filings.toolsItem 11. Executive Compensation
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Item 11. Executive Compensation
2014 Report of the Compensation Committee
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis referred to above be included in this Amendment to the Original Form 10-K for the fiscal year ended December 31, 2014.
| Compensation Committee | |
|---|---|
| Norman C. Epstein, Chairman | |
| Sydney Selati | |
| Harold C. Taber, Jr. | |
| Mark S. Vidergauz |
Compensation Committee Interlocks and Insider Participation
No interlocking relationships exist between any member of the Company’s Board of Directors or Compensation Committee and any member of the board of directors or compensation committee of any other company, nor has any such interlocking relationship existed in the past. No member of the Compensation Committee, other than Mr. Taber, who served as President and Chief Executive Officer of MEC from July 1992 to June 1997, is or was formerly an officer or an employee of the Company.
Compensation Discussion and Analysis
Compensation Philosophy
Our executive compensation program for our NEOs, listed in the summary compensation table on the following pages, is designed to motivate our executive talent, to reward those individuals fairly over time for achieving performance goals, to retain those individuals who continue to perform at or above the levels that are deemed essential to ensure our long-term success and growth, as well as to attract individuals with the skills necessary for us to achieve our business plan. The program is designed to reinforce ownership and overall entrepreneurialism and to link rewards to measurable corporate and qualitative individual performance. In applying these principles we seek to integrate compensation programs with our short- and long-term strategic plans and to align the interests of our NEOs with the long-term interests of our stockholders. The Compensation Committee evaluates risks and rewards associated with the Company’s overall compensation philosophy and structure and does not believe the program promotes excessive risk-taking.
With respect to specific elements of compensation, base salary is a fixed amount to secure executive service, the annual cash bonus opportunity is designed to incentivize and reward achievement of short-term financial and operating performance, and equity grants that vest over multi-year periods are designed to incentivize, retain and provide long-term perspective.
Setting Executive Compensation
The compensation programs for our NEOs are generally administered by or under the direction of the Compensation Committee (in the case of Rodney Sacks, the Chairman and Chief Executive Officer, and Hilton Schlosberg, the Vice Chairman and President) and the Executive Committee (in the case of the other NEOs). The compensation program is reviewed annually to ensure that remuneration levels and benefits are competitive and reasonable and continue to achieve the goals set forth in our compensation philosophy.
For 2014 compensation decisions, the Compensation Committee retained the independent compensation consulting firm, Frederic W. Cook & Co., Inc. (“FWC”), to provide competitive market data and make recommendations to the Board with respect to compensation for outside directors as well as compensation for the NEOs. FWC reports directly to the Compensation Committee and did not perform any other services for the Company in 2014. The Compensation Committee determined that the services provided by FWC did not raise any conflicts of interest.
The Compensation Committee considers relevant market pay practices and performance when setting executive compensation. We do not set compensation at a targeted percentage level relative to the market, but we seek to provide salary, incentive compensation opportunities and employee benefits that are generally competitive within the consumer products industry, the food and beverage industry and within the labor markets in which we participate. We gather market compensation and performance data to provide context, but also consider performance, as well as our recruiting and internal retention experience when making executive compensation decisions.
The Compensation Committee consulted with FWC in late 2013 to conduct a 2014 competitive market analysis using a comparison group of similarly sized, high performing U.S. food and beverage and consumer products companies. The goal of the peer group was to identify relevant industry competitors using objective factors, which included at the time:
| · Beam, Inc · Boston Beer Co. Inc. | · The Hain Celestial Group. Inc. · The J.M. Smucker Company |
|---|---|
| · Brown-Forman Corporation | · Mead Johnson Nutrition Company |
| · Campbell Soup Company · Chipotle Mexican Grill, Inc. · Coca-Cola Enterprises Inc. | · Michael Kors Holdings Limited · Molson Coors Brewing Company · Nu Skin Enterprises Inc. |
| · Constellation Brands Inc. · Dr. Pepper Snapple Group, Inc. · Green Mountain Coffee Roasters, Inc. | · Snyder’s-Lance, Inc. · Under Armour, Inc. · The Whitewave Foods Company |
The peer group established for the 2014 market analysis was reviewed in January 2015 by FWC, resulting in the removal of three companies due to their acquisition or because they were outside of the objective size criteria of revenue between $1.0 billion and $11.0 billion, and a market cap between $2.5 billion and $50.0 billion. Three larger market cap companies with well-known consumer brands were added because our market cap at the end of 2014 was the second highest of the peer group. The peer group changes made in the January 2015 review were as follows:
· Removed Beam, Inc. due to its acquisition and Boston Beer Co. Inc. and Snyder’s-Lance, Inc. for being undersized.
· Added The Estee Lauder Companies, Inc., The Hershey Company and Ralph Lauren Corporation as high-value brands.
FWC’s 2014 market analysis showed that the competitive positioning for Mr. Sacks’ and Mr. Schlosberg’s 2014 salary and annual bonus, in the aggregate, was considerably below the peer group median, and total compensation, including grant date fair value of their long-term incentive compensation, was between the median and the 75th percentile for both of the respective peer groups established in late 2013 and early 2015. The FWC 2014 study also noted that the Company was at or above the median in three-year revenue and earnings per share (“EPS”) growth, return on capital, and both one- and three-year Total Shareholder Return (“TSR”). The early 2015 study showed the Company closer to the 75th percentile in these performance measures. The peer group data is used by us as only one reference point taken into account in making compensation decisions. However, we generally believe that reviewing and analyzing this information is an important component of our executive compensation decision-making process.
The Company historically did not grant equity awards annually to Mr. Sacks and Mr. Schlosberg, but instead provided equity awards periodically to align compensation with performance on a discretionary basis. Equity awards were granted to Mr. Sacks and Mr. Schlosberg in 2013 to reward for and align with the Company’s strong performance in 2011 and 2012, but there were no equity awards granted in 2012. Beginning in 2014, the Company has moved to an annual grant philosophy to overlap vesting and provide a portfolio of exercise prices for equity awards. The 2014 option awards granted to Mr. Sacks and Mr. Schlosberg were made under this philosophy and also as a reward for, and to align with, the Company’s continued strong performance in 2013. Recent equity awards granted to Mr. Sacks and Mr. Schlosberg vest over a three-year period.
Compensation decisions for Mr. Kelly and Mr. Hall were discretionary and not based on specific performance targets. However, the Company considered FWC’s competitive market analysis for guidance in determining the total compensation for Mr. Kelly and Mr. Hall. Recent equity awards granted to Mr. Kelly typically vest over a three- to five-year period and recent equity awards granted to Mr. Hall typically vest over a five-year period.
