UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
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SCHEDULE 14A
Proxy Statement Pursuant
to Section 14(a) of the
Securities Exchange Act of 1934
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Filed by the Registrant x
Filed by a Party other than the Registrant ¨
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under Rule 14a-12
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IDT
Corporation
(Name of Registrant as
Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
x
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No fee required.
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Fee computed on table below per Exchange Act
Rule 14a-6(i)(1), and 0-11.
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(1)
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Title of each class of securities to which
transaction applies:
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(2)
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Aggregate number of securities to which
transactions applies:
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(3)
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Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and state how it
was determined):
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(4)
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Proposed maximum aggregate value of
transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary
materials.
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Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement
No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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IDT
CORPORATION
520 Broad Street
Newark, New Jersey 07102
(973) 438-1000
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
TIME
AND DATE:
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10:30 a.m., local time, on Monday, December 14,
2015
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PLACE:
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Hampton Inn & Suites Newark Riverwalk Hotel,
100 Passaic Ave, Harrison,
New Jersey 07029
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ITEMS
OF BUSINESS:
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1.
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To elect five directors, each for a term of one
year.
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2.
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To approve an amendment to the IDT Corporation
2015 Stock Option and Incentive Plan that will increase the number
of shares of the Company’s Class B Common Stock available for
the grant of awards thereunder by an additional 100,000
shares.
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3.
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To conduct an advisory vote on executive
compensation.
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4.
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To ratify the appointment of Grant Thornton LLP
as the Company’s independent registered public accounting
firm for the Fiscal Year ending July 31, 2016.
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5.
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To transact other business as may properly come
before the Annual Meeting and any adjournment or postponement
thereof.
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RECORD DATE:
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You can vote if you were a stockholder of record
as of the close of business on October 21, 2015.
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PROXY
VOTING:
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You can vote either in person at the Annual
Meeting or by proxy without attending the meeting. See details
under the heading “How do I Vote?”
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ANNUAL MEETING ADMISSION:
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If you are a stockholder of record, a form of
personal photo identification must be presented in order to be
admitted to the Annual Meeting. If your shares are held in the name
of a bank, broker or other holder of record, you must bring a
brokerage statement or other written proof of ownership as of
October 21, 2015 with you to the Annual Meeting, as well as a form
of personal photo identification.
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ANNUAL MEETING DIRECTIONS:
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You may request directions to the annual meeting
via email at invest@idt.net
or by calling IDT Investor Relations at (973) 438-3838.
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Important Notice Regarding the Availability of Proxy Materials for
the IDT Corporation Stockholders Meeting to be Held on December 14,
2015: The Notice of Annual
Meeting and Proxy Statement and the 2015 Annual Report are
available at:
www.idt.net/ir
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BY ORDER OF THE BOARD OF DIRECTORS
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Joyce Mason
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Executive Vice President, General Counsel
and
Corporate Secretary
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Newark, New Jersey
October 30, 2015
IDT
CORPORATION
520 Broad Street
Newark, New Jersey 07102
(973) 438-1000
_____________________
PROXY
STATEMENT
_____________________
GENERAL
INFORMATION
Introduction
This Proxy Statement is furnished to the stockholders of record of
IDT Corporation, a Delaware corporation (the “Company”
or “IDT”) as of the close of business on October 21,
2015, in connection with the solicitation by the Company’s
Board of Directors (the “Board of Directors”) of
proxies for use in voting at the Company’s Annual Meeting of
Stockholders (the “Annual Meeting”). The Annual Meeting
will be held on Monday, December 14, 2015 at 10:30 a.m., local
time, at the Hampton Inn & Suites Newark Riverwalk Hotel, 100
Passaic Ave, Harrison, New Jersey 07029. The shares of the
Company’s Class A common stock, par value $0.01 per share
(“Class A Common Stock”) and Class B common stock, par
value $0.01 per share (“Class B Common Stock”), present
at the Annual Meeting or represented by the proxies received by
Internet or mail (properly marked, dated and executed) and not
revoked, will be voted at the Annual Meeting. This Proxy Statement
is being mailed to the Company’s stockholders starting on
November 6, 2015.
Solicitation and Voting
Procedures
This solicitation of proxies is being made by the Company. The
solicitation is being conducted by mail and by e-mail, and the
Company will bear all attendant costs. These costs will include the
expense of preparing and mailing proxy materials for the Annual
Meeting and any reimbursements paid to brokerage firms and others
for their expenses incurred in forwarding the solicitation
materials regarding the Annual Meeting to the beneficial owners of
the Company’s Class A Common Stock and Class B Common Stock.
The Company may conduct further solicitations personally, by
telephone or by facsimile through its officers, directors and
employees, none of whom will receive additional compensation for
assisting with the solicitation.
The close of business on October 21, 2015 has been fixed as the
record date (the “Record Date”) for determining the
holders of shares of Class A Common Stock and Class B Common Stock
entitled to notice of, and to vote at, the Annual Meeting. As of
the close of business on the Record Date, the Company had
23,326,566 shares outstanding and entitled to vote at the Annual
Meeting, consisting of 1,574,326 shares of Class A Common Stock and
21,752,240 shares of Class B Common Stock. The remaining shares
issued, consisting of 1,698,000 shares of Class A Common Stock and
3,522,835 shares of Class B Common Stock, are beneficially owned by
the Company, and are not entitled to vote or to be counted as
present at the Annual Meeting for purposes of determining whether a
quorum is present. The shares of stock owned by the Company will
not be deemed to be outstanding for determining whether a majority
of the votes cast have voted in favor of any proposal.
Stockholders are entitled to three votes for each share of Class A
Common Stock held by them and one-tenth of one vote for each share
of Class B Common Stock held by them. The holders of Class A Common
Stock and Class B Common Stock will vote as a single body on all
matters presented to the stockholders. There are no
dissenters’ rights of appraisal in connection with any
proposal. Howard Jonas, the Chairman of the Board and holder of all
of the Class A Common Stock, entered into a voting agreement with
the Company, dated December 2, 2010, pursuant to which Howard Jonas
agreed to refrain from voting any shares that Howard Jonas controls
that represent more than 76.1% of the combined voting power of the
Company’s outstanding capital stock.
How do I
Vote?
You can vote either in person at the Annual Meeting or by proxy
without attending the meeting.
Beneficial holders of the Company’s Class A Common Stock and
Class B Common Stock as of the Record Date whose stock is held of
record by another party should receive voting instructions from
their bank, broker or
1
other holder of record. If a stockholder’s shares are held
through a nominee and the stockholder wants to vote at the meeting,
such stockholder must obtain a proxy from the nominee record holder
authorizing such stockholder to vote at the Annual Meeting.
Stockholders of record should receive a paper copy of our proxy
materials and may vote by following the instructions on the proxy
card that is included with the proxy materials. As set forth on the
proxy card, there are two convenient methods for holders of record
to direct their vote by proxy without attending the Annual Meeting:
on the Internet or by mail. To vote by Internet, visit www.voteproxy.com.
To vote by mail, mark, date and sign the enclosed proxy card and
return it in the postage-paid envelope provided. Holders of record
may also vote by attending the Annual Meeting and voting by
ballot.
All shares for which a proxy has been duly executed and delivered
(by Internet or mail) and not properly revoked prior to the meeting
will be voted at the Annual Meeting. If a stockholder of record
signs and returns a proxy card but does not give voting
instructions, the shares represented by that proxy will be voted as
recommended by the Board of Directors. If any other matters are
properly presented at the Annual Meeting for consideration and if
you have voted your shares by Internet or mail, the persons named
as proxies will have the discretion to vote on those matters for
you. On the date of filing this Proxy Statement with the SEC, the
Board of Directors did not know of any other matter to be raised at
the Annual Meeting.
How Can I Change My
Vote?
A stockholder of record can revoke his, her or its proxy at any
time before it is voted at the Annual Meeting by delivering to the
Company (to the attention of Joyce J. Mason, Esq., Executive Vice
President, General Counsel and Corporate Secretary) a written
notice of revocation or by executing a later-dated proxy by
Internet or mail, or by attending the Annual Meeting and voting in
person.
If your shares are held in the name of a bank, broker, or other
nominee, you must obtain a proxy executed in your favor from the
holder of record (that is, your bank, broker, or nominee) to be
able to vote at the Annual Meeting.
Quorum and Vote
Required
The presence at the Annual Meeting of a majority of the voting
power of the Company’s outstanding Class A Common Stock and
Class B Common Stock (voting together), either in person or by
proxy, will constitute a quorum for the transaction of business at
the Annual Meeting. Abstention votes and any broker non-votes
(i.e., votes withheld by brokers on non-routine proposals in the
absence of instructions from beneficial owners) will be counted as
present or represented at the Annual Meeting for purposes of
determining whether a quorum exists.
The affirmative vote of a majority of the voting power present (in
person or by proxy) at the Annual Meeting and casting a vote on a
Proposal will be required for the approval of the election of any
director (Proposal No. 1), the amendment to the 2015 Stock Option
and Incentive Plan (the “2015 Plan”) (Proposal No. 2),
the approval, on an advisory basis, of the compensation of our
Named Executive Officers (Proposal No. 3), and the ratification of
the appointment of the Company’s independent registered
public accounting firm (Proposal No. 4). This means that the number
of votes cast “for” a director nominee must exceed the
number of votes cast “against” that nominee.
Abstentions are not counted as votes “for” or
“against” a nominee or any of these proposals.
If you are a beneficial owner whose shares are held of record by a
broker, you must instruct the broker how to vote your shares. If
you do not provide voting instructions, your shares will not be
voted on any proposal on which the broker does not have
discretionary authority to vote. This is called a “broker
non-vote.” In these cases, the broker can register your
shares as being present at the Annual Meeting for purposes of
determining the presence of a quorum but will not be able to vote
on those matters for which specific authorization is required under
the rules of the New York Stock Exchange. In the event of a broker
non-vote or an abstention with respect to any proposal coming
before the Annual Meeting, the shares represented by the relevant
proxy will not be deemed to be present and entitled to vote on
those proposals for the purpose of determining the total number of
shares of which a majority is required for adoption, having the
practical effect of reducing the number of affirmative votes
required to achieve a majority vote for such matters by reducing
the total number of shares from which a majority is calculated.
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If you are a beneficial owner whose shares are held of record by a
broker, your broker has discretionary voting authority under NYSE
rules to vote your shares on the ratification of the
Company’s independent registered public accounting firm
(Proposal No. 4), even if the broker does not receive voting
instructions from you. However, your broker does not have
discretionary authority to vote on the election of directors
(Proposal No. 1), the adoption of an amendment to the 2015 Stock
Option and Incentive Plan (Proposal No. 2), the approval, on an
advisory basis, of the compensation of our Named Executive Officers
(Proposal No. 3), or on any stockholder proposal or other matter
raised at the Annual Meeting without instructions from you, in
which case a broker non-vote will occur and your shares will not be
voted on these matters.
How Many Votes Are
Required to Approve Other Matters?
Unless otherwise required by law or the Company’s Bylaws, the
affirmative vote of a majority of the voting power represented at
the Annual Meeting and entitled to vote will be required for other
matters that may properly come before the meeting.
Stockholders Sharing the
Same Address
We are sending only one copy of the Annual Report and Proxy
Statement to stockholders of record who share the same last name
and address, unless they have notified the Company that they want
to continue to receive multiple copies. This practice, known as
“householding,” is designed to reduce duplicate
mailings and printings and postage costs. However, if any
stockholder residing at such address wishes to receive a separate
Annual Report or Proxy Statement in the future, he or she may
contact Joyce J. Mason, Esq., Corporate Secretary, IDT Corporation,
520 Broad Street, Newark, New Jersey 07102, or by phone at (973)
438-1000, and we will promptly forward to such stockholder a
separate Annual Report and/or Proxy Statement. The contact
information above may also be used by members of the same household
currently receiving multiple copies of the Annual Report and Proxy
Statement in order to request that only one set of materials be
sent in the future.
References to Fiscal
Years
The Company’s fiscal year ends on July 31 of each calendar
year. Each reference to a fiscal year refers to the fiscal year
ending in the calendar year indicated (e.g., Fiscal 2015 refers to
the Fiscal Year ended July 31, 2015).
CORPORATE
GOVERNANCE
Introduction
The Company has in place a comprehensive corporate governance
framework that reflects the corporate governance requirements and
the rules and regulations promulgated under the Securities Exchange
Act of 1934, as amended, and the corporate governance-related
listing requirements of the New York Stock Exchange. Consistent
with the Company’s commitment to strong corporate governance,
the Company does not rely on the exceptions from the New York Stock
Exchange’s corporate governance listing requirements
available to it because it is a “controlled company,”
except as described below with regard to (i) the composition of the
Nominating Committee and (ii) the Company not having a single
Nominating/Corporate Governance Committee.
In accordance with Sections 303A.09 and 303A.10 of the New York
Stock Exchange Listed Company Manual, the Company has adopted a set
of Corporate Governance Guidelines and a Code of Business Conduct
and Ethics, the full texts of
which are available for your review in the Governance section of
our website at http://ir.idt.net/Governance
and which also are available in print to any stockholder upon
written request to the Corporate Secretary.
The Company qualifies as a “controlled company” as
defined in Section 303A of the New York Stock Exchange Listed
Company Manual, because more than 50% of the voting power of the
Company is controlled by one individual, Howard S. Jonas, who
serves as Chairman of the Board of Directors. Notwithstanding that
being a “controlled company” entitles the Company to
exempt itself from the requirement that a majority of its directors
be independent directors and that the Compensation Committee and
Corporate Governance Committee be comprised entirely of independent
directors, the Board of Directors has determined affirmatively that
a majority of the members of the Board of Directors and the
director nominees are independent in accordance with Section
303A.02 of the New York Stock Exchange Listed Company Manual and
that the Compensation Committee and the Corporate Governance
Committee are in fact comprised entirely of independent directors.
As a “controlled company,” the
3
Company may, and has chosen to, exempt itself from the New York
Stock Exchange requirement that it have a single
Nominating/Corporate Governance Committee composed entirely of
independent directors. As noted above, and discussed in greater
detail below, the Board of Directors maintains a separate Corporate
Governance Committee comprised entirely of independent directors,
and a Nominating Committee comprised of the Chairman of the Board
of Directors and one independent director.
Director
Independence
The Corporate Governance Guidelines adopted by the Board of
Directors provide that a majority of the members of the Board of
Directors, and each member of the Audit, Compensation and Corporate
Governance Committees, must meet the independence requirements set
forth therein. The full text of the Corporate Governance
Guidelines, including the independence requirements, is available
for your review in the Governance section of our website at
http://ir.idt.net/Governance.
For a director to be considered independent, the Board of Directors
must determine that a director meets the Independent Director
Qualification Standards set forth in the Corporate Governance
Guidelines, which comply with the New York Stock Exchange
definitions of independent, and is free from any material
relationship with the Company and its executive officers. The Board
of Directors considers all relevant facts and circumstances known
to it in making an independence determination, and not merely from
the standpoint of the director, but also from that of persons or
organizations with which the director has an affiliation or
significant financial interest. In addition to considering all
relevant information available to it, the Board of Directors uses
the following categorical Independent Director Qualification
Standards in determining the “independence” of its
directors:
1.
During the past three years, the Company shall not have employed
the director, or, except in a non-officer capacity, any of the
director’s immediate family members;
2.
During the past three years, the director shall not have received,
and shall not have an immediate family member who has received,
during any twelve-month period within the last three years, more
than $120,000 in direct compensation from the Company, other than
director and committee fees and pension or other forms of deferred
compensation for prior service (provided such compensation is not
contingent in any way on continued service);
3. (a)
The director shall not be a current partner or employee of a firm
that is the Company’s internal or external auditor, (b) the
director shall not have an immediate family member who is a current
partner of such firm, (c) the director shall not have an immediate
family member who is a current employee of such firm and personally
works on the Company’s audit, and (d) neither the director
nor any of his or her immediate family members shall have been,
within the last three years, a partner or employee of such firm and
personally worked on the Company’s audit within that
time;
4.
Neither the director, nor any of his or her immediate family
members, shall be, or shall have been within the last three years,
employed as an executive officer of another company where any of
the Company’s present executive officers at the same time
serves or served on that company’s compensation (or
equivalent) committee; and
5. The
director shall not be a current employee and shall not have an
immediate family member who is a current executive officer of a
company (excluding tax exempt organizations) that has made payments
to, or received payments from, the Company for property or services
in an amount which, in any of the last three Fiscal Years, exceeds
the greater of (a) $1 million or (b) two percent of the
consolidated gross revenues of such other company. The Corporate
Governance Committee will review the materiality of such
relationship to tax exempt organizations to determine if such
director qualifies as independent.
In addition, all members of the Company’s Audit Committee
must meet the independence requirements of Section 2014.10A-3 of
the Securities Exchange Act of 1934, which are set forth in the
Audit Committee Charter.
Based on the review and recommendation of the Corporate Governance
Committee, the Board of Directors has determined that each of
Michael Chenkin, Eric Cosentino, and Judah Schorr is independent in
accordance with the Corporate Governance Guidelines and the Audit
Committee Charter and, thus, that a majority of the current Board
of Directors, a majority of the director nominees, and each member
or nominee intended to become a member of the Audit, Compensation
and Corporate Governance Committees is independent. As used
herein,
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the term “non-employee director” shall mean any
director who is not an employee or consultant of the Company, and
who is deemed to be independent by the Board of Directors.
Therefore, neither Howard Jonas nor Bill Pereira is a non-employee
director. With the exception of Eric Cosentino, none of the
non-employee directors had any relationships with the Company that
the Corporate Governance Committee was required to consider when
reviewing independence. Eric Cosentino received a grant of 1,217
shares of Class B Common Stock with a value on grant of $18,000 in
connection with his service on the board of directors of the
Company’s subsidiary, Zedge Holdings, Inc., in accordance
with the Company’s policy on compensation for subsidiary
board service. The Corporate Governance Committee determined, after
considering Mr. Cosentino’s service on the Zedge board and
with Mr. Cosentino abstaining, that this stock grant did not impact
Mr. Cosentino’s independence. The Corporate Governance
Committee (with Mr. Cosentino abstaining), therefore, recommended
that the Board of Directors determine that Mr. Cosentino be deemed
independent in accordance with the Corporate Governance Guidelines
and the Audit Committee Charter. The Board of Directors (with Mr.
Cosentino abstaining) accepted the Corporate Governance
Committee’s recommendation.
Director Selection
Process
The Nominating Committee will consider director candidates
recommended by the Company’s stockholders. Stockholders may
recommend director candidates by contacting the Chairman of the
Board as provided under the heading “Director
Communications.” The Nominating Committee considers
candidates suggested by its members, other directors, senior
management and stockholders in anticipation of upcoming elections
and actual or expected board vacancies. All candidates, including
those recommended by stockholders, are evaluated on the same basis
in light of the entirety of their credentials and the needs of the
Board of Directors and the Company. Of particular importance is the
candidate’s wisdom, integrity, ability to make independent
analytical inquiries, understanding of the business environment in
which the Company operates, as well as his or her potential
contribution to the diversity of the Board of Directors and his or
her willingness to devote adequate time to fulfill duties as a
director. Under “Proposal No. 1 — Election of
Directors” below, we provide an overview of each
nominee’s experience, qualifications, attributes and skills
that led the Nominating Committee and the Board of Directors to
determine that each nominee should serve as a Director.
Director
Communications
Stockholders and other interested parties may communicate with: (i)
the Board of Directors, by contacting the Chairman of the Board;
(ii) the non-employee directors, by contacting the Lead Independent
Director (currently Eric Cosentino); and (iii) the Audit,
Compensation, Corporate Governance or Nominating Committees of the
Board of Directors, by contacting the respective chairmen of such
committees. All communications should be in writing, should
indicate in the address whether the communication is intended for
the Lead Independent Director, the Chairman of the Board, or a
Committee Chairman, and should be directed care of IDT
Corporation’s Corporate Secretary, Joyce J. Mason, Esq.,
Stockholder Communications, IDT Corporation, 520 Broad Street,
Newark, New Jersey 07102.
The Corporate Secretary will relay correspondence (i) intended for
the Board of Directors, to the Chairman of the Board, who will, in
turn, relay such correspondence to the entire Board of Directors,
(ii) intended for the non-employee directors, to the Lead
Independent Director, and (iii) intended for the Audit,
Compensation, and Corporate Governance Committees, to the Chairmen
of such committees.
The Corporate Secretary may filter out and disregard or re-direct
(without providing a copy to the directors or advising them of the
communication), or may otherwise handle at his or her discretion,
any director communication that falls into any of the following
categories:
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Obscene materials;
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Unsolicited marketing or advertising material or mass mailings;
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Unsolicited newsletters, newspapers, magazines, books and
publications;
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Surveys and questionnaires;
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Resumes and other forms of job inquiries;
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Requests for business contacts or referrals;
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Material that is threatening or illegal; or
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Any communications or materials that are not in writing.
In addition, the Corporate Secretary may handle in her discretion
any director communication that can be described as an
“ordinary business matter.” Such matters include the
following:
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Routine questions, service and product complaints and comments that
can be appropriately addressed by management; and
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Routine invoices, bills, account statements and related
communications that can be appropriately addressed by
management.
BOARD OF DIRECTORS AND
COMMITTEES
Board of
Directors
The Board of Directors held nine meetings in Fiscal 2015. In Fiscal
2015, each of the Company’s directors attended or
participated in 75% or more of the aggregate of (i) the total
number of meetings of the Board of Directors held during the period
in which each such director served as a director and (ii) the total
number of meetings held by all committees of the Board of Directors
during the period in which each such director served on such
committees.
Directors are encouraged to attend the Company’s annual
meeting of stockholders, and the Company generally schedules a
meeting of the Board of Directors on the same date and at the same
place as the annual meeting of stockholders to encourage director
attendance. All of the members constituting the current Board of
Directors attended the 2014 annual meeting of stockholders.
Board of Directors
Leadership Structure and Risk Oversight Role
Howard Jonas has served as Chairman of the Board since the
Company’s inception. From October 2009 through December 2013,
he also served as Chief Executive Officer. The Board of
Directors’ decision to retain Howard Jonas as Chief Executive
Officer was based on Howard Jonas’ leadership skills and his
knowledge of the Company’s businesses since its inception and
the value he brought to the Company in serving in both capacities.
