UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington
, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant
x
Filed by a Party other than the Registrant
o
Check the appropriate box:
o
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Preliminary Proxy Statement
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o
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Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
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x
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Definitive Proxy Statement
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o
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Definitive Additional Materials
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o
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Soliciting Material Pursuant to §240.14a-12
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Plug Power Inc.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check
the appropriate box):
x
No fee required.
o
Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which
transaction applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of
transaction:
(5) Total fee paid:
o
Fee paid previously with preliminary materials.
o
Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
1
IMPORTANT VOTING INFORMATION
STOCKHOLDERS
MAY REQUEST ELECTRONIC DELIVERY OF PROXY DOCUMENTS.
Stockholders may elect to
receive future distributions of proxy statements and annual reports by e-mail.
To take advantage of this service, please see
Delivery of Proxy Materials
and Annual Report
of this proxy statement for further information.
INFORMATION REGARDING ADMISSION TO THE
2011
ANNUAL MEETING
In accordance
with our security procedures, all stockholders attending the 2011 Annual
Meeting of Stockholders must present valid picture identification upon entry.
2
PLUG
POWER INC.
968 Albany Shaker Road
Latham
, NY 12110
April
11,
2011
Dear
Stockholder:
You are cordially invited to attend the 2011 Annual
Meeting of Stockholders (the Annual Meeting) of Plug Power Inc., a Delaware corporation (the Company), to be held on Thursday, May 12, 2011, at 10:00 a.m.,
Eastern Time, at the offices of Plug Power Inc., 968 Albany Shaker Road, Latham, New York 12110.
The Annual Meeting has been called for the purpose of
(i) electing one Class III Director for a three-year term; (ii)
approving an amendment to the Companys Amended and Restated
Certificate of Incorporation to effect a reverse stock split of the Companys
common stock; (
iii) approving the
Companys 2011 Stock Option and Incentive Plan; (
iv) approving an advisory resolution regarding the
compensation of the Companys named executive officers; (
v) voting on an advisory
proposal
regarding
the frequency at which the Company should
include an advisory vote regarding the compensation of the Companys named
executive officers in its proxy statement for stockholder consideration; and
(vi) considering and voting upon such other business as may properly come
before the Annual Meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business
on March 31, 2011, as the record date for determining stockholders entitled to
notice of, and to vote at, the Annual Meeting and any adjournments or
postponements thereof.
The Board of Directors of the Company recommends that
you
vote:
1.
FOR the election of the one nominee as a Class III
Director of the Company as described in the accompanying proxy statement
;
2.
FOR the approval of the Companys
Second Certificate of Amendment of Amended and Restated Certificate of Incorporation to effect a reverse stock
split of the Companys common stock
as described in the
accompanying proxy statement;
3.
FOR the approval of the Companys 2011 Stock Option
and Incentive Plan as described in the accompanying proxy
statement;
4.
FOR the approval of the advisory resolution
regarding the compensation of the Companys named executive
officers as described in the accompanying proxy
statement; and
5.
FOR the approval of the advisory proposal that an
advisory vote on the compensation of the Companys
Named Executive Officers be included in the Companys proxy
statement every three (3) years
as described
in the accompanying proxy statement
.
IT IS IMPORTANT THAT YOUR
SHARES BE REPRESENTED AT THE ANNUAL MEETING. WHETHER OR NOT YOU PLAN TO ATTEND
THE ANNUAL MEETING, YOU ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN
PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
Sincerely,
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Andrew Marsh
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President and Chief
Executive Officer
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3
PLUG POWER INC.
968 Albany Shaker Road
Latham, NY 12110
(518) 782-7700
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held on Thursday, May 12, 2011
NOTICE IS HEREBY GIVEN that the 2011 Annual Meeting of
Stockholders of Plug Power Inc., a Delaware corporation (the Company), will
be held on Thursday, May 12, 2011, at 10:00 a.m., Eastern Time, at the offices
of Plug Power Inc., 968 Albany Shaker Road, Latham, New York 12110 (the Annual
Meeting) for the purpose of considering and voting upon:
1.
The election of one Class III Director nominated by
the Board of Directors to hold office until the Companys 2014 Annual Meeting
of Stockholders and until such directors successor is duly elected and
qualified or until such directors earlier resignation or removal; and
2.
To
consider and approve the Companys
Second Certificate of Amendment of Amended and Restated Certificate of Incorporation to effect a reverse stock
split of the Companys common stock; and
3.
To consider and approve the Companys 2011 Stock
Option and Incentive Plan; and
4.
To consider and approve an advisory resolution
regarding the compensation of the Companys named executive
officers; and
5.
To consider and vote upon an advisory proposal
regarding the frequency at which the Company should include an advisory vote
regarding the compensation of the Companys named executive officers in its
proxy statement for stockholder consideration; and
6.
Such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.
Proposal number one relates solely to the election of
one Class III Director nominated by the Board of Directors and does not include
any other matters relating to the election of directors, including, without
limitation, the election of directors nominated by any stockholder of the
Company.
The Board of Directors has fixed the close of business
on March 31, 2011 as the record date for determination of stockholders entitled
to notice of, and to vote at, the Annual Meeting and any adjournments or
postponements thereof. Only holders of the Companys common stock of record at
the close of business on that date will be entitled to notice of, and to vote
at, the Annual Meeting and any adjournments or postponements thereof.
Any action may be taken on the foregoing matters at
the Annual Meeting on the date specified above, or on any date or dates to
which, by original or later postponement or adjournment, the Annual Meeting may
be postponed or adjourned.
By Order of the Board of
Directors
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Gerard L. Conway, Jr.
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Corporate Secretary
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Latham, NY
April 11, 2011
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING
IN PERSON, YOU ARE REQUESTED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED
PROXY CARD IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON IF YOU
WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
4
PROXY STATEMENT
TABLE OF CONTENTS
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PROPOSAL 1: ELECTION OF DIRECTORS...........................................................................................................
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9
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Introduction............................................................................................................................................................
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9
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Vote Required for Approval ................................................................................................................................
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9
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Recommendation....................................................................................................................................................
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9
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INFORMATION ABOUT OUR DIRECTORS............................................................................................................
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9
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COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS..................................................................
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11
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Audit Committee.....................................................................................................................................................
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11
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Audit Committee Report.........................................................................................................................................
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12
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Compensation Committee......................................................................................................................................
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13
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Corporate Governance and Nominating Committee..........................................................................................
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13
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Director Compensation..........................................................................................................................................
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14
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Policy Governing Director Attendance at Annual
Meetings..........................................................................
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16
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Policies Governing Director Nominations...........................................................................................................
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16
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Contacting the Board of Directors.......................................................................................................................
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17
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS...........................................................................................
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18
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EXECUTIVE COMPENSATION......................................................................................................................................
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19
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Compensation Discussion and Analysis.............................................................................................................
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19
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Summary Compensation..........................................................................................................................................
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25
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Discussion of Summary Compensation and Grants of
Plan-Based Award Tables .......................................
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26
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Employment Agreements........................................................................................................................................
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27
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Annual Incentive Bonuses.....................................................................................................................................
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28
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2010 Stock Option Grants ......................................................................................................................................
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28
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1999 Stock Option and Incentive Plan ................................................................................................................
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28
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Potential Payments Upon Termination or
Change-in-Control ........................................................................
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30
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Compensation Committee Report.........................................................................................................................
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33
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Compensation Committee Interlocks and Insider
Participation......................................................................
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34
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PROPOSAL 2: APPROVAL OF AMENDMENT TO THE COMPANYS
CHARTER TO EFFECT A REVERSE
STOCK SPLIT OF THE COMPANYS COMMON STOCK................................................................................
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35
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Introduction...............................................................................................................................................................
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35
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Purpose and Background of the Reverse Split....................................................................................................
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35
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Material Effects of Proposed Reverse Stock Split..............................................................................................
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36
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Procedure for Effecting Reverse Split and Exchange
of Stock Certificates.....................................................
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37
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Fractional Shares.....................................................................................................................................................
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37
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Criteria to Be Used for Decision to Apply the
Reverse Stock Split................................................................
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37
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No Dissenters Rights............................................................................................................................................
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38
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Certain Material U.S. Federal Income Tax
Considerations..............................................................................
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38
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Vote Required for Approval ................................................................................................................................
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39
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Recommendation.....................................................................................................................................................
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39
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PROPOSAL 3: APPROVAL OF THE PLUG POWER INC. 2011
STOCK OPTION AND INCENTIVE PLAN
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40
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Summary of the 2011 Plan.....................................................................................................................................
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41
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Effective Date of 2011 Plan...................................................................................................................................
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42
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Equity Compensation Plan Information at December 31,
2010.........................................................................
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42
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Tax Aspects Under the Code.................................................................................................................................
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43
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Parachute Payments................................................................................................................................................
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44
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Limitation on the Companys Deductions...........................................................................................................
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44
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Vote Required for Approval...................................................................................................................................
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44
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Recommendation.....................................................................................................................................................
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44
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5
PROPOSAL 4: ADVISORY VOTE ON EXECUTIVE COMPENSATION............................................................
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45
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Overview............................................................................................................................................................................
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45
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Vote Required for Approval...........................................................................................................................................
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45
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Recommendation.............................................................................................................................................................
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45
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PROPOSAL 5: FREQUENCY OF ADVISORY VOTES ON EXECUTIVE
COMPENSATION.........................
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46
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Overview.............................................................................................................................................................................
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46
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Vote Required for Approval............................................................................................................................................
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46
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Recommendation...............................................................................................................................................................
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46
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ........................................................................
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47
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PRINCIPAL STOCKHOLDERS....................................................................................................................................
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47
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE........................................................
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49
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EXPENSES OF SOLICITATION.....................................................................................................................................
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49
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SUBMISSION OF STOCKHOLDER PROPOSALS FOR 2011 ANNUAL
MEETING.........................................
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49
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DELIVERY OF PROXY MATERIALS AND ANNUAL REPORT.............................................................................
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49
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ANNUAL REPORT ON FORM 10-K ..............................................................................................................................
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50
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APPENDIX A: SECOND CERTIFICATE OF AMENDMENT OF AMENDED AND
RESTATED CERTIFICATE OF
INCORPORATION OF PLUG POWER INC............................................................................................................
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51
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APPENDIX B: PLUG POWER INC. 2011 STOCK OPTION AND
INCENTIVE PLAN.......................................
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52
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6
PLUG POWER INC.
968 Albany Shaker Road
Latham, NY 12110
(518) 782-7700
PROXY
STATEMENT
ANNUAL
MEETING OF STOCKHOLDERS
To
Be Held on Thursday, May 12, 2011
This Proxy Statement is furnished in connection with
the solicitation of proxies by the Board of Directors of Plug Power Inc. (the
Company) for use at the 2011 Annual Meeting of Stockholders of the Company to
be held on Thursday, May 12, 2011, at 10:00 a.m., Eastern Time, at the offices
of Plug Power Inc., 968 Albany Shaker Road, Latham, New York 12110 and any
adjournments or postponements thereof (the Annual Meeting).
At the Annual Meeting, the
stockholders of the Company will be asked to consider and vote upon the
following matters:
1.
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The election of one Class III Director nominated by
the Board of Directors to hold office until the Companys 2014 Annual Meeting
of Stockholders and until such directors successor is duly elected and
qualified or until such directors earlier resignation or removal; and
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2.
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To consider and approve the Companys
Second Certificate of Amendment of Amended and Restated Certificate of Incorporation to effect a reverse stock
split of the Companys common stock; and
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3.
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To consider and approve the Companys 2011 Stock
Option and Incentive Plan; and
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4.
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To consider and approve an advisory resolution
regarding the compensation of the Companys named executive
officers; and
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5.
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To consider and vote upon an advisory proposal
regarding the frequency at which the Company should include an advisory vote
regarding the compensation of the Companys named executive
officers
in its proxy statement for stockholder
consideration; and
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6.
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Such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.
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The Notice of Annual Meeting, Proxy Statement and
Proxy Card are first being mailed to stockholders of the Company on or
about April 13,
2011 in connection with the solicitation of proxies for the Annual Meeting. The
Board of Directors has fixed the close of business on March 31, 2011 as the
record date for the determination of stockholders entitled to notice of, and to
vote at, the Annual Meeting (the Record Date). Only holders of record of the
Companys common stock, par value
$0.01 per share (the Common Stock), at the close of business on the
Record Date will be entitled to notice of, and to vote at, the Annual Meeting.
As of the Record Date, there were 132,784,673
shares of Common Stock outstanding and entitled to vote at the Annual Meeting
and approximately 2,763 stockholders of record. However, management believes
that a significant number of shares are held by brokers under a nominee name
and that the number of beneficial stockholders of the Common Stock exceeds 47,305.
Each holder of Common Stock outstanding as of the close of business on the
Record Date will be entitled to one vote for each share held of record with
respect to each matter submitted at the Annual Meeting.
The presence, in person or by proxy, of a majority of
the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum for the transaction of business at the Annual
Meeting. A quorum being present, the affirmative vote of a plurality of the votes
present in person or represented by proxy at the Annual Meeting and entitled to
vote on the matter is necessary to elect a nominee as a director of the
Company. Withhold authority votes, abstentions and broker non-votes will
be counted as present and entitled to vote for purposes of determining a
quorum. A withhold authority vote is a stockholders vote to withhold
authority to cast a vote for the election of one or more director nominees.
An abstention represents an affirmative choice to decline to vote on a
proposal other than the election of directors. A broker non-vote occurs when
a nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power under applicable
law with respect to that proposal and has not received instructions with
respect to that proposal from the beneficial owner.
7
With respect to
the election of
a director, votes may be cast in
favor of or withheld from
the nominee
. With respect to Proposals 2, 3, and 4,
stockholders may cast a vote in favor of or against, or abstain from voting on,
each proposal.
Stockholders
may cast a vote for one, two or three years, or may
abstain from voting
on Proposal 5.
If you hold shares through a broker, bank or other
custodian (also referred to as holding shares in street-name), only such
broker, bank, custodian or other nominee can vote your shares. In order to
ensure that your shares are voted at the Annual Meeting, you must give specific
instructions regarding how to vote your shares. If you do not give specific
instructions regarding how to vote your shares, the broker, bank, custodian or
other nominee may not exercise their discretion to vote your shares.
Stockholders of the Company are requested to complete,
date, sign and return the accompanying Proxy Card in the enclosed envelope.
Stockholders who hold shares indirectly as the beneficial owner of shares held
for them by a broker or other nominee (i.e., in street name) may direct their
vote without attending the Annual Meeting by submitting voting instructions to
their broker or nominee.
Common Stock represented by properly executed proxies
received by the Company and not revoked will be voted at the Annual Meeting in
accordance with the instructions contained therein.
If instructions are not
given therein, properly executed proxies will be voted FOR the election of
the one nominee of the Board of Directors as a Class III Director of the
Company (Proposal 1); FOR the approval of the Companys
Second Certificate of Amendment of Amended and Restated Certificate of Incorporation to effect a
reverse stock split of the Companys
Common Stock (Proposal
2); FOR the approval of the Companys 2011
Stock Option and Incentive Plan (Proposal
3); FOR the approval of the advisory resolution
regarding the compensation of the Companys
named executive
officers
(Proposal
4); and
FOR
the approval of the advisory proposal that an advisory vote on the compensation
of the Companys named executive officers be included in the Companys proxy
statement every three (3) years
(Proposal
5
), as described in
this Proxy Statement.
It is not anticipated that
any matters other than those set forth in this Proxy Statement will be
presented at the Annual Meeting. If other matters are presented, proxies will
be voted in accordance with the discretion of the proxy holders.
Any properly completed proxy may be revoked at any
time before it is voted on any matter (without, however, affecting any vote
taken prior to such revocation) by (1) giving written notice of such revocation
to the Corporate Secretary of the Company, (2) submitting a new proxy by
telephone, internet or proxy card after the date of the previously submitted
proxy (or submitting new voting instructions with respect to shares held in
street name), or (3) attending the Annual Meeting and voting in person.
Attendance at the Annual Meeting will not, by itself, revoke a proxy.
The Annual Report of the Company is being mailed to
stockholders of the Company concurrently with this Proxy Statement.
8
PROPOSAL
1: ELECTION OF DIRECTORS
Introduction
At the Annual Meeting, one Class III Director will be
elected to serve until the Annual Meeting of Stockholders in 2014 and until
such directors successors are duly elected and qualified or until their
earlier resignation or removal. The Board of Directors has nominated Larry G.
Garberding for re-election as a Class III Director. Shares represented by each
properly executed proxy will be voted for the re-election of Larry G. Garberding
as a director, unless contrary instructions are set forth on such proxy. The
nominee has agreed to stand for re-election and to serve, if elected, as a
director. However, if the nominee fails to stand for re-election or is unable
to accept election, the proxies will be voted for the election of such other
person as the Board of Directors may recommend.
Vote Required
A quorum being present, the affirmative vote of a
plurality of the votes cast is necessary to elect a nominee as a director of
the Company
. Votes
that are withheld will be excluded entirely from the vote
and will have no effect on the vote. Broker non-votes will also have no effect
on the outcome of the election of directors.
Recommendation of the Board
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY
RECOMMENDS A VOTE
FOR
THE ELECTION OF THE NOMINEE OF THE BOARD OF
DIRECTORS AS A
CLASS III
DIRECTOR OF THE COMPANY.
INFORMATION
ABOUT OUR DIRECTORS
The number of directors of the Company is fixed at
five, and the Board of Directors currently consists of five members. The Board
of Directors is divided into three classes, with three directors in Class I,
one director in Class II, and one director in Class III. Directors in Classes
I, II and III serve for three-year terms with one class of directors being
elected by the Companys stockholders at each Annual Meeting of Stockholders.
The Board of Directors has determined that Ms. Helmer and Messrs. Garberding,
McNamee, and Willis are independent directors as defined in Rule 5605(a)(2)
under the Marketplace Rules of the National Association of Securities Dealers,
Inc. (the NASDAQ Rules).
The positions of Chief Executive Officer and Chairman
of the Board are currently each filled by a different individual, Andrew Marsh
and George McNamee, respectively; however, if the position of Chairman of the
Board is vacant, or if he or she is absent, the Chief Executive Officer shall
preside, when present, at meetings of stockholders and of the Board of
Directors.
Set forth below is certain
information regarding the directors of the Company, including the Class III
Director who has been nominated for re-election at the Annual Meeting. The ages
of and biographical information regarding the nominee for election as Class III
Director at the Annual Meeting and each director who is not standing for
election is based on information furnished to the Company by each nominee and
director and is as of January 31, 2011.
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Name
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Age
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Director
Since
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Class ITerm Expires 2012
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Andrew Marsh...................................................................................................................................................
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54
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2008
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Gary K. Willis (1)(2)..........................................................................................................................................
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65
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2003
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Maureen O. Helmer (1)(3)................................................................................................................................
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54
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2004
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Class IITerm Expires 2013
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George C. McNamee(2)(3)..............................................................................................................................
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64
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1997
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Class IIITerm Expires 2011
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Larry G. Garberding (1)(3)*............................................................................................................................