We view all components of compensation as related but distinct. We determine the appropriate level for each compensation component, based in part, but not exclusively, on competitive benchmarks gathered through our recruiting and retention experience, our review of internal comparatives as well as other considerations we deem relevant, such as rewarding for individual and corporate performance. We believe that equity awards effectively reward for long-term performance and are an important compensation-related motivator to attract and retain executives through the vesting periods and through sharing in the value they create. Except as described herein, neither our Compensation Committee nor our Executive Committee have adopted any formal or informal policies or guidelines for allocating compensation between short-term and long-term and current compensation between cash and non-cash compensation. However, our Compensation Committee and Executive Committee’s respective philosophy is that a greater percentage of our NEOs’ compensation should be rewarded in equity rather than cash. Compensation packages for each of our NEOs are tailored to each individual NEO’s circumstances by the Compensation Committee and/or the Executive Committee, as appropriate, and are largely based on subjective evaluations of overall and individual performance. Each element of compensation is determined differently for each individual NEO based on a variety of facts and circumstances applicable at the time and to that specific NEO.
Our Compensation Committee and Executive Committee’s current intent is to perform an annual strategic review of compensation paid to our NEOs to determine whether they have provided adequate incentives and motivation to such NEOs, and whether they adequately compensate our NEOs relative to comparable officers in other companies with which we compete for executives. For compensation decisions, including decisions regarding the grant of equity compensation relating to NEOs, other than our Chairman and Chief Executive Officer and our Vice Chairman and President, the Compensation Committee specifically considers recommendations from the Executive Committee.
Results of 2014 Advisory Vote to Approve Executive Compensation
At our 2014 annual meeting of Stockholders, 97.8% of the votes cast were in favor of our advisory resolution regarding the compensation of our NEOs. The Compensation Committee believes this affirms the stockholders’ support of the Company’s pay-for-performance philosophy with respect to executive compensation. The Compensation Committee will continue to consider the results of future advisory votes on executive compensation.
Compensation Program Components
Our NEO compensation currently has three primary components: base compensation or salary, annual cash bonus, and equity awards granted pursuant to our 2011 Incentive Plan.
Each of the primary components of NEO compensation is discussed below.
Base Salary
Base salaries for our NEOs are established based on the scope of their individual responsibilities, taking into account competitive market compensation paid by other companies for individuals in similar positions. We fix NEO base compensation at levels which we believe enable us to retain individuals in a competitive environment (but without any fixed formula) and reward performance at an acceptable level based upon contributions to our overall business goals. We may also utilize input on compensation from compensation consultants, executive search firms and market data when making crucial hiring decisions.
The Compensation Committee determines the base salaries for Mr. Sacks and Mr. Schlosberg and the Executive Committee (comprised of the Chairman and Chief Executive Officer and the Vice Chairman and President) determines the base salaries for the other NEOs.
Annual Cash Bonus Opportunity
We provide incentive compensation to our NEOs in the form of an annual cash bonus based on a qualitative review of individual and company-wide financial and operational performance, consistent with our emphasis on pay-for-performance incentive compensation programs. In determining bonus awards, our Compensation Committee and Executive Committee review various strategic factors such as sales revenues, distribution levels, introduction of new products, corporate partnerships, overall operating performance, contribution margins and/or profitability, which are used as a broad guide of overall performance. We generally utilize annual cash bonuses to reward performance achievements for the time horizon of one year or less.
The actual amount of the annual bonus is determined and paid in the first quarter following a qualitative review of each NEO’s individual performance and contribution to our strategic goals during the prior year.
The Compensation Committee determines the annual bonuses for Mr. Sacks and Mr. Schlosberg and the Executive Committee (comprised of the Chairman and Chief Executive Officer and the Vice Chairman and President) determines the annual bonuses for the other NEOs.
Long-Term Incentive Program
We believe that long-term performance is achieved through an ownership culture that encourages superior performance by our NEOs through the use of equity awards. Our equity compensation plans have been established to provide our NEOs with incentives to further align their interests with the interests of the stockholders. Equity compensation to our NEOs generally vests over three to five years. Stock options are our preferred form of long-term incentive compensation because we believe they are simple, tax-deferred, and inherently performance-based with value earned only if the price of our common stock appreciates after the options are granted.
The Compensation Committee reviews and approves equity awards to our NEOs based upon compensation data principally gathered through a market analysis conducted by our retained compensation consultants, our recruiting and retention experience, our qualitative assessment of individual performance, as well as a review of each executive’s current long-term incentives and retention considerations.
Other Compensation
Certain NEOs who are parties to employment agreements will continue to be subject to such agreements in their current form based on the terms such agreements, or until such time as the Compensation Committee determines in its discretion that revisions to such employment agreements are recommended. For a summary description of the terms of these agreements, see “Discussion of Summary Compensation Table - Agreements with Named Executive Officers” below. In addition, we intend to continue to maintain our current benefits and perquisites for our NEOs, which include automobile and benefit premiums, among other perquisites. However, the Compensation Committee in its discretion may revise, amend or add to such NEOs benefits and perquisites if it deems it advisable. We believe these benefits and perquisites are currently in line with those provided by comparable companies within the consumer products industry, the food and beverage industry and within the labor markets in which we participate for similarly situated executives, based principally on information gathered through our recruiting and retention experience.
Employee Benefit Plans
Our employees, including our NEOs, are entitled to various employee benefits, which generally include health care plans, flexible spending accounts, life and disability insurance, 401(k) Plan, paid time off, automobile benefits, as well as other allowances.
401(k) Plan
Our employees, including our NEOs, may participate in our 401(k) Plan, a defined contribution plan that qualifies under Section 401(k) of the Internal Revenue Code (the “Code”). Participating employees may contribute up to statutory limits. We make discretionary matching contributions, and currently contribute 25% of the employee contribution, up to 8% of each employee’s earnings on a per pay period basis, which vests at a rate of 20% each year for five years after the first anniversary date.
Separation and Change in Control Arrangements
Certain of our NEOs, per the terms of their respective employment agreements and/or employment offer letters and/or amendments to conditions of employment and/or equity award agreements, are eligible for certain benefits and/or payments if there is a change in control and/or employment terminates following a change in control, as described under “Potential Payments Upon Termination or Change in Control” beginning on page 24.
We believe these arrangements are an important part of overall compensation and will help to secure the continued employment and dedication of our NEOs prior to or following a change in control, notwithstanding any concern that they may have at such time regarding their own continued employment. In addition, we believe that these arrangements are an important recruitment and retention incentive. These arrangements do not provide for tax gross ups.
