This excerpt taken from the HUSA DEF 14A filed Apr 27, 2009.
Stock Option and Equity Incentive Programs
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 well as the direct grant of stock, as a key retention tool. This is a very important factor in our determination of the terms of options granted and stock awarded, 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 or similar stock award and the market price of our common stock, we believe that granting stock options or shares of stock 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.
Stock Awards. Pursuant to our compensation committees review of our Peer Companies and consistent with our objectives in fixing total compensation as described above, during 2007, our compensation committee approved one-time stock awards, subject to individual agreements, of 41,700 shares of common stock to our Chief Executive Officer and 13,900 shares to our Chief Financial Officer. The share awards were fixed to approximate $225,000 of value to our Chief Executive Officer and $75,000 to our Chief Financial Officer based on the price of our stock at the time the awards were approved. Under the terms of the awards, none of the shares were issuable unless and until our shareholders approved the awards, which approval was obtained during 2008. Accordingly, while the awards were approved during 2007, no shares were issued during 2007 and no compensation in that regard was reflected in our financial statements in 2007. The stock awards were made during 2008 and are reflected in our 2008 financial statements and in the summary compensation table below.
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 2008, our compensation committee approved grants of ten year stock options to both our Chief Executive Officer and our Chief Financial Officer. The option grant to our Chief Executive Officer covered 900,000 shares and is subject to vesting over six years as well as a provision barring further option grants for three years. The option grant to our Chief Financial Officer covered 150,000 shares and is subject to vesting over three years.
Timing of Grants. Stock option awards to our executive officers and other key employees have, historically, been limited to the commencement of employment. In the future, we expect that stock option awards to our executive officers and key employees will typically be granted annually in conjunction with the review of the individual performance of our executive officers. This review is expected to take place at the regularly scheduled annual meeting of the compensation committee, which is expected to held in the second quarter of each year. Stock option awards are granted to our non-employee directors on their initial appointment or election and, thereafter, 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 the Nasdaq Stock Market.