requesting that only 500,000 shares be added to the share reserve under our 2015 Plan at the annual meeting, our board of directors specifically assumed the Option Exchange Program would be
adopted by our stockholders and implemented by our board of directors, and that, based on an assumed participation rate, approximately 2,200,000 shares would be returned to our 2015 Plan and made available for future issuance (after taking into
account the grant of restricted stock units in exchange for options under the program). However, due to a number of factors, including the recent volatility in our stock price and our ongoing restructuring efforts, we have not yet implemented the
Option Exchange Program. As a result, the additional shares we anticipated would be returned to our 2015 Plan and made available for future grant have not yet been returned to the plan reserve. In addition, based on the recent decline in our stock
price, and the resulting impact on the anticipated exchange ratios of stock options for restricted stock units, even if the Option Exchange Program is implemented, we currently anticipate that significantly fewer shares would ultimately be returned
to our 2015 Plan than initially projected. In addition, the recent decline in our stock price could make the Option Exchange Program less attractive to our eligible employees, which could limit the participation rate and further reduce the number of
shares that are returned to our 2015 Plan. Further, while we anticipate implementing the Option Exchange Program during the first half of 2019, we cannot provide any assurance that we will implement the Option Exchange Program on the currently
approved terms or at all. Accordingly, we cannot assume that the Option Exchange Program, even if implemented, will have the impact of providing a sufficient number of reserved shares under our 2015 Plan to meet our projected equity grant
requirements or the objectives of our compensation programs.
In light of both the recent decline in our stock price, and the heightened
need to motivate and retain our key employees in the face of our ongoing management transition, commercial restructuring and other strategic changes to our business, we expect the average number of shares underlying equity awards granted by our
compensation committee to be significantly greater in 2018 than in previous years. Assuming this proposal is approved by our stockholders, we project that we will issue equity awards covering an aggregate of approximately 8,400,000 shares to our
executives, employees and
non-employee
directors in 2018, most of which are either the result of specific contractual obligations we have with employees or are annual equity grants that represent a critical
component of the overall compensation opportunity, and which our compensation committee believes are necessary to maintain competitive compensation practices. We estimate the shares authorized for issuance under our 2015 Plan, assuming that this
proposal is adopted, would be sufficient to grant awards for 2018. However, our actual share usage is dependent on a number of important variables, including the future trading price of our common stock, our hiring and promotion activity, and our
retention needs.
Description of our 2015 Plan (as proposed to be amended)
The material terms of our 2015 Plan, as proposed to be amended by this proposal, are outlined below. This summary is qualified in its entirety
by reference to the complete text of our 2015 Plan, which is appended to this proxy statement as Appendix A and incorporated herein by reference. You are encouraged the full text of our 2015 Plan, as proposed to be amended, before making a voting
decision.
General
. Our 2015 Plan is an omnibus stock plan consisting of a variety of equity vehicles to provide
flexibility in implementing equity awards, including incentive stock options,
non-qualified
stock options, restricted stock awards, stock appreciation rights, stock payment awards, restricted stock units and
dividend equivalents. Participants in our 2015 Plan may be granted any one or more of these equity awards, as determined by our board of directors.
Shares Reserved for Issuance
. As of November 9, 2018, (i) options exercisable for 4,344,924 shares of our common stock with a
weighted average exercise price of $8.58 and a weighted average remaining term of 5.24 years were outstanding, (ii) time-based restricted stock units covering 1,039,347 shares of our common stock were outstanding, (iii) performance-based
restricted stock units covering 348,216 shares of our common stock were outstanding, and (iv) 2,415,993 shares of our common stock were reserved for future grant under our 2015 Plan. If this proposal is adopted, an aggregate of up to 8,415,993
shares of our common stock will be available for future issuance under our 2015 Plan. For additional information about grants of equity awards that we would be required to make to certain persons upon the approval of this proposal by our
stockholders, please see the section titled New Plan Benefits below.
Administration
. Our board of directors has
delegated administration of our 2015 Plan to our compensation committee. The members of our compensation committee satisfy the requirements for (i) an independent director for purposes of the applicable NASDAQ Listing Rules,
(ii) a
non-employee
director for purposes of Rule 16b-3 of
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