Tax Implications
Section 162(m) of the Code imposes a $1 million limit on the deduction that we may claim in any tax year with respect to compensation paid to any of the NEOs, excluding the principal financial officer. However, the Code allows for certain types of performance-based exemptions to this $1 million limit, provided that the compensation plan meets certain requirements. Our stock option grants generally comply with the performance-based exemption of Section 162(m). The Compensation Committee, which is comprised solely of “outside directors” as defined for the purposes of Section 162(m) of the Code, believes that stockholder interests are best served if the Compensation Committee’s discretion and flexibility in awarding compensation is not restricted, even though some compensation awards may result in non-deductible compensation expenses. Therefore, the Compensation Committee reserves the right to authorize payments or take other actions that can result in the payment of compensation that is not deductible for income tax purposes.
Executive Compensation Tables
Summary Compensation Table
On August 8, 2005, our Common Stock was split on a two-for-one basis through a 100% stock dividend. On July 7, 2006, our Common Stock was split on a four-for-one basis through a 300% stock dividend. On February 15, 2012, our Common Stock was split on a two-for-one basis through a 100% stock dividend. All share information has been presented to reflect the stock splits.
The Board, in consultation with its legal advisors, reviewed the roles and responsibilities of certain executives and determined who would be deemed an executive officer of the Company. The following table summarizes the total compensation of our NEOs during the fiscal years ended December 31, 2014, 2013 and 2012. During the fiscal year ended December 31, 2014, our NEOs were Rodney C. Sacks, Hilton H. Schlosberg, Mark J. Hall and Thomas J. Kelly.
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($)(1) | All Other Compensation ($) (A) | Total ($) | |
|---|---|---|---|---|---|---|---|---|
| Rodney C. Sacks Chairman, CEO and Director | 2014 | 600,000 | 300,000 | - | 6,606,390 | 76,023 | 7,582,413 | |
| 2013 | 550,000 | 300,000 | - | 5,303,844 | 69,949 | 6,223,793 | ||
| 2012 | 475,000 | 275,000 | - | - | 48,955 | 798,955 | ||
| Hilton H. Schlosberg Vice-Chairman, CFO, COO, President, Secretary and Director | 2014 2013 2012 | 600,000 550,000 475,000 | 300,000 300,000 275,000 | - - - | 6,606,390 5,303,844 - | 43,189 43,223 41,161 | 7,549,579 6,197,067 791,161 | |
| Mark J. Hall Chief Marketing Officer and Director | 2014 | 254,711 | 200,000 | - | 943,770 | 21,477 | 1,419,958 | |
| 2013 | 425,000 | 275,000 | - | 2,038,830 | 23,351 | 2,762,181 | ||
| 2012 | 400,000 | 250,000 | - | - | 23,483 | 673,483 | ||
| Thomas J. Kelly Senior Vice President Finance | 2014 | 270,000 | 100,000 | 166,950 | 873,675 | 20,824 | 1,431,449 | |
| 2013 | 250,000 | 80,000 | - | 305,825 | 20,024 | 655,849 | ||
| 2012 | 230,000 | 70,000 | 211,620 | - | 19,526 | 531,146 |
(1) The amounts represent the current year grant date fair value for all share-based payment awards computed in accordance with Accounting Standards Codification (“ASC”) 718 based on the estimated fair value of the options on the date of grant using the Black-Scholes-Merton option pricing formula with the following assumptions:
| Name | Date | Dividend Yield | Expected Volatility | Risk-Free Interest Rate | Expected Term |
|---|---|---|---|---|---|
| Mr. Sacks | 03/14/2014 | 0% | 45.03% | 1.55% | 6.10 yrs. |
| Mr. Schlosberg | 03/14/2014 | 0% | 45.03% | 1.55% | 6.10 yrs. |
| Mr. Hall | 03/14/2014 | 0% | 45.03% | 1.55% | 6.10 yrs. |
| Mr. Kelly | 03/14/2014 | 0% | 39.57% | 1.55% | 5.47 yrs. |
| Mr. Kelly | 12/01/2014 | 0% | 37.26% | 1.52% | 5.40 yrs. |
(A) All Other Compensation
| Name | Year | Automobile ($) | 401(k) Match ($) | Benefit Premiums ($) | Perquisites ($) | Total ($) |
|---|---|---|---|---|---|---|
| 2014 | 38,710 | 5,200 | 24,274 | 7,839 | 76,023 | |
| 2013 | 39,526 | 5,750 | 19,765 | 4,908 | 69,949 | |
| Rodney C. Sacks | 2012 | 28,521 | 5,000 | 12,579 | 2,855 | 48,955 |
| 2014 | 23,408 | 5,200 | 14,581 | - | 43,189 | |
| 2013 | 23,984 | 5,750 | 13,489 | - | 43,223 | |
| Hilton H. Schlosberg | 2012 | 23,514 | 3,913 | 12,962 | 772 | 41,161 |
| 2014 | 10,159 | 4,077 | 7,241 | - | 21,477 | |
| 2013 | 12,577 | 4,077 | 6,697 | - | 23,351 | |
| Mark J. Hall | 2012 | 12,532 | 3,926 | 7,025 | 23,483 | |
| 2014 | 8,383 | 5,200 | 7,241 | - | 20,824 | |
| 2013 | 8,439 | 4,888 | 6,697 | - | 20,024 | |
| Thomas J. Kelly | 2012 | 8,141 | 4,360 | 7,025 | - | 19,526 |
Discussion of Summary Compensation Table
Agreements with Named Executive Officers:
Rodney C. Sacks – On March 18, 2014, we entered into a new employment agreement with Mr. Sacks (the “Sacks 2014 Employment Agreement”), pursuant to which Mr. Sacks continued to render services as our Chairman and Chief Executive Officer. Under the Sacks 2014 Employment Agreement, Mr. Sacks’ annual base salary will be reviewed annually and increased at the discretion of our Board. Mr. Sacks is eligible to receive an annual bonus in an amount determined at the discretion of our Board as well as certain fringe benefits. The employment period of this agreement commenced on January 1, 2014 and continues through December 31, 2018, subject to automatic one year renewal periods on each December 31 thereafter, unless notice of intent to not renew is given by either us or Mr. Sacks by June 30, 2018 or any subsequent June 30, as may be applicable. Under the Sacks 2014 Employment Agreement, Mr. Sacks is subject to a confidentiality covenant and a six-month post-termination non-competition covenant. The Sacks 2014 Employment Agreement is subject to termination (i) upon the death or disability of Mr. Sacks, (ii) voluntarily by Mr. Sacks on 90 days’ written notice, (iii) for Cause (as defined therein) by us, or (iv) upon Constructive Termination (as defined therein) by Mr. Sacks. The severance provisions in the Sacks 2014 Employment Agreement are discussed in the “Potential Payments Upon Termination or Change in Control” section below. Since January 1, 2009, we entered into certain equity compensation agreements with Mr. Sacks as disclosed in the “Grants of Plan-Based Awards” table below.
