockholders do not approve the amendment to the 2010 Plan, the increase in shares under the 2010 Plan will not be implemented, but the Company reserves the right to adopt such other
compensation plans and programs as it deems appropriate and in the best interests of the Company and its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF THE AMENDMENT TO THE 2010 PLAN
13
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has recommended the reappointment of Squar Milner LLP ("Squar Milner") as the Company's independent registered
public accounting firm for the fiscal year ending December 31, 2017. Squar Milner became our auditors in 2008. The Company anticipates, and has experienced, costs savings in connection with its
engagement of Squar Milner compared to previous auditor engagements. The stockholders are being requested to ratify the reappointment of Squar Milner at the Annual Meeting. If the selection is not
ratified, it is contemplated that the appointment of Squar Milner for 2017 may be permitted to stand in view of the difficulty and the expense involved in changing independent auditors on short
notice, unless the Audit Committee finds other compelling reasons for making a change. Even if the selection is ratified, the Audit Committee and the Board of Directors may direct the appointment of a
different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of the Company and its stockholders. The Company
anticipates that a representative of Squar Milner will attend the Annual Meeting. The representative will have an opportunity to make a statement and to respond to appropriate stockholder questions.
Vote Required
You may vote in favor or against this proposal or you may abstain from voting. The affirmative vote of a majority of all votes cast at the Meeting at which a
quorum is present is required to ratify the appointment of Squar Milner as the Company's independent registered public accounting firm. If stockholders do not specify the manner in which their shares
represented by a validly executed proxy solicited by the Board of Directors are to be voted on this proposal, such shares will be voted in favor of the appointment of Squar Milner as the Company's
independent registered public accounting firm.
Abstentions
will not be counted as votes cast and will have no effect on the result of the vote, although they will be considered present for the purpose of determining the presence of a quorum.
Brokers and other nominees that do not receive instructions are generally entitled to vote on the ratification of the appointment of our independent registered public accounting firm.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY
THE REAPPOINTMENT OF SQUAR MILNER LLP.
14
Principal Accountant Fees and Services
During the year ended December 31, 2016, Squar Milner LLP served as our independent registered public accounting firm and provided certain tax
and other services. The following table sets forth the aggregate fees billed to us by Squar Milner LLP for the years ended December 31, 2016 and 2015.
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|
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|
|
|
|
|
|
|
For the Year Ended
December 31,
|
|
|
|
2016
|
|
2015
|
|
Audit fees
|
|
$
|
1,015,200
|
|
$
|
889,920
|
|
Audit-related fees (1)
|
|
|
102,600
|
|
|
154,136
|
|
Tax fees (2)
|
|
|
43,916
|
|
|
8,523
|
|
All other fees (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,161,716
|
|
$
|
1,052,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Audit-related
fees include fees for an examination under section 1122 of Regulation AB for loan servicing, a separate examination of certain
requirements of our master servicing policies and procedure as well as costs related to our acquisition of CashCall Mortgage, and registration and offering of securities.
-
(2)
-
Tax
fees relate to tax planning and consultation services.
-
(3)
-
All
other fees relate to non-tax related advisory and consulting services.
Pre-Approval Policies and Procedures for Audit and Non-Audit Services
The Audit Committee pre-approves all auditing services and permitted non-audit services, including the fees and terms thereof, to be performed by our
independent registered public accounting firm, subject to the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which are approved by the Audit
Committee prior to the completion of the audit. The Audit Committee may form and delegate authority to subcommittees consisting of one or more members of the Audit Committee when appropriate,
including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of such subcommittee to grant pre-approvals shall be presented to the full Audit
Committee at its next scheduled meeting. In pre-approving the services in 2016 and 2015 under audit related fees, tax fees or all other fees, the Audit Committee did not rely on the de minimis
exception to the SEC pre-approval requirements.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of our Board of Directors is responsible for providing independent, objective oversight of our accounting functions and internal control
over financial reporting. The Audit Committee is currently comprised of four directors. The Audit Committee operates under a written audit committee charter, which was amended and restated by the
Board of Directors on February 7, 2012.
Management
is responsible for our internal control over financial reporting and financial reporting process. Squar Milner LLP, or Squar Milner, the independent registered public accounting
firm, is responsible for performing an independent audit of our consolidated financial statements, as well as the effectiveness of our internal control over financial reporting in accordance with the
standards of the Public Company Accounting Oversight Board (United States) and to issue separate reports thereon. The Audit Committee's responsibility is to monitor and oversee these management
processes and related independent audits.
15
In
connection with these responsibilities, the Audit Committee met with management and Squar Milner to review and discuss the December 31, 2016 financial statements. The Audit Committee also
discussed with Squar Milner the matters required by Statement on Auditing Standards ("SAS") No. 61 (Communication with Audit Committees) as may be modified or supplemented.
In
addition, the Audit Committee also received written disclosures and the letter from Squar Milner required by applicable requirements of the Public Company Accounting Oversight Board regarding Squar
Milner's communications with the Audit Committee concerning independence, and has discussed with Squar Milner their independence from the Company.
Based
on the Audit Committee's discussions with management, review of Squar Milner's letter and discussions with Squar Milner, the Audit Committee has recommended to the Board of Directors that the
audited financial statements be included in our annual report on Form 10-K for the fiscal year ended December 31, 2016, for filing with the SEC.
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|
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Audit Committee
|
|
|
Frank P. Filipps
Leigh J. Abrams
Stephan R. Peers
James Walsh
|
16
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
Information Concerning Director Nominees
|
|
|
|
|
NAME
|
|
AGE
|
|
POSITION
|
Joseph R. Tomkinson
|
|
69
|
|
Chairman of the Board and Chief Executive Officer
|
William S. Ashmore
|
|
68
|
|
President and Director
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James Walsh
|
|
67
|
|
Director
|
Frank P. Filipps
|
|
69
|
|
Director
|
Stephan R. Peers
|
|
64
|
|
Director
|
Leigh J. Abrams
|
|
74
|
|
Director
|
Thomas B. Akin
|
|
65
|
|
Director
|
Joseph R. Tomkinson
has been Chairman of the Board since April 1998 and Chief Executive Officer and a Director of the Company since its formation in
August 1995. Mr. Tomkinson was also an officer and director of a real estate investment trust investing in commercial mortgage assets
and a specialty finance company until its sale. Mr. Tomkinson brings over 35 years of combined experience in real estate, real estate financing and mortgage banking. The Company believes
that Mr. Tomkinson's financial and business expertise, including his past senior executive positions and operating experience with real estate and finance companies, give him the qualifications
and skills to serve as a director.
William S. Ashmore
has been President of the Company since August 1995 and a Director since July 1997. Mr. Ashmore also served as the Chief
Operating Officer from August 1995 to May 2006. Mr. Ashmore has over 35 years of combined experience in real estate, asset liability management, risk management, and mortgage banking.
Mr. Ashmore received a B.S. degree in Psychology from the University of California at Los Angeles in 1971 and a Master's degree in Social Psychology from California State University at
Northridge in 1974. The Company believes that Mr. Ashmore's real estate, financial and business expertise give him the qualifications and skills to serve as a director.
James Walsh
has been a Director of IMH since August 1995. Since January 2000, he has been Managing Director of Sherwood Trading and Consulting
Corporation. The Company believes that Mr. Walsh's financial and business expertise, including his past senior executive positions and operating experience with large, complex organizations
give him the qualifications and skills to serve as a director.
Frank P. Filipps
has been a Director of IMH since August 1995. From April 2005 to July 2008, Mr. Filipps was Chairman and Chief Executive Officer
of Clayton Holdings, Inc., a mortgage services company. From June 1999 to April 2005, Mr. Filipps was Chairman and Chief Executive Officer of Radian Group, Inc. (NYSE: RDN) and
its principal subsidiary, Radian Guaranty, Inc., which were formed through a merger of Amerin and Commonwealth Mortgage Assurance Company. Mr. Filipps has been a director of Orchid
Island Capital (NYSE: ORC), a specialty finance company that invests in residential mortgage-backed securities, since February 2013 and was a director of Primus Guaranty, Ltd. (NYSE: PRS), a
holding company primarily engaged in selling credit protection against investment grade credit obligations of corporate and sovereign entities, from September 2004 to December 2014, and a director of
Fortegra Financial Corp (NYSE: FRF), an insurance services company, from December 2010 to December 2014. Mr. Filipps received a B.A. in Economics in 1969 from Rutgers University and a Master's
degree in Corporate Finance and International Business in 1972 from New York University. The Company believes that Mr. Filipps's financial and business expertise, including a diversified
background of managing companies and his past senior executive positions and operating experience with real
17
estate-related
and mortgage services companies, give him the qualifications and skills to serve as a director.
Stephan R. Peers
has been a Director of IMH since October 1995. Since January 2005, Mr. Peers has been an independent financial advisor. From
September 2001 to January 2005, Mr. Peers was a Managing Director of Sandler O'Neill & Partners, LP practicing corporate finance covering financial institutions. Mr. Peers
received a B.S. in Civil Engineering from Manhattan College in 1974, a M.S. in Industrial Engineering from Stanford University in 1975 and an M.B.A. from Stanford University in 1979. The Company
believes that Mr. Peers' financial and business expertise, including his past senior executive positions and operating experience with corporate finance companies, gives him the qualifications
and skills to serve as a director.
Leigh J. Abrams
has been a Director of IMH since April 2001 and lead independent director since June 2004. Mr. Abrams is currently a director and
Chairman Emeritus of LCI Industries (formerly, Drew Industries Incorporated) (NYSE: LCII), which manufactures a wide variety of components for recreational vehicles and manufactured homes, and was the
Chairman of the Board from January 2009 until May 2014. Prior to that, since August 1979, Mr. Abrams previously served as the President and Chief Executive Officer of Drew, from which he
resigned in May 2008 and December 2008, respectively, to become Chairman of the Board of Drew. Mr. Abrams has served as a director of Drew Industries since August 1979. Mr. Abrams, a
CPA, has over 35 years of experience in corporate finance, mergers and acquisitions, and operations. Mr. Abrams received a B.A in Accounting from Baruch College in 1964. The Company
believes that Mr. Abrams' financial and business expertise, including his past senior executive positions and operating experience with large, complex organizations, gives him the
qualifications and skills to serve as a director.
Thomas B. Akin
was appointed as a director of IMH on May 23, 2017. He is currently the managing general partner of Talkot Capital LLC, a
position he has held since 1996. Talkot Capital is the general partner for various limited partnerships (including the Talkot Fund, L.P.) investing in both private and public companies. From
February 2008 to 2014, Mr. Akin served as the Chief Executive Officer of Dynex Capital, Inc. (NYSE: DX) and was a director from May 2003, serving as chairperson since 2005, until May
2017. From 1991 to 1994, Mr. Akin was the managing director of the Western United States for Merrill Lynch Institutional Services and was the Regional Director of the San Francisco and Los
Angeles regions for Merrill Lynch Institutional Services from 1981 to 1991. Prior to Merrill Lynch, Mr. Akin had been with Salomon Brothers from 1978 to 1981. Mr. Akin currently serves
on the board of directors for Mobivity Holdings Corp. (OTC: MFON). Mr. Akin holds a Master of Business Administration from the Anderson School at the University of California Los Angeles (UCLA)
and a Bachelor of Science in Marine Biology from the University of California at Santa Cruz. The Company believes that Mr. Akin's previous positions as an executive officer and director at
several large financial institutions, his position as managing member at Talkot Capital and the resulting experience and expertise in investing in the financial and investment industries gives him the
qualifications and skills to serve as a director.
Executive Officers
The following table provides certain information regarding the executive officers of IMH, but who do not serve as directors of IMH:
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|
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|
|
NAME
|
|
AGE
|
|
POSITION
|
Todd R. Taylor
|
|
52
|
|
Executive Vice President and Chief Financial Officer
|
Ronald M. Morrison
|
|
66
|
|
General Counsel, Executive Vice President and Secretary
|
18
Todd R. Taylor
has been the Chief Financial Officer and Executive Vice President since November 2008. From February 2008 until November 2008,
Mr. Taylor was the Interim Chief Financial Officer. Mr. Taylor joined IMH in October 2004 as the Senior Vice President, Controller and served in this position until he was promoted to
Senior Vice President and Director of Accounting in June 2006. Mr. Taylor served as the Senior Vice President and Director of Accounting until he was promoted to Chief Accounting Officer in
October 2007 in which he served until he was appointed to the Interim Chief Financial Officer in February 2008. Prior to joining IMH, Mr. Taylor served as the Chief Financial Officer and
Secretary for Primal Solutions, Inc. from August 2003 until October 2004. Mr. Taylor earned his B.A. degree in Business from California State University at Fullerton and is a certified
public accountant.
Ronald M. Morrison
became General Counsel in July 1998 and was promoted to Executive Vice President in August 2001. In July 1998 he was also elected
Secretary of IMH and in August 1998 he was elected Secretary of our mortgage operations and our warehouse lending operations. Mr. Morrison received his B.A. degree in History in 1973 from the
University of California Los Angeles and his Juris Doctor degree in 1976 from Pepperdine University.
Family Relationships
There are no family relationships between any of the directors or executive officers of IMH.
Corporate Governance and Board Matters
Vacancies
All directors are elected at each annual meeting of stockholders for a term of one year and hold office until their successors are elected and qualify. Any
vacancy on the Board of Directors for any cause, other than an increase in the number of directors, may be filled by a majority vote of the remaining directors, although such majority is less than a
quorum. Replacements for vacancies occurring among the unaffiliated directors will be elected by a majority vote of the remaining directors, including a majority of the unaffiliated directors. Any
vacancy in the number of directors created by an increase in the number of directors may be filled by a majority vote of the entire Board of Directors.
Board Member Independence
We are listed on the NYSE MKT and accordingly, we have applied the listing standards of the NYSE MKT in determining the "independence" of the members of our
Board of Directors. Based on the listing standards of the NYSE MKT and after reviewing the relationships with members of our Board, our Board of Directors has determined, with the assistance of the
Corporate Governance and Nomination Committee, that James Walsh, Frank P. Filipps, Stephan R. Peers, Leigh J. Abrams and Thomas B. Akin as independent members of the Board of Directors. The Governance
and Nomination Committee reviews with the Board at least annually the qualifications of new and existing Board members, considering the level of independence of individual members, together with such
other factors as the Board may deem appropriate, including overall skills and experience. The Governance and Nomination Committee also evaluates the composition of the Board as a whole and each of its
committees to ensure the Company's on-going compliance with the independence standards of the NYSE MKT.
Attendance at Board and Committee Meetings
Our Board of Directors met 13 times during 2016. Each director attended at least 75% of the aggregate of the total number of meetings held by the Board of
Directors and the total number of meetings held by those committees of the Board of Directors on which such director served.
19
We
encourage all directors to attend the annual meeting of stockholders. In 2016, all of our directors attended the annual meeting of stockholders.
Committees and Corporate Governance
The current standing committees of our Board of Directors are the Audit Committee, the Compensation Committee, and the Corporate Governance and Nomination
Committee. Each of these committees has a written charter approved by our Board of Directors. The members of the committees and a description of the principal responsibilities of each committee are
described below.
Our
Board of Directors has adopted Corporate Governance Guidelines. The Corporate Governance Guidelines include items such as criteria for director qualifications, director responsibilities,
committees of the Board, director access to officers and employees, director compensation, evaluation of the CEO, annual performance evaluation and management succession. The Board of Directors has
chosen not to impose term limits or mandatory retirement age with regard to service
on the Board in the belief that continuity of service and the past contributions of the Board members who have developed an in-depth understanding of the Company and its business over time bring a
seasoned approach to IMH's governance. Each director is to act on a good faith basis and informed business judgment in a manner such director reasonably believes to be in the best interest of the
Company.
A
copy of each committee charter and our Corporate Governance Guidelines can be found on our website at www.impaccompanies.com by clicking "InvestorCorporate
GovernanceGovernance Documents," and is available in print upon request to the Secretary of Impac Mortgage Holdings, Inc., 19500 Jamboree Road, Irvine, California 92612.
The Audit Committee
The Audit Committee of the Board of Directors consists of four directors, all of whom are independent pursuant to the Director Independence Standards of the
NYSE MKT and other SEC rules and regulations applicable to audit committees. The following directors are currently members of the Audit Committee: Frank P. Filipps, who serves as the chairman, Leigh
J. Abrams, Stephan R. Peers and James Walsh. The Board of Directors has determined that Frank P. Filipps qualifies as an audit committee financial expert, as such term is defined by
Item 407(d)(5)(ii) of Regulation S-K of the Securities Exchange Act of 1934, as amended. During 2016, the Audit Committee met 13 times.
The
purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibility relating to: (i) the integrity of the Company's financial statements and financial reporting
process and its system of internal accounting and financial controls, (ii) the performance of the independent auditors, which would include an evaluation of the independent auditor's
qualifications and independence, (iii) the Company's compliance with legal and regulatory requirements, including disclosure controls and procedures, and (iv) the preparation of an Audit
Committee report to be included in the Company's annual proxy statement. The Audit Committee is authorized to retain independent legal, accounting or other advisors.
