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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
☐ |
Preliminary
Proxy Statement |
☐ |
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
☒ |
Definitive
Proxy Statement |
☐ |
Definitive
Additional Materials |
☐ |
Soliciting
Material under Rule 14a-12 |
IDT
Corporation
(Name
of Registrant as Specified In Its Charter)
Payment
of Filing Fee (Check the appropriate box):
☒ |
No
fee required. |
☐ |
Fee
computed on table below per Exchange Act Rule 14a-6(i)(1), and 0-11. |
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(1) |
Title
of each class of securities to which transaction applies: |
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(2) |
Aggregate
number of securities to which transactions applies: |
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(3) |
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) |
Proposed
maximum aggregate value of transaction: |
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(5) |
Total
fee paid: |
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☐ |
Fee
paid previously with preliminary materials. |
☐ |
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) |
Amount
Previously Paid: |
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(2) |
Form,
Schedule or Registration Statement No.: |
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(3) |
Filing
Party: |
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(4) |
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: |
11:00
a.m., local time, on Wednesday, December 13, 2023 |
|
|
PLACE: |
Offices
of IDT Corporation, 520 Broad Street, Newark, New Jersey 07102 |
|
|
ITEMS
OF BUSINESS: |
1. |
To
elect five directors, each for a term of one year. |
|
|
|
|
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 250,000. |
|
|
|
|
3. |
To
adopt the IDT Corporation 2024 Equity Incentive Plan. |
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|
|
4. |
To
transact other business as may properly come before the Annual Meeting and any adjournment or postponement thereof. |
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RECORD
DATE: |
You
can vote if you were a stockholder of record as of the close of business in New York, New York on October 20, 2023. |
|
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PROXY
VOTING: |
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?” |
|
|
ANNUAL
MEETING
IN-PERSON
ADMISSION: |
If
you were a stockholder of record as of October 20, 2023, 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 20, 2023 with you to the Annual Meeting, as well as a form
of personal photo identification. The Company requests that any stockholder seeking to attend the Annual Meeting in person first
email the Company’s investor relations department at invest@idt.net to RSVP. |
|
|
ANNUAL
MEETING DIRECTIONS: |
You
may request directions to the annual meeting via email at invest@idt.net or by calling IDT Investor Relations at (973) 438-3838. |
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE IDT CORPORATION STOCKHOLDERS MEETING TO BE HELD ON DECEMBER 13, 2023:
The
Notice of Annual Meeting and Proxy Statement and the 2023 Annual Report are available at:
www.idt.net/investors-and-media
|
BY
ORDER OF THE BOARD OF DIRECTORS |
|
|
|
|
|
Joyce
J. Mason |
|
Executive
Vice President, General Counsel and Corporate Secretary |
Newark,
New Jersey
November
1, 2023
IDT
CORPORATION
520 Broad Street
Newark, New Jersey 07102
(973) 438-1000
PROXY
STATEMENT
GENERAL
INFORMATION
Introduction
This
Proxy Statement is being furnished to the stockholders of record of IDT Corporation, a Delaware corporation (the “Company”
or “IDT”) as of the close of business in New York, New York on October 20, 2023, 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 2023 Annual
Meeting of Stockholders (the “Annual Meeting”). The Annual Meeting will be held on Wednesday, December 13, 2023 at 11:00
a.m., local time, at the offices of IDT, 520 Broad Street, Newark, New Jersey 07102. 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 or about November 7, 2023.
Solicitation
and Voting Procedures
This
solicitation of proxies is being made by the Company. The solicitation is being conducted by 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 in New York, New York on October 20, 2023 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 Record Date, the Company had 25,161,570 shares outstanding and entitled to vote at the Annual Meeting, consisting of 1,574,326
shares of Class A Common Stock and 23,587,244 shares of Class B Common Stock. The remaining shares issued, consisting of 1,698,000 shares
of Class A Common Stock and 4,277,772 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.
How
do I Vote?
You
can vote either in person at the Annual Meeting or by proxy without attending the meeting.
Beneficial
holders of 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 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 Securities and Exchange Commission
(or “SEC”), the Board of Directors did not know of any other matters 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 outstanding Class A Common Stock and Class B Common Stock (voting
together and excluding the shares owned by the Company as those shares are not considered to be outstanding), 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 adoption of an amendment to the Company’s
2015 Stock Option and Incentive Plan (as amended and restated to date, the “2015 Plan”) (Proposal No. 2) and the adoption
of the 2024 Equity Incentive Plan (Proposal No. 3). This means that the number of votes cast “for” a Proposal must exceed
the number of votes cast “against” that Proposal. 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.
If
you are a beneficial owner whose shares are held of record by a broker, 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 Plan (Proposal No. 2), the adoption of the 2024
Equity Incentive Plan (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 2023 refers to the Fiscal Year ended July 31, 2023).
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.
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 https://www.idt.net/investors-and-media/governance and which also are available in print to any stockholder
upon written request to the Corporate Secretary.
Director
Independence
The
Corporate Governance Guidelines adopted by the Board of Directors provide that a majority of the voting members of the Board of
Directors, and each member of the Audit Committee, Compensation Committee, Corporate Governance Committee and Nominating Committee, 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 https://www.idt.net/investors-and-media/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’s definition of independent.
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.
Based
on the review and recommendation of the Corporate Governance Committee, the Board of Directors has determined that each of Michael Chenkin,
Eric F. Cosentino and Judah Schorr is independent in accordance with the Corporate Governance Guidelines and Section 2014.10A-3 of the
Securities Exchange Act of 1934 and, thus, that a majority of the current voting members of the Board of Directors, a majority
of the director nominees, and each current member of the Audit, Compensation, Corporate Governance and Nominating Committees is independent.
As used herein, the term “non-employee director” shall mean any director who is not an employee or consultant of the Company
and who is deemed independent by the Board of Directors. Therefore, none of Howard S. Jonas, Bill Pereira, Liora Stein or Elaine S. Yatzkan
is a non-employee director. None of the non-employee directors had any relationships with the Company that the Corporate Governance Committee
was required to consider when reviewing independence.
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, including as to personal factors of
nominees and the diverse perspectives that nominees may bring to their service on the Board, 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 F. 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,
who will, in turn, relay such correspondence to the other non-employee directors, and (iii) intended for the Audit, Compensation, and/or
Corporate Governance Committees, to the Chairmen of such committees, who will, in turn, relay such correspondence to the members of the
applicable committee(s).
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:
| ● | Unsolicited
marketing or advertising material or mass mailings; |
| | |
| ● | Unsolicited
newsletters, newspapers, magazines, books and publications; |
| | |
| ● | Surveys
and questionnaires; |
| | |
| ● | Resumes
and other forms of job inquiries; |
| | |
| ● | Requests
for business contacts or referrals; |
| | |
| ● | Material
that is threatening or illegal; or |
| | |
| ● | 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:
| ● | Routine
questions, service and product complaints and comments that can be appropriately addressed
by management; and |
| | |
| ● | 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 four regularly scheduled meetings and a total of seven meetings in Fiscal 2023. In Fiscal 2023, each of the Company’s
directors attended or participated in 75% or more of the aggregate of (i) the total number of regularly scheduled meetings of the Board
of Directors and (ii) the total number of regularly scheduled meetings held by all committees of the Board of Directors on which each
such director served.
Directors
are encouraged to attend the Company’s annual meeting of stockholders. All of the current members of the Board of Directors attended
the 2022 annual meeting of stockholders either in person or via video/telephonic conference.
Board
of Directors Leadership Structure and Risk Oversight Role
Howard
S. Jonas has served as Chairman of the Board since the Company’s inception and has served as Chairman, an executive officer position,
since September 2022. From October 2009 through December 2013, he also served as Chief Executive Officer. On January 1, 2014, Samuel
“Shmuel” Jonas, who served as the Company’s Chief Operating Officer from June 2010 through December 2013, was elected
as Chief Executive Officer of the Company. Howard S. Jonas is Chairman of the Board and provides overall leadership to the Board of Directors
in its oversight function. The risk management and oversight roles of the Audit, Compensation, Corporate Governance and Nominating Committees
discussed below, which are comprised solely of independent directors, provide an appropriate and effective balance to the Chairman of
the Board role.
The
Company’s Eighth Amended and Restated By-Laws enable the Board of Directors to appoint one or more ex-officio (non-voting)
directors. Since March 24, 2021, Bill Pereira has served as an ex-officio (non-voting) member
of the Board of Directors.
The
Board of Directors selects the Chairman of the Board at the annual meeting of the Board of Directors,
which occurs promptly after the Annual Meeting.
Section
303A.03 of the New York Stock Exchange Listed Company Manual and the Company’s Corporate Governance Guidelines require that the
independent directors of the Company meet privately 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 is 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 private 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 Board of Directors, the Company’s
senior management is responsible for the day-to-day 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 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 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, https://www.idt.net/investors-and-media/governance,
and is also available in print to any stockholder upon request to the Corporate Secretary. The Audit Committee consists of Mr. Chenkin
(Chairman), Rev. Cosentino and Dr. Schorr. The Audit Committee held eight meetings during Fiscal 2023. 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 2015 Plan and recommending
to the Board of Directors the compensation for Board members, such as retainers, committee and other fees, stock options, restricted
stock, deferred stock units 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 Rev. Cosentino (Chairman), Mr. Chenkin and Dr. Schorr. The Compensation Committee held eight meetings during Fiscal 2023. 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, https://www.idt.net/investors-and-media/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 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. Such goals may be Company-wide or targeted at specific segments, business units
or corporate departments. 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.
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 annual self-evaluations of the Board of Directors, the Audit Committee, the Corporate Governance 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 Rev. Cosentino (Chairman), Mr. Chenkin and Dr. Schorr. The Corporate Governance
Committee held six meetings in Fiscal 2023. 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, https://www.idt.net/investors-and-media/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 Eric F. Cosentino
(Chairman) and Judah Schorr. The Board of Directors has determined that both of the members of the Nominating 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 operates under a written charter adopted by the Board of Directors, which can be found in the Governance section
of our web site, https://www.idt.net/investors-and-media/governance, and which is also available in print to any stockholder upon
request to the Corporate Secretary. The Nominating Committee held two meetings in Fiscal 2023.
FISCAL
2023 COMPENSATION FOR NON-EMPLOYEE DIRECTORS
Annual
compensation for non-employee directors for Fiscal 2023 was comprised of equity compensation, consisting of awards of restricted shares
of Class B Common Stock, and cash compensation.
Director
Equity Grants
During
Fiscal 2023, pursuant to the 2015 Plan, each non-employee director of the Company received, on January 5, 2023, an automatic grant of
1,776 restricted shares of Class B Common Stock, which vested in full immediately upon grant, and which had a value of $49,994 based
on the average of the high and the low stock trading prices of Class B Common Stock on the business day immediately prior to the applicable
grant date. A new non-employee 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 amount 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 2015 Plan.
Board
of Directors Retainers
Each
non-employee director of the Company receives an annual cash retainer of $50,000. Such retainer is paid in equal quarterly payments 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 regularly scheduled meetings of the Board of Directors 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
Directors
do not receive fees for committee service.
Lead
Independent Director
The
Lead Independent Director receives an additional annual cash retainer of $50,000, paid in equal quarterly amounts upon the completion
of each quarter of service. Eric F. Cosentino has served as the Lead Independent Director since December 17, 2009.
Fiscal
2023 Director Compensation Table
The
following table lists Fiscal 2023 compensation for any person who served as a non-employee director during Fiscal 2023. This table does
not include compensation to Howard S. Jonas, Bill Pereira or Liora Stein, as they are not non-employee directors and do not receive any
compensation for service as members of the Board of Directors.
Name | |
Dates of Board Service During Fiscal 2023 | |
Fees Earned or Paid in Cash ($) | | |
Stock Awards ($) | | |
All Other Compensation ($) | | |
Total ($) | |
Michael Chenkin | |
08/01/2022–07/31/2023 | |
| 50,000 | (1) | |
| 48,911 | (3) | |
| 0 | | |
| 98,911 | |
Eric F. Cosentino | |
08/01/2022–07/31/2023 | |
| 100,000 | (2) | |
| 48,911 | (3) | |
| 0 | | |
| 148,911 | |
Judah Schorr | |
08/01/2022–07/31/2023 | |
| 50,000 | (3) | |
| 48,911 | (3) | |
| 0 | | |
| 98,911 | |
(1) | Represents
the annual Board of Directors retainer earned in Fiscal 2023. |
| |
(2) | Consists
of (a) $50,000, which represents the annual Board of Directors retainer earned in Fiscal
2023 and (b) $50,000, which represents the Lead Independent Director Fee earned in Fiscal
2023. |
| |
(3) | Represents
the grant date fair value of an award of 1,776 restricted shares of Class B Common Stock
on January 5, 2023, computed in accordance with FASB ASC Topic 718. |
As
of July 31, 2023, non-employee directors held the following shares of 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, 2023.
Name | |
Class B Common Stock | |
Michael Chenkin | |
| 40,038 | |
Eric F. Cosentino | |
| 305 | |
Judah Schorr | |
| 68,910 | |
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 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 at its next regularly
scheduled meeting. The Corporate Governance Committee will evaluate all options available, including approval, 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 and Chairman of the Board, and Shmuel Jonas, Chief Executive Officer.
Trusts for the benefit of Howard S. Jonas’ nine children, if aggregated together, own a controlling interest in the Company. Howard
Jonas’ and Shmuel Jonas’ total compensation during Fiscal 2023 are set forth in the Summary Compensation Table of the Proxy
Statement.
There
is a brother/sister relationship between Howard S. Jonas, and Joyce J. Mason, General Counsel, Corporate Secretary and Executive Vice
President. Howard Jonas’ total compensation during Fiscal 2023 is set forth in the Summary Compensation Table of the Proxy Statement.
Joyce Mason’s total compensation during Fiscal 2023 was $499,920.
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 “Genie TSA”), pursuant to which
the Company provides certain services to Genie, for which Howard S. Jonas serves as the Chairman of the Board, and for which Michael
Stein, his son-in-law, is the Chief Executive Officer. Trusts for the benefit of Howard Jonas’ nine children, if aggregated together,
own a controlling interest in the Company and in Genie. The services under the Genie TSA include, but are not limited to, services relating
to human resources, employee benefits administration, system support and treasury, tax, facilities, investor relations and legal. Furthermore,
the Company granted Genie a license to use the IDT name for its Retail Energy Provider business. Genie paid the Company a total of approximately
$1,290,704 for services provided by the Company pursuant to the Genie TSA during Fiscal 2023. As of July 31, 2023, Genie owed the Company
approximately $237,424 for such services. Additionally, Genie provided human resource, legal and administrative services to the Company
pursuant to the Genie TSA. The Company paid Genie a total of approximately $131,150 for services provided to the Company by Genie pursuant
to the Genie TSA during Fiscal 2023. As of July 31, 2023, the Company owed Genie approximately $30,408 for such services.
On
June 1, 2016, the Company spun off its subsidiary, Zedge, Inc. (“Zedge”). Zedge and the Company entered into a Transition
Services Agreement (the “Zedge TSA”), effective June 1, 2016. Howard S. Jonas is a director and Vice Chairman and his son,
Michael Jonas, is the Chairman of the board of directors, Executive Chairman, and the controlling stockholder of Zedge. Pursuant to the
Zedge TSA, the Company provides legal services to Zedge. Zedge paid the Company a total of $125,000 for legal services provided by the
Company pursuant to the Zedge TSA during Fiscal 2023. In addition, the Company paid Zedge $81,000 for consulting services provided to
the Company by a Zedge employee. As of July 31, 2023, the Company owed Zedge $8,000.
On
March 26, 2018, the Company spun off its subsidiary, Rafael Holdings, Inc. (“Rafael”). In connection with the spin-off, the
Company and Rafael entered into a Transition Services Agreement, dated March 26, 2018 (the “Rafael TSA”), pursuant to which
the Company provides certain services to Rafael, for which Howard S. Jonas serves as the Chairman of the board of directors. Trusts for
the benefit of Howard Jonas’ nine children, if aggregated together, own a controlling interest in the Company and Howard Jonas
is the sole manager of the sole general partner of the limited partnership that owns all the shares of Class A common that provides a
controlling interest in Rafael. The services under the Rafael TSA include, but are not limited to, administrative, tax, and legal. The
Company billed Rafael a total of $312,878 under the Rafael TSA during Fiscal 2023. In addition, during Fiscal 2023, Rafael billed the
Company $56,751 for real estate advisory services provided to the Company. As of July 31, 2023, Rafael owed the Company $69,708.
The
Company leases approximately 80,000 square feet, collectively, of office space and parking space in a building and parking garage located
at 520 Broad St, Newark, New Jersey that was previously owned by Rafael. On August 22, 2022, Rafael sold the building and parking garage
to an unrelated third party. The Company’s lease in that building continues with the new owner. The Company leases 3,600 square
feet of office space in Jerusalem, Israel from Rafael. The Company paid Rafael $124,617 for office rent and parking during Fiscal 2023.
As of July 31, 2023, the Company owed Rafael $211,553 for office rent and parking.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding the beneficial ownership as of the close of business on October 20, 2023, of
Class A Common Stock and Class B Common Stock by (i) each person or entity 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, (ii) each of the Company’s directors, director
nominees, and the Named Executive Officers for Fiscal 2023 (who are listed under Executive Compensation below), and (iii) all directors
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 20, 2023 and all shares
are owned directly. Percentage ownership information is based on the following amounts of outstanding shares: 1,574,326 shares of Class
A Common Stock and 23,587,244 shares of Class B Common Stock. The ownership numbers reported below for Class B Common Stock assume the
conversion of all 1,574,326 currently outstanding shares of Class A Common Stock into shares of Class B Common Stock on a one-for-one
basis. In computing the number of shares of Class B Common Stock beneficially owned by a person and the percentage ownership of that
person, we considered shares of Class B Common Stock subject to options held by that person that are currently exercisable or exercisable
within sixty days of October 20, 2023 and Class B Common Stock issuable upon the vesting of deferred stock units within sixty days of
October 20, 2023 to be outstanding and to be owned by the applicable person.
Name | |
Number of Shares of Class A Common Stock | | |
Percentage of Ownership of Class A Common Stock | | |
Number of Shares of Class B Common Stock | | |
Percentage of Ownership of Class B Common Stock | | |
Percentage of Aggregate Voting
Power δ | |
Howard S. Jonas 520 Broad Street Newark, NJ 07102 | |
| | | |
| | | |
| 2,940,742 | (1) | |
| 12.5 | % | |
| 4.2 | % |
Liora Jonas Stein 2020 Florida Trust 9477 Westover Club Circle Windermere, FL 34786 | |
| 196,791 | | |
| 12.5 | % | |
| 494,588 | | |
| 2.1 | % | |
| 8.8 | % |
Michael Jonas 2020 New Jersey Trust 20 Constitution Court East Brunswick, NJ 08816 | |
| 196,791 | | |
| 12.5 | % | |
| 494,588 | | |
| 2.1 | % | |
| 8.8 | % |
Samuel Jonas 2020 New Jersey Trust 53 Copley Avenue Teaneck, NJ 07666 | |
| 196,791 | | |
| 12.5 | % | |
| 494,587 | | |
| 2.1 | % | |
| 8.8 | % |
Jonathan Jonas 2020 South Dakota Trust 330 South Poplar Avenue, Suite 103 Pierre, SD 57501 | |
| 196,791 | | |
| 12.5 | % | |
| 494,587 | | |
| 2.1 | % | |
| 8.8 | % |
Joseph Jonas 2020 Alaska Trust 3000 A Street, Suite 200 Anchorage, AK 99503 | |
| 196,791 | | |
| 12.5 | % | |
| 494,587 | | |
| 2.1 | % | |
| 8.8 | % |
Rachel Jonas 2020 Nevada Trust 4465 South Jones Boulevard Las Vegas, NV 89103 | |
| 196,790 | | |
| 12.5 | % | |
| 494,586 | | |
| 2.1 | % | |
| 8.8 | % |
Tamar Jonas 2020 Nevada Trust 1840 East Springs Road, Suite 105 Las Vegas, NV 89119 | |
| 196,790 | | |
| 12.5 | % | |
| 494,586 | | |
| 2.1 | % | |
| 8.8 | % |
Miriam Jonas 2020 New Jersey Trust 88 Crescent Avenue Passaic, NJ 07055 | |
| 196,791 | | |
| 12.5 | % | |
| 494,588 | | |
| 2.1 | % | |
| 8.8 | % |
Blackrock, Inc. 55 East 52nd Street New York, NY 10055 | |
| | | |
| | | |
| 1,377,592 | (2) | |
| 5.8 | % | |
| 1.9 | % |
Dimensional Fund Advisors LP Building One 6300 Bee Cave Road Austin, TX 78746 | |
| | | |
| | | |
| 1,241,743 | (2) | |
| 5.3 | % | |
| 1.8 | % |
Shmuel Jonas | |
| | | |
| | | |
| 178,779 | (3) | |
| | * | |
| | * |
Bill Pereira | |
| | | |
| | | |
| 50,021 | (4) | |
| | * | |
| | * |
Marcelo Fischer | |
| | | |
| | | |
| 44,720 | (5) | |
| | * | |
| | * |
Menachem Ash | |
| | | |
| | | |
| 59,299 | (6) | |
| | * | |
| | * |
David Wartell | |
| | | |
| | | |
| 19,064 | (7) | |
| | * | |
| | * |
Michael Chenkin | |
| | | |
| | | |
| 40,038 | | |
| | * | |
| | * |
Eric F. Cosentino | |
| | | |
| | | |
| 305 | | |
| | * | |
| | * |
Judah Schorr | |
| | | |
| | | |
| 126,042 | (8) | |
| | * | |
| | * |
Liora Stein | |
| | | |
| | | |
| 4,056 | (9) | |
| | * | |
| | * |
Elaine S. Yatzkan | |
| | | |
| | | |
| — | | |
| — | | |
| — | |
All directors, Named Executive Officers and other executive officers as a group (14 persons) | |
| | | |
| | | |
| 3,549,115 | (10) | |
| 15.0 | % | |
| 5.0 | % |
* | Less
than 1%. |
| |
δ | Voting
power represents combined voting power of Class A Common Stock (three votes per share) and
Class B Common Stock (one-tenth of one vote per share). Excludes stock options as option
holders have no voting rights related to the shares underlying the options. |
| |
(1) | Consists
of: (a) 506,641 shares of Class B Common Stock held directly; (b) 197,641 shares of Class
B Common Stock owned by the Jonas Foundation; (c) 1,811,711 shares of Class B Common Stock
owned by the Howard S. Jonas 2019 Remainder Trust; (d) 78,016 shares of Class B Common Stock
owned by the Howard S. Jonas 2022 Annuity Trust I; (e) 342,779 shares of Class B Common Stock
owned by Chartwell Holding, LLC; and (f) 3,954 shares of Class B Common Stock held by Howard
S. Jonas in his IDT Corporation 401(k) Plan account as of September 30, 2023. |
Does
not include: (a) 1,000 shares of Class B Common Stock owned by the Howard S. and Deborah Jonas Foundation, Inc., as Howard S. Jonas does
not beneficially own these shares; (b) an aggregate of 4,604,565 shares of Class B Common Stock beneficially owned by trusts for the
benefit of the children of Howard S. Jonas, as Howard S. Jonas does not exercise or share voting or investment control over these shares,
(c) 160,000 shares of Class B Common Stock owned by the 2012 Jonas Family, LLC (Howard S. Jonas is a minority equity holder of such entity);
(d) 1,574,326 shares of Class A Common Stock (which are convertible into Class B Common Stock) beneficially owned by trusts for the benefit
of the children of Howard S. Jonas, as Howard S. Jonas does not exercise or share voting or investment control over these shares; (e)
restricted shares representing 5.0% of the outstanding common stock of net2phone 2.0, Inc., a subsidiary of the Company; or (f) shares
representing 2.33% of the outstanding common stock of National Retail Solutions, Inc., a subsidiary of the Company.