Hilton H. Schlosberg – On March 18, 2014, we entered into a new employment agreement with Mr. Schlosberg (the “Schlosberg 2014 Employment Agreement”), pursuant to which Mr. Schlosberg continued to render services as our Vice Chairman and Chief Financial Officer. Under the Schlosberg 2014 Employment Agreement, Mr. Schlosberg’s annual base salary will be reviewed annually and increased at the discretion of our Board. Mr. Schlosberg is eligible to receive an annual bonus in an amount determined at the discretion of our Board as well as certain fringe benefits. The
employment period of this agreement commenced on January 1, 2014 and continues through December 31, 2018, subject to automatic one year renewal periods on each December 31 thereafter, unless notice of intent to not renew is given by either us or Mr. Schlosberg by June 30, 2018 or any subsequent June 30, as may be applicable. Under the Schlosberg 2014 Employment Agreement, Mr. Schlosberg is subject to a confidentiality covenant and a six-month post-termination non-competition covenant. The Schlosberg 2014 Employment Agreement is subject to termination (i) upon the death or disability of Mr. Schlosberg, (ii) voluntarily by Mr. Schlosberg on 90 days’ written notice, (iii) for Cause (as defined therein) by us, or (iv) upon Constructive Termination (as defined therein) by Mr. Schlosberg. The severance provisions in the Schlosberg 2014 Employment Agreement are discussed in the “Potential Payments Upon Termination or Change in Control” section below. Since January 1, 2009, we entered into certain equity compensation agreements with Mr. Schlosberg as disclosed in the “Grants of Plan-Based Awards” table below.
Mark J. Hall – On October 28, 2013, Mr. Hall entered into an agreement (the “Hall 2013 Agreement”) with MEC. Pursuant to the Hall 2013 Agreement, Mr. Hall agreed to serve as a member of the Board for at least one year, effective January 1, 2014. Effective January 1, 2014, Mr. Hall resigned as President of the Monster Beverage Division and was appointed Chief Brand Officer of MEC, for which Mr. Hall received an annual salary of $250,000. Mr. Hall was eligible to receive an annual bonus in an amount determined at the discretion of our Executive Committee as well as certain fringe benefits. The Hall 2013 Agreement provided for a sabbatical and leave of absence for Mr. Hall from October 28, 2013 through December 31, 2013. Since January 1, 2009, we entered into certain equity compensation agreements with Mr. Hall as disclosed in the “Grants of Plan-Based Awards” table below.
On March 12, 2015, Mr. Hall entered into a new employment agreement (the “Hall 2015 Agreement”) with MEC. The Hall 2015 Agreement confirmed Mr. Hall’s position change from Chief Brand Officer to Chief Marketing Officer of Monster Energy on a full-time basis, effective as of January 1, 2015. As Chief Marketing Officer of Monster Energy, Mr. Hall will receive an annual base salary of $500,000. Mr. Hall is also eligible to receive an annual bonus in an amount to be determined at the discretion of our Executive Committee. The Hall 2015 Agreement provides that Mr. Hall’s employment as Chief Marketing Officer of Monster Energy is of an at-will nature, for no specified period of time. Pursuant to the Hall 2015 Agreement, if Mr. Hall’s employment with MEC is terminated without cause, Mr. Hall will be entitled to receive three months of severance pay (or severance pay as negotiated between the parties), subject to certain restrictions, as well as all applicable employee benefits of MEC during such three-month period.
Thomas J. Kelly – Mr. Kelly’s employment is “at will” and thus may be terminated at any time for any or no reason. Effective January 1, 2015, Mr. Kelly’s annual base salary is $300,000. Mr. Kelly is eligible to receive an annual bonus in an amount determined at the discretion of our Executive Committee as well as certain fringe benefits. Since January 1, 2009, we entered into certain equity compensation agreements with Mr. Kelly as disclosed in the “Grants of Plan-Based Awards” table below.
Grants of Plan-Based Awards
The following table summarizes grants of plan-based awards granted to our NEOs during the fiscal year ended December 31, 2014.
| Name | Grant Date | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Shares Underlying Options (#) | Exercise or Base Price of Option Awards ($/Share) | Grant Date Fair Value of Stock and Option Awards ($)(1) |
|---|---|---|---|---|---|
| Rodney C. Sacks | 03/14/2014 | - | 210,000 | $ 70.06 | $ 6,606,390 |
| Hilton H. Schlosberg | 03/14/2014 | - | 210,000 | $ 70.06 | $ 6,606,390 |
| Mark J. Hall | 03/14/2014 | - | 30,000 | $ 70.06 | $ 943,770 |
| Thomas J. Kelly | 03/14/2014 | - | 10,000 | $ 70.06 | $ 268,840 |
| Thomas J. Kelly | 12/01/2014 | - | 15,000 | $ 111.30 | $ 604,835 |
| Thomas J. Kelly | 12/01/2014 | 1,500 | - | $ - | $ 166,950 |
(1) The amounts represent the current year grant date fair value for all share-based payment awards computed in accordance with ASC 718.
Outstanding Equity Awards at Fiscal Year-End
The following table summarizes the outstanding equity awards held by our NEOs at December 31, 2014.