The Compensation Committee
The Compensation Committee is responsible for (1) recommending to our Board of Directors the cash and non-cash compensation of our executive officers
as defined in the rules promulgated under Section 16 of the Exchange Act, (2) evaluating the performance of our executive
officers, (3) recommending to our Board of Directors the cash and non-cash compensation policies for our non-employee directors, (4) making recommendations to our Board of Directors with
respect to incentive compensation and equity-based plans that are subject to Board approval, (5) recommending
20
to
the Board of Directors on whether the compensation discussion and analysis should be included in the proxy or Form 10-K, and (6) assisting our Board of Directors in evaluating
potential candidates for executive officer positions with the Company. The Committee may consult with the Chief Executive Officer in determining the executive compensation for any executive officer
other than the Chief Executive Officer. The Compensation Committee is authorized to retain or to obtain the advice of independent counsel or other advisors. The Compensation Committee consists of
James Walsh (Chairman), Leigh J. Abrams and Stephan R. Peers. The Compensation Committee met three times during 2016.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee currently consists of three directors, James Walsh (Chairman), Leigh J. Abrams and Stephan R. Peers. None of these individuals was
one of our officers or employees during 2016 or had any relationship with us requiring disclosure under Item 404 of Regulation S-K. None of our current executive officers served as a
member of the board of directors or the compensation committee of any other entity that has or has had one or more executive officers serving as a member of our Board or Compensation Committee.
The Corporate Governance and Nomination Committee
The Corporate Governance and Nomination Committee assists the Board of Directors in (1) identifying qualified individuals to become members of the
Board of Directors, (2) determining the composition of the Board of Directors and its committees, (3) selecting the director nominees for the next annual meeting of stockholders,
(4) monitoring a process to assess board, committee and management effectiveness, (5) aiding and monitoring management succession planning and (6) developing, implementing and
monitoring policies and processes related to our corporate governance. The Committee has the authority to retain any search firm engaged to assist
in identifying director candidates, and to retain outside counsel and any other advisors. The Corporate Governance and Nomination Committee consists of Stephan R. Peers (Chairman) and James Walsh. The
committee met eight times during 2016.
Board Leadership Structure and Role in Risk Oversight
The Board does not have a policy regarding the separation of the roles of Chief Executive Officer and Chairman of the Board as the Board of Directors believes
it is in the best interests of the Company to make that determination based on the position and direction of the Company and the membership of the Board. The Board has determined that having the
Company's Chief Executive Officer serve as Chairman is in the best interest of the Company's stockholders at this time. This structure makes the best use of the Chief Executive Officer's extensive
knowledge of the Company and its industry, as well as fostering greater communication between the Company's management and the Board.
Leigh
J. Abrams serves as the Company's Lead Independent Director. The Lead Independent Director advises the Chairman of the Board or otherwise undertakes the following:
-
(a)
-
assesses
the quality, quantity and timeliness of the flow of information from management as necessary for the independent directors to perform their duties
effectively and responsibly, including requesting that certain material be included in materials prepared for the Board by management; and
-
(b)
-
moderates
executive sessions of the Board's independent directors and acts as a liaison between the independent directors and the Chairman of the Board and/or Chief
Executive Officer on appropriate issues.
21
Risk Management
The Company faces a variety of operational and market risks, including interest rate risk, credit risk, liquidity risk and prepayment risk. The Board of
Directors believes an effective risk management system will (1) timely identify the material risks that the Company faces, (2) communicate necessary information with respect to material
risks to senior executives and, as appropriate, to the Board or Audit Committee, (3) implement appropriate and responsive risk management strategies consistent with Company's risk profile, and
(4) integrate risk management into Company decision-making.
The
Board has designated the Audit Committee to take the lead in overseeing risk management. The Audit Committee discusses with management the Company's major financial risk exposures and the steps
management has taken to monitor and control such exposures, including the Company's risk assessment and risk management policies. The Audit Committee also reviews the significant reports to
management, including assessment of the Company's risk management processes and systems of internal controls.
The
Board of Directors encourages management to promote a corporate culture that incorporates risk management into the Company's corporate strategy and day-to-day business operations. The Board of
Directors also continually works, with the input of the Company's executive officers, to assess and analyze the most likely areas of future risk for the Company.
The Director Nomination Process
The Governance and Nomination Committee considers nominees from all sources, including stockholders. The Committee has the authority to lead the search for
individuals qualified to become members of the Company's Board of Directors and to select or recommend to the Board of Directors director nominees to be presented for stockholder approval. The
committee may use its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm.
The
board of directors will consist of a majority of directors who (i) qualify as "independent" directors within the meaning of the listing standards of the NYSE MKT, as the same may be amended
from time to time; (ii) meet the applicable requirements to be "unaffiliated" as defined in the Company's Bylaws, as may be amended from time to time; and (iii) are affirmatively
determined by the Board to have no material relationship with the Company, its parents or its subsidiaries
(either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company, its parents or its subsidiaries). The committee will select individuals who have
high personal and professional integrity, have demonstrated ability and sound judgment, and are effective, in conjunction with other director nominees, in collectively serving the long-term interests
of our stockholders, together with such other factors as the board may deem appropriate, including overall skills and experience.
Although
the Company does not have a policy regarding diversity, the value of diversity on the Board of Directors is considered and the particular or unique needs of the Company shall be taken into
account at the time a nominee is being considered. The Corporate Governance and Nomination Committee seeks a broad range of perspectives and considers both the personal characteristics (gender,
ethnicity, age) and experience (industry, professional, public service) of directors and prospective nominees to the Board. The Governance and Nomination Committee will recommend to the Board nominees
as appropriate based on these principles.
Director Nominees by Stockholders.
Director nominees provided by stockholders to the Corporate Governance and Nomination Committee are evaluated by the same
criteria used to evaluate potential nominees from other sources. When making a recommendation for a Board nominee to be evaluated by
22
the
Committee, stockholders should include all information about the candidate that is required to be disclosed in a solicitation of proxies for election of directors pursuant to Regulation 14A
under the Exchange Act. The written recommendation should be sent to the Secretary of the Company accompanied by the candidate's written consent to be named in a proxy statement as a nominee, if
recommended by the Committee and nominated by the Board, and to serve as a director if appointed or elected. Additional information about the candidate may be requested by the Committee from time to
time, either from the recommended person or from the recommending shareholder.
Submission for Consideration at Annual Meeting.
The Company's bylaws provide that stockholders may nominate directors for consideration at an annual meeting
provided they comply with the notice procedures set forth in the bylaws, which are further described in this proxy statement under "Stockholder ProposalsProposals to be Submitted for
Annual Meeting" and "Mailing Instructions." The stockholder nominating a director must be a stockholder of record at the time of giving the notice and is entitled to vote at the meeting. If the number
of directors to be elected to the Board of Directors is increased and there is no public announcement naming all of the
nominees for director or specifying the size of the increased Board of Directors made by us at least 70 days prior to the first anniversary of the preceding year's annual meeting, a
stockholder's nomination will be deemed timely, but only with respect to nominees for any new positions created by such increase, if it is delivered to our Secretary not later than the close of
business on the 10
th
day following the day on which public announcement is first made by us. Any notice shall include the information regarding the stockholder making the
nomination and the nominee as required by the Company's bylaws. Nominations made by stockholders in this manner are eligible to be presented by the stockholder at the meeting, but such nominees will
not have been considered by the Nominating Committee as a nominee to be potentially supported by the Company.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics. This code of ethics applies to our directors, executive officers and employees. This code of ethics is
publicly available in the corporate governance section of the stockholder relations page of our website located at www.impaccompanies.com and in print upon request to the Secretary at Impac Mortgage
Holdings, Inc., 19500 Jamboree Road, Irvine, California, 92612. If we make amendments to the code of ethics or grant any waiver that the SEC requires us to disclose, we will disclose the nature
of such amendment or waiver on our website.
Stockholder Communication with Our Board of Directors
Stockholders who wish to contact any of our directors either individually or as a group may do so by writing them c/o Ronald M. Morrison, Secretary, Impac
Mortgage Holdings, Inc., 19500 Jamboree Road, Irvine, California 92612, by telephone at (949) 475-3942 or by email to rmorrison@impaccompanies.com specifying whether the communication is
directed to the entire board or to a particular director. Stockholder letters are screened, which includes filtering out improper or irrelevant topics.
Compensation of Board Members
The compensation of the Company's non-employee directors is described below.
Board Fees.
Beginning with the third quarter of 2016, the non-employee directors are paid $30,000 per quarter, which includes up to 35 meetings per year and
constitutes all fees for board and committee meetings, chairmanships, lead director roles and any other special meetings. If there are more than 35 meetings during a year, then additional compensation
will be awarded as determined by the Compensation Committee. Prior to the third quarter of 2016, the Company's non-employee directors were paid the following fees: (i) an annual fee of $40,000;
(ii) a meeting fee of $2,500; (iii) for services on the Audit Committee, the Compensation Committee and the Corporate Governance Committee, fees of
23
$2,500,
$1,000 and $1,000, respectively, per meeting; (iv) an annual fee payable to the chairperson of each of the Audit Committee, the Compensation Committee and the Corporate Governance
Committee of $20,000, $5,000 and $5,000, respectively; and (v) an annual fee payable to the lead independent director of $10,000.
Equity Awards.
Non-employee directors typically receive an annual equity award of options to purchase shares of the Company's common stock (the "Director Stock
Options"), or instead, at the election of the individual director, a number of shares of restricted Company common stock equal in value to the number of Director Stock Options (based on the binomial
value of the Director Stock Options) not taken by such director. Director Stock Options and any substitute shares of restricted Company common stock typically vest in three (3) equal annual
installments beginning on the first anniversary of the date of grant.
Deferred Stock Unit Awards.
The Company maintains a Non-Employee Director Deferred Stock Unit Award Program (the "DSU Program"), which provides for the grant of
deferred stock units ("DSUs") to non-employee directors pursuant to the 2010 Plan. Each DSU grant vests in substantially equal annual installments over three (3) years, commencing with the
first anniversary of the date of grant, subject to the director's continued service on the Board. Upon vesting, the DSUs continue to be held in the director's stock account until payment becomes due
after termination of service on the Board. When a director ceases to be a member of the Board, all DSUs that remain unvested terminate and are forfeited. Dividends and other distributions on DSUs are
credited to the director's stock account as if such DSUs were actual shares of common stock issued and outstanding. No interest is credited on stock amounts. Dividends and distributions are converted,
based on fair market value of the common stock, into DSUs and credited to the director's stock account. The Board, in its sole discretion, may waive vesting and forfeiture of DSUs. In the event of a
change in
control, all outstanding DSUs are fully vested. Directors receive a distribution of stock within thirty (30) days after the date the director no longer serves on the Board. The distribution
will consist of one share of common stock for each DSU. Any shares of common stock issued are issued under the 2010 Plan.
Special Services.
From time to time, the Company's non-employee directors may be asked to engage in special director services, whether or not a committee of the
Board has been formed for such purpose. Such services have included and may include strategic reviews, strategic transaction oversight, independent major litigation oversight and like matters
involving substantially greater commitments of time from the relevant directors. In such circumstances, the directors engaged in such efforts may receive additional fees for the duration of such
service. Fees related to a special committee may be paid whether or not the matter concludes in a transaction or other specific result and may be adjusted upward or downward based on the amount of
work required and any other criteria the committee and Board deem appropriate.
Set
forth below is the compensation earned by our non-employee directors during 2016. Compensation of Messrs. Tomkinson and Ashmore is reported under "Executive Compensation"; they received no
additional compensation for their services as directors.
24
Director Compensation For 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees Earned or
Paid in Cash
($)
|
|
Stock
Awards
($)(1)(2)
|
|
Option
Awards
($)(1)(3)
|
|
Total
($)
|
|
James Walsh
|
|
$
|
117,500
|
|
|
87,000
|
|
|
|
|
|
204,500
|
|
Frank P. Filipps
|
|
$
|
122,000
|
|
|
|
|
|
79,480
|
|
|
201,480
|
|
Stephan R. Peers
|
|
$
|
113,500
|
|
|
|
|
|
79,480
|
|
|
192,980
|
|
Leigh J. Abrams
|
|
$
|
114,000
|
|
|
|
|
|
79,480
|
|
|
193,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
amounts disclosed reflect the full grant date fair values in accordance with FASB ASC Topic 718. For assumptions used in calculation of the awards, see
"Note 17Share Based Payments and Employee Benefit Plans" to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended
December 31, 2016.
-
(2)
-
On
July 19, 2016, James Walsh was granted 5,000 deferred stock units pursuant to the Non-Employee Director Deferred Stock Unit Award Program. The deferred
stock units vest in three equal annual installments, commencing with the first anniversary of the date of grant, subject to the director's continued service on the Board. The settlement of the
deferred stock units and distribution of shares are further described above. As of December 31, 2016, the following deferred stock units were outstanding:
|
|
|
|
|
|
|
|
Name
|
|
Vested DSUs
|
|
Unvested DSUs
|
|
James Walsh
|
|
|
28,250
|
|
|
5,000
|
|
Frank P. Filipps
|
|
|
19,500
|
|
|
|
|
Stephan R. Peers
|
|
|
19,500
|
|
|
|
|
Leigh J. Abrams
|
|
|
13,500
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(3)
-
On
July 19, 2016, each director, except James Walsh who received 5,000 deferred stock units, was granted an option to purchase 10,000 shares of common stock
with an exercise price of $17.40 per share. The options vest in three (3) equal annual installments beginning on the first anniversary of the date of grant. As of December 31, 2016, the
directors held the following options:
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Option Awards:
Number of Securities
Underlying Options (#)
|
|
Exercise Price of Option
Awards ($)
|
|
Expiration Date
|
|
Frank P. Filipps
|
|
|
6,000
|
|
|
2.73
|
|
|
12/3/2020
|
|
|
|
|
7,500
|
|
|
5.39
|
|
|
7/22/2024
|
|
|
|
|
10,000
|
|
|
20.50
|
|
|
7/21/2025
|
|
|
|
|
10,000
|
|
|
17.40
|
|
|
7/19/2026
|
|
Stephan R. Peers
|
|
|
4,000
|
|
|
2.73
|
|
|
12/3/2020
|
|
|
|
|
7,500
|
|
|
5.39
|
|
|
7/22/2024
|
|
|
|
|
10,000
|
|
|
20.50
|
|
|
7/21/2025
|
|
|
|
|
10,000
|
|
|
17.40
|
|
|
7/19/2026
|
|
Leigh J. Abrams
|
|
|
6,000
|
|
|
2.73
|
|
|
12/3/2020
|
|
|
|
|
12,000
|
|
|
13.81
|
|
|
11/27/2022
|
|
|
|
|
7,500
|
|
|
5.39
|
|
|
7/22/2024
|
|
|
|
|
10,000
|
|
|
20.50
|
|
|
7/21/2025
|
|
|
|
|
10,000
|
|
|
17.40
|
|
|
7/19/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
25
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Overview of Compensation Policies and Objectives
The Compensation Committee of our Board of Directors administers the policies governing our executive compensation program. All issues pertaining to executive
compensation are reviewed and approved by the Compensation Committee and, where appropriate, approved by our Board of Directors. The Committee focuses on designing our executive compensation program
to achieve the following objectives in a market competitive manner:
-
-
Align the interests of executive officers with those of our shareholders by tying long-term incentive compensation to financial and operations
performance and ultimately to the creation of shareholder value.
-
-
Attract and retain high caliber executives by offering total compensation that is competitive with that offered by
similarly situated companies
and rewarding outstanding personal performance.
-
-
Reflect our corporate goals and objectives.
Over
the past several years, as the U.S economy has slowly improved, and at times experienced challenges, the Company's business and operations have also fluctuated. To address the economic and
industry trends, the Company has endeavored to be opportunistic in its mortgage business adding new loan products, developing a mortgage servicing portfolio, maintaining the long-term mortgage
portfolio and seeking potential acquisitions to grow its business. The incentive compensation received by the named executive officers during 2016, which is based on existing programs, reflects the
Company's growth. The Compensation Committee's goal is to provide executive management incentive compensation that will motivate them to successfully implement the Company's strategies, maintain its
business and seek opportunities that will grow and strengthen the Company's mortgage business.
Compensation Decision-Making
General Background.
We rely upon our judgment in making compensation decisions, after reviewing the performance of the Company, including its short- and long-term
strategies, current economic and market conditions, and carefully evaluating an executive's performance during the year against established goals, leadership qualities, operational performance,
business responsibilities, and career with the Company, current compensation arrangements and long-term potential to enhance stockholder value. Our main objective in establishing compensation
arrangements is to set criteria that are consistent with the Company's business strategies. Generally, in evaluating performance, we review the following
criteria:
-
-
strategic goals and objectives, such as acquisitions, dispositions or joint ventures;
-
-
individual management objectives for some
executives that relate to the Company's strategies;
-
-
achieving specific operational goals for the Company or particular business led by the executive officer, including portfolio
management and
portfolio earnings; and
-
-
supporting our corporate values by promoting compliance with internal ethics policies and legal obligations.
Our
executive compensation program and policies depends on the position and responsibilities for each executive officer but remain consistent with our objectives. We seek to achieve an appropriate mix
between guaranteed and at-risk compensation, as well as a balance between cash and equity compensation. Our mix of compensation elements is designed not only to reward past
performance, but also to proactively encourage long-term future performance through a combination of cash and equity incentive awards.
26
Role of Management, Consultants and Peers Groups
In reviewing and making compensation decisions of other executive officers, the Committee has in the past and may in the future consult with the Company's
Chief Executive Officer, Joseph R. Tomkinson, President, William S. Ashmore and other executive officers. These officers review the performance of the other executive officers, provide annual
recommendations for individual management objectives, and provide input on strategic initiatives. Mr. Tomkinson has also been given authority to negotiate employment terms for executive
officers that report to him within certain parameters as approved by the Compensation Committee.