As Chairman of the Board, Howard Jonas provides overall leadership
to the Board of Directors in its oversight function while, as Chief
Executive Officer, he provided leadership in respect to the
day-to-day management and operation of the Company’s
businesses. On January 1, 2014, Shmuel Jonas, who was the
Company’s Chief Operating Officer from June 2010 through
December 2013, was elected as Chief Executive Officer of the
Company. Howard Jonas remains Chairman of the Board and continues
to provide overall leadership to the Board of Directors in its
oversight function. The risk management oversight roles of the
Audit, Compensation and Corporate Governance Committees discussed
below, which are comprised solely of independent directors, provide
an appropriate and effective balance to the Chairman of the Board
role.
Section 303A.03 of the New York Stock Exchange Listed Company
Manual and the Company’s Corporate Governance Guidelines
require that the non-employee directors of the Company meet without
management at regularly scheduled executive sessions. These
executive sessions are held at every regularly scheduled meeting of
the Board of Directors. Eric F. Cosentino, an independent director
and the “Lead Independent Director,” serves as the
presiding director of these executive sessions and has served in
that capacity since December 17, 2009. The Board of Directors
determined that the role of Lead Independent Director was important
to maintain a well-functioning Board of Directors that objectively
assesses management’s proposals.
The Board of Directors and each of its committees conduct annual
self-assessments in executive sessions to review and monitor their
respective continued effectiveness.
The Board of Directors as a whole, and through its committees, has
responsibility for the oversight of risk management, including the
review of the policies with respect to risk management and risk
assessment. With the oversight of the full Board of Directors, the
Company’s senior management is responsible for the
day-to-day
6
management of the material risks the Company faces. The Board of
Directors is required to satisfy itself that the risk management
process implemented by management is adequate and functioning as
designed.
Each of the Audit, Compensation and Corporate Governance Committees
oversees certain aspects of risk management and reports its
respective findings to the full Board of Directors on a quarterly
basis, and as is otherwise needed. The Audit Committee is
responsible for overseeing risk management of financial matters,
financial reporting, the adequacy of the risk-related internal
controls, internal investigations, and security risks, generally.
The Compensation Committee oversees risks related to compensation
policies and practices. The Corporate Governance Committee oversees
our Corporate Governance Guidelines and governance-related risks,
such as board independence, as well as senior management succession
planning.
Board
Committees
The Board of Directors has established an Audit Committee, a
Compensation Committee, a Corporate Governance Committee and a
Nominating Committee.
The Audit
Committee
The Audit Committee is responsible for, among other things, the
appointment, compensation, removal and oversight of the work of the
Company’s independent registered public accounting firm. The
Audit Committee also oversees management’s performance of its
responsibility for the integrity of the Company’s accounting
and financial reporting and its systems of internal controls, the
performance of the Company’s internal audit function and the
Company’s compliance with legal and regulatory requirements.
The Audit Committee operates under a written Audit Committee
charter adopted by the Board of Directors, which can be found in
the Governance section of our web site, http://ir.idt.net/Governance,
and is also available in print to any stockholder upon request to
the Corporate Secretary. The Audit Committee consists of Messrs.
Chenkin (Chairman), Cosentino and Schorr. The Audit Committee held
nine meetings during Fiscal 2015. The Board of Directors has
determined that (i) all of the members of the Audit Committee are
independent within the meaning of the Section 303A.07(b) and
Section 303A.02 of the New York Stock Exchange Listed Company
Manual and Rule 10A-3(b) under the Securities Exchange Act of 1934,
(ii) all of the members of the Audit Committee are financially
literate and (iii) that Mr. Chenkin qualifies as an “audit
committee financial expert” within the meaning of Item
407(d)(5) of Regulation S-K.
The Compensation
Committee
The Compensation Committee is responsible for, among other things,
reviewing, evaluating and approving all compensation arrangements
for the executive officers of the Company, evaluating the
performance of executive officers, administering the
Company’s 2015 Stock Option and Incentive Plan (the
“2015 Plan”) and, its predecessor, the 2005 Stock
Option and Incentive Plan, as amended and restated (the “2005
Plan”), and recommending to the Board of Directors the
compensation for Board members, such as retainers, committee and
other fees, stock option, restricted stock and other stock awards,
and other similar compensation as deemed appropriate. The
Compensation Committee confers with the Company’s executive
officers when making the above determinations. The Compensation
Committee currently consists of Messrs. Cosentino (Chairman),
Chenkin and Schorr. The Compensation Committee held seven meetings
during Fiscal 2015. The Compensation Committee operates under a
written charter adopted by the Board of Directors, which can be
found in the Governance section of our web site, http://ir.idt.net/Governance,
and which is also available in print to any stockholder upon
request to the Corporate Secretary. The Board of Directors has
determined that all of the members of the Compensation Committee
are independent within the meaning of Section 303A.02 of the New
York Stock Exchange Listed Company Manual and the categorical
standards set forth above.
The Compensation Committee adopts Company-wide goals and objectives
for the fiscal year to be used as a guide when determining annual
bonus payments to executive officers after the end of the fiscal
year. The Compensation Committee reviews the performance of the
Company relative to those goals and objectives, and the
contribution of each executive officer to such performance at the
end of the fiscal year and considers them as some of the factors
when determining the amounts of annual bonuses to be awarded to
executive officers.
7
Compensation Committee
Interlocks and Insider Participation
None of the members of the Compensation Committee have served as an
officer or employee of the Company or have any relationship with
the Company that is required to be disclosed under the heading
“Related Person Transactions.” No executive officer of
the Company served or serves on the compensation committee or board
of any company that employed or employs any member of the
Company’s Compensation Committee or Board of Directors.
The Corporate Governance
Committee
The Corporate Governance Committee is responsible for, among other
things, reviewing and reporting to the Board of Directors on
matters involving relationships among the Board of Directors, the
stockholders and senior management. The Corporate Governance
Committee (i) reviews the Corporate Governance Guidelines and other
policies and governing documents of the Company and recommends
revisions as appropriate, (ii) reviews any potential conflicts of
interest of independent directors, (iii) reviews and monitors
related person transactions, (iv) oversees the self-evaluations of
the Board of Directors, the Audit Committee and the Compensation
Committee and (v) reviews and determines director independence, and
makes recommendations to the Board of Directors regarding director
independence. The Corporate Governance Committee currently consists
of Messrs. Cosentino (Chairman), Chenkin and Schorr. The Corporate
Governance Committee held six meetings in Fiscal 2015. The
Corporate Governance Committee operates under a written charter
adopted by the Board of Directors, which can be found in the
Governance section of our web site, http://ir.idt.net/Governance,
and which is also available in print to any stockholder upon
request to the Corporate Secretary. The Board of Directors has
determined that all of the members of the Corporate Governance
Committee are independent within the meaning of Section 303A.02 of
the New York Stock Exchange Listed Company Manual and the
categorical standards set forth above.
The Nominating
Committee
The Nominating Committee is
responsible for overseeing nominations to the Board of Directors,
including: (i) developing the criteria and qualifications for
membership on the Board of Directors, (ii) recommending candidates
to fill new or vacant positions on the Board of Directors, and
(iii) conducting appropriate inquiries into the backgrounds of
potential candidates. A summary of new director qualifications can
be found under the heading “Director Selection
Process.” The Nominating Committee currently consists of
Howard S. Jonas (Chairman) and Eric Cosentino. The Board of
Directors has determined that Eric Cosentino is independent in
accordance with Section 303A.04 of the New York Stock Exchange
Listed Company Manual. Howard Jonas is not independent. The
Company, as a “controlled company,” is exempt from the
requirement to maintain an independent nominating committee
pursuant to Section 303A.00 of the New York Stock Exchange Listed
Company Manual. The Nominating Committee operates under a written
charter adopted by the Board of Directors, which can be found in
the Governance section of our web site, http://ir.idt.net/Governance,
and which is also available in print to any stockholder upon
request to the Corporate Secretary. The Nominating Committee held
one meeting in Fiscal 2015.
2015 COMPENSATION FOR
NON-EMPLOYEE DIRECTORS
Annual compensation for non-employee directors for Fiscal 2015 was
comprised of equity compensation, consisting of awards of
restricted Class B Common Stock, and cash compensation.
Director Equity
Grants
During Fiscal 2015, pursuant to the Company’s 2015 Plan, each
non-employee director of the Company who was determined to be
independent received, on January 5, 2015, an automatic grant of
4,000 shares of the Company’s restricted Class B Common
Stock, which vested immediately upon grant. A new director who
becomes a member of the Board of Directors during the course of the
calendar year receives an automatic grant on the date that he or
she becomes a director in the amounts specified above, pro rated
based on the calendar quarter of the year in which such person
became a director. The stock is granted on a going forward basis,
before the director completes his or her service for the calendar
year. All such grants of stock to non-employee directors are
subject to certain terms and conditions described in the
Company’s 2015 Plan. On September 24, 2015, the Compensation
Committee
8
adopted a change to the Non-Employee Director Compensation Policy
so that each non-employee director who serves simultaneously on the
board of one of the Company’s subsidiaries shall receive a
biennial grant of $18,000 worth of restricted shares of the
Company’s Class B Common Stock on September 28th,
or the first business day thereafter, as compensation for his or
her subsidiary board service, commencing on September 28, 2015.
Director Board
Retainers
Each non-employee director of the Company receives an annual cash
retainer of $50,000. Such payment is made quarterly provided the
non-employee director attended at least 75% of the
regularly-scheduled meetings of the Board of Directors that
quarter. The annual cash retainer is pro-rated (by calendar quarter
based on the calendar quarter when service on the Board of
Directors began or ended) for non-employee directors who join the
Board of Directors or depart from the Board of Directors during the
calendar year, if such director attended 75% of the applicable
board meetings for such quarter. The Company’s Chief
Executive Officer may, in his discretion, waive the requirement of
75% attendance by a director to receive the retainer in the case of
mitigating circumstances.
Committee
Fees
Non-employee directors do not receive fees for committee
service.
Lead Independent
Director
The Lead Independent Director receives an annual cash retainer of
$50,000, paid quarterly upon the completion of each quarter of
service. Eric Cosentino has served as the Lead Independent Director
since December 17, 2009.
2015 Director
Compensation Table
The following table lists Fiscal 2015 compensation for any person
who served as a non-employee director during Fiscal 2015. This
table does not include compensation to Howard S. Jonas or Bill
Pereira as they are not non-employee directors and do not receive
any compensation for their service as directors.
|
|
Dates
of Board Service During Fiscal 2015
|
|
Fees
Earned or Paid in Cash
($)
|
|
|
|
All
Other Compensation
($)(5)
|
|
|
Michael Chenkin
|
|
08/01/2014–07/31/2015
|
|
$
|
50,000
|
(1)
|
|
$
|
76,640
|
(4)
|
|
$
|
4,000
|
|
$
|
130,640
|
Eric F. Cosentino
|
|
08/01/2014–07/31/2015
|
|
$
|
100,000
|
(2)
|
|
$
|
76,640
|
(4)
|
|
$
|
2,968
|
|
$
|
179,608
|
Judah Schorr
|
|
08/01/2014–07/31/2015
|
|
$
|
50,000
|
(3)
|
|
$
|
76,640
|
(4)
|
|
$
|
4,000
|
|
$
|
130,640
|
As of July 31, 2015, non-employee directors held the following
shares of the Company’s Class B Common Stock granted for
their service as directors. Non-employee directors did not hold any
options to purchase shares of the Company’s capital stock as
of July 31, 2015.
|
|
|
Michael Chenkin
|
|
10,083
|
Eric F. Cosentino
|
|
32
|
Judah Schorr
|
|
55,287
|
9
RELATED PERSON
TRANSACTIONS
Review of Related Person
Transactions
The Board of Directors has adopted a Statement of Policy with
respect to Related Person Transactions, which is administered by
the Corporate Governance Committee. This policy covers any
transaction or series of transactions in which the Company or a
subsidiary is a participant, the amount involved exceeds $120,000
and a Related Person has a direct or indirect material interest.
Related Persons include directors, director nominees, executive
officers, any beneficial holder of more than 5% of any class of the
Company’s voting securities, and any immediate family member
of any of the foregoing persons. The policy also covers
transactions which, despite not meeting all of the criteria set
forth above, would otherwise be considered material to investors
based on qualitative factors, as determined by the Corporate
Governance Committee with input from the Company’s management
and advisors. Transactions that fall within the definition are
considered by the Corporate Governance Committee for approval,
ratification or other action. Based on its consideration of all of
the relevant facts and circumstances, the Corporate Governance
Committee will decide whether or not to approve such transactions
and will approve only those transactions that are in the best
interests of the Company and its stockholders. If the Company
becomes aware of an existing Related Person Transaction that has
not been approved under this Policy, the matter will be referred to
the Corporate Governance Committee. The Corporate Governance
Committee will evaluate all options available, including
ratification, revision or termination of such transaction.
Transactions with
Related Persons, Promoters and Certain Control Persons
All of the following ongoing Related Person Transactions were
approved in accordance with the policy described above:
There is a father/son relationship between Howard S. Jonas,
Chairman of the Board and controlling stockholder, and Shmuel
Jonas, Chief Executive Officer. Howard Jonas’ and Shmuel
Jonas’ total compensation during Fiscal 2015 are set forth in
the Summary Compensation Table.
There is a brother/sister relationship between Howard S. Jonas,
Chairman of the Board and controlling stockholder, and Joyce J.
Mason, General Counsel, Corporate Secretary and Executive Vice
President. Howard Jonas’ total compensation during Fiscal
2015 is set forth in the Summary Compensation Table. Joyce
Mason’s total compensation during Fiscal 2015 is set forth in
the Summary Compensation Table.
On October 28, 2011, the Company spun off its subsidiary, Genie
Energy Ltd. (“Genie”). In connection with the spin-off,
the Company and Genie entered into a Transition Services Agreement,
dated October 28, 2011 (the “TSA”), pursuant to which
the Company provides certain services to Genie, which is controlled
by Howard S. Jonas. Howard Jonas is also the Chief Executive
Officer of Genie. The services include, but are not limited to,
services relating to human resources, employee benefits
administration, finance, accounting, tax, internal audit,
facilities, investor relations and legal. Furthermore, the Company
granted Genie a license to use the IDT name for its REP business.
Genie paid IDT a total of $4,134,021 for services provided by IDT
pursuant to the TSA during Fiscal 2015. As of July 31, 2015, Genie
owed the Company $526,511. Additionally, Genie provided human
resource services to IDT pursuant to the TSA. IDT paid Genie a
total of $604,985 for services provided by Genie pursuant to the
TSA during Fiscal 2015. As of July 31, 2015, IDT owed Genie
$71,564.
On July 31, 2013, the Company spun off its subsidiary, Straight
Path Communications Inc. (“SPCI”). In connection with
the spin-off, the Company and SPCI entered into a Transition
Services Agreement, dated July 31, 2013 (the “TSA”),
pursuant to which the Company provides certain services to SPCI,
the Chief Executive Officer of which is Davidi Jonas, son of Howard
S. Jonas. The services include, but are not limited to, services
relating to human resources, finance, accounting, tax, connectivity
and legal. SPCI paid IDT a total of $211,559 for services provided
by IDT pursuant to the TSA during Fiscal 2015.
IDT Domestic Telecom, Inc., a subsidiary of the Company, leases
space at 3220 Arlington Avenue, Bronx NY. The property is owned by
Arlington Suites, LLC, a company jointly owned by Shmuel Jonas and
Howard Jonas. The initial lease expired at the end of April 2012,
but IDT Domestic Telecom continued to occupy the space. For the six
month period from May 1, 2012 until October 31, 2012, IDT Domestic
Telecom was charged a total of $34,513.
10
The parties entered into a new lease, which became effective
November 1, 2012 and had a one-year term, with a one-year renewal
option for IDT Domestic Telecom upon the same terms. Since
expiration of the new lease, the parties have continued IDT
Domestic Telecom’s occupancy of the space on the same terms.
The new lease covers 1,465 square feet of office space, at an
annual rental rate of $25 per square foot, 1,240 square feet of
storage space, at an annual rental rate of $15 per square foot, and
five parking spaces, at a monthly rental rate of $230 per space,
for a total annual rent of $69,025. The Company has determined that
the space is well suited and located to meet the needs of IDT
Domestic Telecom, and that the terms of the lease, including the
rental price, are in accord with the terms for comparable
commercial space in the area.
11
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets
forth certain information regarding the beneficial ownership of the
Company’s Class A Common Stock and Class B Common
Stock by (i) each person known by the Company to be the beneficial
owner of more than 5% of the outstanding shares of the Class A
Common Stock or the Class B Common Stock of the Company, (ii) each
of the Company’s directors, director nominees, and the Named
Executive Officers (who are listed under Executive Compensation
below), and (iii) all directors, Named Executive Officers and
executive officers of the Company as a group. Unless otherwise
noted in the footnotes to the table, to the best of the
Company’s knowledge, the persons named in the table have sole
voting and investing power with respect to all shares indicated as
being beneficially owned by them.
Unless otherwise noted, the security ownership information provided
below is given as of the close of business on October 21, 2015 and
all shares are owned directly. Percentage ownership information is
based on the following amount of outstanding shares: 1,574,326
shares of Class A Common Stock and 21,752,240 shares of Class B
Common Stock. The ownership numbers reported for Howard Jonas
assume the conversion of all 1,574,326 currently outstanding shares
of Class A Common Stock into Class B Common Stock.
|
|
Number of Shares of Class B Common Stock
|
|
Percentage of Ownership of Class B Common
Stock
|
|
Percentage of Aggregate Voting
Powerd
|
Howard S. Jonas
|
|
2,509,603
|
(1)
|
|
10.8
|
%
|
|
69.8
|
%(2)
|
520 Broad Street
Newark, NJ 07102
|
|
|
|
|
|
|
|
|
|
The Vanguard Group Inc.
100 Vanguard Blvd.
Malvern, PA 19355
|
|
1,337,907
|
(3)
|
|
6.2
|
%
|
|
1.9
|
%
|
Blackrock, Inc.
55 East 52nd
Street
New York, NY 10055
|
|
1,130,964
|
(3)
|
|
5.2
|
%
|
|
1.6
|
%
|
Renaissance Technologies, LLC
800 Third Avenue
New York, NY 10022
|
|
1,108,597
|
(3)
|
|
5.1
|
%
|
|
1.6
|
%
|
Shmuel Jonas
|
|
110,982
|
(4)
|
|
|
*
|
|
|
*
|
Marcelo Fischer
|
|
26,144
|
(5)
|
|
|
*
|
|
|
*
|
Bill Pereira
|
|
73,959
|
(6)
|
|
|
*
|
|
|
*
|
Menachem Ash
|
|
21,103
|
(7)
|
|
|
*
|
|
|
*
|
Joyce J. Mason
|
|
57,453
|
(8)
|
|
|
*
|
|
|
*
|
Michael Chenkin
|
|
10,083
|
|
|
|
*
|
|
|
*
|
Eric F. Cosentino
|
|
49
|
|
|
|
*
|
|
|
*
|
Judah Schorr
|
|
55,287
|
|
|
|
*
|
|
|
*
|
All directors, Named Executive Officers and
other executive officers as a group (10) persons)
|
|
2,893,580
|
(9)
|
|
12.4
|
%(10)
|
|
70.3
|
%
|
12
SECTION 16(a) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company’s
directors, executive officers, and any persons holding more than
ten percent or more of a registered class of the Company’s
equity securities are required to file reports of ownership and
changes in ownership, on a timely basis, with the SEC and the New
York Stock Exchange. Based on material provided to the Company, the
Company believes that all such required reports were filed on a
timely basis in Fiscal 2015, except for: (a) a Form 4 was not filed
on a timely basis on behalf of Eric F. Cosentino, Michael Chenkin
and Judah Schorr, the independent Directors of the Company (with
respect to an award of 4,000 shares each of the Company’s
Class B Common stock on January 5, 2015);(b) a Form 4 was not filed
on a timely basis on behalf of Shmuel Jonas, the CEO of the Company
(with respect to the withholding of shares upon the vesting of
restricted shares of Class B Common Stock on January 8, 2015); and
(c) a Form 4 was not filed on a timely basis on behalf of Anthony
S. Davidson, the Senior Vice President–Technology of the
Company (with respect to the withholding of shares upon the vesting
of restricted shares of Class B Common Stock on July 6, 2015).
13
EXECUTIVE
COMPENSATION
COMPENSATION COMMITTEE
REPORT
The Compensation Committee has reviewed and discussed with
management the following Compensation Discussion and Analysis
section of the Company’s 2015 Proxy Statement. Based on our
review and discussions, we have recommended to the Board of
Directors that the Compensation Discussion and Analysis be included
in IDT’s 2015 Proxy Statement.
Eric Cosentino, Chairman
Michael Chenkin
Judah Schorr
Notwithstanding
anything to the contrary set forth in any of the Company’s
previous filings under the Securities Act of 1933, as amended (the
“Act”), or the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), that might incorporate
future filings, including this Proxy Statement, in whole or in
part, the foregoing report shall not be incorporated by reference
into any such filings, nor shall it be deemed to be soliciting
material or deemed filed with the Securities and Exchange
Commission (the “SEC”) under the Act or under the
Exchange Act.
COMPENSATION DISCUSSION
AND ANALYSIS
The following discussion and analysis of our compensation practices
and related compensation information should be read in conjunction
with the Summary Compensation table and other tables included in
this proxy statement, as well as our financial statements and
management’s discussion and analysis of our financial
condition and results of operations included in our Annual Report
on Form 10-K for the fiscal year ended July 31, 2015, which we
refer to as the Form 10-K. The following discussion includes
statements of judgment and forward-looking statements that involve
risks and uncertainties. These forward-looking statements are based
on our current expectations, estimates and projections about our
industry, our business, compensation, management’s beliefs,
and certain assumptions made by us, all of which are subject to
change. Forward-looking statements can often be identified by words
such as “anticipates,” “expects,”
“intends,” “plans,” “predicts,”
“believes,” “seeks,”
“estimates,” “may,” “will,”
“should,” “would,” “could,”
“potential,” “continue,”
“ongoing,” similar expressions, and variations or
negatives of these words and include, but are not limited to,
statements regarding projected performance and compensation. Actual
results could differ significantly from those projected in the
forward-looking statements as a result of certain factors,
including, but not limited to, the risk factors discussed in the
Form 10-K. We assume no obligation to update the forward-looking
statements or such risk factors.
Introduction
It is the responsibility of the Compensation Committee of our board
of directors to: (i) oversee our general compensation policies;
(ii) determine the base salary and bonus to be paid each year to
each of our executive officers; (iii) oversee our compensation
policies and practices as they relate to our risk management; and
(iv) determine the compensation to be paid each year to our
non-employee directors for service on our board of directors and
the various committees of our board of directors. In addition, the
Compensation Committee administers our Stock Option and Incentive
Plans with respect to restricted stock and stock option grants or
other equity-based awards made to our executive officers. Further,
certain individuals have received grants of equity in certain of
our subsidiaries. Shares of restricted stock are granted to our
non-employee directors automatically on an annual or bi-annual
basis under our 2015 Stock Option and Incentive Plan, and under
other policies adopted by the Board and Compensation Committee.