| Option Awards | Stock Awards | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Exercise Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | ||
| Rodney C. Sacks | 03/23/2005 | 1,446,254 | - | - | 3.29375 | 03/23/2015 | - | - | - | - | ||
| 11/11/2005 | 960,000 | - | - | 8.43500 | 11/11/2015 | - | - | - | - | |||
| 06/02/2008 | 18,912 | - | - | 15.86000 | 06/02/2018 | - | - | - | - | |||
| 12/01/2009 | 100,000 | - | - | 17.82000 | 12/01/2019 | - | - | - | - | |||
| 06/03/2013 | 70,000 | 140,000 | (1) | - | 53.96000 | 06/03/2023 | - | - | - | - | ||
| 03/14/2014 | - | 210,000 | (2) | - | 70.06000 | 03/14/2024 | - | - | - | - | ||
| Hilton H. Schlosberg | 03/23/2005 | 1,446,254 | - | - | 3.29375 | 03/23/2015 | - | - | - | - | ||
| 11/11/2005 | 960,000 | - | - | 8.43500 | 11/11/2015 | - | - | - | - | |||
| 06/02/2008 | 18,912 | - | - | 15.86000 | 06/02/2018 | - | - | - | - | |||
| 12/01/2009 | 100,000 | - | - | 17.82000 | 12/01/2019 | - | - | - | - | |||
| 06/03/2013 | 70,000 | 140,000 | (1) | - | 53.96000 | 06/03/2023 | - | - | - | - | ||
| 03/14/2014 | - | 210,000 | (2) | - | 70.06000 | 03/14/2024 | - | - | - | - | ||
| Mark J. Hall | 12/01/2009 | 80,000 | - | - | 17.82000 | 12/01/2019 | - | - | - | - | ||
| 12/01/2010 | 20,000 | 20,000 | (3) | - | 26.25500 | 12/01/2020 | - | - | - | - | ||
| 09/01/2011 | - | - | - | - | - | 10,000 | (4) | 1,083,500 | - | - | ||
| 03/14/2013 | - | 90,000 | (5) | - | 47.13000 | 03/14/2023 | - | - | - | - | ||
| 03/14/2014 | - | 30,000 | (6) | - | 70.06000 | 03/14/2024 | - | - | - | - | ||
| Thomas J. Kelly | 06/02/2008 | 8,000 | - | - | 15.86000 | 06/02/2018 | - | - | - | - | ||
| 06/01/2009 | 8,000 | - | - | 18.06500 | 06/01/2019 | - | - | - | - | |||
| 12/01/2009 | 8,000 | - | - | 17.82000 | 12/01/2019 | - | - | - | - | |||
| 12/01/2010 | 8,000 | 4,000 | (7) | - | 26.25500 | 12/01/2020 | - | - | - | - | ||
| 06/01/2012 | - | - | - | - | - | 3,000 | (8) | 325,050 | - | - | ||
| 03/14/2013 | 1,500 | 13,500 | (9) | - | 47.13000 | 03/14/2023 | - | - | - | - | ||
| 03/14/2014 | - | 10,000 | (10) | - | 70.06000 | 03/14/2024 | - | - | - | - | ||
| 12/01/2014 | - | - | - | - | - | 1,500 | (11) | 162,525 | - | - | ||
| 12/01/2014 | - | 15,000 | (12) | - | 111.30000 | 12/01/2024 | - | - | - | - |
(1) Vest as follows: 70,000 on June 3, 2015; 70,000 on June 3, 2016.
(2) Vest as follows: 70,000 on March 14, 2015; 70,000 on March 14, 2016; 70,000 on March 14, 2017
(3) Vest as follows: 20,000 on December 1, 2015.
(4) Vest as follows: 5,000 on September 1, 2015; 5,000 on September 1, 2016
(5) Vest as follows: 15,000 on March 14, 2015; 20,000 on March 14, 2016; 25,000 on March 14, 2017; 30,000 on March 14, 2018
(6) Vest as follows: 3,000 on March 14, 2015; 4,500 on March 14, 2016; 6,000 on March 14, 2017; 7,500 on March 14, 2018; 9,000 on March 14, 2019
(7) Vest as follows: 4,000 on December 1, 2015.
(8) Vest as follows: 1,500 on June 1, 2016; 1,500 on June 1, 2017
(9) Vest as follows: 2,250 on March 14, 2015; 3,000 on March 14, 2016; 3,750 on March 14, 2017; 4,500 on March 14, 2018
(10) Vest as follows: 1,000 on March 14, 2015; 1,500 on March 14, 2016; 2,000 on March 14, 2017; 2,500 on March 14, 2018; 3,000 on March 14, 2019
(11) Vest as follows: 500 on December 1, 2015; 500 on December 1, 2016; 500 on December 1, 2017
(12) Vest as follows: 1,500 on December 1, 2015; 2,250 on December 1, 2016; 3,000 on December 1, 2017; 3,750 on December 1, 2018; 4,500 on December 1, 2019
Options Exercised and Stock Vested
The following table summarizes the exercise of stock options and stock vested by our NEOs during the Company’s fiscal year ended December 31, 2014.
| Option Awards | Stock Awards | |||
|---|---|---|---|---|
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) |
| Rodney C. Sacks | - | - | 87,000 | 7,809,990 |
| Hilton H. Schlosberg | - | - | 87,000 | 7,809,990 |
| Mark J. Hall | 110,000 | 7,452,347 | 21,668 | 1,806,642 |
| Thomas J. Kelly | - | - | - | - |
Pension Benefits
We do not maintain or make contributions to a defined benefit plan for any of our NEOs.
Non-Qualified Deferred Compensation
None of our NEOs participated or have account balances in non-qualified defined contribution plans or other deferred compensation plans maintained by us. The Compensation Committee may elect to provide our NEOs or other employees with non-qualified defined contribution or deferred compensation benefits should they deem such benefits appropriate.
Potential Payments Upon Termination or Change in Control
We have entered into certain agreements and maintain certain plans that may require us to make certain payments and/or provide certain benefits to our NEOs in the event of a termination of their employment or a change of control. The following tables and narrative disclosure summarize the potential payments to each of our NEOs assuming that one of the events listed in the tables below occurs. The tables assume that the event occurred on December 31, 2014, the last day of our fiscal year.
Key Employment Agreement and Equity Award Agreement Definitions
For purposes of the Sacks 2014 Employment Agreement and the Schlosberg 2014 Employment Agreement described in this section, “cause” (under which we may terminate their employment) is defined as: (i) an act or acts of dishonesty or gross misconduct on the executive’s part which result or are intended to result in material damage to our business or reputation; or (ii) repeated material violations by the executive of his obligations relating to his position and duties, which violations are demonstrably willful and deliberate on the executive’s part and which result in material damage to our business or reputation and as to which material violations our Board has notified the executive in writing.
For purposes of the Sacks 2014 Employment Agreement and the Schlosberg 2014 Employment Agreement described in this section, constructive termination (under which they may terminate their employment) is defined as: (i) without the written consent of the executive, (A) the assignment to the executive of any duties inconsistent in any substantial respect with the executive’s position, authority or responsibilities as contemplated by the position and duties described in his employment agreement, or (B) any other substantial adverse change in such position, including titles, authority or responsibilities; (ii) any failure by us to comply with any of the provisions of his employment agreement, other than an insubstantial or inadvertent failure, remedied by us promptly after receipt of notice thereof given by the executive; (iii) our requiring the executive without his consent to be based at any office location outside of Riverside County, California or Orange County, California, except for travel reasonably required in the performance of the executive’s responsibilities; or (iv) any failure by the Company to obtain the assumption and agreement by a successor entity to perform his employment agreement, provided that the successor entity has had actual written notice of the existence of his employment agreement and its terms and an opportunity to assume the Company’s responsibilities under his employment agreement during a period of 10 business days after receipt of such notice.
