Business Context and Reporting Period
This Form 8-K is a current report filed by AudioEye, Inc. on December 23, 2015. The filing discloses the adoption of the Company's 2016 Incentive Compensation Plan and the subsequent award of Performance Options to key executives, subject to shareholder approval.
Key Financial Metrics
The filing text does not provide specific values for revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on corporate governance and executive compensation arrangements.
Material Changes and Compensation Details
On December 17, 2015, the Board approved the 2016 Incentive Compensation Plan, reserving 10 million shares of Common Stock. On December 22, 2015, Performance Options were awarded to the following executives:
- Executive Chairman: 2,000,000 shares Target Award (up to 3,000,000 shares with Performance Increase).
- Chief Executive Officer: 2,000,000 shares Target Award (up to 3,000,000 shares with Performance Increase).
- President/Chief Technology Officer: 1,500,000 shares Target Award (up to 2,250,000 shares with Performance Increase).
Vesting Conditions:
- Performance Goals: Vesting is based 33.33% on Targeted Cash Contract Bookings, 33.33% on Targeted Net Operating Cash Flow, and 33.33% on Board Defined Operations Goals.
- Share Price Condition: Vesting only occurs if the closing share price is at least $0.20 per share for 20 consecutive trading days ending on the measurement date.
- Performance Periods: 2016 and 2017, with 50% of the award subject to vesting in each period. Cumulative achievement over the two-year period allows for full vesting if the first period falls short.
- Exercise Price: Determined by the 10-day average closing price beginning January 4, 2016.
- Term: Five years from the date of grant.
Guidance, Outlook, and Risks
The filing does not contain financial guidance or general outlook commentary. The primary contingency noted is that the 2016 Plan and the associated Performance Options are subject to shareholder approval. Additionally, the Compensation Committee retains sole discretion in determining whether Performance Goals have been achieved.
Investor Verification Checklist
- Confirm whether the 2016 Incentive Compensation Plan received the required shareholder approval.
- Verify the final exercise price once the 10-day average closing price calculation (starting Jan 4, 2016) is complete.
- Monitor the Company's share price to ensure it meets the $0.20 threshold for 20 consecutive trading days prior to vesting dates.
- Review future filings for the specific "Board Defined Operations Goals" which are not detailed in this report.
- Assess the dilution impact of the 10 million shares reserved under the 2016 Plan.