This excerpt taken from the XIDE DEF 14A filed Jul 27, 2006.
Long Term Incentives (Equity Compensation)
On August 30, 2005, the shareholders approved the 2004 Stock Incentive Plan (the 2004 Plan) to provide incentives and awards to certain employees, including the Chief Executive Officer and other senior
executive officers, directors and certain consultants. The types of awards available under the 2004 Plan include options, restricted shares and performance awards.
The 2004 Plan was created to align the interests of management with the long-term interests of our shareholders and consistent with the business strategy. For fiscal 2006, the Committee, after review with an independent compensation consultant, determined that an allocation of 25% options, 15% restricted shares and 60% cash performance unit awards would provide the appropriate balance of maximizing long-term shareholder value with the goals of compensating executive officers, as well as preserving shares in the 2004 Plan for future grants.
The amount of equity awards granted to each recipient is determined after consultation with the Committees independent consultant and is based on company performance, company standing in the market place, and competitive market data. The value of awards granted under the 2004 Plan ranges from 40% and 200% of the base compensation, depending on the participants position.
Pursuant to the 2004 Plan, 603,038 options (net of forfeitures) were granted to executive officers in fiscal 2006, representing 68.2% of all options awarded. The options have a three-year vesting period, with one-third of the options vesting on November 29, 2006, one-third vesting on November 29, 2007 and the remaining one-third vesting on November 29, 2008. The option awards are valued using the Black-Scholes model based on outside consultant review and determination of peer companies and their volatility rates and the exercise price was set at the 10-day trailing average closing price of common stock immediately prior to the grant date.
Pursuant to the 2004 Plan, 246,654 restricted shares (net of forfeitures) were approved for granting to executive officers in fiscal 2006, representing 70.4% of all shares awarded. These restricted shares have a five-year vesting period, with 20% vesting on November 29 of each year from 2006 through 2010. The number of restricted shares was based on a 10-day trailing average closing price of the common stock immediately prior to the grant date of the awards by the Board of Directors upon recommendations from the Committee.
The 2004 Plan provides the Committee with the discretion to grant performance awards to participants in the 2004 Plan. Performance awards provide executives with the opportunity to receive payments for meeting certain objective goals established by the Committee during a specified performance period. For fiscal 2006, the Board of Directors established targets based on Consolidated EBITDA and Return on Net Assets payable upon achievement of targets as of March 31, 2008.