For purposes of the Sacks 2014 Employment Agreement and the Schlosberg 2014 Employment Agreement described in this section, disability is defined as any disability which would entitle the executive to receive full long-term disability benefits under our long-term disability plan, or if no such plan will then be in effect, any physical or mental disability or incapacity which renders the executive incapable of performing the services and obligations required of him relating to the executive’s position and duties for a period of more than 120 days in the aggregate during any 12-month period during the employment period.
For purposes of the restricted stock unit agreements with Mr. Sacks and Mr. Schlosberg, good reason is defined as termination of employment on or after a reduction in his compensation or benefits, his removal from his current position, or his being assigned duties and responsibilities that are inconsistent with the dignity, importance of scope of his position.
For purposes of the restricted stock unit agreements with Mr. Sacks and Mr. Schlosberg, cause is defined as an act of fraud or dishonesty, knowing and material failure to comply with applicable laws or regulations, or drug or alcohol abuse, in any case as determined by the Board.
For purposes of the stock option agreements with Mr. Sacks and Mr. Schlosberg, change in control is defined as: (i) the acquisition of “Beneficial Ownership” by any person (as defined in rule 13(d)–3 under the Exchange Act), corporation or other entity other than us or a wholly-owned subsidiary of 20% or more of our outstanding stock; (ii) the sale or disposition of substantially all of our assets; or (iii) our merger with another corporation in which our Common Stock is no longer outstanding after such merger.
For purposes of the stock option agreements with Mr. Sacks and Mr. Schlosberg, cause (under which we may terminate their employment) is defined as the individual’s act of fraud or dishonesty, knowing and material failure to comply with applicable laws or regulations or drug or alcohol abuse; and good reason (under which they may terminate their employment) is defined as a reduction in the individual’s compensation or benefits, the individual’s removal from his current position or the assignment to the individual of duties or responsibilities that are inconsistent with the dignity, importance or scope of his position with us.
For purposes of all the stock option agreements, total disability is defined as the complete and permanent inability of the executive to perform all his duties of employment with us.
For purposes of the Hall 2015 Agreement, “good cause” (under which we may terminate employment with no obligation to pay severance) will include: (i) the neglect, breach of duty, or any failure to perform, to the reasonable satisfaction of the Executive Committee; (ii) the conviction of a felony, or any determination by the Executive Committee of the commission of theft, larceny, embezzlement, fraud, dishonesty, illegality, moral turpitude, harassment or gross mismanagement; (iii) the death or material disability to such an extent that, even with reasonable accommodation, the executive is precluded from performing the essential duties of his position; or (iv) the breach of the Hall 2015 Agreement or any fiduciary duties to MEC.
For purposes of the stock option agreements with Mr. Hall, change in control is generally defined as: (i) the acquisition of “beneficial ownership” by any person (as defined in Rule 13(d)–3 under the Exchange Act), corporation or other entity other than us or a wholly-owned subsidiary of ours of 50% or more of our outstanding stock; (ii) the sale or disposition of substantially all of our assets; or (iii) our merger with another corporation in which our Common Stock is no longer outstanding after such merger.
For purposes of the stock option agreements with Mr. Hall and Mr. Kelly, cause (under which we may terminate their employment) is defined as the individual’s act of fraud or dishonesty, knowing and material failure to comply with applicable laws or regulations or satisfactory performance of his duties of employment, insubordination or drug or alcohol abuse.
| Rodney C. Sacks | |||||||
|---|---|---|---|---|---|---|---|
| Circumstances of Termination | |||||||
| Payments and Benefits | Death ($) | Disability ($) | Non- Renewal by Executive ($) | Cause ($) | Voluntary Termination ($) | Termination by Corporation other than for Cause or Disability or Termination by the Executive for Constructive Termination or Good Reason ($) | Change in control ($) |
| (a) | (a) | (b) | (c) | (d) | (d) | (f) | |
| Base Salary | 600,000 | 600,000 | - | - | 300,000 | 1,223,077 | - |
| Bonus | - | - | - | - | - | 300,000 | - |
| Vacation | 77,206 | 77,206 | 77,206 | 77,206 | 77,206 | 77,206 | - |
| Benefit Plans | 24,274 | 32,825 | - | 16,413 | 16,413 | 131,300 | - |
| Automobile | 38,710 | 38,710 | - | - | - | 154,840 | - |
| Perquisites & other personal benefits | - | - | - | - | - | - | - |
| Acceleration of stock option awards | - | - | - | - | - | 7,362,716 | 7,362,716 |
| Total | 740,190 | 748,741 | 77,206 | 93,619 | 393,619 | 9,249,139 | 7,362,716 |
(a) Under the Sacks 2014 Employment Agreement, upon termination due to death or disability, Mr. Sacks, or his legal representative, would be entitled to continuation of base salary, payment of benefit premiums for himself and his family and automobile benefits for a period of one year from the date of termination and payment for accrued vacation.
(b) Under the Sacks 2014 Employment Agreement, upon non-renewal by Mr. Sacks, Mr. Sacks would be entitled to payment for accrued vacation.
(c) Under the Sacks 2014 Employment Agreement, upon termination by us for cause, Mr. Sacks would be entitled to payment of benefit premiums for himself and his family for a period of six months from the date of termination and payment for accrued vacation.
(d) Upon voluntary termination by Mr. Sacks, Mr. Sacks would be entitled to payment of his full base salary for a period of six months from the date of termination, payment of benefit premiums for himself and his family for a period of six months from the date of termination and payment for accrued vacation.
(e) Under the Sacks 2014 Employment Agreement, upon termination by us without cause or termination by Mr. Sacks for constructive termination, or if we elected not to renew his employment agreement, Mr. Sacks would be entitled to a payment of two times his base salary, at the rate in effect on the date of termination, and a pro-rata portion of the bonus received in the year immediately prior to the year of the termination date, payable in the same manner and at the same time as the other senior officers of the Company, as if he remained employed through the applicable payment date. In addition, Mr. Sacks would be entitled to payment of all benefit premiums and automobile benefits for the period from the date of termination to December 31, 2018, or through the date which is eighteen months from the date of termination, whichever period is longer. Also, in the case of termination without cause, Mr. Sacks would be entitled to two weeks base salary in lieu of notice at the rate in effect on the date of termination. In addition, under Mr. Sacks’ stock equity agreements, if Mr. Sacks’ employment is terminated by us without cause or by Mr. Sacks for good reason, all equity awards will immediately become exercisable in their entirety.