Although
the Compensation Committee has explored the use of compensation consultants, and has used compensation consultants in the past, it did not use or rely on reports of compensation consultants
during 2016 in connection with determining appropriate compensation and arrangements for the named executive officers.
Elements of our Executive Compensation Program
Historically and for 2016, our executive compensation program consisted of the following elements:
-
(1)
-
base salary;
-
(2)
-
quarterly and annual cash-based incentive compensation;
-
(3)
-
discretionary bonuses;
-
(4)
-
stock- based plans and equity awards;
-
(5)
-
fringe
benefits
including standard employee health, welfare and retirement benefits; and
-
(6)
-
severance benefits.
We
do not have formal policies relating to the allocation of total compensation among the various elements. However, both management and the Committee believe that executives holding more senior
positions have substantial influence over our financial performance, and, therefore, should have a greater amount of their compensation at-risk based on the Company's financial performance.
Because
the mortgage lending market has continued to change and evolve since 2008, we generally enter into short term (1 to 2 year) employment agreements with our executive officers. The
employment agreements with Joe Tomkinson and Bill Ashmore, which were originally entered into in 2013, were extended in 2015 and expire at the end of 2017. In September 2016, we amended the employment
agreements with Todd Taylor and Ron Morrison, which were originally entered into in 2014 and now also expire at the end of 2017. These employment agreements are described below under "Employment
Agreements."
Base Salary
The Committee typically sets an executive's base salary with the objective of attracting and retaining highly qualified individuals for the relevant position
and rewarding individual performance. When setting and adjusting individual executive salary levels, the Committee considers the relevant established salary range, the executive officer's
responsibilities, experience, potential, individual performance, and contribution to the Company. The Committee also considers
other factors such as our overall corporate budget for annual merit increases, unique skills, demand in the labor market and succession planning.
The
base salaries for our named executive officers have essentially remained unchanged since 2010. This is consistent with our philosophy that an increase in an executive's compensation should be
related to the Company's performance.
27
Quarterly and Annual Cash-Based Incentive Compensation
We have used cash-based incentive compensation to emphasize and reward the attainment of certain annual or quarterly financial goals and corporate or
individual performance metrics. The objective is to select performance metrics that provide a meaningful measure of our success in implementing our short-term business strategies that yield long-term
benefits, such as maintaining and growing the Company's mortgage business and maintaining the amount of mortgage loans in the Company's long-term mortgage portfolio, credit quality and portfolio
earnings.
As
the Company is focusing on long-term success through a slowly improving market, the Compensation Committee believes that cash-based incentive compensation based on financial performance is
appropriate. Messrs. Tomkinson and Ashmore receive annual bonuses based on adjusted net earnings, while Messrs. Taylor and Morrison each receives a quarterly incentive bonus based on the
achievement of mutually agreed upon management objectives.
Performance Metrics.
Historically, cash incentive awards were typically driven by a combination of taxable net income, return on equity, and production goals.
Based on these performance metrics, contractual incentive compensation was directly tied to the Company's financial performance. We believe that the performance metrics for the CEO and President
contribute to our success in meeting our strategic objectives of maintaining and growing our overall business and that the management objectives for the CFO and GC provide a strong corporate
environment.
Currently,
incentive bonuses for Tomkinson and Ashmore are currently based on a percentage of the Company's adjusted net earnings, subject to a cap provided that there is no cap on the Annual Bonus if
the officer pre-elects on or before December 31 of the prior year to receive 5.0% of adjusted net earnings during a year. For 2016, Messrs. Tomkinson and Ashmore each elected to receive
5.0% of adjusted net earnings with no cap.
The
incentive compensation for Taylor and Morrison is based on management objectives. Mr. Taylor's incentive compensation may be up to 65% of his base salary, while Mr. Morrison's
incentive compensation may be up to 50% of his base salary. Their incentive compensation is determined and paid on a quarterly basis. Mr. Taylor's management objectives for his quarterly
incentive compensation during 2016 included the hiring accounting personnel, completing internal controls for a recent acquisition, completing public offerings and new warehouse financing, and
improvements to financing reporting and technology. Mr. Morrison's management objectives for his quarterly incentive compensation during 2016 were based on corporate actions, such as the
Company's office lease, legal aspects of equity and debt financing and staffing.
Stock-Based Plans and Equity Awards
We believe that long-term performance is aided by the use of stock-based awards which create an ownership culture amongst our executive officers that fosters
beneficial, long-term performance by the Company. We have established an equity incentive plan to provide our employees, including our executive officers, as well as our directors and consultants,
with incentives to help align their interests with the interests of stockholders. The Compensation Committee believes that the use of stock-based awards promotes our overall executive compensation
objectives and expects that stock options will continue to be a significant source of potential compensation for our executives. All of our awards are nonqualified stock option grants with time-based
vesting.
The
Committee believes granting stock options to our executive officers encourages the creation of long-term value for our stockholders and promotes employee retention and stock ownership, all of
which serve our overall compensation objectives. The number of shares of our common stock under a
28
stock
option that is granted to an officer is determined by taking into consideration the officer's position with the Company, overall individual performance, our performance and an estimate of the
long-term value of the award considering current base salary and any cash bonus awarded. Other than the individual limit of 450,000 shares that may be awarded during any fiscal year, we do not have
any limit on the amount of options or awards that may be granted to any executive officer. The Compensation Committee determines the appropriate criteria for granting awards to executive officers,
which generally include individual performance, our strategic goals and our financial condition. The exercise price of any stock option issued by us is the [closing price per share of
common stock on the stock exchange on the grant date. The Compensation Committee generally has issued awards under the Company's equity incentive plan once a year and the number of shares under
options granted to each named executive officer is based on position and seniority.
Fringe Benefits
Health Benefits
During 2016, we provided the following benefits to all of our U.S. salaried employees, including the named executive officers: medical, dental and
prescription coverage, company-paid short- and long- term disability insurance, and paid vacation and holidays.
Retirement Benefits
We maintain the Impac Companies 401(k) Savings Plan for all full time employees, including the executive officers, with at least six months of service. The
401(k) Plan provides that each participant may contribute up to 25% of salary pursuant to certain restrictions. The Company contributes to the participant's plan account at the end of each plan year
50% of the first 4% of salary contributed by a participant. Subject to the rules for maintaining the tax status of the 401(k) Plan, an additional company contribution may be made at our discretion, as
determined by the Board of Directors. Contributions made by us to the plan for the year ended December 31, 2016 was approximately $895,000. There were no discretionary matching contributions
recorded during the year ended December 31, 2016.
Severance
Currently, all the executive officers are entitled to certain severance benefits under the terms of each officer's respective employment agreement, which are
on file with the SEC. Severance benefits are intended to ease the consequences of an unexpected or involuntary termination of employment and give the executive an opportunity to find new employment.
The severance payments for Messrs. Tomkinson and Ashmore are currently the lesser of 18 months or the balance payable through the contract term of base salary and incentive compensation
earned through the termination date. Messers Taylor and Morrison each are entitled to severance compensation equal to the lesser of 12 months or the balance payable through the contract term of
base salary and earned incentive compensation. The Committee believes that the different severance payments periods are reasonable in light of each officer's position, value to the Company and length
of service. We do not provide for change of control payments. Please see the discussion below entitled "Potential Payments upon Termination and Change-in Control" for a further description of
severance payments for each Named Executive Officer.
Perquisites
The Committee typically prefers to compensate our executive officers in cash and equity rather than with perquisites and does not view perquisites as a
significant element of our total compensation structure. Executive officers usually receive a car allowance.
29
Tax and Accounting Implications
Deductibility of Executive Compensation
Under Section 162(m) of the Internal Revenue Code, publicly-held corporations may not take a tax deduction for compensation in excess of
$1 million paid to any of the executive officers named in the Summary Compensation Table during any fiscal year. There is an exception to the $1 million limitation for performance-based
compensation meeting certain requirements, including compensation based upon performance goals determined by a compensation committee consisting solely of two or more outside directors, the material
terms of which are approved by a majority vote of the stockholders prior to the payment of such remuneration. Plus, performance objectives must be established no later than within the first
90 days of the performance period. To maintain flexibility in compensating executives in a manner designed to promote varying corporate goals, the Compensation Committee has not adopted a
policy requiring all compensation to be deductible under Section 162(m). However, the Compensation Committee considers deductibility under Section 162(m) with respect to compensation
arrangements for executives, and to the extent applicable, intends to qualify for the exception under Section 162(m). The incentive compensation under the Employment Agreements with each of
Messrs. Tomkinson and Ashmore and our 2010 Stock Plan are currently structured with the intent to meet the compensation deduction under Section 162(m).
The
Compensation Committee regularly reviews our compensation programs to determine the deductibility of the future compensation paid or awarded pursuant thereto and will seek guidance with respect to
changes to our existing compensation program that will enable the Company to continue to attract and retain key individuals while optimizing the deductibility to the Company of amounts paid as
compensation. However, this policy does not rule out the possibility that compensation may be approved that may not qualify for the compensation deduction if, in light of all applicable circumstances,
it would be in the best interests of the Company for such compensation to be paid.
Compensation Risk Management
As part of its annual review of our executive compensation program, the Compensation Committee reviews with management the design and operation of our
incentive compensation arrangements for senior management, including executive officers, to determine if such programs might encourage inappropriate risk-taking that could have a material adverse
effect on the Company. The Compensation Committee considered, among other things, the features of the Company's compensation program that are designed to mitigate compensation-related risk, such as
the performance objectives and target levels for incentive awards (which are based on overall Company performance), and its compensation recoupment policy. The Compensation Committee also considered
our internal control structure which, among other things, limits the number of persons authorized to execute material agreements, requires approval of our board of
directors for matters outside of the ordinary course and its whistle blower program. Based upon the above, the Compensation Committee concluded that any risks arising from the Company's compensation
plans, policies and practices are not reasonably likely to have a material adverse effect on the Company.
Impact of Shareholder Advisory Vote
At our 2016 annual meeting, our shareholders approved, in a non-binding advisory vote, our current executive compensation with approximately 92% of the votes
cast on the proposal at the annual meeting affirmatively giving their approval (with broker non-votes and abstentions having no effect on the vote). Accordingly, we believe that this vote ratifies our
executive compensation philosophy and policies, as currently adopted and implemented, and we intend to continue such philosophy and policies.
30
COMPENSATION COMMITTEE REPORT
The information contained in this Compensation Committee Report shall not be deemed incorporated by reference in any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing (except to the
extent that we specifically incorporate this information by reference) and shall not otherwise be deemed "soliciting material" or "filed" with the Securities and Exchange Commission or subject to
Regulation 14A or 14C, or to the liabilities of Section 18 of the Securities Exchange Act of 1934 (except to the extent that we specifically request that this information be treated as
soliciting material or specifically incorporate this information by reference).
The
Compensation Committee has reviewed and discussed the "Compensation Discussion and Analysis" section of this proxy statement with management. Based on this review and discussion, the Compensation
Committee recommended to the Board of Directors that the "Compensation Discussion and Analysis" section be included in this proxy statement.
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Submitted by the Compensation Committee:
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Stephan R. Peers
James Walsh
Leigh Abrams
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31
Summary Compensation Table
The following table presents compensation earned by our executive officers for the years ended December 31, 2016, 2015 and 2014 (the "Named Executive
Officers"). The compensation of Messrs. Tomkinson and Ashmore is based on each of their employment agreements, which are further described below under "Employment Agreements."
SUMMARY COMPENSATION TABLE
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Name and Principal Position
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Year
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|
Salary
($)
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|
Bonus
($)(3)
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|
Option
Awards
($)(1)
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Non-Equity
Incentive Plan
Compensation
($)(2)
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All Other
Compensation
($)(6)
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Total
($)
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Joseph R. Tomkinson
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2016
|
|
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600,000
|
|
|
|
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254,335
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5,720,869
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(4)
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37,200
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6,612,404
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Chairman of the Board and
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2015
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600,000
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600,000
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326,610
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1,500,000
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(4)
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20,100
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3,046,710
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Chief Executive
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2014
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600,000
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200,000
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132,825
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(4)
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14,400
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947,225
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William S. Ashmore
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2016
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600,000
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|
|
|
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254,335
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5,720,869
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(4)
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37,200
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6,612,404
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President
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2015
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600,000
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600,000
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326,610
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1,500,000
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(4)
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20,100
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3,046,710
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2014
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600,000
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200,000
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132,825
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(4)
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14,400
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947,225
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Todd R. Taylor
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2016
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360,000
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190,751
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234,000
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(5)
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6,000
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790,751
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Chief Financial Officer
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2015
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360,000
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245,435
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230,500
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(5)
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6,000
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841,935
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2014
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360,000
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|
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|
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100,050
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234,000
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(5)
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6,000
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700,050
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Ron Morrison
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2016
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390,000
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190,751
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195,000
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(7)
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6,000
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781,751
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Executive Vice President and General Counsel
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-
(1)
-
The
amounts disclosed reflect the full grant date fair values in accordance with FASB ASC Topic 718. For assumptions used in calculation of the option awards, see
"Note 19Share Based Payments and Employee Benefit Plans" to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended
December 31, 2016. See "Option Grants During 2016" below for a further description of the terms of the options.
-
(2)
-
Amounts
set forth in this column are based on the terms of the incentive bonuses set forth in the employment agreements as described below under "Employment
Agreements."
-
(3)
-
In
2015, the Board of Directors granted Messrs. Tomkinson and Ashmore a one-time discretionary bonus related to the acquisition of CashCall Mortgage. In 2014,
the Board of Directors granted Mr. Tomkinson and Mr. Ashmore a one-time bonus for various actions taken over the past several years, including but not limited to the raising of operating
funds, and the settlement of various lawsuits, as well as the negotiation and acquisition of CashCall Mortgage.
-
(4)
-
Mr. Tomkinson's
and Mr. Ashmore's annual incentive bonus payments for 2014 and 2015 were based on 7.5% of the Company's adjusted net earnings, subject
to certain limitations. For 2016, pursuant to the terms of their employment agreements, each officer elected to receive 5.0% of adjusted net earnings.
-
(5)
-
Mr. Taylor
received a quarterly incentive bonus of up to 65% of his base salary based upon the achievement of mutually agreed management objectives.
-
(6)
-
Consists
of (i) an annual car allowance of $14,400 for each of Tomkinson and Ashmore, and $6,000 for each of Taylor and Morrison, (ii) a fixed expense
reimbursement of $22,800 with respect to Tomkinson and Ashmore, and (iii) a fringe benefit associated with an executive retention plan by which the Company pledges a portion of the collateral
needed to finance premiums from a third party lender for life insurance policies in the amount of $6 million, $5 million and $4 million for trusts of which the family members of
Mr. Ashmore, Mr. Morrison and Mr. Taylor, respectively, are the beneficiaries. As of December 31, 2016, the Company posted collateral of $700,000, $583,333 and $466,667 for
each trust, respectively. The executive is responsible for taxes on the imputed value of the life insurance benefit. The Company also provides a small amount of additional life insurance coverage to
the named executive officers under its group term life insurance program, which is provided to all employees.
-
(7)
-
Mr. Morrison
received a quarterly incentive bonus of up to 50% of his base salary based upon the achievement of mutually agreed management objectives.
32
GRANTS OF PLAN-BASED AWARDS
The following table provides information with respect to grants of plan-based awards made during 2016 to the Named Executive Officers.
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Estimated Possible Payouts
Under Non-Equity
Incentive Plan Award
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All Other Option
Awards:
Number of
Securities
Underlying Option
(#)(4)
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Exercise or
Base Price
of Option
Awards
($/Sh)
|
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Grant Date
Fair Value of
Stock and
Option
Awards($)(5)
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Name
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Grant
Date
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Threshold
($)
|
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Target
($)
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Maximum
($)
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Joseph R. Tomkinson
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7/19/2016
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34,200
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17.40
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254,335
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5,720,869
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(1)
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William S. Ashmore
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7/19/2016
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32,000
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17.40
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254,335
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5,720,869
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(1)
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Todd R. Taylor
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7/19/2016
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25,700
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17.40
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190,751
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234,000
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(2)
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234,000
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(2)
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Ron Morrison
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7/19/2016
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24,000
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17.40
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190,751
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195,000
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195,000
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(3)
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-
(1)
-
Mr. Tomkinson's
and Mr. Ashmore's annual incentive bonus payments for 2016 were based on 5.0% of the Company's adjusted net earnings for that year.
There are no threshold or maximum levels for these awards.
-
(2)
-
Mr. Taylor
is eligible to receive a quarterly incentive bonus of up to 65% of his base salary based upon the achievement of mutually agreed management
objectives.
-
(3)
-
Mr. Morrison
is eligible to receive a quarterly incentive bonus of up to 50% of his base salary based upon the achievement of mutually agreed management
objectives.
-
(4)
-
Option
awards vest in three equal annual installments beginning on the first anniversary of the date of grant.
-
(5)
-
The
amounts in this column represent the aggregate grant date fair value of option awards granted during 2016 computed in accordance with ASC 718. The assumptions
for these amounts are included in Note 17Share Based Payments and Employee Benefit Plans, to our audited financial statements included in our Annual Report on Form 10-K for
2016.
Outstanding Equity Awards at December 31, 2016
The following table sets forth the outstanding stock options for each of our Named Executive Officers as of December 31, 2016.