(2) | According
to the applicable Schedule 13G as filed by the applicable beneficial owner. |
| |
(3) | Consists
of (a) 177,223 shares of Class B Common Stock owned directly and (b) 1,556 shares of Class
B Common Stock owned by Shmuel Jonas’ wife. Does not include (a) 196,791 shares of
Class A Common Stock and 649,106 shares of Class B Common Stock owned by trusts for the benefit
of Shmuel Jonas, as Shmuel Jonas does not share investment control of such shares, which
are controlled by an independent trustee; (b) restricted shares representing 5.0% of the
outstanding common stock of net2phone 2.0, Inc., a subsidiary of the Company; or (c) shares
representing 6.98% of the outstanding common stock of National Retail Solutions, Inc., a
subsidiary of the Company. |
| |
(4) | Consists
of (a) 46,458 shares of Class B Common Stock owned directly, and (b) 3,563 shares of Class
B Common Stock held by Mr. Pereira in his IDT Corporation 401(k) Plan account as of September
30, 2023. |
| |
(5) | Consists
of (a) 41,533 shares of Class B Common Stock owned directly, and (b) 3,187 shares of Class
B Common Stock held by Mr. Fischer in his IDT Corporation 401(k) Plan account as of September
30, 2023. |
| |
(6) | Consists
of (a) 40,367 shares of Class B Common Stock owned directly, (b) 16,000 restricted shares
of Class B Common Stock that vest, and vest in full,
only if the Class B Common Stock closes above $50 per share for 10 consecutive trading days
prior to February 25, 2025, and (c) 2,932 shares of Class B Common Stock held by Mr.
Ash in his IDT Corporation 401(k) Plan account as of September 30, 2023. |
| |
(7) | Consists
of (a) 11,064 shares of Class B Common Stock owned directly and (b) 8,000 restricted shares
of Class B Common Stock that vest, and vest in full,
only if the Class B Common Stock closes above $50 per share for 10 consecutive trading days
prior to February 25, 2025. |
| |
(8) | Consists
of (a) 118,910 shares of Class B Common Stock owned directly, (b) 7,000 shares of Class B
Common Stock held in the Schorr Family Trust, and (c) 132 shares of Class B Common Stock
in his IRA account. |
| |
(9) | Consists
of (a) 1,556 shares of Class B Common Stock owned directly, and (b) 2,500 shares of Class
B Common Stock owned by Ms. Stein’s husband. Does not include 196,791 shares of Class
A Common Stock and 649,861 shares of Class B Common Stock owned by trusts for the benefit
of Ms. Stein, as Ms. Stein does not share investment control of such shares, which are controlled
by an independent trustee. |
| |
(10) | Consists
of the shares set forth above with respect to the Named Executive Officers and directors,
and the following shares of Class B Common Stock beneficially owned by other executive officers
of the Company: (a) 77,377 shares of Class B Common Stock held by other executive officers
and their immediate family; (b) 7,276 shares of Class B Common Stock held by other executive
officers’ in their respective IDT Corporation 401(k) Plan accounts as of September
30, 2023; and (c) 1,396 shares of Class B Common Stock purchased through the Company’s
Employee Stock Purchase Program held by an executive officer. |
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 2023.
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
2023 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 2023 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, 2023, 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, if any, 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, stock options or other equity-based awards. Further, from time
to time, certain individuals have received grants of equity in certain of our subsidiaries and any grants in subsidiaries to our executive
officers must be approved by the Compensation Committee. Shares of restricted stock are granted to our non-employee directors automatically
on an 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 annual base salary, annual bonus awards, and long-term equity-based
incentive awards, including awards that may have time and performance-based vesting conditions and that may present the recipient with
additional growth opportunities through decisions to remain at risk related to continued employment. 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, in the context of our overall compensation policy. Additionally, the Compensation Committee, reviews the
relationship of executive compensation to corporate performance generally and with respect to specific enumerated goals that are approved
by the 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.
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 to meet 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 perform their duties and execute their roles in order to achieve our long-term plans.
The
base salary that we pay to each of our Named Executive Officers is 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, from time to time, certain other key, highly compensated individuals, the Compensation Committee.
Incentive
compensation is designed to reward contributions towards achieving the Company’s goals for the current period, as well as for the
longer term. Bonuses are generally a reward for performance in the relevant period and equity awards also provide incentive to contribute
to future performance and growth and to align our personnel’s interest with those of our stockholders.
The
Compensation Committee, with recommendations from the Company’s management, sets goals for executive compensation 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 Company’s
practice has evolved to setting detailed financial, operational and strategic goals to provide ample metrics against which to measure
performance of the Company, each business or other unit, and the contributions of senior corporate and divisional personnel toward the
achievement of (or failure to achieve) the goals.
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 or units over which the individual exercised management or with respect to which the individual contributed, 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 prior year levels, Company performance and available resources.
Proposed bonuses for executive officers are then presented to the Compensation Committee. The bonus amount awarded to each executive
officer is the result of subjective proposals made by the relevant members of management and determination of 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.
Executive
officers are eligible to receive cash bonuses of up to 100% of base salary (or higher upon extraordinary performance or other circumstances
as determined by the Compensation Committee) 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 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, 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 2023
Company
Performance
Fiscal
2023 was notable for the growth and improved profitability for the Company’s high margin growth businesses. NRS added significantly
to its customer base as it continued to expand the range of services it provides and increased revenue from a variety of sources. net2phone
delivered significant domestic and international growth in seats while growing subscription revenue (a key performance metric for that
business) by 25% and focusing on its relatively new CCaaS offering. BOSS Money grew transaction volume and further enhanced its network
of payers. The Traditional Telecom segment continued to streamline operations and took initiative to stem the impact of secular declines
in per-minute calling. Mobile Top had a challenging year, but is positioning itself for a return to growth. The Company saw increasing
benefits from cross-selling offerings, particularly within its BOSS Revolution ecosystem. Corporate and divisional management were key
to all developments and the technology development team played essential roles in the execution of many operational enhancements and
new products and features.
Goals
and Performance
Goals
for Fiscal Year 2023
At
a meeting held on September 19, 2022, the Compensation Committee approved executive compensation goals for Fiscal 2023. The goals cover
Company-wide targets as well as goals for specific business units and other groups. The goals are detailed and, in many instances, consist
of specific operational achievements related to an identified effort or unit. The key goals set for Fiscal 2023 include:
| ● | Financial
goals as to consolidated revenue, profitability, EBITDA less capital expenditures above budgeted
levels, generating free cash flow and generating higher profits or cutting costs from prior
year; |
| ● | Additional
financial goals with respect to specific business units, including Boss Calling, IDT Global,
Mobile Top-Up, Boss Money, net2phone and NRS; |
| ● | Relaunch
wireless offering nationally and achieve certain customer levels; |
| ● | Launch
updated retailer portal across multiple product lines with cross-product functionality; |
| ● | Grow
net2phone revenue and seats (domestic and international), reduce variable costs and improve
operating efficiencies, enhance user experience, roll out additional features, and improve
uptime; |
| ● | Grow
NRS’s revenues, POS terminal network, NRS Pay and advertising and data sales, offer
additional services for merchants; |
| ● | Grow
Mobile Top-Up revenue and profitability, migrate all activity to new platform; and add promotional
tools; diversify revenues through specific new offerings and improve B2B penetration; |
| ● | Grow
Boss Money – retail and D2C, address identified technological issues; improve risk
management and consumer communication, increase efficiencies in back-end processing, grow
payer network and expand origination in Canada; |
| ● | Enhance
Boss Revolution Calling beyond per minute basis. |
At
a meeting held on September 20, 2023, management reported to the Compensation Committee on the Company’s performance relative to
the above goals as follows:
| ● | Financial
goals as to consolidated revenue, profitability, EBITDA less capital expenditures above budgeted
levels, generating free cash flow and generating higher profits or cutting costs from prior
year: |
| ● | The
Company either substantially (over 90%) met or exceeded each of the enumerated goals; |
| ● | Additional
financial goals with respect to specific business units, including Boss Calling, IDT Global,
Mobile Top-Up, Boss Money, net2phone and NRS: |
| ● | The
goals were substantially (over 90%) met or exceeded by the business units, other than NRS,
which achieved approximately 85% of the targeted amounts on a segment basis and between 68%
and 116% with regard to specific metrics; |
| ● | Relaunch
wireless offering nationally and achieve certain customer levels; |
| ● | The
offering was relaunched, but the customer levels achieved were only 42% of the target; |
| ● | Launch
updated retailer portal across multiple product lines with cross-product functionality; |
| ● | The
goal was accomplished; |
| ● | Grow
net2phone revenue and seats (domestic and international), reduce variable costs and improve
operating efficiencies, enhance user experience, roll out additional features, and improve
uptime; |
| ● | Revenue
and domestic goals were completely met, international growth was approximately 80% of target
and other goals were between 50% and 99% accomplished; |
| ● | Grow
NRS’s revenues, POS terminal network, NRS Pay and advertising and data sales, offer
additional services for merchants; |
| ● | Revenue
growth was 85% of targeted amounts, POS terminal and NRS Pay growth targets were exceeded,
ad data sales growth achieved 68% of targeted amount and most additional services were successfully
rolled out; |
| ● | Grow
Mobile Top-Up revenue and profitability, migrate all activity to new platform; and add promotional
tools; diversify revenues through specific new offerings and improve B2B penetration; |
| ● | Financial
targets were over 90% met, platform migration was 95% accomplished, promotional tool additions
were 90% accomplished, diversification of revenues goals were 65% met and B2B penetration
goals were met; |
| ● | Grow
Boss Money – retail and D2C, address identified technological issues; improve risk
management and consumer communication, increase efficiencies in back-end processing, grow
payer network and expand origination in Canada: |
| ● | Growth
targets for retail and D2C were exceeded, technological issued were addressed with 97% success,
other operational goals were over 90% achieved, payer network grew by 66% of the targeted
amounts and targets for expanding originations in Canada were not met; |
| ● | Enhance
Boss Revolution Calling beyond per minute basis; |
| ● | Enhancement
90% achieved. |
When
considering the key goals listed above as well as the other goals approved by the Compensation Committee, the Compensation Committee
concluded that the Company had substantially met or exceeded almost all of the key quantitative and qualitative goals, while certain
of the goals that were not met had been de-emphasized due to market or other conditions that arose during the fiscal year.
Bonus
Awards for Fiscal 2023 Performance
In
light of the performance relative to the enumerated goals and the overall financial performance of the Company, in particular the top
line and bottom line performance of the Company’s higher-margin growth businesses, particularly the move toward self-funding and
profitability at those units, while continuing to limit the impact of the sector-wide decline in the Company’s Traditional Communications
segment’s operations, management recommended performance bonuses for management that were approximately 8-9% higher than those
paid for services provided in Fiscal 2022. As a percentage of base salary, the amounts paid ranged from 18% to 117% of the executive
officer’s base salary. The following individual bonus levels were determined and paid in early Fiscal 2024 in respect of services
provided in Fiscal 2023:
| ● | Shmuel
Jonas was awarded a cash bonus of $580,425 an increase from the $532,500 paid for services
provided in Fiscal 2022. In Fiscal 2023, he continued to provide overall strategic guidance
and directed efforts in setting priorities and goals for each of the Company’s business
units and particularly in driving improvements in profitability of the Company’s growth
businesses, while maintaining a focus on the fiscal conservatism that has been a hallmark
of his tenure as CEO. He was instrumental in budgeting decisions and allocation of resources
and in setting priorities for development. He continued to drive cost management and re-allocation
of resources to enable the Company to maintain performance in extremely challenging competitive
and industry environments. |
| | |
| ● | Marcelo
Fischer was awarded cash a bonus of $269,775, an increase from the $247,500 paid for services
provided in Fiscal 2022. As CFO, Mr. Fischer is one of the principal executives responsible
for strategic planning and budgeting and executing on the strategic initiatives of the Company.
He plays an essential role in preparing models and projections for business units and managing
costs. Mr. Fischer plays a key role in investor relations and communications with market
professionals. In fiscal 2023, Mr.. Fischer was instrumental in the factors that led to the
Company’s financial performance that exceeded budgets. |
| ● | Bill
Pereira was awarded a bonus of $490,500, an increase from the $450,000 paid for services
provided in Fiscal 2022, of which $340,500 was paid in cash and the remaining $150,000 is
contingent to be paid via the award of Deferred Stock Units to Mr. Pereira upon the execution
of an amended and restated employment agreement between the Company and Mr. Periera (as of
November 1, 2023, such amended and restated employment agreement had not been executed and
such $150,000 of Deferred Stock Units had not been awarded). During Fiscal 2023, he oversaw
day-to-day operations for the Company’s business units, providing direction to divisional
management while addressing developments and internal and external factors that impacted
the Company’s ability to carry out its strategic initiatives. Mr. Pereira is an essential
link between the executive, operational and financial teams at the Company and operating
units. He helps to shape growth strategies and set priorities for the Company and to execute
on those directives. |
| | |
| ● | Menachem
Ash was paid a cash bonus of $185,300, an increase from the $170,000 paid for services provided
in Fiscal 2022. Mr. Ash is responsible for supporting existing operations and plays a significant
role in various strategic initiatives, as well as risk management and overseeing legal proceedings
and disputes. Mr. Ash is also actively involved in the legal aspects of dealing with third
parties, including commercial relationships and strategic partnerships. |
| | |
| ● | David
Wartell received a cash bonus of $150,000, equal to the bonus paid for services provided
in Fiscal 2022. As the Company’s Chief Technology Officer, Mr. Wartell is responsible
for managing all technology development at the Company. He is instrumental in planning development
goals and determining what can be accomplished, as well as allocation of resources. A significant
number of the goals set by the Compensation Committee related to new product development
and product enhancements, which have become key competitive factors and essential for the
Company’s operating units, particularly those that are technology focused, to distinguish
their offering on the marketplace. Mr. Wartell is also responsible for ensuring that the
technology group has the skill and resources necessary to meet the evolving and growing needs
of the business units. |
| | |
| ● | Howard
S. Jonas did not receive a cash bonus for services provided in Fiscal 2023 or Fiscal 2022.
Howard Jonas serves as the Company’s Chairman and provides strategic guidance to the
Company and is actively involved in all major decisions and in the implementation of key
initiatives for the Company. |
Base
Salaries
The
Company paid 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. 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 Named Executive
Officers from the Fiscal 2023 levels.
Pursuant
to the Fifth Amended and Restated Employment Agreement (the “Fifth Amended H. Jonas Agreement”), effective January 1, 2021,
between the Company and Howard Jonas that is discussed in more detail below, Howard Jonas receives a cash base salary of $250,000 per
annum.
Shmuel
Jonas receives a base salary of $495,000 per annum.
Marcelo
Fischer receives a base salary of $450,000 per annum.
Under
the agreement described below, Bill Pereira receives a base salary of $500,000 per annum.
Mr.
Ash receives a base salary of $400,000 per annum.
Mr.
Wartell receives a base salary of $300,000 per annum.
Equity
Grants
Certain
of the Company’s Executive Officers participated in the broad-based grant of deferred stock units (DSUs) under the Company’s
2022 Equity Growth Program which is described in the Company’s financial statements included in its Form 10-K. Grants under that
program serve to create incentives for outstanding performance that drives increases in the stock price for the Company’s Class
B common stock, and create opportunities to enhance the value to be received by retaining risk with respect to grants.
Messrs.
Fischer and Pereira each received a grant of 30,000 DSUs under the Growth Program with a grant date fair value of $816,000.
Mr.
Ash received (a) aggregate grants of 10,000 DSUs under the Growth Program with a total grant date value of $272,000, and (b) a grant
of 16,000 shares of restricted Class B Common Stock that will only vest if the closing price for the Class B Common Stock on the NYSE
is over $50 for 10 consecutive trading days prior to February 25, 2025. The restricted stock had a grant date value of $298,400.
Mr.
Wartell received (a) aggregate grants of 10,000 DSUs under the Growth Program with a total grant date value of $272,000, and (b) a grant
of 8,000 shares of restricted Class B Common Stock that will only vest if the closing price for the Class B Common Stock on the NYSE
is over $50 for 10 consecutive trading days prior to February 25, 2025. The restricted stock had a grant date value of $149,200.
As
set forth below, bonuses for fiscal 2022 performance for Shmuel Jonas, Marcelo Fischer and Bill Pereira were paid one-half in cash and
one half through the receipt of 10,654, 8,961 and 4,928 shares of Class B Common Stock, respectively.
Goals
for Fiscal Year 2024
At
a meeting held on September 20, 2023, the Compensation Committee approved executive compensation goals for Fiscal 2024. The goals cover
Company-wide targets as well as goals for specific business units and other groups. The goals are detailed and, in many instances, consist
of specific operational achievements related to an identified effort or unit. The key goals set for Fiscal 2024 include:
| ● | Financial
goals as to consolidated revenue, profitability, EBITDA less capital expenditures above budgeted
levels, generating free cash flow and cutting costs from prior year; |
| ● | Additional
financial goals (including as to revenue and profitability) with respect to specific business
units, including Boss PINLESS, IDT Global, Mobile Top-Up, Boss Money, net2phone and NRS; |
| ● | Grow
the NRS POS network and NRS Pay accounts to specified targets, and achieve targeted revenue
growth for advertising and data sales; |
| ● | Launch
a tablet-based POS terminal; |
| ● | Improve
security measures and enhance service offerings, including at the loyalty program; |
| ● | Grow
seats domestically and internationally; |
| ● | Improve
operational stability and uptime statistics, including adding redundancy; |
| ● | Add
premium plans with non-standard feature sets; |
| ● | Build
out AI product and development team; |
| ● | Complete
mobile app overhaul unifying voice, video, messaging, contact and calendar; |
| ● | Operate
at breakeven or better through top line growth and efficiencies; |
| ● | Establish
the US as a destination corridor; |
| ● | Expand
delivery methods and retail network, while reducing payout costs and banking fees |
| ● | Improve
back office efficiencies and eliminate redundant infrastructure; |
| ● | Secure
additional international money remittance licenses; |
| ● | Explore
strategies to migrate customers to D2C channel; |
| ● | Expand
international geographic scope of Top-Up and gift offerings; |
| ● | Continue
buildout of the Zendit platform; |
| ● | Launch
or further develop earlier stage businesses. |
Compensation
Decisions Made in Fiscal 2022
Company
Performance
In
Fiscal 2022, the Company delivered the highest level of Income from Operations in seven years and the highest level of Adjusted EBITDA
in its history. NRS, net2phone and Boss Money all reported significant increases in revenue and contribution to the bottom line, substantially
offsetting the significant decline in revenues from IDT Global and other portions of the Traditional Communications segment and more
than replacing the profitability impact from the accelerating decline in minute-based telecom revenues that have represented the bulk
of the Company’s revenue for many years. The performance was made possible through bold strategic actions with regard to the growth
businesses and fiscal discipline. Corporate and divisional management were key to all developments and the technology development team
played essential roles in the execution of many operational enhancements and new products and features.