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72
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1997
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_______________________
* Nominee for re-election.
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Corporate Governance and
Nominating Committee.
9
The
principal occupation and business experience for at least the last five years
for each nominee and director of the Company is set forth below. The
biographies of each of the nominees and continuing directors below contains
information regarding the persons service as a director, business experience,
director positions held currently or at any time during the last five years,
information regarding the experiences, qualifications, attributes or skills
that caused the Corporate Governance Committee and the Board to determine that
the person should serve as a director.
Andrew J. Marsh
has served as Chief Executive Officer, President and
member of the Board of Directors of the Company since April 8, 2008.
Previously, Mr. Marsh was a co-founder of Valere
Power where he served as President, CEO and director from the companys
inception in 2001 through its sale to Eltek ASA in 2007. Under his leadership,
Valere grew into a profitable global operation with over 200 employees and $90
million in revenues derived from the sale of DC power products to the
telecommunications sector. During Mr. Marshs tenure, Valere Power received
many awards such as the Tech Titan award as the fastest growing technology
company in the Dallas Fort Worth area and the Red Herring Top 100 Innovator
Award. Prior to founding Valere, he spent approximately eighteen years with
Lucent Bell Laboratories where he held a variety of sales and technical
management positions. Mr. Marsh is a member of the board of directors
of Power Distribution Inc., a company focused on quality power management. Mr.
Marsh holds a Bachelor of Science in Electrical Engineering Technology from Temple University, a Master of Science in Electrical Engineering from Duke University and a Masters of Business Administration from Southern Methodist University.
We believe Mr. Marshs qualifications to sit on our Board
include his record of success in leadership positions in technology companies
having attributes similar to our Company, his extensive experience in
management positions as well as his educational background in engineering and
business administration.
Gary K. Willis
has been a director of the Company
since 2003. Mr. Willis joined Zygo Corporations Board of Directors in June
2009 after retiring as Chairman of the Board of Directors in November 2000,
having served in that capacity since November 1998.
Zygo
Corporation is a provider of metrology, optics, optical assembly, and systems
solutions to the semiconductor, optical manufacturing, and
industrial/automotive markets. Mr. Willis had been a director of Zygo
Corporation since February 1992 and also served as
its President from 1992 to 1999 and as
its
Chief Executive Officer from 1993 to 1999. Prior to
joining Zygo Corporation, Mr. Willis served as the President and Chief
Executive Officer of The Foxboro Company, a manufacturer of process control
instruments and systems. Mr. Willis is also a director of Rofin-Sinar
Technologies, Inc.
since 1996 and
Middlesex Health Services, Inc.
since
1996. Mr. Willis holds a Bachelor of Science degree in Mechanical Engineering
from Worcester Polytechnic Institute.
We
believe Mr. Willis qualifications to sit on our Board include his extensive
experience in management and director positions with similar companies as well
as his educational background in mechanical engineering.
Maureen O. Helmer
has been a director of
the Company since 2004. Ms. Helmer is currently a member of the law firm
Hiscock & Barclay LLP and is the Co-Chair of the firms Regulatory Practice
Group. Prior to her joining Hiscock & Barclay LLP
in November 2008,
Ms. Helmer was a member of Green &
Seifter Attorneys, PLLC
since October 2006. From 2003 through 2006 she practiced as
a partner in the law firm of Couch White, LLP and then as a solo practitioner.
In addition to serving as Chair of the New York State Public Service Commission
(PSC) from 1998 to 2003, Ms. Helmer also served as Chair of the New York State
Board on Electric Generation Siting and the Environment. Ms. Helmer has
advised international energy, telecommunications and industrial companies on
policy and government affairs issues. Prior to her appointment as Chair, Ms.
Helmer served as Commissioner of the Public Service Commission from 1997 until
1998 and was General Counsel to the Department of the Public Service Commission
from 1995 through 1997. From 1984 through 1995, Ms. Helmer held several
positions in the New York Legislature. She also served as a board member of
the New York State Energy Research and Development Authority, the New York
State Environmental Board and the New York State Disaster Preparedness
Commission during her tenure as Chair of the PSC. In addition, she was Vice
Chair of the Electricity Committee of the National Association of Regulatory
Utility Commissioners and a member of the NARUC Board of Directors. She was
also appointed to serve as a member of the New York State Cyber-Security Task
Force. Ms. Helmer earned her Bachelor of Science from the State University at Albany and her Juris Doctorate from the University of Buffalo law school.
She is admitted to practice law in New York.
We believe Ms. Helmers qualifications to sit on our Board
include her long history of experience with energy regulation, policy and
government affairs and advising energy and industrial companies.
10
George C. McNamee
serves as Chairman of the Companys Board of Directors
and has served as such since 1997. Mr.
McNamee is also Managing Partner of FA Tech Ventures, an information and energy
technology venture capital firm,
a director of iRobot
Corporation (IRBT)
since 1997 and
Gleacher Securities, formerly Broadpoint Securities (BPSG)
,
and previously Chairman of BPSGs predecessor First Albany Companies. Mr.
McNamees background in investment banking has given him broad exposure to many
financing and merger and acquisition issues. As an executive, he has dealt
with rapid-growth companies, technological change, crisis management, team
building and strategy. As a public company director, Mr. McNamee led board
special committees, chaired audit committees, chaired three boards and has been
an active lead director. His past public company boards include Mechanical
Technology Inc. (MTI) and Home Shopping Network (HSN). He has been an early
stage investor, director and mentor for private companies that subsequently
went public including MapInfo (now Pitney Bowes), META Group and IRBT. Mr.
McNamee served on industry boards like the Securities Industry Association, the
National Association of Securities Dealers (NASD) district committee, the
National Stock Clearing Corporation and chaired the Regional Firms Advisory
Committee of the New York Stock Exchange (NYSE). He served as an NYSE director
from 1999 to 2004 and chaired its foundation. In the aftermath of the 1987
stock market crash, he chaired the Group of Thirty Committee to reform the
Clearance and Settlement System. Mr. McNamee has been active as a director or
trustee of civic organizations including The Albany Academies and Albany Medical Center, whose finance Committee he chaired for a dozen years. Mr. McNamee
chaired New York State Comptroller Ned Regans Temporary State Commission on
State and Local Fiscal Policies and served as a member of the New York State
Science and Tech Council for Governors Carey, Cuomo and Pataki. He is also a
director of several private companies, a member of the Yale Development Board
and a Trustee of The American Friends of Eton College. He received his
Bachelor of Arts degree from Yale University.
We believe Mr. McNamees qualifications to sit on our
Board include his experience serving on countless boards, his background in
investment banking and experience with the financial sector and its regulatory
bodies.
Larry G. Garberding
has served as a director of
the Company since 1997. Mr. Garberding
was a Director and Executive Vice
President and Chief Financial Officer of DTE Energy Company and the Detroit
Edison Company from 1990 until retiring in 2001. Mr. Garberding was a Certified
Public Accountant, a partner with a major public accounting firm, and has been
on the board of several corporations, having had responsibility for financial,
operational, regulatory and sales activities. Mr. Garberding is currently a
director of Altarum Institute, a non-profit research and innovations institute;
and Intermap Technologies Corporation, a digital mapping
company,
since 2001.
Mr. Garberding received a Bachelor of Science degree in
Industrial Administration from Iowa State University.
We
believe Mr. Garberdings qualifications to sit on our Board include his
extensive experience with power and energy companies and his background in
accounting, financing and operations.
COMMITTEES AND MEETINGS OF
THE BOARD OF DIRECTORS
The Board of Directors of the Company held seven (7)
meetings during the fiscal year ended December 31, 2010 (Fiscal 2010). The
Board of Directors has established three standing committees, an Audit
Committee (the Audit Committee), a Compensation Committee (the Compensation
Committee), and a Corporate Governance and Nominating Committee (the
Governance Committee). During Fiscal 2010, each director attended at least
75% of the aggregate of (1) the total number of meetings of the Board of Directors
of the Company (held during the period for which he or she has been a director)
and (2) the total number of meetings of all committees of the Board of
Directors of the Company on which the director served (during the periods that
he or she served).
Discussed below in greater detail, the Board of
Directors administers its risk oversight function directly and through its
Audit Committee and Corporate Governance and Nominating Committee. The Board
and each of these Committees regularly discuss with management our major risk
exposures, their potential financial impact on Plug Power and the steps we take
to manage them. The Audit Committee is responsible for oversight of Company
risks relating to accounting matters, financial reporting and legal and
regulatory compliance, while the Corporate Governance and Nominating Committee
is responsible for oversight of risks relating to management and Board
succession planning, stakeholder responses to the Companys ethics and business
practices.
The Chief Financial Officer and the General Counsel
report to the Board of Directors regarding ongoing risk management activities
at the regularly scheduled, quarterly Board of Directors meetings and may
report on risk management activities more frequently, as appropriate.
Additionally, risk management is a standing agenda item for the regularly
scheduled, quarterly Audit Committee meetings.
Audit Committee
The Audit Committee consists of Messrs. Garberding
(Chair) and Willis, and Ms. Helmer. The Audit Committee held six (6) meetings
during Fiscal 2010 and each member attended all of the meetings during the
period in which such person served on the committee.
11
Audit Committee Report
The Audit Committee of the Board of Directors is
currently composed of three directors, each of whom is an independent director
as defined in the NASDAQ Rules and the applicable rules of the Securities and
Exchange Commission (SEC). In addition, the Board of Directors has made a
determination that Mr. Garberding qualifies as an audit committee financial
expert as defined in the applicable rules of the SEC. Mr. Garberdings
designation by the Board as an audit committee financial expert is not
intended to be a representation that he is an expert for any purpose as a
result of such designation, nor is it intended to impose on him any duties,
obligations, or liability greater than the duties, obligations or liability
imposed on him as a member of the Audit Committee and the Board in the absence
of such designation.
The Audit Committees primary responsibility is for
oversight of the Companys accounting and financial reporting processes and
audits of the Companys financial statements. A more complete description of
the Audit Committees functions is set forth in the Audit Committees charter
which is published on the Investors section of the Companys website at
www.plugpower.com
.
In accordance with the Audit
Committees charter, management has the primary responsibility for the
financial statements and the financial reporting process, including maintaining
an adequate system of internal controls over financial reporting. The Companys
independent auditors, KPMG LLP (KPMG), report directly to the Audit Committee
and are responsible for performing an independent audit of the Companys consolidated
financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States) and of the effectiveness of the Companys
internal controls over financial reporting. The Audit Committee, among other
matters, is responsible for (i) appointing the Companys independent auditors,
(ii) evaluating such independent auditors qualifications, independence and
performance, (iii) determining the compensation for such independent auditors,
and (iv) approving all audit and non-audit services. Additionally, the Audit
Committee is responsible for oversight of the Companys accounting and
financial reporting processes and audits of the Companys financial statements
including the work of the independent auditors. The Audit Committee reports to
the Board of Directors with regard to:
-
the scope of the
annual audit;
-
fees to be paid to the auditors;
-
the performance of
the Companys independent auditors;
-
compliance with accounting and financial
policies; and
-
the Companys procedures
and policies relative to the adequacy of internal accounting controls.
The Audit Committee reviewed and discussed with
management of the Company and KPMG, the Companys 2010 quarterly unaudited
interim consolidated financial statements and 2010 annual consolidated
financial statements, including managements assessment of the effectiveness of
the Companys internal controls over financial reporting and KPMGs evaluation
of the effectiveness of the Companys internal controls over financial reporting
as of December 31, 2010. Management has represented to the Audit Committee
that the Companys consolidated financial statements were prepared in
accordance with U.S. generally accepted accounting principles.
Additionally, the Audit Committee has discussed with
KPMG any matters required to be discussed under professional standards which include, among other items,
matters related to the conduct of the audit of the Companys annual
consolidated financial statements. The Audit Committee has also discussed the
critical accounting policies used in the preparation of the Companys annual
consolidated financial statements, alternative treatments of financial
information within generally accepted accounting principles that KPMG discussed
with management, if any, the ramifications of using such alternative treatments
and other written communications between KPMG and management.
KPMG has provided to the Audit Committee the written
disclosures and the letter required by the applicable Public Company Accounting
Oversight Board requirements for independent accountant communications with
audit committees concerning auditor independence, and the Audit Committee
discussed with KPMG that firms independence. The Audit Committee has also
concluded that KPMGs performance of non-audit services is compatible with
KPMGs independence.
The Audit Committee also discussed with KPMG their
overall scope and plans for their audit and met with KPMG, with and without
management present, to discuss the results of their audit, the evaluations of
the Companys internal control over financial reporting, and the overall
quality of the Companys financial reporting. The Audit Committee also
discussed with KPMG whether there were any audit problems or difficulties, and
managements response.
12
In reliance on the reviews
and discussions referred to above, the Audit Committee recommended to the Board
of Directors, and the Board has approved, the inclusion of audited consolidated
financial statements in the Companys Annual Report on Form 10-K for the year
ended December 31, 2010. This report is provided by the following independent
directors, who constitute the Audit Committee:
Larry G. Garberding (Chairman)
Maureen O. Helmer
Gary K. Willis
Independent Auditors Fees
The following table presents fees for professional
services rendered by KPMG for the audit of the Companys annual financial
statements and fees billed for other services rendered by KPMG:
|
KPMG
|
|
2010
|
2009
|
Audit Fees
|
$563,000
|
$473,000
|
Audit-Related Fees
|
19,300
|
49,900
|
Tax Fees
|
-
|
50,000
|
Other
|
-
|
-
|
Total
|
$582,300
|
$572,900
|
In the above table, and in accordance with SEC
definitions and rules: (1) audit fees are fees for professional services for
the audit of the Companys consolidated financial statements included in Form
10-K, review of unaudited interim consolidated financial statements included in
Form 10-Qs, testing of the effectiveness of internal control on financial
reporting, or for services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements; (2)
audit-related fees are fees for assurance and related services that are
reasonably related to the performance of the audit or review of the Companys consolidated
financial statements; (3) tax fees are fees for tax compliance, tax advice,
and tax planning; and (4) all other fees are fees for any services not
included in the first three categories.
The Audit Committee approved all audit and non-audit services
provided to the Company by KPMG during Fiscal 2010.
Compensation
Committee
The Compensation Committee consists of Messrs. Willis
(Chair) and McNamee, each of whom is an independent director under the NASDAQ
Rules. The Compensation Committee held four (4) meetings during Fiscal 2010.
See Report of the Compensation Committee and the Board of Directors on
Executive Compensation and Compensation Committee Interlocks and Insider
Participation for a further description of the activities of the Compensation
Committee in Fiscal 2010. The Compensation Committees primary responsibilities
include (i) discharging the responsibilities of the Board of Directors of the
Company relating to compensation of the Companys executive officers, (ii)
providing oversight of the Companys benefit, perquisite and employee equity
programs, and (iii) reviewing the adequacy of the Companys management
succession plans. A more complete description of the Compensation Committees
functions is set forth in the Compensation Committees charter which is
published on the Investors section of the Companys website at
www.plugpower.com
.
Corporate Governance and
Nominating Committee
The Corporate Governance and Nominating Committee (the
Governance Committee) consists of Ms. Helmer (Chair) and Messrs. Garberding
and McNamee,
each
of whom is an independent director under the NASDAQ Rules.
The Governance Committee held five (5) meetings during Fiscal 2010. The
Governance Committees responsibilities include (i) establishing criteria for
Board and committee membership, (ii) considering director nominations
consistent with the requirement that a majority of the Board be comprised of
independent directors as defined in the NASDAQ Rules, (iii) identifying
individuals qualified to become board members, and (iv) selecting the director
nominees for election at each Annual Meeting of Stockholders. The Governance
Committee is also responsible for developing and recommending to the Board a
set of corporate governance guidelines applicable to the Company and
periodically reviewing such guidelines and recommending any changes thereto. A
more complete description of the Governance Committees functions is set forth
in the Governance Committees charter which is published on the Investors section
of the Companys website at
www.plugpower.com
.
13
Director Compensation
The Compensation Committee periodically reviews the
Companys Non-Employee Director Compensation Plan (the Plan) to ensure that
the compensation aligns the directors interests with the long-term interests
of the stockholders and that the structure of the compensation is simple,
transparent and easy for stockholders to understand. The Compensation Committee
also considers whether the Plan fairly compensates the Companys directors when
considering the work required in a company of the size and scope of the
Company. Employee directors do not receive additional compensation for their
services as directors. The following is a summary of the Plan:
Pursuant to the current form
of the Plan, upon initial election or appointment to the Board of Directors,
new non-employee directors receive non-qualified stock options to purchase
125,000 shares (50,000 shares for any new non-employee Chairman) of Common
Stock with an exercise price equal to fair market value on the date of grant
and that are fully vested on the first anniversary of the date of the grant.
Each year of a non-employee directors tenure, the director will receive
non-qualified options to purchase 10,000 shares (15,000 shares for any
non-employee Chairman), plus non-qualified options to purchase an additional
5,000 shares for serving as chairman of the Audit Committee and non-qualified
options to purchase an additional 2,000 shares for serving as chairman of any
other committee, including the Compensation Committee and the Corporate
Governance and Nominating Committee. These annual options, with an exercise
price equal to fair market value on the grant date, fully vest on the first
anniversary of the date of the grant.
In
addition, under the current form of the Plan each non-employee director is paid
an annual retainer of $30,000 ($85,000 for any non-employee Chairman) for their
services. Committee members receive additional annual retainers in accordance
with the following table:
|
|
|
Committee
|
Non-Employee
Chairman
|
Non-Employee
Director
|
Audit Committee...........................................................................................
|
$ 20,000
|
$ 15,000
|
Compensation Committee...........................................................................
|
15,000
|
5,000
|
Corporate Governance and Nominating Committee................................
|
10,000
|
5,000
|
These additional payments for service on a committee
are due to the workload and broad-based responsibilities of the committees. The
total amount of the annual retainers are paid in a combination of fifty percent
(50%) cash and fifty percent (50%) Common Stock, with an option to receive up
to one hundred percent (100%) Common Stock, at the election of the non-employee
director. At the Boards discretion, directors may receive a greater portion
of the foregoing amounts, up to eighty percent (80%), in cash. All such stock
shall be fully vested at the time of issuance and is valued at its fair market
value on the date of issuance. Non-employee directors are also reimbursed for
their direct expenses associated with their attendance at board meetings.
14
Non-Employee Director Compensation Table
The
following table provides information for non-employee directors who served
during Fiscal 2010.
