PROPOSAL 2
APPROVAL OF AN INCREASE IN THE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED
FOR ISSUANCE UNDER THE CYTODYN INC. 2012 EQUITY INCENTIVE PLAN
GENERAL
The Board has approved an amendment to the
CytoDyn Inc. 2012 Equity Incentive Plan (as previously amended effective August 24, 2018, the 2012 Equity Incentive Plan) to increase the number of shares of Common Stock available for issuance thereunder by 10,000,000 shares, from
15,000,000 shares to 25,000,000 shares, and directed that the amendment be submitted to the stockholders for approval at the Special Meeting. The proposed amendment is attached hereto as Exhibit B.
The amendment to the 2012 Equity Incentive Plan is intended to ensure that we can continue to provide an incentive to our employees, directors and consultants
by enabling them to share in our future growth. If approved by the stockholders, all of the additional shares will be available for grant as incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the Code), or as nonqualified stock options, restricted stock awards, stock appreciation rights, or other kinds of equity based compensation available under the 2012 Equity Incentive Plan. If the stockholders do not approve the
amendment, no shares will be added to the number of shares available for issuance under the 2012 Equity Incentive Plan.
BACKGROUND
The 2012 Equity Incentive Plan was adopted on December 12, 2012, and approved by the stockholders of the Company at an annual meeting of the
Companys stockholders on the same date. 3,000,000 shares of Common Stock were initially available for awards under the 2012 Equity Incentive Plan. At a special meeting held on February 27, 2015, our stockholders approved an increase in
the number of shares of Common Stock available for issuance under the 2012 Equity Incentive Plan, from 3,000,000 shares to 5,000,000 shares, which was subsequently effected. At a special meeting held on March 18, 2016, our stockholders approved
an increase in the number of shares of Common Stock available for issuance under the 2012 Equity Incentive Plan from 5,000,000 shares to 7,000,000 shares, which was subsequently effected. Further, at an annual meeting held on November 8, 2018,
our stockholders approved an increase in the number of shares of Common Stock available for issuance under the 2012 Equity Incentive Plan from 7,000,000 shares to 15,000,000 shares, which was subsequently effected.
We use equity-based incentive compensation as a component of our
pay-for-performance
philosophy. The purposes of the 2012 Equity Incentive Plan are to create incentives which are designed to motivate eligible employees, directors, and
consultants to put forth maximum effort toward the success and growth of the Company, and to enable the Company to attract and retain experienced individuals who by their position, ability and diligence are able to make important contributions to
the Companys success.
Our Board requires additional shares available for issuance under the 2012 Equity Incentive Plan for the effective
implementation of its compensation strategy. The 2012 Equity Incentive Plan currently authorizes for issuance a maximum of only 15,000,000 shares. As of April 10, 2019, the number of shares available for issuance under future awards under the
2012 Equity Incentive Plan was only 24,144 shares. If Proposal 2 is not approved, we will not be able to provide equity incentive compensation to our current and future employees and, as a result, we may not be able to retain our current employees
or attract new employees.
The 10,000,000 share increase from 15,000,000 shares to 25,000,000 shares of Common Stock available for grant under the 2012
Equity Incentive Plan represents approximately 3.2% of the total number of outstanding shares of Common Stock as of April 10, 2019. After giving effect to such increase, the number of shares of Common Stock subject to outstanding equity awards
and available for issuance pursuant to future awards will represent approximately 1.8% of our total issued and outstanding shares of Common Stock (on a fully diluted basis after giving effect to such future award issuances).
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