Goals
and Performance
At
a meeting held on September 13, 2021, the Compensation Committee approved the goals for Fiscal 2022. As noted above, the goals are detailed
and, in many instances, consist of specific operational achievements related to an identified effort or unit. The key goals set for Fiscal
2022 include:
| ● | Financial
goals as to revenue, profitability and EBITDA above budgeted levels and generating free cash
flow; |
| ● | Additional
financial goals with respect to specific business units, including Boss Calling, IDT Global,
Mobile Top-Up, Boss Money, net2phone and NRS; |
| ● | Grow
net2phone revenue and seats, and improve functionality while increasing operating efficiency
to approach profitability. |
| ● | Prepare
for a tax-free spin-off of net2phone; |
| ● | Grow
NRS’s revenues, POS terminal network and ancillary offerings, including merchant services,
advertising and data sales, add additional features for retailers and improve back end functionality
and security. |
| ● | Grow
Mobile Top-Up through multiple efforts and measured by several metrics, including greater
integration, technological enhancements and internal IT efficiencies; |
| ● | Upgrade
multiple apps and web-based customer interfaces; |
| ● | Grow
Boss Money through enhanced offerings, growth in payor network, expanded origination footprint;
improved customer interaction and success rate with reduced cancellation, and improved bottom
line through operating efficiencies and migration to upgraded platforms; |
| ● | Launch
a wireless offering nationally and achieving certain customer levels; |
| ● | Add
features to Boss Revolution Calling; |
| ● | Add
carrier relationships at IDT Global and improve regulatory compliance matters. |
At
a meeting held on September 19, 2022, management reported to the Compensation Committee on the Company’s performance relative to
the above goals as follows:
| ● | Financial
goals as to revenue, profitability and EBITDA less capital expenditures above budgeted levels
and generating free cash flow – |
| ● | The
Company met or exceeded goals as to consolidated profitability, EBITDA less capital expenditures
and generating fee cash flow and missed the revenue target (without compromising the overall
level of profitability); |
| ● | Additional
financial goals with respect to specific business units, including Boss Revolution Calling,
IDT Global, Mobile Top-Up, Boss Money, net2phone and NRS – |
| ● | All
of the growth businesses met or exceeded (in certain instances, by wide margins) their financial
targets, Boss Revolution Calling also met its revenue targets, while IDT Global missed its
revenue target. |
| ● | Grow
net2phone revenue and seats, and improve functionality while increasing operating efficiency
to approach profitability – |
| ● | net2phone
exceeded its revenue growth target and over 80% of its goal for seat growth, while successfully
implementing many of the planned enhancements and improving operating efficiencies; |
| ● | Prepare
for a tax-free spin-off of net2phone – |
| ● | The
planned spin-off was suspended due to market conditions; |
| ● | Grow
NRS’s revenues, POS terminal network and ancillary offerings, including merchant services,
advertising and data sales, add additional features for retailers and improve back end functionality
and security – |
| ● | NRS’
revenues and number of active POS terminals exceeded targets as did sales of merchant services
and advertising and data. Most planned additional features as well as improvements to back
end functions and security were successfully implemented; |
| ● | Grow
Mobile Top-Up through multiple efforts and measured by several metrics, including greater
integration, technological enhancements and internal IT efficiencies. Integrate acquisition
of Sochitel - |
| ● | Most
key metrics for Mobile Top-Up exceeded targets and most planned enhancements were implemented.
Goals for Sochitel integration were met. |
| ● | Upgrade
multiple apps and web-based customer interfaces – |
| ● | The
technology group generated many enhancements and new features adapting to changing priorities
from the business units, though some specific goals were not met; |
| ● | Grow
Boss Money through enhanced offerings, growth in payor network, expanded origination footprint;
improved customer interaction and success rate with reduced cancellation, and improved bottom
line through operating efficiencies and migration to upgraded platforms – |
| ● | Most
performance metrics, including numbers of transactions, revenue, and expansion of payor network,
exceeded targets. Expansion of origination locations was partially completed. Customer interaction
was significantly improved with specific goals achieved, though some were not completed.
Plans for operating efficiencies and migration to platforms were implemented. |
| ● | Launch
a wireless offering nationally and achieving certain customer levels – |
| ● | The
wireless offering did not meet its planned goals due to changing priorities from management; |
| ● | Add
features to Boss Revolution Calling – |
| ● | Certain
of the planned features were added while others were cancelled or delayed due to changing
priorities. |
| ● | Add
carrier relationships at IDT Global and improve regulatory compliance matters – |
| ● | New
relationship targets were partially met and regulatory compliance enhancements were successfully
implemented. |
When
considering the key goals listed above as well as the other goals approved by the Compensation Committee, the Compensation Committee
concluded that the Company had met or exceeded almost all of the key quantitative and qualitative goals and, certain objectives were
modified due to changing circumstances and priorities. In some instances, missed targets were replaced with other initiatives deemed
a higher priority during the course of the fiscal year.
Bonus
Awards for Fiscal 2022 Performance
In
light of the performance relative to the enumerated goals and the overall financial performance of the Company, in particular the performance
of the Company’s higher-margin growth businesses and the success in replacing the gross profit previously contributed by the Company’s
Traditional Communications segment’s BOSS Revolution Calling and IDT Global units, management recommended performance bonuses for
management that were substantially in line with those paid for services provided in Fiscal 2021. The following individual bonus levels
were determined and paid in early Fiscal 2023 in respect of services provided in Fiscal 2022:
| ● | Shmuel
Jonas was awarded a bonus of $532,500 (paid one-half in cash and one-half in shares of Class
B Common Stock), equal to the bonus paid for services provided in Fiscal 2021. In Fiscal
2022, he continued to provide overall strategic guidance and directed efforts to balance
the investment in growth of certain business units with the fiscal conservatism that has
been a hallmark of his tenure as CEO. He was instrumental in budgeting decisions and allocation
of resources and in setting priorities for development. He continued to drive cost management
and re-allocation of resources to enable the Company to maintain performance in extremely
challenging competitive and industry environments. |
| | |
| ● | Marcelo
Fischer was awarded a bonus of $247,500 (paid one-half in cash and one-half in shares of
Class B Common Stock), equal to the bonus paid for services provided in Fiscal 2021. As CFO,
Mr. Fischer is one of the principal executives responsible for strategic planning, budgeting
and ensuring that the Company has the necessary resources to execute on management’s
and the board’s direction. He assists in projecting the needs of the business in light
of market conditions and the priorities established for development. Mr. Fischer spearheaded
efforts in securing external capital to accelerate growth of NRS as well as the plans for
the net2phone spin-off that were later suspended. Mr. Fischer was instrumental in the factors
that led to the Company’s financial performance that exceeded budgets. |
| ● | Bill
Pereira was awarded a bonus of $450,000 (to be paid one-half in cash and one-half in shares
of Class B Common Stock), equal to the bonus paid for services provided in Fiscal 2021. During
Fiscal 2022, he oversaw day-to-day operations for the Company’s business units, providing
direction to divisional management. Mr. Pereira was integral to corporate development activities
and shaping growth strategies for the Company’s newer business units. He is a key decision
maker in setting priorities for development and allocation of resources and provides strategic
guidance in balancing current performance and investment in future growth. |
| | |
| ● | Menachem
Ash was paid a cash bonus of $170,000 compared to $95,000 paid for services provided in Fiscal
2021 when he was serving both the Company and Rafael Holdings. During Fiscal 2021, Mr. Ash
dedicated approximately half of his time to the Company’s former subsidiary, Rafael
Holdings, Inc., that was spun off to the Company’s stockholders in 2018. Accordingly,
a portion of his base salary and bonus compensation was paid by Rafael in Fiscal 2021. In
Fiscal 2022, he returned to IDT on a full-time basis and all of his bonus compensation was
paid by the Company. Mr. Ash is responsible for supporting existing operations and plays
a significant role in various strategic initiatives. He successfully navigated the resolution
of several legal and regulatory matters. Mr. Ash is also actively involved in the legal aspects
of dealing with third parties, including commercial relationships, strategic partnerships
and disputes. |
| | |
| ● | David
Wartell received a cash bonus of $150,000, equal to the bonus paid for services provided
in Fiscal 2021. As the Company’s Chief Technology Officer, Mr. Wartell is responsible
for managing all technology development at the Company. He is instrumental in planning development
goals and determining what can be accomplished, as well as allocation of resources. In light
of the increased role that new product and product enhancements plays in the Company’s
technologically-focused growth businesses, the value added by the group headed by Mr. Wartell
has greatly increased. He is also responsible for ensuring that the technology group has
the skill and resources necessary to meet the evolving and growing needs of the business
units. |
| | |
| ● | Howard
S. Jonas did not receive a cash bonus for services provided in Fiscal 2022. Howard Jonas
serves as the Company’s Chairman and provides strategic guidance to the Company and
is actively involved in all major decisions and in the implementation of key initiatives
for the Company. |
Base
Salaries
The
Company paid 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. Subject to those written agreements, the base salaries are set by the Compensation
Committee on an annual basis, based on presentations made by management. Other than the Company paying all of Mr. Ash’s base compensation
for the period when he worked full-time for the Company, no changes were made to the base compensation of any Named Executive Officers
from the Fiscal 2022 levels other than a $5,000 increase in Mr. Fischer’s base compensation.
Pursuant
to the Fifth Amended and Restated Employment Agreement (the “Fifth Amended H. Jonas Agreement”), effective January 1, 2021,
between the Company and Howard Jonas that is discussed in more detail below, Howard Jonas receives a cash base salary of $250,000 per
annum.
Shmuel
Jonas receives a base salary of $495,000 per annum.
Marcelo
Fischer receives a base salary of $450,000 per annum.
Under
the agreement described below, Bill Pereira receives a base salary of $500,000 per annum.
Mr.
Ash receives a base salary of $400,000 per annum.
Mr.
Wartell receives a base salary of $300,000 per annum.
Equity
Grants
There
we no equity awards made to any of the Named Executive Officers in Fiscal 2022.
Employment
Agreement
Pursuant
to his Employment Agreement, Mr. Pereira is paid a base salary of $500,000 per year, and has a target annual bonus of $300,000, based
on performance and as approved by the Compensation Committee. Mr. Pereira is also entitled to participate in any of the Company’s
broad-based equity grants to its employees. Should Mr. Pereira’s employment be terminated without Cause or should he resign for
Good Reason (as such terms are defined in the agreement), the Company will be obligated to pay him severance of $800,000. The agreement
continues until it is terminated by either the Company or Mr. Pereira.
Compensation
Decisions Made in Fiscal 2021
Company
Performance
Fiscal
2021 was impacted by the COVID-19 pandemic, which had a negative impact on the IDT Global business unit and on other smaller operations
as well. NRS, net2phone and Mobile Top-Up generated substantial increases in revenues leading to Company-wide revenue growth as well
as major improvements in operating and net income. Boss Money’s growth was more modest due to the ending of transitory foreign
exchange market conditions that had boosted the prior year’s results. The results supported the Company’s decisions to invest
in its growth-oriented businesses to replace revenue and profitability from the Traditional Communications segment that continues to
face long-term sectoral challenges.
Goals
and Performance
At
a meeting held on September 13, 2021, management reported to the Compensation Committee on the Company’s performance relative to
goals for executive compensation that were set by the Compensation Committee for Fiscal 2021. The Compensation Committee concluded that
the Company had met or exceeded (in certain instances by a very large margin) all of the financial goals that were set and that the Company
and its operating units had met or substantially met almost all of the operational goals with certain of the missed targets due to changing
priorities or decisions to shift resources to projects or efforts that were deemed to be more appropriate under circumstances during
course of the fiscal year.
Bonus
Awards for Fiscal 2021 Performance; Base Compensation for Fiscal 2022
In
light of the performance relative to the enumerated goals and the overall financial performance of the Company, in particular the growth
of NRS, net2phone and Mobile Top-Up and the resilience of portions of the Traditional Communications segment despite the challenges facing
that industry, management recommended and the Compensation Committee approved increases in performance bonuses from Fiscal 2020 for Shmuel
Jonas, Bill Pereira and Marcelo Fischer. Menachem Ash’s bonus was below the bonus paid to him in Fiscal 2020 as during the period
he dedicated a portion of his time to Rafael Holdings, and David Wartell’s bonus was equal to his Fiscal 2020 bonus. Base salaries
for all named executive officers for Fiscal 2022 were set at the same levels as for Fiscal 2021.
Equity
Grants
There
were no grants of Company equity made to any of the Named Executive Officers in Fiscal 2021. In Fiscal 2021, in consideration of the
extraordinary contributions made and expected to be made in furtherance of the business of net2phone, Howard Jonas and Shmuel Jonas each
received a grant of 50 shares of Class B common stock of net2phone (each grant representing 5% of the outstanding equity of net2phone),
subject to vesting conditions linked to subscription revenue and valuation of net2phone by October 2023 (which would be deemed satisfied
on certain sales of net2phone prior to that date), and were entitled to certain limited anti-dilution protection. The grant date value
of each of the awards was determined to be $117,000.
EXECUTIVE
COMPENSATION TABLES
Summary
Compensation Table
The
table below summarizes the total compensation paid or awarded for performance during Fiscal 2023, Fiscal 2022 and Fiscal 2021 to each
of the Chief Executive Officer, Chief Financial Officer and the three other highest paid executive officers of the Company during Fiscal
2023, and Howard S. Jonas, the Chairman and the Chairman of the Board (the “Named Executive Officers”).
Name and Principal Position | |
Fiscal Year | | |
Salary ($) | | |
Bonus ($) | | |
Stock Awards ($)(1) | | |
Option Awards ($)(1) | | |
All Other Compensation ($) | | |
Total ($) | |
Shmuel Jonas | |
| 2023 | | |
| 495,000 | | |
| 580,425 | | |
| — | | |
| — | | |
| — | | |
| 1,075,425 | |
Chief Executive Officer | |
| 2022 | | |
| 495,000 | | |
| 266,250 | | |
| 266,250 | (2) | |
| — | | |
| — | | |
| 1,027,500 | |
| |
| 2021 | | |
| 495,000 | | |
| 532,500 | | |
| 117,000 | (3) | |
| — | | |
| — | | |
| 1,144,500 | |
Bill Pereira | |
| 2023 | | |
| 500,000 | | |
| 340,500 | | |
| 816,000 | (4) | |
| — | | |
| 2,000 | (5) | |
| 1,658,500 | |
President and Chief Operating Officer, | |
| 2022 | | |
| 500,000 | | |
| 225,000 | | |
| 225,011 | (6) | |
| — | | |
| 2,000 | (5) | |
| 952,011 | |
Ex-Officio Board Member | |
| 2021 | | |
| 500,000 | | |
| 450,000 | | |
| — | | |
| — | | |
| 2,000 | (5) | |
| 952,000 | |
Marcelo Fischer | |
| 2023 | | |
| 450,000 | | |
| 269,775 | | |
| 816,000 | (7) | |
| — | | |
| 2,000 | (5) | |
| 1,537,755 | |
Chief Financial Officer | |
| 2022 | | |
| 445,000 | | |
| 123,750 | | |
| 123,742 | (8) | |
| — | | |
| 2,000 | (5) | |
| 694,492 | |
| |
| 2021 | | |
| 445,000 | | |
| 247,500 | | |
| — | | |
| — | | |
| 2,000 | (5) | |
| 694,500 | |
David Wartell(9) | |
| 2023 | | |
| 300,000 | | |
| 150,000 | | |
| 421,200 | (10) | |
| — | | |
| — | | |
| 871,200 | |
Chief Technology Officer | |
| 2022 | | |
| 300,000 | | |
| 150,000 | | |
| — | | |
| — | | |
| — | | |
| 450,000 | |
Menachem Ash(9) | |
| 2023 | | |
| 400,000 | | |
| 185,300 | | |
| 570,400 | (11) | |
| — | | |
| 2,000 | (5) | |
| 1,157,700 | |
Executive Vice President of Strategy and Legal Affairs | |
| 2022 | | |
| 400,000 | | |
| 170,000 | | |
| — | | |
| — | | |
| 2,000 | (5) | |
| 572,000 | |
Howard S. Jonas | |
| 2023 | | |
| 250,000 | | |
| — | | |
| — | | |
| — | | |
| 2,000 | (5) | |
| 252,000 | |
Chairman and | |
| 2022 | | |
| 250,000 | | |
| — | | |
| — | | |
| — | | |
| 2,000 | (5) | |
| 252,000 | |
Chairman of the Board(12) | |
| 2021 | | |
| 250,000 | | |
| — | | |
| 117,000 | (3) | |
| — | | |
| 2,000 | (5) | |
| 369,000 | |
(1) | The
amounts shown in these columns reflect the aggregate grant date fair value of restricted
stock awards, deferred stock units and option awards computed in accordance with FASB ASC
Topic 718. In valuing such awards, the Company made certain assumptions. For a discussion
of those assumptions, please see Note 21 – Stock-Based Compensation to our Consolidated
Financial Statements included in our Annual Report on Form 10-K for the Fiscal Year ended
July 31, 2023. Holders of restricted shares of Class B Common Stock are entitled to receive
any dividends paid on Class B Common Stock. Stock Awards include the value of stock awards
made in a subsequent fiscal year for services provided during the fiscal year in question. |
| |
(2) | Consists
of the value of a grant on October 7, 2022 of 10,654 restricted shares of Class B Common
Stock for services performed in Fiscal 2022 that vested in full upon grant. |
| |
(3) | Consists
of the value of a grant on December 31, 2020 of 50 restricted shares of Class B common stock
of net2phone 2.0, Inc., a wholly owned subsidiary of the Company (“net2phone 2.0”),
which represents 5% of the outstanding common stock of net2phone 2.0 that vests if: (a) for
any fiscal quarter of net2phone 2.0 between November 1, 2020 and October 31, 2023, net2phone
2.0 records subscription revenue that is at least $18 million, and (b) as of October 31,
2023, the valuation of net2phone 2.0 is $100 million or more. The restricted shares will
also vest in the event, prior to October 31, 2023, net2phone 2.0 or its assets are sold at
an equity valuation and on a cash-free basis of $100 million or more, regardless of whether
the revenue threshold was satisfied prior thereto. The restricted shares entitle each grantee
to proceeds only upon a sale, spin-off, initial public offering, or other monetization of
net2phone 2.0 and have protection from dilution for the first $15 million invested in net2phone
2.0 following the grant. |
| |
(4) | Consists
of the value of a grant on December 5, 2022 of 30,000 Deferred Stock Units (each a “DSU”).
Each DSU is the right to receive between one half of a share and two shares of Class B Common
Stock. Vesting was originally scheduled in equal one-third installments in May 2023, February
2024 and February 2025. The number of shares of Class B Common Stock that will be issued
for each DSU depends on the market price for the Class B Common Stock as of the relevant
vesting date. One half of a share will be issued for each DSU if the market price on the
vesting date is less than $12.705 (50% of the grant date value of a share of Class B Common
Stock) and two shares will be issued for each DSU if the market price on the vesting date
is $50.82 (200% of the grant date value) or greater, with a proportionate amount to vest
based on thresholds of 62.5%, 75%, 87.5%, 100%, 112.5%, 125%, 137.5%, 150%, 162.5% and 175%
of the grant date value. As of the grant date and as of October 20, 2023, upon vesting in
full, Mr. Pereira was entitled to receive between 15,000 and 60,000 shares of Class B Common
Stock from the 30,000 DSUs held by him. Mr. Pereira elected to defer the vesting in May 2023,
and the related issuance of shares of Class B Common Stock, of one third of the 30,000 DSUs
to the next vesting date in February 2024. |
| |
(5) | Represents
the value of shares of Class B Common Stock given as a matching contribution to the IDT Corporation
401(k) Plan. |
| |
(6) | Consists
of the value of a grant on October 7, 2022 of 8,961 restricted shares of Class B Common Stock
for services performed in Fiscal 2022 that vested in full upon grant. |
| |
(7) | Consists
of the value of a grant on December 5, 2022 of 30,000 DSUs. Each DSU is the right to receive
between one half of a share and two shares of Class B Common Stock. Vesting was originally
scheduled in equal one-third installments in May 2023, February 2024 and February 2025. The
number of shares of Class B Common Stock that will be issued for each DSU depends on the
market price for the Class B Common Stock as of the relevant vesting date. One half of a
share will be issued for each DSU if the market price on the vesting date is less than $12.705
(50% of the grant date value of a share of Class B Common Stock) and two shares will be issued
for each DSU if the market price on the vesting date is $50.82 (200% of the grant date value)
or greater, with a proportionate amount to vest based on thresholds of 62.5%, 75%, 87.5%,
100%, 112.5%, 125%, 137.5%, 150%, 162.5% and 175% of the grant date value. As of the grant
date and as of October 20, 2023, upon vesting in full, Mr. Fischer was entitled to receive
between 15,000 and 60,000 shares of Class B Common Stock from the 30,000 DSUs held by him.