Name
|
Fees Earned or
Paid in Cash
($)
|
Stock Awards
(1)
($)
|
Option Awards
(2)
($)
|
Total
($)
|
Gary Willis
|
30,000
|
30,000
|
4,440
|
64,440
|
George McNamee
|
76,000
|
19,000
|
5,550
|
100,550
|
Jeffrey Drazan (3)
|
13,743
|
13,743
|
3,700
|
31,186
|
Larry Garberding
|
27,500
|
27,500
|
5,550
|
60,550
|
Maureen Helmer
|
27,500
|
27,500
|
4,440
|
59,440
|
(1) This column represents the dollar
amount recognized for financial statement reporting purposes with respect to
the 2010 fiscal year for the fair value of restricted stock earned in
2010. Fair value is calculated using the closing price of Plug Power
stock on the date of grant. Stock awards granted to directors vest
immediately. For additional information, refer to note 14 of the Companys
consolidated financial statements in the Form 10-K for the year ended
December 31, 2010, as filed with the SEC.
a. Gary Willis has no unexercised
stock awards. Stock awards earned by Mr. Willis in 2010 include 11,364
shares granted on April 1, 2010 with a grant date fair value of $0.66, 17,857
shares granted on July 1, 2010 with a grant date fair value of $0.42, 19,231
shares granted on October 1, 2010 with a grant date fair value of $0.39, and
19,231 shares granted on January 3, 2011 with a grant date fair value of $0.39.
b. George McNamee has no unexercised
stock awards. Stock awards earned by Mr. McNamee in 2010 include 7,197
shares granted on April 1, 2010 with a grant date fair value of $0.66, 11,310
shares granted on July 1, 2010 with a grant date fair value of $0.42, 12,179
shares granted on October 1, 2010 with a grant date fair value of $0.39, and
12,179 shares granted on January 3, 2011 with a grant date fair value of $0.39.
c. Jeffrey Drazan has no unexercised
stock awards. Stock awards earned by Mr. Drazan in 2010 include 6,629
shares granted on April 1, 2010 with a grant date fair value of $0.66, 10,417
shares granted on July 1, 2010 with a grant date fair value of $0.42, 11,218
shares granted on October 1, 2010 with a grant date fair value of $0.39, and
1,585 shares granted on January 3, 2011 with a grant date fair value of $0.39.
d. Larry Garberding has no
unexercised stock awards. Stock awards earned by Mr. Garberding in 2010
include 10,417 shares granted on April 1, 2010 with a grant date fair value of
$0.66, 16,369 shares granted on July 1, 2010 with a grant date fair value of
$0.42, 17,628 shares granted on October 1, 2010 with a grant date fair value of
$0.39, and 17,628 shares granted on January 3, 2011 with a grant date fair
value of $0.39.
e. Maureen Helmer has no unexercised
stock awards. Stock awards earned by Ms. Helmer in 2010 include 10,417
shares granted on April 1, 2010 with a grant date fair value of $0.66,16,369
shares granted on July 1, 2010 with a grant date fair value of $0.42, 17,628
shares granted on October 1, 2010 with a grant date fair value of $0.39, and
17,628 shares granted on January 3, 2011 with a grant date fair value of $0.39.
15
(2) This column represents the dollar
amount recognized for financial statement reporting purposes with respect to
the 2010 fiscal year for the fair value of stock options granted to each of the
named Non-Employee Directors in 2010 as well as prior fiscal years, in
accordance with Financial Accounting Standards Board (FASB) Accounting
Standards Codification (ASC) Topic 718. Pursuant to SEC rules, the amounts
shown exclude the impact of estimated forfeitures related to service-based vesting
conditions. For additional information on the valuation assumptions with
respect to the 2010 grants, refer to note 14 of the Companys consolidated
financial statements in the Form 10-K for the year ended December 31,
2010, as filed with the SEC. Also see note 14 for information on the valuation
assumptions with respect to grants made prior to 2010.
These amounts
reflect the Companys accounting expense for these awards, and do not
correspond to the actual value that will be recognized by the directors
.
As of December 31, 2010:
a. Gary Willis has 235,245
unexercised option awards including 95,337 unvested awards. Option awards for
2010 include 12,000 shares granted on May 19, 2010 with a grant date fair value
of $0.37.
b. George McNamee has 410,000
unexercised option awards including 98,337 unvested awards. Option awards for
2010 include 15,000 shares granted on May 19, 2010 with a grant date fair value
of $0.37.
c. Jeffrey Drazan has 145,000
unexercised option awards including 10,000 unvested awards. Option awards for
2010 include 10,000 shares granted on May 19, 2010 with a grant date fair value
of $0.37.
d. Larry Garberding has 275,000
unexercised option awards including 98,337 unvested awards. Option awards for
2010 include 15,000 shares granted on May 19, 2010 with a grant date fair value
of $0.37.
e. Maureen Helmer has no 220,000
unexercised option awards including 95,337 unvested awards. Option awards for
2010 include 12,000 shares granted on May 19, 2010 with a grant date fair value
of $0.37.
(3) Jeffrey Drazan resigned from the
Companys Board of Directors as of October 2010.
Policy Governing Director Attendance at Annual
Meetings
The Board of Directors has adopted a formal policy
that all directors are expected to attend the Companys Annual Meetings of
Stockholders in person, unless doing so is impracticable due to unavoidable
conflicts. Five of the Companys directors attended the 20010 annual meeting
and one director, Jeffrey Drazan, was absent due to such an unavoidable
conflict.
Policies Governing
Director Nominations
Securityholder Recommendations
The Governance Committees
current policy with regard to the consideration of director candidates
recommended by securityholders is that it will review and consider any director
candidates who have been recommended by one or more of the stockholders of the
Company entitled to vote in the election of directors in compliance with the
procedures established from time to time by the Governance Committee. All
securityholder recommendations for director candidates must be submitted to the
Companys Corporate Secretary at Plug Power Inc., 968 Albany Shaker Road, Latham, New York 12110, who will forward all recommendations to the Governance Committee.
We did not receive any securityholder recommendations for director candidates
for election at the 2011 annual meeting. All securityholder recommendations for
director candidates for election at the Companys 2012 annual meeting must be
submitted to the Companys Corporate Secretary on or before December 13, 2012
and must include the following information:
-
the name and address
of record of the stockholder;
-
a representation that
the securityholder is a record holder of the Companys stock entitled to vote
in the election of directors, or if the securityholder is not a record holder,
evidence of ownership in accordance with Rule 14a-8(b)(2) of the Securities
Exchange Act of 1934, as amended;
-
the name, age,
business and residential address, educational background, current principal
occupation or employment, and principal occupation or employment for the
preceding five (5) full fiscal years of the proposed director candidate;
-
a description of the
qualifications and background of the proposed director candidate which
addresses the minimum qualifications and other criteria for membership on the
Board of Directors approved by the Governance Committee from time to time;
-
a description of all
arrangements or understandings between the securityholder and the proposed
director candidate;
-
the consent of the
proposed director candidate (i) to be named in the proxy statement relating to
the Annual Meeting of Stockholders and (ii) to serve as a director if elected
at such annual meeting; and
-
any other information
regarding the proposed director candidate that is required to be included in a
proxy statement filed pursuant to the rules of the SEC.
16
Board Membership Criteria
The Governance Committee has
established criteria for membership on the Board of Directors. These criteria
include the following specific, minimum qualifications that the Governance
Committee believes must be met by a Governance Committee-recommended nominee
for a position on the Board of Directors:
-
The nominee must have
high personal and professional integrity, must have demonstrated exceptional
ability and judgment, and must be expected, in the judgment of the Governance
Committee, to be highly effective, in conjunction with the other nominees to
the Board of Directors, in collectively serving the interests of the Company
and its stockholders.
In addition to the minimum qualifications for each
nominee set forth above, the Governance Committee will recommend that the Board
of Directors select persons for nomination to help ensure that:
-
the Board of
Directors will be comprised of a majority of independent directors in
accordance with NASDAQ rules;
-
each of the Audit,
Compensation and Governance Committees shall be comprised entirely of
independent directors;
-
each member of the
Audit Committee is able to read and understand fundamental financial
statements, including a companys balance sheet, income statement, and cash
flow statement; and
-
at least one member
of the Audit Committee has past employment experience in finance or accounting,
requisite professional certification in accounting, or any other comparable
experience or background which results in the individuals financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight
responsibilities.
Finally, in addition to any
other standards the Governance Committee may deem appropriate from time to time
for the overall structure and composition of the Board of Directors, the
Governance Committee, when recommending that the Board of Directors select
persons for nomination, may consider whether the nominee has direct experience
in the industry or in the markets in which the Company operates.
The Governance Committee will recommend to the Board
of Directors the nomination of the director candidates who it believes will,
together with the existing members of the Board of Directors and other
nominees, best serve the interests of the Company and its stockholders.
Identifying and Evaluating Nominees
In considering
whether to recommend any candidate for inclusion in the Boards slate of
recommended director nominees, including candidates recommended by
shareholders, the Companys Corporate Governance and Nominating Committee will
apply the criteria set forth in Plug Powers Corporate Governance Guidelines.
These criteria include the candidates integrity, business acumen, age,
experience, commitment, diligence, conflicts of interest and the ability to act
in the interests of all shareholders. Our Corporate Governance Guidelines
specify that the value of diversity on the Board should be considered by the
Corporate Governance and Nominating Committee in the director identification
and nomination process. The Committee seeks nominees with a broad diversity of
experience, professions, skills, geographic representation and backgrounds. The
Committee does not assign specific weights to particular criteria and no
particular criterion is necessarily applicable to all prospective nominees. The
Company believes that the backgrounds and qualifications of the directors,
considered as a group, should provide a significant composite mix of
experience, knowledge and abilities that will allow the Board to fulfill its
responsibilities. Nominees are not discriminated against on the basis of race,
religion, national origin, sexual orientation, disability or any other basis
proscribed by law. For a more comprehensive discussion of our Corporate Governance
and Nominating Committees current policy with regard to the consideration of
director candidates, please refer to the section of this document titled
Policies Governing Director Nominations.
To review the
effectiveness of assessing the diverse skills, qualifications and backgrounds
of Director Nominations, the Board of Directors and each of the three standing
Board Committees conduct annual self-evaluations. In addition, the Corporate
Governance and Nominating Committee monitors the effectiveness of these
procedures on an ongoing basis.
17
Contacting the Board of Directors
You may contact any director of the Company by writing
to them c/o Plug Power Inc., 968 Albany Shaker Road, Latham, New York 12110, Attention: Corporate Secretary. Your letter should clearly specify
the name of the individual director or group of directors to whom your letter
is addressed. Any communications received in this manner will be forwarded as
addressed.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The names and ages of all
executive officers of the Company and the principal occupation and business
experience for at least the last five years for each are set forth below. The
ages of and biographical information regarding each executive officer is based
on information furnished to the Company by each executive officer and is as
of January 31,
2011.
|
|
|
Executive Officers
|
Age
|
Position
|
Andrew Marsh...................................
|
54
|
President, Chief Executive
Officer and Director
|
Gerald A. Anderson...........................
|
53
|
Chief Financial Officer and Senior Vice President -
Operations
|
Gerard L. Conway, Jr........................
|
46
|
General Counsel, Corporate Secretary and Senior Vice President
- Government Relations
|
Erik Hansen........................................
|
39
|
Senior Vice President - Sales, Service and Hydrogen
|
Adrian Corless....................................
|
44
|
Chief Technology Officer, Senior Vice President -
Engineering
|
Reid Hislop........................................
|
50
|
Vice President - Marketing and Investor Relations
|
The principal occupation and
business experience for at least the last five years for each executive officer
of the Company is set forth below. The biographies of each of the executive
officers below contains information regarding the persons service as an
executive, business experience, director positions held currently or at any
time during the last five years, information regarding the experiences,
qualifications, attributes or skills that caused the Corporate Governance
Committee and the Board to determine that the person should serve as an
executive officer.
Andrew Marshs
biographical information can be found in the section
entitled
Information about our Directors
in this Proxy Statement.
Gerald A. Anderson
joined Plug Power as Chief Financial Officer in July
2007 and, since March 2009, has also served as Senior Vice President. He is
responsible for managing all aspects of the Companys financial, investor
relations and information services operations. Prior to joining Plug Power, Mr.
Anderson was the Treasurer and Director of Finance for Intermagnetics General
Corporation
. Utilizing an acquisition growth strategy,
he managed finance, treasury, risk management and business valuation functions
for the medical device manufacturing company. Prior to that, he was Chief
Financial Officer for J Management Company
. In addition
to managing finance, controllership, merger and acquisition and treasury
functions, he also helped set the strategic direction of the company. Earlier
in his career, Mr. Anderson spent 15 years with KeyCorp, eventually as Senior
Vice President, Director of Business Analysis and Management Reporting. He has
30 years of financial experience. He holds a Bachelor of Science degree in
Business Administration, with a concentration in Accounting, from the University of Arizona.
Gerard L. Conway, Jr.
has served as General Counsel and Corporate Secretary
since September 2004 and, since March 2009, has also served as Senior Vice
President. In that capacity, Mr. Conway is responsible for advising the
Company on legal issues such as corporate law, securities, contracts, strategic
alliances and intellectual property. He also serves as the Compliance Officer
for securities matters affecting the Company. During his tenure, Mr. Conway
served as Vice President of Government Relations from 2005 to June 2008 and in
that capacity he advocated on energy issues, policies, legislation and
regulations on the state, federal, national and international levels on behalf
of the Company and the alternative energy sector. Prior to his appointment to
his current position, Mr. Conway served as Associate General Counsel and
Director of Government Relations for the Company beginning in July 2000. Prior
to joining Plug Power, Mr. Conway spent four years as an Associate with
Featherstonhaugh, Conway, Wiley & Clyne, LLP, where he concentrated in
government relations, business and corporate law. Mr. Conway has more than
nineteen years of experience in general business, corporate real estate and
government relations. Mr. Conway holds a Bachelor of Arts degree in English
and Philosophy from Colgate University and a Juris Doctorate from Boston
University School of Law.
Erik Hansen
joined Plug Power Inc. as Vice President of Business Development in 2008 and
was appointed Senior Vice President and General Manager of the Motive Power
Division in October of 2009. Mr. Hansen is responsible for directing the
Motive Power Division as it commercializes its fuel cell power products for
material handling customers. Mr. Hansen has more than 15 years of experience
with cutting edge technologies related to energy storage systems. Prior to
joining Plug Power, he was General Manager of Sales and Systems Engineering for
Cobasys LLC in Orion, Michigan, where he worked for eight years. In that role,
Mr. Hansen led the decision-making and strategic planning for the manufacture
and sales of advanced energy storage solutions for both the transportation and
uninterruptible power systems. Mr. Hansen holds a Bachelor of Science degree
in Electrical Engineering and a Bachelor of Science degree in Computer
Engineering, both from West Virginia University.
18
Adrian Corless
joined Plug Power in April 2007 as Vice President of Technology and was
appointed Chief Technology officer in June 2008. As of February 2010, Mr. Corless
was appointed Senior Vice President and Chief Technology Officer and is
currently responsible for the development of Plug Powers Motive Power products
as well as guiding Plug Powers overall technology and Intellectual Property
strategies. Prior to joining Plug Power, Mr. Corless was the Chief Technical
Officer of Cellex Power Products
and was responsible for
the technical aspects of the product development process. Prior to joining
Cellex, Mr. Corless worked for Ballard Power Systems Inc.
and
Excellsis Inc. latterly as Program Manger for the Phase 4 fuel cell bus program
. Mr. Corless is an active participant in the Industrial
Truck Association, an executive board member of the Canadian Hydrogen and Fuel
Cell Association, a Technical Advisory Board member for the NRC Institute for
Fuel Cell Innovation, and a member of both UL and CSA standards development
committees. Mr. Corless holds a Masters of Applied Science degree in
Mechanical Engineering from the University of Victoria and is a Registered
Professional Engineer in British Columbia, Canada.
Reid Hislop
joined Plug Power in 2010 as Vice President of Marketing and Investor
Relations. Mr. Hislop brings over twenty years of technology marketing
experience and a long history of developing successful and innovative marketing
programs to his role. For Plug Power, he leads the Companys Marketing
Communications and Investor relations teams. He works directly with the
Companys executive team to grow and strengthen its overall market position, vision
and awareness in the alternative energy economy. Prior to joining Plug Power,
Mr. Hislop was Vice President of Global Marketing for Pitney Bowes Business
Insight (PBBI)
. PBBI was the business unit created
shortly after MapInfo was acquired by Pitney Bowes in 2007. Prior to the
acquisition, Mr. Hislop served
as the Vice President of
Marketing for MapInfo, where he led the Companys global marketing team,
directed branding efforts and helped create MapInfos leadership role in the
Location Intelligence category. Mr. Hislop holds a Bachelor of Science degree
from the University of Alberta, Canada.
Subject to any terms of any employment agreement with
the Company (as further described in this Proxy Statement), each of the
executive officers holds his or her respective office until the regular annual
meeting of the Board of Directors following the Annual Meeting of Stockholders
and until his or her successor is elected and qualified or until his or her
earlier resignation or removal.
EXECUTIVE
COMPENSATION
Compensation Discussion and Analysis
We provide what we
believe is a competitive total compensation package to our executive management
team through a combination of base salary, annual incentive bonuses, long-term
equity incentive compensation, and broad-based benefits programs. We place
emphasis on pay-for-performance based incentive compensation, which is designed
to reward our executives based on the achievement of predetermined performance
goals. This Compensation Discussion and Analysis explains our compensation
objectives, policies and practices with respect to our Chief Executive Officer,
Chief Financial Officer
, the other three most highly-compensated
executive officers and an additional individual for whom disclosure would have
been provided but for the fact that he was not serving as an executive officer
of the Company at the end of the last completed fiscal year as
determined in accordance with applicable SEC rules, who are collectively
referred to as the Named Executive Officers.
Mr. Sperry was formerly a party to an employment agreement with the Company that
provided for a payment upon termination for other than "Cause."
Mr. Sperry's position was eliminated as part of the Company's May 2010
restructuring to focus on harnessing commercial traction in the material
handling market. He subsequently stepped down from his position as Senior Vice
President and General Manager of the Company's Continuous Power Division on
August 27, 2010.
In accordance with the terms of his employment agreement, the Company made a
severance payment to Mr. Sperry in the amount of $258,000.
Objectives of Our Executive
Compensation Programs
Our compensation programs for our named executive officers
are designed to achieve the following objectives:
-
Attract and retain talented and experienced executives;
-
Motivate and reward executives whose knowledge, skills and
performance are critical to our success;
-
Provide a competitive compensation package which is weighted
towards pay-for-performance and in which total compensation is primarily
determined by Company and individual results and the creation of shareholder
value;
-
Ensure fairness among the executive management team by
recognizing the contributions each executive makes to our success; and
-
Motivate our executives to manage our business to meet our short-
and long-term objectives and reward them for meeting these objectives.
19
Our Executive Compensation
Programs
Our executive
compensation primarily consists of base salary, annual incentive bonuses,
long-term equity incentive compensation and broad-based benefits programs.
Consistent with the emphasis we place on pay-for-performance based incentive
compensation, long-term equity incentive compensation in the form of stock
options and restricted stock constitute a significant portion of our total
executive compensation.