Elements of
Compensation
The three broad components of our executive officer compensation
are base salary, annual cash incentive bonus awards, and long term
equity-based incentive awards. The Compensation Committee
periodically reviews total compensation levels and the allocation
of compensation among these three components for each of the
executive officers, as well as for the Company as a whole, in the
context of our overall compensation policy. Additionally, the
Compensation Committee, in conjunction with our board, reviews the
relationship of executive compensation to corporate performance
generally and with respect to specific enumerated goals that are
approved by the
14
Compensation Committee in each fiscal year. The Compensation
Committee believes that our current compensation plans are serving
their intended purposes and are functioning reasonably. Below is a
description of the general policies and processes that govern the
compensation paid to our executive officers, as reflected in the
accompanying compensation tables.
Company
Performance
During Fiscal 2015, the Company continued to perform well in a
challenging environment. At IDT Telecom, Boss Revolution continued
to grow, despite significant pricing pressure on routes to Mexico,
one of our key destinations. The growth at Boss Revolution
partially offset revenue declines in the Wholesale and Hosted
Platform business units as well as at Consumer Phone Services. IDT
Telecom continued to invest in new product offerings, as well as in
infrastructure and in streamlining its operations. The Company
overall successfully cut its SG&A spending, resulting in a
positive impact on the consolidated bottom line. The sale of Fabrix
in the first quarter of Fiscal 2015 had a significant positive
impact on the Company’s Income from Operations, Net Profit
and EPS. The Company generated positive Cash Flow from Operations,
and paid regular quarterly dividends as well as two special
dividends returning a portion of the proceeds from the sale of
Fabrix to its stockholders. Zedge continued to grow its user base
significantly, while growing its revenue and remaining cash flow
positive and contributing to the Company’s performance.
Compensation
Structure, Philosophy and Process
Our executive compensation structure is designed to attract and
retain qualified and motivated personnel and align their interests
with the short-term and long-term goals of the Company and with the
best interests of our stockholders. Our compensation philosophy is
to provide sufficient compensation to attract the individuals
necessary for our current needs and planned organic growth and
changes in operations, as well as for the business units that
represent longer-term growth initiatives, and provide them with the
proper incentives to motivate those individuals to achieve our
long-term plans.
The base salary levels we pay
to each of our Named Executive Officers are based on the
responsibilities undertaken by the respective individuals, if
applicable, the business unit managed and its complexity and role
within the Company, and the market place for employment of people
of similar skills and backgrounds. The base salaries paid are
determined by discussions with the covered individual and his or
her manager, as well as budgetary considerations. Such base
salaries are approved by the relevant members of our senior
management and, in the case of executive officers and certain other
key, highly compensated individuals, our Compensation
Committee.
Incentive compensation is
designed to reward contributions to achieving the Company’s
goals for the current period, as well as for the longer term. The
Compensation Committee, with recommendations from the
Company’s management, sets goals for executive compensation
purposes in each fiscal year. These goals are set for the Company
and for specific operating divisions, and are designed to set forth
achievable goals for the current performance of the Company and its
business units and for current contributions to long-term
initiatives. The Compensation Committee’s decision regarding
bonuses is primarily subjective and specific to each Named
Executive Officer and is made by the Committee in its discretion
after an overall assessment of all of the factors it deems
appropriate, which includes, but is not limited to, the specific
Company-wide goals, the individual’s role in achieving those
goals, if relevant, the performance of the business unit over which
the individual exercised management, and other accomplishments
during the fiscal year that were deemed relevant in specific
instances. Following the end of a fiscal year, our management sets
Company-wide bonus amounts for the fiscal year then-ended, based on
Company performance and available resources. The proposed bonuses
are then presented to the Compensation Committee. The bonus amounts
awarded to executive officers are the result of subjective
determinations made by the relevant members of management and the
Compensation Committee with respect to each subject individual,
based on Company and individual performance, particularly relative
to the performance goals set by the Compensation Committee for the
fiscal year, and levels relative to the bonuses of other personnel
and officers. Individual bonus amounts are not determined based on
previously established formulae, targets or ranges, though prior
year amounts, performance versus budgets and similar figures may
serve as guidelines for bonuses for certain executives, and
individuals and their direct supervisors may use target figures in
initiating discussions of bonus levels.
15
Executive officers are eligible to receive cash bonuses of up to
100% of base salary (or up to 120% or higher upon extraordinary
performance) based upon performance, including the specific
financial and other goals set by the Compensation Committee, which
goals are Company-wide, specific to a business unit or specific to
an executive and his or her area of responsibility, as well as
specific extraordinary accomplishments by such officers during the
relevant period. Specific bonuses will depend on the individual
achievements of executives and their contribution to achievement of
the enumerated goals. These goals are approved by the Compensation
Committee.
Equity grants are made in order to provide longer term incentive
compensation and to better align the interests of our executives
with our stockholders. Executives have been granted equity
interests in the Company and, in limited circumstances, with regard
to individuals whose areas of responsibility focus on specific
operations or who have contributed in significant ways to specific
subsidiaries, in those subsidiaries, so as to better incentivize
and reward the executives for the results of their efforts.
Compensation
Decisions Made in Fiscal 2015
Bonuses Paid for
Fiscal 2014 Performance
In Fiscal 2015, the Company paid bonuses to its named executive
officers based on performance in Fiscal 2014 and the goals for that
fiscal year that were set out by the Compensation Committee.
Shmuel Jonas was paid a cash bonus of $155,000, and was granted
restricted shares of Class B Common Stock with a value of $200,000
that are to vest in equal amounts over three years from grant.
Marcelo Fischer was paid a cash bonus of $143,000. Bill Pereira was
paid a cash bonus of $600,000. Menachem Ash was paid a cash bonus
of $85,000. Joyce Mason was paid a cash bonus of $75,000.
Employment
Agreement
Bill Pereira was party to an employment agreement with IDT Telecom
that expired on December 31, 2014. IDT Telecom and Mr. Pereira
entered into an Amended and Restated Employment Agreement on
January 12, 2015. The amended agreement, which is described in more
detail below, has a three year term, began on the scheduled
expiration of the then existing Employment Agreement with Mr.
Pereira, and provides for annual compensation and the one-time
grant of 25,000 shares of Class B Common Stock which vests over
three years from grant. Such grant was made on January 12, 2015. In
light of Mr. Pereira’s performance as CEO of IDT Telecom, the
Company and IDT Telecom determined that it was in their best
interests to retain Mr. Pereira’s services for an additional
three-year period.
On November 29, 2013, the Company announced that Howard Jonas would
step down as Chief Executive Officer of the Company on December 31,
2013, but would remain Chairman of the Board. On December 20, 2013,
the Company and Howard Jonas entered into the Third Amended and
Restated Employment Agreement, the terms of which are described
below.
Goals and
Performance
At a meeting held on October 28, 2014, our Compensation Committee
approved the following goals for Fiscal 2015: (i) meet or exceed
(A) budgeted Revenue and/or (B) budgeted Gross Profit; (ii) meet or
exceed budgeted EBITDA less Capital Expenditures; (iii) achieve
positive cash flow; (iv) continue to improve IDT Telecom’s
technology infrastructure by merging duplicate platforms when
possible, improving back-end support systems for Boss Revolution
including Retailer Settlement, and begin the process of moving
viable parts of the network to the Cloud; (v) continue to enhance
the Boss Revolution product suite including the launch of Unlimited
Plans and the re-launch of Call Me and domestic closed loop cards
and nationwide GPR cards; (vi) get closer to consumers by updating
the Calling App, launching Web/Mobile site (including remittance),
expanding distribution through e-kiosks and kicking-off a payments
app and a CRM initiative; (vii) grow Money Remittance active retail
agent base to over 1,000 agents and or 400,000 transactions; (viii)
restructure IDT Retail Europe business to be break-even; (ix)
maintain PCI Level 1 compliance; (x) fully execute the move of all
IDT Newark employees to 520 Broad Street; and (xi) effectuate the
sale of Fabrix, in a tax efficient form.
On September 24, 2015, management reported to the Compensation
Committee on the Company’s performance relative to the above
goals as follows:
16
Fiscal 2014 revenue missed the Company’s internal budget by
3% and Fiscal 2014 gross profit missed the Company’s internal
budget by 1%.
Fiscal 2014 EBITDA less Capital Expenditures exceeded the
Company’s internal budget by 39%.
The Company generated positive cash flow from operations.
IDT Telecom improved its technology infrastructure, including
moving several on-line and mobile portals and functions to unified
platforms, consolidation of back-end functions, and transitioning
to proprietary switched from third party suppliers, while lagging
behind target for migrating functions to the Cloud.
The Company significantly enhanced the Boss Revolution suite of
products, including introducing Boss Revolution Unlimited
(unlimited calling for a flat monthly fee) to dozens of countries,
re-launching Call-Me, and introducing domestic and international
closed loop cards, but failed to launch a GPR card.
The Company launched a web/mobile site with extensive
functionality, but did not release an update of the Boss Revolution
calling app or a payments app.
The Company did not grow its money remittance agent base to 1,000
agents, but processed in excess of 400,000 transactions during
Fiscal 2015.
The Company completed the restructuring of IDT Europe Retail and,
other than a one-time write-off related to a specific product, the
business unit operated at break-even.
The Company maintained PCI Level 1 compliance. All Newark, NJ
employees were relocated back to the Company’s owned 520
Broad Street headquarters, and the Company completed its sale of
Fabrix, and all proceeds received in a tax efficient manner.
Bonus Awards for
Fiscal 2015 Performance
In connection with such performance and accomplishments, management
determined, in general, to modestly reduce the bonuses paid to some
executive officers and other key employees from the levels paid in
respect of Fiscal 2014. The following individual bonus levels were
determined and paid in Fiscal 2016 in respect of Fiscal 2015:
Shmuel Jonas was paid a cash bonus of $330,000 in cash, a reduction
from the $155,000 of cash plus $200,000 in Class B Common Stock
paid in respect of Fiscal 2014. Mr. Jonas served as Chief Executive
Officer of the Company for the entire Fiscal 2015 and was
integrally involved in all strategic decisions and initiatives
undertaken by the Company. He spearheaded the cost-cutting measures
instituted during the fiscal year quarters that were instrumental
in the bottom line performance of the Company. Mr. Jonas was an
active participant in the sale process for Fabrix, from initiation
to completion.
Marcelo Fischer was paid a cash bonus of $120,000, a reduction of
$23,000 from the prior fiscal year’s bonus. As the principal
financial officer of the Company, Mr. Fischer was involved in all
decisions on budgeting, new initiatives, spending and otherwise
related to IDT Telecom operations and execution of the initiatives
that produced the Company’s operating and bottom line
results. Mr. Fischer was a lead participant in implementing changes
to the internal systems and in maintaining the financial discipline
and implementing cost cutting that generated the Company’s
cash flows and bottom line results. Mr. Fischer was a driver of the
IDT Retail Europe restructuring, provided the financial analysis
necessary for all such enterprises and played a significant role in
the internal controls and other matters necessary to achieve and
maintain PCI compliance.
Bill Pereira was paid a cash bonus of $600,000, unchanged from the
prior year. As Chief Executive Officer of IDT Telecom, Mr. Pereira
was the principal executive responsible for IDT Telecom’s
performance and for implementing all initiatives related to new
products and growth of sales of existing products. He oversaw the
launch of new products and customer relationship initiatives, as
well as changes to IDT Telecom infrastructure and internal
compliance efforts. Mr. Pereira provided the strategic guidance in
balancing current performance and investment in future growth and
ensuring that the Company will have the offerings to drive
performance in future periods.
Menachem Ash was paid a cash bonus of $85,000, the same bonus as he
received for Fiscal 2014 performance. He also received a mid-year
bonus of $25,000 upon completion of the Fabrix sale. Mr. Ash served
as Executive Vice President of Strategy and Legal Affairs, and was
actively involved in the legal aspects of many matters and
17
dealing with third parties, including commercial relationships,
strategic partnerships and disputes. In that capacity, he
participated in implementing many of the initiatives that produced
the Company’s results and growth potential. Mr. Ash was one
of the principal individuals tasked with implementing the sale of
Fabrix that was completed during Fiscal 2015.
Joyce Mason received a bonus of $65,000, a $10,000 reduction from
the level of the prior fiscal year. As General Counsel, Ms. Mason
guides corporate legal, disclosure and compliance policy, and plays
an active role in major transactions and all aspects of corporate
governance. She serves as Corporate Secretary for the Company and
its subsidiaries and ensures ongoing compliance with corporate and
regulatory requirements.
Howard Jonas did not receive a bonus for Fiscal 2015
performance.
Base
Salaries
The Company pays base salaries to its executives intended to meet
the goals and purposes outlined above. The base salaries of certain
executives are set forth in written agreements with the Company,
which agreements are described below. Subject to those written
agreements, the base salaries are set by the Compensation Committee
on an annual basis, based on presentations made by management. No
changes were made to the base compensation of any executive
officers for Fiscal 2016, and all such salaries remain at the
Fiscal 2015 level.
Howard Jonas receives a cash base salary of $250,000 per annum,
pursuant to the Third Amended and Restated Employment Agreement
discussed below, that was entered into during Fiscal 2014. Pursuant
to the Third Amended Agreement, on January 6, 2014, the Company
granted Mr. Jonas 63,320 shares of Class B Common Stock, with a
grant date value of $1,349,982, that vested and vest in January
2014, 2015 and 2016 as a portion of his base salary for the
three-year term of that agreement, which expires on December 31,
2016.
Shmuel Jonas receives a base salary of $495,000 per annum. Marcelo
Fischer receives a base salary of $395,000 per annum. Bill Pereira
receives a base salary of $500,000 per annum, in accordance with
his employment agreement with IDT Telecom. Mr. Ash receives a base
salary of $370,000 per annum. Ms. Mason receives a base salary of
$315,000 per annum.
Equity Grants during
Fiscal 2015
On March 11, 2015, the Compensation Committee approved the
following grants of restricted shares of Class B Common Stock, with
a vesting of one-half on each of January 16, 2017 and July 16,
2018: Shmuel Jonas — 18,000 shares, Marcelo Fischer —
15,000 shares, Bill Pereira — 18,000 shares, Menachem Ash
— 7,500 shares and Joyce Mason — 7,500 shares. The
above grants are in addition to the grant to Shmuel Jonas on
September 17, 2014 in connection with his bonus and the grant to
Bill Pereira on January 12, 2015 in connection with his entry into
the Amended and Restated Employment Agreement. The March 11, 2015
grants of restricted shares of Class B Common Stock to Named
Executive Officers were part of a broader company-wide grant of
316,500 shares of restricted Class B Common Stock to incentivize
certain employees over a three year period.
Goals for Fiscal Year
2016
At a meeting held on September 24, 2015, our Compensation Committee
approved the following goals for Fiscal 2016:
•
Meet or exceed (i) budgeted Revenue and/or (ii) budgeted Gross
Profit.
•
Meet or exceed budgeted EBITDA less Capital Expenditures.
•
Achieve positive cash flow.
•
Reorganize the Company into three separate entities, with goal to
spin-off two business units to stockholders.
•
Continue to enhance Boss Revolution product platform including the
introduction of new functionality and products.
18
•
Get closer to consumers by updating the Boss Revolution Calling
App, providing for greater flexibility and expanding options for
customers to access our systems and their accounts.
•
Significantly grow the Money Remittance business unit’s
number of transactions processed via the retailer portal and
website and advance payment functionality.
•
Grow the Company’s nascent IDT Retail offering.
•
Grow Net2Phone Office seats and other Net2Phone initiatives.
•
Have South American retail operations operate at break even or
positive.
•
Continue to improve IDT Telecom technology infrastructure by
reducing duplicate platforms when possible, improving internal
systems and platforms, and moving a significant number of
applications to the Cloud.
•
Maintain PCI Level 1 compliance.
•
Grow Zedge revenues by 25% while having it remain cash flow
positive.
19
EXECUTIVE COMPENSATION
TABLES
Summary Compensation
Table
The table below summarizes the total compensation paid or awarded
for performance during Fiscal 2015 and, where required, Fiscal 2014
and Fiscal 2013, to each of the Chief Executive Officer, the
principal financial officer, the three other highest paid executive
officers of the Company during Fiscal 2015, and Howard S. Jonas,
the Chairman of the Board (the “Named Executive
Officers”).
Name and Principal
Position
|
|
|
|
|
|
|
|
|
|
|
|
All Other Compensation
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shmuel
Jonas
|
|
2015
|
|
$
|
497,288
|
|
|
$
|
330,000
|
|
$
|
293,400
|
(4)
|
|
$
|
—
|
|
$
|
141,175
|
(5)
|
|
$
|
1,261,863
|
Chief Executive
Officer(3)
|
|
2014
|
|
$
|
395,000
|
|
|
$
|
155,000
|
|
$
|
1,099,145
|
(6)
|
|
$
|
—
|
|
$
|
29,178
|
(5)
|
|
$
|
1,678,323
|
|
|
2013
|
|
$
|
395,000
|
|
|
$
|
155,000
|
|
$
|
—
|
(7)
|
|
$
|
—
|
|
$
|
40,125
|
(5)
|
|
$
|
590,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcelo
Fischer
|
|
2015
|
|
$
|
396,546
|
|
|
$
|
120,000
|
|
$
|
244,500
|
(9)
|
|
$
|
—
|
|
$
|
37,850
|
(10)
|
|
$
|
798,896
|
Senior Vice President
– Finance (Principal Financial Officer)(8)
|
|
2014
|
|
$
|
388,000
|
|
|
$
|
143,000
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
10,850
|
(11)
|
|
$
|
541,850
|
|
|
2013
|
|
$
|
388,000
|
|
|
$
|
127,000
|
|
$
|
—
|
(12)
|
|
$
|
—
|
|
$
|
13,250
|
(13)
|
|
$
|
528,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bill
Pereira
|
|
2015
|
|
$
|
501,923
|
|
|
$
|
600,000
|
|
$
|
809,150
|
(15)
|
|
$
|
—
|
|
$
|
40,563
|
(16)
|
|
$
|
1,951,636
|
Chief Executive
Officer and President of IDT Telecom, Current Board
Member(14)
|
|
2014
|
|
$
|
500,000
|
|
|
$
|
600,000
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
12,083
|
(17)
|
|
$
|
1,112,083
|
|
|
2013
|
|
$
|
500,000
|
|
|
$
|
600,000
|
|
$
|
—
|
(18)
|
|
$
|
—
|
|
$
|
47,750
|
(19)
|
|
$
|
1,147,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Menachem
Ash
|
|
2015
|
|
$
|
371,423
|
|
|
$
|
110,000
|
|
$
|
122,250
|
(21)
|
|
$
|
—
|
|
$
|
33,120
|
(22)
|
|
$
|
636,793
|
Executive Vice
President of Strategy and Legal Affairs(20)
|
|
2014
|
|
$
|
370,000
|
|
|
$
|
85,000
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
10,677
|
(23)
|
|
$
|
465,677
|
|
|
2013
|
|
$
|
368,654
|
|
|
$
|
85,000
|
|
$
|
—
|
(24)
|
|
$
|
—
|
|
$
|
15,000
|
(25)
|
|
$
|
468,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joyce J.
Mason
|
|
2015
|
|
$
|
316,229
|
|
|
$
|
65,000
|
|
$
|
122,250
|
(27)
|
|
$
|
—
|
|
$
|
14,850
|
(28)
|
|
$
|
518,329
|
Executive Vice
President, General Counsel and Corporate
Secretary(26)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Howard S.
Jonas
|
|
2015
|
|
$
|
250,961
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
64,587
|
(30)
|
|
$
|
315,549
|
Chairman of the
Board(29)
|
|
2014
|
|
$
|
152,308
|
|
|
$
|
—
|
|
$
|
1,349,982
|
(31)
|
|
$
|
—
|
|
$
|
389,248
|
(32)
|
|
$
|
1,891,538
|
|
|
2013
|
|
$
|
35,000
|
(33)
|
|
$
|
—
|
|
$
|
662,000
|
(34)
|
|
$
|
—
|
|
$
|
1,120,684
|
(35)
|
|
$
|
1,817,684
|
20
21
Employment
Agreements
Howard S.
Jonas: On October 28, 2011, the Company and Howard Jonas
entered into the Second Amended and Restated Employment Agreement
(the “Second Revised Jonas Agreement”) with a term from
October 28, 2011 to December 31, 2013. Pursuant to the Second
Revised Jonas Agreement, Howard Jonas was entitled to receive an
annual cash base salary of $50,000 and 883,333 restricted shares of
Common Stock (which were later converted to Class B Common Stock)
and 1,176,427 restricted shares of Class B Common Stock in lieu of
a cash base salary from January 1, 2009 through December 31,
2013.
On October 28, 2011, the Company spun off its subsidiary, Genie
Energy Ltd. Since the spin-off, Howard Jonas has served as the
Chairman of the Board of Genie Energy and, since January 1, 2014,
also as Chief Executive Officer of Genie Energy.
22
On November 29, 2013, the Company announced that Howard Jonas would
step down as Chief Executive Officer of the Company on December 31,
2013, but would remain Chairman of the Board. On December 20, 2013,
the Company and Howard Jonas entered into the Third Amended and
Restated Employment Agreement (the “Third Revised Jonas
Agreement”) with a term from January 1, 2014 to December 31,
2016. The Third Revised Jonas Agreement is automatically extendable
for additional one-year periods unless the Company or Howard Jonas
notifies the other within ninety days of the end of the term that
the agreement will not be extended. Pursuant to the Third Revised
Jonas Agreement, Howard Jonas (i) will serve as Chairman of the
Board of Directors of the Company, (ii) will receive an annual cash
base salary of $250,000 and (iii) received a grant of 63,320
restricted shares of Class B Common that vest in equal amounts on
January 5th
of 2014, 2015 and 2016.
Bill
Pereira: On April 29, 2009, the Company and Mr. Pereira
entered into an Employment Agreement (the “Original Pereira
Agreement”), pursuant to which Mr. Pereira received an annual
base salary of $435,000 from January 2, 2009 through January 1,
2012 (the term of the Original Pereira Agreement). In addition, Mr.
Pereira was entitled to participate in any established bonus
program for senior executive management. Among other things, the
Original Pereira Agreement provided that Mr. Pereira would serve as
Chief Financial Officer of the Company.
