Connecticut Share Appreciation Rights Plan with amendment

• Category: Corporations - Public - Stock Options
• State: Multi-State
• Control #: US-CC-18-400D
• Format: Word; Rich Text

Description

18-400D 18-400D . . . Share Appreciation Rights Plan under which stock option committee determines to whom units are awarded, number of units to be awarded and terms of such units. On grant date, committee assigns each unit a base value which cannot be less than market value of share of common stock on that date. Each award becomes exercisable with respect to 25% of units awarded on each of first four anniversaries of grant date, provided grantee has been continually employed full-time by corporation or subsidiary. Units may be exercised, to extent vested, at any time until five years after grant date. Upon exercise of vested units, grantee is entitled to receive net appreciation of such units in cash or in shares of common stock, as determined by committee

Connecticut Share Appreciation Rights Plan (SHARP) is a compensation program that has gained popularity among companies and organizations for its ability to reward and retain key employees by providing them with additional financial incentives based on the company's stock appreciation. It is a form of equity-based compensation that grants eligible employees the right to receive cash or stock equivalent to the appreciation in the company's stock value. The purpose of implementing a Connecticut SHARP is to align the interests of the employees with those of the company's shareholders. By granting employees the opportunity to participate in the company's financial success, it encourages them to work harder, make decisions that contribute to long-term growth, and ultimately drive shareholder value. Under the original Connecticut SHARP, eligible employees are granted a specific number of share appreciation rights, which entitle them to the appreciation in the company's stock price over a predetermined period. These rights typically vest over time, incentivizing employees to remain with the company. When the SARS are exercised, employees receive the difference between the fair market value of the stock at the date of exercise and the grant price as either cash or company stock. However, amendments to the original Connecticut SHARP have introduced variations of this compensation plan to accommodate specific needs and circumstances of companies. Some notable variations include: 1. Performance-based SHARP: This type of SHARP ties the share appreciation rights to achieving predetermined performance goals set by the company. These goals can be financial targets, operational milestones, or specific market benchmarks. Employees only receive the appreciation rights if the performance targets are met, which further aligns their interests with the company's overall objectives. 2. Restricted Stock Unit (RSU) based SHARP: This variation replaces the SARS with RSS, which are essentially contractual rights to receive company stock in the future. RSS have become popular due to their simplicity and their ability to provide long-term incentives to employees, especially in heavily regulated industries. 3. Cash-settled SHARP: Instead of receiving company stock, employees are granted the right to receive a cash payment equivalent to the stock appreciation. This type of SHARP is particularly useful for organizations that don't want to dilute their existing shareholders' equity or those that are not publicly traded. 4. Change of Control (COC) SHARP: This variation of the SHARP focuses on protecting the interests of employees in the event of a merger, acquisition, or other change of control. COC SARS often trigger vesting acceleration or special cash payouts if specific criteria, such as a change in company ownership, are met. In summary, Connecticut Share Appreciation Rights Plan (SHARP) is an effective compensation mechanism that encourages employee retention and fosters a sense of ownership and alignment with the company's objectives. Its variations, including performance-based SARS, RSU-based SARS, cash-settled SARS, and COC SARS, allow companies to tailor the program to suit their unique needs and circumstances.