Within the context of
the overall objectives of our compensation programs, our Compensation Committee
determined the specific amounts of compensation to be paid to each of our
executives in 2010 based on a number of factors, including:
-
Its understanding of the amount of compensation generally paid by
similarly situated companies to their executives with similar roles and
responsibilities;
-
Our executives performance during 2010 in general and as
measured against predetermined performance goals;
-
The nature, scope and level of our executives responsibilities;
-
Our executives effectiveness in leading the Companys
initiatives to increase customer value, productivity and revenue growth;
-
The individual experience and skills of, and expected
contributions from, our executives;
-
The executives contribution to the Companys commitment to
corporate responsibility, including the executives success in creating a
culture of unyielding integrity and compliance with applicable law and the
Companys ethics policies;
-
The amounts of compensation being paid to our other executives;
-
The executives contribution to our financial results;
-
Our executives historical compensation at our Company; and
-
Any contractual commitments we have made to our executives
regarding compensation.
Each of the primary
elements of our executive compensation is discussed in detail below, including
a description of the particular element and how it fits into our overall
executive compensation. Compensation paid to our named executive officers in
2010 is discussed under each element. In the descriptions below, we have
identified particular compensation objectives which we have designed our
executive compensation programs to serve; however, we have designed our
compensation programs to complement each other and to collectively serve all of
our executive compensation objectives described above. Accordingly, whether or
not specifically mentioned below, we believe that, as a part of our overall
executive compensation, each element to a greater or lesser extent serves each
of our objectives.
Base Salary
We pay our executives a
base salary which we review and determine annually. We believe that a
competitive base salary is a necessary element of any compensation program
designed to attract and retain talented and experienced executives. We also
believe that attractive base salaries can motivate and reward executives for their
overall performance. Base salaries are, in part, established based on the
individual experience, skills, expected contributions of our executives, and
our executives performance during the prior year.
In
2010, we did not increase the base salaries of Mr. Marsh and Mr. Conway. The
base salaries for these executives remained at the 2009 levels as follows: Mr.
Marshs base salary was $375,000 per year and Mr. Conways base salary was
$200,000 per year. Mr. Corless became a named executive officer in 2010 and
his base salary was set at $215,000. In 2010, we increased the base salaries of
Mr. Anderson and Mr. Hansen as follows: Mr. Andersons salary was increased
from $250,000 to $300,000 and Mr. Hansens salary was increased from $200,000
to $230,000. Our executives base salaries reflect the initial base salaries
that we negotiated with each of our executives at the time of his or her
initial employment or promotion and our subsequent adjustments to these amounts
to reflect market increases, the growth and stage of development of our
Company, our executives performance and increased experience, any changes in
our executives roles and responsibilities, and other factors. The initial
base salaries that we negotiated with our executives were based on our
understanding of the market at the time, the individual experience and skills
of, and expected contribution from, each executive, the roles and
responsibilities of the executive, the base salaries of our existing
executives, and other factors.
20
Annual Incentive Bonuses
Our named executive
officers are eligible to receive annual incentive bonuses based on our
pay-for-performance incentive compensation program. They are eligible to
receive annual incentive bonuses primarily based upon their performance as
measured against predetermined individual performance goals, including
financial measures, achievement of strategic objectives, and other factors.
The primary objective of this program is to motivate and reward our named
executive officers for meeting individual performance goals. We do not believe
that every important aspect of executive performance is capable of being
specifically quantified in a predetermined performance goal. For example,
events outside of our control may occur after we have established the named
executive officers individual performance goals for the year that require our
named executive officers to focus their attention on different or other
strategic initiatives; thus, the individual performance goals may be modified
during the fiscal year by the President and Chief Executive Officer, or the
Board of Directors in the case of the President and Chief Executive Officer
himself, to account for such events beyond our control.
Within our
pay-for-performance incentive compensation program, specific performance
attainment levels are indicated for each performance goal. These performance
attainment levels correlate to potential award amounts that are calculated as a
percent of each executives base salary.
We established attainment levels for each of our
executives, other than Mr. Marsh, as 10%, 20% or 30% of his or her base salary
to be awarded in the form of a stock grant. Since the annual incentive bonus is payable based on the achievement of
each of the different levels of performance, the executive officer may earn
between 0% and 30% of his base salary given his actual performance. The 20%
attainment level is considered the target level for each performance goal
because it is challenging for the executive to attain, and the executive would
meet expectations if he achieved this level. The 10% attainment level is
considered the threshold level for each performance goal because although still
challenging, it is the minimum acceptable performance level. The 30%
attainment level is considered the maximum, or stretch, level for each
performance goal because it is most challenging for the executive to attain,
and the executive would have to exceed expectations to achieve this level. Our
maximum and threshold performance attainment levels are determined in relation
to our target attainment levels and are intended to provide for correspondingly
greater or lesser incentives in the event that performance is within an
appropriate range above or below the target performance attainment level.
We also established attainment levels for our Chief
Executive Officer as 17%, 34% or 50% of his base salary to be awarded in the
form of a stock grant. Since the annual
incentive bonus is payable based on the achievement of each of the different
levels of performance, the Chief Executive Officer may earn between 0% and 50%
of his base salary given his actual performance. The 34% attainment level is
considered the target level for each performance goal because it is challenging
for the Chief Executive Officer to attain, and the executive would meet
expectations if he achieved this level. The 17% attainment level is considered
the threshold level for each performance goal because although still
challenging, it is the minimum acceptable performance level. The 50%
attainment level is considered the maximum, or stretch, level for each
performance goal because it is most challenging for the Chief Executive Officer
to attain, and the Chief Executive Officer would have to exceed expectations to
achieve this level. Our maximum and threshold performance attainment levels
are determined in relation to our target attainment levels and are intended to
provide for correspondingly greater or lesser incentives in the event that
performance is within an appropriate range above or below the target
performance attainment level.
As a way of linking each executives performance to
corporate-wide strategy, the executives individual performance goals directly
correlate to our corporate milestones, which management recommends to the Board
of Directors and the Board of Directors approves after appropriate discussion
and review. The executives individual performance goals are determined in the
same way as the corporate milestones such that management reviews how each
executive may contribute to the corporate milestones and recommends individual
performance goals to the Board of Directors. The Board of Directors, after
appropriate discussion and review, ultimately approves the individual
performance goals. Because disclosure of the specific individual performance
goals would give competitors information that could be leveraged for
competitive advantage, we do not disclose these specific individual performance
goals or our executives actual performance against such goals. Generally the
individual performance goals, as well as the corporate milestones, fell into
one or more of the following categories: (i) increase sales, (ii) meet product
launch schedules, (iii) meet goals for number of units shipped, (iv) decrease
product and fuel costs, and (v) decrease costs of business operations.
21
Initially, the CEO, and other members of management as
appropriate, make a recommendation to the Compensation Committee of the Board
of Directors for each executives potential award amount based on his level of
attainment of each of his individual performance goals (with the exception of
the CEO himself whose level of attainment is evaluated by the Compensation
Committee directly). Ultimately, the Board of Directors, after review and
discussion and recommendation from the Compensation Committee, determines the
final achieved level of attainment for each executives individual performance
goals. In 2010, no annual incentive
awards in the form of stock grants were made to the named executive officers.
Long-Term
Equity Incentive Compensation
We grant long-term equity
incentive awards in the form of stock options and restricted stock to
executives as part of our total compensation package. Consistent with our
emphasis on pay-for-performance based incentive compensation, these awards
represent a significant
portion
of total executive compensation. Based on the stage of our Companys
development and the incentives we aim to provide to our executives, we have
chosen to use either stock options or a combination of stock options and
restricted stock as our long-term equity incentive awards. Our decisions
regarding the amount and type of long-term equity incentive compensation and
relative weighting of these awards among total executive compensation have also
been based on our understanding of market practices of similarly situated
companies and our negotiations with our executives in connection with their
initial employment or promotion by our Company.
Additionally, the Board
adopted stock ownership guidelines for named executives, effective as of August
15, 2005, which are also considered when granting long-term equity incentive
awards to executives. These guidelines provide a target level of Company
equity holdings with which named executives are expected to comply within five
(5) years from the latter of the effective date of the guidelines or the date
the individual is first appointed as an executive. The target stock holdings
are determined as a multiple of the named executives
base salary and then converted to a fixed number of shares. The named
executives base salary is multiplied by five (5) for Chief Executive Officer
and by three (3) for all other named executives; that product is divided by
Plug Powers 200-day average common stock price as reported by the NASDAQ
Global Market; and finally that amount is then rounded to the nearest 100
shares. The following count towards satisfaction of these stock ownership
guidelines: (i) shares owned outright by the executive or his or her
immediate family members residing in the same household; (ii) stock held in the
Plug Power Inc. Savings and Retirement Plan (401K Plan); (iii) stock held in
the Plug Power Inc. Employee Stock Purchase Plan (ESPP); (iv) restricted stock
issued as part of an executives annual or other bonus whether or not vested;
(v) shares acquired upon the exercise of employee stock options; (vi) shares
underlying unexercised employee stock options as part of the Plug Power Inc.
Employee Stock Option Plan (ESOP) times a factor of thirty-three percent; and
(vii) shares held in trust.
Stock option awards
provide our executive officers with the right to purchase shares of our common
stock at a fixed exercise price typically for a period of up to ten years,
subject to continued employment with our Company. Stock options are earned on
the basis of continued service and generally vest over three years, beginning
with one-third vesting on the first anniversary of the grant date, one-third
vesting on the second anniversary of the grant date and the final one-third
vesting on the third anniversary of the grant date, subject to acceleration in
certain circumstances. Stock option awards are made pursuant to our 1999 Stock
Option and Incentive Plan. Except as may otherwise be provided in the applicable
stock option award agreement, stock option awards become fully exercisable upon
a change of control under the 1999 Stock Option and Incentive Plan. The
exercise price of each stock option granted under our 1999 Stock Option and
Incentive Plan is the closing price of our common stock on the NASDAQ
Capital
Market as of the effective date of each grant.
Grants to new hires and
grants relating to an existing executive officers promotion may be made on a
periodic basis. All grants to executive officers are approved by the
Compensation Committee. We consider a number of factors in determining the
number of stock options, if any, to grant to our executives, including:
-
the number of shares subject to, and exercise price of,
outstanding options, both vested and unvested, held by our named executive
officers;
-
the vesting schedule of the unvested stock options held by our
named executive officers; and
-
the amount and percentage of our total equity on a diluted basis
held by our named executive officers.
22
Restricted stock awards provide our executive officers with
shares of our stock that they may retain or trade; however, all executive
officers must trade within their rights according to our Insider Trading
Policy. The restricted stock is intended to be a long-term incentive
alternative to the stock option awards that may be appropriate for executive
officers based on their performance and their critical skills. Restricted
stock awards may vest over three years, beginning with one-third vesting one
year after the date of grant, then pro-rata vesting monthly thereafter.
Restricted stock awards are made pursuant to our 1999 Stock Option and
Incentive Plan.
On October 28, 2009, the
Compensation Committee recommended and the Board of Directors approved a Long
Term Incentive (LTI) Plan pursuant to the terms of the Companys 1999 Stock
Option and Incentive Plan. Designed as an incentive vehicle to support employee
efforts, the LTI Plan seeks to increase shareholder value by encouraging Plug
Power employees to continue to work diligently to further the Companys long
term goals, particularly the recently announced three year plan to achieve
profitability in 2012.
Under the LTI Plan, a select
group of critical employees received a Restricted Stock Unit Award Agreement
(Agreement) awarding a one time grant of restricted stock units (RSUs)
calculated using a multiple of the selected employees base salary. According
to the Agreement, the restrictions on each participants RSU allocation will
lapse over a three year period upon successful completion of weighted
performance-based metrics. Specifically, restrictions on 25% of RSUs are tied
to the Companys achievement of revenue targets, while the restrictions on 75%
of RSUs are tied to the Companys achievement of earnings before interest expense, taxes, depreciation, amortization
and non-cash charges for equity compensation (measurement referred to in the
Agreement as EBITDAS) targets. Intended to supplement the annual employee
incentive plan payout, the total number of RSUs on which restrictions shall
lapse each year will vary depending on the Companys progress achieving the
corresponding threshold, target or stretch goals.
Restrictions shall lapse
with respect to the corresponding revenue RSUs based on the following sample
schedule, depending on the Companys achievement of the Revenue targets for
2010, 2011 and 2012:
|
|
|
|
|
|
|
|
|
|
|
|
FOR ACHIEVEMENT OF REVENUE PERFORMANCE TARGETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU
|
Percent
|
RSU's
|
RSU's
|
2010 PERFORMANCE
|
Allocation
|
Vesting
|
Earned
|
Forfeited
|
< Threshold
|
0
|
0%
|
0
|
3,831
|
>= Threshold and < Target
|
13,931
|
20%
|
2,786
|
1,045
|
>= Target and < Stretch
|
17,413
|
20%
|
3,483
|
348
|
>= Stretch
|
19,155
|
20%
|
3,831
|
0
|
|
|
|
|
|
|
RSU
|
Percent
|
RSU's
|
RSU's
|
2011 PERFORMANCE
|
Allocation
|
Vesting
|
Earned
|
Forfeited
|
< Threshold
|
0
|
0%
|
0
|
4,789
|
>= Threshold and < Target
|
13,931
|
25%
|
3,483
|
1,306
|
>= Target and < Stretch
|
17,413
|
25%
|
4,353
|
436
|
>= Stretch
|
19,155
|
25%
|
4,789
|
0
|
|
|
|
|
|
|
RSU
|
Percent
|
RSU's
|
RSU's
|
2012 PERFORMANCE
|
Allocation
|
Vesting
|
Earned
|
Forfeited
|
< Threshold
|
0
|
0%
|
0
|
10,535
|
>= Threshold and < Target
|
13,931
|
55%
|
7,662
|
2,873
|
>= Target and < Stretch
|
17,413
|
55%
|
9,577
|
958
|
>= Stretch
|
19,155
|
55%
|
10,535
|
0
|
23
Restrictions shall lapse with respect to the
corresponding EBITDAS RSUs based on the following sample schedule, depending on
the Companys achievement of the EBITDAS targets for 2010, 2011 and 2012:
|
|
|
|
|
|
|
|
|
|
|
|
FOR ACHIEVEMENT OF EBITDAS PERFORMANCE TARGETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSU
|
Percent
|
RSU's
|
RSU's
|
2010 PERFORMANCE
|
Allocation
|
Vesting
|
Earned
|
Forfeited
|
< Threshold
|
0
|
0%
|
0
|
11,493
|
>= Threshold and < Target
|
41,791
|
20%
|
8,358
|
3,135
|
>= Target and < Stretch
|
52,240
|
20%
|
10,448
|
1,045
|
>= Stretch
|
57,463
|
20%
|
11,493
|
0
|
|
|
|
|
|
|
RSU
|
Percent
|
RSU's
|
RSU's
|
2011 PERFORMANCE
|
Allocation
|
Vesting
|
Earned
|
Forfeited
|
< Threshold
|
0
|
0%
|
0
|
14,366
|
>= Threshold and < Target
|
41,791
|
25%
|
10,448
|
3,918
|
>= Target and < Stretch
|
52,240
|
25%
|
13,060
|
1,306
|
>= Stretch
|
57,463
|
25%
|
14,366
|
0
|
|
|
|
|
|
|
RSU
|
Percent
|
RSU's
|
RSU's
|
2012 PERFORMANCE
|
Allocation
|
Vesting
|
Earned
|
Forfeited
|
< Threshold
|
0
|
0%
|
0
|
31,604
|
>= Threshold and < Target
|
41,791
|
55%
|
22,985
|
8,619
|
>= Target and < Stretch
|
52,240
|
55%
|
28,732
|
2,872
|
>= Stretch
|
57,463
|
55%
|
31,604
|
0
|
For example, assuming the
Company achieves stretch revenue and EBITDAS metrics, restrictions on a maximum
of 20% of total awarded RSUs will lapse in 2011 for performance in 2010;
restrictions on a maximum of 25% of total awarded RSUs will lapse in 2012 for
performance in 2011; and restrictions on a maximum of 55% of total awarded RSUs
will lapse in 2013 for performance in 2012. Alternatively, if at the end of
the fiscal year it is determined that the Company failed to achieve these
articulated performance-based metrics, a percentage of RSUs will be forfeited
for that fiscal year.
Pursuant to the terms of the
Agreement, in the event stretch revenue and EBITDAS metrics are reached during
each of the three years of the grant period commencing on January 1, 2010, the
Company could issue a maximum of 8,667,666 shares to LTI Plan participants,
currently representing approximately 6.6% of total outstanding shares.
Restrictions on these shares only lapse in the event the Company performs at
the articulated performance metrics.
In 2010, no threshold, target or stretch
revenue and EBITDAS performance-based metrics were reached. Accordingly,
no restrictions lapsed with respect to the 2010 performance period and 20% of
the total awarded RSUs for the Named Executive Officers were forfeited as follows: Mr. Marsh - 257,813 RSUs,
Mr. Anderson - 158,654 RSUs, Mr. Conway - 95,192 RSUs, Mr. Hansen - 95,192 RSUs
and Mr. Corlesss - 91,942 RSUs.
Broad-Based Benefits
All full-time employees,
including our named executive officers, may participate in our health and
welfare benefit programs, including medical, dental, and vision care coverage,
disability insurance and life insurance, and our 401(k) plan.
Our Executive Compensation Process
The Compensation
Committee of our Board of Directors is responsible for determining the
compensation for our named executive officers. The Compensation Committee is
composed entirely of non-employee directors who are independent as that term
is defined in the applicable NASDAQ rules. In determining executive
compensation, our Compensation Committee annually reviews the performance of
our executives with our Chief Executive Officer, and our Chief Executive
Officer makes recommendations to our Compensation Committee with respect to the
appropriate base salary, annual incentive bonuses and performance measures, and
grants of long-term equity incentive awards for each of our executives. The
Chairman of the Compensation Committee makes recommendations to the
Compensation Committee with regards to the Chief Executive Officers
compensation. The Compensation Committee makes its determination regarding
executive compensation and then recommends such determination to the Board of
Directors. The Board of Directors ultimately approves executive compensation.
24
As a result, the total
amount of compensation that we paid to our executives, the types of executive
compensation programs we maintained, and the amount of compensation paid to our
executives under each program has been determined by our Compensation Committee
and Board of Directors based on their understanding of the market, experience
in making these types of decisions, and judgment regarding the appropriate
amounts and types of executive compensation to provide.