Mr. Pereira resigned as Chief Financial Officer of the Company on
October 28, 2011 and was appointed as the Chief Executive Officer
of IDT Telecom, the Company’s subsidiary, on October 31,
2011. On November 22, 2011, Mr. Pereira and IDT Telecom entered
into an Employment Agreement (the “Revised Pereira
Agreement”), which terminated the Original Pereira Agreement,
pursuant to which Mr. Pereira received an annual base salary of
$500,000 from November 22, 2011 to December 31, 2014 (the term of
the Revised Pereira Agreement). In addition, Mr. Pereira was
entitled to participate in any established bonus program for senior
executive management as approved by the Compensation Committee. Mr.
Pereira also received, on November 22, 2011, (i) a grant of options
to purchase 7,750 shares of the Company’s Class B Common
Stock with an exercise price equal to the fair market value on the
date of grant ($12.67) and an expiration date of November 21, 2021
and (ii) a grant of 25,000 restricted shares of the Company’s
Class B Common Stock. Such options and restricted stock were
granted pursuant to the Company’s 2005 Plan, and vest in
equal annual installments on the first through the third
anniversaries of November 22, 2011. Among other things, the Revised
Pereira Agreement provided that Mr. Pereira would serve as Chief
Executive Officer of IDT Telecom. The Revised Pereira Agreement was
automatically extendable for additional one-year periods unless IDT
Telecom or Mr. Pereira notified the other within ninety days of the
end of the term that the agreement would not be extended.
On January 12, 2015, Mr.
Pereira and IDT Telecom entered into an Amended and Restated
Employment Agreement, which amended and restated the Revised
Pereira Agreement, pursuant to which Mr. Pereira receives an annual
base salary of $500,000 from January 1, 2015 to December 31, 2017
(the term of the Second Revised Pereira Agreement). In addition,
Mr. Pereira is entitled to participate in any established bonus
program for senior executive management as approved by the
Compensation Committee. Mr. Pereira also received, on January 12,
2015, a grant of 25,000 shares of the Company’s restricted
Class B Common Stock, which was granted pursuant to the
Company’s 2015 Plan, and vest in three equal annual
installments commencing on January 5, 2016. Among other things, the
Second Revised Pereira Agreement provides that Mr. Pereira will
serve as Chief Executive Officer of IDT Telecom. The Second Revised
Pereira Agreement is automatically extendable for additional
one-year periods unless IDT Telecom or Mr. Pereira notifies the
other within ninety days of the end of the term that the agreement
will not be extended.
In addition, including pursuant to their employment agreements,
executives are eligible to receive bonuses based upon performance,
including the specific financial and other goals set by the
Compensation Committee of the Board of Directors.
Menachem Ash, Shmuel Jonas and Joyce Mason do not have employment
agreements with the Company or any of its subsidiaries. On November
13, 2008, Mr. Fischer and the Company entered into a Confidential
Release and Retention Agreement, which is described below under
“Potential Payments Upon Termination or
Change-in-Control.”
Grants of Plan-Based
Awards
The following table sets forth information concerning the number of
shares of Class B Common Stock underlying restricted stock awards
under the Company’s 2005 Plan and 2015 Plan, granted to the
Named Executive Officers in Fiscal 2015. There are no estimated
future payouts in connection with such awards. There were no stock
option awards to Named Executive Officers in Fiscal 2015.
23
|
|
Compensation Committee Approval
|
|
|
|
All
Other Stock Awards: Number of Shares of Stock or Units
(#)(1)
|
|
Grant
Date Fair Value of Stock and Option
Awards(2)
|
Shmuel Jonas
|
|
03/11/2015
|
|
03/11/2015
|
|
18,000
|
(3)
|
|
$
|
293,400
|
|
|
09/17/2014
|
|
09/17/2014
|
|
12,414
|
(4)
|
|
|
199,121
|
|
|
|
|
|
|
|
|
|
|
|
Marcelo Fischer
|
|
03/11/2015
|
|
03/11/2015
|
|
15,000
|
(5)
|
|
|
244,500
|
|
|
|
|
|
|
|
|
|
|
|
Bill Pereira
|
|
03/11/2015
|
|
03/11/2015
|
|
18,000
|
(6)
|
|
|
293,400
|
|
|
12/15/2014
|
|
01/12/2015
|
|
25,000
|
(7)
|
|
|
515,750
|
|
|
|
|
|
|
|
|
|
|
|
Menachem Ash
|
|
03/11/2015
|
|
03/11/2015
|
|
7,500
|
(8)
|
|
|
122,250
|
|
|
|
|
|
|
|
|
|
|
|
Joyce J. Mason
|
|
03/11/2015
|
|
03/11/2015
|
|
7,500
|
(8)
|
|
|
122,250
|
|
|
|
|
|
|
|
|
|
|
|
Howard S. Jonas
|
|
—
|
|
—
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding Equity
Awards at Fiscal Year-End
The following table sets forth all equity awards made to each of
the Named Executive Officers that were outstanding at the end of
Fiscal 2015.
|
|
|
|
|
|
|
Number of Securities Underlying
Unexercised Options (#) Exercisable
|
|
Number of Securities Underlying
Unexercised Options (#) Unexercisable
|
|
Option Exercise Price
($)
|
|
|
|
Number of Shares or Units of Stock That
Have Not Vested (#)
|
|
Market Value of Shares or Units of Stock
That Have Not Vested($)(1)
|
Shmuel
Jonas
|
|
—
|
|
—
|
|
—
|
|
—
|
|
60,902
|
(2)
|
|
$
|
1,036,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcelo
Fischer
|
|
—
|
|
—
|
|
—
|
|
—
|
|
15,000
|
(3)
|
|
$
|
255,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bill
Pereira
|
|
10,222
|
|
—
|
|
16.18
|
|
04/22/2020
|
|
43,000
|
(4)
|
|
$
|
731,860
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Menachem
Ash
|
|
—
|
|
—
|
|
—
|
|
—
|
|
7,500
|
(5)
|
|
$
|
127,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joyce J.
Mason
|
|
10,000
|
|
—
|
|
16.18
|
|
04/22/2020
|
|
7,500
|
(5)
|
|
$
|
127,650
|
|
|
5,555
|
|
—
|
|
18.49
|
|
07/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Howard S.
Jonas
|
|
—
|
|
—
|
|
—
|
|
—
|
|
21,107
|
(6)
|
|
$
|
359,241
|
24
Option Exercises and
Stock Vested
The following table sets forth information regarding the shares of
restricted Class B Common Stock that vested for each of the Named
Executive Officers in Fiscal 2015. There were no stock options
exercised by Named Executive Officers in Fiscal 2015.
|
|
|
|
|
Number of Shares Acquired Upon Vesting
(#)
|
|
Number of Shares Withheld to Cover Taxes
|
|
Value
Realized on Vesting ($)(1)
|
Shmuel Jonas
|
|
29,227
|
|
11,107
|
|
$
|
555,843
|
Marcelo Fischer
|
|
15,000
|
|
6,226
|
|
$
|
274,800
|
Bill Pereira
|
|
8,333
|
|
3,105
|
|
$
|
143,160
|
Menachem Ash
|
|
14,000
|
|
5,176
|
|
$
|
256,480
|
Joyce J. Mason
|
|
5,000
|
|
2,183
|
|
$
|
91,600
|
Howard S. Jonas
|
|
21,107
|
|
—
|
|
$
|
423,406
|
POTENTIAL PAYMENTS UPON
TERMINATION OR CHANGE-IN-CONTROL
Marcelo
Fischer: On November 13, 2008, Mr. Fischer and the
Company entered into a Confidential Release and Retention Agreement
(the “Fischer Agreement”), pursuant to which the
Company shall pay Mr. Fischer (or his estate) a severance payment
of $550,000 in the event he is terminated without
“cause,” as defined in the Fischer Agreement, or in the
event of Mr. Fischer’s death or disability. Mr. Fischer has
agreed not to compete with the Company for a period of one year
following the termination of his employment.
Howard
Jonas: Under the terms of the Third Revised Jonas
Agreement, in the event of Howard Jonas’ death or disability,
or in the event the Company terminates Howard Jonas’
employment without “cause” or Howard Jonas voluntarily
terminates his employment with “good reason,” which
includes a “change in control,” any unvested restricted
stock or other equity grant granted in connection with Howard
Jonas’ service to the Company shall vest. In the event of
Howard Jonas’ death, or in the event the Company terminates
Howard Jonas’ employment without “cause” or
Howard Jonas voluntarily terminates his employment with “good
reason,” which includes a “change in control,”
the Company shall pay Howard Jonas’ estate a lump sum payment
equal to twelve (12) months of Howard Jonas’ annual base
salary (at the rate in effect on the date of his death). Howard
Jonas has agreed not to compete with the Company for a period of
one year following the termination of his agreement (other than
termination of his employment for “good reason” or by
the Company other than for “cause”). In the event that
Howard Jonas is terminated for “cause,” the
restrictions shall lapse on the pro-rata portion of the unvested
restricted stock for the time served between January of that year
and the date of termination.
Bill
Pereira: Under the terms of the Second Revised Pereira
Agreement, in the event of Mr. Pereira’s death or disability,
the Company shall pay Mr. Pereira or his estate a death/disability
benefit equal to $1,225,000, one-half to be paid within sixty (60)
days of termination, and one-half to be paid monthly in equal
installments over the six month period following the date of the
initial payment. If Mr. Pereira is terminated without
“cause,” if he voluntarily terminates his employment
with “good reason,” each as defined in the Second
Revised Pereira Agreement, or if IDT Telecom does not extend the
term of the agreement upon its expiration, (i) he is entitled to a
payment equal to the greater of (a) his annual base salary at the
rate in effect on the termination date and (b) $1,225,000; one-half
paid
25
upon the effective date of a release agreement and one-half paid
monthly over the following six month period and (ii) all awards
granted under the Company’s incentive plan shall vest (and
the restrictions thereon lapse). A “change in control”
is deemed to be “good reason” under the Second Revised
Pereira Agreement. Mr. Pereira has agreed not to compete with the
Company for a period of one year following the termination of his
agreement.
All Named Executive
Officers: The Named Executive Officers have all been
granted stock options and/or restricted stock pursuant to the
Company’s 2005 Plan and the 2015 Plan. Under the 2005 Plan
and the 2015 Plan, in the event of “change in control”
(other than a “change in control” which is also a
“corporate transaction”), each as defined in the
Company’s 2005 Plan, (i) each option award which is
outstanding at the time of the change in control automatically
becomes fully vested and exercisable, and (ii) each share of
restricted stock is released from any restrictions on transfer and
repurchase or forfeiture rights. All severance payments are
contingent on Named Executive Officers executing the
Company’s standard release agreement.
The Named Executive Officers are subject to the Company’s
Severance Pay and Plan Document (the “Severance Plan”),
which was adopted by the Board on October 14, 2015. Under the
Severance Plan, U.S. employees who are terminated without case are
entitled, in specific instances as set forth in the Severance Plan,
to severance payments as follows: (i) Employees who started on our
before August 1, 2009 shall receive four weeks for each completed
year of service and two weeks for each completed period of service
that is less than one year of service but greater than six months
of service or (ii) Employees who started after August 1, 2009 shall
receive two weeks for each completed year of service and one week
for each completed period of service that is less than one year of
service but greater than six months of service. Such severance
payments are capped at 52 weeks. If a Named Executive Officers is
entitled to a greater severance payment pursuant to an agreement,
the greater severance payment shall control. The Severance Plan was
not in effect on July 31, 2015; therefore, amounts due under the
Severance Policy are not included in the chart below.
The following table sets forth quantitative information with
respect to potential payments to be made to each of the Named
Executive Officers upon termination in various circumstances and/or
a change in control of the Company (each an “Event”),
assuming the Event took place on July 31, 2015, using the closing
price of the Company’s Class B Common Stock on July 31, 2015
($17.02). The potential payments are based on agreements entered
into by Named Executive Officers with the Company, discussed above,
the 2005 Plan and the 2015 Plan. The value of each restricted share
is computed by multiplying the closing market price per share of
the Company’s Class B Common Stock on July 31, 2015 ($17.02)
by the number of unvested shares of restricted Class B Common Stock
held by the Named Executive Officer on that date.
|
|
Event
of Death or Disability
($)
|
|
|
|
Termination For Cause
($)
|
|
Voluntary Termination without Good Reason
($)
|
|
Termination Without Cause/Voluntary Termination for Good
Reason ($)
|
Shmuel Jonas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
—
|
|
$
|
1,036,522
|
(1)
|
|
—
|
|
—
|
|
|
—
|
|
Severance
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marcelo Fischer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
—
|
|
$
|
255,300
|
(2)
|
|
—
|
|
—
|
|
|
—
|
|
Severance
|
|
$
|
550,000
|
|
|
—
|
|
|
—
|
|
—
|
|
$
|
550,000
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bill
Pereira
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
—
|
|
$
|
731,860
|
(4)
|
|
—
|
|
—
|
|
$
|
731,860
|
(4)
|
Severance
|
|
$
|
1,225,000
|
|
$
|
1,225,000
|
|
|
—
|
|
—
|
|
$
|
1,225,000
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Menachem Ash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
|
—
|
|
$
|
127,650
|
(6)
|
|
—
|
|
—
|
|
|
—
|
|
Severance
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
26
|
|
Event
of Death or Disability
($)
|
|
|
|
Termination For Cause
($)
|
|
Voluntary Termination without Good Reason
($)
|
|
Termination Without Cause/Voluntary Termination for Good
Reason ($)
|
Joyce
J. Mason
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
$
|
—
|
|
|
$
|
127,650
|
(7)
|
|
$
|
—
|
|
|
—
|
|
$
|
—
|
|
Severance
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Howard S. Jonas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Shares
|
|
$
|
359,241
|
(8)
|
|
$
|
359,241
|
(8)
|
|
$
|
209,550
|
(9)
|
|
—
|
|
$
|
359,241
|
(8)
|
Severance
|
|
$
|
250,000
|
(10)
|
|
$
|
250,000
|
|
|
|
—
|
|
|
—
|
|
$
|
250,000
|
|
27
PROPOSAL REQUIRING YOUR
VOTE
PROPOSAL NO.
1
ELECTION OF
DIRECTORS
Pursuant to the Company’s Third Restated Certificate of
Incorporation, the authorized number of members of the Board of
Directors is between three and seventeen, with the actual number to
be set, within that range, by the Board of Directors from time to
time. The Board of Directors has set the number of directors on the
Board of Directors at five. There are currently five directors on
the Board of Directors. The current terms of all of the serving
directors expire at the Annual Meeting. All five of the directors
are standing for re-election at the Annual Meeting.
The nominees to the Board of Directors are Michael Chenkin, Eric F.
Cosentino, Howard S. Jonas, Bill Pereira and Judah Schorr, each of
whom has consented to be named in this proxy statement and to serve
if elected. Each of the nominees is currently serving as a director
of the Company. Brief biographical information about the nominees
for directors is furnished below.
Each of these director nominees is standing for election for a term
of one year until the 2016 Annual Meeting, or until his successor
is duly elected and qualified or until his earlier resignation or
removal. A majority of the votes cast for or against a director
nominee at the Annual Meeting shall elect each director.
Stockholders may not vote for more than five persons, which is the
number of nominees identified herein. The following pages contain
biographical information and other information about the nominees.
Following each nominee’s biographical information, we have
provided information concerning particular experience,
qualifications, attributes and/or skills that the Nominating
Committee and the Board of Directors considered when determining
that each nominee should serve as a director.
Michael Chenkin has been a director of the Company since
October 16, 2013. Mr. Chenkin is a Certified Public Accountant and
worked in the Audit Department of Coopers and Lybrand from 1974 to
1993 and as a consultant to the securities industry from 1993 to
2008 with an emphasis on business implementation, internal
controls, compliance and regulatory matters for large financial
institutions. Mr. Chenkin received a Bachelor of Science degree
from Cornell University and a Master of Business Administration
from Columbia University.
Key Attributes,
Experience and Skills:
Mr. Chenkin’s diverse business experiences as a Certified
Public Accountant — working as an auditor for a large
multi-national accounting firm for close to 20 years — and
consulting for large financial institutions for 15 years, offer
valuable insights to the Board of Directors, particularly given the
enhanced accounting rules and regulations affecting public
companies. Mr. Chenkin’s strong accounting background, as
well as his M.B.A. from Columbia University, provides financial and
audit-related expertise to the Board of Directors.
Eric F. Cosentino has been a director of the Company since
February 2007. Rev. Cosentino has been a director of Zedge
Holdings, Inc., a subsidiary of the Company, since September 2008
and a member of the National Association of Corporate Directors
(NACD) since March 2009. Rev. Cosentino has been an NACD Governance
Fellow since 2014, when he completed NACD’s comprehensive
program study for corporate directors. He supplements his skill
sets through ongoing engagement with the director community and
access to leading practices. Rev. Cosentino served on the Board of
Directors of a Company subsidiary, IDT Entertainment, until it was
sold to Liberty Media in 2006. Rev. Cosentino was the Rector of the
Episcopal Church of the Divine Love in Montrose, New York, from
1987 until his retirement in 2014. He remains canonically resident
in the Episcopal Diocese of New York. He began his ordained
ministry in 1984 as curate (assistant) at St. Elizabeth’s
Episcopal Church in Ridgewood, Bergen County, New Jersey. He has
also served on the Board of Directors of the Evangelical Fellowship
Anglican Communion of New York. Rev. Cosentino has published
articles and book reviews for The Episcopal New Yorker, Care &
Community, and Evangelical Journal. Rev. Cosentino received a B.A.
from Queens College and a M.Div. from General Theological Seminary,
New York.
Key Attributes,
Experience and Skills:
Rev. Cosentino has strong leadership skills, having served as the
Rector of the Episcopal Church of the Divine Love in Montrose, New
York, from 1987 until 2014. As Chairman of the Company’s
Corporate Governance Committee, Rev. Cosentino has become
well-versed in corporate governance issues by attending seminars
and
28
joining the National Association of Corporate Directors in March
2009. Rev. Cosentino’s long tenure as a director of the
Company and of Zedge Holdings, as well as former subsidiary, IDT
Entertainment, brings extensive knowledge of our Company to the
Board.
Howard S. Jonas founded IDT in August 1990, and has served
as Chairman of the Board of Directors since its inception. Mr.
Jonas served as Chief Executive Officer of the Company from October
2009 through December 2013 and from December 1991 until July 2001.
Mr. Jonas is also the founder and has been President of Jonas Media
Group (formerly Jonas Publishing) since its inception in 1979.
Since January 2014, Mr. Jonas has served as the Chief Executive
Officer of Genie Energy Ltd, a former subsidiary of IDT that was
spun off to stockholders in October 2011, and has served as
Chairman of the board of directors of Genie Energy since the
spin-off. Mr. Jonas also serves as the Chairman of the Board of CTM
Media Holdings, Inc., a former subsidiary of IDT that was spun off
to stockholders in September 2009. Mr. Jonas received a B.A. in
Economics from Harvard University.
Key Attributes,
Experience and Skills:
As founder of the Company and Chairman of the Board since its
inception, Howard Jonas brings tremendous knowledge of all aspects
of our Company and each industry in which it is involved to the
Board. Howard Jonas’ service as Chairman of the Board creates
a critical link between management and the Board, enabling the
Board to perform its oversight function with the benefits of
management’s perspectives on the businesses of the Company.
In addition, having Howard Jonas on the Board provides our Company
with effective leadership.
Bill Pereira has served as a member of the Company’s
Board of Directors and as the Chief Executive Officer, President
and Co–Chairman of IDT Telecom since October 31, 2011. Mr.
Pereira served as Chief Financial Officer of the Company from
January 2009 until October 2011, and served as the Treasurer from
January 2009 to December 2010. Previously, he served as Executive
Vice President of Finance for the Company from January 2008 to
January 2009. Mr. Pereira initially joined the Company in December
2001 when the Company bought Horizon Global Trading, a financial
software firm where he was a managing partner. In February 2002,
Mr. Pereira joined Winstar Communications, a subsidiary of the
Company, as a Senior Vice President of Finance. Mr. Pereira was
promoted to CFO of Winstar Communications, a position he held until
2006 when he was named a Senior Vice President of the Company
responsible for financial reporting, budgeting and planning. Prior
to joining the Company, Mr. Pereira worked for a number of
companies in the financial sector, including Prudential Financial,
SBC Warburg and UBS. Mr. Pereira received a B.S. from Rutgers
University and an M.B.A. from the New York University Stern School
of Business.
Key Attributes,
Experience and Skills:
Mr. Pereira’s history with the Company, particularly his
nearly three-year tenure as Chief Financial Officer of the Company,
brings extensive knowledge of the Company’s business
divisions. Mr. Pereira’s financial background, coupled with
his first-hand knowledge of the Company’s financial reporting
and internal audit process, provides financial expertise to the
Board. Mr. Pereira’s successful leadership of the
Company’s turn-around plan provides valuable insight to the
Board.
Judah Schorr has been a director of the Company since
December 2006. Dr. Schorr founded Judah Schorr MD PC in 1994, an
anesthesia provider to hospitals, ambulatory surgery centers and
medical offices, and has been its President and owner since its
inception, as well as the President of its subsidiary, Tutto
Anesthesia. Dr. Schorr is an attending physician at Anesthesia
Services at Bergen Regional Medical Center, the largest hospital in
the state of New Jersey, and the Managing Partner of Chavrusa
Realty Corp., a commercial real-estate company in Long Island, New
York. Dr. Schorr received his B.S. in Psychology from Brooklyn
College and his M.D. from the University of Trieste Faculty of
Medicine and Surgery in Italy.
Key Attributes,
Experience and Skills:
Through Dr. Schorr’s career as an entrepreneur driving the
growth of Judah Schorr MD PC and Chavrusa Realty Corp., he has
obtained valuable business and management experience and brings
important perspectives on the issues facing the Company. Dr.
Schorr’s tenure as a member of the Board and its
Compensation, Corporate Governance and Audit Committees brings
useful compliance insights to the Board.
29
The Board of Directors has no reason to believe that any of the
persons named above will be unable or unwilling to serve as a
director, if elected.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE
FOR
THE ELECTION OF THE NOMINEES NAMED ABOVE.
