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Proxy
Excerpt
Prior to the completion of the share distribution, Comverse expects to
adopt the Comverse, Inc. 2012 Stock Incentive Compensation Plan (or
the
2012
Incentive
Plan).
The
purpose
of
the
2012
Incentive
Plan
will
be
to
provide
Comverse
with
a
competitive
advantage
in
attracting,
retaining and motivating employees, non-employee directors and consultants.
Comverse’s business requires a highly talented and seasoned
team of
communication and business professionals capable of managing a sophisticated global business in a rapidly changing industry. The
2012 Incentive Plan is intended to align the interests of Comverse’s
employees, non-employee directors and consultants with those of its
shareholders through the issuance of equity-based compensation and enhance
their focus on improvements in operating performance and
the creation of
shareholder value. The 2012 Incentive Plan permits the granting of awards that are intended to constitute performance-based
compensation
for
certain
executive
officers
under
Section
162(m)
of
the
Internal
Revenue
Code
of
1986,
as
amended
(or
the
Code).
In
addition,
the
2012
Incentive
Plan
is
expected
to
provide
for
the
assumption
of
awards
pursuant
to
the
adjustment
of
awards
granted
under
CTI’s current incentive plan. See “PROPOSAL 1 AUTHORIZATION OF THE SHARE
DISTRIBUTION—Treatment of Stock-Based Awards.”
The following is
a summary of the material terms of the 2012 Incentive Plan, but does not include all of the provisions of the 2012 Incentive
Plan. For further information about the 2012 Incentive Plan, we refer you to a
complete copy of the 2012 Incentive Plan, which is attached as
Annex B
to this proxy statement.
The 2012 Incentive Plan provides for the issuance of nonqualified stock options,
incentive stock options, stock appreciation rights, restricted
stock, other
stock-based awards and performance-based compensation awards (referred to collectively as the Awards) based on shares of
Comverse common stock (referred to as the Shares). Comverse’s employees,
non-employee directors and consultants as well as employees
and
consultants of its subsidiaries and affiliates are eligible to receive Awards.
A total of 2.5 million Shares will be reserved for issuance under future awards to
be granted under the 2012 Incentive Plan following the
effective date of the
plan (referred to as the Future Awards). No Future Awards have been granted as of the this time.
Pursuant to the terms of the share distribution, certain awards that were
previously granted under CTI’s stock incentive plan have been
converted
to awards that relate to Comverse common stock and have been assumed by the 2012 Incentive Plan (referred to as the Assumed
CTI Awards). A total of 5.0 million Shares will be reserved for issuance under the
Assumed CTI Awards. Such reserved Shares may only be
issued pursuant to the
Assumed CTI Awards and may not be issued pursuant to any Future Awards.
The
numbers of Shares authorized for issuance under Future Awards and under Assumed CTI Awards will represent approximately 11.4%
and 22.8%, respectively of the outstanding shares of Comverse stock following the
share distribution. In connection with the share distribution,
steps have
been taken to reduce the number of Shares and potential dilution associated with the Assumed CTI Awards, to the extent
reasonably
possible
within
the
limitations
of
the
terms
of
these
awards,
as
well
as
applicable
tax
and
accounting
limitations.
As
described
more fully in “PROPOSAL 1 AUTHORIZATION OF THE SHARE
DISTRIBUTION—Treatment of Stock–Based Awards”, the aggregate value
of stock options will be preserved using Black-Scholes modeling, but with the
result that the number of Shares issuable under the options (as
a percentage
of outstanding shares) has been reduced significantly.
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