Summary Compensation
The following table sets forth information concerning
compensation for services rendered in all capacities awarded to, earned by or
paid in the last three fiscal years to the Company's Named Executive Officers.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
Name and Principal Position
|
Year
|
Salary ($)
|
Stock Awards ($)
|
Option Awards ($)
|
Compensation ($)
|
|
Total ($)
|
|
|
|
(1)
|
(2)
|
(3)
|
|
|
|
|
Andrew Marsh (4)
|
2010
|
375,000
|
-
|
-
|
12,526
|
(5)
|
387,526
|
|
President, Chief Executive Officer and
|
2009
|
382,212
|
57,562
|
1,775
|
48,742
|
(5)
|
490,291
|
|
Director
|
2008
|
272,596
|
109,835
|
832,000
|
127,864
|
(5)
|
1,342,295
|
|
Gerald A. Anderson
|
2010
|
258,654
|
-
|
-
|
12,526
|
(6)
|
271,180
|
|
Chief Financial Officer and
|
2009
|
254,807
|
50,150
|
1,775
|
12,526
|
(6)
|
319,258
|
|
Senior Vice President - Operations
|
2008
|
248,577
|
87,256
|
42,120
|
11,995
|
(6)
|
389,948
|
|
Gerard L. Conway, Jr. (7)
|
2010
|
200,000
|
-
|
-
|
180
|
(8)
|
200,180
|
|
General Counsel, Corporate Secretary
|
2009
|
203,846
|
38,300
|
1,775
|
180
|
(8)
|
244,101
|
|
and Senior Vice President - Government Relations
|
2008
|
197,693
|
80,500
|
42,120
|
7,757
|
(8)
|
328,070
|
|
Erik J. Hansen (9)
|
2010
|
209,034
|
-
|
-
|
9,346
|
(10)
|
218,380
|
|
Senior Vice President - Sales, Service
|
2009
|
181,000
|
37,400
|
1,775
|
9,158
|
(10)
|
229,333
|
|
and Hydrogen
|
2008
|
-
|
-
|
-
|
-
|
|
-
|
|
Adrian Corless (11)
|
2010
|
215,827
|
-
|
-
|
61,122
|
(12)
|
276,949
|
|
Chief Technology Officer,
|
2009
|
-
|
-
|
-
|
-
|
|
-
|
|
Senior Vice President - Engineering
|
2008
|
-
|
-
|
-
|
-
|
|
-
|
|
Mark A. Sperry (13)
|
2010
|
193,828
|
-
|
-
|
258,000
|
(14)
|
451,828
|
|
Senior Vice President and General
|
2009
|
262,962
|
18,602
|
1,775
|
12,430
|
(14)
|
295,769
|
|
Manager of Continuous Power Division
|
2008
|
257,231
|
77,399
|
42,120
|
11,499
|
(14)
|
388,249
|
(1) This column represents the dollar
amount of base salary actually paid to executives. During 2009, our fiscal
calendar included fifty-three (53) pay periods, and therefore, each executive
earned one (1) additional week of base pay.
(2) This column represents the aggregate
grant date fair value of the stock award computed in accordance with Financial
Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic
718. Pursuant to SEC rules, the amounts shown exclude the impact of estimated
forfeitures. Fair value is calculated using the closing price of Plug Power
stock on the date of grant. For additional information on stock awards, refer
to note 14 of the Companys consolidated
financial statements in the Form 10-K for the year ended December 31,
2010, as filed with the SEC. These amounts reflect the Companys accounting
expense for these awards, and do not correspond to the actual value that will
be recognized by the named executives.
25
(3) This column represents the
aggregate grant date fair value of the option award computed in accordance with
Financial Accounting Standards Board (FASB) Accounting Standards Codification
(ASC) Topic 718. Pursuant to SEC rules, the amounts shown exclude the impact of
estimated forfeitures. For additional information on the valuation assumptions
with respect to option awards, refer to note 14 of the Companys consolidated
financial statements in the Form 10-K for the year ended December 31, 2010,
as filed with the SEC. These amounts reflect the Companys accounting expense
for these awards, and do not correspond to the actual value that will be
recognized by the named executives.
(4) Mr. Marsh was hired in April 2008,
and therefore he received compensation in 2008 for nine months.
(5) Includes the Companys share of
contributions on behalf of Mr. Marsh to the Plug Power 401(k) savings plan in
the amount of $12,250, $12,250 and $10,130 in the years ended 2010, 2009 and
2008, respectively, payments of $276, $276 and $673 for supplemental life
insurance premiums in the years ended 2010, 2009 and 2008, respectively, and payments
of $36,216 and $117,061 for moving and relocation expenses in 2009 and 2008,
respectively.
(6) Includes the Companys share of
contributions on behalf of Mr. Anderson to the Plug Power 401(k) savings plan
in the amount of $12,250, $12,250 and $11,443 in the years ended 2010, 2009 and
2008, respectively, and payments of $276, $276 and $552 for supplemental life
insurance premiums in the years ended 2010, 2009 and 2008, respectively.
(7) Mr. Conway became a named
executive officer in 2008.
(8) Includes the Companys share of
contributions on behalf of Mr. Conway to the Plug Power 401(k) savings plan in
the amount of $0, $0 and $7,577 in the years ended 2010, 2009 and 2008,
respectively, and payments of $180, $180 and $180 for supplemental life
insurance premiums in the years ended 2010, 2009 and 2008, respectively.
(9) Mr. Hansen became a named
executive officer in 2009.
(10) Includes the Companys share of contributions on
behalf of Mr. Hansen to the Plug Power 401(k) savings plan in the amount of
$9,346 and $9,158 in the years ended 2010 and 2009, respectively.
(11) Mr. Corless became a named executive officer in 2010.
(12) Includes the Companys share of contributions on
behalf of Mr. Corless of $120 for supplemental life insurance premiums in the
year ended 2010, as well as a stipend of $61,000 related to moving and
relocation expenses.
(13)
Mr.
Sperry's position was eliminated as part of the Company's May 2010 restructuring
to focus on harnessing commercial traction in the material handling market. He
subsequently stepped down from his position as Senior Vice President and General
Manager of the Company's Continuous Power Division on August 27, 2010.
(14) Includes the Companys share of
contributions on behalf of Mr. Sperry to the Plug Power 401(k) savings plan in
the amount of $0, $12,250, and $11,125 in the years ended 2010, 2009 and 2008,
respectively, and payments of $0, $180 and $374 for supplemental life insurance
premiums in the years ended 2010, 2009 and 2008, respectively, and a severance
payment of $258,000 in 2010.
Grants of Plan-Based Awards
Table
There were no equity
awards granted to the named executive officers in 2010.
DISCUSSION OF SUMMARY COMPENSATION AND GRANTS OF
PLAN-BASED AWARDS TABLES
Our executive compensation policies and practices,
pursuant to which the compensation set forth in the Summary Compensation Table
and the Grants of Plan Based Awards Table was paid or awarded, are described
above under Compensation Discussion and Analysis. A summary of certain
material terms of our compensation plans and arrangements is set forth below.
26
Employment Agreements
The Company and Mr. Marsh are parties to an employment
agreement which renews automatically for successive one-year terms unless Mr.
Marsh or the Company gives notice to the contrary. Mr. Marsh receives an annual
base salary of $375,000 and is eligible to: (i) receive an annual incentive
bonus of up to an amount equal to fifty percent (50%) of his annual base
salary; (ii) participate in all savings and retirement plans; and (iii)
participate in all benefit and executive perquisites. Mr. Marshs employment
may be terminated by the Company for Cause, as defined in the agreement, or
by Mr. Marsh for Good Reason, as defined in the agreement, or without Good
Reason upon written notice of termination to the Company. If Mr. Marshs
employment is terminated by the Company for any reason other than cause, death
or disability, or in the event that Mr. Marsh terminates his employment with
the Company and is able to establish Good Reason, the Company is obligated to
pay Mr. Marsh the sum of the following amounts:
(i) any earned but
unpaid annual base salary,
(ii) incentive bonus
earned but not yet paid,
(iii)
unpaid expense
reimbursements,
(iv) accrued but
unused vacation, plus
(v) any benefits
that may have vested under any employee benefit plan of the Company through the
date of termination; plus
:
(
a) one (1) times annual base salary
and
(
b) one
(1) times the annual incentive bonus for the immediately preceding fiscal year.
In addition, Mr. Marsh is entitled to fully vest as of
the date of termination in any outstanding restricted stock, stock options and
other stock awards previously granted that would have vested had he remained an
employee for an additional twelve (12) months following the date of termination.
Furthermore, the Company is required to continue paying health insurance and
other benefits to Mr. Marsh and his eligible family members for twelve (12)
months following his termination. The agreement also provides, among other
things, that if, within twelve (12) months after a Change in Control, as
defined in the agreement, the Company terminates such executives employment
without Cause, then such executive shall be entitled to
:
(i) receive a lump
sum payment equal to three (3) times the sum of (1) his current annual base
salary plus (2) his average annual incentive bonus over the three (3) fiscal
years prior to the Change in Control (or his annual incentive bonus for the
fiscal year immediately preceding to the Change of Control, if higher),
(ii) continued
vesting of his stock options and other stock-based awards for twelve (12)
months following the Change of Control as if he had remained an active
employee, and
(iii) receive
benefits, including health and life insurance for twelve (12) months following
the Change of Control.
The Company and Messrs. Anderson, Conway, Hansen
and Corless are parties to
Executive Employment Agreements pursuant to which if any of their employment is
terminated by the Company for any reason other than Cause, as defined in the
agreement, death or disability, or in the event that any terminates his
employment with the Company and is able to establish Good Reason, as defined
in the agreement, the Company is obligated to pay each the sum of the following
amounts:
(i) any earned but
unpaid annual base salary,
(ii) incentive bonus
earned but not yet paid,
(iii) unpaid expense
reimbursements,
(iv) accrued but
unused vacation, plus
(v) any benefits
that may have vested under any employee benefit plan of the Company through the
date of termination; plus (
a) one
(1) times annual base salary.
27
In addition, each is entitled to exercise any vested
stock options for twelve (12) months following the date of termination.
Furthermore, the Company is required to continue paying health insurance and
other benefits to each and his eligible family members for twelve (12) months
following his termination. The Executive Employment Agreements also provide,
among other things, that if, within twelve (12) months after a Change in Control,
as defined in the agreement, the Company terminates such executives employment
without Cause, then such executive shall be entitled to:
(i) receive a lump
sum payment equal to the sum of (1) his average annual base salary over the
three (3) fiscal years immediately prior to the Change of Control (or the
executives annual base salary in effect immediately prior to the Change of
Control, if higher) and (2) his average annual bonus over the three (3) fiscal
years prior to the Change in Control (or the executives annual bonus in effect
immediately prior to the Change of Control, if higher),
(ii) continued
vesting of his stock options for twelve (12) months following the Change of
Control as if he had remained an active employee, and
(iii) receive benefits,
including health and life insurance for twelve (12) months following the Change
of Control.
Annual Incentive
Bonuses
We
established incentive bonus potentials for each of our named executive officers
as a percentage of that executives base salary according to the executives
achievement of a number of predetermined performance goals, as described above
under Our Executive Compensation Programs Annual Incentive Bonuses. With
the exception of Mr. Marsh, each executive has the ability to earn a stock
grant equivalent to between 0% and 30% of his base salary given his actual
performance. Mr. Marsh has the ability to earn a stock grant equivalent to
between 0% and 50% of his base salary given his actual performance. In 2010,
no annual incentive awards in the form of stock grants were made to the named
executive officers.
2010 Stock Option Grants
There were no equity
awards granted to the named executive officers in 2010.
1999 Stock Option and Incentive Plan
Administration.
Our
Board of Directors currently administers our 1999 Stock Option and Incentive
Plan. The Compensation Committee of our Board of Directors is responsible for
reviewing all of our executive compensation plans.
Eligibility.
All
of our employees, consultants and non-employee directors are eligible to be
granted awards under our 1999 Stock Option and Incentive Plan. An employee,
consultant or non-employee director granted an award is a participant under our
1999 Stock Option and Incentive Plan.
Number
of Shares Available for Issuance.
The maximum number of shares of our
common stock that are authorized for issuance under our 1999 Stock Option and
Incentive Plan as of January 1, 2011 is 22,355,685. Shares issued under the
1999 Stock Option and Incentive Plan may be treasury shares or authorized but
unissued shares. In the event the number of shares to be delivered upon the
exercise or payment of any award granted under the 1999 Stock Option and
Incentive Plan is reduced for any reason or in the event that any award (or
portion thereof) can no longer be exercised or paid, the number of shares no
longer subject to such award shall be released from such award and shall
thereafter be available under the 1999 Stock Option and Incentive Plan for the
grant of additional awards. Upon the occurrence of a merger, consolidation,
recapitalization, reclassification, stock split, stock dividend, combination of
shares or the like, the plan administrator may ratably adjust the aggregate
number and affected class of securities available under the 1999 Stock Option
and Incentive Plan.
Types of Awards.
The plan administrator
may grant the following types of awards under our 1999 Stock Option and
Incentive Plan: stock options; restricted stock; or other stock-based awards.
Stock options awarded under our 1999 Stock Option and Incentive Plan may be
nonqualified stock options or incentive stock options under Section 422 of the
Internal Revenue Code of 1986, as amended. With the exception of incentive
stock options, the plan administrator may grant, from time to time, any of the
types of awards under our 1999 Stock Option and Incentive Plan to our
employees, consultants and non-employee directors. Incentive stock options may
only be granted to our employees.
Stock Options.
A stock option is the right to acquire shares of our common stock at a
fixed price for a fixed period of time and generally is subject to a vesting
requirement. To date, as a matter of practice, options have generally been
subject to a three-year vesting period, with one-third of the total award
vesting at the first anniversary of the grant date and the remainder vesting in
equal thirds each anniversary thereafter. A stock option will be in the form
of a nonqualified stock option or an incentive stock option. The exercise price
is set as the market price on the grant date. The term of a stock option may
not exceed ten years or five years in the case of incentive stock options
granted to a 10% owner. Our 1999 Stock Option and Incentive Plan also allows
for the early exercise of unvested options, provided that right is permitted in
the applicable stock option agreement. All outstanding unvested shares of our
common stock acquired through early exercised options are subject to repurchase
by us. After termination of an optionee, he or she may exercise his or her
vested options for the period of time stated in the stock option agreement. If
termination is for cause, vested options may no longer be exercised. In all
other cases, the vested options will remain exercisable for executives twelve
(12) months. However, an option may not be exercised later than its expiration
date.
28
Restricted Stock.
A restricted stock award is an award entitling the recipient to acquire, at par
value or such other higher purchase price determined by the administrator,
shares of stock subject to such restrictions and conditions as the
administrator may determine at the time of grant. Conditions may be based on
continuing employment (or other business relationship) and/or achievement of
pre-established performance goals and objectives. The grant of a restricted
stock award is contingent on the participant executing the restricted stock
award agreement. Restricted stock awards are shares of our common stock that
are subject to cancellation, restrictions and vesting conditions, as determined
by the plan administrator. Restricted stock awards generally vest over three
years, beginning with one-third vesting one year after the date of grant, then
pro-rata vesting monthly thereafter. Restricted stock awards are made pursuant
to our 1999 Stock Option and Incentive Plan.
Other Awards.
The
administrator of the
1999 Stock Option and Incentive Plan
also may grant other forms of awards that generally are based on the value of
our common stock as determined by the plan administrator to be consistent with
the purposes of our 1999 Stock Option and Incentive Plan including restricted
Stock units. A restricted Stock unit is a commitment by the Company to
issue a share of our Common Stock for each restricted Stock unit at the time
that the restrictions set in forth in the award lapse or are satisfied.
Amendment and Discontinuance; Term.
The plan administrator may amend, suspend or
terminate our 1999 Stock Option and Incentive Plan at any time, with or without
prior notice to or consent of any person, except as would require the approval
of our stockholders, be required by law or the requirements of the exchange on
which our common stock is listed or would adversely affect a participants
rights to outstanding awards without their consent. The Companys shareholders
approved an amendment to the 1999 Stock Option and Incentive Plan on May 16,
2001, and the date of this amendment constitutes the effective date of the 1999
Stock Option and Incentive Plan. Unless terminated earlier, our 1999 Stock
Option and Incentive Plan will expire on the tenth anniversary of its effective
date, which is May 16, 2011.
29
Outstanding Equity Awards at 2010 Fiscal
Year-End
The following table provides information on the holdings of stock options by
the Named Executive Officers as of December 31, 2010. For additional information about the option awards and
stock awards, see the description of equity incentive compensation in the
section titled Compensation Discussion and Analysis.
|
Option Awards
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive Plan
|
|
|
|
|
|
|
|
Awards: Market or
|
|
|
|
|
|
|
Equity Incentive Plan
|
Payout Value Of
|
|
|
|
|
|
|
Awards: Number of
|
Unearned Shares,
|
|
Number of Securities
|
Number of Securities
|
|
|
|
Unearned Shares, Units, or
|
Units, or Other Rights
|
|
Underlying Unexercised
|
Underlying Unexercised
|
Option Exercise
|
|
Option Expiration
|
Other Rights That Have
|
That Have Not Yet
|
Name
|
Options
|
Options
|
Price ($)
|
|
Date
|
Not Yet Vested (1)
|
Vested ($) (2)
|
|
|
|
|
|
|
|
|
|
Exercisable
|
Unexercisable
|
|
|
|
Unexercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Andrew Marsh
|
400,000
|
|
3.58
|
|
04/08/18
|
750,000
|
|
277,500
|
|
834
|
|
0.95
|
|
05/20/19
|
|
|
|
|
|
1,666
|
0.95
|
|
05/20/19
|
|
|
|
|
|
|
|
|
|
|
|
|
Gerald A. Anderson
|
45,000
|
|
3.33
|
|
07/09/17
|
461,539
|
|
170,769
|
|
27,000
|
|
2.60
|
|
01/24/18
|
|
|
|
|
834
|
|
0.95
|
|
05/20/19
|
|
|
|
|
|
1,666
|
0.95
|
|
05/20/19
|
|
|
|
|
|
|
|
|
|
|
|
|
Gerard L. Conway, Jr.
|
1,871
|
|
8.53
|
|
11/14/11
|
276,923
|
|
102,462
|
|
2,250
|
|
8.53
|
|
11/14/11
|
|
|
|
|
8,000
|
|
6.73
|
|
12/22/13
|
|
|
|
|
12,000
|
|
5.39
|
|
01/28/15
|
|
|
|
|
30,000
|
|
5.58
|
|
02/01/16
|
|
|
|
|
30,000
|
|
3.75
|
|
02/14/17
|
|
|
|
|
27,000
|
|
2.60
|
|
01/24/18
|
|
|
|
|
834
|
|
0.95
|
|
05/20/19
|
|
|
|
|
|
1,666
|
0.95
|
|
05/20/19
|
|
|
|
|
|
|
|
|
|
|
|
|
Erik J. Hansen
|
50,000
|
|
0.86
|
|
10/29/18
|
276,923
|
|
102,462
|
|
834
|
|
0.95
|
|
05/20/19
|
|
|
|
|
|
1,666
|
0.95
|
|
05/20/19
|
|
|
|
|
|
|
|
|
|
|
|
|
Adrian Corless
|
30,000
|
|
3.24
|
|
04/04/17
|
267,469
|
|
98,964
|
|
27,000
|
|
2.42
|
|
07/30/18
|
|
|
|
|
834
|
|
0.95
|
|
05/20/19
|
|
|
|
|
|
1,666
|
0.95
|
|
05/20/19
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark A. Sperry
|
35,027
|
|
8.53
|
|
11/14/11
|
|
|
|
|
20,000
|
|
9.20
|
|
02/10/14
|
|
|
|
|
25,000
|
|
5.39
|
|
01/28/15
|
|
|
|
|
40,000
|
|
5.58
|
|
02/01/16
|
|
|
|
|
40,000
|
|
3.75
|
|
02/14/17
|
|
|
|
|
27,000
|
|
2.60
|
|
01/24/18
|
|
|
|
|
834
|
|
0.95
|
|
05/20/19
|
|
|
|
(1) This column represents the number of shares that
have not yet vested, and have not yet been earned. The number of shares is
based on achieving threshold performance of goals.