Directors, Director
Nominees and Executive Officers
The executive officers, directors, director nominees and Named
Executive Officers of the Company are as follows:
|
|
|
|
|
Shmuel Jonas
|
|
34
|
|
Chief Executive Officer and Named Executive
Officer
|
Howard S. Jonas
|
|
59
|
|
Chairman of the Board of Directors, Director and
Director Nominee and Named Executive Officer
|
Marcelo Fischer
|
|
48
|
|
Senior Vice President of Finance and Named
Executive Officer
|
Bill Pereira
|
|
50
|
|
Director, Director Nominee, Chief Executive
Officer and President of IDT Telecom and Named Executive
Officer
|
Joyce J. Mason
|
|
56
|
|
Executive Vice President, General Counsel,
Corporate Secretary and Named Executive Officer
|
Mitch Silberman
|
|
47
|
|
Chief Accounting Officer and
Controller
|
Menachem Ash
|
|
43
|
|
Executive Vice President of Strategy and Legal
Affairs and Named Executive Officer
|
Anthony S. Davidson
|
|
47
|
|
Senior Vice President —
Technology
|
Michael Chenkin
|
|
64
|
|
Director and Director Nominee
|
Eric F. Cosentino
|
|
58
|
|
Director and Director Nominee
|
Judah Schorr
|
|
63
|
|
Director and Director Nominee
|
Set forth below is biographical information with respect to the
Company’s current executive officers and named executive
officers, except Howard S. Jonas and Bill Pereira, whose
information is set forth above in Proposal No. 1:
Shmuel Jonas has served as Chief Executive Officer of the
Company since January 2014. Mr. Jonas served as Chief Operating
Officer of the Company from June 2010 through December 2013. Mr.
Jonas joined the Company in June 2008 and served as a Vice
President until June 2009 when he was elected to serve as the
Company’s Vice President of Operations. Since 2004, Mr. Jonas
has been the managing member of Arlington Suites, LLC, manager of a
thirty million dollar mixed-use ground up development project in
Bronx, New York. From 2006 through 2008, Mr. Jonas was a partner in
a 160‑unit garden apartment complex in Memphis, Tennessee.
Between 2004 and 2005, Mr. Jonas owned and operated various
businesses in the food industry, including BID Distribution, a
distributor and marketer of frozen desserts to grocery stores and
food service operations.
Marcelo Fischer has served as the Company’s Senior
Vice President–Finance (the Company’s principal
financial officer position) since October 31, 2011 and as Chief
Financial Officer of IDT Telecom since June 2007. Mr. Fischer also
served as the Company’s Senior Vice President of Finance from
March 2007 to June 2007. Mr. Fischer served as the Company’s
Chief Financial Officer and Treasurer from June 2006 to March 2007,
as the Company’s Controller from May 2001 until June 2006 and
as Chief Accounting Officer from December 2001 until June 2006.
Prior to joining the Company, Mr. Fischer was the Corporate
Controller of Viatel, Inc. from 1999 until 2001. From 1998 through
1999, Mr. Fischer was the Controller of the Consumer International
Division of Revlon, Inc. From 1991 through 1998, Mr. Fischer held
various accounting and finance positions at Colgate-Palmolive
Corporation. Mr. Fischer, a Certified Public Accountant, received a
B.A. from the University of Maryland and an M.B.A. from the New
York University Stern School of Business.
Joyce J. Mason has served as an Executive Vice President of
the Company since December 1998 and as General Counsel and
Corporate Secretary of the Company from its inception. Ms. Mason
also served as a director of the Company from its inception until
December 2006. In addition, Ms. Mason is currently a director of
Zedge Holdings, Inc., a subsidiary of the Company, and she also
served as a director of IDT Telecom from December 1999 until May
2001 and as a director of Net2Phone from October 2001 until October
2004. Prior to joining the Company,
30
Ms. Mason had been in private legal practice. Ms. Mason received a
B.A. from the City University of New York and a J.D. from New York
Law School.
Mitch Silberman has served as the Company’s Chief
Accounting Officer and Controller since June 2006. Mr. Silberman
joined the Company in October 2002 as Director of Financial
Reporting until his promotion to Assistant Controller in October
2003. Prior to joining the Company, Mr. Silberman was a senior
manager at KPMG LLP, where he served in the firm’s
Biotechnology and Pharmaceutical practice. Prior to KPMG, Mr.
Silberman worked for Grant Thornton LLP, serving in the
firm’s Telecommunications, Service and Technology practice.
Mr. Silberman, a Certified Public Accountant, received a Bachelor
of Science in Accounting from Brooklyn College.
Menachem Ash has served as the Company’s Executive
Vice President of Strategy and Legal Affairs since October 2012.
Mr. Ash served as the managing attorney of the Company’s
legal department from June 2011 to October 2012. Mr. Ash has served
as senior counsel to several IDT divisions since he joined the
Company in July 2004, including IDT Telecom and IDT Carmel. Prior
to joining the Company, Mr. Ash served as General Counsel to
Telstar International, Inc., a telecommunications services
provider. Mr. Ash also worked at KPMG as a senior associate in its
tax group focusing on financial services and technology companies.
He is a graduate of Brooklyn College and the Benjamin N. Cardozo
School of Law.
Anthony S. Davidson has served as Senior Vice President
— Technology of the Company since December 2014. Mr. Davidson
has also served as Executive Vice President — Carrier
Operations of IDT Telecom since 2003 and in several different
senior management positions in finance, technology and commercial
operations and corporate development at IDT Investments and IDT
Telecom since January 2000. Prior to joining IDT, Mr. Davidson
served as Director of Finance at a small, privately held satellite
television programming company in New Jersey and was previously a
middle market relationship manager at Fleet Bank in Albany, NY. He
holds a B.A. from Williams College and an M.B.A. from Cornell
University.
Relationships among
Directors or Executive Officers
Howard S. Jonas and Joyce J. Mason are brother and sister. Howard
Jonas and Shmuel Jonas are father and son. Joyce J. Mason and
Shmuel Jonas are aunt and nephew. There are no other familial
relationships among any of the directors or executive officers of
the Company.
31
PROPOSAL NO.
2
APPROVAL OF AMENDMENT TO
THE COMPANY’S
2015 STOCK OPTION AND INCENTIVE PLAN
The Company’s stockholders are being asked to approve an
amendment to the Company’s 2015 Stock Option and Incentive
Plan (the “2015 Plan”) that will increase the number of
shares of the Company’s Class B Common Stock available for
the grant of awards thereunder by an additional 100,000 shares. The
Board of Directors adopted the proposed amendment to the 2015 Plan
on September 24, 2015, subject to stockholder approval at the
Annual Meeting.
The Board of Directors believes that the proposed amendment to
increase the number of shares of the Company’s Class B Common
Stock available for the grant of awards thereunder by an additional
100,000 shares is necessary in order to provide the Company with a
sufficient reserve of shares of Class B Common Stock for future
grants needed to attract and retain the services of key employees,
directors and consultants of the Company essential to the
Company’s long-term success.
The proposed amendment is being submitted for a stockholder vote in
order to enable the Company to grant, among other equity grants
permitted pursuant to the 2015 Plan, options which are incentive
stock options (“ISOs”) within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the
“Code”); and because such approval may be required or
advisable in connection with (i) the provisions set forth in
Section 162(m) of the Code relating to the deductibility of certain
compensation (ii) the provisions set forth in Rule 16b-3
promulgated under the Exchange Act and (iii) the rules and
regulations applicable to New York Stock Exchange-listed
companies.
The following description of the 2015 Plan, as proposed to be
amended by this Proposal, is a summary, does not purport to be
complete and is qualified in its entirety by the full text of the
2015 Plan, as proposed to be amended. A copy of the 2015 Plan, as
proposed to be amended, is attached hereto as Exhibit A and has
been filed with the SEC with this Proxy Statement.
DESCRIPTION OF THE 2015
PLAN
Pursuant to the 2015 Plan, officers, employees, directors and
consultants of the Company and certain of its subsidiaries are
eligible to receive awards of stock options, stock appreciation
rights, limited stock appreciation rights, restricted stock and
deferred stock units. There are approximately 1,252 employees and
directors eligible for grants under the Plan. Options granted under
the 2015 Plan may be ISOs or non-qualified stock options
(“NQSOs”). Stock appreciation rights
(“SARs”) and limited stock appreciation rights
(“LSARs”) may be granted either alone or simultaneously
with the grant of an option. Restricted stock and deferred stock
units may be granted in addition to or in lieu of any other award
made under the 2015 Plan.
The maximum number of shares reserved for the grant of awards under
the 2015 Plan is 600,000 shares of Class B Common Stock (including
the 100,000 shares of Class B Common Stock reserved subject to
approval of the stockholders). Such share reserves are subject to
further adjustment in the event of specified changes to the capital
structure of the Company. The shares may be made available either
from the Company’s authorized but unissued capital stock or
from capital stock reacquired by the Company.
The Compensation Committee of the Board of Directors administers
the 2015 Plan. Subject to the provisions of the 2015 Plan, the
Compensation Committee determines the type of awards, when and to
whom awards will be granted, the number and class of shares covered
by each award and the terms, provisions and kind of consideration
payable (if any), with respect to awards. The Compensation
Committee may interpret the 2015 Plan and may at any time adopt
such rules and regulations for the 2015 Plan as it deems advisable,
including the delegation of certain of its authority. In
determining the persons to whom awards shall be granted and the
number of shares covered by each award, the Compensation Committee
takes into account the duties of the respective persons, their
present and potential contributions to the success of the Company
and such other factors as the Compensation Committee deems
relevant.
An option may be granted on such terms and conditions as the
Compensation Committee may approve, and generally may be exercised
for a period of up to ten years from the date of grant. Generally,
ISOs will be granted with an exercise price equal to the
“Fair Market Value” (as defined in the 2015 Plan) on
the date of grant. In the
32
case of ISOs, certain limitations will apply with respect to the
aggregate value of option shares which can become exercisable for
the first time during any one calendar year, and certain additional
limitations will apply to ISOs granted to “Ten Percent
Stockholders” of the Company (as defined in the 2015 Plan).
The Compensation Committee may provide for the payment of the
option price in cash, by delivery of Class B Common Stock having a
Fair Market Value equal to such option price, by a combination
thereof or by any other method. Options granted under the 2015 Plan
will become exercisable at such times and under such conditions as
the Compensation Committee shall determine, subject to acceleration
of the exercisability of options in the event of, among other
things, a “Change in Control,” a “Corporate
Transaction” or a “Related Entity Disposition”
(in each case, as defined in the 2015 Plan).
Each non-employee director will receive 4,000 shares of Class B
Common Stock annually. New non-employee directors will receive a
pro-rata amount (based on projected quarters of service for such
calendar year following the grant date) of such annual grant on
their date of initial election and qualification as a non-employee
director. The grant date for incumbent annual non-employee director
grants will be each January 5th
(or the next business day).
The 2015 Plan also provides for the granting of restricted stock
awards, which are awards of Class B Common Stock that may not be
disposed of, except by will or the laws of descent and
distribution, for such period as the Compensation Committee
determines (the “restricted period”). The Compensation
Committee may also impose such other conditions and restrictions,
if any, on the shares as it deems appropriate, including the
satisfaction of performance criteria. All restrictions affecting
the awarded shares lapse in the event of a Change in Control, a
Corporate Transaction or a Related Entity Disposition.
During the restricted period for a restricted stock award, the
grantee will be entitled to receive dividends with respect to, and
to vote, the shares of restricted stock awarded to him or her. If,
during the restricted period, the grantee’s service with the
Company terminates, any shares remaining subject to restrictions
will be forfeited. The Compensation Committee has the authority to
cancel any or all outstanding restrictions prior to the end of the
restricted period, including cancellation of restrictions in
connection with certain types of termination of service.
The 2015 Plan also permits the Compensation Committee to grant SARs
and/or LSARS. Generally, SARs may be exercised at such time or
times and only to the extent determined by the Compensation
Committee and LSARs may be exercised only (i) during the 90 days
immediately following a Change in Control or (ii) immediately prior
to the effective date of a Corporate Transaction (as defined in the
2015 Plan). LSARs will be exercisable at such time or times and
only to the extent determined by the Compensation Committee. An
LSAR granted in connection with an ISO is exercisable only if the
Fair Market Value per share of Class B Common Stock on the date of
grant exceeds the purchase price specified in the related ISO.
Upon exercise of an SAR, a grantee will receive for each share for
which an SAR is exercised, an amount in cash or Class B Common
Stock, as determined by the Compensation Committee, equal to the
excess, if any, of (i) the Fair Market Value of a share of Class B
Common Stock on the date the SAR is exercised, over (ii) the
exercise or other base price of the SAR or, if applicable, the
exercise price per share of the option to which the SAR
relates.
Upon exercise of an LSAR, a grantee will receive for each share for
which an LSAR is exercised, an amount in cash equal to the excess,
if any, of (i) the greater of (x) the highest Fair Market Value of
a share of Class B Common Stock, during the 90-day period ending on
the date the LSAR is exercised, and (y) whichever of the following
is applicable: (1) the highest per share price paid in any tender
or exchange offer which is in effect at any time during the 90 days
ending on the date of exercise of the LSAR; (2) the fixed or
formula price for the acquisition of shares of Class B Common Stock
in a merger in which the Company will not continue as the surviving
corporation, or upon a consolidation, or a sale, exchange or
disposition of all or substantially all of the Company’s
assets, approved by the Company’s stockholders (if such price
is determinable on the date of exercise); and (3) the highest price
per share of Class B Common Stock shown on Schedule 13D, or any
amendment thereto, filed by the holder of the specified percentage
of Class B Common Stock, the acquisition of which gives rise to the
exercisability of the LSAR over (ii) the exercise or other base
price of the LSAR or, if applicable, the exercise price per share
of the option to which the LSAR relates. In no event, however, may
the holder of an LSAR granted in connection with an ISO receive an
amount in excess of the maximum amount which will enable the option
to continue to qualify as an ISO.
When an SAR or LSAR is exercised, the option to which it relates,
if any, will cease to be exercisable to the extent of the number of
shares with respect to which the SAR or LSAR is exercised, but will
be deemed to have been exercised for purposes of determining the
number of shares available for the future grant of awards under the
2015 Plan.
33
The 2015 Plan further provides for the granting of deferred stock
units, which are awards providing a right to receive shares of
Class B Common Stock on a deferred basis, subject to such
restrictions and a restricted period as the Compensation Committee
determines. The Compensation Committee may also impose such other
conditions and restrictions, if any, on the payment of shares as it
deems appropriate, including the satisfaction of performance
criteria. All deferred stock awards become fully vested in the
event of a Change in Control, a Corporate Transaction or a Related
Entity Disposition.
The grantee of a deferred stock unit will not be entitled to
receive dividends or vote the underlying shares until the
underlying shares are delivered to the grantee. The Compensation
Committee has the authority to cancel any or all outstanding
restrictions prior to the end of the restricted period, including
cancellation of restrictions in connection with certain types of
termination of service.
The Board of Directors may at any time and from time to time
suspend, amend, modify or terminate the 2015 Plan; provided,
however, that, to the extent required by any other law, regulation
or stock exchange rule, no such change shall be effective without
the requisite approval of the Company’s stockholders. In
addition, no such change may adversely affect an award previously
granted, except with the written consent of the grantee.
No awards may be granted under the 2015 Plan after September 16,
2024, ten years from the Board’s approval of the 2015
Plan.
ISOs (and any related SARs) are not assignable or transferable
except by the laws of descent and distribution. Non-qualified stock
options (and any SARs or LSARs related thereto) may be transferred
to the extent permitted by the Compensation Committee. Holders of
NQSOs (and any SARs or LSARs related thereto) are permitted to
transfer such NQSOs for no consideration to such holder’s
“family members” (as defined in Form S-8) with the
prior approval of the Compensation Committee.
Except as set forth in the table below, the Company cannot now
determine the number of options or other awards to be granted in
the future under the 2015 Plan to officers, directors, employees
and consultants. Actual awards under the 2015 Plan to Named
Executive Officers for Fiscal 2015 are reported under the heading
“Grant of Plan-Based Awards.”
New Plan
Benefits
Name
and Principal Position
|
|
Number of
Shares of Stock
|
Non-Employee Director Group
|
|
12,000
|
(1)
|
Federal Income Tax
Consequences of Awards Granted under the 2015 Plan
The Company believes that, under present law, the following are the
U.S. federal income tax consequences generally arising with respect
to awards under the 2015 Plan:
Incentive Stock
Options. ISOs granted under the 2015 Plan are intended
to meet the definitional requirements of Section 422(b) of the Code
for “incentive stock options.” A participant who
receives an ISO does not recognize any taxable income upon the
grant of such ISO. Similarly, the exercise of an ISO generally does
not give rise to federal taxable income to the participant,
provided that (i) the federal “alternative minimum
tax,” which depends on the participant’s particular tax
situation, does not apply and (ii) the participant is employed by
the Company from the date of grant of the option until three months
prior to the exercise thereof, except where such employment or
service terminates by reason of disability or death (where the
three month period is extended to one year).
Further, if after exercising an ISO, a participant disposes of the
Class B Common Stock so acquired more than two years from the date
of grant and more than one year from the date of transfer of the
Class B Common Stock pursuant to the exercise of such ISO (the
“applicable holding period”), the participant will
normally recognize a long-term capital gain or loss equal to the
difference, if any, between the amount received for the shares and
the exercise price. If, however, the participant does not hold the
shares so acquired for the applicable holding period —thereby making a “disqualifying disposition”
— the participant would realize ordinary income on the excess of the
34
fair market value of the shares at the time the ISO was
exercised over the exercise price, and the balance of income, if
any, would be long-term capital gain (provided the holding period
for the shares exceeded one year and the participant held such
shares as a capital asset at such time).
A participant who exercises an ISO by delivering Class B Common
Stock previously acquired pursuant to the exercise of another ISO
is treated as making a “disqualifying disposition” of
such Class B Common Stock if such shares are delivered before the
expiration of their applicable holding period. Upon the exercise of
an ISO with previously acquired shares as to which no disqualifying
disposition occurs, the participant would not recognize gain or
loss with respect to such previously acquired shares. The Company
will not be allowed a federal income tax deduction upon the grant
or exercise of an ISO or the disposition, after the applicable
holding period, of the Class B Common Stock acquired upon exercise
of an ISO. In the event of a disqualifying disposition, the Company
generally will be entitled to a deduction in an amount equal to the
ordinary income recognized by the participant, provided that such
amount constitutes an ordinary and necessary business expense to
the Company and is reasonable and the limitations of Sections 280G
and 162(m) of the Code (discussed below) do not apply.
Non-Qualified Stock
Options and Stock Appreciation Rights. Non-qualified
stock options granted under the 2015 Plan are options that do not
qualify as ISOs. A participant who receives an NQSO or an SAR
(including an LSAR) will not recognize any taxable income upon the
grant of such NQSO or SAR. However, the participant generally will
recognize ordinary income upon exercise of an NQSO in an amount
equal to the excess of (i) the fair market value of the shares of
Class B Common Stock at the time of exercise over (ii) the exercise
price. Similarly, upon the receipt of cash or shares pursuant to
the exercise of an SAR, the individual generally will recognize
ordinary income in an amount equal to the sum of the cash and the
fair market value of the shares received.
The ordinary income recognized with respect to the receipt of
shares or cash upon exercise of a NQSO or an SAR will be subject to
both wage withholding and other employment taxes. In addition to
the customary methods of satisfying the withholding tax liabilities
that arise upon the exercise of an SAR for shares or upon the
exercise of a NQSO, the Company may satisfy the liability in whole
or in part by withholding shares of Class B Common Stock from those
that otherwise would be issuable to the participant or by the
participant tendering other shares owned by him or her, valued at
their fair market value as of the date that the tax withholding
obligation arises.
A federal income tax deduction generally will be allowed to the
Company in an amount equal to the ordinary income recognized by the
individual with respect to his or her NQSO or SAR, provided that
such amount constitutes an ordinary and necessary business expense
to the Company and is reasonable and the limitations of Sections
280G and 162(m) of the Code do not apply.
If a participant exercises an NQSO by delivering shares of Class B
Common Stock to the Company, other than shares previously acquired
pursuant to the exercise of an ISO which is treated as a
“disqualifying disposition” as described above, the
participant will not recognize gain or loss with respect to the
exchange of such shares, even if their then fair market value is
different from the participant’s tax basis. The participant,
however, will be taxed as described above with respect to the
exercise of the NQSO as if he or she had paid the exercise price in
cash, and the Company likewise generally will be entitled to an
equivalent tax deduction.
Other
Awards. With respect to other awards under the 2015
Plan that are settled either in cash or in shares of Class B Common
Stock that are either transferable or not subject to a substantial
risk of forfeiture (as defined in the Code and the regulations
thereunder), participants generally will recognize ordinary income
equal to the amount of cash or the fair market value of the Class B
Common Stock received. Participants also will not recognize income
upon the grant of a deferred stock unit, and will instead recognize
ordinary income when shares of Class B Common Stock are delivered
in satisfaction of such award.
With respect to restricted stock awards under the 2015 Plan that
are restricted to transferability and subject to a substantial risk
of forfeiture — absent a written election pursuant to Section
83(b) of the Code filed with the Internal Revenue Service within 30
days after the date of transfer of such shares pursuant to the
award (a “Section 83(b) election”) — a
participant will recognize ordinary income at the earlier of the
time at which (i) the shares become transferable or (ii) the
restrictions that impose a substantial risk of forfeiture of such
shares (the “Restrictions”) lapse, in an amount equal
to the excess of the fair market value (on such date) of such
shares over the price paid for the award, if any. If a Section
83(b) election is made, the participant will recognize ordinary
income, as of the transfer date, in an amount equal to the excess of the fair market
value of the Class B Common Stock as of that date over the price
paid for such award, if any.
35
The ordinary income recognized with respect to the receipt of cash,
shares of Class B Common Stock or other property under the 2015
Plan will be subject to both wage withholding and other employment
taxes. In addition to the customary methods of satisfying
withholding tax liabilities that arise with respect to the delivery
of cash or property (or vesting thereof), the Company may satisfy
the liability in whole or in part by withholding shares of Class B
Common Stock from those that would otherwise be issuable to the
participant or by the participant tendering other shares owned by
him or her, valued at their fair market value as of the date that
the tax withholding obligation arises.
The Company generally will be allowed a deduction for federal
income tax purposes in an amount equal to the ordinary income
recognized by the participant, provided that such amount
constitutes an ordinary and necessary business expense and is
reasonable and the limitations of Sections 280G and 162(m) of the
Code do not apply.
Change in
Control. In general, if the total amount of payments to
a participant that are contingent upon a “change in
control” of the Company (as defined in Section 280G of the
Code), including awards under the 2015 Plan that vest upon a
“change in control,” equals or exceeds three times the
individual’s “base amount” (generally, such
participant’s average annual compensation for the five
calendar years preceding the change in control), then, subject to
certain exceptions, the payments may be treated as “parachute
payments” under the Code, in which case a portion of such
payments would be non-deductible to the Company and the participant
would be subject to a 20% excise tax on such portion of the
payments.