Mr. Fischer elected to defer the vesting in May 2023, and the related issuance of shares
of Class B Common Stock, of one third of the 30,000 DSUs to the next vesting date in February
2024. |
(8) | Consists
of the value of a grant on October 7, 2022 of 4,928 restricted shares of Class B Common Stock
for services performed in Fiscal 2022 that vested in full upon grant. |
| |
(9) | Neither
David Wartell nor Menachem Ash was a Named Executive Officer in Fiscal 2021. |
| |
(10) | Consists
of: (a) the value of a grant on December 5, 2022 of 7,000 DSUs. Each DSU is the right to
receive between one half of a share and two shares of Class B Common Stock. Vesting was originally
scheduled in approximately equal one-third installments in May 2023, February 2024 and February
2025. The number of shares of Class B Common Stock that will be issued for each DSU depends
on the market price for the Class B Common Stock as of the relevant vesting date. One half
of a share will be issued for each DSU if the market price on the vesting date is less than
$12.705 (50% of the grant date value of a share of Class B Common Stock) and two shares will
be issued for each DSU if the market price on the vesting date is $50.82 (200% of the grant
date value) or greater, with a proportionate amount to vest based on thresholds of 62.5%,
75%, 87.5%, 100%, 112.5%, 125%, 137.5%, 150%, 162.5% and 175% of the grant date value. As
of the grant date, upon vesting in full, Mr. Wartell was entitled to receive between 3,500
and 14,000 shares of Class B Common Stock from the 7,000 DSUs held by him. As of October
20, 2023, upon vesting in full, Mr. Wartell was entitled to receive between 2,333 and 9,332
shares of Class B Common Stock from the 4,666 DSUs held by him as Mr. Wartell elected vest
2,334 DSUs in May 2023 and receive 2,918 shares of Class B Common Stock; (b) the value of
a grant on May 16, 2023 of 3,000 DSUs. Each DSU is the right to receive between one half
of a share and two shares of Class B Common Stock. Vesting is two thirds in February 2024
and one third in February 2025. The number of shares of Class B Common Stock that will be
issued for each DSU depends on the market price for the Class B Common Stock as of the relevant
vesting date. One half of a share will be issued for each DSU if the market price on the
vesting date is less than $12.705 (50% of the grant date value of a share of Class B Common
Stock) and two shares will be issued for each DSU if the market price on the vesting date
is $50.82 (200% of the grant date value) or greater, with a proportionate amount to vest
based on thresholds of 62.5%, 75%, 87.5%, 100%, 112.5%, 125%, 137.5%, 150%, 162.5% and 175%
of the grant date value. As of the grant date and as of October 20, 2023, upon vesting in
full, Mr. Wartell was entitled to receive between 1,500 and 6,000 shares of Class B Common
Stock from the 3,000 DSUs held by him; and (c) the value of a grant on May 16, 2023 of 8,000
restricted shares of Class B Common Stock that vest,
and vest in full, only if the Class B Common Stock closes
above $50 per share for 10 consecutive trading days prior to February 25, 2025. |
| |
(11) | Consists
of: (a) the value of a grant on December 5, 2022 of 7,000 DSUs. Each DSU is the right to
receive between one half of a share and two shares of Class B Common Stock. Vesting was originally
scheduled in approximately equal one-third installments in May 2023, February 2024 and February
2025. The number of shares of Class B Common Stock that will be issued for each DSU depends
on the market price for the Class B Common Stock as of the relevant vesting date. One half
of a share will be issued for each DSU if the market price on the vesting date is less than
$12.705 (50% of the grant date value of a share of Class B Common Stock) and two shares will
be issued for each DSU if the market price on the vesting date is $50.82 (200% of the grant
date value) or greater, with a proportionate amount to vest based on thresholds of 62.5%,
75%, 87.5%, 100%, 112.5%, 125%, 137.5%, 150%, 162.5% and 175% of the grant date value. As
of the grant date, upon vesting in full, Mr. Ash was entitled to receive between 3,500 and
14,000 shares of Class B Common Stock from the 7,000 DSUs held by him. As of October 20,
2023, upon vesting in full, Mr. Ash was entitled to receive between 2,333 and 9,332 shares
of Class B Common Stock from the 4,666 DSUs held by him as Mr. Ash elected vest 2,334 DSUs
in May 2023 and receive 2,918 shares of Class B Common Stock; (b) the value of a grant on
March 2, 2023 of 3,000 DSUs. Each DSU is the right to receive between one half of a share
and two shares of Class B Common Stock. Vesting was originally scheduled in approximately
equal one-third installments in May 2023, February 2024 and February 2025. The number of
shares of Class B Common Stock that will be issued for each DSU depends on the market price
for the Class B Common Stock as of the relevant vesting date. One half of a share will be
issued for each DSU if the market price on the vesting date is less than $12.705 (50% of
the grant date value of a share of Class B Common Stock) and two shares will be issued for
each DSU if the market price on the vesting date is $50.82 (200% of the grant date value)
or greater, with a proportionate amount to vest based on thresholds of 62.5%, 75%, 87.5%,
100%, 112.5%, 125%, 137.5%, 150%, 162.5% and 175% of the grant date value. As of the grant
date, upon vesting in full, Mr. Ash was entitled to receive between 1,500 and 6,000 shares
of Class B Common Stock from the 3,000 DSUs held by him. As of October 20, 2023, upon vesting
in full, Mr. Ash was entitled to receive between 1,000 and 4,000 shares of Class B Common
Stock from the 2,000 DSUs held by him as Mr. Ash elected vest 1,000 DSUs in May 2023 and
receive 1,250 shares of Class B Common Stock; and (c) the value of a grant on March 2, 2023
of 16,000 restricted shares of Class B Common Stock that vest,
and vest in full, only if the Class B Common Stock closes
above $50 per share for 10 consecutive trading days prior to February 25, 2025. |
(12) | On
September 19, 2022, the Board of Directors of the Company adopted the Company’s Eighth
Amended and Restated By-Laws, effective as of September 19, 2022, with the effect of authorizing
the Company to appoint, at the discretion of the Board, a Chairman, an officer position.
Howard S. Jonas was elected Chairman, an executive officer position, on September 19, 2022.
On April 6, 2020, the Board of Directors adopted the Company’s Sixth Amended and Restated
By-Laws, effective as of April 6, 2020, with the effect of changing the position of Chairman
of the Board from an officer position to a non-executive Board position. Between April 6,
2020 and September 19, 2022, Howard S. Jonas was not an officer of the Company. |
Employment
Agreements
Shmuel
Jonas, David Wartell and Menachem Ash: None of Shmuel Jonas, David Wartell and Menachem Ash is a party to an employment agreement
with the Company or any of its subsidiaries.
Bill
Pereira: On January 12, 2015, Mr. Pereira and IDT Telecom entered into an Amended and Restated Employment Agreement (the “Revised
Pereira Agreement”), pursuant to which Mr. Pereira received an annual cash base salary of $500,000 from January 1, 2015 to December
31, 2017 (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 January 12, 2015, a grant of
25,000 restricted shares of Class B Common Stock, which was granted pursuant to the 2015 Plan, and vested in three equal annual installments
commencing on January 5, 2016. 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 sixty days of the end of the term that the agreement would not be extended.
On
December 5, 2017, the Company entered into an agreement with Mr. Pereira (the “Second Pereira Agreement”). Under the Second
Pereira Agreement, effective December 31, 2017, the Revised Pereira Agreement was terminated, and changed Mr. Pereira’s role from
Chief Executive Officer of IDT Telecom to President and Chief Operating Officer of the Company. Mr. Pereira is paid a base salary of
$500,000 per year, and has a target annual bonus of $300,000, based on performance and as approved by the Chief Executive Officer and
the Compensation Committee. Mr. Pereira is also entitled to participate in any of the Company’s broad-based equity grants to its
employees. Should Mr. Pereira’s employment be terminated without Cause or should he resign for Good Reason (as such terms are defined
in the Second Pereira Agreement), the Company will be obligated to pay him severance of $800,000. The Second Pereira Agreement continues
until it is terminated by either the Company or Mr. Pereira.
Marcelo
Fischer: On November 13, 2008, Marcelo 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.”
Howard
S. Jonas: On October 28, 2011, the Company and Howard S. 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 S. 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 shares of 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
November 29, 2013, the Company announced that Howard S. 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 S. 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.
Pursuant to the Third Revised Jonas Agreement, Howard S. Jonas (i) served as Chairman of the Board of Directors of the Company, (ii)
received an annual cash base salary of $250,000 and (iii) received a grant of 63,320 restricted shares of Class B Common Stock that vested
in equal amounts on January 5th of 2014, 2015 and 2016.
On
December 13, 2016, the Company and Howard S. Jonas entered into the Fourth Amended and Restated Employment Agreement (the “Fourth
Revised Jonas Agreement”) with an initial term from January 1, 2017 to December 31, 2019, which was automatically extended to December
31, 2020 in accordance with its terms. Pursuant to the Fourth Revised Jonas Agreement, Howard S. Jonas (i) served as Chairman of the
Board of Directors of the Company, (ii) received an annual cash base salary of $250,000 and (iii) received a grant of 69,624 restricted
shares of Class B Common Stock that vested in equal amounts on January 5th of each of 2017, 2018 and 2019.
Effective
January 1, 2021, the Company and Howard S. Jonas entered
into the Fifth Amended and Restated Employment Agreement (the “Fifth Revised Jonas
Agreement”) with an initial term from January 1, 2021 to December 31, 2021, which
automatically extends for additional one-year periods unless prior notice is given by either party,
which has not occurred. Pursuant to the Fifth Revised Jonas Agreement, Howard S. Jonas receives
(i) an annual cash base salary of $250,000 for his role as senior advisor to the Chief Executive Officer and, if so designated by the
Board of Directors, Chairman of the Board of the Company and (ii) discretionary bonuses approved by the Chief Executive Officer or the
Compensation Committee of the Company’s Board of Directors.
In
addition, including pursuant to their employment agreements, executives are eligible to receive bonuses based upon performance, including
the specific financial and other goals set by the Compensation Committee of the Board of Directors as described above in the Compensation
Discussion and Analysis.
Grants
of Plan-Based Awards
The
following table sets forth information concerning the number of shares of Class B Common Stock underlying stock options and shares of
restricted Class B Common Stock granted to the Named Executive Officers in Fiscal 2023 as Plan-based awards. All of the following were
issued pursuant to the Company’s 2015 Stock Option and Incentive Plan, as amended and restated. There are no estimated future payouts
in connection with such awards.
Name | |
Type of Award | |
Grant Date | | |
All Other Stock
Awards;
Number of
Shares of Stock
or Units (#) | | |
All Other Option
Awards; Number
of Securities
Underlying Options (#) | | |
Exercise or
Base Price
of Option
Awards ($/Sh) | | |
Grant Date Fair
Value of Stock
and Option
Awards ($)(1) | |
Shmuel Jonas | |
Restricted Stock | |
| 10/07/2022 | | |
| 10,654 | (2) | |
| — | | |
| — | | |
$ | 266,250 | |
Bill Pereira | |
Restricted Stock | |
| 10/07/2022 | | |
| 8,961 | (2) | |
| — | | |
| — | | |
$ | 225,011 | |
| |
Deferred Stock Units | |
| 12/05/2022 | | |
| 30,000 | (3) | |
| — | | |
| — | | |
$ | 816,000 | |
Marcelo Fischer | |
Restricted Stock | |
| 10/07/2022 | | |
| 4,928 | (2) | |
| — | | |
| — | | |
$ | 123,742 | |
| |
Deferred Stock Units | |
| 12/05/2022 | | |
| 30,000 | (3) | |
| — | | |
| — | | |
$ | 816,000 | |
David Wartell | |
Deferred Stock Units | |
| 12/05/2022 | | |
| 7,000 | (4) | |
| — | | |
| — | | |
$ | 190,400 | |
| |
Restricted Stock | |
| 05/16/2023 | | |
| 8,000 | (5) | |
| — | | |
| — | | |
$ | 149,200 | |
| |
Deferred Stock Units | |
| 05/16/2023 | | |
| 3,000 | (6) | |
| — | | |
| — | | |
$ | 81,600 | |
Menachem Ash | |
Deferred Stock Units | |
| 12/05/2022 | | |
| 7,000 | (4) | |
| — | | |
| — | | |
$ | 190,400 | |
| |
Restricted Stock | |
| 03/02/2023 | | |
| 16,000 | (5) | |
| — | | |
| — | | |
$ | 298,400 | |
| |
Deferred Stock Units | |
| 03/02/2023 | | |
| 3,000 | (7) | |
| — | | |
| — | | |
$ | 81,600 | |
Howard S. Jonas | |
— | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
(1) | Represents
the grant date fair value of each equity award calculated in accordance with FASB ASC Topic
718. |
| |
(2) | Such
restricted shares of Class B Common Stock vested in full upon grant. |
| |
(3) | Each
Deferred Stock Unit (each a “DSU”) is the right to receive between one half of
a share and two shares of Class B Common Stock. Vesting was originally scheduled in equal
one-third installments in May 2023, February 2024 and February 2025. The number of shares
of Class B Common Stock that will be issued for each DSU depends on the market price for
the Class B Common Stock as of the relevant vesting date. One half of a share will be issued
for each DSU if the market price on the vesting date is less than $12.705 (50% of the grant
date value of a share of Class B Common Stock) and two shares will be issued for each DSU
if the market price on the vesting date is $50.82 (200% of the grant date value) or greater,
with a proportionate amount to vest based on thresholds of 62.5%, 75%, 87.5%, 100%, 112.5%,
125%, 137.5%, 150%, 162.5% and 175% of the grant date value. As of the grant date and as
of October 20, 2023, upon vesting in full, the holder was entitled to receive between 15,000
and 60,000 shares of Class B Common Stock from the 30,000 DSUs held by him. The holder elected
to defer the vesting in May 2023, and the related issuance of shares of Class B Common Stock,
of one third of the 30,000 DSUs to the next vesting date in February 2024. |
(4) | Each
DSU is the right to receive between one half of a share and two shares of Class B Common
Stock. Vesting was originally scheduled in approximately equal one-third installments in
May 2023, February 2024 and February 2025. The number of shares of Class B Common Stock that
will be issued for each DSU depends on the market price for the Class B Common Stock as of
the relevant vesting date. One half of a share will be issued for each DSU if the market
price on the vesting date is less than $12.705 (50% of the grant date value of a share of
Class B Common Stock) and two shares will be issued for each DSU if the market price on the
vesting date is $50.82 (200% of the grant date value) or greater, with a proportionate amount
to vest based on thresholds of 62.5%, 75%, 87.5%, 100%, 112.5%, 125%, 137.5%, 150%, 162.5%
and 175% of the grant date value. As of the grant date, upon vesting in full, the holder
was entitled to receive between 3,500 and 14,000 shares of Class B Common Stock from the
7,000 DSUs held by him. As of October 20, 2023, upon vesting in full, the holder was entitled
to receive between 2,333 and 9,332 shares of Class B Common Stock from the 4,666 DSUs held
by him as the holder elected vest 2,334 DSUs in May 2023 and receive 2,918 shares of Class
B Common Stock. |
| |
(5) | Such
restricted shares of Class B Common Stock vest, and
vest in full, only if the Class B common stock closes above $50 per share for 10 consecutive
trading days prior to February 25, 2025. |
| |
(6) | Each
DSU is the right to receive between one half of a share and two shares of Class B Common
Stock. Vesting is two thirds in February 2024 and one third in February 2025. The number
of shares of Class B Common Stock that will be issued for each DSU depends on the market
price for the Class B Common Stock as of the relevant vesting date. One half of a share will
be issued for each DSU if the market price on the vesting date is less than $12.705 (50%
of the grant date value of a share of Class B Common Stock) and two shares will be issued
for each DSU if the market price on the vesting date is $50.82 (200% of the grant date value)
or greater, with a proportionate amount to vest based on thresholds of 62.5%, 75%, 87.5%,
100%, 112.5%, 125%, 137.5%, 150%, 162.5% and 175% of the grant date value. As of the grant
date and as of October 20, 2023, upon vesting in full, Mr. Wartell was entitled to receive
between 1,500 and 6,000 shares of Class B Common Stock from the 3,000 DSUs held by him. |
| |
(7) | Each
DSU is the right to receive between one half of a share and two shares of Class B Common
Stock. Vesting was originally scheduled in approximately equal one-third installments in
May 2023, February 2024 and February 2025. The number of shares of Class B Common Stock that
will be issued for each DSU depends on the market price for the Class B Common Stock as of
the relevant vesting date. One half of a share will be issued for each DSU if the market
price on the vesting date is less than $12.705 (50% of the grant date value of a share of
Class B Common Stock) and two shares will be issued for each DSU if the market price on the
vesting date is $50.82 (200% of the grant date value) or greater, with a proportionate amount
to vest based on thresholds of 62.5%, 75%, 87.5%, 100%, 112.5%, 125%, 137.5%, 150%, 162.5%
and 175% of the grant date value. As of the grant date, upon vesting in full, Mr. Ash was
entitled to receive between 1,500 and 6,000 shares of Class B Common Stock from the 3,000
DSUs held by him. As of October 20, 2023, upon vesting in full, Mr. Ash was entitled to receive
between 1,000 and 4,000 shares of Class B Common Stock from the 2,000 DSUs held by him as
Mr. Ash elected vest 1,000 DSUs in May 2023 and receive 1,250 shares of Class B Common Stock. |
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth all equity awards made to each of the Named Executive Officers that were outstanding at the end of Fiscal
2023. All of the following were issued pursuant to the Company’s 2015 Stock Option and Incentive Plan, as amended and restated.
| |
Option Awards | | |
Stock Awards | |
Name | |
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable | | |
Number
of
Securities
Underlying
Unexercised
Options (#)
Unexercisable | | |
Option
Exercise
Price
($) | | |
Option
Expiration
Date | | |
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 | |
| — | | |
| — | | |
| — | | |
| | | |
| — | | |
| — | |
Bill Pereira | |
| — | | |
| — | | |
| — | | |
| | | |
| 30,000 | (2) | |
| 711,600 | |
Marcelo Fischer | |
| — | | |
| — | | |
| — | | |
| | | |
| 30,000 | (2) | |
| 711,600 | |
David Wartell | |
| — | | |
| — | | |
| — | | |
| — | | |
| 4,666 | (3) | |
| 110,678 | |
| |
| — | | |
| — | | |
| — | | |
| — | | |
| 8,000 | (4) | |
| 189,769 | |
| |
| — | | |
| — | | |
| — | | |
| — | | |
| 3,000 | (2) | |
| 71,160 | |
Menachem Ash | |
| — | | |
| — | | |
| — | | |
| — | | |
| 4,666 | (3) | |
| 110,678 | |
| |
| — | | |
| — | | |
| — | | |
| — | | |
| 16,000 | (4) | |
| 379,520 | |
| |
| — | | |
| — | | |
| — | | |
| — | | |
| 2,000 | (3) | |
| 47,440 | |
Howard S. Jonas | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
1) | Market
value is computed by multiplying the closing market price of the Class B Common Stock on
July 31, 2023, the last day that the stock was traded in Fiscal 2023 ($23.72), by the number
of restricted shares of Class B Common Stock or DSUs that had not vested as of July 31, 2023.
Such computation does not take into consideration the impact of certain vesting conditions.
Please see Note 21 – Stock-Based Compensation to our Consolidated Financial Statements
included in our Annual Report on Form 10-K for the Fiscal Year ended July 31, 2023. |
(2) | Consists
of Deferred Stock Units (each a “DSU”). Each DSU is the right to receive between
one half of a share and two shares of Class B Common Stock. Vesting is two thirds in February
2024 and one third in February 2025. The number of shares of Class B Common Stock that will
be issued for each DSU depends on the market price for the Class B Common Stock as of the
relevant vesting date. One half of a share will be issued for each DSU if the market price
on the vesting date is less than $12.705 (50% of the grant date value of a share of Class
B Common Stock) and two shares will be issued for each DSU if the market price on the vesting
date is $50.82 (200% of the grant date value) or greater, with a proportionate amount to
vest based on thresholds of 62.5%, 75%, 87.5%, 100%, 112.5%, 125%, 137.5%, 150%, 162.5% and
175% of the grant date value. |
| |
(3) | Consists
of DSUs. Each DSU is the right to receive between one half of a share and two shares of Class
B Common Stock. Vesting is one half in February 2024 and one half in February 2025. The number
of shares of Class B Common Stock that will be issued for each DSU depends on the market
price for the Class B Common Stock as of the relevant vesting date. One half of a share will
be issued for each DSU if the market price on the vesting date is less than $12.705 (50%
of the grant date value of a share of Class B Common Stock) and two shares will be issued
for each DSU if the market price on the vesting date is $50.82 (200% of the grant date value)
or greater, with a proportionate amount to vest based on thresholds of 62.5%, 75%, 87.5%,
100%, 112.5%, 125%, 137.5%, 150%, 162.5% and 175% of the grant date value. |
| |
(4) | Consists
of restricted shares of Class B Common Stock that vest,
and vest in full, only if the Class B Common Stock closes
above $50 per share for 10 consecutive trading days prior to February 25, 2025. |
Option
Exercises and Stock and Deferred Stock Units Vested
The
following table sets forth information regarding the stock options exercised and the Deferred Stock Units (“DSUs”) and restricted
shares of Class B Common Stock that vested for each of the Named Executive Officers in Fiscal 2023.
| |
Option Awards | | |
DSUs / Restricted Stock Awards | |
Name | |
Number of
Shares
Acquired
Upon Exercise (#) | | |
Value
Realized
On
Exercise(1) ($) | | |
Number of
Shares
Acquired
Upon Vesting (#) | | |
Number of
Shares
Withheld to
Cover
Taxes (#) | | |
Value
Realized on
Vesting ($)(1) | |
Shmuel Jonas | |
| — | | |
| — | | |
| 6,802 | | |
| 3,852 | | |
| 319,620 | |
Bill Pereira | |
| — | | |
| — | | |
| 5,721 | | |
| 3,240 | | |
| 268,830 | |
Marcelo Fischer | |
| — | | |
| — | | |
| 2,937 | | |
| 1,991 | | |
| 147,840 | |
David Wartell | |
| — | | |
| — | | |
| 2,137 | | |
| 781 | | |
| 95,360 | |
Menachem Ash | |
| — | | |
| — | | |
| 2,661 | | |
| 1,507 | | |
| 136,210 | |
Howard S. Jonas | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
(1) | The
“Value Realized on Exercise” and the “Value Realized on Vesting”
represent the total number of shares of Class B Common Stock acquired upon exercise or vesting
(without regard to the amount of shares withheld to cover taxes, if applicable) and is based
on the closing price of the Class B Common Stock on the exercise or vesting date, as applicable. |
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
Bill
Pereira: Under the terms of the Second 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 $800,000, one-half to be paid within ten (10) 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 Pereira Agreement, (i) he is entitled to a payment equal to $800,000; one-half paid upon ten days after 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 Pereira Agreement. Mr. Pereira has agreed not to compete with the Company for a period of one year following the termination
of his agreement.
