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BRCD » Topics » AMENDMENT OF THE 1999 DIRECTOR OPTION PLAN

This excerpt taken from the BRCD DEF 14A filed Feb 25, 2008.
AMENDMENT OF THE 1999 DIRECTOR OPTION PLAN
 
We are asking our stockholders to approve an amendment to and restatement of the 1999 Director Option Plan (the “Plan”). The Compensation Committee, on behalf of our Board of Directors (“Board”), has approved the amendment, subject to approval from our stockholders at the Annual Meeting. If the stockholders approve the amendment, it will modify the current version of the Plan. Otherwise, the current version of the Plan will remain in effect. All of our non-employee directors (“Outside Directors”), to the extent that they may receive additional awards under the Plan in the future, have an interest in the proposal.
 
We are proposing to amend and restate the Plan so that we can continue to use the Plan to attract and retain the best available personnel for service as Outside Directors and to encourage their continued service on our Board. Currently, an Outside Director receives an automatic and non-discretionary initial stock option grant upon becoming an Outside Director and a subsequent annual grant upon each anniversary of the date he or she became an Outside Director. The following represents a brief summary of the material changes to the Plan:
 
  •  We are downwardly adjusting the size of the initial stock option grant.
 
  •  We are adding initial and annual grants of restricted stock units (which would begin upon approval of the amendment to the Plan).
 
  •  We are adjusting the vesting criteria of all awards.
 
  •  We are explicitly prohibiting the repricing of stock options granted pursuant to the Plan.
 
  •  We are changing the timing of grants of all annual awards under the Plan (other than the initial award made to an Outside Director) so that they will be made on the date of the Company’s annual meeting of shareholders (“Annual Meeting”).
 
  •  We are adding a methodology for phasing in the new grants and similarly adjusting the size of the first annual grants for new Outside Directors who start between Annual Meeting dates.
 
  •  We are adding a fungibility provision so that each restricted stock unit will count as 2.5 shares for purposes of determining the available number of shares for issuance under the Plan.
 
The following table provides a summary of grants under the current Plan compared to the Plan as proposed to be amended and is qualified by the greater detail below and the terms of the Plan itself:
 
                 
    Current Plan   Plan as Proposed to be Amended
    Number of
 		      Number of
 		   
    Equity
 		      Equity
 		   
Grant
  Grants   Vesting   Grants   Vesting(2)
 
New Outside Director
  80,000 options   1/48th monthly over 4 years   50,000 options   1/3rd annually over 3 years
Initial Grant
               
            15,000 restricted stock units   1/3rd annually over 3 years
Subsequent Annual Grants(1)
  20,000 options   1/4 each quarter after the 3rd year; vests completely after 4 years   20,000 options   100% at the end of 1 year
            10,000 restricted stock units   100% at the end of 1 year
 
 
(1) Currently, subsequent annual grants are made on the anniversary date of a director joining the Company’s Board. Under the Plan, as amended, the subsequent annual grants will be made on the date of the Company’s stockholder meeting. In order to transition from an anniversary date grant cycle (per director) to an annual meeting date grant cycle (for all Outside Directors), the size of the annual option awards will be reduced as we approach the 2009 Annual Meeting as described in more detail below under “Timing of Grants Under the Plan.” A similar adjustment is made when a new director receives the first annual grant.
 
(2) For grants made on an annual meeting date, subject to earlier vesting for a director who does not stand for re-election if the anniversary date is after the date of the annual meeting as described in more detail below.
 
We believe strongly that the approval of the Plan is essential to our continued success. Stock-based awards are vital to our ability to attract and retain outstanding and highly skilled individuals to serve on the Board. With


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increasing workloads, greater exposure and more stringent independence standards, recruiting and retaining Board members has become challenging. Concerns over executive compensation are drawing greater attention to corporate governance, Board independence and Board compensation; the SEC’s new disclosure rules will bring greater visibility and scrutiny to Board and executive compensation. The Board believes that the Plan is necessary so that the Company can continue to provide meaningful, long-term equity based incentives to present and future Outside Directors.
 
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