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DEF 14A
GRAHAM HOLDINGS CO filed this Form DEF 14A on 03/23/2017
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for delivery under the 2012 ICP. In addition, if shares of common stock are issued subject to conditions that may result in the forfeiture, cancellation or return of such shares to the Company, any portion of the shares forfeited, cancelled or returned shall be treated as not issued pursuant to the 2012 ICP. In addition, if shares of common stock owned by a participant (or such participants permitted transferees as described in the 2012 ICP) are tendered (either actually or through attestation) to the Company in payment of any obligation in connection with an award, the number of shares tendered shall be added to the number of shares of common stock that are available for delivery under the 2012 ICP. Shares of common stock covered by awards granted pursuant to the 2012 ICP in connection with the assumption, replacement, conversion or adjustment of outstanding equity-based awards in the context of a corporate acquisition or merger shall not count as used under the 2012 ICP for these purposes.

As of December 31, 2016, a total of approximately 446,170 shares remain available for issuance under the 2012 ICP.

Award Types. The 2012 ICP allows for grants of the following types of incentive awards: (1) stock options; (2) other stock-based awards, including in the form of stock appreciation rights, phantom stock, restricted stock, restricted stock units, performance shares, deferred share units or share-denominated performance units; or (3) cash awards. Subject to the terms and limitations set forth in the 2012 ICP, awards may be settled in cash or in stock and may be designed to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code.

Awards of Options. The 2012 ICP permits grants of stock options.

Repricing Prohibited. Consistent with the applicable rules of the New York Stock Exchange List Company Manual, the repricing of any stock option by the Company without shareholder approval is prohibited.

Exercise Price. The exercise price per share of common stock covered by any option shall be not less than 100% of the fair market value, as defined in the 2012 ICP, of a share of common stock on the date on which such option is granted. For this purpose, fair market value is calculated as the average of the high and low sales prices on the date of grant; or if not so reported for such date, on the immediately preceding business day, as reported on the principal securities exchange on which shares of common stock are then listed or admitted to trade; or if not so reported, the fair market value shall be calculated as set forth in the ICP.

Terms Applicable to Options. An option granted to a participant under the 2012 ICP allows a participant to purchase up to a specified total number of shares of the Company’s Class B Common Stock, or any other security that the common stock shall be converted pursuant to the adjustment provisions of the 2012 ICP, at a specified exercise price per share during specified time periods. Stock options will have a term no longer than ten years. Subject to the terms and limitations of the 2012 ICP, the Compensation Committee will determine the terms and conditions applicable to awards of stock options, including with regard to vesting and exercisability, which may be based on, among other things, continued employment with the Company, the passage of time or the level of achievement of certain performance goals as the Compensation Committee deems appropriate.

Federal Income Tax Consequences of Options. The following is a general description of the U.S. federal income tax consequences to participants relating to options awards that may be granted under the 2012 ICP based upon current tax laws. This summary applies only to U.S. citizens and/or residents and does not describe state, local or foreign tax consequences. This summary is not intended to be exhaustive and does not purport to cover all tax consequences relating to all award types under the 2012 ICP.

Stock options under the 2012 ICP do not qualify as incentive stock options (“non-qualified stock options”) and do not qualify for any special tax benefits to the optionee. An optionee will not recognize any taxable income at the time he or she is granted a non-qualified stock option. Upon exercise of the stock option, the optionee will generally recognize compensation income for federal tax purposes measured by the excess, if any, of the then fair market value of the shares at the time of exercise over the exercise price. The Company is generally entitled to a tax deduction in an amount equal to the ordinary income recognized by the participant in connection with such exercise. The employee’s basis in the shares issued upon exercise of the stock option will be increased by the amount of the compensation income recognized. Upon the sale of the shares issued upon exercise of a non-qualified stock option, any further gain or loss recognized will be treated as capital gain or loss and will be treated as short-term capital gain or loss if the shares have been held for less than one year.

Terms Applicable to Other Stock-Based Awards. Subject to the terms and limitations of the 2012 ICP, the Compensation Committee will determine the terms and conditions applicable to awards of other stock-based awards, including with regard to vesting and exercisability, which may be based on, among other things, continued employment with the Company, the passage of time or the level of achievement of certain performance goals as the Compensation Committee deems appropriate.

 

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