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
S. Jonas: Under the terms of the Fifth Revised Jonas Agreement, in the event of Howard S. Jonas’ death or disability, or in
the event the Company terminates Howard S. Jonas’ employment without “cause” or Howard S. Jonas voluntarily terminates
his employment with “good reason,” which includes a “change in control,” any unvested restricted shares of Class
B Common Stock or other equity award granted in connection with Howard S. Jonas’ service to the Company shall vest. In the event
of Howard S. Jonas’ death or disability, or in the event the Company terminates Howard S. Jonas’ employment without “cause”
or Howard S. Jonas voluntarily terminates his employment with “good reason,” which includes a “change in control,”
the Company shall pay Howard S. Jonas’ estate a lump sum payment equal to twelve (12) months of Howard S. Jonas’ annual base
salary (at the rate in effect on the date of his death). Howard S. 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”).
All
Named Executive Officers: 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 amended and restated on February 19, 2019. Under the Severance Plan, U.S. employees who are terminated without cause are entitled,
in specific instances as set forth in the Severance Plan, to severance payments as follows: employees shall receive four weeks of severance
pay for each completed year of service up to August 1, 2009 and two weeks for each completed period of service on or after August 1,
2009. Such severance payments are equal to 100% of the employee’s base salary for weeks one through twenty, 80% of the employee’s
base salary for weeks twenty-one through twenty-six, and 60% of the employee’s base salary for weeks twenty-seven through forty.
Severance payments are capped at 40 weeks. If a Named Executive Officer is entitled to a greater severance payment pursuant to an agreement,
the greater severance payment shall control.
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”). The following table
assumes the Event took place on July 31, 2023 for each of the Named Executive Officers and uses the closing price of Class B Common Stock
on July 31, 2023, the last trading day in Fiscal 2023 ($23.72). The potential payments are based on agreements entered into by Named
Executive Officers with the Company, discussed above, the 2015 Plan and the Severance Plan.
Name | |
Event of Death or Disability ($) | | |
Change In Control ($) | | |
Termination For Cause ($) | | |
Voluntary Termination for Good Reason ($) | | |
Termination Without Cause ($) | |
Shmuel Jonas | |
| | | |
| | | |
| | | |
| | | |
| | |
Restricted Shares/DSUs | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Severance | |
| — | | |
| — | | |
| — | | |
| — | | |
| 281,769 | (1) |
Bill Pereira | |
| | | |
| | | |
| | | |
| | | |
| | |
Restricted Shares/DSUs | |
| — | | |
| 711,600 | (2) | |
| — | | |
| 711,600 | (2) | |
| 711,600 | (2) |
Severance | |
| 800,000 | (3) | |
| 800,000 | (3) | |
| — | | |
| 800,000 | (3) | |
| 800,000 | (3) |
Marcelo Fischer | |
| | | |
| | | |
| | | |
| | | |
| | |
Restricted Shares/DSUs | |
| — | | |
| 711,600 | (2) | |
| — | | |
| — | | |
| — | |
Severance | |
| 550,000 | (4) | |
| — | | |
| — | | |
| — | | |
| 550,000 | (4) |
David Wartell | |
| | | |
| | | |
| | | |
| | | |
| | |
Restricted Shares/DSUs | |
| — | | |
| 189,760 | (5) | |
| — | | |
| — | | |
| — | |
Severance | |
| — | | |
| — | | |
| — | | |
| — | | |
| 69,231 | (1) |
Menachem Ash | |
| | | |
| | | |
| | | |
| | | |
| | |
Restricted Shares/DSUs | |
| — | | |
| 379,520 | (6) | |
| — | | |
| — | | |
| | |
Severance | |
| — | | |
| — | | |
| — | | |
| — | | |
| 209,231 | (1) |
Howard S. Jonas | |
| | | |
| | | |
| | | |
| | | |
| | |
Restricted Shares/DSUs | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
Severance | |
| 250,000 | (7) | |
| 250,000 | (7) | |
| — | | |
| 250,000 | (7) | |
| 250,000 | (7) |
(1) | Payable
pursuant to the Severance Plan. |
(2) | Represents
the accelerated vesting of 30,000 DSUs. Market value is computed by multiplying the closing
market price of the Class B Common Stock on July 31, 2023, the last day that the stock was
traded in Fiscal 2023 ($23.72), by the number of DSUs that had not vested as of July 31,
2023. Such computation does not take into consideration the impact of certain vesting conditions.
Please see Note 21 – Stock-Based Compensation to our Consolidated Financial Statements
included in our Annual Report on Form 10-K for the Fiscal Year ended July 31, 2023. |
| |
(3) | Payable
pursuant to the Second Pereira Agreement. |
| |
(4) | Payable
pursuant to the Fischer Agreement. |
| |
(5) | Represents
the accelerated vesting of (a) 7,666 DSUs. Market value is computed by multiplying the closing
market price of the Class B Common Stock on July 31, 2023, the last day that the stock was
traded in Fiscal 2023 ($23.72), by the number of DSUs that had not vested as of July 31,
2023. Such computation does not take into consideration the impact of certain vesting conditions,
and (b) 8,000 restricted shares of Class B Common Stock. Market value is computed by multiplying
the closing market price of the Class B Common Stock on July 31, 2023, the last day that
the stock was traded in Fiscal 2023 ($23.72), by the number of restricted shares of Class
B Common Stock that had not vested as of July 31, 2023. Such computation does not take into
consideration the impact of certain vesting conditions. Please see Note 21 – Stock-Based
Compensation to our Consolidated Financial Statements included in our Annual Report on Form
10-K for the Fiscal Year ended July 31, 2023. |
| |
(6) | Represents
the accelerated vesting of (a) 6,666 DSUs. Market value is computed by multiplying the closing
market price of the Class B Common Stock on July 31, 2023, the last day that the stock was
traded in Fiscal 2023 ($23.72), by the number of DSUs that had not vested as of July 31,
2023. Such computation does not take into consideration the impact of certain vesting conditions,
and (b) 16,000 restricted shares of Class B Common Stock. Market value is computed by multiplying
the closing market price of the Class B Common Stock on July 31, 2023, the last day that
the stock was traded in Fiscal 2023 ($23.72), by the number of restricted shares of Class
B Common Stock that had not vested as of July 31, 2023. Such computation does not take into
consideration the impact of certain vesting conditions. Please see Note 21 – Stock-Based
Compensation to our Consolidated Financial Statements included in our Annual Report on Form
10-K for the Fiscal Year ended July 31, 2023. |
| |
(7) | Payable
pursuant to the Fifth Revised Jonas Agreement. Howard S. Jonas’ annual base salary
was $250,000 as of July 31, 2023. |
Pay
vs. Performance
The
following table presents compensation information for Shmuel Jonas, the Company’s Chief Executive Officer, and the average compensation
information for the other individuals named in the summary compensation table, as well as certain measures relating to Company performance.
Fiscal Year(1) | |
Summary Compensation Table Total for PEO(2) ($) | | |
Compensation Actually Paid to PEO ($) | | |
Average Summary Compensation Table Total for Non-PEO NEOs(3) ($) | | |
Average Compensation Actually Paid to Non-PEO NEOs ($) | | |
Value of Initial Fixed $100 Investment Based On Total Shareholder Return(4) ($) | | |
Value of Initial Fixed $100 Investment Based On Peer Group’s Total Shareholder Return(5) ($) | | |
Net Income ($) | |
Fiscal 2023 | |
| 1,075,425 | | |
| 1,075,425 | | |
| 1,095,435 | | |
| 1,083,516 | (6) | |
| 364.36 | | |
| 123.63 | | |
| 44,366,000 | |
Fiscal 2022 | |
| 1,027,500 | | |
| 1,080,870 | (7) | |
| 584,101 | | |
| 597,684 | (8) | |
| 399.85 | | |
| 102.23 | | |
| 29,005,000 | |
Fiscal 2021 | |
| 1,144,500 | | |
| 1,144,500 | (9) | |
| 671,833 | | |
| 671,833 | (10) | |
| 764.87 | | |
| 143.91 | | |
| 96,891,000 | |
(1) | Information
provided for the last three fiscal years. |
(2) | Shmuel Jonas, Chief Executive Officer. |
(3) | Howard
S. Jonas, Chairman, Bill Pereira, President and Chief Operating Officer, Marcelo Fischer,
Chief Financial Officer, David Wartell, Chief Technology Officer, and Menachem Ash, Executive
Vice President – Strategy and Legal Affairs, for Fiscal 2023 and Fiscal 2022. Howard
S. Jonas, Chairman, Bill Pereira, President and Chief Operating Officer, and Marcelo Fischer,
Chief Financial Officer, for Fiscal 2021. |
(4) | Calculated
based on a hypothetical $100 investment beginning at market close on July 31, 2020. |
(5) | Calculated
based on a hypothetical $100 investment beginning at market close on July 31, 2020 in the
S&P 500 Communication Services. |
(6) | In
Fiscal 2023, the average compensation actually paid to non-PEO NEOs was lower than the total
amount disclosed in the Summary Compensation Table in the average amount of $11,919, due
to the following: |
| (a) | an
increase in the average amount of $466,487 ($2,332,436 in the aggregate) related to the fair
market value of restricted shares of Class B Common Stock and Deferred Stock Units (“DSUs”)
awarded during Fiscal 2023 to the Non-PEO NEOs that did not vest during Fiscal 2023 based
upon the closing price of our Class B Common Stock on July 31, 2023 (the last trading day
of Fiscal 2023) of $23.72; see Outstanding Equity Awards at Fiscal Year-End, above; |
| (b) | an
increase in the average amount of $46,314 ($231,570 in the aggregate) related to the fair
market value of restricted shares of Class B Common Stock and Deferred Stock Units (“DSUs”)
awarded during Fiscal 2023 to the Non-PEO NEOs that vested during Fiscal 2023 based upon
the closing price of our Class B Common Stock on the applicable date of vesting; see Option
Exercises and Stock and Deferred Stock Units Vested, above. Excluded from this calculation
are restricted shares of Class B Common Stock owned by Bill Pereira and Marcelo Fischer that
were awarded in Fiscal 2023 for services provided in Fiscal 2022, see footnote 8 below; and |
| (c) | a
decrease in the average amount of $524,720 ($2,623,200 in the aggregate) related to the fair
market value of restricted shares of Class B Common Stock and DSUs awarded during Fiscal
2023 to the Non-PEOs based upon the price of the Class B Common Stock at the applicable grant
date; see Summary Compensation Table, above. |
(7) | In
Fiscal 2022, the compensation actually paid to Shmuel Jonas (PEO) was greater than the total
amount disclosed in the Summary Compensation Table in the amount of $53,370, due to the following: |
| (a) | an
increase in the amount of $319,620 related to the fair market value of restricted shares
of Class B Common Stock awarded during Fiscal 2023 for services provided by Shmuel Jonas
in Fiscal 2022 that vested upon grant based upon the closing price of our Class B Common
Stock on the applicable date of vesting; see Option Exercises and Stock and Deferred Stock
Units Vested, above; and |
| (b) | a
decrease in the amount of $266,250 related to the fair market value of restricted shares
of Class B Common Stock awarded during Fiscal 2023 for services provided by Shmuel Jonas
in Fiscal 2022 based upon the price of the Class B Common Stock at the applicable grant date;
see Summary Compensation Table, above. |
(8) | In
Fiscal 2022, the average compensation actually paid to non-PEO NEOs was higher than the total
amount disclosed in the Summary Compensation Table in the average amount of $13,583, due
to the following: |
| (a) | an
increase in the average amount of $83,334 ($416,670 in the aggregate) related to the fair
market value of restricted shares of Class B Common Stock awarded during Fiscal 2023 for
services provided by two non-PEO NEOs (Bill Pereira and Marcelo Fischer) in Fiscal 2022 that
vested upon grant based upon the closing price of our Class B Common Stock on the applicable
date of vesting; see Option Exercises and Stock and Deferred Stock Units Vested, above; and |
| (b) | a
decrease in the average amount of $69,751 ($348,753 in the aggregate) related to the fair
market value of restricted shares of Class B Common Stock awarded during Fiscal 2023 for
services provided by two non-PEO NEOs (Bill Pereira and Marcelo Fischer) in Fiscal 2022 based
upon the price of the Class B Common Stock at the applicable grant date; see Summary Compensation
Table, above. |
(9) | The
value of a grant to Shmuel Jonas in Fiscal 2021 of 50 restricted shares of Class B common
stock of net2phone 2.0, Inc., a wholly owned subsidiary of the Company (“net2phone
2.0”), which represents 5% of the outstanding common stock of net2phone 2.0, was valued
at the time of grant and assumed to not have changed value by the end of Fiscal 2021 as such
shares were illiquid and did not vest by the end of Fiscal 2021; see Summary Compensation
Table, above. |
(10) | The
value of a grant to Howard S. Jonas (a non-PEO NEO) in Fiscal 2021 of 50 restricted shares
of Class B common stock of net2phone 2.0, which represents 5% of the outstanding common stock
of net2phone 2.0, was valued at the time of grant and assumed to not have changed value by
the end of Fiscal 2021 as such shares were illiquid and did not vest by the end of Fiscal
2021; see Summary Compensation Table, above. |
The
cash components of our executive compensation are based on a number of factors, including, in the case of bonus compensation, goals for
the Company and for individual executive officers that are set early in the fiscal year by the Compensation Committee of our Board of
Directors. Those goals typically include specific financial metrics as well as other qualitative and quantitative factors related to
operational and other matters. Following the end of each fiscal year, management reports to the Compensation Committee regarding actual
performance relative to the goals, the contribution of each executive officer related to the goals set for the Company and the relevant
executive and other factors regarding the performance of the executive officers, and makes recommendations regarding various elements
of compensation. The Compensation Committee then determines the compensation to be awarded.
Executive
officers are also granted, from time to time, equity awards in securities of the Company or its subsidiaries to directly align
their interests with those of our stockholders. Equity awards may include grants of restricted stock, options to purchase stock and deferred
stock units which may have performance-based vesting criteria in addition to time-based vesting criteria.
While
the specific factors that drive compensation decisions may not directly correlate with our net income or Total Shareholder Return, many
of the criteria used tend to impact compensation as well as Total Shareholder Return and that contributes to the correlation shown in
the table above.
EQUITY
COMPENSATION PLAN INFORMATION
Employee
Stock Incentive Program
The
Company adopted the 2015 Plan, pursuant to which options to purchase shares of Class B Common Stock, restricted shares of Class B Common
Stock and Deferred Stock Units may be awarded. As fully described in Proposal No. 2, the Company is asking its stockholders to vote on
an amendment to the 2015 Plan that would increase the number of shares of Class B Common Stock available for the grant of awards thereunder
by 250,000. The Company anticipates awarding options to purchase shares of Class B Common Stock, restricted shares of 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 as of July 31, 2023.
Plan Category | |
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 | |
| 12,000 | | |
$ | 13.72 | | |
| 61,448 | (2) |
Equity compensation plans not approved by security holders | |
| 0 | | |
$ | — | | |
| — | |
Total | |
| 12,000 | | |
$ | 13.72 | | |
| 61,448 | (2) |
| (1) | Reflects
all outstanding options exercisable for shares of Class B Common Stock as of July 31, 2023. |
| | |
| (2) | Does
not include shares of Class B Common Stock issuable pursuant to 189,021 outstanding DSUs
that will be deducted from the 2015 Plan when the underlying shares of Class B Common Stock
are issued on the DSUs’ vesting dates. The number of shares of Class B Common Stock
to be issued on the DSUs’ vesting date will vary depending upon the market price of
the Class B Common Stock. Please see Note 21 – Stock-Based Compensation to our Consolidated
Financial Statements included in our Annual Report on Form 10-K for the Fiscal Year ended
July 31, 2023. |
PROPOSALS
REQUIRING YOUR VOTE
PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
Pursuant
to the Company’s Third Restated Certificate of Incorporation, the number of members of the Board of Directors is to be 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 six, including one ex-officio (non-voting) director who
is to be appointed by the voting members of the Board, and there are currently six directors on the Board of Directors, including
one ex-officio (non-voting) director. The current terms of all serving directors expire at the Annual Meeting. All of the
current directors except Liora Stein are standing for re-election at the Annual Meeting. The Company’s Eighth Amended and Restated
By-Laws enable the Board of Directors to appoint one or more ex-officio (non-voting) directors to serve on the Board. Bill Pereira
was appointed ex-officio (non-voting) director on March 24, 2021 and has since served in that capacity. The stockholders are not
being asked to vote on Mr. Pereira’s appointment as an ex-officio (non-voting) director.
The
nominees for voting members of the Board of Directors are Michael Chenkin, Eric F. Cosentino, Howard S. Jonas, Judah Schorr and
Elaine S. Yatzkan, each of whom has consented to be named in this proxy statement and to serve if elected.
Each
of these director nominees is standing for election for a term of one year until the 2024 annual meeting of stockholders, or until his
or her successor is duly elected and qualified or until his or her earlier resignation or removal. A majority of the votes cast for or
against a director nominee at the Annual Meeting shall elect each voting 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 director nominees. Following each nominee’s biographical information, we have provided information concerning particular
experience, qualifications, attributes and/or skills, including as to personal factors of nominees and the diverse perspectives that
nominees may bring to their service on the Board and 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, provide 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 was a director of Zedge, Inc., a former subsidiary
of the Company that was spun off to stockholders in June 2016, from September 2008 until May 2016. Rev. Cosentino was a member of the
National Association of Corporate Directors (NACD) from March 2009 to 2021. Rev. Cosentino earned an NACD Governance Fellowship in 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 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 joining the National Association of Corporate Directors in March 2009. Rev. Cosentino’s
long tenure as a director of the Company, as well as prior tenures with former Company subsidiaries Zedge and IDT Entertainment, brings
extensive knowledge of our Company to the Board.
Howard
S. Jonas founded IDT in August 1990, has served as Chairman of the Board of Directors since its inception and has served as its
Chairman since September 2022. Mr. Jonas served as a member of the Board of Directors from inception to December 2020, when he was appointed
as an ex-officio (non-voting) member of the Board of Directors. In March 2021, Mr. Jonas was reappointed as a voting member of
the Board of Directors. Mr. Jonas served as Chief Executive Officer of the Company from October 2009 through December 2013 and from December
1991 until July 2001. From January 2014 until November 2017, Mr. Jonas 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. From June 2016 to November 2016, Mr. Jonas served as the Chairman of the Board of Zedge, Inc., a former subsidiary
of IDT that was spun off to stockholders in June 2016. Mr. Jonas has served as the Vice Chairman of Zedge, Inc. since November 2016.
Mr. Jonas also has served as the Chairman of the Board of Rafael Holdings, Inc., a former subsidiary of IDT that was spun off to stockholders
in March 2018, since the spin-off, and also as its Chief Executive Officer until May 2021. Mr. Jonas also has served as the Chairman
of the Board of IDW Media Holdings, Inc., a former subsidiary of IDT, since it was spun off to stockholders in September 2009, and has
been its Chairman since June 2022 and was its Chief Executive Officer from February 2019 through April 2020. Mr. Jonas has been a director
of Rafael Pharmaceuticals, Inc. (f/k/a Cornerstone Pharmaceuticals) since April 2013 and was appointed Chairman of the Board in April
2016. 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 S. Jonas brings tremendous knowledge of all aspects of our
Company and each industry in which it is involved to the Board. Howard S. Jonas’ service as Chairman and 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 S. Jonas on the Board provides our Company with effective leadership.
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.
Elaine
S. Yatzkan has been nominated to serve as a director of the Company. Elaine Yatzkan received her B.A. from Barnard College, and
her MSW and PhD degrees from the New York University School of Social Work. Elaine Yatzkan had a private practice of psychotherapy from
1973-2023 and served as the Director of Program Development for the Jewish Guild for the Blind from 1990-2010.
Key
Attributes, Experience and Skills:
Elaine
Yatzkan brings a different perspective to the Board than the current members due to her age and gender. She is active in promoting women
to leadership roles and is committed to that goal. The Company believes that obtaining input from more diverse perspectives enhances
the Board’s oversight of management and provides input on addressing different markets.
