officers. Awards for remaining employees were delayed until after the annual general meeting subject to receipt of shareholder approval of an increase in shares available under the Amended 2016
Stock Plan. The average trading price of our common shares for March had fallen another 76.4%, to $34.00 ($0.68 pre-reverse split).
In early March we received an informal notification from our representative at the New York Stock Exchange (NYSE) that we were at risk of receiving a notice of delisting
if the trading price of our shares fell below $1.00 (pre-reverse split) for 30 consecutive trading days. The notice also informed the Company that the NYSE reserved the right to delist a company immediately if
its securities are viewed to trade at abnormally low levels. In light of this informal communication and the continued volatility in our share price, the Board of Directors called a special meeting of shareholders and recommended that shareholders
approve the reverse split rather than wait for a potential formal notice of delisting from the NYSE. On April 20, 2020, the shareholders approved the reverse split which the Board implemented at a rate of 1-for-50. The reverse split became effective after market close on April 22, 2020. The closing price of our common shares on April 23, 2020 was $11.67, an equivalent of $0.23 pre-reverse split, down 92% from the beginning of the year.
On June 2, 2020, the day of our 2020 annual general meeting, the
closing price of our common shares was $38.92 ($0.78 pre-reverse split). Although the Amended 2016 Stock Plan was approved by the shareholders at the annual meeting, the Board nonetheless determined it to be
in the best interest of the Company and the shareholders to forego awarding equity-based awards to employees other than named executive officers (who received their awards in early 2020, as described above) in order to preserve shares under the
Amended 2016 Stock Plan and avoid excessive dilution to shareholders. Instead, deferred cash awards were granted to employees other than named executive officers. Subsequently, the directors also elected to receive deferred cash awards, with the
value of the grant being reduced from the $250,000 to which they were entitled to $180,000. Had the annual equity awards been made as originally planned to employees other than named executive officers and to
non-executive directors on June 2, 2020, the Company would have granted approximately 231,000 shares, or over 75%, of the 305,000 shares that had been just approved by the
shareholders on that day.
This year the Board has taken additional steps to preserve shares available for grant under the Amended 2016 Stock Plan by granting
Performance Share Units to the CEO and CFO that may either vest 100% in cash or shares or, in the case of the CEO grant, vest in cash or shares up to target payout but only in cash for any payout above target. Although employees received restricted
stock awards in 2021, if Amendment No. 1 is not approved at our 2021 annual general meeting, we may not have enough shares available under the Amended 2016 Stock Plan to cover all of the director equity awards in 2021 or the employee and
executive equity awards in 2022. If we are unable to adequately provide long-term equity compensation to incentivize our employees, or to provide annual equity grants as part of compensation to our
non-employee directors, we may lose key personnel to competitors, which would be detrimental to our operations. The Board, therefore, is requesting that shareholders approve the proposed Amendment No. 1
at this years annual general meeting in order to avoid the possibility that there will be an insufficient number of shares available under the Amended 2016 Stock Plan for grants to be made in 2021 and 2022.
The Board is requesting that shareholders approved Amendment No. 1 to the Amended 2016 Stock Plan in order to allow the Company to continue to grant equity-based
awards (referred to collectively under the 2013 Stock Plan and the Amended Stock Plan as Awards). If we are unable to adequately provide long-term equity compensation to incentivize our employees, or provide annual equity grants as part
of compensation to our non-employee directors, we may lose key personnel to competitors, which would be detrimental to our operations.
For additional information for share-based awards previously granted under our equity compensation plans, please see Note 7 to our consolidated financial statements in
our 2020 Annual Report. As of April 5, 2021, there were 8,503,845 common shares outstanding. The closing price for one common share on the New York Stock Exchange as of April 5, 2021 was $90.60.
In considering the New Shares to be issued under the Amended 2016 Stock Plan if Amendment No. 1 is approved, the Board encourages you to consider the following:
As of April 5, 2021, dilution attributed to the Companys equity compensation plans was approximately 6.77% and would increase by approximately 1.91% upon
the reserve of the New Shares. Dilution is measured as the sum of the total number of shares available for grant and shares outstanding under all equity awards (vested and unvested), as a percentage of the weighted average number of
common shares outstanding for that year. Over the past three years, the average annual dilution was 7.38%, 4.92% and 5.93% (for 2020, 2019 and 2018, respectively).
Over the past three years, the Company has had a very low burn rate for its equity compensation. As calculated for internal purposes, the burn rate over the
last three years was 1.66% for 2020, 2.40% for 2019 and 1.39% for 2018, respectively. When calculated using the methodology of Institutional Shareholder Services, Inc. (ISS) the burn rate was 2.08%, 2.54% and 1.68% for 2020, 2019 and
2018, respectively. The burn rate measures the number of shares granted during the fiscal year (disregarding cancellations), as a percentage of the weighted average number of common shares
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2021 Proxy Statement
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