Use defined terms effectively

Before

All of our executive officers are required to hold a minimum position in our stock. The Company established this program to help align long-term interest of executive officers with stockholders. The Chief Executive Officer must have a position equal to four times his or her annual base salary and Other Executive Officers must have a position equal to three times his or her annual base salary.

Although there is no specific period of time by which the executive officers will be required to achieve the applicable ownership guidelines, they are expected to make continuous progress toward their respective ownership guidelines and to comply with the following retention ratios until such guidelines have been achieved:

  • The CEO must hold 75% of net profit shares from equity awards until the minimum position requirement has been achieved.
  • Other Executive Offices must hold 50% of net profit shares from equity awards until the minimum position requirement has been achieved.

These retention ratios apply to net profit shares received upon: (i) the vesting of restricted stock, restricted stock units, performance-based restricted stock and performance-based restricted stock units or (ii) the exercise of stock options. “Net profit shares” are those shares that remain after payment of any exercise price and taxes owed at the exercise of stock options or vesting or settlement of restricted stock or restricted stock units.

Before, with commentary

All of our executive officers are required to hold a minimum position in our stock. The Company established this program to help align long-term interest of executive officers with stockholders [this phrasing is grammatically awkward]. The Chief Executive Officer must have a position equal to four times his or her annual base salary and Other Executive Officers must have a position equal to three times his or her annual base salary [this mixes plural (Officers) and singular (his or her) references].

Although there is no specific period of time by which the executive officers will be required to achieve the applicable ownership guidelines [you can “comply” with a “guideline,” but I don’t think it’s correct to say you “achieve” one] they are expected to make continuous progress toward their respective ownership guidelines and to comply with the following retention ratios until such guidelines have been achieved:

  • The CEO must hold 75% of net profit shares [this is defined in the next paragraph, but you wouldn’t know it from here] from equity awards [this is incorporated in the definition] until the minimum position requirement has been achieved.
  • Other Executive Offices must hold 50% of net profit shares from equity awards until the minimum position requirement has been achieved.

These retention ratios apply to net profit shares received upon: (i) the vesting of restricted stock, restricted stock units, performance-based restricted stock and performance-based restricted stock units or (ii) the exercise of stock options. “Net profit shares” [aha!] are those shares that remain after payment of any exercise price and taxes owed at the exercise of stock options or vesting or settlement of restricted stock or restricted stock units.

After

All of our executive officers are required to hold a minimum position in our stock. We established this program to help align the long-term interests of our executive officers with those of our stockholders. The Chief Executive Officer must have a position equal to four times his or her annual base salary; the other NEOs* must have positions equal to three times their respective annual base salaries.

Although there is no specific period of time in which the executive officers are required to achieve the applicable ownership threshold, they are expected to make continuous progress toward that goal, and to comply with the following retention ratios in the interim:

  • The CEO must hold 75% of his or her Net Profit Shares until the minimum position requirement has been achieved; and
  • The other NEOs must hold 50% of their respective Net Profit Shares until the minimum position requirement has been achieved.

For purposes of our stock ownership requirements, Net Profit Shares are shares received upon: (i) the vesting and settlement of restricted stock, restricted stock units, performance-based restricted stock, and performance-based restricted stock units, or (ii) the exercise of stock options, after payment of any exercise price and taxes owed as a result of that transaction.

 

* The proxy this sample came from had already defined the term NEO.