33
OUTSTANDING OPTION AWARDS AT DECEMBER 31, 2016
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OPTION AWARDS
|
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Name
|
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Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Joseph R. Tomkinson
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|
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11,321
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0.53
|
|
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06/09/2019
|
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48,000
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|
|
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|
2.73
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|
|
12/3/2020
|
|
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29,250
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|
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13.81
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|
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11/27/2022
|
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25,000
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|
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10.65
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7/23/2023
|
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25,667
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12,833
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5.39
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72/2/2024
|
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11,400
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22,800
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20.50
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7/21/2025
|
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32,000
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17.40
|
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7/19/2026
|
|
William S. Ashmore
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16,000
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|
|
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|
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2.73
|
|
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12/3/2020
|
|
|
|
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29,250
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|
|
|
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|
13.81
|
|
|
11/27/2022
|
|
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25,000
|
|
|
|
|
|
10.65
|
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7/23/2023
|
|
|
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25,667
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|
|
12,833
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5.39
|
|
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7/22/2024
|
|
|
|
|
11,400
|
|
|
22,800
|
|
|
20.50
|
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|
7/21/2025
|
|
|
|
|
|
|
|
32,000
|
|
|
17.40
|
|
|
7/19/2026
|
|
Todd R. Taylor
|
|
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10,000
|
|
|
|
|
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0.53
|
|
|
6/9/2019
|
|
|
|
|
24,000
|
|
|
|
|
|
13.81
|
|
|
11/27/2022
|
|
|
|
|
22,000
|
|
|
|
|
|
10.65
|
|
|
7/23/2023
|
|
|
|
|
19,334
|
|
|
9,666
|
|
|
5.39
|
|
|
7/22/2024
|
|
|
|
|
8,567
|
|
|
17,133
|
|
|
20.50
|
|
|
7/21/2025
|
|
|
|
|
|
|
|
24,000
|
|
|
17.40
|
|
|
7/19/2026
|
|
Ron Morrison
|
|
|
10,000
|
|
|
|
|
|
0.53
|
|
|
6/9/2019
|
|
|
|
|
24,000
|
|
|
|
|
|
13.81
|
|
|
11/27/2022
|
|
|
|
|
20,000
|
|
|
|
|
|
10.65
|
|
|
7/23/2023
|
|
|
|
|
19,334
|
|
|
9,666
|
|
|
5.39
|
|
|
7/22/2024
|
|
|
|
|
8,567
|
|
|
17,133
|
|
|
20.50
|
|
|
7/21/2025
|
|
|
|
|
|
|
|
24,000
|
|
|
17.40
|
|
|
7/19/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Exercises and Stock Vested
None of the named executive officers exercised stock options during 2016 and none hold any restricted stock subject to vesting.
Employment Agreements
Joseph R. Tomkinson, CEO, and William S. Ashmore, President
Joseph R. Tomkinson, Chief Executive Officer, and William S. Ashmore, President, each have employment agreements with the Company that were originally
effective as of January 1, 2013, amended in 2015, and continue through December 31, 2017, unless terminated earlier. The employment agreements may be extended by mutual written agreement
of the officer and the Company.
Base Salary, Annual Bonus and Other Compensation.
The base salary for each of Messrs. Tomkinson and Ashmore is $600,000 per year. Each officer also receives
a fixed expense reimbursement of $1,900 per month and is eligible to receive an annual bonus in an amount equal to 7.5% of the Company's
34
adjusted
net earnings (the "Annual Bonus"). The Annual Bonus is subject to a cap in any calendar year in an amount equal to 2.5 times annual base salary; provided that there will be no cap on the
Annual Bonus if the officer pre-elects on or before December 31 of the prior year to receive 5.0% of adjusted net earnings during a year. The officers may elect to defer any portion of his base
salary, bonuses or incentive compensation into an approved Company-sponsored deferred compensation plan.
An
amount equal to 80% of the estimated Annual Bonus will be paid within 10 days after the Company has determined its adjusted net earnings for the year for which the annual bonus is to be paid
and the remaining amount will be finally calculated and paid within 10 days after the release of the Company's audited financial statements for the year. The Annual Bonus is required to be paid
by the Company by December 31 of the calendar year immediately following the year for which adjusted net earnings is determined for purposes of the Annual Bonus. If it is determined that any
bonus or incentive compensation is underpaid or overpaid to the officer, then the Company will either pay the amount owed within 15 days after the determination is made by the Compensation
Committee of the Board of Directors or offset an overpayment against the officer's next bonus or incentive compensation payments or require the officer to repay such amounts, as applicable.
For
purposes of the Annual Bonus, "adjusted net earnings" means the net earnings (loss) attributable to common stockholders excluding (1) any adjustment relating to change in fair value of net
trust assets, change in fair value of long-term debt (including preferred stock), noncash level yield long-term debt recognition or valuing of deferred tax assets, earnout accretion associated with
the acquisition of CashCall mortgage, and change in estimated fair value of the contingent consideration liability associated with the acquisition of CashCall mortgage, (ii) any accrual already
made with respect to the officer's bonus compensation, (iii) any charge relating to amortization of deferred charges, and (iv) any adjustment relating to lower of cost or market and
repurchase liability of the discontinued operations.
Messrs. Tomkinson
and Ashmore are also eligible to receive paid vacation, a car allowance of $1,200 per month, participate in the Company's health and other benefit plans, be reimbursed for
reasonable and necessary business and entertainment expenses, and receive other benefits at the discretion of the Board of Directors. Each officer is prohibited, without approval from the Board of
Directors, from receiving compensation, directly or indirectly, from any company with whom the Company or any of its affiliates has any financial, business, or affiliated relationship. Any amounts
paid to the officer are subject to any claw back policy that the Company is required to adopt pursuant to listing standards of any national securities exchange or as otherwise required under
applicable law.
Severance Compensation.
If either Mr. Tomkinson's or Mr. Ashmore's employment is terminated (a) by the Company for cause,
(b) voluntarily by such officer, (c) as a result of such officer's death, (d) by mutual agreement of the parties, or (e) because such officer is declared legally
incompetent or he has a mental or physical condition that can reasonably be expected to prevent him from carrying out his essential duties for more than six months, then such officer will be entitled
to receive the following:
-
(i)
-
base
salary earned through the termination date;
-
(ii)
-
Annual
Bonus prorated through the termination date; with 80% of the amount due relating to the Annual Bonus paid upon termination and the balance paid after the
preparation of the Company's audited financial statements;
-
(iii)
-
any
expense reimbursements due and owing for reasonable and necessary business and entertainment expenses; and
-
(iv)
-
the
dollar value of accrued and unused paid time off.
35
If
either officer is terminated (a) without cause or (b) resigns with good reason, such officer will also receive the following severance payments:
-
(i)
-
the
lesser of 18 months of base salary or the base salary payable through the balance of the employment contract term with (A) the lesser of
12 months of base salary or the balance through the employment contract term paid in a lump sum, and (B) the lesser of six months of base salary or the balance in excess of
12 months through the employment contract term paid over the six-month period from the termination date, in each case to be paid after the officer executes a waiver and release agreement within
52 days of the termination date;
-
(ii)
-
incentive
compensation whereby 80% of the Annual Bonus earned as of the termination date will be paid on the termination date and the remaining 20% will be paid
after calculation of the Company's audited financial statements on or before December 31 of that year; and
-
(iii)
-
health
insurance benefits for 18 months following the termination date.
Each
officer has agreed that if he is terminated without cause or resigns for good reason, he will not compete with the Company during the 18 months after termination, provided that the
agreement not to compete will be waived if the officer foregoes the severance compensation.
Termination
with cause, which will be determined only by an affirmative majority vote of the Board of Directors (not including the officer if he is a director), includes (a) conviction of, or
entry of plea of nolo contendere to, a crime of dishonesty or a felony leading to incarceration of more than 90 days or a penalty or fine of $100,000 or more, (b) material and
substantial failure by the officer to perform his duties after notice (and given a reasonable time to correct any failures, if possible), (c) willful misconduct or gross negligence that causes
material harm, or (d) material breach by the officer of the terms of the employment agreement or any other obligation.
Good
reason includes (a) assignment of duties materially inconsistent with, or material reduction or alteration to, employee's duties without his prior written consent, (b) relocation,
without his prior written consent, of the place of principal performance of such officer's responsibilities and duties to a location more than 65 miles away, (c) a material breach by the
Company of the terms of the employment agreement, including a material reduction of the officer's base salary, or (d) failure by the Company to obtain from any acquirer of the Company an
agreement to assume the employment agreement prior to an acquisition. Each of Messrs. Tomkinson and Ashmore may terminate his employment for good reason upon providing the Company at least
90 days prior written notice within 90 days of event and the Company has not less than 30 days to cure.
Change of Control.
The employment agreements will not be terminated by merger, an acquisition by another entity, or by transferring of all or substantially all of
the Company's assets. In the event of any such change of control, the surviving entity or transferee would be bound by the employment agreements.
Todd R. Taylor, CFO, and Ron Morrison, EVP & GC
The employment agreements for Mr. Taylor and Mr. Morrison were originally entered into on February 25, 2014 and March 11, 2014,
respectively. The employment agreements
were each effective as of January 1, 2014, and pursuant to amendments, currently expire on December 31, 2017, unless terminated earlier, and may be extended by mutual written consent.
36
Base Salary, Annual Bonus and Other Compensation.
Under the terms of the employments agreements, the base salary for Mr. Taylor and Mr. Morrison is
$360,000 and $390,000 per year, respectively. Each are eligible to receive a bonus of up to 65%, in the case of Mr. Taylor, and up to 50%, in the case of Mr. Morrison, of their
respective base salary if mutually agreed upon management objectives are achieved (the "Incentive Bonus"). The Incentive Bonus is paid quarterly within 30 days of each calendar year quarter
end. Each officer (a) may elect to defer any portion of his base salary, bonuses, or incentive compensation into an approved Company-sponsored deferred compensation plan, (b) is eligible
to receive stock options, paid vacation, an automobile allowance of $500 per month, and to be reimbursed for reasonable and necessary business and entertainment expenses, (c) may participate in
the Company's health and other benefit plans, and (d) may receive other benefits at the discretion of the Board of Directors.
Each
officer is prohibited, without approval from the Board, from receiving compensation, directly or indirectly, from any company with whom the Company or any of its affiliates has any financial,
business, or affiliated relationship. Any amounts paid under the employment agreements are subject to any claw back policy that the Company is required to adopt pursuant to listing standards of any
national securities exchange or as otherwise required under applicable law.
Severance Compensation.
If either officer's employment is terminated (a) by the Company for cause, (b) voluntarily by the officer, (c) as a
result of death, (d) by mutual agreement of the parties, or (e) because the officer is declared legally incompetent or he has a mental or physical condition that can reasonably be
expected to prevent him from carrying out his essential duties for more than six months, then such officer will be entitled to receive the following:
(i) base
salary earned through the termination date;
(ii) Incentive
Bonus through the last consolidated quarter;
(iii) any
expense reimbursements due and owing for reasonable and necessary business and entertainment expenses; and
(iv) the
dollar value of accrued and unused paid time off.
If
either officer is terminated (a) without cause or (b) resigns with good reason, in addition to the foregoing compensation, such officer will also receive the following severance
payments:
-
(i)
-
additional
payments of (A) the lesser of 12 months of base salary or the balance through the contract term, and (B) six months of base salary
paid over the six-month period from the termination date, in each case to be paid after the officer executes a waiver and release agreement within 52 days of the termination date;
-
(ii)
-
100%
of the unpaid portion of earned Incentive Bonus and the prorated Incentive Bonus for the current calendar year quarter as of and paid on the termination date;
and
-
(iii)
-
health
insurance benefits for 12 months following the termination date.
Each
officer has agreed that if he is terminated without cause or resigns for good reason, he will not compete with the Company during the 12 months after termination or the balance of the
employment contract term, if shorter, provided that the agreement not to compete will be waived if the officer foregoes the severance compensation.
Termination
with cause, which will be determined only by an affirmative majority vote of the Board (not including the officer if he is a director), includes (a) conviction of, or entry of plea
of nolo contendere to a crime of dishonesty or a felony leading to incarceration of more than 90 days or a penalty or fine of $100,000 or more, (b) material and substantial failure by
such officer to perform his duties after notice (and given a reasonable time to correct any failures, if possible), (c) willful misconduct or gross
37
negligence
that causes material harm, or (d) material breach of the terms of the employment agreement or any other obligation.
Good
reason includes assignment of duties materially inconsistent with, or material reduction or alteration to, employee's duties without his prior written consent, (b) relocation, without his
prior written consent, of the place of principal performance of his responsibilities and duties to a location more than 65 miles away, (c) a material breach by the Company of the terms of the
employment agreement, including a material reduction in base salary, without such officer's consent, or (d) failure by the Company to obtain from any acquirer of the Company an agreement to
assume the employment agreement prior to an acquisition. Each officer may terminate his employment for good reason upon providing the Company at least 90 days prior written notice and the
Company has a reasonable time to cure any event constituting good reason.
Change of Control.
The employment agreements will not be terminated by merger, an acquisition by another entity, or by transferring of all or substantially all of
the Company's assets. In the event of any such change of control, the surviving entity or transferee would be bound by the employment agreements.
Potential Payments Upon Termination or Change-in-Control
Based on the termination provisions of their applicable employment agreements, as described above, if each named executive officer was terminated without
cause or resigned for good reason as of December 31, 2016, he would have received the following aggregate payments:
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Cash
Severance
($)(1)
|
|
Health
Benefits
($)(2)
|
|
Total
($)
|
|
Joseph R. Tomkinson
|
|
|
6,320,869
|
|
|
15,000
|
|
|
6,335,869
|
|
William S. Ashmore
|
|
|
6,320,869
|
|
|
15,000
|
|
|
6,335,869
|
|
Todd R. Taylor
|
|
|
594,000
|
|
|
10,000
|
|
|
604,000
|
|
Ronald Morrison
|
|
|
585,000
|
|
|
10,000
|
|
|
595,000
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
With
respect to Mr. Tomkinson and Mr. Ashmore, cash severance consists of (i) $600,000, which is 12 months of base salary since the
employment contract expires on December 31, 2017, and (ii) $5,720,869 representing incentive compensation earned for 2016. With respect to Mr. Taylor, cash severance consists of
(i) $360,000, which is 12 months of base salary since the employment contract expires on December 31, 2017, and (ii) $234,000 representing incentive compensation earned for
2016. With respect to Mr. Morrison, cash severance consists of (i) $390,000, which is 12 months of base salary since the employment contract expires on December 31, 2017,
and (ii) $195,000 representing incentive compensation earned for 2016.
-
(2)
-
The
employment contracts for the named executive officers provide for continuation of health insurance benefits for a period of 12 or 18 months, as
applicable. The Company maintains a self-insured health plan, and therefore there is no direct employer contribution amount. This assumes that premiums for the named executive officers are paid by the
employee only. Benefits paid by the Company will be dependent on actual claims incurred due to the self-insured nature of the Company's plan. We have estimated the cost of post-termination health care
to be $10,000 per named executive officer per year. This amount could vary depending on actual claims incurred.
In
connection with any termination event, the Company will continue to pledge a portion of the collateral needed to finance premiums from a third party lender for life insurance policies in the amount
of $6 million, $5 million and $4 million for trusts of which the family members of Mr. Ashmore, Mr. Morrison
38
and
Mr. Taylor, respectively, are the beneficiaries. As of December 31, 2016, the Company posted collateral of $700,000, $583,333 and $466,667 for each trust, respectively.
None
of the named executive officers receive payments upon a change-on-control.
Equity Compensation Plan Information
Our current stock plan is the Company's 2010 Omnibus Incentive Plan (the "2010 Plan"), which was approved by our stockholders and became effective on
July 20, 2010. The 2010 Plan is administered by the Compensation Committee of the Company's Board of Directors, with participation and approval of the Board of Directors. Awards under the Plan
may include incentive stock options, nonqualified stock options, stock appreciation rights, restricted shares of common stock, restricted stock units, performance share or unit awards, other
stock-based awards and cash-based incentive awards.
As
a result of the approval of the 2010 Plan by the Company's stockholders, the Company's 2001 Stock Plan was frozen and no further grants or awards are under such plan. Further, all outstanding
awards under the 2001 Stock Option, Deferred Stock and Restricted Stock Plan and are deemed to be awards granted and outstanding under the 2010 Plan (the "Assumed Options"). To the extent any of the
Assumed Options are forfeited or canceled, shares of common stock underlying those options will not be available for new awards under the 2010 Plan.
The
following table summarizes our equity compensation plan information as of December 31, 2016 with respect to outstanding awards and shares remaining available for issuance under our Plan.
|
|
|
|
|
|
|
|
|
|
|
Plan Category
|
|
Number of securities to
be issued upon exercise
of outstanding options
(A)(1)
|
|
Weighted-average
exercise price of
outstanding options
(B) ($)
|
|
Number of securities remaining
available for future issuance
(excluding securities
in col A) (C)
|
|
2010 Omnibus Incentive Plan approved by stockholders
|
|
|
1,391,327
|
|
|
13.37
|
|
|
39,380
|
|
Equity compensation plans not approved by stockholders
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
As
of December 31, 2016, there were also 85,750 deferred stock units outstanding at a weighted average grant value of $9.83 per unit under the 2010 Plan,
which amount represents 171,500 shares charged against the number of shares available for the grant of awards under the 2010 Plan. Pursuant to the 2010 Plan, shares of common stock awarded as
restricted shares, restricted units, performance awards or other stock-based awards are charged as two shares against the number of shares of common stock available for the grant of awards under the
2010 Plan.
401(k) Plan
We maintain the Impac Companies 401(k) Savings Plan for all full time employees with at least six months of service, which is designed to be tax deferred in
accordance with the provisions of Section 401(k) of the Internal Revenue Code. The 401(k) Plan provides that each participant may contribute from 1% to 25% of his or her salary pursuant to
certain restrictions or up to $18,000 annually for 2016. We will contribute to the participant's plan account at the end of each plan year 50% of the first 4% of salary contributed by a participant.