Certain Limitations
on Deductibility of Executive Compensation. With
certain exceptions, Section 162(m) of the Code denies a deduction
to publicly held corporations for compensation paid to certain
executive officers in excess of $1 million per executive per
taxable year (including any deduction with respect to the exercise
of an NQSO or SAR or the disqualifying disposition of stock
purchased pursuant to an ISO). One such exception applies to
certain performance-based compensation provided that such
compensation has been approved by stockholders in a separate vote
and certain other requirements are met. The Company believes that
Stock Options, SARs and LSARs granted under the 2015 Plan should
qualify for the performance-based compensation exception to Section
162(m).
On October 21, 2015, the last reported sale price of the
Company’s Class B Common Stock on the New York Stock Exchange
was $13.25 per share.
36
EQUITY COMPENSATION PLAN
INFORMATION
Employee Stock Incentive
Program
The Company adopted the 2015 Plan, pursuant to which options to
purchase Class B Common Stock, shares of restricted Class B Common
Stock and Deferred Stock Units may be awarded. As fully described
in Proposal No. 2, the Company is asking the Stockholders to vote
on an amendment to the 2015 Plan that will increase the number of
shares of the Company’s Class B Common Stock available for
grant of awards thereunder by an additional 100,000 shares. The
Company anticipates awarding options to purchase Class B Common
Stock, restricted Class B Common Stock and Deferred Stock Units to
employees, officers, directors and consultants under the 2015
Plan.
Equity Compensation
Plans and Individual Compensation Arrangements
The following chart provides aggregate information regarding grants
under all equity compensation plans of the Company through July 31,
2015.
|
|
Number of Securities to be Issued upon Exercise of
Outstanding Options(1)
|
|
Weighted-Average Exercise Price of Outstanding
Options
|
|
Number of Securities Remaining Available for Future
Issuance under Equity Compensation Plans
|
Equity compensation plans approved by security
holders
|
|
423,782
|
|
$
|
14.58
|
|
114,396
|
Equity compensation plans not approved by
security holders
|
|
—
|
|
$
|
—
|
|
—
|
Total
|
|
423,782
|
|
$
|
14.58
|
|
114,396
|
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE
FOR
APPROVAL OF THE 2015 PLAN AS DESCRIBED ABOVE.
37
PROPOSAL NO.
3
ADVISORY VOTE ON
EXECUTIVE COMPENSATION
As required by Section 14A of the Securities Exchange Act of 1934,
we are asking our stockholders to cast an advisory vote on the
compensation of the “Named Executive Officers”
identified in the 2015 Summary Compensation Table in the
“Executive Compensation” section of this Proxy
Statement. This vote is advisory and not binding on the Company;
however, it will provide feedback concerning our executive
compensation program.
As noted in the Compensation Discussion and Analysis included in
the “Executive Compensation” section of this Proxy
Statement, the Compensation Committee believes that our executive
compensation program implements and achieves the goals of our
executive compensation philosophy. That philosophy, which is set by
the Compensation Committee, is designed to attract and retain
qualified and motivated personnel and align their interests with
the short-term and long-term goals of the Company and with the best
interests of our stockholders. Our compensation philosophy is to
provide compensation to attract the individuals necessary for our
current needs and growth initiatives, and provide them with the
proper incentives to motivate those individuals to achieve our
long-term plans.
The three broad components of our executive officer compensation
are base salary, annual cash incentive bonuses awards, and long
term equity-based awards. The Compensation Committee periodically
reviews total compensation levels and the allocation of
compensation among these three components for each of the executive
officers in the context of our overall compensation policy.
Additionally, the Compensation Committee, in conjunction with our
Board of Directors, reviews the relationship of executive
compensation to corporate performance generally and with respect to
specific enumerated goals that are established by the Compensation
Committee early in each fiscal year. The Compensation Committee
believes that our current compensation plans are competitive and
reasonable.
Further details concerning how we implement our philosophy and
goals, and how we apply the above principles to our compensation
program, are provided in the Compensation, Discussion and Analysis
above. In particular, we discuss how we set compensation targets
and other objectives and evaluate performance against those targets
and objectives to assure that performance is appropriately
rewarded.
The compensation of our Named Executive Officers was set by our
Compensation Committee of the Board of Directors of IDT Corporation
after discussions with management about the recommended levels and
components of compensation for each of the individuals.
Stockholders are urged to read the Compensation, Discussion and
Analysis and other information in the “Executive
Compensation” section of this Proxy Statement. The
Compensation Committee and the Board of Directors believe that the
information provided in that section demonstrates that our
executive compensation program aligns our executives’
compensation with IDT’s short-term and long-term performance
and provides the compensation and incentives needed to attract,
motivate and retain key executives who are crucial to IDT’s
long-term success. Accordingly, the following resolution will be
submitted for a stockholder vote at the Annual Meeting:
“RESOLVED, that the stockholders of IDT Corporation (the
“Company”) approve, on an advisory basis, the
compensation of the Company’s Named Executive Officers, as
disclosed pursuant to Item 402 of Securities and Exchange
Commission Regulation S-K, including the Compensation Discussion
and Analysis, the compensation tables and narrative
disclosures.”
Although the advisory vote is non-binding, the Compensation
Committee and the Board of Directors will review the results of the
vote. The Compensation Committee will consider stockholders’
concerns and take them into account in future determinations
concerning our executive compensation program.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE
FOR THE APPROVAL, ON AN
ADVISORY BASIS, OF THE COMPENSATION OF THE COMPANY’S NAMED
EXECUTIVE OFFICERS, AS STATED IN THE ABOVE RESOLUTION.
38
PROPOSAL NO.
4
RATIFICATION OF THE
APPOINTMENT OF GRANT THORNTON LLP
AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Company’s stockholders are being asked to ratify the
Board of Directors’ appointment of Grant Thornton LLP as the
Company’s independent registered public accounting firm for
the Fiscal Year ending July 31, 2016.
Grant Thornton LLP has served the Company as its independent
registered public accounting firm since 2008. The Audit Committee
of the Board of Directors has appointed Grant Thornton LLP as the
Company’s independent registered public accounting firm for
Fiscal 2016. Neither the Company’s governing documents nor
applicable law require stockholder ratification of our independent
registered public accounting firm. However, the Audit Committee
will consider the results of the stockholder vote for this proposal
and, in the event of a negative vote, will review any future
selection of Grant Thornton LLP. Even if Grant Thornton LLP’s
appointment is ratified by the stockholders, the Audit Committee
may, in its discretion, appoint a new independent registered public
accounting firm at any time if it determines that such a change
would be in the best interests of the Company and its
stockholders.
We expect that representatives for Grant Thornton LLP will be
present at the Annual Meeting, will be available to respond to
appropriate questions and will have the opportunity to make such
statements as they may desire.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE
FOR
RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP
AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
FOR THE FISCAL YEAR ENDING JULY 31, 2016.
39
Audit and Non-Audit
Fees
The following table presents fees billed for professional services
rendered by Grant Thornton LLP for the Fiscal Years ended July 31,
2015 and July 31, 2014.
Fiscal Year Ended July 31
|
|
|
|
|
Audit Fees(1)
|
|
$
|
1,028,399
|
|
$
|
1,012,695
|
Audit Related Fees(2)
|
|
|
3,785
|
|
|
77,283
|
Tax Fees
|
|
|
87,633
|
|
|
43,816
|
All Other Fees(3)
|
|
|
7,804
|
|
|
—
|
Total
|
|
$
|
1,127,621
|
|
$
|
1,133,794
|
The Audit Committee concluded that the provision of the non-audit
services listed above is compatible with maintaining the
independence of Grant Thornton LLP.
Policy on Audit
Committee Pre-Approval of Audit and Permissible Non-Audit Services
of the Independent Registered Public Accounting Firm
The Audit Committee is responsible for appointing, setting
compensation for, and overseeing the work of the Company’s
independent registered public accounting firm. The Audit Committee
has established a policy regarding pre-approval of all audit and
permissible non-audit services provided by the independent
registered public accounting firm, and all such services were
approved by the Audit Committee in Fiscal 2015 and Fiscal 2014.
The Audit Committee assesses requests for services by the
independent registered public accounting firm using several
factors. The Audit Committee will consider whether such services
are consistent with the Public Company Accounting Oversight
Board’s (“PCAOB”) and SEC’s rules on
auditor independence. In addition, the Audit Committee will
determine whether the independent registered public accounting firm
is best positioned to provide the most effective and efficient
service based upon the members’ familiarity with the
Company’s business, people, culture, accounting systems, risk
profile and whether the service might enhance the Company’s
ability to manage or control risk or improve audit quality.
Report of the Audit
Committee
The purpose of the Audit Committee is to assist the Board of
Directors in its general oversight of the Company’s financial
reporting process, internal controls, and audit functions. The
Audit Committee’s purpose is more fully described in its
charter, which can be found on the Company’s website at
http://ir.idt.net/Governance.
The Audit Committee reviews its charter on an annual basis. The
Board of Directors annually reviews the NYSE listing
standards’ definition of independence for Audit Committee
members and has determined that each member of the Audit Committee
meets that standard. The Board of Directors has also determined
that Michael Chenkin qualifies as an “audit committee
financial expert” within the meaning of Item 407(d)(5) of
Regulation S-K.
The Company’s management is responsible for the preparation,
presentation, and integrity of the Company’s financial
statements, accounting and financial reporting principles, internal
controls, and procedures designed to reasonably assure compliance
with accounting standards, applicable laws, and regulations. The
Company has a full-time Internal Audit department that reports to
the Audit Committee and to the Company’s management. This
department is responsible for objectively reviewing and evaluating
the adequacy, effectiveness, and quality of the Company’s
system of internal controls related to, for example, the
reliability and integrity of the Company’s financial
information and the safeguarding of the Company’s assets.
The Company’s independent registered public accounting firm
for Fiscal 2015, Grant Thornton LLP, is responsible for performing
an independent audit of the consolidated financial statements in
accordance with generally accepted auditing standards and
expressing an opinion on the conformity of those financial
statements
40
with U.S. generally accepted accounting principles. In accordance
with law, the Audit Committee has ultimate authority and
responsibility for selecting, compensating, evaluating, and, when
appropriate, replacing the Company’s independent audit firm,
and evaluates its independence. The Audit Committee has the
authority to engage its own outside advisors, including experts in
particular areas of accounting, as it determines appropriate, apart
from counsel or advisors hired by the Company’s
management.
Audit Committee members are not professional accountants or
auditors, and their functions are not intended to duplicate or to
certify the activities of the Company’s management and the
independent audit firm; nor can the Audit Committee certify that
the independent audit firm is “independent” under
applicable rules. The Audit Committee serves a Board-level
oversight role in which it provides advice, counsel, and direction
to the Company’s management and to the auditors on the basis
of the information it receives, discussions with the
Company’s management and the auditors, and the experience of
the Audit Committee’s members in business, financial, and
accounting matters.
The Audit Committee’s
agenda for the year includes reviewing the Company’s
financial statements, internal control over financial reporting,
and audit and other matters. The Audit Committee meets each quarter
with Grant Thornton LLP and the Company’s management to
review the Company’s interim financial results before the
publication of the Company’s quarterly earnings news
releases. The Company’s management’s and the
independent audit firm’s presentations to, and discussions
with, the Audit Committee cover various topics and events that may
have significant financial impact or are the subject of discussions
between the Company’s management and the independent audit
firm. The Audit Committee reviews and discusses with the
Company’s management the Company’s major financial risk
exposures and the steps that the Company’s management has
taken to monitor and control such exposures. In accordance with
law, the Audit Committee is responsible for establishing procedures
for the receipt, retention, and treatment of complaints received by
the Company regarding accounting, internal accounting controls, or
auditing matters, including confidential, anonymous submission by
the Company’s employees, received through established
procedures, of any concerns regarding questionable accounting or
auditing matters.
Among other matters, the Audit Committee monitors the activities
and performance of the Company’s internal auditors and
independent registered public accounting firm, including the audit
scope, external audit fees, auditor independence matters, and the
extent to which the independent audit firm can be retained to
perform non-audit services. The Company’s independent audit
firm has provided the Audit Committee with the written disclosures
and the letter required by the PCAOB regarding the independent
accountant’s communications with the Audit Committee
concerning independence, and the Audit Committee has discussed with
the independent audit firm and the Company’s management that
firm’s independence. In accordance with Audit Committee
policy and the requirements of law, the Audit Committee
pre-approves all services to be provided by Grant Thornton LLP.
Pre-approval includes audit services, audit-related services, tax
services, and other services.
The Committee has reviewed and discussed with the Company’s
management the audited financial statements of the Company for the
Fiscal Year ended July 31, 2015, as well as the effectiveness of
the Company’s internal controls over financial reporting as
of July 31, 2015. The Committee has also reviewed and discussed
with Grant Thornton LLP the matters required to be discussed with
the independent registered public accounting firm by applicable
PCAOB rules regarding “Communication with Audit
Committees.”
In reliance on these reviews and discussions, the Audit Committee
recommended to the Board of Directors, and the Board has approved,
that the audited financial statements be included in the
Company’s Annual Report on Form 10-K for the fiscal year
ended July 31, 2015, for filing with the Securities and Exchange
Commission.
|
|
THE AUDIT COMMITTEE OF THE BOARD OF
DIRECTORS
|
|
|
|
|
|
Michael Chenkin, Chairman
|
|
|
Eric Cosentino
|
|
|
Judah Schorr
|
Notwithstanding
anything to the contrary set forth in any of the Company’s
previous filings under the Act, as amended, or the Exchange Act, as
amended, that might incorporate future filings, including this
Proxy Statement, in whole or in part, the foregoing report, as well
as any charters op policies referenced within this Proxy Statement,
shall not be incorporated by reference into any such filings, nor
shall they be deemed to be soliciting material or deemed filed with
the SEC under the Act or under the Exchange Act.
41
OTHER
INFORMATION
Submission of Proposals
for the 2015 Meeting of Stockholders
Stockholders who wish to present proposals for inclusion in the
Company’s proxy materials in connection with the 2016 annual
meeting of stockholders must submit such proposals in writing to
the General Counsel and Corporate Secretary of the Company at 520
Broad Street, Newark, New Jersey 07102, which proposals must be
received at such address no later than July 5, 2016. In addition,
any stockholder proposal submitted with respect to the
Company’s 2016 annual meeting of stockholders, which proposal
is submitted outside the requirements of Rule 14a-8 under the
Exchange Act and, therefore, will not be included in the relevant
proxy materials, will be considered untimely for purposes of Rule
14a-4 and 14a-5 if written notice thereof is received by the
Company’s General Counsel and Corporate Secretary after
September 22, 2015.
Availability of Annual
Report on Form 10-K
Additional copies of the Company’s Annual Report on form 10-K
may be obtained by contacting Bill Ulrey, Vice President —
Investor Relations and External Affairs, by phone at (973)
438-3838, by mail addressed to Bill Ulrey, Vice President —
Investor Relations and External Affairs, at 520 Broad Street,
Newark, NJ 07102, or may be requested through the Request Info
section of our website: http://ir.idt.net/Request_Info.
Other Matters
The Board of Directors knows of no other business that will be
presented at the Annual Meeting. If any other business is properly
brought before the Annual Meeting, it is intended that proxies
granted will be voted in respect thereof in accordance with the
judgments of the persons voting the proxies.
It is important that the proxies be returned promptly and that your
shares be represented. Stockholders are urged to fill in, sign and
promptly return the accompanying form in the enclosed envelope.
|
|
BY ORDER OF THE BOARD OF DIRECTORS
|
October 30, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joyce Mason
|
|
|
Executive Vice President, General Counsel
and
Corporate Secretary
|
42
EXHIBIT A
IDT CORPORATION
2015 STOCK OPTION AND INCENTIVE PLAN
Effective January 1,
2015 to September 16, 2024
(Amended and Restated on September 24, 2015)
1.
Purpose; Types of
Awards; Construction.
The purpose of the IDT Corporation 2015 Stock Option and Incentive
Plan (the “Plan”) is to provide incentives to officers,
employees, directors and consultants of IDT Corporation (the
“Company”), or any subsidiary of the Company which now
exists or hereafter is organized or acquired by the Company, to
acquire a proprietary interest in the Company, to continue as
officers, employees, directors or consultants, to increase their
efforts on behalf of the Company and to promote the success of the
Company’s business. The provisions of the Plan are intended
to satisfy the requirements of Section 16(b) of the Securities
Exchange Act of 1934, as amended, and of Section 162(m) of the
Internal Revenue Code of 1986, as amended, and shall be interpreted
in a manner consistent with the requirements thereof.
2.
Definitions.
As used in this Plan, the following words and phrases shall have
the meanings indicated:
(a)
“Agreement” shall mean a written agreement entered into
between the Company and a Grantee in connection with an award under
the Plan.
(b)
“Board” shall mean the Board of Directors of the
Company.
(c)
“Change in Control” means a change in ownership or
control of the Company effected through any “person,”
as such term is used in Sections 13(d) and 14(d) of the Exchange
Act (other than (A) the Company, (B) any trustee or other fiduciary
holding securities under an employee benefit plan of the Company,
(C) any corporation or other entity owned, directly or indirectly,
by the stockholders of the Company in substantially the same
proportions as their ownership of common stock, or (D) any person
who, immediately prior to the Initial Public Offering, owned more
than 25% of the combined voting power of the Company’s then
outstanding voting securities), is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company (not including
in the securities beneficially owned by such person any securities
issued or sold directly by the Company or any of its affiliates
other than in connection with the acquisition by the Company or its
affiliates of a business) representing 25% or more of the combined
voting power of the Company’s then outstanding voting
securities.
(d)
“Class B Common Stock” shall mean shares of Class B
Common Stock, par value $.01 per share, of the Company.
(e)
“Code” shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(f)
“Committee” shall mean the Compensation Committee of
the Board or such other committee as the Board may designate from
time to time to administer the Plan.
(g)
“Company” shall mean IDT Corporation, a corporation
incorporated under the laws of the State of Delaware, or any
successor corporation.
(h)
“Continuous Service” means that the provision of
services to the Company or a Related Entity in any capacity of
officer, employee, director or consultant is not interrupted or
terminated. Continuous Service shall not be considered interrupted
in the case of (i) any approved leave of absence, (ii) transfers
between locations of the Company or among the Company, any Related
Entity or any successor in any capacity of officer, employee,
director or consultant, or (iii) any change in status as long as
the individual remains in the service of the Company or a Related
Entity in any capacity of officer, employee, director or consultant
(except as otherwise provided in the applicable Agreement). An
approved leave of absence shall include, without limitation, sick
leave, temporary disability, maternity leave, military leave
(including, without limitation, service in the National Guard or
the Army Reserves) or any other personal leave approved by the
Committee.
A-1
For purposes of Incentive Stock Options, no such leave may exceed
ninety (90) days unless reemployment upon expiration of such leave
is guaranteed by statute or contract.
(i)
“Corporate Transaction” means any of the following
transactions:
(i) a
merger or consolidation of the Company with any other corporation
or other entity, other than (A) a merger or consolidation which
would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving or parent entity) 80% or more of the combined
voting power of the voting securities of the Company or such
surviving or parent entity outstanding immediately after such
merger or consolidation or (B) a merger or consolidation effected
to implement a recapitalization of the Company (or similar
transaction) in which no “person” (as defined in the
Exchange Act) acquired 25% or more of the combined voting power of
the Company’s then outstanding securities; or
(ii) a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of its
assets (or any transaction having a similar effect).
(j)
“Deferred Stock Units” mean a Grantee’s rights to
receive shares of Class B Common Stock on a deferred basis, subject
to such restrictions, forfeiture provisions and other terms and
conditions as shall be determined by the Committee.
(k)
“Disability” shall mean a Grantee’s inability to
perform his or her duties with the Company or any of its affiliates
by reason of any medically determinable physical or mental
impairment, as determined by a physician selected by the Grantee
and acceptable to the Company.
(l)
“Exchange Act” shall mean the Securities Exchange Act
of 1934, as amended from time to time.
(m)
“Fair Market Value” per share as of a particular date
shall mean (i) the closing sale price per share of Class B Common
Stock on the national securities exchange on which the Class B
Common Stock is principally traded for the last preceding date on
which there was a sale of such Class B Common Stock on such
exchange, or (ii) if the shares of Class B Common Stock are then
traded in an over-the-counter market, the average of the high and
low trades for the shares of Class B Common Stock in such
over-the-counter market for the last preceding date on which there
was a sale of such Class B Common Stock in such market, or (iii) if
the shares of Class B Common Stock are not then listed on a
national securities exchange or traded in an over-the-counter
market, such value as the Committee, in its sole discretion, shall
determine.
(n)
“Grantee” shall mean a person who receives a grant of
Options, Stock Appreciation Rights, Limited Rights, Deferred Stock
Units or Restricted Stock under the Plan.
(o)
“Incentive Stock Option” shall mean any option intended
to be, and designated as, an incentive stock option within the
meaning of Section 422 of the Code.
(p)
“Insider” shall mean a Grantee who is subject to the
reporting requirements of Section 16(a) of the Exchange Act.
(q)
“Insider Trading Policy” shall mean the Insider Trading
Policy of the Company, as may be amended from time to time.
(r)
“Limited Right” shall mean a limited stock appreciation
right granted pursuant to Section 10 of the Plan.
(s)
“Non-Employee Director” means a member of the Board or
the board of directors of any Subsidiary (other than a Subsidiary
that has either (A) a class of “equity securities” (as
defined in Rule 3a11-1 promulgated under the Exchange Act)
registered under the Exchange Act or a similar foreign statute or
(B) adopted any stock option plan, equity compensation plan or
similar employee benefit plan in which non-employee directors of
such Subsidiary are eligible to participate), in each of clause (A)
and (B), who is not an employee of the Company or any
Subsidiary.
(t)
“Non-Employee Director Annual Grant” shall mean an
award of 4,000 shares of Restricted Stock.
A-2
(u)
“Non-Employee Director Grant Date” shall mean January 5
of the applicable year (or the following business day if January 5
is not a business day).
(v)
“Nonqualified Stock Option” shall mean any option not
designated as an Incentive Stock Option.
(w)
“Option” or “Options” shall mean a grant to
a Grantee of an option or options to purchase shares of Class B
Common Stock.
(x)
“Option Agreement” shall have the meaning set forth in
Section 6 of the Plan.
(y)
“Option Price” shall mean the exercise price of the
shares of Class B Common Stock covered by an Option.
(z)
“Parent” shall mean any company (other than the
Company) in an unbroken chain of companies ending with the Company
if, at the time of granting an award under the Plan, each of the
companies other than the Company owns stock possessing fifty
percent (50%) or more of the total combined voting power of all
classes of stock in one of the other companies in such chain.