(2) This column represents the market value of the
unearned restricted stock awards using the stock price at the end of fiscal
year 2010.
Option Exercises and Stock Vested in Fiscal 2010 Table
There were no option exercises or stock awards vested
during the year for the named executive officers.
Potential Payments Upon Termination or
Change-in-Control
The Company and Messrs.
Marsh, Anderson, Conway, Hansen and Corless are parties to employment
agreements, respectively, that provide for a potential payment upon termination
for other than Cause as discussed above in
Employment Agreements
.
30
Such payments by the Company to any of Messrs.
Marsh, Anderson, Conway, Hansen, or Corless are subject to the executive
signing a general release of claims in a form and manner satisfactory to the
Company and in no event is the executive entitled to receive any such payment
after he breaches the Employee Patent, Confidential Information and Non-Compete
Agreement referenced in the executives respective agreement or any
non-compete, non-solicit or non-disclosure covenants in any agreement between
the Company and such executive. We agreed to provide severance payments to
such executives in these circumstances based on our negotiations with each of
our executives at the time they joined our Company, or as negotiated subsequent
to hiring, and in order to provide a total compensation package that we
believed to be competitive. Additionally, we believe that providing severance
upon a termination without cause can help to encourage our executives to take
the risks that we believe are necessary for our Company to succeed and also
recognizes the longer hiring process typically involved in hiring a senior
executive.
Cause shall mean (i)
a willful act of dishonesty by the Executive with respect to any matter
involving the Company or any subsidiary or affiliate, or (ii) conviction of the
Executive of a crime involving moral turpitude, (iii) the failure to perform
to the reasonable satisfaction of the Board a substantial portion of the
Executives duties and responsibilities assigned or delegated under this
Agreement (other than any such failure after the Executive gives notice of
termination for Good Reason), which failure continues, in the reasonable
judgment of the Board, after written notice given to the Executive by the Board.
For purposes of this definition (i) hereof, no act, or failure to act, on the
Executives part shall be deemed willful unless done, or omitted to be done,
by the Executive without reasonable belief that the Executives act, or failure
to act, was in the best interests of the Company and its subsidiaries and
affiliates. Cause may also include (i) the failure or refusal of the named
executive to render services to us in accordance with his obligations under the
employment agreement or a determination by us that the named executive has
failed to perform the duties of his employment; (ii) disloyalty, gross
negligence, dishonesty, breach of fiduciary duty or breach of the terms of the
employment agreement or the other agreements executed in connection therewith;
(iii) the commission by the named executive of an act of fraud, embezzlement or
disregard of our rules or policies or the commission by the named executive of
any other action which injures us; (iv) acts which, in the judgment of our
board of directors, would tend to generate adverse publicity toward us; (v) the
commission, or plea of nolo contendere, by the named executive of a felony;
(vi) the commission of an act which constitutes unfair competition with us or
which induces any of our customers to breach a contract with us; or (vii) a
breach by the named executive of the terms of the non-competition and
non-solicitation agreement or the employee nondisclosure and developments
agreement between us and the named executive.
Terminating Event shall mean a termination by the
Company of the employment of the Executive with the Company for any reason
other than (i) a willful act of dishonesty by the Executive with respect to any
matter involving the Company or any subsidiary or affiliate, or (ii) conviction
of the Executive of a crime involving moral turpitude, or (iii) the gross or
willful failure by the Executive to substantially perform the Executives
duties with the Company, which failure is not cured within thirty (30) days
after a written demand for substantial performance is received by the Executive
from the Board of Directors of the Company (the Board) which specifically
identifies the manner in which the Board believes the Executive has not
substantially performed the Executives duties, or (iv) the failure by the
Executive to perform his full-time duties with the Company by reason of his
death or Disability. For purposes of clauses (i) and (iii) of this Section
1(a), no act, or failure to act, on the Executives part shall be deemed willful
unless done, or omitted to be done, by the Executive without reasonable belief
that the Executives act, or failure to act, was in the best interests of the
Company and its subsidiaries and affiliates. For purposes of this Agreement,
Disability shall mean the Executives incapacity due to physical or mental
illness which has caused the Executive to be absent from the full-time
performance of his duties with the Company for a period of six (6) consecutive
months if the Company shall have given the Executive a Notice of Termination
and, within thirty (30) days after such Notice of Termination is given, the
Executive shall not have returned to the full-time performance of his duties.
If Mr. Marsh had been
terminated without cause on December 31, 2010, the approximate value of the
severance package, including, as mentioned above in
Employment Agreements
,
salary, benefits and equity awards, under his employment agreement would have
been $466,792. This includes an acceleration of any remaining unvested options
granted to such named executive under the 1999 Stock Option and Incentive Plan.
If Mr. Anderson, Conway, Hansen or Corless had been terminated without cause on
December 31, 2010, the approximate value of the severance packages, including,
as mentioned above in
Employment Agreements
, salary, benefits and equity
awards, under the employment agreement for such named executive would have been
for Mr. Anderson $366,090, for Mr. Conway $261,934, for Mr. Hansen $293,147 and
Mr. Corless $293,504.
31
Mr. Sperry was formerly a party to an employment agreement with the Company that
provided for a payment upon termination for other than "Cause."
Mr. Sperry's position was eliminated as part of the Company's May 2010
restructuring to focus on harnessing commercial traction in the material
handling market. He subsequently stepped down from his position as Senior Vice
President and General Manager of the Company's Continuous Power Division on
August 27, 2010.
In accordance with the terms of his employment agreement, the Company made a
severance payment to Mr. Sperry in the amount of $258,000.
The Company and Messrs.
Marsh, Anderson, Conway, Hansen, and Corless are parties to employment agreements,
respectively, that provide for a potential payment upon a Change of Control,
as discussed above in
Employment Agreements
. Such payments by the
Company to the executive are subject to the executive signing a general release
of claims in a form and manner satisfactory to the Company and in no event is
Messrs. Marsh, Anderson, Conway, Hansen or Corless entitled
to receive any such payment after he breaches the Employee Patent, Confidential
Information and Non-Compete Agreement referenced in the executives respective
agreement or any non-compete, non-solicit or non-disclosure covenants in any
agreement between the Company and such executive.
Change in Control
shall be deemed to have occurred in any one of the following events:
(i)
any person, as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the Exchange Act), (other than the Company, any of its subsidiaries, any
trustee, fiduciary or other person or entity holding securities under any
employee benefit plan or trust of the Company or any of its subsidiaries,
OGK-3, together with all Affiliates and Associates (as such terms are
hereinafter defined) of such person, shall become the beneficial owner (as
such term is defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing 25% or more of the then
outstanding shares of common stock of the Company (the Stock) (other than as
a result of an acquisition of securities directly from the Company); or
(ii)
persons who, as of the effective date of
this Agreement (the Effective Date), constitute the Companys Board of
Directors (the Incumbent Directors) cease for any reason, including, without
limitation, as a result of a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority of the Board, provided that any
person becoming a director of the Company subsequent to the Effective Date
shall be considered an Incumbent Director if such persons election was
approved by or such person was nominated for election by either (A) a vote of
at least a majority of the Incumbent Directors or (B) a vote of at least a
majority of the Incumbent Directors who are members of a nominating committee
comprised, in the majority, of Incumbent Directors; but provided further, that
any such person whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of members of
the Board of Directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board, including by reason
of agreement intended to avoid or settle any such actual or threatened contest
or solicitation, shall not be considered an Incumbent Director; or
(iii)
Upon (A) the consummation of any
consolidation or merger of the Company where the shareholders of the Company,
immediately prior to the consolidation or merger, did not, immediately after
the consolidation or merger, beneficially own (as such term is defined in Rule
13d-3 of the Exchange Act), directly or indirectly, shares representing in the
aggregate more than 50% of the voting shares of the corporation issuing cash or
securities in the consolidation or merger (or of its ultimate parent
corporation, if any), (B) the consummation of any sale, lease, exchange or
other transfer (in one transaction or a series of transactions contemplated or
arranged by any party as a single plan) of all or substantially all of the
assets of the Company or (C) the completion of a liquidation or dissolution
that has been approved by the stockholders of the Company; or
(iv) OGK-3,
together with all Affiliates and Associates (as such
terms are hereinafter defined) of such person, shall become the beneficial
owner (as such term is defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more of the then
outstanding Stock (other than as a result of an acquisition of securities
directly from the Company).
For purposes of this Agreement, Affiliate and
Associate shall have the respective meanings ascribed to such terms in Rule
12b-2 of the Exchange Act, as in effect on the date of this Agreement;
provided
,
however
, that no person who is a director or officer of the Company
shall be deemed an Affiliate or an Associate of any other director or officer
of the Company solely as a result of his position as director or officer of the
Company.
32
Notwithstanding the
foregoing, a Change in Control shall not be deemed to have occurred for
purposes of the foregoing clauses (i) or (iv) solely as the result of an
acquisition of securities by the Company which, by reducing the number of
shares of Stock outstanding, increases the proportionate number of shares of
Stock beneficially owned by any person to 25% or more (or 50% or more in the
case of clause (iv)) of the shares of Stock then outstanding; provided,
however, that if any such person shall at any time following such acquisition
of securities by the Company become the beneficial owner of any additional
shares of Stock (other than pursuant to a stock split, stock dividend, or
similar transaction) and such person immediately thereafter is the beneficial
owner of 25% or more (or 50% or more in the case of clause (iv)) of the shares
of Stock then outstanding, then a Change in Control shall be deemed to have
occurred for purposes of the foregoing clause (i) or (iv), as applicable.
Change-in-control may
also generally mean any of the following: (1) a sale or other disposition of
all or substantially all of our assets; or (2) a merger or consolidation after
which our voting securities outstanding immediately before the transaction
cease to represent at least a majority of the combined voting power of the
successor entitys outstanding voting securities immediately after the
transaction. We agreed to provide payments to these executives in these
circumstances in order to provide a total compensation package that we believed
to be competitive. Additionally, the primary purpose of our equity-based
incentive awards is to align the interests of our executives and our
stockholders and provide our executives with strong incentives to increase
stockholder value over time. As change-in-control transactions typically
represent events where our stockholders are realizing the value of their equity
interests in our Company, we believe it is appropriate for our executives to
share in this realization of stockholder value, particularly where their
employment is terminated in connection with the change-in-control transaction.
We believe that this will also help to better align the interests of our
executives with our stockholders in pursuing and engaging in these
transactions.
If a change-in-control had occurred on
December 31, 2010 and on that date Messrs. Marsh, Anderson, Conway, Hansen
or Corless had been terminated without Cause, experienced a material negative
change in his or her compensation or responsibilities or was required to be
based at a location more than fifty (50) miles from his or her current work
location, the value of the change-of-control provisions, including, as
mentioned above, salary, benefits, vested equity awards and expected bonus,
under the employment or executive severance agreements for each such named
executive would have been as follows:
Mr. Marsh $1,386,646, Mr. Anderson $365,975, Mr. Conway
$251,893, Mr. Hansen $
280,074 and Mr. Corless $281,100.
The following Report
of the Compensation Committee of the Board of Directors on Executive
Compensation will not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any of the
Companys filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
Company specifically incorporates this information by reference, and will not
otherwise be deemed filed under such Acts.
Compensation Committee
Report
The Compensation Committee reviews and evaluates
individual executive officers and determines the compensation for each executive
officer (See the section entitled
Executive Compensation
). The
Compensation Committee also oversees managements decisions concerning the
performance and compensation of other Company officers, administers the
Companys incentive compensation and other stock-based plans, evaluates the
effectiveness of its overall compensation programs, including oversight of the
Companys benefit, perquisite and employee equity programs, and reviews the
Companys management succession plans. A more complete description of the
Compensation Committees functions is set forth in the Compensation Committees
charter which is published on the Investors section of the Companys website
at
www.plugpower.com
. Each member of the
Compensation Committee is an independent director as defined in the NASDAQ
Rules.
In general, the Compensation Committee designs
compensation to attract, retain and motivate a superior executive team, reward
individual performance, relate compensation to Company goals and objectives and
align the interests of the executive officers with those of the Companys
stockholders. We rely upon our judgment about each individualand not on rigid
guidelines or formulas, or short-term changes in business performancein
determining the amount and mix of compensation elements for each senior
executive officer. Key factors affecting our judgments include: the executives
performance compared to the goals and objectives established for the executive
at the beginning of the year; the nature, scope and level of the executives
responsibilities; the executives contribution to the Companys financial
results; the executives effectiveness in leading the Companys initiatives to
increase customer value, productivity and revenue growth; and the executives
contribution to the Companys commitment to corporate responsibility, including
the executives success in creating a culture of unyielding integrity and
compliance with applicable law and the Companys ethics policies.
33
The Compensation Committee has reviewed the Compensation
Discussion and Analysis and discussed that analysis with Management. Based on
its review and discussions with Management, the Compensation Committee
recommended to our Board of Directors that the Compensation Discussion and
Analysis be included in the Companys Annual Report on Form 10-K for 2010 and
the Companys 2011 Proxy statement. This report on executive compensation for
Fiscal 2009 is provided by the undersigned members of the Compensation
Committee of the Board of Directors.
Gary K. Willis (Chairman)
George C. McNamee
Compensation Committee Interlocks and Insider
Participation
During Fiscal 2010, Messrs.
Willis (Chairman) and McNamee served as members of the Compensation Committee.
None of them had any relationship with the Company requiring disclosure under
applicable rules and regulations of the SEC.
34
PROPOSAL
2
: APPROVAL OF AMENDMENT
TO THE COMPANYS CHARTER
TO EFFECT A REVERSE STOCK
SPLIT OF THE COMPANYS COMMON STOCK
Introduction
The Board of Directors is recommending
that the stockholders approve the Companys Second Certificate of Amendment
of Amended and
Restated Certificate of Incorporation (the Charter) to effect a reverse stock
split of the Companys outstanding shares of Common Stock at a ratio within a
range of 1:4 to 1:20, inclusive. If this
proposal is approved, the Board of Directors or a committee of the Board of
Directors will have the authority to decide, within 12 months from the Annual Meeting, whether to implement the
split and the exact amount of the split within this range, if it is to be
implemented. If the Board of Directors decides to implement the split, it will
become effective at 5:00 p.m. (eastern time) on a date to be specified in the amendment to the Charter
to be filed with the
Secretary of State of the State of Delaware (the Effective Time and Effective Date). If the
reverse split is implemented, the number of issued and outstanding shares of
Common Stock would be reduced in accordance with the exchange ratio selected by
the Board of Directors or committee. The total number of authorized shares of
Common Stock would remain unchanged at its current total of 245,000,000. The
form of amendment to the Charter to effect the reverse split is attached as
Appendix
A
to this Proxy Statement.
Purpose and Background of the Reverse Split
The Board of Directors primary objectives
in proposing the reverse split are to raise the per share trading price of our
Common Stock and to increase the number of shares of our authorized but
unissued Common Stock. The Board of Directors believes that the reverse split
would, among other things, (i) better enable the Company to maintain the
listing of its Common Stock on The NASDAQ Capital Market, (ii) facilitate
higher levels of institutional stock ownership, where investment policies
generally prohibit investments in lower-priced securities and (iii) better
enable the Company to raise funds to finance its planned operations.
The Companys Common Stock has been listed
on The NASDAQ Capital Market since June 7, 2010, when the Companys stock was
transferred from The NASDAQ Global Market. On January 20, 2011, the Company
presented its plan to regain and sustain compliance with the minimum $1.00 bid
price requirement for continued listing on The NASDAQ Capital Market, as set
forth in Listing Rule 5550(a)(2), before the NASDAQ Listing Qualifications
Panel (the Panel). On February 1, 2011, the Company received a determination
from the Panel indicating that the Panel had granted the Companys request for
continued listing on The NASDAQ Capital Market pursuant to an extension of
time. In accordance with the Panels decision, on or before June 6, 2011, the
Company must evidence compliance with the minimum price bid requirement for a
minimum of ten consecutive business days. Under NASDAQs rules, June 6, 2011
represents the maximum length of time that the Panel may grant the Company to
regain compliance with the bid requirement.
If a delisting from The NASDAQ Capital
Market were to occur, the Common Stock would then
likely
trade on the OTC Bulletin Board or in the pink
sheets. These alternative markets are generally considered to be less
efficient than, and not as broad as, The NASDAQ Capital Market.
The closing sale price of the Company's
Common Stock on April 8, 2011 was $0.68 per share. The Board of
Directors has considered the potential harm to the Company of a delisting from
The NASDAQ Capital Market and believes that a reverse stock split would help
the Company regain compliance with NASDAQ
s minimum bid price listing standard.
The Board of Directors further believes
that an increased stock price may encourage investor interest and improve the
marketability of the Companys Common Stock to a broader range of investors,
and thus improve liquidity. Because of the trading volatility often associated
with low-priced stocks, many brokerage firms and institutional investors have
internal policies and practices that either prohibit them from investing in
low-priced stocks or tend to discourage individual brokers from recommending
low-priced stocks to their customers. The Board of Directors believes that the
anticipated higher market price resulting from a reverse stock split would
enable institutional investors and brokerage firms with policies and practices such
as those described above to invest in the Companys Common Stock.
Furthermore, the Board of Directors
believes that the reverse split would facilitate the Companys efforts to raise
capital to fund its planned operations. As previously disclosed in the
Companys periodic reports filed with the SEC, the Company will need to raise
additional capital and may elect to do so through the issuance of equity
securities. The reverse split would reduce the number of shares of Common Stock
outstanding without reducing the total number of authorized shares of Common
Stock. As a result, the Company would have a larger number of authorized but
unissued shares from which to issue additional shares of Common Stock, or
securities convertible or exercisable into shares of Common Stock, in equity
financing transactions.
35
The purpose of seeking stockholder
approval of a range of exchange ratios from 1:4 to 1:20 (rather than a fixed exchange ratio) is to provide the
Company with the flexibility to achieve the desired results of the reverse
stock split. If the stockholders approve this proposal, the Board of Directors
or a committee of the Board of Directors would effect a reverse stock split
only upon the Board of Directors or committees determination that a reverse
stock split would be in the best interests of the Company at that time. If the
Board of Directors were to effect a reverse stock split, the Board of Directors
would set the timing for such a split and select the specific ratio within the
range of 1:4 to 1:20, inclusive. No further
action on the part of stockholders would be required to either implement or
abandon the reverse stock split. If the stockholders approve the proposal, and
the Board of Directors or a committee of the Board of Directors determines to
effect the reverse stock split, we would communicate to the public, prior to
the Effective Date, additional details regarding the reverse split, including
the specific ratio selected by the Board of Directors or committee. If the
Board of Directors or a committee of the Board of Directors does not implement
the reverse stock split within 12
months from the Annual Meeting, the authority granted in this proposal to
implement the reverse stock split will terminate. The Board of Directors
reserves its right to elect not to proceed with the reverse stock split if it
determines, in its sole discretion, that this proposal is no longer in the best
interests of the Company.