Under the 401(k) Plan, employees may elect to enroll on the first day of any month, provided that they have been employed for at least six months. Subject to the rules for maintaining the tax status
of the 401(k) Plan, an additional company contribution may be made at our discretion, as determined by the Board of Directors. The discretionary contributions made to the plan vest over a three year
period. We recorded approximately $895 thousand for matching contributions and no discretionary contributions during 2016.
39
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act") requires our directors, executive officers, and persons who own more than 10%
of a registered class of our equity securities, to file reports of ownership of such securities with the SEC. Directors, executive officers and greater than 10% beneficial owners are required by SEC
regulations to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on review of the copies of such reports furnished to us during the fiscal year ended
December 31, 2016, all Section 16(a) filing requirements applicable to our executive officers, directors and greater than 10%
stockholders were satisfied by such persons except for the following: Richard Pickup filed eight late Form 4 reports for 15 transactions and Todd M. Pickup filed one late Form 4 for one
transaction.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except as disclosed herein, no director, executive officer, shareholder holding at least 5% of shares of our common stock, or any immediate family member
thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since the beginning of our last fiscal year, in which the amount involved in the transaction
exceeded or exceeds $120,000 since the beginning of the last fiscal year.
During
2016, Allison Ashmore (Account Executive) and Meagan Ashmore (AVP Client Management), daughters of William Ashmore, the Company's President and Director, earned $253,841 and $147,912,
respectively in salary, bonus and auto allowance, and Ben Tomkinson (Account Executive) and Sedamar Fitzgerald (Relationship Manager), son and sister-in-law of Joseph Tomkinson, the Company's Chairman
of the Board and Chief Executive Officer, earned $130,542 and $120,066, respectively, in salary and bonus. In addition, all participated in the employee health care benefit plans available to all
employees of the Company.
The
Company provides a fringe benefit associated with an executive retention plan by which the Company pledges a portion of the collateral needed to finance premiums from a third party lender for life
insurance policies in the amount of $6 million, $5 million and $4 million for trusts of which the family members of Mr. Ashmore, Mr. Morrison and Mr. Taylor,
respectively, are the beneficiaries. As of December 31, 2016, the Company posted collateral of $700,000, $583,333 and $466,667 for each trust, respectively.
Conversion of 2018 Notes
On
February 10, 2016, the Company converted the Convertible Promissory Notes Due 2018 with an aggregate principal amount of $20 million (the "2018 Notes") in accordance
with their terms. Pursuant to the conversion the 2018 Notes, entities related to Richard H. Pickup and Todd M. Pickup, stockholders of the Company, received 524,138 shares and 898,851 shares,
respectively. Furthermore, on January 25, 2016, the Company and the note holders, including the entities related to Messrs. Pickup and Pickup, entered into a Consent and Waiver Agreement
whereby the holders waived the immediate payment at the time of conversion of the accrued and unpaid interest on such notes through April 30, 2016 and consented to the delay of the payment of
such interest until April 30, 2016.
Registered Direct Public Offering
On
April 18, 2017, in connection with the Company's registered direct public offering, Richard H. Pickup, Todd M. Pickup and Talkot Capital LLC and their respective
affiliates purchased 1,579,779 shares, 394,945 shares, and 1,974,724 shares of common stock, respectively, at a purchase price of $12.66 per share.
Policies and Procedures
Pursuant to our Code of Business Conduct and Ethics, directors and officers must notify the General Counsel or the Chairman of our Audit Committee of the
existence of any actual or potential conflict of interest. The Audit Committee, as described in its charter, reviews reports and disclosures of insider and affiliated party transactions or other
conflicts of interest.
40
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to us with respect to beneficial ownership of our common stock as of May 30, 2017 by
(i) each director, (ii) each named executive officer, (iii) each person known to us to beneficially own more than five percent of our common stock, and (iv) all directors
and executive officers as a group. As of May 30, 2017, there were 20,882,544 shares of common stock outstanding. In computing the number of shares beneficially owned by a person and the
percentage of ownership of that person, shares of common stock subject to options held by that person that are currently exercisable or become exercisable within 60 days of May 30, 2017
are deemed outstanding even if they have not actually been exercised. Those shares, however, are not deemed outstanding for the purpose of computing the ownership percentage of any other person.
Unless otherwise indicated in the footnotes to the table, the beneficial owners named have, to our knowledge, sole voting and investment power with respect to the shares beneficially owned, subject to
community property laws where applicable.
|
|
|
|
|
|
|
|
Name of Beneficial Owner(1)
|
|
Number of Shares
Beneficially Owned
|
|
Percentage of Shares
Beneficially Owned
|
|
Richard H. Pickup (2)
|
|
|
5,179,779
|
|
|
24.1
|
%
|
Todd M. Pickup (3)
|
|
|
2,949,913
|
|
|
13.8
|
%
|
Talkot Capital, LLC (4)
|
|
|
2,777,031
|
|
|
13.3
|
%
|
Joseph R Tomkinson (5)
|
|
|
408,792
|
|
|
1.9
|
%
|
William S Ashmore (6)
|
|
|
236,679
|
|
|
1.1
|
%
|
Ron Morrison (7)
|
|
|
123,025
|
|
|
*
|
|
Todd R. Taylor (8)
|
|
|
110,491
|
|
|
*
|
|
James Walsh (9)
|
|
|
35,294
|
|
|
*
|
|
Leigh J Abrams (10)
|
|
|
65,709
|
|
|
*
|
|
Stephan R Peers (11)
|
|
|
54,942
|
|
|
*
|
|
Frank P Filipps (12)
|
|
|
46,809
|
|
|
*
|
|
Thomas B. Akin (4)
|
|
|
2,777,031
|
|
|
13.3
|
%
|
Directors and executive officers as a group (9 persons) (13)
|
|
|
3,858,772
|
|
|
17.9
|
%
|
|
|
|
|
|
|
|
|
-
*
-
Indicates
less than 1%
-
(1)
-
Except
as otherwise noted, all named beneficial owners can be contacted at 19500 Jamboree Road, Irvine, California 92612.
-
(2)
-
According
to a Schedule 13D/A filed with the SEC on April 21, 2017, (i) 2,354,146 shares are owned directly by RHP Trust, dated May 31,
2011 (the "Trust"), 100,000 shares are owned by Mr. Pickup and held in an individual retirement account, and the Trust has the right to acquire 639,535 shares at any time by converting into
such shares the outstanding principal balance of Convertible Promissory Notes Due 2020 issued to the Trust, at the initial conversion price of $21.50 per share, and (ii) 1,191,153 shares are
owned directly by Dito Caree LP, and 894,945 shares are owned directly by Dito Devcar LP, each of which Gamebusters, Inc. is the sole general partner with Mr. Pickup is its
sole officer and director. Mr. Pickup has sole investment and voting power. The stockholder's and the Trust's address is 2532 Dupont Drive, Irvine, California 92612.
-
(3)
-
According
to a Schedule 13G/A filed on February 9, 2016 and subsequent filings pursuant to Section 16 of the Exchange Act, the share amount
consists of (A) (i) 100,000 shares owned directly by Mr. Pickup; (ii) 294,446 shares owned by Pickup Grandchildren's Trust; (iii) 100,000 shares owned directly by Pickup
Living Trust; (iv) 1,793,796 shares owned directly by Vintage Trust II, dated July 19, 2007, (the "Trust"); and (v) 456,117 shares that the Trust has the right to acquire at any
time by converting into such shares the outstanding principal balance of Convertible Promissory Notes Due 2020 issued to the Trust, at the initial conversion price of $21.50 per share, all of which
Mr. Pickup exercises sole investment and voting power, and (B) 100,000 shares owned directly by
41
Plus
Four Equity Partners, L.P. and 50,000 shares owned directly by Vintage Trust, dated October 28, 1993, which Mr. Pickup shares investment and voting power. The stockholder's
address is 2532 Dupont Drive, Irvine, California 92612.
-
(4)
-
According
to a Schedule 13G/A filed with the SEC on April 20, 2017, consists of 1,598,394 shares held by Talkot Fund, L.P., over which it has
sole voting and dispositive power, and 1,178,637 shares held by Thomas B. Akin, over which he has sole voting and dispositive power. Talkot Capital, LLC acts as an investment adviser to certain
private pooled investment vehicles. Talkot Capital, by virtue of investment advisory agreements with these pooled investment vehicles, has investment and voting power over securities owned of record
by these pooled investment vehicles. Despite their delegation of investment and voting power to Talkot Capital, under Rule 13d-3 of the Securities Exchange Act of 1934, these pooled investment
vehicles may be deemed the beneficial owner of the securities they own of record because they have the right to acquire investment and voting power, and have dispositive power, through termination of
the investment advisory agreements with Talkot Capital. Talkot Capital may be deemed the beneficial owner of the securities covered by this statement under Rule 13d-3 of the Act. None of the
securities are owned of record by Talkot Capital, and Talkot Capital disclaims any beneficial interest in such securities. Thomas B. Akin is the Managing Member of the General Partner, Talkot
Capital, LLC. The principal business address is 2400 Bridgeway, Suite 300, Sausalito, CA 94965.
-
(5)
-
Represents
(i) 7,854 shares of common stock, (ii) 215,400 shares held in trust with Mr. Tomkinson as trustee and (iii) options to
purchase an aggregate of 185,538 shares.
-
(6)
-
Represents
(i) 6,495 shares of common stock, (ii) 87,967 shares held in trust with Mr. Ashmore as trustee, and (iii) options to purchase
an aggregate of 110,133 shares.
-
(7)
-
Represents
(i) 14,892 shares of common stock, (ii) options to purchase an aggregate of 108,133 shares.
-
(8)
-
Represents
(i) 358 shares of common stock and (ii) options to purchase an aggregate of 110,133 shares.
-
(9)
-
Represents
(i) 5,377 shares of common stock and (ii) 29,917 shares with respect to vested deferred stock units.
-
(10)
-
Represents
(i) 16,710 shares of common stock, (ii) options to purchase an aggregate of 35,499 shares, and (iii) 13,500 shares with respect to
vested deferred stock units.
-
(11)
-
Represents
(i) 13,943 shares of common stock, (i) options to purchase an aggregate of 21,499 shares, and (ii) 19,500 shares with respect to
vested deferred stock units.
-
(12)
-
Represents
(i) 3,810 shares of common stock, (ii) options to purchase an aggregate of 23,499 shares, and (iii) 19,500 shares with respect to
vested deferred stock units.
-
(13)
-
Includes
(i) options to purchase an aggregate of 626,518 shares and (ii) an aggregate of 82,417 shares with respect to vested deferred stock
units.
42
STOCKHOLDER PROPOSALS
Proposals to be Included in Proxy Statement
If a stockholder would like us to consider including a proposal in our proxy statement and form of proxy relating to our 2018 annual meeting of stockholders
pursuant Rule 14a-8 under the Exchange Act, a written copy of the proposal must be delivered no later than February 8, 2018 (the date that is 120 calendar days before the one year
anniversary of the date of the proxy statement released to stockholders for this year's annual meeting of stockholders). If the date of next year's annual meeting is changed by more than
30 days from the anniversary date of this year's meeting, then the deadline is a reasonable time before we begin to print and mail proxy materials. Proposals must comply with the proxy rules
relating to stockholder proposals, in particular Rule 14a-8 under Exchange Act, in order to be included in our proxy materials.
Proposals to be Submitted for Annual Meeting
Stockholders who wish to submit a proposal for consideration at our 2018 annual meeting of stockholders, but who do not wish to submit the proposal for
inclusion in our proxy statement pursuant to Rule 14a-8 under the Exchange Act, must, in accordance with our bylaws, deliver a copy of their proposal no later than the close of business on the
60
th
day prior to the first anniversary of this annual meeting (May 26, 2018), nor earlier than the 90
th
day prior to the first anniversary of this
annual meeting (April, 26, 2018). The proposal must comply with the notice procedures and information requirements set forth in our bylaws, and the stockholder making the proposal must be a
stockholder of record at the time of giving the notice and is entitled to vote at the meeting. Any stockholder proposal that is not submitted pursuant to the procedures set forth in our bylaws will
not be eligible for presentation or consideration at the next annual meeting.
In
the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from the first anniversary of the preceding year's annual meeting, then
notice must be delivered not earlier than the 90
th
day prior to such annual meeting and not later than the close of business on the later of the 60
th
day
prior to such annual meeting or the 10
th
day following the day on which public announcement of the date of such meeting is first made. Public announcement means disclosure in a
press release reported by the Dow Jones News Service, Associated Press or comparable news service or in a document publicly filed by the company with the SEC pursuant to Section 13, 14 or 15(d)
of the Exchange Act.
Mailing Instructions
In each case, proposals should be delivered to 19500 Jamboree Road, Irvine, California 92612, Attention: Ronald M. Morrison, Secretary. To avoid controversy
and establish timely receipt by us, it is suggested that stockholders send their proposals by certified mail return receipt requested.
43
OTHER BUSINESS
The Board of Directors does not know of any other matter to be acted upon at the Meeting. However, if any other matter shall properly come before the Meeting,
the proxy holders named in the proxy accompanying this proxy statement will have authority to vote all proxies in accordance with their discretion.
|
|
|
|
|
By order of the Board of Directors
|
|
|
|
|
|
Ronald M. Morrison, Secretary
|
Dated:
June 2, 2017
Irvine, California
44
Appendix A
IMPAC MORTGAGE HOLDINGS, INC.
OMNIBUS INCENTIVE PLAN
Effective July 20, 2010
(amended as of July 25, 2017)
IMPAC MORTGAGE HOLDINGS, INC.
OMNIBUS INCENTIVE PLAN
ARTICLE I
PURPOSE AND ADOPTION OF THE PLAN
1.01
Purpose.
The purpose of the Impac Mortgage Holdings, Inc. Omnibus Incentive Plan (as amended from time to time, the "Plan") is to assist in
attracting and retaining
highly competent employees, directors and consultants, to act as an incentive in motivating selected employees, directors and consultants of the Company and its Affiliates to achieve long-term
corporate objectives and to enable stock-based and cash-based incentive awards to qualify as performance-based compensation for purposes of the tax deduction limitations under Section 162(m) of
the Code.
1.02
Adoption and Term.
The Plan shall be effective on July 20, 2010 upon and otherwise subject to approval of the stockholders of the Company (the
"Effective Date"). The Plan
shall remain in effect until the tenth anniversary of the Effective Date, or until terminated by action of the Board, whichever occurs sooner.
1.03
Assumption of Outstanding Awards under Prior Plans.
As of the Effective Date, the Prior Plans of the Company shall be frozen and no new awards shall
be made under such Prior Plans. Further, all awards outstanding
under the Prior Plans as of the Effective Date shall be assumed by this Plan and thereafter deemed to be Awards granted and outstanding under this Plan;
provided,
that such assumed awards shall continue
to be subject to the same terms and conditions as set forth in the applicable Award Agreement, except
that references in such Award Agreements to the "Plan" shall be deemed to refer to this Plan and references to "Deferred Stock" shall be deemed to refer to Restricted Stock Units.
ARTICLE II
DEFINITIONS
For the purpose of this Plan, capitalized terms shall have the following meanings:
2.01
Affiliate
means an entity in which, directly or indirectly through one or more intermediaries, the Company has at least a fifty
percent (50%) ownership interest or, where permissible under Section 409A of the Code, at least a twenty percent (20%) ownership interest;
provided
,
however
, for purposes of any grant of an Incentive Stock Option, "Affiliate" means a
corporation which, for purposes of Section 424 of the Code, is a parent or subsidiary of the Company, directly or indirectly.
2.02
Award
means any one or a combination of Non-Qualified Stock Options or Incentive Stock Options described in Article VI, Stock
Appreciation Rights described in Article VI, Restricted Shares or Restricted Stock Units described in Article VII, Performance Awards described in Article VIII, other stock-based
Awards described in Article IX, short-term cash incentive Awards described in Article X or any other award made under the terms of the Plan.
2.03
Award Agreement
means a written agreement between the Company and a Participant or a written acknowledgment from the Company to a
Participant specifically setting forth the terms and conditions of an Award granted under the Plan.
2.04
Award Period
means, with respect to an Award, the period of time, if any, set forth in the Award Agreement during which specified
target performance goals must be achieved or other conditions set forth in the Award Agreement must be satisfied.
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2.05
Beneficiary
means an individual, trust or estate who or which, by a written designation of the Participant filed with the Company, or
if no such written designation is filed, by operation of law, succeeds to the rights and obligations of the Participant under the Plan and the Award Agreement upon the Participant's death.
2.06
Board
means the Board of Directors of the Company.
