We also considered overhang, which measures potential Shareholder dilution, in setting the
number of additional shares authorized for issuance under the 2022 Plan. As of the date hereof, there are 66,131,298 Shares outstanding, 3,830,080 Shares are subject to outstanding stock-based awards, and 17,755 Shares are available for future
awards under the 2010 Plan (assuming that performance share units vest at maximum 200% of target and taking into consideration the May 2022 Grants). Therefore, as of the date hereof, our overhang (calculated as the number of shares subject to
outstanding awards plus the number of shares available to be granted (Total Award Shares), divided by the total number of outstanding Shares) is 0.6%. Had the 2,500,000 additional shares being requested under the 2022 Plan been available
for grant as of the date hereof, our overhang will increase to 1.0%.
Material Features of the 2022 Plan
Below is a summary of the material features of the 2022 Plan, which is qualified in its entirety by reference to the full text of the 2022
Plan, attached hereto as Appendix A.
Purpose
The purpose of the 2022 Plan is to promote the long-term success of the Company and the creation of Shareholder value by encouraging the
attraction and retention of employees and non-employee directors with exceptional qualifications, encouraging them to focus on the critical long-range objectives of the Company and linking their interests
directly to Shareholder interests through increased Share ownership. The 2022 Plan achieves this purpose by providing for awards to participants in the form of restricted shares, restricted stock units, performance shares, performance share units,
options and/or SARs. The Company believes it is important to have flexibility to grant various types of equity awards to its employees so that it can react appropriately to the changing environment.
Eligibility and Minimum Vesting Requirements
Awards granted under the 2022 Plan may be made only to those persons who are employees, officers, consultants to and non-employee directors of Mercer on the grant date of the award. Presently, we estimate that 72 persons are eligible each year to receive awards under the 2022 Plan.
Awards granted under the 2022 Plan following the effective date of the 2022 Plan will not vest prior to the
one-year anniversary of the grant date provided that such requirement will not apply to (i) 5% of the shares initially reserved under the 2022 Plan, (ii) awards assumed or substituted in connection with
an acquisition by the Company, and (iii) any awards to non-employee directors, which vest on the earlier of one year and the next annual meeting of shareholders, which is at least 50 weeks after the
immediately preceding annual meeting of shareholders.
Stock Subject to the 2022 Plan
The number of Shares available for issuance under the 2022 Plan pursuant to awards will equal to the sum of (a) 2,500,000, plus (b) the
number of Shares that were unissued and available for grant under the 2010 Plan plus (c) any Shares that, on the effective date of the 2022 Plan, are subject to outstanding awards under the 2010 Plan and that, after that date, cease to be
subject to such awards for any reason other than by such awards being exercised.
As of the date hereof and taking into consideration the
May 2022 Grants, subject to adjustment for changes in capitalization, the total number of Shares subject to outstanding awards under the 2010 Plan is 3,830,080, and 17,755 Shares (assuming that all performance share units granted under the 2010 Plan
will vest at the maximum of 200% target level) or 210,815 Shares (assuming that all performance share units will vest at 100% target level) remain available for future grants under the 2010 Plan. Under the 2022 Plan, an additional 2,500,000 Shares
will become available for issuance.
If the 2022 Plan is approved by the Shareholders at the Meeting, subject to adjustment for changes in
capitalization and taking into account the May 2022 Grants, the number of Shares initially available under the 2022 Plan, other than substitute awards in a corporate transaction, is equal to 2,517,755 Shares (assuming performance share units vest at
maximum 200% of target) or 2,710,815 Shares (assuming performance share units vest at 100% of target).
The maximum number of Shares which
may be issued as incentive stock options under the 2022 Plan is limited to 500,000. Further, the maximum number of Shares that may be granted to any one participant in the 2022 Plan, who is a Covered Employee (as defined in the 2010 Plan) during the
fiscal year where such participants employment commences, shall be 300,000 and 250,000 for all other fiscal years.
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