(aa)
“Plan” means this IDT Corporation 2015 Stock Option and
Incentive Plan, as amended or restated from time to time.
(bb)
“Related Entity” means any Parent, Subsidiary or any
business, corporation, partnership, limited liability company or
other entity in which the Company, a Parent or a Subsidiary holds a
substantial ownership interest, directly or indirectly.
(cc)
“Related Entity Disposition” means the sale,
distribution or other disposition by the Company of all or
substantially all of the Company’s interest in any Related
Entity effected by a sale, merger or consolidation or other
transaction involving such Related Entity or the sale of all or
substantially all of the assets of such Related Entity.
(dd)
“Restricted Period” shall have the meaning set forth in
Section 11(b) of the Plan.
(ee)
“Restricted Stock” means shares of Class B Common Stock
issued under the Plan to a Grantee for such consideration, if any,
and subject to such restrictions on transfer, rights of refusal,
repurchase provisions, forfeiture provisions and other terms and
conditions as shall be determined by the Committee.
(ff)
“Retirement” shall mean a Grantee’s retirement in
accordance with the terms of any tax-qualified retirement plan
maintained by the Company or any of its affiliates in which the
Grantee participates.
(gg) “Rule
16b-3” shall mean Rule 16b-3, as from time to time in effect,
promulgated under the Exchange Act, including any successor to such
Rule.
(hh)
“Stock Appreciation Right” shall mean the right,
granted to a Grantee under Section 9 of the Plan, to be paid an
amount measured by the appreciation in the Fair Market Value of a
share of Class B Common Stock from the date of grant to the date of
exercise of the right, with payment to be made in cash or Class B
Common Stock as applicable, as specified in the award or determined
by the Committee.
(ii)
“Subsidiary” shall mean any company (other than the
Company) in an unbroken chain of companies beginning with the
Company if each of the companies other than the last company in the
unbroken chain owns stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one of
the other companies in such chain.
(jj)
“Tax Event” shall have the meaning set forth in Section
17 of the Plan.
(kk) “Ten
Percent Stockholder” shall mean a Grantee who at the time an
Incentive Stock Option is granted, owns stock possessing more than
ten percent (10%) of the total combined voting power of all classes
of stock of the Company or any Parent or Subsidiary.
3.
Administration.
(a) The Plan
shall be administered by the Committee, the members of which may be
composed of “non-employee directors” under Rule 16b-3
and “outside directors” under Section 162(m) of the
Code.
A-3
(b)
The Committee shall have the authority in its discretion, subject
to and not inconsistent with the express provisions of the Plan, to
administer the Plan and to exercise all the powers and authorities
either specifically granted to it under the Plan or necessary or
advisable in the administration of the Plan, including, without
limitation, the authority to grant Options, Stock Appreciation
Rights, Limited Rights, Deferred Stock Units and Restricted Stock;
to determine which Options shall constitute Incentive Stock Options
and which Options shall constitute Nonqualified Stock Options; to
determine which Options (if any) shall be accompanied by Limited
Rights; to determine the Option Price for each Option; to determine
the persons to whom, and the time or times at which awards shall be
granted; to determine the number of shares to be covered by each
award; to interpret the Plan and any award under the Plan; to
reconcile any inconsistent terms in the Plan or any award under the
Plan; to prescribe, amend and rescind rules and regulations
relating to the Plan; to determine the terms and provisions of the
Agreements (which need not be identical) and to cancel or suspend
awards, as necessary; and to make all other determinations deemed
necessary or advisable for the administration of the Plan.
(c) All
decisions, determination and interpretations of the Committee shall
be final and binding on all Grantees of any awards under this Plan.
No member of the Board or Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan
or any award granted hereunder.
(d)
The Committee may delegate to one or more executive officers of the
Company the authority to (i) grant awards under the Plan to
employees of the Company and its Subsidiaries who are not executive
officers or a member of the Board, (ii) execute and deliver
documents or take such other ministerial actions on behalf of the
Committee with respect to awards and (iii) to make interpretations
of the Plan. The grant of authority in this Section 3(d) shall be
subject to such conditions and limitations as may be determined by
the Committee. If the Committee delegates authority to any such
executive officer or executive officers of the Company pursuant to
this Section 3(d), and such executive officer or executive officers
grant awards pursuant to such delegated authority, references in
this Plan to the “Committee” as they relate to such
awards shall be deemed to refer to such executive officer or
executive officers, as applicable.
4.
Eligibility.
Awards may be granted to officers, employees, members of the Board
and consultants of the Company or of any Subsidiary. In addition to
any other awards granted to Non-Employee Directors hereunder,
awards shall be granted to Non-Employee Directors pursuant to
Section 14 of the Plan. In determining the persons to whom awards
shall be granted and the number of shares to be covered by each
award, the Committee shall take into account the duties of the
respective persons, their present and potential contributions to
the success of the Company and such other factors as the Committee
shall deem relevant in connection with accomplishing the purposes
of the Plan.
5.
Stock.
(a) The
maximum number of shares of Class B Common Stock reserved for the
grant of awards under the Plan shall be 600,000, all of which may
be granted as Incentive Stock Options, subject to adjustment as
provided in Section 12 of the Plan. Such shares may, in whole or in
part, be authorized but unissued shares or shares that shall have
been or may be reacquired by the Company.
(b)
If any outstanding award under the Plan should, for any reason
expire, be canceled or be forfeited (other than in connection with
the exercise of a Stock Appreciation Right or a Limited Right),
without having been exercised in full, the shares of Class B Common
Stock allocable to the unexercised, canceled or terminated portion
of such award shall (unless the Plan shall have been terminated)
become available for subsequent grants of awards under the Plan,
unless otherwise determined by the Committee.
6.
Terms and Conditions
of Options.
(a) OPTION
AGREEMENT. Each Option granted pursuant to the Plan shall be
evidenced by a written agreement between the Company and the
Grantee (the “Option Agreement”), in such form and
containing such terms and conditions as the Committee shall from
time to time approve, which Option Agreement shall comply with and
be subject to the following terms and conditions, unless otherwise
specifically provided in such Option Agreement. For purposes of
interpreting this Section 6, a director’s service as a member
of the Board or a consultant’s service shall be deemed to be
employment with the Company.
A-4
(b)
NUMBER OF SHARES. Each Option Agreement shall state the number of
shares of Class B Common Stock to which the Option relates.
(c) TYPE OF
OPTION. Each Option Agreement shall specifically state that the
Option constitutes an Incentive Stock Option or a Nonqualified
Stock Option. In the absence of such designation, the Option will
be deemed to be a Nonqualified Stock Option.
(d)
OPTION PRICE. Each Option Agreement shall state the Option Price,
which, in the case of an Incentive Stock Option, shall not be less
than one hundred percent (100%) of the Fair Market Value of the
shares of Class B Common Stock covered by the Option on the date of
grant. The Option Price shall be subject to adjustment as provided
in Section 12 of the Plan.
(e) MEDIUM
AND TIME OF PAYMENT. The Option Price shall be paid in full, at the
time of exercise, in cash or in shares of Class B Common Stock
having a Fair Market Value equal to such Option Price or in a
combination of cash and Class B Common Stock including a cashless
exercise procedure through a broker-dealer; provided, however, that
in the case of an Incentive Stock Option, the medium of payment
shall be determined at the time of grant and set forth in the
applicable Option Agreement.
(f) TERM AND
EXERCISABILITY OF OPTIONS. Each Option Agreement shall provide the
exercisability schedule for the Option as determined by the
Committee, provided, that, the Committee shall have the authority
to accelerate the exercisability of any outstanding Option at such
time and under such circumstances as it, in its sole discretion,
deems appropriate. The exercise period will be ten (10) years from
the date of the grant of the Option unless otherwise determined by
the Committee; provided, however, that in the case of an Incentive
Stock Option, such exercise period shall not exceed ten (10) years
from the date of grant of such Option. The exercise period shall be
subject to earlier termination as provided in Sections 6(g) and
6(h) of the Plan. An Option may be exercised, as to any or all full
shares of Class B Common Stock as to which the Option has become
exercisable, by written notice delivered in person, by mail,
e-mail, fax or overnight delivery to the Company’s transfer
agent or other administrator designated by the Company, specifying
the number of shares of Class B Common Stock with respect to which
the Option is being exercised.
(g)
TERMINATION. Except as provided in this Section 6(g) and in Section
6(h) of the Plan, an Option may not be exercised unless the Grantee
is then in the employ of or maintaining a director or consultant
relationship with the Company or a Subsidiary thereof (or a company
or a Parent or Subsidiary of such company issuing or assuming the
Option in a transaction to which Section 424(a) of the Code
applies), and unless the Grantee has remained in Continuous Service
with the Company or any Subsidiary since the date of grant of the
Option unless otherwise determined by the Committee. In the event
that the employment or consultant relationship of a Grantee shall
terminate (other than by reason of death, Disability or
Retirement), all Options of such Grantee that are exercisable at
the time of Grantee’s termination may, unless earlier
terminated in accordance with their terms, be exercised within 180
days after the date of termination (or such different period as the
Committee shall prescribe).
(h) DEATH,
DISABILITY OR RETIREMENT OF GRANTEE. If a Grantee shall die while
employed by, or maintaining a director or consultant relationship
with, the Company or a Subsidiary thereof, or within thirty (30)
days after the date of termination of such Grantee’s
employment, director or consultant relationship (or within such
different period as the Committee may have provided pursuant to
Section 6(g) of the Plan), or if the Grantee’s employment,
director or consultant relationship shall terminate by reason of
Disability, all Options theretofore granted to such Grantee (to the
extent otherwise exercisable) may, unless earlier terminated in
accordance with their terms, be exercised by the Grantee or by the
Grantee’s estate or by a person who acquired the right to
exercise such Options by bequest or inheritance or otherwise by
result of death or Disability of the Grantee, at any time within
180 days after the death or Disability of the Grantee (or such
different period as the Committee shall prescribe). In the event
that an Option granted hereunder shall be exercised by the legal
representatives of a deceased or former Grantee, written notice of
such exercise shall be accompanied by a certified copy of letters
testamentary or equivalent proof of the right of such legal
representative to exercise such Option. In the event that the
employment or consultant relationship of a Grantee shall terminate
on account of such Grantee’s Retirement, all Options of such
Grantee that are exercisable at the time of such Retirement may,
unless earlier terminated in accordance with their terms, be
exercised at any time within one hundred eighty (180) days after
the date of such Retirement (or such different period as
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the Committee shall prescribe). All unvested Options shall be
terminated upon death, disability or retirement, unless otherwise
determined by the Committee.
(i)
OTHER PROVISIONS. The Option Agreements evidencing awards under the
Plan shall contain such other terms and conditions not inconsistent
with the Plan as the Committee may determine.
7.
Nonqualified Stock
Options.
Options granted pursuant to this Section 7 are intended to
constitute Nonqualified Stock Options and shall be subject only to
the general terms and conditions specified in Section 6 of the
Plan.
8.
Incentive Stock
Options.
Options granted pursuant to this Section 8 are intended to
constitute Incentive Stock Options and shall be subject to the
following special terms and conditions, in addition to the general
terms and conditions specified in Section 6 of the Plan:
(a)
LIMITATION ON VALUE OF SHARES. To the extent that the aggregate
Fair Market Value of shares of Class B Common Stock subject to
Options designated as Incentive Stock Options which become
exercisable for the first time by a Grantee during any calendar
year (under all plans of the Company or any Subsidiary) exceeds
$100,000, such excess Options, to the extent of the shares covered
thereby in excess of the foregoing limitation, shall be treated as
Nonqualified Stock Options. For this purpose, Incentive Stock
Options shall be taken into account in the order in which they were
granted, and the Fair Market Value of the shares of Class B Common
Stock shall be determined as of the date that the Option with
respect to such shares was granted.
(b)
TEN PERCENT STOCKHOLDER. In the case of an Incentive Stock Option
granted to a Ten Percent Stockholder, (i) the Option Price shall
not be less than one hundred ten percent (110%) of the Fair Market
Value of the shares of Class B Common Stock on the date of grant of
such Incentive Stock Option, and (ii) the exercise period shall not
exceed five (5) years from the date of grant of such Incentive
Stock Option.
9.
Stock Appreciation
Rights.
The Committee shall have authority to grant a Stock Appreciation
Right, either alone or in tandem with any Option. A Stock
Appreciation Right granted in tandem with an Option shall, except
as provided in this Section 9 or as may be determined by the
Committee, be subject to the same terms and conditions as the
related Option. Each Stock Appreciation Right granted pursuant to
the Plan shall be evidenced by a written Agreement between the
Company and the Grantee in such form as the Committee shall from
time to time approve, which Agreement shall comply with and be
subject to the following terms and conditions, unless otherwise
specifically provided in such Agreement:
(a) TIME OF
GRANT. A Stock Appreciation Right may be granted at such time or
times as may be determined by the Committee.
(b)
PAYMENT. A Stock Appreciation Right shall entitle the holder
thereof, upon exercise of the Stock Appreciation Right or any
portion thereof, to receive payment of an amount computed pursuant
to Section 9(d) of the Plan.
(c) EXERCISE.
A Stock Appreciation Right shall be exercisable at such time or
times and only to the extent determined by the Committee, and will
not be transferable. A Stock Appreciation Right granted in
connection with an Incentive Stock Option shall be exercisable only
if the Fair Market Value of a share of Class B Common Stock on the
date of exercise exceeds the purchase price specified in the
related Incentive Stock Option. Unless otherwise approved by the
Committee, no Grantee shall be permitted to exercise any Stock
Appreciation Right during the period beginning two weeks prior to
the end of each of the Company’s fiscal quarters and ending
on the second business day following the day on which the Company
releases to the public a summary of its fiscal results for such
period.
(d)
AMOUNT PAYABLE. Upon the exercise of a Stock Appreciation Right,
the Optionee shall be entitled to receive an amount determined by
multiplying (i) the excess of the Fair Market Value of a share of
Class B Common Stock on the date of exercise of such Stock
Appreciation Right over the exercise or other
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base price of the Stock Appreciation Right or, if applicable, the
Option Price of the related Option, by (ii) the number of shares of
Class B Common Stock as to which such Stock Appreciation Right is
being exercised.
(e) TREATMENT
OF RELATED OPTIONS AND STOCK APPRECIATION RIGHTS UPON EXERCISE.
Upon the exercise of a Stock Appreciation Right, the related
Option, if any, shall be canceled to the extent of the number of
shares of Class B Common Stock as to which the Stock Appreciation
Right is exercised. Upon the exercise or surrender of an Option
granted in connection with a Stock Appreciation Right, the Stock
Appreciation Right shall be canceled to the extent of the number of
shares of Class B Common Stock as to which the Option is exercised
or surrendered.
(f) METHOD OF
EXERCISE. Stock Appreciation Rights shall be exercised by a Grantee
only by a written notice delivered to the Company in accordance
with procedures specified by the Company from time to time. Such
notice shall state the number of shares of Class B Common Stock
with respect to which the Stock Appreciation Right is being
exercised. A Grantee may also be required to deliver to the Company
the underlying Agreement evidencing the Stock Appreciation Right
being exercised and any related Option Agreement so that a notation
of such exercise may be made thereon, and such Agreements shall
then be returned to the Grantee.
(g)
FORM OF PAYMENT. Payment of the amount determined under Section
9(d) of the Plan may be made solely in whole shares of Class B
Common Stock in a number based upon their Fair Market Value on the
date of exercise of the Stock Appreciation Right or, alternatively,
at the sole discretion of the Committee, solely in cash, or in a
combination of cash and shares of Class B Common Stock as the
Committee deems advisable. If the Committee decides to make full
payment in shares of Class B Common Stock and the amount payable
results in a fractional share, payment for the fractional share
will be made in cash.
10.
Limited Stock
Appreciation Rights.
The Committee shall have authority to grant a Limited Right, either
alone or in tandem with any Option. Each Limited Right granted
pursuant to the Plan shall be evidenced by a written Agreement
between the Company and the Grantee in such form as the Committee
shall from time to time approve, which Agreement shall comply with
and be subject to the following terms and conditions, unless
otherwise specifically provided in such Agreement:
(a) TIME OF
GRANT. A Limited Right may be granted at such time or times as may
be determined by the Committee.
(b)
EXERCISE. A Limited Right may be exercised only (i) during the
ninety-day period following the occurrence of a Change in Control
or (ii) immediately prior to the effective date of a Corporate
Transaction. A Limited Right shall be exercisable at such time or
times and only to the extent determined by the Committee, and will
not be transferable except to the extent any related Option is
transferable or as otherwise determined by the Committee. A Limited
Right granted in connection with an Incentive Stock Option shall be
exercisable only if the Fair Market Value of a share of Class B
Common Stock on the date of exercise exceeds the purchase price
specified in the related Incentive Stock Option.
(c) AMOUNT
PAYABLE. Upon the exercise of a Limited Right, the Grantee thereof
shall receive in cash whichever of the following amounts is
applicable:
(i) in
the case of the realization of Limited Rights by reason of an
acquisition of common stock described in clause (i) of the
definition of “Change in Control” (Section 2(c) of this
Plan), an amount equal to the Acquisition Spread as defined in
Section 10(d)(ii) below; or
(ii) in the
case of the realization of Limited Rights by reason of stockholder
approval of an agreement or plan described in clause (i) of the
definition of “Corporate Transaction” (Section 2(j) of
this Plan), an amount equal to the Merger Spread as defined in
Section 10(d)(iv) below; or
(iii) in the case of
the realization of Limited Rights by reason of the change in
composition of the Board described in clause (ii) of the definition
of “Change in Control” or stockholder approval of a
plan or agreement described in clause (ii) of the definition of
Corporate Transaction, an amount equal to the Spread as defined in
Section 10(d)(v) of this Plan.
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Notwithstanding the foregoing provisions of this Section 10(c) (or
unless otherwise approved by the Committee), in the case of a
Limited Right granted in respect of an Incentive Stock Option, the
Grantee may not receive an amount in excess of the maximum amount
that will enable such option to continue to qualify under the Code
as an Incentive Stock Option.
(d)
DETERMINATION OF AMOUNTS PAYABLE. The amounts to be paid to a
Grantee pursuant to Section 10(c) of this Plan shall be determined
as follows:
(i) The
term “Acquisition Price per Share” as used herein shall
mean, with respect to the exercise of any Limited Right by reason
of an acquisition of Class B Common Stock described in clause (i)
of the definition of Change in Control, the greatest of (A) the
highest price per share shown on the Statement on Schedule 13D or
amendment thereto filed by the holder of 25% or more of the voting
power of the Company that gives rise to the exercise of such
Limited Right, (B) the highest price paid in any tender or exchange
offer which is in effect at any time during the ninety-day period
ending on the date of exercise of the Limited Right, or (C) the
highest Fair Market Value per share of Class B Common Stock during
the ninety day period ending on the date the Limited Right is
exercised.
(ii) The term
“Acquisition Spread” as used herein shall mean an
amount equal to the product computed by multiplying (A) the excess
of (1) the Acquisition Price per Share over (2) the exercise or
other base price of the Limited Right or, if applicable, the Option
Price per share of Class B Common Stock at which the related Option
is exercisable, by (B) the number of shares of Class B Common Stock
with respect to which such Limited Right is being exercised.
(iii) The term
“Merger Price per Share” as used herein shall mean,
with respect to the exercise of any Limited Right by reason of
stockholder approval of an agreement described in clause (i) of the
definition of Corporate Transaction, the greatest of (A) the fixed
or formula price for the acquisition of shares of Class B Common
Stock specified in such agreement, if such fixed or formula price
is determinable on the date on which such Limited Right is
exercised, (B) the highest price paid in any tender or exchange
offer which is in effect at any time during the ninety-day period
ending on the date of exercise of the Limited Right, (C) the
highest Fair Market Value per share of Class B Common Stock during
the ninety-day period ending on the date on which such Limited
Right is exercised.
(iv)
The term “Merger Spread” as used herein shall mean an
amount equal to the product. computed by multiplying (A) the excess
of (1) the Merger Price per Share over (2) the exercise or other
base price of the Limited Right or, if applicable, the Option Price
per share of Class B Common Stock at which the related Option is
exercisable, by (B) the number of shares of Class B Common Stock
with respect to which such Limited Right is being exercised.
(v) The term
“Spread” as used herein shall mean, with respect to the
exercise of any Limited Right by reason of a change in the
composition of the Board described in clause (ii) of the definition
of Change in Control or stockholder approval of a plan or agreement
described in clause (ii) of the definition of Corporate
Transaction, an amount equal to the product computed by multiplying
(i) the excess of (A) the greater of (1) the highest price paid in
any tender or exchange offer which is in effect at any time during
the ninety-day period ending on the date of exercise of the Limited
Right or (2) the highest Fair Market Value per share of Class B
Common Stock during the ninety day period ending on the date the
Limited Right is exercised over (B) the exercise or other base
price of the Limited Right or, if applicable, the Option Price per
share of Class B Common Stock at which the related Option is
exercisable, by (ii) the number of shares of Class B Common Stock
with respect to which the Limited Right is being exercised.
(e) TREATMENT
OF RELATED OPTIONS AND LIMITED RIGHTS UPON EXERCISE. Upon the
exercise of a Limited Right, the related Option, if any, shall
cease to be exercisable to the extent of the shares of Class B
Common Stock with respect to which such Limited Right is exercised
but shall be considered to have been exercised to that extent for
purposes of determining the number of shares of Class B Common
Stock available for the grant of future awards pursuant to this
Plan. Upon the exercise or termination of a related Option, if any,
the Limited Right with respect to such related Option shall
terminate to the extent of the shares of Class B Common Stock with
respect to which the related Option was exercised or
terminated.
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(f) METHOD OF
EXERCISE. To exercise a Limited Right, the Grantee shall (i)
deliver written notice to the Company specifying the number of
shares of Class B Common Stock with respect to which the Limited
Right is being exercised, and (ii) if requested by the Committee,
deliver to the Company the Agreement evidencing the Limited Rights
being exercised and, if applicable, the Option Agreement evidencing
the related Option; the Company shall endorse thereon a notation of
such exercise and return such Agreements to the Grantee. The date
of exercise of a Limited Right that is validly exercised shall be
deemed to be the date on which there shall have been delivered the
instruments referred to in the first sentence of this Section
10(f).
11.
Restricted
Stock.
The Committee may award shares of Restricted Stock to any eligible
employee, director or consultant of the Company or of any
Subsidiary. Each award of Restricted Stock under the Plan shall be
evidenced by a written Agreement between the Company and the
Grantee, in such form as the Committee shall from time to time
approve, which Agreement shall comply with and be subject to the
following terms and conditions, unless otherwise specifically
provided in such Agreement:
(a) NUMBER OF
SHARES. Each Agreement shall state the number of shares of
Restricted Stock to be subject to an award.