2.07
Change in Control
means, and shall be deemed to have occurred upon the occurrence of, any one of the following events, unless an Award
Agreement specifically provides for a different definition of Change in Control:
(a) Any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company; any trustee or other fiduciary holding securities under an employee
benefit plan of the Company; or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the Common Stock of the
Company) 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 or any securities acquired directly from the Company or its Affiliates) representing 30% or more of the combined voting power of the Company's then outstanding
securities; or
(b) during
any period of two consecutive years (not including any period prior to the Effective Date), individuals who at the beginning of such period constitute the Board, and any new
director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (a), (c) or (d) of this
Section 2.07) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (
2
/
3
) of the directors then still
in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority
thereof; or
(c) the
consummation of a Merger of the Company with any other corporation, other than (i) a Merger 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 entity), in combination with the ownership of any
trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least 75% of the combined voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such Merger, or (ii) a Merger effected to implement a recapitalization of the Company (or similar transaction) in which no person acquires more than 50% of the
combined voting power of the Company's then outstanding securities;
(d) the
consummation of any sale, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all the assets of the Company to an unrelated
party; or
(e) the
stockholders of the Company approve a plan of complete liquidation or dissolution of the Company.
2.08
Code
means the Internal Revenue Code of 1986, as amended. References to a section of the Code shall include that section and any
comparable section or sections of any future legislation that amends, supplements or supersedes said section.
2.09
Committee
means the Compensation Committee of the Board.
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2.10
Common Stock
means the common stock of the Company, par value $0.01 per share.
2.11
Company
means Impac Mortgage Holdings, Inc., a Maryland corporation, and its successors.
2.12
Date of Grant
means the date designated by the Committee as the date as of which it grants an Award, which shall not be earlier than
the date on which the Committee approves the granting of such Award.
2.13
Disability
means permanent and total disability as determined under the Company's disability program or policy, or if no disability
program or policy exists, then any physical or mental disability that renders a Participant unable perform services for the Company in the capacity for which the Participant served immediately prior
to such disability and such disability is reasonably expected to last for at least twelve (12) months.
2.14
Dividend Equivalent Account
means a bookkeeping account in accordance with Section 11.17 and related to an Award that is
credited with the amount of any cash dividends or stock distributions that would be payable with respect to the shares of Common Stock subject to such Awards had such shares been outstanding shares of
Common Stock.
2.15
Exchange Act
means the Securities Exchange Act of 1934, as amended.
2.16
Exercise Price
with respect to Options, the amount established by the Committee in the Award Agreement in accordance with
Section 6.01(b) which is required to purchase each share of Common Stock upon exercise of the Option, or with respect to a Stock Appreciation Right, the amount established by the Committee in
the Award Agreement in accordance with Section 6.02(b) which is to be subtracted from the Fair Market Value on the date of exercise in order to determine the amount of the payment to be made to
the Participant.
2.17
Fair Market Value
of the Common Stock means: the closing sales price of the Common Stock on the applicable date, or if no sale of
stock has been recorded on such day, then on the next preceding day on which a sale was so made. In the event the Common Stock is not admitted to trade on a securities exchange, the Fair Market Value
as of any applicable date shall be as determined in good faith by the Committee (but in any event not less than "fair market value" within the meaning of Section 409A of the Code, and any
regulations and other guidance thereunder). For purposes of this definition, when determining the Fair Market Value for the grant of an Award, "applicable date" means the date of grant of the Award.
2.18
Incentive Stock Option
means a stock option within the meaning of Section 422 of the Code.
2.19
Merger
means any merger, reorganization, consolidation, exchange, transfer of assets or other transaction having similar effect
involving the Company.
2.20
Non-Qualified Stock Option
means a stock option which is not an Incentive Stock Option.
2.21
Non-Vested Share
means shares of Common Stock issued to a Participant in respect of the non-vested portion of an Option in the event
of the early exercise of such Participant's Options pursuant to such Participant's Award Agreement, as permitted in Section 6.06 below.
2.22
Options
means all Non-Qualified Stock Options and Incentive Stock Options granted at any time under the Plan.
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2.23
Outstanding Common Stock
means, at any time, the issued and outstanding shares of Common Stock.
2.24
Participant
means a person designated to receive an Award under the Plan in accordance with Section 5.01.
2.25
Performance Awards
means Awards granted in accordance with Article VIII.
2.26
Performance Goals
means operating income, operating profit (earnings from continuing operations before interest and taxes), earnings
per share, return on investment or working capital, return on stockholders' equity, economic value added (the amount, if any, by which net operating profit after tax exceeds a reference cost of
capital), Adjusted Net Earnings (as defined below), net earnings (loss) attributable to common stockholders, stock price any one of which may be measured with respect to the Company or any one or more
of its Affiliates, divisions, units and either in absolute terms or as compared to another company or companies, and quantifiable, objective measures of individual performance relevant to the
particular individual's job responsibilities
"Adjusted
Net Earnings" means net earnings (loss) attributable to common stockholders as reported in the Company's periodic reports filed with the Securities and Exchange Commission, provided that
such amount shall be adjusted by reversing the following, to the extent such adjustments were made in calculating such net earnings (loss) attributable to common stockholders:
(a) any
accrual already made with respect to the annual bonus, special bonus, or incentive bonus applicable to such person:
(b) any
adjustment relating to change in fair value of net trust assets;
(c) any
adjustment relating to change in fair value of long term debt;
(d) any
adjustment relating to noncash level yield long term debt;
(e) any
charge relating to amortization of deferred charges; and
(f) any
adjustment relating to the following items within earnings of discontinued operations: (1) lower of cost or market and (2) repurchase liability provision.
2.27
Plan
has the meaning given to such term in Section 1.01.
2.28
Prior Plans
means the Company's 1995 Stock Option, Deferred Stock and Restricted Stock Plan, as amended, and the Company's 2001 Stock
Option, Deferred Stock and Restricted Stock Plan, as amended.
2.29
Restricted Shares
means Common Stock subject to restrictions imposed in connection with Awards granted under Article VII.
2.30
Restricted Stock Unit
means a unit representing the right to receive Common Stock or the value thereof in the future subject to
restrictions imposed in connection with Awards granted under Article VII.
2.31
Rule 16b-3
means Rule 16b-3 promulgated by the Securities and Exchange Commission under Section 16 of the
Exchange Act, as the same may be amended from time to time, and any successor rule.
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2.32
Stock Appreciation Rights
means awards granted in accordance with Article VI.
2.33
Termination of Service
means the voluntary or involuntary termination of a Participant's service as an employee, director or
consultant with the Company or an Affiliate for any reason, including death, disability, retirement or as the result of the divestiture of the Participant's employer or any similar transaction in
which the Participant's employer ceases to be the Company or one of its Affiliates. Whether entering military or other government service shall constitute Termination of Service, or whether and when a
Termination of Service shall occur as a result of disability, shall be determined in each case by the Committee in its sole discretion.
ARTICLE III
ADMINISTRATION
3.01
Committee.
(a)
Duties and Authority.
The Plan shall be administered by the Committee and the Committee shall have exclusive and final
authority in each determination, interpretation or other action affecting the Plan and its Participants. The Committee shall have the sole discretionary authority to interpret the Plan, to establish
and modify administrative rules for the Plan, to impose such conditions and restrictions on Awards as it determines appropriate, and to make all factual determinations with respect to and take such
steps in connection with the Plan and Awards granted hereunder as it may deem necessary or advisable. The Committee shall not, however, have or exercise any discretion that would disqualify amounts
payable under Article X as performance-based
compensation for purposes of Section 162(m) of the Code. The Committee may delegate such of its powers and authority under the Plan as it deems appropriate to a subcommittee of the Committee or
designated officers or employees of the Company. In addition, the full Board may exercise any of the powers and authority of the Committee under the Plan. In the event of such delegation of authority
or exercise of authority by the Board, references in the Plan to the Committee shall be deemed to refer, as appropriate, to the delegate of the Committee or the Board. To the extent applicable,
actions taken by the Committee or any subcommittee thereof, and any delegation by the Committee to designated officers or employees, under this Section 3.01 shall comply with
Section 16(b) of the Exchange Act, the performance-based provisions of Section 162(m) of the Code, and the regulations promulgated under each of such statutory provisions, or the
respective successors to such statutory provisions or regulations, as in effect from time to time.
(b)
Indemnification.
Each person who is or shall have been a member of the Board or the Committee, or an officer or employee
of the Company to whom authority was delegated in accordance with the Plan, shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such individual in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be
involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him
or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend
the same before he or she undertakes to handle and defend it on his or her own behalf; provided, however, that the foregoing indemnification shall not apply to any loss, cost, liability, or expense
that is a result of his or her own willful misconduct.
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ARTICLE IV
SHARES
4.01
Number of Shares Issuable.
The total number of shares of Common Stock authorized to be issued under the Plan shall be
3,680,585
shares which
consists of
(i) 1,280,585 shares allocated to outstanding Options granted under the Prior Plans and being assumed by this Plan (the "Assumed Option Shares"), and
(ii)
2,400,000
shares(1) of Common Stock reserved for future grants under this Plan. Shares of Common Stock underlying Awards issued under Articles VII, VIII
and IX of this Plan shall be charged as 2.0 shares against the number of shares of Common Stock available for the grant of Awards hereunder. The foregoing share limits shall be subject to adjustment
in accordance with Section 11.07. The shares to be offered under the Plan shall be authorized and unissued Common Stock, or issued Common Stock that shall have been reacquired by the Company.
4.02
Shares Subject to Terminated Awards.
The Assumed Option Shares shall only be available for issuance upon exercise of an Option granted under the Prior
Plans and assumed by this Plan and none of the
Assumed Option Shares shall be available for grants of new Options or other Awards under this Plan, even if the assumed Options are forfeited, canceled or otherwise terminated without issuance of any
shares of Common Stock. Except as provided in the preceding sentence, Common Stock covered by any unexercised portions of terminated or forfeited Options (including canceled Options) granted under the
Plan or any predecessor employee stock plan of the Company, Restricted Stock or Restricted Stock Units (whether granted under this Plan or any predecessor employee stock plan) that are forfeited or
terminated for any reason prior to the date that the restrictions on such Awards would otherwise have lapsed, other stock-based Awards that are forfeited or terminated for any reason as provided under
the Plan, and Common Stock subject to any Awards that are otherwise surrendered by the Participant may again be subject to new Awards under the Plan. Further, any Award settled in cash shall not be
counted as shares of Common Stock for any purpose under the Plan.
ARTICLE V
PARTICIPATION
5.01
Eligible Participants.
Participants in the Plan shall be such employees, directors and consultants of the Company and its Affiliates as the Committee,
in its sole discretion, may
designate from time to time. The Committee's designation of a Participant in any year shall not require the Committee to designate such person to receive Awards or grants in any other year. The
designation of a Participant to receive Awards or grants under one portion of the Plan does not require the Committee to include such Participant under other portions of the Plan. The Committee shall
consider such factors as it deems pertinent in selecting Participants and in determining the type and amount of their respective Awards. Subject to adjustment in accordance with Section 11.07,
no Participant shall be granted Awards in any calendar year in respect of more than 450,000 shares of Common Stock (whether through grants of Options or Stock Appreciation Rights or other Awards of
Common Stock or rights with respect thereto) or cash-based Awards for more than $5,000,000;
provided,
the Committee may grant Awards to a Participant in
excess of these annual limits if the Committee expressly determines that a particular Award shall not be designed to qualify as "performance-based compensation" as defined under Section 162(m)
of the Code and the applicable treasury regulations thereunder.
-
(1)
-
On
July 20, 2010, the stockholders approved the Plan initially authorizing 450,000 shares. On each of July 24, 2012, July 23, 2013,
July 22, 2014, July 21, 2015, July 19, 2016,
and July 25, 2017
the stockholders approved an increase of the authorized shares by 250,000,
300,000, 300,000, 300,000, 300,000
and 500,000
shares, respectively.
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ARTICLE VI
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
6.01
Option Awards
.
(a)
Grant of Options.
The Committee may grant, to such Participants as the Committee may select, Options entitling the
Participant to purchase shares of Common Stock from the Company in such number, at such price, and on such terms and subject to such conditions, not inconsistent with the terms of this Plan, as may be
established by the Committee. The terms of any Option granted under this Plan shall be set forth in an Award Agreement.
(b)
Exercise Price of Options.
The Exercise Price of each share of Common Stock upon exercise of any Option granted under the
Plan shall not be less than 100% of the Fair Market Value of the Common Stock on the Date of Grant;
provided, however,
that the Committee shall have
discretion, with respect to a Non-Qualified Stock Option, to establish an Exercise Price at less than the Fair Market Value on the Date of Grant to the extent that such Option is designed to comply
with the requirements of Section 409A of the Code.
(c)
Designation of Options.
The Committee shall designate, at the time of the grant of each Option, the Option as an Incentive
Stock Option or a Non-Qualified Stock Option;
provided, however,
that an Option may be designated as an Incentive Stock Option only if the applicable
Participant is an employee of the Company on the Date of Grant.
(d)
Special Incentive Stock Option Rules.
To the extent that the aggregate Fair Market Value (determined as of the time the
Option is granted) of the shares of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year (under all plans of the
Company and its parent and subsidiary corporations) exceeds $100,000, such Incentive Stock Options shall constitute Non-Qualified Stock Options. For purposes of this Section 6.01(d), Incentive
Stock Options shall be taken into account in the order in which they were granted. If pursuant to the above, an Incentive Stock Option is treated as an Incentive Stock Option in part and a
Non-Qualified Stock Option in part, the Participant may designate at the time of exercise which portion shall be deemed to be exercised, and in the absence of such express designation in writing, the
portion of the Option treated as an Incentive Stock Option shall be deemed to be exercised first. Notwithstanding any other provision of the Plan to the contrary, the Exercise Price of each Incentive
Stock Option shall be equal to or greater than the Fair Market Value of the Common Stock subject to the Incentive Stock Option as of the Date of Grant of the Incentive Stock Option;
provided
,
however
, that no Incentive Stock Option shall be granted to any person who, at the time the
Option is granted, owns stock (including stock owned by application of the constructive ownership rules in Section 424(d) of the Code) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company, unless at the time the Incentive Stock Option is granted the Exercise Price of the Option is at least one hundred ten percent (110%) of
the Fair Market Value of the Common Stock subject to the Incentive Stock Option and the Incentive Stock Option, by its terms, is not exercisable for more than five years from the Date of Grant.
(e)
Rights As a Stockholder.
A Participant or a transferee of an Option pursuant to Section 11.04 shall have no rights
as a stockholder with respect to Common Stock covered by an Option until the Participant or transferee shall have become the holder of record of any such shares, and no adjustment shall be made for
dividends in cash or other property or distributions or other rights with respect to any such Common Stock for which the record date is prior to the date on which the
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Participant
or a transferee of the Option shall have become the holder of record of any such shares covered by the Option; provided, however, that Participants are entitled to share adjustments to
reflect capital changes under Section 11.07.
6.02
Stock Appreciation Rights
.
(a)
Stock Appreciation Right Awards.
The Committee is authorized to grant to any Participant one or more Stock Appreciation
Rights. Upon exercise of a Stock Appreciation Right with respect to a share of Common Stock, the Participant shall be entitled to receive an amount equal to the excess, if any, of (i) the Fair
Market Value of a share of Common Stock on the date of exercise over (ii) the Exercise Price of such Stock Appreciation Right established in the Award Agreement, which amount shall be payable
as provided in Section 6.02(c).
(b)
Exercise Price.
The Exercise Price of each share of Common Stock upon exercise of any Stock Appreciation Right granted
under the Plan shall not be less than 100% of the Fair Market Value of the Common Stock on the Date of Grant;
provided, however,
that the Committee
shall have discretion to establish an Exercise Price at less than the Fair Market Value on the Date of Grant to the extent that such Stock Appreciation Right is designed to comply with the
requirements of Section 409A of the Code.
(c)
Payment of Incremental Value.
Any payment which may become due from the Company by reason of a Participant's exercise of a
Stock Appreciation Right may be paid to the Participant as determined by the Committee (i) all in cash, (ii) all in Common Stock, or (iii) in any combination of cash and Common
Stock. In the event that all or a portion of the payment is made in Common Stock, the number of shares of Common Stock delivered in satisfaction of such payment shall be determined by dividing the
amount of such payment or portion thereof by the Fair Market Value on the date of exercise. No fractional share of Common Stock shall be issued to make any payment in respect of Stock Appreciation
Rights; if any fractional share would be issuable, the combination of cash and Common Stock payable to the Participant shall be adjusted as directed by the Committee to avoid the issuance of any
fractional share.
6.03
Terms of Stock Options and Stock Appreciation Rights
.
(a)
Conditions on Exercise.
An Award Agreement with respect to Options or Stock Appreciation Rights may contain such waiting
periods, exercise dates and restrictions on exercise (including, but not limited to, periodic installments) as may be determined by the Committee at the time of grant.
(b)
Duration of Options and Stock Appreciation Rights.
Options and Stock Appreciation Rights shall terminate upon the first to
occur of the following events:
(i) Expiration
of the Option or Stock Appreciation Right, as provided in the Award Agreement; or
(ii) Termination
of the Award in the event of a Participant's disability, retirement, death or other Termination of Service, as provided in the Award Agreement; or
(iii) Ten
years from the Date of Grant (five years in certain cases, as described in Section 6.01(d)).
(c)
Acceleration or Extension of Exercise Period.
The Committee, in its sole discretion, shall have the right (but shall not
be obligated), exercisable on or at any time after the Date of Grant, to permit
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the
exercise of an Option or Stock Appreciation Right (i) prior to the time such Option or Stock Appreciation Right would become exercisable under the terms of the Award Agreement, or
(ii) after the termination of the Option or Stock Appreciation Right under the terms of the Award Agreement.