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:
Name |
|
Age |
|
Position |
Shmuel
Jonas |
|
42 |
|
Chief
Executive Officer and Named Executive Officer |
Howard
S. Jonas |
|
67 |
|
Chairman,
Chairman of the Board, Director, Director Nominee and Named Executive Officer |
Bill
Pereira |
|
58 |
|
President,
Chief Operating Officer, Ex-Officio (Non-Voting) Director and Named Executive Officer |
Marcelo
Fischer |
|
56 |
|
Chief
Financial Officer and Named Executive Officer |
Joyce
J. Mason |
|
64 |
|
Executive
Vice President, General Counsel and Corporate Secretary |
David
Wartell |
|
44 |
|
Chief
Technology Officer and Named Executive Officer |
Menachem
Ash |
|
51 |
|
Executive
Vice President of Strategy and Legal Affairs and Named Executive Officer |
Mitch
Silberman |
|
55 |
|
Chief
Accounting Officer and Controller |
Nadine
Shea |
|
52 |
|
Executive
Vice President of Global Human Resources |
Michael
Chenkin |
|
72 |
|
Director
and Director Nominee |
Eric
F. Cosentino |
|
66 |
|
Director
and Director Nominee |
Judah
Schorr |
|
71 |
|
Director
and Director Nominee |
Liora
Stein |
|
34 |
|
Director |
Elaine
S. Yatzkan |
|
90 |
|
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, 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, a thirty million dollar mixed-use ground up development project in Bronx, New York. In addition, Mr. Jonas was a
director of Zedge, Inc., a former subsidiary of the Company that was spun off to stockholders in June 2016, from October 2010 until May
2016. 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.
Bill
Pereira served as a voting member of the Company’s Board of Directors from October 31, 2011 to March 2021, when
he was appointed as an ex-officio (non-voting) member of the Board of Directors. Mr. Pereira has also served as President and
Chief Operating Officer of the Company since January 1, 2018. Mr. Pereira served as the Chief Executive Officer and President
of IDT Telecom from October 31, 2011 to December 31, 2017. 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.
Marcelo
Fischer has served as the Company’s Chief Financial Officer since June 3, 2019 and as Chief Financial Officer of IDT Telecom
since June 2007. Mr. Fischer served as Senior Vice President–Finance (the Company’s principal financial officer position)
from October 31, 2011 to June 2019. 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 was a director of Zedge, Inc., a former subsidiary of the Company that was spun off to stockholders in June 2016, from September
2008 until May 2016, 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. Ms. Mason has served as the Corporate Secretary of Rafael Holdings, Inc., a former subsidiary of
the Company that was spun off to stockholders in March 2018, from its inception in July 2017. Ms. Mason has also served as a director
of Genie Energy Ltd., a former subsidiary of the Company that was spun off to stockholders in October 2011, since May 2021. Ms. Mason
has served as Corporate Secretary of IDW Media Holdings, Inc. since March 2023 and, prior to that from September 2019 to March 2023 as
its Assistant Corporate Secretary. Prior to joining the Company, 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. Mr. Ash served as President
of Rafael Holdings, Inc., a former subsidiary of the Company that was spun off to stockholders in March 2018, from its inception in July
2017 to September 2021. 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.
Nadine
Shea has served as the Company’s Executive Vice President of Global Human Resources since September 2019. Ms. Shea joined
the Company in May 2000 as Associate General Counsel and held various senior counsel roles at the Company. Prior to joining the Company,
Ms. Shea worked in private legal practice. Ms. Shea received a B.A. in Criminal Justice from the University of Maryland and a J.D. from
New York Law School.
David
Wartell has been the Chief Technology Officer of the Company since March 2018 and the Executive Vice President – Technology
of IDT Telecom since June 2017. Mr. Wartell brings 20 years of operational experience in enterprise and cloud technology to the Company.
Prior to joining the Company, he was Executive Vice President of Idera Inc., one of the largest private B2B software vendors in the world,
with products evangelized by millions of community members, and more than 50,000 customers. Previously he was founder and CEO of R1soft.com,
a leading provider of cloud backup and disaster recovery software. Earlier in his career, he ran operations for some of the largest cloud
service providers in the world. Mr. Wartell received a B.S. in Computer Engineering from Michigan State University.
Relationships
among Directors, Director Nominees and Executive Officers
Howard
S. Jonas and Joyce J. Mason are brother and sister. Howard S. Jonas and Shmuel Jonas are father and son. Joyce J. Mason and Shmuel Jonas
are aunt and nephew. Howard S. Jonas and Liora Stein are father and daughter. Joyce J. Mason and Liora Stein are aunt and niece. Shmuel
Jonas and Liora Stein are brother and sister. Howard S. Jonas and Elaine S. Yatzkan are son-in-law and mother-in-law. Shmuel Jonas and
Elaine S. Yatzkan are grandson and grandmother. Liora Stein and Elaine S. Yatzkan are granddaughter and grandmother. There are no other
familial relationships among any of the directors, director nominees or executive officers of the Company.
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 250,000. The Board of Directors adopted the proposed amendment to the 2015 Plan on October 11,
2023, subject to stockholder approval at the Annual Meeting.
The
Board of Directors believes that the proposed amendment to increase the number of shares of Class B Common Stock available for the grant
of awards thereunder by 250,000 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 Rule 16b-3 promulgated under the Exchange Act and (ii) 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 1,893 employees and directors eligible for grants under the 2015 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 2,030,000 shares of Class B Common Stock (including
the 250,000 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 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, annually, fully vested restricted shares of Class B Common Stock equal to $50,000 based on the average
of the high and the low stock trading prices of the Class B Common Stock on the business day immediately prior to the applicable grant
date. 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 shares of 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.
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.
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.
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 shares of 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 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.
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).
On
October 31, 2023, the last reported sale price of the Class B Common Stock on the New York Stock Exchange was $28.05per share.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL
OF THE AMENDMENT TO THE 2015 PLAN AS DESCRIBED ABOVE.
PROPOSAL
NO. 3
APPROVAL
OF THE COMPANY’S
2024
EQUITY INCENTIVE PLAN
The
Company’s stockholders are being asked to approve the 2024 Equity Incentive Plan (the “2024 Plan”). The Board
of Directors adopted the Plan on October 26, 2023, subject to stockholder approval at the Annual Meeting.
The
Company’s current stock incentive plan, the 2015 Plan, is scheduled to expire on September 16, 2024. The 2024 Plan, if approved
by the stockholders, will become effective and will replace the 2015 Plan as of September 16, 2024.
The
proposed 2024 Plan 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 (ii) the rules and regulations applicable to New York Stock Exchange-listed
companies.
The
following description of the 2024 Plan is a summary, does not purport to be complete and is qualified in its entirety by the full text
of the 2024 Plan. A copy of the 2024 Plan is attached hereto as Exhibit B and has been filed with the SEC with this Proxy Statement.
DESCRIPTION
OF THE 2024 PLAN
Pursuant
to the 2024 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, restricted stock and deferred stock units. There are approximately 1,893 employees
and directors eligible for grants under the 2024 Plan. Options granted under the 2024 Plan may be ISOs or non-qualified stock options
(“NQSOs”). Stock appreciation rights (“SARs”) may be granted either alone or simultaneously with the grant of
an option. Restricted stock and restricted stock units may be granted in addition to or in lieu of any other award made under the 2024
Plan.
The
maximum number of shares reserved for the grant of awards under the 2024 Plan is 250,000 shares of Class B Common Stock. 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 2024 Plan. Subject to the provisions of the 2024 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 2024 Plan and may at any time adopt such rules and regulations for the 2024 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 2024 Plan) on the date of grant. In the 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
may apply to ISOs. 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
2024 Plan will become exercisable at such times and under such conditions as the Compensation Committee shall determine.
The
2024 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.
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
2024 Plan also permits the Compensation Committee to grant SARs. Generally, SARs may be exercised at such time or times and only to the
extent determined by the Compensation Committee.
Upon
exercise of an SAR, a grantee will receive for each share for which an SAR is exercised, an amount in cash or shares of 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.
When
an SAR 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 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 2024 Plan.
The
2024 Plan further provides for the granting of restricted 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.
The
grantee of a restricted 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 2024 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 2024 Plan after October 26, 2033, ten years from the Board’s approval of the 2024 Plan.
The
Company cannot now determine the number of options or other awards to be granted in the future under the 2024 Plan to officers, directors,
employees and consultants.
Federal
Income Tax Consequences of Awards Granted under the 2024 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 2024 Plan:
Incentive
Stock Options. ISOs granted under the 2024 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 shares of 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 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 2024 Plan are options that do not qualify
as ISOs. A participant who receives an NQSO or an SAR 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 2024 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 2024 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.
The
ordinary income recognized with respect to the receipt of cash, shares of Class B Common Stock or other property under the 2024 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 2024 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).
On
October 31, 2023, the last reported sale price of the Class B Common Stock on the New York Stock Exchange was $28.05 per share.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL
OF THE 2024 PLAN AS DESCRIBED ABOVE.
THE
COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2024
Grant
Thornton LLP is the Company’s independent registered public accounting firm and has served the Company as its independent registered
public accounting firm since January 28, 2020. Grant Thornton LLP was the Company’s independent registered public accounting firm
for Fiscal 2022 and Fiscal 2023.
The
Company is not asking stockholders to ratify at the Annual Meeting the appointment of Grant Thornton LLP or any other firm as the Company’s
independent registered public accounting firm for the Fiscal Year ending July 31, 2024.
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.
Audit
and Non-Audit Fees
The
following table presents fees billed for professional services rendered by Grant Thornton LLP for the period from August 1, 2021 to July
31, 2023.
Fiscal Years Ended July 31 | |
2023 | | |
2022 | |
Audit Fees(1) | |
$ | 1,368,875 | | |
$ | 1,025,970 | |
Audit-Related Fees(2) | |
| - | | |
| 475,550 | |
Tax Fees(3) | |
| 38,660 | | |
| 8,898 | |
All Other Fees(4) | |
| 7,700 | | |
| 13,258 | |
Total | |
$ | 1,415,235 | | |
$ | 1,523,676 | |
(1) |
Audit
Fees consist of fees for the audit of the Company’s financial statements included in the Company’s Form 10-K and reviews
of financial statements included in the Company’s Form 10-Qs, for the audits of the effectiveness of the Company’s internal
controls over financial reporting and for services that are normally provided by the independent accountant in connection with statutory
and regulatory filings or engagements. |
|
|
(2) |
There
were no Audit-Related Fees for Fiscal 2023. In Fiscal 2022, Audit-Related Fees mainly related to the potential spinoff of net2phone,
and for fees incurred in connection with the acquisition of a foreign subsidiary. |
|
|
(3) |
Tax
Fees consist of fees for tax compliance and tax preparation related to three of the Company’s subsidiaries in Fiscal 2022 and
Fiscal 2023. |
|
|
(4) |
In
Fiscal 2022 and Fiscal 2023, All Other Fees included fees relating to the support with statutory filings of a foreign subsidiary. |
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 Company’s independent registered public
accounting firm. The Audit Committee has established a policy regarding the 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 2023
and Fiscal 2022.
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 www.idt.net/investors-and-media/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 2023, 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 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.
The
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 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, 2023, as well as the effectiveness of the Company’s internal controls over financial reporting as of July 31,
2023. 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, 2023,
for filing with the Securities and Exchange Commission.
|
THE
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS |
|
|
|
Michael
Chenkin, Chairman |
|
Eric
F. 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.
OTHER
INFORMATION
Submission
of Proposals for the 2024 Annual Meeting of Stockholders
Stockholders
who wish to present proposals for inclusion in the Company’s proxy materials in connection with the 2024 annual meeting of stockholders
must submit such proposals in writing to the 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, 2024. In addition, any stockholder proposal submitted with respect to
the Company’s 2024 annual meeting of stockholders, which proposal is submitted outside the requirements of Rule 14a-8 under the
Exchange Act and relevant interpretations thereof and other guidance related thereto will not be included in the relevant proxy materials
and 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, 2024.
In
addition, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other
than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act
no later than October 14, 2024, or not later than the date that is 60 days prior to the one-year anniversary of the Annual Meeting if
such meeting takes place on any day other than December 13, 2024.
Availability
of Annual Report on Form 10-K
Additional
copies of the Company’s Annual Report on Form 10-K for Fiscal 2023 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, New Jersey 07102, or may be requested through the Get In Touch section of our website:
https://www.idt.net/investors-and-media.
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 |
|
|
November
1, 2023 |
|
|
Joyce
J. Mason |
|
Executive
Vice President, General Counsel and Corporate Secretary |
EXHIBIT
A
IDT
CORPORATION
2015
STOCK OPTION AND INCENTIVE PLAN
Effective
January 1, 2015 to September 16, 2024
(Amended
and Restated on October 11, 2023)
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 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
(i)
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) directly
or directly by: (i) 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, (ii) one or more trusts solely for the
benefit of such person and/or any Family Member(s) of such person or (iii) one or more entities that are directly or indirectly
controlled by such person or and/or any Family Member(s) of such person or (E) as otherwise reasonably determined by the Committee),
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. 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)
“Family Member” shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships),
any person sharing the household (other than a tenant or employee), a trust in which these persons have more than 50% of the beneficial
interest, a foundation in which these persons control the management of assets, and any other entity in which these persons own more
than 50% of the voting interests.
(n)
“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.
(o)
“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.
(p)
“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.
(q)
“Insider” shall mean a Grantee who is subject to the reporting requirements of Section 16(a) of the Exchange Act.
(r)
“Insider Trading Policy” shall mean the Insider Trading Policy of the Company, as may be amended from time to time.
(s)
“Limited Right” shall mean a limited stock appreciation right granted pursuant to Section 10 of the Plan.
(t)
“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.
(u)
“Non-Employee Director Annual Grant” shall mean an award of shares of Restricted Stock equal to $50,000 based on the average
of the high and the low stock price on the business day prior to the Non-Employee Director Grant Date.
(v)
“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), or, in the case of a new Non-Employee Director joining the Board, shall mean the date of appointment as a member
of the Board.
(w)
“Nonqualified Stock Option” shall mean any option not designated as an Incentive Stock Option.
(x)
“Option” or “Options” shall mean a grant to a Grantee of an option or options to purchase shares of Class B Common
Stock.
(y)
“Option Agreement” shall have the meaning set forth in Section 6 of the Plan.
(z)
“Option Price” shall mean the exercise price of the shares of Class B Common Stock covered by an Option.
(aa)
“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.
(bb)
“Plan” means this IDT Corporation 2015 Stock Option and Incentive Plan, as amended or restated from time to time.
(cc)
“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.
(dd)
“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.
(ee)
“Restricted Period” shall have the meaning set forth in Section 11(b) of the Plan.
(ff)
“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.
(gg)
“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.
(hh)
“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.
(ii)
“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.
(jj)
“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.
(kk)
“Tax Event” shall have the meaning set forth in Section 17 of the Plan.
(ll)
“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.
(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 2,030,000, 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.
(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 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 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.
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.
(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 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 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.
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 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 and October 13, 2016 to
increase the amount of authorized shares under the Plan to 600,000 and then 700,000, respectively, shares of Class B Common Stock. The
Company’s stockholders ratified such amendments to the Plan on December 14, 2015 and December 14, 2016, respectively. The Board
amended the Plan on September 28, 2017 to increase the amount of authorized shares under the Plan to 1,030,000 shares of Class B Common
Stock and on November 9, 2017 to remove certain provisions related to Section 162(m) of the Code. The Company’s stockholders ratified
such amendments to the Plan on December 14, 2017. The Board amended the Plan on November 15, 2018 to increase the amount of authorized
shares under the Plan to 1,130,000 shares of Class B Common Stock. The Company’s stockholders ratified such amendment to the Plan
on December 13, 2018. The Board further amended the Plan on September 12, 2019 to (i) increase the amount of authorized shares under
the Plan to 1,555,000 shares of Class B Common Stock and (ii) change the Non-Employee Director Annual Grant from 4,000 shares of Restricted
Stock to Restricted Stock equal to $50,000 based on the average of the high and the low stock price on the business day prior to the
Non-Employee Director Grant Date. The Company’s stockholders ratified such amendment to the Plan on December 12, 2019. The Board
further amended the Plan on September 14, 2021 to increase the amount of authorized shares under the Plan to 1,730,000 shares of Class
B Common Stock. The Company’s stockholders ratified such amendment to the Plan on December 15, 2021. The Board further amended
the Plan on October 31, 2022 to increase the amount of authorized shares under the Plan to 1,780,000 shares of Class B Common Stock and
on November 3, 2022 to change the definition of Change in Control. The Company’s stockholders ratified such amendments to the Plan
on December 14, 2022. The Board further amended the Plan on October 11, 2023 to increase the amount of authorized shares under the Plan
to 2,030,000 shares of Class B Common Stock and on November 3, 2022 to change the definition of Change in Control. The Company’s
stockholders ratified such amendments to the Plan on December 13, 2023.
(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.
EXHIBIT
B
IDT
CORPORATION
2024
EQUITY INCENTIVE PLAN
(Adopted
on October 26, 2023)
Section
1. Purpose; Definitions. The purposes of the IDT Corporation 2024 Equity Incentive Plan (as amended from time to time, the
“Plan”) are to: (a) enable IDT Corporation, a Delaware corporation (the “Company”), and its affiliated
companies to recruit and retain highly qualified employees, directors and consultants; (b) provide those employees, directors and consultants
with an incentive for productivity; and (c) provide those employees, directors and consultants with an opportunity to share in the growth
and value of the Company.
For
purposes of the Plan, the following terms will have the meanings defined below, unless the context clearly requires a different meaning:
(a)
“Affiliate” means, with respect to a Person, a Person that directly or indirectly controls, is controlled by, or is
under common control with such Person.
(b)
“Applicable Law” means the legal requirements relating to the administration of and issuance of securities under stock
incentive plans, including, without limitation, the requirements of state corporations law, federal, state and foreign securities law,
federal, state and foreign tax law, and the requirements of any stock exchange or quotation system upon which the Shares may then be
listed or quoted.
(c)
“Approval Date” has the meaning defined below in Section 17.
(d)
“Award” means an award of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units or Cash or
Other Stock Based Awards made under this Plan.
(e)
“Award Agreement” means, with respect to any particular Award, the written document that sets forth the terms of that
particular Award.
(f)
“Board” means the Board of Directors of the Company, as constituted from time to time.
(g)
“Cash or Other Stock Based Award” means an award that is granted under Section 10.
(h)
“Cause” means (i) the Participant’s refusal to comply with any lawful directive or policy of the Company which
refusal is not cured by the Participant within ten (10) days of such written notice from the Company; (ii) the Company’s determination
that the Participant has committed any act of dishonesty, embezzlement, unauthorized use or disclosure of confidential information or
other intellectual property or trade secrets, common law fraud or other fraud against the Company or any Subsidiary or Affiliate; (iii)
a material breach by the Participant of any written agreement with or any fiduciary duty owed to any Company or any Subsidiary or Affiliate;
(iv) the Participant’s conviction (or the entry of a plea of a nolo contendere or equivalent plea) of a felony or any misdemeanor
involving material dishonesty or moral turpitude; or (v) the Participant’s habitual or repeated misuse of, or habitual or repeated
performance of Participant’s duties under the influence of, alcohol, illegally obtained prescription controlled substances or non-prescription
controlled substances. Notwithstanding the foregoing, if a Participant and the Company (or any of its Affiliates) have entered into an
employment agreement, consulting agreement or other similar agreement that specifically defines “cause,” then with respect
to such Participant, “Cause” shall have the meaning defined in such other agreement.
(i)
“Change in Control” shall mean the occurrence of any of the following events: (i) 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) directly or directly by: (i) any person
who, together with such person’s Affiliates, on November 1, 2023, owned beneficially or of record securities representing 25% or
more of the combined voting power of the Company’s then outstanding voting securities, (ii) one or more trusts solely
for the benefit of any such persons and/or any Family Member(s) of such persons or (iii) one or more entities that are directly
or indirectly controlled by such persons or and/or any Family Member(s) of such persons or (iv) as otherwise determined by the Committee),
is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
of the Company representing 50% or more of the total power to vote for the election of directors of the Company; (ii) during any twelve
month period, individuals who at the beginning of such period constitute the Board and any new director (other than a director designated
by a person who has entered into an agreement with the Company to effect a transaction described in Section 1(i)(i), Section
1(i)(iii), Section 1(i)(iv) or Section 1(i)(v) hereof) whose election by the Board or nomination for election by the
Company’s stockholders was approved by a vote of at least a majority of the directors then still in office who either were directors
at the beginning of the period of whose election or nomination for election was previously approved, cease for any reason to constitute
a majority thereof; (iii) the merger or consolidation of the Company with another corporation where the stockholders of the Company,
immediately prior to the merger or consolidation, will not beneficially own, immediately after the merger or consolidation, shares entitling
such stockholders to 50% or more of all votes to which all stockholders of the surviving corporation would be entitled in the election
of directors (without consideration of the rights of any class of stock to elect directors by a separate class vote); (iv) the sale or
other disposition of all or substantially all of the assets of the Company; (v) a liquidation or dissolution of the Company; or (vi)
such other event deemed to constitute a “Change in Control” by the Board.
Notwithstanding
anything in the Plan or an Award Agreement to the contrary, to the extent necessary to comply with Section 409A of the Code, no event
that, but for the application of this paragraph, would be a Change in Control as defined in the Plan or the Award Agreement, as applicable,
shall be a Change in Control unless such event is also a “change in control event” as defined in Section 409A of the Code.
(j)
“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.