Material Effects of Proposed Reverse Stock Split
The Board of Directors believes that the
reverse split will increase the price level of the Companys Common Stock in
order to, among other things, ensure continued compliance with The NASDAQ
Capital Markets minimum bid price listing standard and generate interest in
the Company among investors. The Board of Directors cannot predict, however,
the effect of the reverse split upon the market price for the Common Stock, and
the history of similar reverse stock splits for companies in like circumstances
is varied. The market price per share of Common Stock after the reverse split
may not rise in proportion to the reduction in the number of shares of Common
Stock outstanding resulting from the reverse split, which would reduce the
market capitalization of the Company. The market price per post-reverse split
share may not remain in excess of the $1.00 minimum bid price as required by
The NASDAQ Capital Market, or the Company may not otherwise meet the additional
requirements for continued listing on The NASDAQ Capital Market. The market
price of the Common Stock may also be based on our performance and other
factors, the effect of which the Board of Directors cannot predict.
The reverse split will affect all
stockholders of the Company uniformly and will not affect any stockholders percentage
ownership interests or proportionate voting power, except to the extent that
the reverse split results in any of stockholders owning a fractional share. In
lieu of issuing fractional shares, the Company will make arrangements with the Companys transfer
agent or exchange agent to aggregate all fractional shares otherwise issuable
in the reverse stock split and sell these whole shares as soon as possible
after the Effective Date at then prevailing market prices on the open market on
behalf of those holders, and then pay each such holder his, her or its pro rata
potion of the total net sale proceeds.
The principal effects of the reverse split will be that (i) the number of shares
of Common Stock issued and outstanding will be reduced from 132,784,673 shares as of March
31, 2011 to a range of 33,196,168 to 6,639,233 shares, depending on the exact split ratio chosen
by the Board of Directors or a committee of the Board of Directors, (ii) the
conversion ratio for all outstanding shares of the Preferred Stock will be
adjusted such that the number of shares of Common Stock issuable upon the
conversion of the Preferred Stock will be reduced to one-fourth to one-twentieth
of the number of shares of Common Stock that were issuable upon conversion of
the Preferred Stock immediately before the Effective Date, (iii) all outstanding
options and warrants entitling the holders thereof to purchase shares of Common
Stock will enable such holders to purchase, upon exercise of their options or
warrants, one-fourth to one-twentieth of the
number of shares of Common Stock which such holders would have been able to
purchase upon exercise of their options or warrants immediately preceding the
reverse split, at an exercise price equal to four to twenty times the exercise
price specified before the reverse split, resulting in the same aggregate price
being required to be paid upon exercise thereof immediately preceding the
reverse split and (iv) the number of shares reserved for issuance pursuant to
the Companys 1999 Stock Option and Incentive Plan and Employee Stock Purchase
Plan and will be reduced to one-fourth to one-twentieth of the number of shares
currently included in each such plan.
The reverse split will not affect the par value of the Common Stock. As a
result, on the Effective Date of the reverse split, the stated capital on the
Companys balance sheet attributable to the Common Stock will be reduced to
one-fourth to one-twentieth of its present amount, depending on the exact amount
of the split, and the additional paid-in capital account will be credited with
the amount by which the stated capital is reduced. The per share net income or
loss and net book value of the Common Stock will be retroactively increased for
each period because there will be fewer shares of Common Stock outstanding.
36
The amendment will not change the terms of
the Common Stock. After the reverse split, the shares of common stock will have
the same voting rights and rights to dividends and distributions and will be
identical in all other respects to the Common Stock now authorized. Each
stockholders percentage ownership of the new Common Stock will not be altered
except for the effect of eliminating fractional shares. The Common Stock issued
pursuant to the reverse split will remain fully paid and non-assessable. The
reverse split is not intended as, and will not have the effect of, a going
private transaction covered by Rule 13e-3 under the Securities Exchange Act of
1934. Following the reverse split, the Company will continue to be subject to
the periodic reporting requirements of the Securities Exchange Act of 1934.
Because the Company will not reduce the
number of authorized shares of Common Stock, the overall effect will be an
increase in authorized but unissued shares of Common Stock as a result of the
reverse stock split. These shares may be issued at the Board of Directors
discretion. Any future issuances will have the effect of diluting the
percentage of stock ownership and voting rights of the present holders of
Common Stock.
The reverse stock split would result in
some stockholders owning odd-lots of less than 100 shares of our Common
Stock. Brokerage commissions and other costs of transactions in odd-lots are
generally higher than the costs of transactions in round-lots of even
multiples of 100 shares.
Procedure for Effecting Reverse Split and Exchange
of Stock Certificates
If the reverse split is approved by the Company's stockholders, and the Board of
Directors or a committee of the Board of Directors determines it is in the best
interests of the Company to effect the split, the reverse stock split would
become effective at 5:00 p.m. (eastern time) on the Effective Date. Upon the filing of
the amendment, all of the Companys existing Common Stock will be converted
into new Common Stock as set forth in the amendment.
As soon as practicable after the Effective
Date, stockholders will be notified that the reverse split has been effected.
American Stock Transfer & Trust Company, the Companys transfer agent, will
act as exchange agent for purposes of implementing the exchange of stock
certificates. Holders of pre-reverse split shares will be asked to surrender to
the exchange agent certificates representing pre-reverse split shares in
exchange for certificates representing post-reverse split shares in accordance
with the procedures to be set forth in a letter of transmittal that will be
delivered to the Companys stockholders. No new certificates will be issued to
a stockholder until the stockholder has surrendered to the exchange agent his,
her or its outstanding certificate(s) together with the properly completed and
executed letter of transmittal. STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK
CERTIFICATES AND SHOULD NOT SUBMIT ANY CERTIFICATES UNTIL REQUESTED TO DO SO.
Stockholders whose shares are held in book-entry form do not need to submit
old share certificates for exchange. These shares will automatically reflect
the new quantity of shares based on the reverse split. Beginning on the
Effective Date, each certificate representing pre-reverse split shares will be
deemed for all corporate purposes to evidence ownership of post-reverse split
shares.
Fractional Shares
Stockholders will not
receive fractional post-reverse stock split shares in connection with the
reverse stock split. Instead, the Company's transfer agent will aggregate
all fractional shares and sell them as soon as practicable after the Effective
Date at the then prevailing prices on the open market, on behalf of those
stockholders who would otherwise be entitled to receive a fractional share.
After the transfer agent's completion of such sale, stockholders will receive a
cash payment from the Company's transfer agent in an amount equal to their
respective pro rata shares of the total net proceeds of that sale.
If a stockholder who holds shares
in certificated form is entitled to a payment in lieu of any fractional share
interest, the stockholder will receive payment as soon as practicable after the
Effect Date and after the stockholder has submitted an executed transmittal
letter and surrendered all certificates held by such stockholder immediately
prior to the Effective Date representing shares of Common Stock. If a
stockholder holds shares of our Common Stock with a bank, broker, custodian or
other nominee, the stockholder should contact his/her bank, broker, custodian or
other nominee for information on the treatment and processing of fractional
shares by his/her bank, broker, custodian or other nominee. A stockholder
who holds shares in book-entry form will receive payment for any fractional
shares as soon as practicable after the Effective Date without need for further
action by the stockholder. The cash payment is subject to applicable
federal and state income tax and state abandoned property laws. No
transaction costs will be assessed on stockholders for the cash payment.
Stockholders will not be entitled to receive interest for the period of time
between the effective time of the reverse stock split and the date payment is
made for their fractional share interest in the Common Stock.
Criteria to Be Used for Decision to Apply the
Reverse Stock Split
If the stockholders approve the reverse
stock split, the Board of Directors or a committee of the Board of Directors
will be authorized to proceed with the reverse split. In determining whether to
proceed with the reverse split and setting the exact amount of split, if any,
the Board of Directors or committee will consider a number of factors,
including market conditions, existing and expected trading prices of the
Companys Common Stock, The NASDAQ Capital Market listing requirements, the
Companys additional funding requirements and the amount of the Companys
authorized but unissued Common Stock.
37
No Dissenters Rights
Under the Delaware
General Corporation Law, stockholders will not be entitled to dissenters
rights with respect to the proposed amendment to the Charter to effect the
reverse stock split, and the Company does not intend to independently provide
stockholders with any such right.
Certain
Material U.S. Federal Income Tax
Considerations
The
following
description of
material U.S. federal income tax
considerations regarding the reverse
stock split
is based
on the Internal Revenue Code of 1986, as amended (the
Code),
applicable Treasury
Regulations promulgated thereunder, judicial authority, and current
administrative rulings and interpretations as in effect on the date of this proxy statement. These authorities are subject to
change, including possibly with retroactive effect, which could alter the U.S. federal income
tax consequences described below. We have not
sought and will not seek an opinion of counsel or a ruling from the Internal
Revenue Service (the IRS) regarding the U.S. federal income tax
consequences of the reverse stock split.
This discussion is intended to
provide only a general summary to stockholders who hold their shares of Common
Stock as capital assets and does not discuss the tax consequences of any other
transaction that may occur before, after, or at the same time as the reverse
stock split. This discussion does not address other federal taxes (such as the
alternative minimum tax or gift or estate taxes) or tax considerations under state,
local or foreign
laws. This discussion does not address every aspect of
U.S. federal income taxation
that may be relevant to stockholders in light of their
particular circumstances or to persons who are otherwise
subject to special tax treatment, including, without limitation: (i)
partnerships, subchapter S corporations, trusts or other pass-through entities;
(ii) dealers in securities; (iii) banks or other financial institutions;
(iv) insurance companies;
(v) mutual
funds; (vi) tax exempt organizations or pension funds; (vii) foreign persons,
foreign entities or U.S. expatriates; (viii) stockholders whose functional
currency is not the U.S. dollar; or (ix) persons who hold our Common Stock as
part of a hedging, straddle, conversion or other risk reduction transaction.
Tax
Consequences to the Company
The Company will not recognize gain or loss as a result of the
reverse stock split.
Tax
Consequences to the Stockholders of the Reverse Stock Split
A
stockholder generally will not recognize gain or loss on the reverse stock
split, except in respect of cash, if any, received in lieu of a fractional
share interest. In general, the aggregate tax basis of the post-split shares
received will be equal to the aggregate tax basis of the pre-split shares
exchanged therefor (excluding any portion of the holders basis allocated to
fractional shares), and the holding period of the post-split shares received
will include the holding period of the pre-split shares exchanged.
A holder of
the pre-split shares who receives cash generally will be treated as having
exchanged a fractional share interest for cash in a redemption that is subject
to Section 302 of the Code. The redemption will be treated as a sale of the
fractional share, and not as a distribution under Section 301 of the Code, if
the receipt of cash (a) is substantially disproportionate with respect to the
holder, (b) results in a complete termination of the holders interest, or
(c) is not essentially equivalent to a dividend with respect to the holder,
in each case taking into account shares both actually and constructively owned
by such holder (under certain constructive ownership rules). A distribution is
not essentially equivalent to a dividend if the holder undergoes a meaningful
reduction in the holders proportionate interest. If the redemption is
treated as a sale, the holder will recognize capital gain or loss equal to the
difference between the portion of the tax basis of the post-split shares
allocated to the fractional share interest and the cash received. If the
redemption does not meet one of the Section 302 tests, the cash distribution
will be treated as a distribution under Section 301 of the Code. In such case,
the cash distribution will be treated as a dividend to the extent of our
current and accumulated earnings and profits allocable to the distribution, and
then as a recovery of basis to the extent of the holders tax basis in his or
her shares (which, for these purposes, may include the holders tax basis in
all of his or her shares rather than only the holders tax basis in his or her
fractional share interest, although the law is not entirely clear), and finally
as gain from the sale of stock.
Whether a
holder who receives cash in lieu of fractional shares will have a meaningful
reduction in ownership will depend on all of the facts and circumstances
existing at and around the time of the reverse stock split, including the size
of the holders percentage interest in our Common Stock before and after the reverse
stock split. In this regard, the IRS has indicated in published rulings that
any reduction in the percentage interest of a public company stockholder whose
relative stock interest is minimal (an interest of less than 1% of the
outstanding Company Common Stock should satisfy this requirement) and who
exercises no control over corporate affairs should constitute a meaningful
reduction in such stockholders interest.
38
We recommend
that stockholders consult their own tax advisors to determine the extent to
which their fractional share redemption is treated as a sale of the fractional
share or as a distribution under Section 301 of the Code and the tax
consequences thereof.
Other Tax
Considerations for Stockholders
The state
and local tax consequences of the reverse stock split may vary significantly as
to each stockholder depending upon the jurisdiction in which such stockholder
resides. Stockholders are urged to consult their own tax advisors regarding
the specific tax consequences to them of the reverse stock split, including the
applicable federal, state, local and foreign tax consequences, if any.
Information Reporting and Backup Withholding
Payment
of cash in lieu of fractional shares within the United States or conducted
through certain U.S. related financial intermediaries is subject to both backup
withholding and information reporting unless the beneficial owner certifies
under penalties of perjury that
he
or she is not a U.S. holder (and the payor does not have actual knowledge or
reason to know that the beneficial owner is a U.S. holder) or the stockholder
otherwise establishes an exemption. Any amounts
withheld under the backup withholding rules may be allowed as a refund or a
credit against such stockholders U.S. federal income tax liability provided
the required information is furnished to the IRS.
Vote Required for Approval
The affirmative vote of the holders of a majority of
the outstanding shares of the Companys Common Stock as of the record date is
required to approve the amendment of the Charter to effect a reverse split of
the Common Stock in the range of 1:4 to 1:20, inclusive. Abstentions and broker non-votes will not be counted as
having been voted on the proposal, and therefore will have the same effect as
negative votes.
Recommendation of the
Board
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THE
AMENDMENT TO THE COMPANYS CHARTER
TO EFFECT A REVERSE STOCK
SPLIT OF THE COMPANYS COMMON STOCK
39
PROPOSAL
3: APPROVAL OF THE PLUG POWER INC. 2011 STOCK OPTION AND
INCENTIVE PLAN
The Board of Directors believes that stock options and
other stock-based incentive awards can play an important role in the success of
the Company by encouraging and enabling the current employees, consultants,
officers and non-employee directors and prospective employees of the Company
and its subsidiaries upon whose judgment, initiative and efforts the Company
largely depends for the successful conduct of its business to acquire a
proprietary interest in the Company. The Board of Directors anticipates that
providing such persons with a direct stake in the Company will assure a closer
identification of the interests of participants in the plan with those of the
Company and its stockholders, thereby stimulating their efforts on the Company
s behalf and strengthening their
desire to remain with the Company.
On March 31, 2011, the Board of Directors adopted the
2011 Stock Option and Incentive Plan (the 2011 Plan), subject to the approval
of the Companys stockholders. The 2011 Plan will replace the Companys
expiring 1999 Stock Option and Incentive Plan (the 1999 Stock Option Plan),
which would terminate effective immediately upon the approval by the Companys
stockholders of the 2011 Plan. The 1999 Stock Option Plan is scheduled to expire
on May 16, 2011. The 2011 Plan provides flexibility to the Companys
Compensation Committee to use various equity-based incentive awards as
compensation tools to motivate the Companys workforce. Following approval of
the 2011 Plan by the stockholders, the Company will no longer make any grants
under the 1999 Stock Option Plan.
The material features of the 2011 Plan are:
-
The
maximum number of shares to be issued under the 2011 Plan is the sum of
(i)
10,000,000
shares of Common Stock, plus (ii) the
number of shares of Common Stock underlying any grants pursuant to the
2011 Plan or the 1999 Stock Option Plan that are forfeited
, canceled
,
repurchased or are terminated (other than by exercise);
-
The
award of stock options (both incentive and non-qualified options), stock
appreciation rights, deferred stock awards, restricted stock, unrestricted
stock, cash-based awards and performance share awards is permitted; and
-
The
2011 Plan will be administered by the Compensation Committee of the
Board. The Compensation Committee, in its discretion, may grant a variety
of incentive awards based on the common stock of the Company.
Based solely on the closing price of the Company
s common stock as reported on the
NASDAQ Capital Market on April 8,
2011, the maximum aggregate market value of the
10,000,000
shares that could potentially be issued under the 2011 Plan is $0.68. The shares issued by the Company
under the 2011 Plan will be authorized but unissued shares. Shares tendered or
held back upon exercise of an option or settlement of an award to cover the
exercise price or tax withholding shall not be available for future issuance
under the 2011 Plan.
To
ensure that certain awards granted under the 2011 Plan, including awards of
restricted stock and deferred stock awards, to a Covered Employee (as defined
in the Internal Revenue Code of 1986 (the Code)) qualify as performance‑based
compensation under Section 162(m) of the Code, the 2011 Plan provides that the
Compensation Committee may require that the vesting of such awards be
conditioned on the satisfaction of performance criteria (which shall be
applicable to the organizational level specified by the Compensation Committee
including, but not limited to, the Company or a unit, division, group or
subsidiary of the Company) which are limited to the following: (i) earnings
before interest, taxes, depreciation and amortization (ii) return on equity,
assets, capital or investment: (iii) net income (loss) (either before or
after interest, taxes, depreciation and/or amortization); (iv) cash flow
(including, but not limited to, operating cash flow and free cash flow); (v)
total stockholder return; (vi) changes in the market price of the Companys
Common Stock; (vii) sales or market share; (viii) earnings (loss) per share of
the Companys Common Stock; (ix) economic value-added; (x) sales or revenue;
(xi) acquisitions or strategic transactions; (xii) achievement of project
development milestones; (xiii) operating income (loss); (xiv) return on sales;
(xv) gross or net profit levels; (xvi) productivity; (xvii) expense; (xviii)
margins; (xix) operating efficiency; (xx) capital raising transactions; (xxi)
debt transactions; (xxii) working capital; and (xxiii) number of customers, any
of which may be measured either in absolute terms or as compared to any
incremental increase or as compared to results of a peer group. The
Compensation Committee will select the particular performance criteria within 90
days following the commencement of a performance cycle. Subject to
adjustments for stock splits and similar events, the maximum award of restricted
stock or deferred stock (or combination thereof) granted to any one individual
that is intended to qualify as performance‑based compensation under Section
162(m) of the Code will not exceed 2,500,000 shares for any performance cycle,
and incentive stock options with respect to no more than 2,000,000 shares may be granted to any one
individual during any calendar year period.
40
Summary
of the 2011 Plan
The following description of certain features of the
2011 Plan is intended to be a summary only. The summary is qualified in its
entirety by the full text of the 2011 Plan that is attached hereto as
Appendix
B
.
Plan Administration
. The Compensation Committee has the power and authority to select,
from among the individuals eligible for awards, the individuals to whom awards
will be granted, to make any combination of awards to participants and to
determine the specific terms and conditions of each award, subject to the
provisions of the 2011 Plan. The Compensation Committee may delegate to the
Chief Executive Officer of the Company the authority to grant awards at fair
market value to employees who are not subject to the reporting and other
provisions of Section 16 of the Exchange Act.