(d)
Exercise of Options or Stock Appreciation Rights Upon Termination of Services.
Unless an Award Agreement provides
otherwise, the following rules shall govern the treatment of an Award of Options or Stock Appreciation Rights upon a Participant's Termination of Services:
(i) Termination
of Vested Options or Stock Appreciation Rights Upon Termination of Services.
(A)
Termination Other Than Due to Death or Disability.
In the event of a Participant's Termination of Services
for any reason other than due to the Participant's death or Disability, the right of the Participant to exercise any vested Options or Stock Appreciation Rights shall, unless the exercise period is
extended by the Board in accordance with Section 6.03(c) above, terminate upon the earlier of: (I) thirty (30) days after the date of the Termination of Services; and
(II) the date of expiration of the Options or Stock Appreciation Rights determined pursuant to Sections 6.03(b)(i) or (iii) above.
(B)
Death or Disability.
In the event of a Participant's Termination of Services by reason of death or
Disability, the right of the Participant to exercise any vested Options or Stock Appreciation Rights shall, unless the exercise period is extended by the Board in accordance with
Section 6.03(c) above, terminate upon the earlier of: (I) six (6) months after the date of the Termination of Services; and (II) the date of expiration of the Options or
Stock Appreciation Rights determined pursuant to Sections 6.03(b)(i) or (iii) above.
(ii)
Termination of Unvested Options Upon Termination of Services.
To the extent the right to exercise Options
or Stock Appreciation Rights, or any portion thereof, has not vested as of the date of Termination of Services, the right shall expire on the date of Termination of Services regardless of the reason
for the Termination of Services.
6.04
Exercise Procedures.
Each Option and Stock Appreciation Right granted under the Plan shall be exercised under such procedures and by such methods as
the Committee may establish or
approve from time to time. The Exercise Price of shares purchased upon exercise of an Option granted under the Plan shall be paid in full in cash by the Participant pursuant to the Award Agreement;
provided,
however
, that the Committee may (but shall not be required to) permit payment to be made (a) by delivery to the Company of shares of
Common Stock held by the Participant, (b) by a "net exercise" method under which the Company reduces the number of shares of Common Stock issued upon exercise by the largest whole number of
shares with a Fair Market Value that does not exceed the aggregate Exercise Price, or (c) such other consideration as the Committee deems appropriate and in compliance with applicable law
(including payment under an arrangement constituting a brokerage transaction as permitted under the provisions of Regulation T applicable to cashless exercises promulgated by the Federal
Reserve Board, unless prohibited by Section 402 of the Sarbanes-Oxley Act of 2002). In the event that any Common Stock shall be transferred to the Company to satisfy all or any part of the
Exercise Price, the part of the Exercise Price deemed to have been satisfied by such transfer of Common Stock shall be equal to the product derived by multiplying the Fair Market Value as of the date
of exercise times the number of shares of Common Stock transferred to the Company. The Participant may not transfer to the Company in satisfaction of the Exercise Price any fractional share of Common
Stock. Any part of the Exercise Price paid in cash upon the exercise of any Option shall be added to the general funds of the Company and may be used for any proper corporate purpose. Unless the
Committee shall otherwise determine, any Common Stock transferred to the Company as payment of all or part of the Exercise Price upon the exercise of any Option shall be held as treasury shares.
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6.05
Change in Control.
With respect to each Award of Options or Stock Appreciation Rights, the Committee shall determine whether and to what extent such
Options or Stock Appreciation
Rights shall become immediately and fully exercisable in the event of a Change in Control or upon the occurrence of one or more specified conditions following a Change in Control. Notwithstanding the
foregoing, unless otherwise determined by the Committee, no Change in Control of the Company shall be deemed to have occurred for purposes of determining a Participant's rights under this Plan if
(a) the Participant is a member of a group that first announces a proposal which, if successful, would result in a Change in Control, which proposal (including any modifications thereof) is
ultimately successful, or (b) the Participant acquires a two percent (2%) or more equity interest in the entity that ultimately acquires the Company pursuant to the transaction described in
clause (a) of this Section 6.05.
6.06
Early Exercise.
An Option may, but need not, include a provision by which the Participant may elect to exercise the Option in whole or in part prior
to the date the Option is
fully vested. The provision may be included in the Award Agreement at the time of grant of the Option or may be added to the Award Agreement by amendment at a later time. In the event of an early
exercise of an Option, any shares of Common Stock received shall be subject to a special repurchase right in favor of the Company with terms established by the Committee. The Committee shall determine
the time and/or the event that causes the repurchase right to terminate and fully vest the Common Stock in the Participant.
ARTICLE VII
RESTRICTED SHARES AND RESTRICTED STOCK UNITS
7.01
Award of Restricted Stock and Restricted Stock Units.
The Committee may grant to any Participant an Award of Restricted Shares consisting of a
specified number of shares of Common Stock issued to the Participant
subject to such terms, conditions and forfeiture and transfer restrictions, whether based on performance standards, periods of service, retention by the Participant of ownership of specified shares of
Common Stock or other criteria, as the Committee shall establish. The Committee may also grant Restricted Stock Units representing the right to receive shares of Common Stock in the future subject to
such terms, conditions and restrictions, whether based on performance standards, periods of service, retention by the Participant of ownership of specified shares of Common Stock or other criteria, as
the Committee shall establish. With respect to performance-based Awards of Restricted Shares or Restricted Stock Units intended to qualify as "performance-based" compensation for purposes of
Section 162(m) of the Code, performance targets will consist of specified levels of one or more of the Performance Goals. The terms of any Restricted Share and Restricted Stock Unit Awards
granted under this Plan shall be set forth in an Award Agreement which shall contain provisions determined by the Committee and not inconsistent with this Plan.
7.02
Restricted Shares
.
(a)
Issuance of Restricted Shares.
As soon as practicable after the Date of Grant of a Restricted Share Award by the
Committee, the Company shall cause to be transferred on the books of the Company, or its agent, Common Stock, registered on behalf of the Participant, evidencing the Restricted Shares covered by the
Award, but subject to forfeiture to the Company as of the Date of Grant if an Award Agreement with respect to the Restricted Shares covered by the Award is not duly executed by the Participant and
timely returned to the Company. All Common Stock covered by Awards under this Article VII shall be subject to the restrictions, terms and conditions contained in the Plan and the Award
Agreement entered into by the Participant. Until the lapse or release of all restrictions applicable to an Award of Restricted Shares, the share certificates representing such Restricted Shares may be
held in custody by the Company, its designee, or, if the certificates bear a restrictive legend, by the Participant. Upon the lapse or release of all restrictions with respect to an Award as described
in Section 7.02(d), one or more share certificates, registered in the name of the
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Participant,
for an appropriate number of shares as provided in Section 7.02(d), free of any restrictions set forth in the Plan and the Award Agreement shall be delivered to the Participant.
(b)
Stockholder Rights.
Beginning on the Date of Grant of the Restricted Share Award and subject to execution of the Award
Agreement as provided in Section 7.02(a), the Participant shall become a stockholder of the Company with respect to all shares subject to the Award Agreement and shall have all of the rights of
a stockholder, including, but not limited to, the right to vote such shares and the right to receive dividends;
provided, however
, that the Award
Agreement may provide that any dividend distributed with respect to any Restricted Shares as to which the restrictions have not yet lapsed shall be subject to the same restrictions as such Restricted
Shares and held or restricted as provided in Section 7.02(a).
(c)
Restriction on Transferability.
None of the Restricted Shares may be assigned or transferred (other than by will or the
laws of descent and distribution, or to an inter vivos trust with respect to which the Participant is treated as the owner under Sections 671 through 677 of the Code, except to the extent that
Section 16 of the Exchange Act limits a Participant's right to make such transfers), pledged or sold prior to lapse of the restrictions applicable thereto.
(d)
Delivery of Shares Upon Vesting.
Upon expiration or earlier termination of the forfeiture period without a forfeiture and
the satisfaction of or release from any other conditions prescribed by the Committee, or at such earlier time as provided under the provisions of Section 7.04, the restrictions applicable to
the Restricted Shares shall lapse. As promptly as administratively feasible thereafter, subject to the requirements of Section 11.05, the Company shall deliver to the Participant or, in case of
the Participant's death, to the Participant's Beneficiary, one or more share certificates for the appropriate number of shares of Common Stock, free of all such restrictions, except for any
restrictions that may be imposed by law.
(e)
Forfeiture of Restricted Shares.
Subject to Sections 7.02(f) and 7.04, all Restricted Shares shall be forfeited and
returned to the Company and all rights of the Participant with respect to such Restricted Shares shall terminate unless the Participant continues in the service of the Company or an Affiliate as an
employee until the expiration of the forfeiture period for such Restricted Shares and satisfies any and all other conditions set forth in the Award Agreement. The Committee shall determine the
forfeiture period (which may, but need not, lapse in installments) and any other terms and conditions applicable with respect to any Restricted Share Award.
(f)
Waiver of Forfeiture Period.
Notwithstanding anything contained in this Article VII to the contrary, the Committee
may, in its sole discretion, waive the forfeiture period and any other conditions set forth in any Award Agreement under appropriate circumstances (including the death, disability or retirement of the
Participant or a material change in circumstances arising after the date of an Award) and subject to such terms and conditions (including forfeiture of a proportionate number of the Restricted Shares)
as the Committee shall deem appropriate.
7.03
Restricted Stock Units
.
(a)
Settlement of Restricted Stock Units.
Payments shall be made to Participants with respect to their Restricted Stock Units
as soon as practicable after the Committee has determined that the terms and conditions applicable to such Award have been satisfied or at a later date if distribution has been deferred. Payments to
Participants with respect to Restricted Stock Units shall be made in the form of Common Stock, or cash or a combination of both, as the Committee may determine. The amount of any cash to be paid in
lieu of Common Stock shall be determined on the basis of the Fair Market Value of the Common Stock on the date any such payment is processed. As to shares of
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Common
Stock which constitute all or any part of such payment, the Committee may impose such restrictions concerning their transferability and/or their forfeiture as may be provided in the applicable
Award Agreement or as the Committee may otherwise determine, provided such determination is made on or before the date certificates for such shares are first delivered to the applicable Participant.
(b)
Shareholder Rights.
Until the lapse or release of all restrictions applicable to an Award of Restricted Stock Units, no
shares of Common Stock shall be issued in respect of such Awards and no Participant shall have any rights as a shareholder of the Company with respect to the shares of Common Stock covered by such
Award of Restricted Stock Units.
(c)
Waiver of Forfeiture Period.
Notwithstanding anything contained in this Section 7.03 to the contrary, the Committee
may, in its sole discretion, waive the forfeiture period and any other conditions set forth in any Award Agreement under appropriate circumstances (including the death, Disability or retirement of the
Participant or a material change in circumstances arising after the date of an Award) and subject to such terms and conditions (including forfeiture of a proportionate number of shares issuable upon
settlement of the Restricted Stock Units constituting an Award) as the Committee shall deem appropriate.
(d)
Deferral of Payment.
If approved by the Committee and set forth in the applicable Award Agreement, a Participant may elect
to defer the amount payable with respect to the Participant's Restricted Stock Units in accordance with such terms as may be established by the Committee, subject to the requirements of
Section 409A of the Code.
7.04
Change in Control.
With respect to each Award of Restricted Stock or Restricted Stock Units, the Committee shall determine whether and to what extent
such Restricted Stock or
Restricted Stock Units shall become immediately and fully exercisable in the event of a Change in Control or upon the occurrence of one or more specified conditions following a Change in Control.
Notwithstanding the foregoing, unless otherwise determined by the Committee, no Change in Control of the Company shall be deemed to have occurred for purposes of determining a Participant's rights
under this Plan if (a) the Participant is a member of a group that first announces a proposal which, if successful, would result in a Change in Control, which proposal (including any
modifications thereof) is ultimately successful, or (b) the Participant acquires a two percent (2%) or more equity interest in the entity that ultimately acquires the Company pursuant to the
transaction described in clause (a) of this Section 7.04.
ARTICLE VIII
PERFORMANCE AWARDS
8.01
Performance Awards
.
(a)
Award Periods and Calculations of Potential Incentive Amounts.
The Committee may grant Performance Awards to Participants.
A Performance Award shall consist of the right to receive a payment (measured by the Fair Market Value of a specified number of shares of Common Stock, increases in such Fair Market Value during the
Award Period and/or a fixed cash amount) contingent upon the extent to which certain predetermined performance targets have been met during an Award Period. The Award Period shall be one or more
fiscal or calendar years as determined by the Committee. The Committee, in its discretion and under such terms as it deems appropriate, may permit newly eligible Participants, such as those who are
promoted or newly hired, to receive Performance Awards after an Award Period has commenced.
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(b)
Performance Targets.
Subject to Section 11.18, the performance targets applicable to a Performance Award may
include such goals related to the performance of the Company or, where relevant, any one or more of its Affiliates or divisions and/or the performance of a Participant as may be established by the
Committee in its discretion. In the case of Performance Awards to "covered employees" (as defined in Section 162(m) of the Code), the targets will be limited to specified levels of one or more
of the Performance Goals. The performance targets established by the Committee may vary for different Award Periods and need not be the same for each Participant receiving a Performance Award in an
Award Period.
(c)
Earning Performance Awards.
The Committee, at or as soon as practicable after the Date of Grant, shall prescribe a formula
to determine the percentage of the Performance Award to be earned based upon the degree of attainment of the applicable performance targets.
(d)
Payment of Earned Performance Awards.
Subject to the requirements of Section 11.05, payments of earned Performance
Awards shall be made in cash or Common Stock, or a combination of cash and Common Stock, in the discretion of the Committee. The Committee, in its sole discretion, may define, and set forth in the
applicable Award Agreement, such terms and conditions with respect to the payment of earned Performance Awards as it may deem desirable.
8.02
Termination of Service or Change in Control.
The Award Agreement with respect to any Performance Award shall contain
provisions dealing with the disposition of such Award in the event of a Change in Control or in the event of a Termination of Services prior to the exercise, realization or payment of such Award, with
such provisions to take account of the specific nature and purpose of the Award.
ARTICLE IX
OTHER STOCK-BASED AWARDS
9.01
Grant of Other Stock-Based Awards.
Other stock-based awards, consisting of stock purchase rights (with or without loans
to Participants by the Company containing such terms as the Committee shall determine), Awards of Common Stock, or Awards valued in whole or in part by reference to, or otherwise based on, Common
Stock, may be granted either alone or in addition to or in conjunction with other Awards under the Plan. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to
determine the persons to whom and the time or times at which such Awards shall be made, the number of shares of Common Stock to be granted pursuant to such Awards, and all other conditions of the
Awards. Any such Award shall be confirmed by an Award Agreement executed by the Committee and the Participant, which Award Agreement shall contain such provisions as the Committee determines to be
necessary or appropriate to carry out the intent of this Plan with respect to such Award.
9.02
Terms of Other Stock-Based Awards.
In addition to the terms and conditions specified in the Award Agreement, Awards made
pursuant to this Article IX shall be subject to the following:
(a) Any
Common Stock subject to Awards made under this Article IX may not be sold, assigned, transferred, pledged or otherwise encumbered prior to the date on which the shares are
issued, or, if later, the date on which any applicable restriction, performance or deferral period lapses; and
(b) If
specified by the Committee in the Award Agreement, the recipient of an Award under this Article IX shall be entitled to receive, currently or on a deferred basis, interest
or dividends or dividend equivalents with respect to the Common Stock or other securities covered by the Award; and
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(c) The
Award Agreement with respect to any Award shall contain provisions dealing with the disposition of such Award in the event of a Termination of Service prior to the exercise,
payment or other settlement of such Award, whether such termination occurs because of retirement, disability, death or other reason, with such provisions to take account of the specific nature and
purpose of the Award.
ARTICLE X
SHORT-TERM CASH INCENTIVE AWARDS
10.01
Eligibility.
Executive officers of the Company who are from time to time determined by the Committee to be "covered
employees" for purposes of Section 162(m) of the Code will be eligible to receive short-term cash incentive awards under this Article X.
10.02
Awards
.
(a)
Performance Targets.
The Committee shall establish objective performance targets based on specified levels of one or more
of the Performance Goals. Such performance targets shall be established by the Committee on a timely basis to ensure that the targets are considered "preestablished" for purposes of
Section 162(m) of the Code.
(b)
Amounts of Awards.
In conjunction with the establishment of performance targets for a fiscal year or such other short-term
performance period established by the Committee, the Committee shall adopt an objective formula (on the basis of percentages of Participants' salaries, shares in a bonus pool or otherwise) for
computing the respective amounts payable under the Plan to Participants if and to the extent that the performance targets are attained. Such formula shall comply with the requirements applicable to
performance-based compensation plans under Section 162(m) of the Code and, to the extent based on percentages of a bonus pool, such percentages shall not exceed 100% in the aggregate.
(c)
Payment of Awards.
Awards will be payable to Participants in cash each year upon prior written certification by the
Committee of attainment of the specified performance targets for the preceding fiscal year or other applicable performance period.
(d)
Negative Discretion.
Notwithstanding the attainment by the Company of the specified performance targets, the Committee
shall have the discretion, which need not be exercised uniformly among the Participants, to reduce or eliminate the award that would be otherwise paid.
(e)
Guidelines.
The Committee may adopt from time to time written policies for its implementation of this Article X.