(k)
“Committee” means the committee authorized to administer the Plan under Section 2. To the extent required under
Applicable Law, the Committee shall have at least two members and each member of the Committee shall be a Non-Employee Director. Unless
otherwise determined by the Board, the Compensation Committee of the Board will serve as the Committee.
(l)
“Director” means a member of the Board.
(m)
“Disability” means a condition rendering a Participant Disabled.
(n)
“Disabled” will have the same meaning as set forth in Section 22I(3) of the Code.
(o)
“Effective Date” has the meaning defined below in Section 17.
(p)
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
(q)
“Fair Market Value” means, as of any date, the value of a Share determined as follows: (i) if the Shares are listed
on any established stock exchange or a national market system (including, without limitation, the New York Stock Exchange), the Fair
Market Value of a Share will be the closing sales price for such stock as quoted on that exchange or system at the close of regular hours
trading for the last preceding date on which there were sales of Shares on such exchange or system; (ii) if the Shares are regularly
quoted by recognized securities dealers but selling prices are not reported, the Fair Market Value of a Share will be the mean between
the high bid and low asked prices for Shares at the close of regular hours trading on the last preceding date; or (iii) if Shares are
not traded as set forth above, the Fair Market Value will be determined in good faith by the Committee taking into consideration such
factors as the Committee considers appropriate, such determination by the Committee to be final, conclusive and binding. Notwithstanding
the foregoing, in connection with a Change in Control, Fair Market Value shall be determined in good faith by the Committee, such determination
by the Committee to be final conclusive and binding.
(r)
“Family Member” shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, aunt, uncle, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including
adoptive relationships), any person sharing the household (other than a tenant or employee), a trust in which these persons have more
than 50% of the beneficial interest, a foundation in which these persons control the management of assets, and any other entity in which
these persons own more than 50% of the voting interests.
(s)
“Incentive Stock Option” means any Option intended to be an “Incentive Stock Option” within the meaning
of Section 422 of the Code.
(t)
“Insider Trading Policy” shall mean the Insider Trading Policy (or similar policy) of the Company, as may be amended from
time to time or any replacement therefor.
(u)
“Non-Employee Director” will have the meaning set forth in Rule 16b-3(b)(3)(i) promulgated by the Securities and Exchange
Commission under the Exchange Act, or any successor definition adopted by the Securities and Exchange Commission and shall refer to a
Non-Employee Director of the Company or any Subsidiary of the Company who is not an employee of the Company or any Subsidiary.
(v)
“Non-Qualified Stock Option” means any Option that is not an Incentive Stock Option.
(w)
“Option” means any option to purchase Shares (including an option to purchase Restricted Stock, if the Committee so
determines) granted pursuant to Section 5 hereof.
(x)
“Parent” means, in respect of the Company, a “parent corporation” as defined in Section 424(e) of the
Code.
(y)
“Participant” means an employee, consultant, Director, or other service provider of or to the Company or any of its
Affiliates to whom an Award is granted.
(z)
“Person” means an individual, partnership, corporation, limited liability company, trust, joint venture, unincorporated
association, or other entity or association.
(aa)
“Restricted Stock” means Shares that are subject to restrictions pursuant to Section 8 hereof.
(bb)
“Restricted Stock Unit” means a right granted under and subject to restrictions pursuant to Section 9 hereof.
(cc)
“Securities Act” means the Securities Act of 1933, as amended.
(dd)
“Shares” means shares of the Company’s Class B common stock, par value $0.01, subject to substitution or adjustment
as provided in Section 3(e) hereof.
(ee)
“Stock Appreciation Right” means a right granted under and subject to Section 6 hereof.
(ff)
“Subsidiary” means, in respect of the Company, a subsidiary company as defined in Sections 424(f) and (g) of the Code.
Section
2. Administration. The Plan shall be administered by the Committee; provided, that, notwithstanding anything
to the contrary herein, in its sole discretion, the Board may at any time and from time to time exercise any and all rights and duties
of the Committee under the Plan except with respect to matters which under Applicable Law are required to be determined in the sole discretion
of the Committee. Any action of the Committee in administering the Plan shall be final, conclusive and binding on all persons, including
the Company, its Subsidiaries, Affiliates, their respective employees, the Participants, persons claiming rights from or through Participants
and stockholders of the Company.
The
Committee will have full authority to grant Awards under this Plan and determine the terms of such Awards. Such authority will include
the right to:
(a)
select the individuals to whom Awards are granted (consistent with the eligibility conditions set forth in Section 4);
(b)
determine the type of Award to be granted;
(c)
determine the number of Shares, if any, to be covered by each Award;
(d)
establish the other terms and conditions of each Award; and
(e)
modify or amend each Award, subject to the Participant’s consent if such modification or amendment would materially impair such
Participant’s rights.
The
Committee will have the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as
it, from time to time, deems advisable; to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any
Award Agreement); and to otherwise take any action that may be necessary or desirable to facilitate the administration of the Plan. The
Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award Agreement in the manner
and to the extent it deems necessary to carry out the intent of the Plan.
To
the extent permitted by Applicable Law, the Committee may delegate to one or more officers of the Company the authority to grant Awards
to employees of the Company or its Subsidiaries who are not executive officers of the Company subject to the requirements of Section
16 of the Exchange Act and the rules and regulations thereunder. The Committee may revoke any such delegation at any time for any reason
with or without prior notice.
No
Director will be liable for any good faith determination, act or omission in connection with the Plan or any Award.
Section
3. Shares Subject to the Plan.
(a)
Shares Subject to the Plan. Subject to adjustment as provided in this Section 3, the maximum number of Shares that may
be issued in respect of Awards under the Plan is 250,000. Any Shares issued hereunder may consist, in whole or in part, of authorized
and unissued Shares or treasury shares. Any Shares issued in respect of Awards granted in substitution for equity-based awards of an
entity acquired by the Company or a Subsidiary, or with which the Company or a Subsidiary combines, shall not reduce the maximum number
of Shares available for delivery under the Plan.
(b)
Incentive Stock Option Limit. Subject to adjustment as provided in Section 3(e) of the Plan, the maximum aggregate number
of Shares that may be issued under the Plan in respect of Incentive Stock Options is 100% of the amount stated in the first sentence
of Section 3(a) of the Plan.
(c)
Effect of the Expiration or Termination of Awards. If and to the extent that an Option or a Stock Appreciation Right expires,
terminates or is canceled or forfeited for any reason without having been exercised in full, the Shares associated with that Award will
again become available for grant under the Plan. Similarly, if and to the extent an Award of Restricted Stock or Restricted Stock Units
is canceled or forfeited for any reason, the Shares subject to that Award will again become available for grant under the Plan.
(d)
Shares Withheld in Satisfaction of Taxes or Exercise Price. Shares withheld in settlement of a tax withholding obligation associated
with an Award, or in satisfaction of the exercise price payable upon exercise of an Option, will again become available for grant under
the Plan.
(e)
Other Adjustment. In the event of any corporate event or transaction such as a merger, consolidation, reorganization, recapitalization,
stock split, reverse stock split, split up, spin-off, combination of shares, exchange of shares, stock dividend, dividend in kind, or
other like change in capital structure (other than ordinary cash dividends) to stockholders of the Company, or other similar corporate
event or transaction affecting the Shares, the Committee, to prevent dilution or enlargement of Participants’ rights under the
Plan, shall, in such manner as it deems equitable, substitute or adjust, in its sole discretion, the number and kind of shares that may
be issued under the Plan or under any outstanding Awards, the number and kind of shares subject to outstanding Awards, the exercise price,
grant price or purchase price applicable to outstanding Awards, and/or any other affected terms and conditions of this Plan or outstanding
Awards.
(f)
Change in Control. Notwithstanding anything to the contrary set forth in the Plan, upon or in anticipation of any Change in Control,
the Committee may, in its sole and absolute discretion and without the need for the consent of any Participant, take one or more of the
following actions contingent upon the occurrence of that Change in Control:
(i)
cause any or all outstanding Awards to become vested and immediately exercisable (as applicable), in whole or in part;
(ii)
cause any outstanding Option or Stock Appreciation Right to become fully vested and immediately exercisable for a reasonable period in
advance of the Change in Control and, to the extent not exercised prior to that Change in Control, cancel that Option or Stock Appreciation
Right upon closing of the Change in Control;
(iii)
cancel any unvested Award or unvested portion thereof, with or without consideration;
(iv)
cancel any Award in exchange for a substitute award;
(v)
redeem any Restricted Stock or Restricted Stock Unit for cash and/or other substitute consideration with value equal to the Fair Market
Value of an unrestricted Share on the date of the Change in Control;
(vi)
cancel any Option or Stock Appreciation Right in exchange for cash and/or other substitute consideration with a value equal to: (A) the
number of Shares subject to that Option or Stock Appreciation Right, multiplied by (B) the difference, if any, between the Fair Market
Value on the date of the Change in Control and the exercise price of that Option or the base price of the Stock Appreciation Right; provided,
that if the Fair Market Value on the date of the Change in Control does not exceed the exercise price of any such Option or the base
price of any such Stock Appreciation Right, the Committee may cancel that Option or Stock Appreciation Right without any payment of consideration
therefor; and/or
(vii)
take such other action as the Committee determines to be appropriate under the circumstances.
In
the discretion of the Committee, any cash or substitute consideration payable upon cancellation of an Award may be subjected to (i) vesting
terms substantially identical to those that applied to the cancelled Award immediately prior to the Change in Control, or (ii) earn-out,
escrow, holdback or similar arrangements, to the extent such arrangements are applicable to any consideration paid to stockholders in
connection with the Change in Control.
Notwithstanding
any provision of this Section 3(f), in the case of any Award subject to Section 409A of the Code, the Committee shall only be
permitted to take actions under this Section 3(f) to the extent that such actions would be consistent with the intended treatment
of such Award under Section 409A of the Code.
(g)
Foreign Holders. Notwithstanding any provision of the Plan to the contrary, in order to
comply with the laws in countries other than the United States in which the Company and its Subsidiaries operate or have employees,
directors and consultants, or in order to comply with the requirements of any foreign securities
exchange or other Applicable Law, the Committee, in its sole discretion, shall have the power and authority to: (i) modify the terms
and conditions of any Award granted to employees, directors and consultants outside the
United States to comply with Applicable Law (including, without limitation, applicable foreign laws or listing requirements of any foreign
securities exchange); (ii) establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions
may be necessary or advisable; provided, however, that no such subplans and/or modifications shall increase the share limitations
contained in Section 3; and (iii) take any action, before or after an Award is made, that it deems advisable to obtain approval
or comply with any necessary local governmental regulatory exemptions or approvals or listing requirements of any foreign securities
exchange.
(h)
Annual Compensation Limitations for Non-Employee Directors. Beginning with the first fiscal year following the year in which the
Approval Date occurs, the aggregate amount of equity and cash compensation (collectively “Compensation”) payable to
a Non-Employee Director with respect to a fiscal year, whether under the Plan or otherwise, for services as a Non-Employee Director,
shall not exceed $750,000; provided, however, that such amount shall be $1,000,000 for the fiscal year in which the applicable
Non-Employee Director is initially elected or appointed to the Board (collectively, the “Director Limit”). Equity
incentive awards shall be counted towards the Director Limit in the year in which they are granted, based on the grant date fair value
of such awards for financial reporting purposes (but excluding the impact of estimated forfeitures related to service-based vesting provisions).
Cash fees shall be counted towards the Director Limit in the year for which they are reported as compensation in the Company’s
director compensation disclosures pursuant to Item 402 of Regulation S-K under the Securities Act, or a successor provision. The Director
Limit shall not apply to (i) Compensation earned by a Non-Employee Director solely in his or her capacity as chairperson of the Board
or lead independent director; (ii) Compensation earned with respect to services a Non-Employee Director provides in a capacity other
than as a Non-Employee Director, such as an advisor or consultant to the Company; and (iii) Compensation awarded by the Board to a Non-Employee
Director in extraordinary circumstances, as determined by the Board in its discretion, in each case provided that the Non-Employee Director
receiving such additional Compensation does not participate in the decision to award such Compensation.
Section
4. Eligibility. Employees, Directors, consultants and other persons who provide services to the Company or its Affiliates
are eligible to be granted Awards under the Plan; provided that such persons are eligible to be issued securities of the Company
registered on Form S-8 or exempt from registration under Rule 701 under the Securities Act, as applicable (or any successor provision).
However, only employees of the Company, any Parent or a Subsidiary are eligible to be granted Incentive Stock Options.
Section
5. Options. Options granted under the Plan may be of two types: (i) Incentive Stock Options or (ii) Non-Qualified Stock Options.
The Award Agreement shall state whether such grant is an Incentive Stock Option or a Non-Qualified Stock Option.
The
Award Agreement evidencing any Option will incorporate the following terms and conditions and will contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee deems appropriate in its sole and absolute discretion:
(a)
Shares. The number of Shares subject to the Option.
(b)
Option Price. The exercise price per Share under an Option will be determined by the Committee and, in the case of an Incentive
Stock Option, will not be less than 100% of Fair Market Value on the date of the grant. However, any Incentive Stock Option granted to
any Participant who, at the time the Option is granted, owns, either directly and/or within the meaning of the attribution rules contained
in Section 424(d) of the Code, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company,
will have an exercise price per Share of not less than 110% of Fair Market Value on the date of the grant.
(c)
Option Term. The term of each Option will be fixed by the Committee, but no Option will be exercisable more than 10 years after
the date the Option is granted. However, any Incentive Stock Option granted to any Participant who, at the time such Option is granted,
owns, either directly and/or within the meaning of the attribution rules contained in Section 424(d) of the Code, stock possessing more
than 10% of the total combined voting power of all classes of stock of the Company, may not have a term of more than 5 years. No Option
may be exercised by any Person after expiration of the term of the Option. Unless otherwise specified by the Committee or required by
the second sentence of this paragraph, each Option will have a term of 10 years (subject to earlier termination in accordance with other
provisions of this Plan and the applicable award agreement).
(d)
Exercisability. Options will vest and be exercisable at such time or times and subject to such terms and conditions as determined
by the Committee. Such terms and conditions may include the continued employment or service of the Participant, the attainment of specified
individual or corporate performance goals, or such other factors as the Committee may determine in its sole discretion (the “Vesting
Conditions”). The Committee may provide in the terms of an Award Agreement that the Participant
may exercise the unvested portion of an Option in whole or in part in exchange for shares of Restricted Stock subject to the same vesting
terms as the portion of the Option so exercised. Restricted Stock acquired upon the exercise of an unvested Option shall be subject to
such additional terms and conditions as determined by the Committee.
(e)
Method of Exercise. Subject to the terms of the applicable Award Agreement, the exercisability provisions of Section 5(d)
and the termination provisions of Section 7, Options may be exercised in whole or in part from time to time during their
term by the delivery of written notice to the Company specifying the number of Shares to be purchased. Such notice will be accompanied
by payment in full of the purchase price and any taxes required to be withheld in connection with such exercise, either by certified
or bank check, in the manner described in the next sentence, or by such other means as the Committee may accept. Unless otherwise determined
by the Committee (which determination may be made at any time), payment of the exercise price of an Option may be paid in the form of
previously acquired Shares based on the Fair Market Value of the Shares on the date the Option is exercised or by means of a “net
settlement,” whereby the Option exercise price will not be due in cash and where the number of Shares issued upon such exercise
will be equal to: (A) the product of (i) the number of Shares as to which the Option is then being exercised, and (ii) the excess, if
any, of (a) the then current Fair Market Value over (b) the Option exercise price, divided by (B) the then current Fair Market Value.
An
Option will not confer upon the Participant any of the rights or privileges of a stockholder in the Company unless and until the Participant
exercises the Option in accordance with the paragraph above and is issued Shares pursuant to such exercise.
(f)
Incentive Stock Option Limitations. In the case of an Incentive Stock Option, the aggregate Fair Market Value (determined as of
the time of grant) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant
during any calendar year under the Plan and/or any other plan of the Company, its Parent or any Subsidiary will not exceed $100,000.
For purposes of applying the foregoing limitation, Incentive Stock Options will be taken into account in the order granted. To the extent
any Option does not meet such limitation, that Option will be treated for all purposes as a Non-Qualified Stock Option.
(g)
Termination of Service. Unless otherwise specified in the applicable Award Agreement or as otherwise provided by the Committee
at or after the time of grant, Options will be subject to the terms of Section 7 with respect to exercise upon or following termination
of employment or other service.
Section
6. Stock Appreciation Right. Subject to the other terms of the Plan, the Committee may grant Stock Appreciation Rights to
eligible individuals. Each Stock Appreciation Right shall represent the right to receive, upon exercise, an amount equal to the number
of Shares subject to the Award that is being exercised multiplied by the excess of (i) the Fair Market Value on the date the Award is
exercised, over (ii) the base price specified in the applicable Award Agreement. Distributions may be made in cash, Shares, or a combination
of both, at the discretion of the Committee. The Award Agreement evidencing each Stock Appreciation Right shall indicate the base price,
the term and the Vesting Conditions for such Award. A Stock Appreciation Right base price may never be less than the Fair Market Value
of an underlying Share of the Company on the date of grant of such Stock Appreciation Right. The term of each Stock Appreciation Right
will be fixed by the Committee, but no Stock Appreciation Right will be exercisable more than 10 years after the date the Stock Appreciation
Right is granted. Subject to the terms and conditions of the applicable Award Agreement, Stock Appreciation Rights may be exercised in
whole or in part from time to time during their term by the delivery of written notice to the Company specifying the portion of the Award
to be exercised. Unless otherwise specified in the applicable Award Agreement or as otherwise provided by the Committee at or after the
time of grant, Stock Appreciation Rights will be subject to the terms of Section 7 with respect to exercise upon or following
termination of employment or other service.
Section
7. Termination of Service. Unless otherwise specified with respect to a particular Option or Stock Appreciation Right in the
applicable Award Agreement or otherwise determined by the Committee, any portion of an Option or Stock Appreciation Right that is not
exercisable upon termination of service will expire immediately and automatically upon such termination and any portion of an Option
or Stock Appreciation Right that is exercisable upon termination of service will expire on the date it ceases to be exercisable in accordance
with this Section 7.
(a)
Termination by Reason of Death. If a Participant’s service with the Company or any Affiliate terminates by reason of death,
any Option or Stock Appreciation Right held by such Participant may thereafter be exercised, to the extent it was exercisable at the
time of his or her death or on such accelerated basis as the Committee may determine at or after grant, by the legal representative of
the estate or by the legatee of the Participant, for a period expiring (i) at such time as may be specified by the Committee at or after
grant, or (ii) if not specified by the Committee, then six (6) months from the date of death, or (iii) if sooner than the applicable
period specified under (i) or (ii) above, upon the expiration of the stated term of such Option or Stock Appreciation Right. In the event
that an Option or Stock Appreciation Right granted hereunder shall be exercised by the legal representatives of a deceased or former
Participant, 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 or Stock Appreciation Right.
(b)
Termination by Reason of Disability. If a Participant’s service with the Company or any Affiliate terminates by reason of
Disability, any Option or Stock Appreciation Right held by such Participant may thereafter be exercised by the Participant or his or
her personal representative, to the extent it was exercisable at the time of termination, or on such accelerated basis as the Committee
may determine at or after grant, for a period expiring (i) at such time as may be specified by the Committee at or after grant, or (ii)
if not specified by the Committee, then six (6) months from the date of termination of service, or (iii) if sooner than the applicable
period specified under (i) or (ii) above, upon the expiration of the stated term of such Option or Stock Appreciation Right. In the event
that an Option or Stock Appreciation Right granted hereunder shall be exercised by the legal representatives of a former Participant,
written notice of such exercise shall be accompanied by proof of the right of such legal representative to exercise such Option or Stock
Appreciation Right
(c)
Cause. If a Participant’s service with the Company or any Affiliate is terminated for Cause or if a Participant resigns
at a time that there was a Cause basis for such Participant’s termination: (i) any Option or Stock Appreciation Right, or portion
thereof, not already exercised will be immediately and automatically forfeited as of the date of such termination, and (ii) any Shares
that the Company has not yet delivered will be immediately and automatically forfeited and the Company will refund to the Participant
the Option exercise price paid for such Shares, if any.
(d)
Other Termination. If a Participant’s service with the Company or any Affiliate terminates for any reason other than death,
Disability or Cause, any Option or Stock Appreciation Right held by such Participant may thereafter be exercised by the Participant,
to the extent it was exercisable at the time of such termination, or on such accelerated basis as the Committee may determine at or after
grant, for a period expiring (i) at such time as may be specified by the Committee at or after grant, or (ii) if not specified by the
Committee, then 90 days from the date of termination of service, or (iii) if sooner than the applicable period specified under (i) or
(ii) above, upon the expiration of the stated term of such Option or Stock Appreciation Right.
Section
8. Restricted Stock.
(a)
Issuance. Restricted Stock may be issued either alone or in conjunction with other Awards. The Committee will determine the time
or times within which Restricted Stock may be subject to forfeiture, and all other conditions of such Awards. The purchase price for
Restricted Stock may, but need not, be zero.
(b)
Restrictions and Conditions. The Award Agreement evidencing the grant of any Restricted Stock will incorporate the following terms
and conditions and such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee deems appropriate
in its sole and absolute discretion:
(i)
During a period commencing with the date of an Award of Restricted Stock and ending at such time or times as specified by the Committee
(the “Restriction Period”), the Participant will not be permitted to sell, transfer, pledge, assign or otherwise encumber
Restricted Stock awarded under the Plan. The Committee may condition the lapse of restrictions on Restricted Stock upon one or more Vesting
Conditions (provided that such Shares shall continue to be subject to the Insider Trading Policy to the extent applicable).
