Proposal 4
— Approval– Advisory Vote to Approve Frequency of
Amended and Restated Equity Incentive PlanSay-on-Pay VoteOn April 4, 2022, the Board, upon the recommendationPursuant to Section 14A of the Compensation Committee, approvedExchange Act, we are asking stockholders to approve, on an amendment and restatementadvisory basis, whether the advisory vote on the compensation of our Amendednamed executive officers, or say-on-pay vote, such as Proposal 3, should occur every one, two, or three years. This proposal is commonly called a “say-on-frequency” vote and Restated Equity Incentive Plan (as amended pursuant to this proposal,must occur every six years. Our last say-on-frequency vote was in 2017, at which time our stockholders supported on an advisory basis, and our Board approved, holding the “EIP”), subject to stockholder approval. say-on-pay vote on an annual basis.
We are asking stockholders to approve a frequency of every one, two, or three years for our proposed EIP. The EIP has been amended and restated to increaseadvisory vote on executive compensation, as determined by the highest number of shares availablevotes cast by stockholders.
You may cast your vote by choosing a frequency of every one, two, or three years or you may abstain from voting on this proposal. The frequency that receives the greatest number of votes cast by our stockholders will be considered the frequency for issuancethe say-on-pay vote recommended by 600,000 shares, to extendstockholders. As this is an advisory vote, the termresult will not be binding on Intrepid, the Board, or the Compensation Committee. However, the Board and Compensation Committee will consider the outcome of the EIP to May 19, 2032, and to make other minor changes. By approving this proposal, stockholders would authorize for issuance under the EIP a total of 600,000 shares, plus the number of shares remaining available for grant under the EIP as of May 19, 2022.
Background
Our Board and stockholders originally approved the EIP in 2008 and approved the most recent amendment and restatement of the EIP in 2019. On April 4, 2022, the Board, upon the unanimous recommendation of the Compensation Committee, unanimously approved an amendment and restatement of the EIP, subject to stockholder approval. Our Board then directed thatvote when determining how often we should submit the amended and restated EIP to a vote of our stockholders at the Annual Meeting. On April 1, 2022, there were 493,880 shares remaining available for grant under the EIP.
Purpose of the EIP
The EIP is an equity incentive plan that is designed to provide equity incentives to attract, retain, and motivate eligible employees, directors, and consultants and to align their interests with those of our stockholders. The EIP is designed with the flexibility to award restricted stock, restricted stock units, performance awards, incentive stock options, non-qualified stock options, stock appreciation rights, cash-based awards, and other stock-based awards to eligible individuals. Equity incentives have been an important part of our overall compensation program. A portion of total annual compensation of our executive officers is paid in the form of equity awards to more closely align the interests of management with the long-term interests of our stockholders.
Burn Rate and Total Potential Dilution
In setting and recommending to stockholders the number of additional shares to authorize under the EIP, the Compensation Committee considered historical equity awards granted under the EIP, as well as our burn rate as calculated in the table below.
2021 | | | 57,720 | | | 96,349 | | | 154,069 | | | 13,098,871 | | | 1.2% |
2020 | | | 94,518 | | | 215,892 | | | 310,410 | | | 12,993,235 | | | 2.4% |
2019 | | | 76,390 | | | 68,333 | | | 144,723 | | | 12,904,916 | | | 1.1% |
3 Year Average | | | 76,209 | | | 126,858 | | | 203,067 | | | 12,999,007 | | | 1.6% |
The burn rate is the ratio of the number of shares underlying awards granted under the EIP during a year divided by our weighted average common shares outstanding for that year.say-on-pay vote.
We calculate total potential dilution asbelieve that say-on-pay votes should be conducted every year so that stockholders may annually express their views on our executive compensation program. In formulating its recommendation, our Board considered that an annual advisory vote on executive compensation will continue to allow our stockholders to provide the sum of the total number of shares subject to equity awards outstandingBoard with direct and the total number of shares available for grant under the EIP (our only equity plan) divided by the sum of the total number of shares of common stock outstanding, the total number of shares subject to equity awards outstanding (which are not already included in total common stock outstanding),timely input on our executive compensation principles, policies, and the total number of shares available for grant under the EIP. Our total potential dilution as of December 31, 2021, was 8.4%. Assuming the EIP is approved, the additional 600,000 shares available for issuance would have increased our total potential dilution as of December 31, 2021, to approximately 12%.