(f) Under Mr. Sacks’ equity agreements, upon a change in control, all equity awards will immediately become exercisable in their entirety. With respect to Mr. Sacks’ stock option agreements, options may, with the consent of Mr. Sacks, be purchased by the Company for cash at a price equal to the aggregate of the fair market value for one (1) share of our common stock less the purchase price payable by Mr. Sacks to exercise the options as set forth under each option agreement, multiplied by the number of shares of Common Stock which Mr. Sacks has the option to purchase.
| Hilton H. Schlosberg | |||||||
|---|---|---|---|---|---|---|---|
| Circumstances of Termination | |||||||
| Payments and Benefits | Death ($) | Disability ($) | Non- Renewal by Executive ($) | Cause ($) | Voluntary Termination ($) | Termination by Corporation other than for Cause or Disability or Termination by the Executive for Constructive Termination or Good Reason ($) | Change in control ($) |
| (a) | (a) | (b) | (c) | (d) | (e) | (f) | |
| Base Salary | 600,000 | 600,000 | - | - | 300,000 | 1,223,077 | - |
| Bonus | - | - | - | - | - | 300,000 | - |
| Vacation | 49,731 | 49,731 | 49,731 | 49,731 | 49,731 | 49,731 | - |
| Benefit Plans | 14,581 | 23,132 | - | 11,566 | 11,566 | 92,528 | - |
| Automobile | 23,408 | 23,408 | - | - | - | 93,632 | - |
| Perquisites & other personal benefits | - | - | - | - | - | - | - |
| Acceleration of stock option awards | - | - | - | - | - | 7,362,716 | 7,362,716 |
| Total | 687,720 | 696,271 | 49,731 | 61,297 | 361,297 | 9,121,684 | 7,362,716 |
| (a) | Under the Schlosberg 2014 Employment Agreement, upon termination due to death or disability, Mr. Schlosberg, or his legal representative, would be entitled to continuation of base salary, payment of benefit premiums for himself and his family and automobile benefits for a period of one year from the date of termination and payment for accrued vacation. | |
|---|---|---|
| (b) | Under the Schlosberg 2014 Employment Agreement, upon non-renewal by Mr. Schlosberg, Mr. Schlosberg would be entitled to payment for accrued vacation. | |
| (c) | Under the Schlosberg 2014 Employment Agreement, upon termination by us for cause, Mr. Schlosberg would be entitled to payment of benefit premiums for himself and his family for a period of six months from the date of termination and payment for accrued vacation. | |
| (d) | Upon voluntary termination by Mr. Schlosberg, Mr. Schlosberg would be entitled to payment of his full base salary for a period of six months from the date of termination, payment of benefit premiums for himself and his family for a period of six months from the date of termination and payment for accrued vacation. | |
| (e) | Under the Schlosberg 2014 Employment Agreement, upon termination by us without cause or termination by Mr. Schlosberg for constructive termination, or if we elected not to renew his employment agreement, Mr. Schlosberg would be entitled to a payment of two times his base salary, at the rate in effect on the date of termination, and a pro-rata portion of the bonus received in the year immediately prior to the year of the termination date, payable in the same manner and at the same time as the other senior officers of the Company, as if he remained employed through the applicable payment date. In addition, Mr. Schlosberg would be entitled to payment of all benefit premiums and automobile benefits for the period from the date of termination to December 31, 2018, or through the date which is eighteen months from the date of termination, whichever period is longer. Also, in the case of termination without cause, Mr. Schlosberg would be entitled to two weeks base salary in lieu of notice at the rate in effect on the date of termination. In addition, under Schlosberg’s stock equity agreements, if Mr. Schlosberg’s employment is terminated by us without cause or by Mr. Schlosberg for good reason, all equity awards will immediately become exercisable in their entirety. | |
| (f) | Under Mr. Schlosberg’s equity agreements, upon a change in control, all equity awards will immediately become exercisable in their entirety. With respect to Mr. Schlosberg’s stock option agreements, options may, with the consent of Mr. Schlosberg, be purchased by the Company for cash at a price equal to the aggregate of the fair market value for one (1) share of our common stock less the purchase price payable by Mr. Schlosberg to exercise the options as set forth under each option agreement, multiplied by the number of shares of Common Stock which Mr. Schlosberg has the option to purchase. |
| Mark J. Hall | ||||||
|---|---|---|---|---|---|---|
| Circumstances of Termination | ||||||
| Payments and Benefits | Death ($) | Disability ($) | Cause or Voluntary Termination ($) | Termination by Corporation other than for Cause or Disability ($) | Change in control ($) | |
| (a) | (a) | (b) | (c) | (d) | ||
| Base Salary | - | - | - | 41,667 | - | |
| Vacation | 25,338 | 25,338 | 25,338 | 25,338 | - | |
| Benefit Plans | 603 | 1,213 | 1,213 | 2,426 | - | |
| Automobile | - | - | - | - | - | |
| Perquisites & other personal benefits | - | - | - | - | - | |
| Acceleration of stock option awards | - | - | - | - | 264,431 | |
| Total | 25,941 | 26,551 | 26,551 | 69,431 | 264,431 |
| (a) | Under our general employment practices, upon termination due to death or disability, Mr. Hall, or his legal representative, is entitled to payment for accrued vacation. | |
|---|---|---|
| (b) | Under our general employment practices, upon termination by us for cause or voluntary termination by Mr. Hall, Mr. Hall is entitled to payment for accrued vacation. | |
| (c) | Under Mr. Hall’s employment offer letter, dated January 21, 1997, upon termination by us without cause, Mr. Hall would be entitled to two months of severance pay and the continuation of medical and dental benefit coverage for both himself and his family for a period of two months. In addition, under our general employment practices, upon termination by us without cause, Mr. Hall is entitled to payment for accrued vacation. | |
| (d) | Under Mr. Hall’s stock option agreements (exclusive of the stock option agreement dated December 1, 2010), upon a change in control, all stock option awards will immediately become exercisable in their entirety and the options may, with the consent of Mr. Hall, be purchased by us for cash at a price equal to the aggregate of the fair market value for one (1) share of our Common Stock less the purchase price payable by Mr. Hall to exercise the options as set forth under each option agreement, multiplied by the number of shares of Common Stock which Mr. Hall has the option to purchase. Under Mr. Hall’s stock option agreement dated December 1, 2010, our Board may, at any time, in its sole discretion, provide that upon the occurrence of a change in control (as determined by the Board), all or a specified portion of any outstanding options, not theretofore exercisable, will immediately become exercisable and that any options not exercised prior to such change in control will be canceled. |