(b)
RESTRICTIONS. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of, except
by will or the laws of descent and distribution, for such period as
the Committee shall determine from the date on which the award is
granted (the “Restricted Period”). The Committee may
also impose such additional or alternative restrictions and
conditions on the shares as it deems appropriate including, but not
limited to, the satisfaction of performance criteria. Such
performance criteria may include, without limitation, sales,
earnings before interest and taxes, return on investment, earnings
per share, any combination of the foregoing or rate of growth of
any of the foregoing, as determined by the Committee. The Company
may, at its option, maintain issued shares in book entry form.
Certificates, if any, for shares of stock issued pursuant to
Restricted Stock awards shall bear an appropriate legend referring
to such restrictions, and any attempt to dispose of any such shares
of stock in contravention of such restrictions shall be null and
void and without effect. During the Restricted Period, any such
certificates shall be held in a restricted account a at the
transfer agent appointed by the Company. In determining the
Restricted Period of an award, the Committee may provide that the
foregoing restrictions shall lapse with respect to specified
percentages of the awarded shares on successive anniversaries or
other specified dates of the date of such award.
(c)
FORFEITURE. Subject to such exceptions as may be determined by the
Committee, if the Grantee’s Continuous Service with the
Company or any Subsidiary shall terminate for any reason prior to
the expiration of the Restricted Period of an award, any shares
remaining subject to restrictions (after taking into account the
provisions of Subsection (e) of this Section 11) shall thereupon be
forfeited by the Grantee and transferred to, and retired by, the
Company without cost to the Company or such Subsidiary, and such
shares shall become available for subsequent grants of awards under
the Plan, unless otherwise determined by the Committee.
(d)
OWNERSHIP. During the Restricted Period, the Grantee shall possess
all incidents of ownership of such shares, subject to Subsection
(b) of this Section 11, including the right to receive dividends
with respect to such shares and to vote such shares.
(e)
ACCELERATED LAPSE OF RESTRICTIONS. Upon the occurrence of any of
the events specified in Section 13 of the Plan (and subject to the
conditions set forth therein), all restrictions then outstanding on
any shares of Restricted Stock awarded under the Plan shall lapse
as of the applicable date set forth in Section 13. The Committee
shall have the authority (and the Agreement may so provide) to
cancel all or any portion of any outstanding restrictions prior to
the expiration of the Restricted Period with respect to any or all
of the shares of Restricted Stock awarded on such terms and
conditions as the Committee shall deem appropriate.
11A. Deferred Stock
Units.
The Committee may award Deferred Stock Units to any outside
director, eligible employee or consultant of the Company or of any
Subsidiary. Each award of Deferred Stock Units under the Plan shall
be evidenced by a
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written Agreement between the Company and the Grantee, in such form
as the Committee shall from time to time approve, which Agreement
shall comply with and be subject to the following terms and
conditions, unless otherwise specifically provided in such
Agreement:
(a) NUMBER OF
SHARES. Each Agreement for Deferred Stock Units shall state the
number of shares of Class B Common Stock to be subject to an
award.
(b)
RESTRICTIONS. Deferred Stock Units may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of, except
by will or the laws of descent and distribution, until shares of
Class B Common Stock are payable with respect to an award. The
Committee may impose such vesting restrictions and conditions on
the payment of shares as it deems appropriate including the
satisfaction of performance criteria. Such performance criteria may
include sales, earnings before interest and taxes, return on
investment, earnings per share, any combination of the foregoing or
rate of growth of any of the foregoing, as determined by the
Committee.
(c)
FORFEITURE. Subject to such exceptions as may be determined by the
Committee, if the Grantee’s Continuous Service with the
Company or any Subsidiary shall terminate for any reason prior to
the Grantee becoming fully vested in the award, then the
Grantee’s rights under any unvested Deferred Stock Units
shall be forfeited without cost to the Company or such
Subsidiary.
(d)
OWNERSHIP. Until shares are delivered with respect to Deferred
Stock Units, the Grantee shall not possess any incidents of
ownership of such shares, including the right to receive dividends
with respect to such shares and to vote such shares.
(e)
ACCELERATED LAPSE OF RESTRICTIONS. Upon the occurrence of any of
the events specified in Section 13 of the Plan (and subject to the
conditions set forth therein), all restrictions then outstanding on
any Deferred Stock Units awarded under the Plan shall lapse as of
the applicable date set forth in Section 13. The Committee shall
have the authority (and the Agreement may so provide) to cancel all
or any portion of any outstanding restrictions prior to the
expiration of any restricted period with respect to any or all of
the shares of Deferred Stock Units awarded on such terms and
conditions as the Committee shall deem appropriate.
12.
Effect of Certain
Changes.
(a)
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of any
extraordinary liquidating dividend, stock dividend,
recapitalization, merger, consolidation, stock split, warrant or
rights issuance, or combination or exchange of such shares, or
other similar transactions, the Committee shall equitably adjust
(i) the number of shares of Class B Common Stock available for
awards under the Plan, (ii) the number and/or kind of shares
covered by outstanding awards and (iii) the Option Price per share
of Options or the applicable market value of Stock Appreciation
Rights or Limited Rights, in each such case so as to reflect such
event and preserve the value of such awards; provided, however,
that any fractional shares resulting from such adjustment shall be
eliminated. This provision shall not apply to cash dividends or
returns of capital.
(b)
CHANGE IN CLASS B COMMON
STOCK. In the event of a change in the Class B Common Stock
as presently constituted that is limited to a change of all of its
authorized shares of Class B Common Stock into the same number of
shares with a different par value or without par value, the shares
resulting from any such change shall be deemed to be the Class B
Common Stock within the meaning of the Plan.
13.
Corporate
Transaction; Change in Control; Related Entity
Disposition.
(a) CORPORATE
TRANSACTION. In the event of a Corporate Transaction, each award
which is at the time outstanding under the Plan shall automatically
become fully vested and exercisable and, in the case of an award of
Restricted Stock or an award of Deferred Stock Units, shall be
released from any restrictions on transfer (except with regard to
the Insider Trading Policy and such other agreements between the
Grantee and the Company) and repurchase or forfeiture rights,
immediately prior to the specified effective date of such Corporate
Transaction. Effective upon the consummation of the Corporate
Transaction, all outstanding awards of Options, Stock Appreciation
Rights and Limited Rights under the Plan shall terminate, unless
otherwise
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determined by the Committee. However, all such awards shall not
terminate if the awards are, in connection with the Corporate
Transaction, assumed by the successor corporation or Parent
thereof.
(b)
CHANGE IN CONTROL. In the event of a Change in Control (other than
a Change in Control which is also a Corporate Transaction), each
award which is at the time outstanding under the Plan automatically
shall become fully vested and exercisable and, in the case of an
award of Restricted Stock or an award of Deferred Stock Units,
shall be released from any restrictions on transfer and repurchase
or forfeiture rights, immediately prior to the specified effective
date of such Change in Control.
(c)
RELATED ENTITY DISPOSITION.
The Continuous Service of each Grantee (who is primarily engaged in
service to a Related Entity at the time it is involved in a Related
Entity Disposition) shall terminate effective upon the consummation
of such Related Entity Disposition, and each outstanding award of
such Grantee under the Plan shall become fully vested and
exercisable and, in the case of an award of Restricted Stock or an
award of Deferred Stock Units, shall be released from any
restrictions on transfer (except with regard to the Insider Trading
Policy and such other agreements between the Grantee and the
Company). Unless otherwise determined by the Committee, the
Continuous Service of a Grantee shall not be deemed to terminate
(and each outstanding award of such Grantee under the Plan shall
not become fully vested and exercisable and, in the case of an
award of Restricted Stock or an award of Deferred Stock Units,
shall not be released from any restrictions on transfer) if (i) a
Related Entity Disposition involves the spin-off of a Related
Entity, for so long as such Grantee continues to remain in the
service of such entity that constituted the Related Entity
immediately prior to the consummation of such Related Entity
Disposition (“SpinCo”) in any capacity of officer,
employee, director or consultant or (ii) an outstanding award is
assumed by the surviving corporation (whether SpinCo or otherwise)
or its parent entity in connection with a Related Entity
Disposition.
(d)
SUBSTITUTE AWARDS. The Committee may grant awards under the Plan in
substitution of stock-based incentive awards held by employees,
consultants or directors of another entity who become employees,
consultants or directors of the Company or any Subsidiary by reason
of a merger or consolidation of such entity with the Company or any
Subsidiary, or the acquisition by the Company or a Subsidiary of
property or equity of such entity, upon such terms and conditions
as the Committee may determine, and such awards shall not count
against the share limitation set forth in Section 5 of the
Plan.
14.
Non-Employee Director
Restricted Stock.
The provisions of this Section 14 shall apply only to certain
grants of Restricted Stock to Non-Employee Directors, as provided
below. Except as set forth in this Section 14, the other provisions
of the Plan shall apply to grants of Restricted Stock to
Non-Employee Directors to the extent not inconsistent with this
Section. For purposes of interpreting Section 6 of the Plan and
this Section 14, a Non-Employee Director’s service as a
member of the Board or the board of directors of any Subsidiary
shall be deemed to be employment with the Company.
(a) GENERAL.
Non-Employee Directors shall receive Restricted Stock in accordance
with this Section 14. Restricted Stock granted pursuant to this
Section 14 shall be subject to the terms of such section and shall
not be subject to discretionary acceleration of vesting by the
Committee. Unless determined otherwise by the Committee,
Non-Employee Directors shall not receive separate and additional
grants hereunder for being a Non-Employee Director of (i) the
Company and a Subsidiary or (ii) more than one Subsidiary.
(b)
INITIAL GRANTS OF RESTRICTED STOCK. A Non-Employee Director who
first becomes a Non-Employee Director shall receive a pro-rata
amount (based on projected quarters of service to the following
Non-Employee Director Grant Date) of a Non-Employee Director Annual
Grant on his date of appointment as a Non-Employee Director.
(c) ANNUAL
GRANTS OF RESTRICTED STOCK. On each Non-Employee Director Grant
Date, each Non-Employee Director shall receive a Non-Employee
Director Annual Grant.
(d)
VESTING OF RESTRICTED STOCK. Restricted Stock granted under this
Section 14 shall be fully vested on the date of grant.
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15.
Period During which
Awards May Be Granted.
Awards may be granted pursuant to the Plan from time to time
commencing on January 1, 2015 until September 16, 2024 (ten (10)
years from September 17, 2014, the date the Board initially adopted
the Plan). No awards shall be effective prior to the approval of
the Plan by a majority of the Company’s stockholders.
16.
Transferability of
Awards.
(a) Incentive
Stock Options and Stock Appreciation Rights may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any
manner other than by the laws of descent and distribution and may
be exercised, during the lifetime of the Grantee, only by the
Grantee or his or her guardian or legal representative.
(b)
Nonqualified Stock Options shall be transferable in the manner and
to the extent acceptable to the Committee, as evidenced by a
writing signed by the Company and the Grantee. Nonqualified Stock
Options (together with any Stock Appreciation Rights or Limited
Rights related thereto) shall be transferable by a Grantee as a
gift to the Grantee’s “family members” (as
defined in Form S-8) under such terms and conditions as may be
established by the Committee; provided that the Grantee receives no
consideration for the transfer. Notwithstanding the transfer by a
Grantee of a Nonqualified Stock Option, the transferred
Nonqualified Stock Option shall continue to be subject to the same
terms and conditions as were applicable to the Nonqualified Stock
Option immediately before the transfer (including, without
limitation, the Insider Trading Policy) and the Grantee will
continue to remain subject to the withholding tax requirements set
forth in Section 17 hereof.
(c) The terms
of any award granted under the Plan, including the transferability
of any such award, shall be binding upon the executors,
administrators, heirs and successors of the Grantee.
(d)
Restricted Stock shall remain subject to the Insider Trading Policy
after the expiration of the Restricted Period. Deferred Stock Units
shall remain subject to the Insider Trading Policy after payment
thereof.
17.
Agreement by Grantee
regarding Withholding Taxes.
If the Committee shall so require, as a condition of exercise of an
Option, Stock Appreciation Right or Limited Right, the expiration
of a Restricted Period or payment of a Deferred Stock Unit (each, a
“Tax Event”), each Grantee shall agree that no later
than the date of the Tax Event, the Grantee will pay to the Company
or make arrangements satisfactory to the Committee regarding
payment of any federal, state or local taxes of any kind required
by law to be withheld upon the Tax Event. Unless determined
otherwise by the Committee, a Grantee shall permit, to the extent
permitted or required by law, the Company to withhold federal,
state and local taxes of any kind required by law to be withheld
upon the Tax Event from any payment of any kind due to the Grantee.
Unless otherwise determined by the Committee, any such
above-described withholding obligation may, in the discretion of
the Company, be satisfied by the withholding by the Company or
delivery to the Company of Class B Common Stock.
18.
Rights as a
Stockholder.
Except as provided in Section 11(d) of the Plan, a Grantee or a
transferee of an award shall have no rights as a stockholder with
respect to any shares covered by the award until the date of the
issuance of such shares to him or her. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distribution of other rights for
which the record date is prior to the date such shares are issued,
except as provided in Section 12(a) of the Plan.
19.
No Rights to
Employment; Forfeiture of Gains.
Nothing in the Plan or in any award granted or Agreement entered
into pursuant hereto shall confer upon any Grantee the right to
continue as a director of, in the employ of, or in a consultant
relationship with, the Company or any Subsidiary or to be entitled
to any remuneration or benefits not set forth in the Plan or such
Agreement or to interfere with or limit in any way the right of the
Company or any such Subsidiary to terminate such Grantee’s
employment or consulting relationship. Awards granted under the
Plan shall not be affected by any change in duties or position of a
Grantee as long as such Grantee continues to be employed by, or in
a consultant relationship with, or a director of the Company or any
Subsidiary. The Agreement for any award under the Plan may require
the Grantee to pay to the Company any financial gain realized from
the prior exercise, vesting or payment of the award
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in the event that the Grantee engages in conduct that violates any
non-compete, non-solicitation or non-disclosure obligation of the
Grantee under any agreement with the Company or any Subsidiary,
including, without limitation, any such obligations provided in the
Agreement.
20.
Beneficiary.
A Grantee may file with the Committee a written designation of a
beneficiary on such form as may be prescribed by the Committee and
may, from time to time, amend or revoke such designation. If no
designated beneficiary survives the Grantee, the executor or
administrator of the Grantee’s estate shall be deemed to be
the Grantee’s beneficiary.
21.
Authorized Share
Approval; Amendment and Termination of the Plan.
(a)
AUTHORIZED SHARE APPROVAL. The Plan was adopted by the Board on
September 17, 2014. The Plan was ratified by the Company’s
stockholders on December 15, 2014, with 500,000 shares of Class B
Common Stock authorized for awards under the Plan. The Plan shall
become effective on January 1, 2015 and shall terminate on
September 16, 2024. The Board amended the Plan on September 24,
2015 to increase the amount of authorized shares under the Plan to
600,000 shares of Class B Common Stock. The Company’s
stockholders ratified such amendment to the Plan on December 14,
2015.
(b)
AMENDMENT AND TERMINATION OF THE PLAN. The Board, or the Committee
if so delegated by the Board, at any time and from time to time may
suspend, terminate, modify or amend the Plan; however, unless
otherwise determined by the Board, or the Committee if applicable,
an amendment that requires stockholder approval in order for the
Plan to continue to comply with any law, regulation or stock
exchange requirement shall not be effective unless approved by the
requisite vote of stockholders. Except as provided in Section 13(a)
of the Plan, no suspension, termination, modification or amendment
of the Plan may adversely affect any award previously granted,
unless the written consent of the Grantee is obtained.
22.
Governing
Law.
The Plan and all determinations made and actions taken pursuant
hereto shall be governed by the laws of the State of Delaware.
A-13
ANNUAL MEETING OF
STOCKHOLDERS OF
IDT CORPORATION
December 14,
2015
Important Notice Regarding the Availability of Proxy Materials for
the IDT Corporation
Stockholders Meeting to be Held on December 14,
2015:
The Notice of Annual Meeting and Proxy Statement and the 2015
Annual Report are available at:
www.idt.net/ir
Please date, sign and
mail
your proxy card in the
envelope provided as soon
as possible.
â Please detach
along perforated line and mail in the envelope provided.
â
PLEASE SIGN, DATE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTES IN
BLUE OR BLACK INK AS SHOWN HERE x
THE BOARD OF DIRECTORS
RECOMMENDS VOTES
“FOR” THE LISTED NOMINEES, “FOR” PROPOSAL
2, “FOR” PROPOSAL 3 AND “FOR” PROPOSAL
4.
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FOR
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AGAINST
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ABSTAIN
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AGAINST
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ABSTAIN
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1. Election of
Directors:
NOMINEES:
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2. To approve an
amendment to the IDT Corporation 2015 Stock Option and Incentive
Plan that will increase the number of shares of the Company’s
Class B Common Stock available for the grant of awards thereunder
by an additional 100,000 shares.
3. To conduct an
advisory vote on executive compensation.
4. To ratify the
appointment of Grant Thornton LLP as the Company’s
independent registered public accounting firm for the Fiscal Year
ending July 31, 2016.
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Michael Chenkin
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Eric F. Cosentino
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Howard S. Jonas
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Bill Pereira
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Judah Schorr
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To change the address on your account, please
check the box at right and indicate your new address in the address
space above. Please note that changes to the registered name(s) on
the account may not be submitted via this method.
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MARK “X” HERE IF YOU PLAN TO ATTEND
THE MEETING.
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Signature of
Stockholder ______________________
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Date: ________
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Signature of
Stockholder ______________________
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Date: ________
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Note:
Please sign exactly as your name or names appear on this Proxy.
When shares are held jointly, each holder should sign. When signing
as executor, administrator, attorney, trustee or guardian, please
give full title as such. If the signer is a corporation, please
sign full corporate name by a duly authorized officer, giving full
title as such. If signer is a partnership, please sign in
partnership name by an authorized person.
Electronic Distribution
If you would like to receive future IDT CORPORATION proxy
statements and annual reports electronically, please visit
www.amstock.com.
Click on Shareholder Account Access to enroll. Please enter your
account number and tax identification number to log in, then select
Receive Company Mailings via e-Mail and provide your e-mail
address.
THIS PROXY IS BEING
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
IDT CORPORATION
520 Broad Street, Newark, New Jersey 07102
(973) 438-1000
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held December 14, 2015
The undersigned appoints Howard S. Jonas and Joyce J. Mason, or
either one of them, as the proxy of the undersigned with full power
of substitution to attend and vote at the Annual Meeting of
Stockholders (the “Annual Meeting”) of IDT Corporation
to be held at the Hampton Inn & Suites Newark Riverwalk Hotel,
100 Passaic Ave, Harrison, New Jersey 07029 on December 14, 2015 at
10:30 a.m., and any adjournment or postponement of the Annual
Meeting, according to the number of votes the undersigned would be
entitled to cast if personally present, for or against any
proposal, including the election of members of the Board of
Directors, and any and all other business that may come before the
Annual Meeting, except as otherwise indicated on the reverse side
of this card.
THIS PROXY, WHEN
PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED
STOCKHOLDER. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES FOR THE BOARD OF DIRECTORS,
FOR PROPOSAL 2, FOR PROPOSAL 3 AND FOR PROPOSAL 4 LISTED ON THE
REVERSE SIDE.
CONTINUED AND TO BE
SIGNED ON REVERSE SIDE
ANNUAL MEETING OF
STOCKHOLDERS OF
IDT
CORPORATION
December 14,
2015
PROXY VOTING
INSTRUCTIONS
INTERNET - Access
“www.voteproxy.com”
and follow the on-screen instructions or scan the QR code with your
smartphone. Have your proxy card available when you access the web
page. Vote online until 11:59 PM EST the day before the
meeting.
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MAIL - Date,
sign and mail your proxy card in the envelope provided as soon as
possible.
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IN PERSON - You may vote your shares
in person by attending the Annual Meeting.
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COMPANY NUMBER ______________
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GO GREEN - e-Consent makes it easy
to go paperless. With e-Consent, you can quickly access your proxy
material, statements and other eligible documents online, while
reducing costs, clutter and paper waste. Enroll today via
www.amstock.com to enjoy online access.
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ACCOUNT NUMBER ______________
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â
Please detach along perforated line and
mail in the envelope provided
IF
you are not voting via the Internet. â
PLEASE SIGN, DATE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTES IN
BLUE OR BLACK INK AS SHOWN HERE x
THE BOARD OF DIRECTORS
RECOMMENDS VOTES
“FOR” THE LISTED NOMINEES, “FOR” PROPOSAL
2, “FOR” PROPOSAL 3 AND “FOR” PROPOSAL
4.
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FOR
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AGAINST
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ABSTAIN
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FOR
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AGAINST
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ABSTAIN
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|
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1. Election of
Directors:
NOMINEES:
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|
|
|
|
2. To approve an
amendment to the IDT Corporation 2015 Stock Option and Incentive
Plan that will increase the number of shares of the Company’s
Class B Common Stock available for the grant of awards thereunder
by an additional 100,000 shares.
3. To conduct an
advisory vote on executive compensation.
4. To ratify the
appointment of Grant Thornton LLP as the Company’s
independent registered public accounting firm for the Fiscal Year
ending July 31, 2016.
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¨
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¨
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¨
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Michael Chenkin
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¨
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¨
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¨
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Eric F. Cosentino
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¨
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¨
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¨
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Howard S. Jonas
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¨
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¨
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¨
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Bill Pereira
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¨
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¨
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¨
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¨
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¨
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¨
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Judah Schorr
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¨
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¨
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¨
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¨
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¨
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¨
|
|
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|
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|
|
To change the address on your account, please
check the box at right and indicate your new address in the address
space above. Please note that changes to the registered name(s) on
the account may not be submitted via this method.
|
|
¨
|
|
MARK “X” HERE IF YOU PLAN TO ATTEND
THE MEETING.
|
|
¨
|
Signature of
Stockholder ______________________
|
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Date: ________
|
|
Signature of
Stockholder ______________________
|
|
Date: ________
|
Note:
Please sign exactly as your name or names appear on this Proxy.
When shares are held jointly, each holder should sign. When signing
as executor, administrator, attorney, trustee or guardian, please
give full title as such. If the signer is a corporation, please
sign full corporate name by a duly authorized officer, giving full
title as such. If signer is a partnership, please sign in
partnership name by an authorized person.