Such guidelines shall reflect the intention of the Company that all payments hereunder qualify as performance-based compensation under Section 162(m) of the Code.
(f)
Non-Exclusive Arrangement.
The adoption and operation of this Article X shall not preclude the Board or the
Committee from approving other short-term incentive compensation arrangements for the benefit of individuals who are Participants hereunder as the Board or Committee, as the case may be, deems
appropriate and in the best interests of the Company.
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ARTICLE XI
TERMS APPLICABLE GENERALLY TO AWARDS
GRANTED UNDER THE PLAN
11.01
Plan Provisions Control Award Terms.
Except as provided in Section 11.16, the terms of the Plan shall govern all
Awards granted under the Plan, and in no event shall the Committee have the power to grant any Award under the Plan which is contrary to any of the provisions of the Plan. In the event any provision
of any Award granted under the Plan shall conflict with any term in the Plan as constituted on the Date of Grant of such Award, the term in the Plan as constituted on the Date of Grant of such Award
shall control. Except as provided in Section 11.03 and Section 11.07, the terms of any Award granted under the Plan may not be changed after the Date of Grant of such
Award so as to materially decrease the value of the Award without the express written approval of the holder.
11.02
Award Agreement.
No person shall have any rights under any Award granted under the Plan unless and until the Company and
the Participant to whom such Award shall have been granted shall have executed and delivered an Award Agreement or received any other Award acknowledgment authorized by the Committee expressly
granting the Award to such person and containing provisions setting forth the terms of the Award.
11.03
Modification of Award After Grant.
No Award granted under the Plan to a Participant may be modified (unless such
modification does not materially decrease the value of the Award) after the Date of Grant except by express written agreement between the Company and the Participant, provided that any such change
(a) shall not be inconsistent with the terms of the Plan, and (b) shall be approved by the Committee.
11.04
Limitation on Transfer.
Except as provided in Section 7.02(c) in the case of Restricted Shares, a Participant's
rights and interest under the Plan may not be assigned or transferred other than by will or the laws of descent and distribution, and during the lifetime of a Participant, only the Participant
personally (or the Participant's personal representative) may exercise rights under the Plan. The Participant's Beneficiary may exercise the Participant's rights to the extent they are exercisable
under the Plan following the death of the Participant. Notwithstanding the foregoing, to the extent permitted under Section 16(b) of the Exchange Act with respect to Participants subject to
such Section, the Committee may grant Non-Qualified Stock Options that are transferable, without payment of consideration, to immediate family members of the Participant or to trusts or partnerships
for such family members, and the Committee may also amend outstanding Non-Qualified Stock Options to provide for such transferability.
11.05
Taxes.
The Company shall be entitled, if the Committee deems it necessary or desirable, to withhold (or secure payment
from the Participant in lieu of withholding) the amount of any withholding or other tax required by law to be withheld or paid by the Company with respect to any amount payable and/or shares issuable
under such Participant's Award, and the Company may defer payment or issuance of the cash or shares upon exercise or vesting of an Award unless indemnified to its satisfaction against any liability
for any such tax. The amount of such withholding or tax payment shall be determined by the Committee and shall be payable by the Participant at such time as the Committee determines in accordance with
the following rules:
(a) The
Participant shall have the right to elect to meet his or her withholding requirement (i) by having withheld from such Award at the appropriate time that number of shares of
Common Stock, rounded down to the nearest whole share, whose Fair Market Value is equal to the amount of withholding taxes due, (ii) by direct payment to the Company in cash of the amount of
any taxes required to be withheld with respect to such Award or (iii) by a combination of shares and cash.
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(b) In
the case of Participants who are subject to Section 16 of the Exchange Act, the Committee may impose such limitations and restrictions as it deems necessary or appropriate
with respect to the delivery or withholding of shares of Common Stock to meet tax withholding obligations.
11.06
Surrender of Awards.
Any Award granted under the Plan may be surrendered to the Company for cancellation on such terms
as the Committee and the holder approve. With the consent of the Participant, the Committee may substitute a new Award under this Plan in connection with the surrender by the Participant of an equity
compensation award previously granted under this Plan or any other plan sponsored by the Company.
11.07
Adjustments to Reflect Capital Changes
.
(a)
Recapitalization.
In the event of any corporate event or transaction (including, but not limited to, a change in the
Common Stock or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse
stock split, spin-off, or other distribution of stock or property of the Company, a combination or exchange of Common Stock, dividend in kind, or other like change in capital structure, number of
outstanding shares of Common Stock, distribution (other than normal cash dividends) to shareholders of the Company, or any similar corporate event or transaction, the Committee, in order to prevent
dilution or enlargement of Participants' rights under this Plan, shall make equitable and appropriate adjustments and substitutions, as applicable, to or of the number and kind of shares subject to
outstanding Awards, the Exercise Price for such shares, the number and kind of shares available for future issuance under the Plan and the maximum number of shares in respect of which Awards can be
made to any Participant in any calendar year, and other determinations applicable to outstanding Awards. The Committee shall have the power and sole discretion to determine the amount of the
adjustment to be made in each case.
(b)
Merger.
In the event that the Company is a party to a Merger, outstanding Awards shall be subject to the agreement of
merger or reorganization. Such agreement may provide, without limitation, for the continuation of outstanding Awards by the Company (if the Company is a surviving corporation), for their assumption by
the surviving corporation or its parent or subsidiary, for the substitution by the surviving corporation or its parent or subsidiary of its own awards for such Awards, for accelerated vesting and
accelerated expiration, or for settlement in cash or cash equivalents.
(c)
Options to Purchase Shares or Stock of Acquired Companies.
After any Merger in which the Company or an Affiliate shall be
a surviving corporation, the Committee may grant substituted
options under the provisions of the Plan, pursuant to Section 424 of the Code, replacing old options granted under a plan of another party to the Merger whose shares or stock subject to the old
options may no longer be issued following the Merger. The foregoing adjustments and manner of application of the foregoing provisions shall be determined by the Committee in its sole discretion. Any
such adjustments may provide for the elimination of any fractional shares which might otherwise become subject to any Options.
11.08
No Right to Continued Service.
No person shall have any claim of right to be granted an Award under this Plan. Neither
the Plan nor any action taken hereunder shall be construed as giving any Participant any right to be retained in the service of the Company or any of its Affiliates.
11.09
Awards Not Includable for Benefit Purposes.
Payments received by a Participant pursuant to the provisions of the Plan
shall not be included in the determination of benefits under any pension, group insurance or other benefit plan applicable to the Participant which is maintained by the Company or any
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of
its Affiliates, except as may be provided under the terms of such plans or determined by the Committee.
11.10
Governing Law.
All determinations made and actions taken pursuant to the Plan shall be governed by the laws of the State
of California and construed in accordance therewith.
11.11
No Strict Construction.
No rule of strict construction shall be implied against the Company, the Committee, or any other
person in the interpretation of any of the terms of the Plan, any Award granted under the Plan or any rule or procedure established by the Committee.
11.12
Compliance with Rule 16b-3.
It is intended that, unless the Committee determines otherwise, Awards under the Plan
be eligible for exemption under Rule 16b-3. The Board is authorized to amend the Plan and to make any such modifications to Award Agreements to comply with Rule 16b-3, as it may be
amended from time to time, and to make any other such amendments or modifications as it deems necessary or appropriate to better accomplish the purposes of the Plan in light of any amendments made to
Rule 16b-3.
11.13
Captions.
The captions (i.e., all Section headings) used in the Plan are for convenience only, do not constitute
a part of the Plan, and shall not be deemed to limit, characterize or affect in any way any provisions of the Plan, and all provisions of the Plan shall be construed as if no captions have been used
in the Plan.
11.14
Severability.
Whenever possible, each provision in the Plan and every Award at any time granted under the Plan shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision of the Plan or any Award at any time granted under the Plan shall be held to be prohibited by or
invalid under applicable law, then (a) such provision shall be deemed amended to accomplish the objectives of the provision as originally written to the fullest extent permitted by law and
(b) all other provisions of the Plan and every other Award at any time granted under the Plan shall remain in full force and effect.
11.15
Amendment and Termination
.
(a)
Amendment.
The Board shall have complete power and authority to amend the Plan at any time; provided, however, that the
Board shall not, without the requisite affirmative approval of stockholders of the Company, make any amendment which requires stockholder approval under the Code or under any other applicable law or
rule of any stock exchange or listing service which lists Common Stock or Company Voting Securities. No termination or amendment of the Plan may, without the consent of the Participant to whom any
Award shall theretofore have been granted under the Plan, adversely affect the right of such individual under such Award.
(b)
Termination.
The Board shall have the right and the power to terminate the Plan at any time. No Award shall be granted
under the Plan after the termination of the Plan, but the termination of the Plan shall not have any other effect on any Award outstanding at the time of the termination of the Plan and any such
outstanding Award will continue in accordance with its terms and conditions.
11.16
Foreign Qualified Awards.
Awards under the Plan may be granted to such employees, directors and consultants of the
Company and its Affiliates who are residing in foreign jurisdictions as the Committee in its sole discretion may determine from time to time. The Committee may adopt such supplements to the Plan as
may be necessary or appropriate to comply with the applicable laws of such foreign jurisdictions and to afford Participants favorable treatment under such laws.
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11.17
Dividend Equivalents.
For any Award granted under the Plan, the Committee shall have the discretion, upon the Date of
Grant or thereafter, to establish a Dividend Equivalent Account with respect to the Award, and the applicable Award Agreement or an amendment thereto shall confirm such establishment. If a Dividend
Equivalent Account is established, the following terms shall apply:
(a)
Terms and Conditions.
Dividend Equivalent Accounts shall be subject to such terms and conditions as the Committee shall
determine and as shall be set forth in the applicable Award Agreement. Such terms and conditions may include, without limitation, for the Participant's Account to be credited as of the record date of
each cash dividend on the Common Stock with an amount equal to the cash dividends which would be paid with respect to the number of shares of Common Stock then covered by the related Award if such
shares of Common Stock had been owned of record by the Participant on such record date.
(b)
Unfunded Obligation.
Dividend Equivalent Accounts shall be established and maintained only on the books and records of the
Company and no assets or funds of the Company shall be set aside, placed in trust, removed from the claims of the Company's general creditors, or otherwise made available until such amounts are
actually payable as provided hereunder.
11.18
Adjustment of Performance Goals and Targets.
Notwithstanding any provision of the Plan to the contrary, the Committee
shall have the authority to adjust any Performance Goal, performance target or other performance-based criteria established with respect to any Award under the Plan if circumstances occur (including,
but not limited to, unusual or nonrecurring events, changes in tax laws or accounting principles or practices or changed business or economic conditions) that cause any such Performance Goal,
performance target or performance-based criteria to be inappropriate in the judgment of the Committee; provided, that with respect to any Award that is intended to qualify for the "performance-based
compensation" exception under Section 162(m) of the Code and the regulations thereunder, any adjustment by the Committee shall be consistent with the requirements of Section 162(m) and
the regulations thereunder.
11.19
Legality of Issuance.
Notwithstanding any provision of this Plan or any applicable Award Agreement to the contrary, the
Committee shall have the sole discretion to impose such conditions, restrictions and limitations (including suspending exercises of Options or Stock Appreciation Rights and the tolling of any
applicable exercise period during such suspension) on the issuance of Common Stock with respect to any Award unless and until the Committee determines that such issuance complies with (a) any
applicable registration requirements under the Securities Act of 1933 or the Committee has determined that an exemption therefrom is available, (b) any applicable listing requirement of any
stock exchange on which the Common Stock is listed, (c) any applicable Company policy or administrative rules, and (d) any other applicable provision of state, federal or foreign law,
including foreign securities laws where applicable.
11.20
Restrictions on Transfer.
Regardless of whether the offering and sale of Common Stock under the Plan have been
registered under the Securities Act of 1933 or have been registered or qualified under the securities laws of any state, the Company may impose restrictions upon the sale, pledge, or other transfer of
such Common Stock (including the placement of appropriate legends on stock
certificates) if, in the judgment of the Company and its counsel, such restrictions are necessary or desirable to achieve compliance with the provisions of the Securities Act of 1933, the securities
laws of any state, the United States or any other applicable foreign law.
11.21
Further Assurances.
As a condition to receipt of any Award under the Plan, a Participant shall agree, upon demand of the
Company, to do all acts and execute, deliver and perform all additional documents, instruments and agreements which may be reasonably required by the Company, to implement the provisions and purposes
of the Plan.
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IMPAC MORTGAGE HOLDINGS, INC.
Annual Meeting of Stockholders
July 25, 2017 9:00 AM
This proxy is solicited by the Board of Directors
The undersigned stockholder(s) of Impac Mortgage Holdings, Inc., a Maryland corporation, hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement dated June 2, 2017, and hereby appoints Todd R. Taylor and Ronald M. Morrison, or either of them acting singly in the absence of the other, with full power of substitution, as attorneys-in-fact and proxies for, and in the name and place of, the undersigned, and hereby authorizes each of them to represent and to vote all of the shares which the undersigned is entitled to vote at the Annual Meeting of Stockholders of Impac Mortgage Holdings, Inc. to be held on July 25, 2017, at 9:00 a.m. Pacific Daylight Time, and at any adjournments thereof, upon the matters as set forth in the Notice of Annual Meeting of Stockholders and Proxy Statement, receipt of which is hereby acknowledged.
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED IN A TIMELY MANNER, WILL BE VOTED AT THE ANNUAL MEETING AND AT ANY ADJOURNMENTS THEREOF IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO SPECIFICATION IS MADE, THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE BOARD OF DIRECTORS RECOMMENDATIONS AND IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS NAMED AS PROXIES HEREIN ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
DETACH AND RETURN THIS PORTION ONLY
(Continued, and to be marked, dated and signed, on the other side)
PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED.
Important Notice Regarding the Availability of Proxy Materials for the Annual
Meeting of Stockholders to be held July 25, 2017. The Proxy Statement and our
2016 Annual Report to Stockholders are available at:
http://www.viewproxy.com/impaccompanies/2017
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Please mark your votes like this
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The Board of Directors recommends you vote FOR the following:
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The Board of Directors recommends you vote FOR proposals 2 and 3.
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1. Election of Directors
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FOR
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WITHHOLD
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FOR ALL
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2. Approval of amendment to 2010 Omnibus Incentive Plan to increase the shares subject to the plan by 500,000 shares.
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Nominees:
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ALL
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ALL
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EXCEPT
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01 Joseph R. Tomkinson
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05 Stephan R. Peers
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o
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o
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o
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FOR
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AGAINST
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ABSTAIN
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02 William S. Ashmore
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06 Leigh J. Abrams
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3. Ratification of the appointment of Squar Milner LLP as the Companys independent registered public accounting firm for the year ending December 31, 2017.
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03 James Walsh
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07 Thomas B. Akin
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04 Frank P. Filipps
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FOR
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AGAINST
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ABSTAIN
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To withhold authority to vote for any individual nominee(s), mark For All Except
and write the number(s) of the nominee(s) on the line below.
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NOTE: Such other business as may properly come before the meeting or any adjournments or postponements thereof.
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I plan on attending the meeting
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
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Date:
, 2017
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Signature
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Signature (if held jointly)
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For address change/comments, mark here.
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(see reverse for instructions)
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CONTROL NUMBER
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PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED.
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CONTROL NUMBER
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PROXY VOTING INSTRUCTIONS
Please have your 11 digit control number ready when voting by Internet or Telephone
INTERNET
Vot
e
You
r
Prox
y
o
n
th
e
Internet:
Go to
www.aalvote.com/IMH
Have your proxy card available
when you access the above
website. Follow the prompts to vote your shares.
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TELEPHONE
Vote Your Proxy by Phone:
Call
1
(866)804-9616
Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares.
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MAIL
Vote
Your
Proxy
by
Mail:
Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided.
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QuickLinks
IMPAC MORTGAGE HOLDINGS, INC. 19500 Jamboree Road Irvine, California 92612 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS To Be Held on July 25, 2017 9:00 A.M. (Pacific Daylight Time)
IMPAC MORTGAGE HOLDINGS, INC. 19500 Jamboree Road, Irvine, CA. 92612 (949) 475-3722
FOR ANNUAL STOCKHOLDERS MEETING TO BE HELD ON JULY 25, 2017 AT 9:00 A.M. (PACIFIC DAYLIGHT TIME)
PROPOSAL NO. 1 ELECTION OF DIRECTORS
PROPOSAL NO. 2 APPROVAL OF AMENDMENT TO 2010 OMNIBUS INCENTIVE PLAN TO INCREASE THE SHARES SUBJECT TO THE PLAN BY 500,000 SHARES
PROPOSAL NO. 3 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
REPORT OF THE AUDIT COMMITTEE
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
Director Compensation For 2016
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT
SUMMARY COMPENSATION TABLE
GRANTS OF PLAN-BASED AWARDS
OUTSTANDING OPTION AWARDS AT DECEMBER 31, 2016
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
STOCKHOLDER PROPOSALS
OTHER BUSINESS
IMPAC MORTGAGE HOLDINGS, INC. OMNIBUS INCENTIVE PLAN
ARTICLE I PURPOSE AND ADOPTION OF THE PLAN
ARTICLE II DEFINITIONS
ARTICLE III ADMINISTRATION
ARTICLE IV SHARES
ARTICLE V PARTICIPATION
ARTICLE VI STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
ARTICLE VII RESTRICTED SHARES AND RESTRICTED STOCK UNITS
ARTICLE VIII PERFORMANCE AWARDS
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