Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Adoption of Fiscal 2023 Senior Management Equity Incentive Program
On
The FY2023 Program provides an incentive opportunity for the Company's executive officers and senior vice presidents (the "Eligible Employees") through the grant of an award expressed in "Units" where each Unit shall consist of (i) a restricted stock award representing 65% of the Unit (the "Restricted Stock Component"), to be granted to Eligible Employees upon approval of the FY2023 Program, and (ii) a cash bonus award representing 35% of the Unit (the "Cash Component"), to be paid to Eligible Employees on the later of (a) the payroll date following the Vesting Date (as defined below), or (b) the payroll date following the Compensation Committee's determination of the Company's achievement of performance goals. All awards under the FY2023 Program shall be subject to achievement of performance goals.
The value of the Restricted Stock Component of a Unit shall be set on the grant date of the Unit under the FY2023 Program. The value of the Cash Component of a Unit shall be calculated on the Vesting Date of the Unit as the product of 0.35 multiplied by the closing price of one share of the Company's Common Stock on the Vesting Date (the "Vesting FMV").
For example, if an award is expressed as 100 Units and all performance goals are
achieved at the 100% payout level (as more fully described below), all 100 Units
would fully vest. The Restricted Stock Component of the 100 Units would equate
to 65 fully vested shares of the Company's Common Stock. Assuming the Vesting
FMV is
For the avoidance of doubt, the Cash Component of a Unit does not represent any security interest in the Company, and does not in any way represent an ownership interest in the Company, nor does it give an Eligible Employee any rights as a shareholder of the Company.
Units granted under the FY2023 Program have both performance and service
measures. Achievement of an Eligible Employee's performance measures shall be
measured by the Committee as follows: (1) 65% of each Unit shall be based on the
achievement of a Company goal regarding revenue (the "Revenue Measure"); and (2)
35% of each Unit shall be based on the achievement of a Company goal regarding
EBITDA (the "EBITDA Measure" and together with the Revenue Measure, the "Company
Measures"), all for the period from
If the Company does not achieve 90% of the Revenue Measure, the Revenue Measure
component of each Restricted Stock Component of each Unit shall be forfeited and
the Cash Component of each Unit related to such Revenue Measure shall not be
paid. The Company must achieve at least 90% of the Revenue Measure in order for
the portion of the Unit attributed to the Revenue Measure to be vested/paid, as
applicable. Achievement of 90% or 100% of the Revenue Measure shall result in
payment of 50% or 75% of the portion of the Unit attributed to the Revenue
Measure, respectively. Achievement of revenue rounding to 103% or 110% of the
Revenue Measure shall result in payment of 100% or 125% of the portion of the
Unit attributed to the Revenue Measure, respectively, so long as the EBITDA
Measure is achieved. If the Company does not achieve 100% of the EBITDA Measure,
the EBITDA Measure component of each Restricted Stock Component of each Unit
shall be forfeited and the Cash Component of each Unit related to such EBITDA
Measure shall not be paid. The Company Measures are determined by the Committee
and may be modified by the Committee during, and after the end of, the
Performance Measurement Period, subject to the terms of the 2018 Plan. In
addition, an Eligible Employee must remain in continuous service until
Under the FY2023 Program, the Compensation Committee has granted the Chief Executive Officer 150,000 target Units, the Chief Financial Officer 75,000 target Units, and each Senior Vice President 50,000 target Units. The FY2023 Program also provides the Compensation Committee discretion to make additional awards above the targeted award level in recognition of extraordinary performance. The Restricted Stock Component and the Cash Component of all Units granted pursuant to the FY2023 Program shall be issued under and pursuant to the 2018 Plan.
The foregoing description of the FY2023 Program does not purport to be complete and is qualified in its entirety by reference to the FY2023 Program, a copy of which is filed as Exhibit 10.1 to this Form 8-K and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. Exhibit No. Description of Document 10.1Charles & Colvard, Ltd. Fiscal 2023 Senior Management Equity Incentive Program, effectiveJuly 1, 2022 + 104 Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL Document + Denotes management contract or compensatory plan or arrangement
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