| Thomas J. Kelly | ||||||
|---|---|---|---|---|---|---|
| Circumstances of Termination | ||||||
| Payments and Benefits | Death ($) | Disability ($) | Cause or Voluntary Termination ($) | Termination by Corporation other than for Cause or Disability ($) | Change in control ($) | |
| (a) | (a) | (b) | (c) | (d) | ||
| Base Salary | - | - | - | - | - | |
| Vacation | 10,927 | 10,927 | 10,927 | 10,927 | - | |
| Benefit Plans | 603 | 1,213 | 1,213 | 1,213 | - | |
| Automobile | - | - | - | - | - | |
| Perquisites & other personal benefits | - | - | - | - | - | |
| Acceleration of stock option awards | - | - | - | - | - | |
| Total | 11,531 | 12,140 | 12,140 | 12,140 | - |
| (a) | Under our general employment practices, upon termination due to death or disability, Mr. Kelly or his legal representative, is entitled to payment for accrued vacation. | |
|---|---|---|
| (b) | Under our general employment practices, upon termination by us for cause or voluntary termination by Mr. Kelly, Mr. Kelly is entitled to payment for accrued vacation. | |
| (c) | Under our general employment practices, upon termination by us without cause, Mr. Kelly is entitled to payment for accrued vacation. | |
| (d) | Under Mr. Kelly’s stock option agreements, the Board may, at any time, in its sole discretion, provide that upon the occurrence of a change in control (as determined by the Board), all or a specified portion of any outstanding options not theretofore exercisable, will immediately become exercisable and that any options not exercised prior to such change in control will be canceled. Under the Amendment to Conditions of Employment of Mr. Kelly dated December 7, 1999, if, following a change in control, Mr. Kelly’s employment with us is terminated by us other than for cause or in the event that Mr. Kelly resigns under circumstances which constitute constructive dismissal by us of Mr. Kelly, then Mr. Kelly will be entitled to receive severance pay from us as follows: If termination occurs within the first six (6) months after the change in control occurs, Mr. Kelly will be entitled to six (6) months severance pay in the amount of $125,000; if termination occurs between six (6) and twelve (12) months after the change in control occurs, Mr. Kelly will be entitled to five (5) months severance pay in the amount of $104,167; if termination occurs between twelve (12) and eighteen (18) months after the change in control occurs, Mr. Kelly will be entitled to four (4) months severance pay in the amount of $83,333 and if the termination occurs between eighteen and twenty-four (24) months after the change in control occurs, Mr. Kelly will be entitled to three (3) months severance pay in the amount of $62,500. |
Director Compensation
The following table sets forth a summary of the fees earned by our outside directors during the fiscal year ended December 31, 2014.
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Total ($) |
|---|---|---|---|---|
| Benjamin M. Polk | 60,000 | 144,969 | 204,969 | |
| Norman C. Epstein | 92,500 | 144,969 | 237,469 | |
| Sydney Selati | 85,000 | 144,969 | 229,969 | |
| Harold C. Taber, Jr. | 87,500 | 144,969 | 232,469 | |
| Mark S. Vidergauz | 67,500 | 144,969 | 212,469 |
-
The outside directors held the following numbers of restricted stock units as of December 31, 2014, which vest on the last business day prior to the Company’s 2015 annual shareholder meeting: Benjamin M. Polk, 2,101; Norman C. Epstein, 2,101; Harold C. Taber, Jr. 2,101; Mark S. Vidergauz, 2,101 and Sydney Selati, 2,101. Each restricted stock unit represents either (i) a contingent right to receive one share of the Common Stock or (ii) a cash amount equal to the number of shares received as of the vesting date (the last business day prior to the Company’s 2015 annual meeting of stockholders (the “Annual Meeting”).
-
The outside directors held the following numbers of outstanding stock options as of December 31, 2014; Benjamin M. Polk, 6,924; Norman C. Epstein, 0; Harold C. Taber, Jr. 45,324; Mark S. Vidergauz, 13,524 and Sydney Selati, 0.
In 2014, outside directors were entitled to receive an annual cash retainer of $60,000. Except for committee chairs, members of the Audit Committee received an additional annual retainer of $10,000 and members of the Compensation Committee and Nominating Committee received an additional $7,500. The chairman of the Audit Committee received an additional annual retainer of $15,000 and the chairs of the Compensation Committee and Nominating Committee each received an additional $10,000. In 2014, outside directors were entitled to receive an annual equity retainer of approximately $145,000. These awards vest one day prior to the Annual Meeting.
Outside Directors Equity Compensation Plans
The 2009 Hansen Natural Corporation Stock Incentive Plan for Non-Employee Directors (the “2009 Directors Plan”) permits the granting of options, stock appreciation rights (each, an “SAR”), and other stock-based awards to purchase up to an aggregate of 1,600,000 shares of common stock of the Company to non-employee directors of the Company. The 2009 Directors Plan is administered by the Board of Directors. Each award granted under the 2009 Directors Plan is to be evidenced by a written agreement and will contain the terms and conditions that the Board of Directors deems appropriate. The Board of Directors may grant such awards on the last business day prior to the date of the annual meeting of stockholders. Any award granted under the 2009 Directors Plan will vest, with respect to 100% of such award, on the last business day prior to the date of the annual meeting, in the calendar year following the calendar year in which such award is granted. The Board of Directors may determine the exercise price per share of the Company’s common stock under each option, but such price may not be less than 100% of the closing price of the Company’s common stock on the date an option is granted. Option grants may be made under the 2009 Directors Plan for 10 years from June 4, 2009. The Board of Directors may also grant SARs, independently, or in connection with an option grant. The Board of Directors may determine the exercise price per share of the Company’s common stock under each SAR, but such price may not be less than the greater of (i) the fair market value of a share on the date the SAR is granted and (ii) the price of the related option, if the SAR is granted in connection with an option grant. Additionally, the Board of Directors may grant other stock-based awards, which include awards of shares of the Company’s common stock, restricted shares of the Company’s common stock, and awards that are valued based on the fair market value of shares of the Company’s common stock. SARs and other stock-based awards are subject to the general provisions of the 2009 Directors Plan. The Board of Directors may amend or terminate the 2009 Directors Plan at any time. The 2009 Directors Plan replaced the 2005 Hansen Natural Corporation Stock Option Plan for Non-Employee Directors.
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