(ii)
While any Share of Restricted Stock remains subject to restriction, the Participant will have, with respect to the Restricted Stock,
the right to vote the Shares. If any cash distributions or dividends are payable with respect to the Restricted Stock, the cash distributions
or dividends will be subjected to the same Restriction Period as is applicable to the Restricted Stock with respect to which such amounts
are paid, or, if the Committee so determines, reinvested in additional Restricted Stock, to the extent Shares are available under Section
3 of the Plan. A Participant shall not be entitled to interest with respect to any dividends or distributions subjected to the Restriction
Period. Any distributions or dividends paid in the form of securities with respect to Restricted Stock will be subject to the same terms
and conditions as the Restricted Stock with respect to which they were paid, including, without limitation, the same Restriction Period.
(iii)
Subject to the provisions of the applicable Award Agreement or as otherwise determined by the Committee, if a Participant’s service
with the Company and its Affiliates terminates prior to the expiration of the applicable Restriction Period, the Participant’s
Restricted Stock that then remains subject to forfeiture will then be forfeited automatically.
Section
9. Restricted Stock Units. Subject to the other terms of the Plan, the Committee may grant Restricted Stock Units to eligible
individuals and may impose one or more Vesting Conditions on such units. Each Restricted Stock Unit will represent a right to receive
from the Company, upon fulfillment of any applicable conditions, an amount equal to the Fair Market Value (at the time of the distribution).
Distributions may be made in cash, Shares, or a combination of both, at the discretion of the Committee. The Award Agreement evidencing
a Restricted Stock Unit shall set forth the Vesting Conditions and time and form of payment with respect to such Award. The Participant
shall not have any stockholder rights with respect to the Shares subject to a Restricted Stock Unit Award until that Award vests and
the Shares are actually issued thereunder; provided, however, that an Award Agreement may provide for the inclusion of
dividend equivalent payments or unit credits with respect to the Award in the discretion of the Committee. Subject to the provisions
of the applicable Award Agreement or as otherwise determined by the Committee, if a Participant’s service with the Company terminates
prior to the Restricted Stock Unit Award vesting in full, any portion of the Participant’s Restricted Stock Units that then remain
subject to forfeiture will then be forfeited automatically.
Section
10. Cash or Other Stock Based Awards. Subject to the other terms of the Plan, the Committee may grant Cash or Other Stock
Based Awards (including Awards to receive unrestricted Shares or immediate cash payments) to eligible individuals. The Award Agreement
evidencing a Cash or Other Stock Based Award shall set forth the terms and conditions of such Cash or Other Stock Based Award, including,
as applicable, the term, any exercise or purchase price, performance goals, Vesting Conditions and other terms and conditions. Payment
in respect of a Cash or Other Stock Based Award may be made in cash, Shares, or a combination of cash and Shares, as determined by the
Committee.
Section
11. Amendments and Termination. Subject to any stockholder approval that may be required
under Applicable Law, the Plan may be amended or terminated at any time or from time to time by the Board.
Section
12. Repricing Permitted. The Committee may reprice Options or Stock Appreciation Rights without stockholder approval, whether
such repricing is accomplished by (i) means of a cancellation/re-grant program pursuant to which outstanding Options or Stock Appreciation
Rights are cancelled and new Options or Stock Appreciation Rights are granted in replacement with a lower exercise or base price per
share, (ii) cancellation of outstanding Options or Stock Appreciation Rights with exercise prices or base prices per share in excess
of the then current Fair Market Value for consideration payable in equity securities of the Company or cash, (iii) directly or indirectly
reducing the exercise price or base price of outstanding Options or Stock Appreciation Rights, or (iv) any other method.
Section
13. Conditions Upon Grant of Awards and Issuance of Shares.
(a)
The implementation of the Plan, the grant of any Award and the issuance of Shares in connection with the issuance, exercise or vesting
of any Award made under the Plan shall be subject to the Company’s procurement of all approvals and permits required by regulatory
authorities having jurisdiction over the Plan, the Awards made under the Plan and the Shares issuable pursuant to those Awards.
(b)
No Shares or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable
requirements of Applicable Law.
(c)
If the Company cannot, by the exercise of commercially reasonable efforts, obtain authority from any regulatory body having jurisdiction
over the issuance or sale of Shares under this Plan, and such authority is deemed by the Company’s counsel to be necessary to the
lawful issuance of those Shares, the Company will be relieved of any liability for failing to issue or sell those Shares.
Section
14. Limits on Transferability; Beneficiaries. No Award or other right or interest of a Participant under the Plan shall be
pledged, encumbered, or hypothecated to, or in favor of, or subject to any lien, obligation, or liability of such Participant to, any
party, other than the Company, any Subsidiary or Affiliate, or assigned or transferred by such Participant other than by will or the
laws of descent and distribution, and such Awards and rights shall be exercisable during the lifetime of the Participant only by the
Participant or his or her guardian or legal representative. Notwithstanding the foregoing, the Committee may, in its discretion, provide
that Awards or other rights or interests of a Participant granted pursuant to the Plan (other than an Incentive Stock Option) be transferable,
without consideration, to immediate family members (i.e., children, grandchildren or spouse), to trusts for the benefit of such immediate
family members, to partnerships in which such family members are the only partners, to other similar estate planning vehicles, or to
such other transferees as the Committee permits (taking into account the restrictions or requirements of applicable tax, securities and
other laws), provided that the Shares underlying such Award shall continue to be subject to the Insider Trading Policy to the extent
applicable. The Committee may attach to such transferability feature such terms and conditions as it deems advisable. In addition, a
Participant may, in the manner established by the Committee, designate a beneficiary (which may be a person or a trust) to exercise the
rights of the Participant, and to receive any distribution, with respect to any Award upon the death of the Participant. A beneficiary,
guardian, legal representative or other person claiming any rights under the Plan from or through any Participant shall be subject to
all terms and conditions of the Plan and any Award Agreement applicable to such Participant, except as otherwise determined by the Committee,
and to any additional restrictions deemed necessary or appropriate by the Committee.
Section
15. Withholding of Taxes. No later than the date as of which an amount first becomes includible in the gross income of the
Participant for federal income tax purposes with respect to any Award under the Plan, the Participant will pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any federal, state or local taxes of any kind required by law to be
withheld with respect to such amount. To the extent authorized by the Committee, the required tax withholding may be satisfied by the
withholding of Shares subject to the Award based on the fair market value of those Shares, as determined by the Company, but in any case
not in excess of the amount determined based on the maximum statutory tax rate in the applicable jurisdiction. The obligations of the
Company under the Plan will be conditioned on such payment or arrangements and the Company will have the right to deduct any such taxes
from any payment of any kind otherwise due to the Participant.
Section
16. General Provisions.
(a)
The Committee may require each Participant to represent to and agree with the Company in writing that the Participant is acquiring securities
of the Company for investment purposes and without a view to distribution thereof and as to such other matters as the Committee believes
are appropriate.
(b)
The Awards, and any Shares subject thereto, will be subject to the Company’s stock ownership, securities trading, anti-hedging
and other similar policies as in effect from time to time.
(c)
All Shares or other securities delivered under the Plan will be subject to such stop-transfer orders and other restrictions as the Board
may deem necessary to reflect the terms of the applicable Award or advisable to comply with the rules, regulations and other requirements
of the Securities Act, the Exchange Act, any stock exchange upon which the Shares are then listed, and any other Applicable Law.
(d)
Nothing contained in the Plan will prevent the Company from adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required.
(e)
Neither the adoption of the Plan nor the execution of any document in connection with the Plan will: (i) confer upon any employee or
other service provider of the Company or an Affiliate any right to continued employment or engagement with the Company or such Affiliate,
or (ii) interfere in any way with the right of the Company or such Affiliate to terminate the employment or engagement of any of its
employees or other service providers at any time.
(f)
The Awards (whether vested or unvested) shall be subject to rescission, cancellation or recoupment, in whole or in part, under any current
or future “clawback” or similar policy of the Company that is applicable to the Participant. Notwithstanding any other provisions
in this Plan, any Award which is subject to recovery under any law, government regulation or stock exchange listing requirement, will
be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange
listing requirement.
Section
17. Effectiveness of Plan. The Plan became effective on October 26, 2023 (the “Effective Date”), the date
it was approved by the Board; and was approved by the stockholders of the Company at its annual meeting of stockholders on December 13,
2023 (the “Approval Date”)].
Section
18. Term of Plan. Unless extended with the approval of the stockholders of the Company, the Plan shall terminate on the 10-year
anniversary of the Effective Date, and no Awards shall thereafter be granted under the Plan.
Section
19. Invalid Provisions. In the event that any provision of this Plan is found to be invalid or otherwise unenforceable under
any Applicable Law, such invalidity or unenforceability will not be construed as rendering any other provisions contained herein as invalid
or unenforceable, and all such other provisions will be given full force and effect to the same extent as though the invalid or unenforceable
provision was not contained herein.
Section
20. Governing Law. The Plan and all Awards granted hereunder will be governed by and construed in accordance with the laws
and judicial decisions of the State of Delaware, without regard to the application of the principles of conflicts of laws.
Section
21. Notices. Any notice to be given to the Company pursuant to the provisions of this Plan must be given in writing and addressed,
if to the Company, to its principal executive office to the attention of its Chief Financial Officer (or such other Person as the Company
may designate in writing from time to time), and, if to a Participant, to the address contained in the Company’s personnel files,
or at such other address as that Participant may hereafter designate in writing to the Company. Any such notice will be deemed duly given:
if delivered personally or via recognized overnight delivery service, on the date and at the time so delivered; if sent via telecopier
or email, on the date and at the time telecopied or emailed with confirmation of delivery; or, if mailed, five (5) days after the date
of mailing by registered or certified mail.
ANNUAL
MEETING OF STOCKHOLDERS OF
IDT
CORPORATION
December
13, 2023
Important
Notice Regarding the Availability of Proxy Materials for the IDT Corporation
Stockholders
Meeting to be Held on December 13, 2023:
The
Notice of Annual Meeting and Proxy Statement and the 2023 Annual Report are available at:
www.idt.net/investors-and-media
Please
date, sign and mail
your
proxy card in the
envelope
provided as soon
as
possible.
↓
Please detach along perforated line and mail in the envelope provided. ↓
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTES IN BLUE OR BLACK INK AS SHOWN HERE ☒
THE
BOARD OF DIRECTORS RECOMMENDS VOTES
“FOR”
THE LISTED NOMINEES AND “FOR” PROPOSALS 2 AND 3
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Election of Directors:
NOMINEES: |
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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 250,000. |
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To approve the IDT Corporation 2024 Equity Incentive Plan |
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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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☐ |
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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: |
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 13, 2023
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 Offices
of IDT Corporation, 520 Broad Street, Newark, New Jersey 07102 on December 13, 2023 at 11:00 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 AND “FOR”
PROPOSALS
2 AND 3 LISTED ON THE REVERSE SIDE.
CONTINUED
AND TO BE SIGNED ON REVERSE SIDE
ANNUAL
MEETING OF STOCKHOLDERS OF
IDT
CORPORATION
December
13, 2023
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 _______________ |
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. |
|
ACCOUNT
NUMBER _______________ |
↓
Please detach along perforated line and mail in the envelope provided you are not voting via the Internet. ↓
PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTES IN BLUE OR BLACK INK AS SHOWN HERE ☒
THE
BOARD OF DIRECTORS RECOMMENDS VOTES
“FOR”
THE LISTED NOMINEES AND “FOR” PROPOSALS 2 AND 3
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FOR |
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AGAINST |
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ABSTAIN |
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Election of Directors:
NOMINEES: |
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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 250,000. |
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To approve the 2024 IDT Corporation Equity Incentive
Plan |
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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 |
|
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. |
v3.23.3
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v3.23.3
Pay vs Performance Disclosure - USD ($)
|
12 Months Ended |
Jul. 31, 2023 |
Jul. 31, 2022 |
Jul. 31, 2021 |
Pay vs Performance Disclosure [Table] |
|
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|
Pay vs Performance [Table Text Block] |
Fiscal Year(1) | |
Summary Compensation Table Total for PEO(2) ($) | | |
Compensation Actually Paid to PEO ($) | | |
Average Summary Compensation Table Total for Non-PEO NEOs(3) ($) | | |
Average Compensation Actually Paid to Non-PEO NEOs ($) | | |
Value of Initial Fixed $100 Investment Based On Total Shareholder Return(4) ($) | | |
Value of Initial Fixed $100 Investment Based On Peer Group’s Total Shareholder Return(5) ($) | | |
Net Income ($) | |
Fiscal 2023 | |
| 1,075,425 | | |
| 1,075,425 | | |
| 1,095,435 | | |
| 1,083,516 | (6) | |
| 364.36 | | |
| 123.63 | | |
| 44,366,000 | |
Fiscal 2022 | |
| 1,027,500 | | |
| 1,080,870 | (7) | |
| 584,101 | | |
| 597,684 | (8) | |
| 399.85 | | |
| 102.23 | | |
| 29,005,000 | |
Fiscal 2021 | |
| 1,144,500 | | |
| 1,144,500 | (9) | |
| 671,833 | | |
| 671,833 | (10) | |
| 764.87 | | |
| 143.91 | | |
| 96,891,000 | |
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|
Named Executive Officers, Footnote [Text Block] |
(2) | Shmuel Jonas, Chief Executive Officer. |
|
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|
PEO Total Compensation Amount |
$ 1,075,425
|
$ 1,027,500
|
$ 1,144,500
|
PEO Actually Paid Compensation Amount |
1,075,425
|
1,080,870
|
1,144,500
|
Non-PEO NEO Average Total Compensation Amount |
1,095,435
|
584,101
|
671,833
|
Non-PEO NEO Average Compensation Actually Paid Amount |
$ 1,083,516
|
597,684
|
671,833
|
Adjustment to Non-PEO NEO Compensation Footnote [Text Block] |
(6) | In
Fiscal 2023, the average compensation actually paid to non-PEO NEOs was lower than the total
amount disclosed in the Summary Compensation Table in the average amount of $11,919, due
to the following: |
| (a) | an
increase in the average amount of $466,487 ($2,332,436 in the aggregate) related to the fair
market value of restricted shares of Class B Common Stock and Deferred Stock Units (“DSUs”)
awarded during Fiscal 2023 to the Non-PEO NEOs that did not vest during Fiscal 2023 based
upon the closing price of our Class B Common Stock on July 31, 2023 (the last trading day
of Fiscal 2023) of $23.72; see Outstanding Equity Awards at Fiscal Year-End, above; |
| (b) | an
increase in the average amount of $46,314 ($231,570 in the aggregate) related to the fair
market value of restricted shares of Class B Common Stock and Deferred Stock Units (“DSUs”)
awarded during Fiscal 2023 to the Non-PEO NEOs that vested during Fiscal 2023 based upon
the closing price of our Class B Common Stock on the applicable date of vesting; see Option
Exercises and Stock and Deferred Stock Units Vested, above. Excluded from this calculation
are restricted shares of Class B Common Stock owned by Bill Pereira and Marcelo Fischer that
were awarded in Fiscal 2023 for services provided in Fiscal 2022, see footnote 8 below; and |
| (c) | a
decrease in the average amount of $524,720 ($2,623,200 in the aggregate) related to the fair
market value of restricted shares of Class B Common Stock and DSUs awarded during Fiscal
2023 to the Non-PEOs based upon the price of the Class B Common Stock at the applicable grant
date; see Summary Compensation Table, above. |
(7) | In
Fiscal 2022, the compensation actually paid to Shmuel Jonas (PEO) was greater than the total
amount disclosed in the Summary Compensation Table in the amount of $53,370, due to the following: |
| (a) | an
increase in the amount of $319,620 related to the fair market value of restricted shares
of Class B Common Stock awarded during Fiscal 2023 for services provided by Shmuel Jonas
in Fiscal 2022 that vested upon grant based upon the closing price of our Class B Common
Stock on the applicable date of vesting; see Option Exercises and Stock and Deferred Stock
Units Vested, above; and |
| (b) | a
decrease in the amount of $266,250 related to the fair market value of restricted shares
of Class B Common Stock awarded during Fiscal 2023 for services provided by Shmuel Jonas
in Fiscal 2022 based upon the price of the Class B Common Stock at the applicable grant date;
see Summary Compensation Table, above. |
(8) | In
Fiscal 2022, the average compensation actually paid to non-PEO NEOs was higher than the total
amount disclosed in the Summary Compensation Table in the average amount of $13,583, due
to the following: |
| (a) | an
increase in the average amount of $83,334 ($416,670 in the aggregate) related to the fair
market value of restricted shares of Class B Common Stock awarded during Fiscal 2023 for
services provided by two non-PEO NEOs (Bill Pereira and Marcelo Fischer) in Fiscal 2022 that
vested upon grant based upon the closing price of our Class B Common Stock on the applicable
date of vesting; see Option Exercises and Stock and Deferred Stock Units Vested, above; and |
| (b) | a
decrease in the average amount of $69,751 ($348,753 in the aggregate) related to the fair
market value of restricted shares of Class B Common Stock awarded during Fiscal 2023 for
services provided by two non-PEO NEOs (Bill Pereira and Marcelo Fischer) in Fiscal 2022 based
upon the price of the Class B Common Stock at the applicable grant date; see Summary Compensation
Table, above. |
(9) | The
value of a grant to Shmuel Jonas in Fiscal 2021 of 50 restricted shares of Class B common
stock of net2phone 2.0, Inc., a wholly owned subsidiary of the Company (“net2phone
2.0”), which represents 5% of the outstanding common stock of net2phone 2.0, was valued
at the time of grant and assumed to not have changed value by the end of Fiscal 2021 as such
shares were illiquid and did not vest by the end of Fiscal 2021; see Summary Compensation
Table, above. |
(10) | The
value of a grant to Howard S. Jonas (a non-PEO NEO) in Fiscal 2021 of 50 restricted shares
of Class B common stock of net2phone 2.0, which represents 5% of the outstanding common stock
of net2phone 2.0, was valued at the time of grant and assumed to not have changed value by
the end of Fiscal 2021 as such shares were illiquid and did not vest by the end of Fiscal
2021; see Summary Compensation Table, above. |
|
|
|
Equity Valuation Assumption Difference, Footnote [Text Block] |
(4) | Calculated
based on a hypothetical $100 investment beginning at market close on July 31, 2020. |
|
|
|
Total Shareholder Return Amount |
$ 364.36
|
399.85
|
764.87
|
Peer Group Total Shareholder Return Amount |
123.63
|
102.23
|
143.91
|
Net Income (Loss) Attributable to Parent |
$ 44,366,000
|
29,005,000
|
$ 96,891,000
|
Additional 402(v) Disclosure [Text Block] |
(5) | Calculated
based on a hypothetical $100 investment beginning at market close on July 31, 2020 in the
S&P 500 Communication Services. |
|
|
|
Non-PEO NEO [Member] |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
$ 11,919
|
|
|
Number of restricted shares grant |
|
|
50
|
Outstanding common stock percentage |
|
|
5.00%
|
Non-PEO NEO [Member] | Increase in Average Amount Equity Awards did not Vest in Current Year [Member] |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
466,487
|
|
|
Non-PEO NEO [Member] | Aggregate Amount Equity Awards did not Vest in Current Year [Member] |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
$ 2,332,436
|
|
|
Non-PEO NEO [Member] | Outstanding Equity Awards [Member] |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Common stock closing price |
$ 23.72
|
|
|
Non-PEO NEO [Member] | Increase in Average Amount Equity Awards Vested in Current Year [Member] |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
$ 46,314
|
|
|
Non-PEO NEO [Member] | Aggregate Amount Equity Awards Vested in Current Year [Member] |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
231,570
|
|
|
Non-PEO NEO [Member] | Decrease in Average Amount Equity Awards Grant in Current Year [Member] |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
524,720
|
|
|
Non-PEO NEO [Member] | Aggregate Amount Equity Awards Grant in Current Year [Member] |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
$ 2,623,200
|
|
|
Non-PEO NEO [Member] | Average Compensation Higher than Total Amount [Member] |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
|
13,583
|
|
Non-PEO NEO [Member] | Increase in Average Amount of Equity Awards Vested upon Grant based upon Closing Price of ClassB Common Stock [Member] |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
|
83,334
|
|
Non-PEO NEO [Member] | Aggregate Amount of Equity Awards Vested upon Grant based upon Closing Price of Class B Common Stock [Member] |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
|
416,670
|
|
Non-PEO NEO [Member] | Decrease in Average Amount of Equity Awards for Services Based upon Price of Class B Common Stock [Member] |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
|
69,751
|
|
Non-PEO NEO [Member] | Aggregate Amount of Equity Awards for Services Based upon Price of Class B Common Stock [Member] |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
|
348,753
|
|
PEO [Member] |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
|
53,370
|
|
Number of restricted shares grant |
|
|
50
|
Outstanding common stock percentage |
|
|
5.00%
|
PEO [Member] | Increase in Amount Related to Fair Market Value Awards for Services [Member] |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
|
319,620
|
|
PEO [Member] | Decrease in Amount Related to Fair Market Value Awards for Services [Member] |
|
|
|
Pay vs Performance Disclosure [Table] |
|
|
|
Adjustment to Compensation Amount |
|
$ 266,250
|
|
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