This excerpt taken from the GRIL DEF 14A filed Apr 27, 2007.
Stock Option Program
We intend that our stock option program is the primary vehicle for offering long-term incentives and rewarding our executive officers and key employees. We also regard our stock option program as a key retention tool. This is a very important factor in our determination of the terms of options granted, including the number of underlying shares that are granted in connection with that award. Because of the direct relationship between the value of an option and the market price of our common stock, we believe that granting stock options is the best method of motivating the executive officers to manage our company in a manner that is consistent with the interests of our company and our stockholders.
Option Awards Granted. We grant options to our executive officers and key employees at the time of hiring and, thereafter, at the time of the compensation committees annual review of compensation based upon prior performance, the importance of retaining their services and the potential for their performance to help us attain our long-term goals. However, there is no set formula for the granting of options to individual executives
or employees. During 2006, we granted stock options to purchase 183,250 shares of common stock, or 2.9% of our outstanding stock on a fully diluted basis. Of the options granted during 2006, 94,000, or 51%, were to named executive officers and the balance was to other officers, non-employee directors and key employees. Of the options granted to named executive officers, 80,000, or 44%, were granted in conjunction with the promotion of Philip Gay from the CFO position to the CEO position and the hiring of Wayne Lipschitz as CFO.
Timing of Grants. Stock option awards to our executive officers and other key employees have, historically, been limited to the commencement of employment and annually thereafter in conjunction with the review of the individual performance of our executive officers. This review takes place at the regularly scheduled quarterly meeting of the compensation committee, which is typically held in June of each year. Stock option awards are granted to our non-employee directors on the date of our annual meeting of stockholders. Grants to newly hired employees are effective on the employees first day of employment, and to facilitate this practice, the compensation committee may authorize the chair of the compensation committee to grant individual stock awards to non-executive employees between scheduled meetings of the compensation committee. The compensation committee has adopted as a policy a specific prohibition of timing stock option grants, and has made no stock option grants, to coordinate with the release of material non-public information in any manner designed to affect the value of executive compensation. The exercise price of all stock options is set at the prior days closing price of our common stock on Nasdaq.
Stock Ownership Guidelines. We do not presently maintain any guidelines or requirements with respect to minimum number, or value, of our shares to be owned by our executive officers or directors. In determining whether to grant stock option awards, and the number of shares covered by stock option awards, we will, however, consider the number of shares held by an executive officer to determine whether additional grants will serve to motivate performance.