Eligibility and Limitations on Grants
.
Persons eligible to participate in the 2011 Plan will be those officers,
employees, non-employee directors and other key persons (including consultants
and prospective employees) of the Company and its subsidiaries as selected from
time to time by the Compensation Committee. Approximately 140 individuals are
currently eligible to participate in the 2011 Plan.
The maximum award of stock options or stock
appreciation rights granted to any one individual will not exceed 2,000,000 shares (subject to adjustment for
stock splits and similar events) for any calendar year period. If any award of
restricted stock or deferred stock granted to an individual is intended to
qualify as performance-based compensation under Section 162(m) of the Code, then
the maximum award shall not exceed 2,500,000
shares (subject to adjustment for stock splits and similar events) to any one
such individual in any performance cycle.
Stock Options
.
The 2011 Plan permits the granting of (1) stock options intended to qualify as
incentive stock options under Section 422 of the Code and (2) stock options
that do not so qualify. Options granted under the 2011 Plan will be
non-qualified options if they fail to qualify as incentive options or exceed
the annual limit on incentive stock options. Non-qualified options may be
granted to any persons eligible to receive incentive options and to
non-employee directors and key persons. The option exercise price of each
option will be determined by the Compensation Committee but may not be less
than 100% of the fair market value of the Common Stock on the date of grant.
The term of each option will be fixed by the
Compensation Committee and may not exceed ten years from the date of grant.
The Compensation Committee will determine at what time or times each option may
be exercised. Options may be made exercisable in installments and the
exercisability of options may be accelerated by the Compensation Committee.
Options may be exercised in whole or in part with written ore electronic notice
to the Company.
Upon exercise of options, the option exercise price
must be paid in full either in cash, by certified or bank check or other
instrument acceptable to the Compensation Committee, or by delivery (or
attestation to the ownership) of shares that are beneficially owned by the optionee.
Subject to applicable law, the exercise price may also be delivered to the
Company by a broker pursuant to irrevocable instructions to the broker from the
optionee.
To qualify as incentive options, options must meet
additional federal tax requirements, including a $100,000 limit on the value of
shares subject to incentive options that first become exercisable by a
participant in any one calendar year. In addition, no more than 10,000,000 shares may be awarded under the 2011
Plan as incentive options.
Stock Appreciation Rights.
The Compensation Committee may award a stock
appreciation right either as a freestanding award or in tandem with a stock
option. The Compensation Committee may award stock appreciation rights subject
to such conditions and restrictions as the Compensation Committee may
determine, provided that (1) the exercise price of a stock appreciation right
shall not be less than 100% of the fair market value of the Common Stock on the
date of grant and (2) the term of each stock appreciation right fixed by the
Compensation Committee shall not exceed ten years.
Restricted Stock
. The Compensation Committee may award shares to participants subject
to such conditions and restrictions as the Compensation Committee may
determine. These conditions and restrictions may include the achievement of
certain performance goals (as summarized above) and/or continued employment
with the Company through a specified restricted period. A grant of restricted
stock shall be contingent on the grantee executing a restricted stock award
agreement.
Deferred Stock Awards
. The Compensation Committee may award phantom stock
units as deferred stock awards to participants. Phantom stock units are
ultimately payable in the form of shares and may be subject to such conditions
and restrictions as the Compensation Committee may determine. These conditions
and restrictions may include the achievement of certain performance goals (as
summarized above) and/or continued employment with the Company through a
specified vesting period. In the Compensation Committees sole discretion and
subject to the participants compliance with the procedures established by the
Compensation Committee and requirements of Section 409A of the Code, it may
permit a participant to make an advance election to receive a portion of his or
her future cash compensation otherwise due in the form of a deferred stock
award.
41
Unrestricted Stock
. The Compensation Committee may grant shares (at no cost or for a
purchase price determined by the Committee) that are free from any restrictions
under the 2011 Plan. Unrestricted stock may be issued to participants in
recognition of past services or other valid consideration and may be issued in
lieu of cash compensation to be paid to such individuals.
Tax Withholding
.
Participants in the 2011 Plan are responsible for the payment of any federal,
state or local taxes that the Company is required by law to withhold upon any
option exercise or vesting of other awards. Subject to approval by the
Compensation Committee, participants may elect to have the minimum tax
withholding obligations satisfied either by authorizing the Company to withhold
shares to be issued pursuant to an option exercise or other award, or by
transferring to the Company shares having a value equal to the amount of such
taxes.
Change in Control Provisions
. The 2011 Plan provides that in the event of a sale
event (as defined in the 2011 Plan) resulting in a change in control of the
Company, to the extent that the parties to such sale event do not agree that
the outstanding awards under the 2011 Plan will be assumed or continued by the
successor entity, all stock options and stock appreciation rights will
automatically become fully exercisable and conditions and restrictions relating
solely to the passage of time and continued employment on all other awards will
automatically be deemed waived, except as the Compensation Committee may
otherwise provide in the relevant award agreement. Awards with conditions and
restrictions relating to the attainment of performance goals may become vested
and non-forfeitable in connection with a change in control in the Compensation
Committees discretion. In addition, in the event of a sale event in which the
Companys stockholders will receive cash consideration, the Company may make or
provide for a cash payment to participants holding options and stock
appreciation rights equal to the difference between the per share cash
consideration and the exercise price of the options or stock appreciation
rights or provide participants with a specified period of time prior to the
consummation of the sale event to exercise all outstanding options and stock
appreciation rights.
Amendments and Termination
. The Board of Directors may at any time amend or
discontinue the 2011 Plan and the Compensation Committee may at any time amend
or cancel any outstanding award for the purpose of satisfying changes in the
law or for any other lawful purpose. However, no such action may adversely
affect any rights under any outstanding award without the holders consent.
Any amendments that materially change the terms of the 2011 Plan, including any
amendments that increase the number of shares reserved for issuance under the
2011 Plan, expand the types of awards available, materially expand the
eligibility to participate in, or materially extend the term of, the 2011 Plan,
or materially change the method of determining the fair market value of the
Companys common stock, will be subject to approval by stockholders.
Amendments shall also be subject to approval by the Companys stockholders if
and to the extent determined by the Compensation Committee to be required by
the Code to preserve the qualified status of incentive options or to ensure
that compensation earned under the 2011 Plan qualifies as performance-based
compensation under Section 162(m) of the Code. In addition, except in
connection with a reorganization or other similar change in the capital stock
of the Company or a merger or other transaction, the Compensation Committee may
not without prior stockholder approval reduce the exercise price of an
outstanding stock option or stock appreciation right or effect repricing of an
outstanding stock option or stock appreciation right through cancellation or
regrants.
Effective
Date of 2011 Plan
The Board adopted the 2011 Plan on March
31, 2011, and
the 2011 Plan becomes effective on the date it is approved by stockholders.
Awards of incentive options may be granted under the 2011 Plan until March 31,
2021. No other awards may be granted under the 2011 Plan after the date that
is 10 years from the date of stockholder approval. If the 2011 Plan is not
approved by stockholders, the 1999 Stock Option Plan will continue in effect
until it expires, and awards may be granted thereunder, in accordance with its
terms.
Equity
Compensation Plan Information at December 31, 2010
The following table provides information as of
December 31, 2010 regarding shares of Common Stock that may be issued under the
Companys equity compensation plans consisting of the 1999 Stock Option Plan. The table sets forth the total number
of shares of Common Stock issuable upon the exercise of outstanding options as
of December 31, 2010 and the weighted average exercise price of these options.
42
Equity Compensation Plan Information
Plan Category
|
|
Number of shares to be issued
upon exercise of outstanding
options, warrants and rights (a)
|
|
Weighted average
exercise price of
outstanding options,
warrants and rights (b)
|
|
Number of shares
remaining available for
future issuance under
equity compensation
plans (excluding shares
reflected in column (a))(c)
|
|
Equity compensation plans approved by security holders
|
|
8,842,774
|
(1)
|
$
|
2.19
|
|
6,699,873
|
(2)
|
Equity compensation plans not approved by security holders
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
Total
|
|
8,842,774
|
|
$
|
2.19
|
|
6,699,873
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents
4,463,251 outstanding options and 4,379,523 shares of unvested restricted
stock issued under the 1999 Stock Option Plan.
|
(2)
|
Includes 6,610,547
shares available for future issuance under the 1999 Stock Option Plan and
89,326 shares available for future issuance under the 1999 Employee Stock
Purchase Plan. The 1999 Stock Option Plan incorporates an evergreen formula
pursuant to which the aggregate number of shares reserved for issuance under
the 1999 Stock Option Plan will increase on the first day of January and July
each year. On each January 1 and July 1, the aggregate number of
shares reserved for issuance under the 1999 Stock Option Plan increases by
16.4% of any net increase in the total number of outstanding shares since the
preceding July 1 or January 1, as the case may be. In accordance
with this formula, on January 1, 2011, the maximum number of shares
remaining available for future issuance under the 1999 Stock Option Plan is
6,714,127.
|
Tax Aspects Under the Code
The following is a summary of the principal federal
income tax consequences of certain transactions under the 2011 Plan. It does
not describe all federal tax consequences under the 2011 Plan, nor does it
describe state or local tax consequences.
Incentive Options
. No taxable income is generally realized by the optionee upon the
grant or exercise of an incentive option. If shares issued to an optionee
pursuant to the exercise of an incentive option are sold or transferred after
two years from the date of grant and after one year from the date of exercise,
then (1) upon sale of such shares, any amount realized in excess of the option
price (the amount paid for the shares) will be taxed to the optionee as a
long-term capital gain, and any loss sustained will be a long-term capital
loss, and (2) there will be no deduction for the Company for federal income tax
purposes. The exercise of an incentive option will give rise to an item of tax
preference that may result in alternative minimum tax liability for the
optionee.
If shares acquired upon the exercise of an incentive
option are disposed of prior to the expiration of the two-year and one-year
holding periods described above (a disqualifying disposition), generally (a)
the optionee will realize ordinary income in the year of disposition in an
amount equal to the excess (if any) of the fair market value of the shares at
exercise (or, if less, the amount realized on a sale of such shares ) over the
option price thereof, and (b) the Company will be entitled to deduct such
amount. Special rules will apply where all or a portion of the exercise price
of the incentive option is paid by tendering shares.
If an incentive option is exercised at a time when it
no longer qualifies for the tax treatment described above (e.g., if the holding
periods described above are not satisfied), the option is treated as a
non-qualified option. In addition, an incentive option will not be eligible
for the tax treatment described above if it is exercised more than three months
following termination of employment (or one year in the case of termination of
employment by reason of disability). In the case of termination of employment
by reason of death, the three-month rule does not apply.
Non-Qualified Options
. No income is realized by the optionee at the time
the option is granted. Generally (i) at exercise, ordinary income is realized
by the optionee in an amount equal to the difference between the option price
and the fair market value of the shares on the date of exercise, and the
Company receives a tax deduction for the same amount, and (ii) at disposition,
appreciation or depreciation after the date of exercise is treated as either
short-term or long-term capital gain or loss depending on how long the shares
have been held. Special rules will apply where all or a portion of the
exercise price of the non-qualified option is paid by tendering shares. Upon
exercise, the optionee will also be subject to Social Security taxes on the
excess of the fair market value over the exercise price of the option.
43
Parachute
Payments
The vesting of any portion of an option or other award
that is accelerated due to the occurrence of a change in control may cause a
portion of the payments with respect to such accelerated awards to be treated
as parachute payments as defined in the Code. Any such parachute payments
may be non-deductible to the Company, in whole or in part, and may subject the
recipient to a non-deductible 20% federal excise tax on all or a portion of
such payment (in addition to other taxes ordinarily payable).
Limitation
on the Companys Deductions
As a result of Section 162(m) of the Code, the
Companys deduction for certain awards under the 2011 Plan may be limited to
the extent that the Chief Executive Officer or other executive officer whose
compensation is required to be reported in the summary compensation table
receives compensation in excess of $1 million a year (other than
performance-based compensation that otherwise meets the requirements of Section
162(m) of the Code). The 2011 Plan is structured to allow grants to qualify as
performance-based compensation.
Vote
Required for Approval
A quorum being present, the affirmative vote of a
majority of shares of common stock present in person or represented by proxy at
the meeting and entitled to vote on this proposal is required for the approval
of the 2011 Plan. For purposes of determining whether this proposal has
passed, abstentions will be treated as votes cast against this proposal, while
broker non-votes will not be treated as votes cast on this proposal and those
non-votes will have the effect of reducing the number of affirmative votes
required to achieve a majority for such matter by reducing the total number of
shares from which the majority is calculated.
Recommendation of the Board
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU
VOTE FOR
THE APPROVAL OF THE PLUG POWER INC. 2011 STOCK OPTION
AND INCENTIVE PLAN
44
PROPOSAL
4: ADVISORY VOTE ON EXECUTIVE COMPENSATION
Overview
In accordance with recently adopted provisions of
Section 14A of the Exchange Act, we are providing the Companys stockholders
the opportunity to vote on a non-binding, advisory resolution to approve the
compensation of our Named Executive Officers, which is described in the section
titled Compensation Discussion and Analysis in this Proxy Statement.
Accordingly, the following resolution will be submitted for a stockholder vote
at the 2011 Annual Meeting:
RESOLVED, that the stockholders of Plug Power Inc.
(the Company) approve, on an advisory basis, the overall compensation of the
Companys Named Executive Officers, as disclosed pursuant to Item 402 of
Regulation S-K,
in the
Compensation Discussion and Analysis section, compensation tables and narrative
discussion set forth in the Proxy Statement for this Annual Meeting.
As described in the section titled Compensation
Discussion and Analysis, our executive compensation program is designed to (1)
attract and retain talented and experienced executives, (2) motivate and reward
executives whose knowledge, skills and performance are critical to our success,
(3) provide a competitive compensation package which is weighted towards
pay-for-performance and in which total compensation is primarily determined by
Company and individual results and the creation of shareholder value, (4)
ensure fairness among the executive
management team by recognizing the contributions each executive makes to our
success, and (5) motivate our
executives to manage our business to meet our short- and long-term objectives
and reward them for meeting these objectives. In order to align executive
compensation with the interests of our stockholders, an important portion of
compensation for our Named Executive Officers is at risk, or contingent upon
the successful achievement of annual as well as long-term strategic corporate
goals that we believe will drive stockholder value. Stockholders are urged to
read the Compensation Discussion and Analysis section of this Proxy Statement,
which more thoroughly discusses how our compensation policies and procedures
implement our compensation philosophy and objectives. The Compensation
Committee and the Board believe that these policies and procedures are
effective in implementing our compensation philosophy and in achieving its
objectives.
This vote is only advisory and will not be binding
upon the Company or the Board. However, the Board values constructive dialogue
on executive compensation and other important governance topics with the
Companys stockholders and encourages all stockholders to vote their shares on
this matter.
Vote
Required for Approval
A quorum being present, the affirmative vote of a
majority of the shares present in person or represented by proxy at the Annual
Meeting and entitled to vote is necessary to approve this resolution. Even
though this vote will neither be binding on the Company or the Board nor will
it create or imply any change in the fiduciary duties of, or impose any
additional fiduciary duty on, the Company or the Board, the Compensation
Committee will take into account the outcome of the vote when considering
future executive compensation decisions. For purposes of determining whether
this proposal has passed, abstentions will be treated as votes cast against
this proposal, while broker non-votes will not be treated as votes cast on this
proposal and those non-votes will have the effect of reducing the number of
affirmative votes required to achieve a majority for such matter by reducing
the total number of shares from which the majority is calculated.
Recommendation of the Board
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
THE APPROVAL OF THE OVERALL COMPENSATION OF THE COMPANYS NAMED EXECUTIVE
OFFICERS.
UNLESS OTHERWISE INSTRUCTED, PROXIES SOLICITED BY THE
BOARD WILL BE VOTED FOR THIS RESOLUTION.
45
PROPOSAL
5: FREQUENCY OF ADVISORY VOTES ON EXECUTIVE
COMPENSATION
Overview
In accordance with recently adopted provisions of
Section 14A of the Exchange Act, we are providing the Companys stockholders
the opportunity to cast a non-binding, advisory vote on whether a non-binding,
advisory stockholder resolution to approve the compensation of the Companys
Named Executive Officers should occur every one, two or three years. The Board
recommends that stockholders vote to hold an advisory vote on executive
compensation triennially.
The Board believes that, of the three choices,
submitting a non-binding, advisory vote on executive compensation resolution to
stockholders every three years is the most appropriate choice. The Company
believes that stockholder feedback every three years will be more useful as it
will provide stockholders with a sufficient period of time to evaluate the
overall compensation of the Named Executive Officers, the components of that
compensation and the effectiveness of that compensation. The amount of
compensation and mix of components of such compensation in any one year may
differ from year to year, and the three year period will provide stockholders
with a more complete view of the amount and mix of that compensation. The
triennial advisory vote on executive compensation will provide stockholders
with the benefit of assessing over a period of years whether the components of
the compensation paid to the Named Executive Officers have achieved positive
results for the Company.
In particular, the three-year period will provide
stockholders with the ability to assess the effectiveness of the Companys
awards of long-term incentive compensation. Consistent with the Companys
emphasis on performance-based incentive compensation, these long-term incentive
awards represent a significant portion of total executive compensation. The Company
uses long-term equity incentive awards in order to align the interests of the
Companys executives and the Companys stockholders by providing executives
with strong incentives to increase stockholder value and a significant reward
for doing so. A triennial vote will enable stockholders to evaluate the
effectiveness of long-term equity incentive awards, which is a significant
portion of executive compensation, in achieving these objectives over a longer
period of time, which is consistent with the long-term nature of this form of
compensation and the Companys corresponding long-term business strategies and
objectives.
Vote
Required for Approval
A quorum being present, the affirmative vote of a
majority of the shares present in person or represented by proxy at the Annual
Meeting and entitled to vote is necessary to approve this resolution. However,
because this vote is advisory and non-binding, if none of the frequency options
receive a majority of the votes cast, the option receiving the greatest number
of votes will be considered the frequency recommended by the Companys
stockholders. Even though this vote will neither be binding on the Company or
the Board nor will it create or imply any change in the fiduciary duties of, or
impose any additional fiduciary duty on, the Company or the Board, the Board
will take into account the outcome of the vote in making a determination on the
frequency at which advisory votes on executive compensation will be included in
the Companys proxy statement. For purposes of determining whether this
proposal has passed, abstentions will be treated as votes cast against this
proposal, while broker non-votes will not be treated as votes cast on this
proposal and those non-votes will have the effect of reducing the number of
affirmative votes required to achieve a majority for such matter by reducing
the total number of shares from which the majority is calculated.
Recommendation of the Board
THE BOARD OF DIRECTORS RECOMMENDS THAT AN ADVISORY
VOTE ON THE COMPENSATION OF THE COMPANYS NAMED EXECUTIVE OFFICERS BE INCLUDED
IN THE COMPANYS PROXY STATEMENT EVERY THREE (3) YEARS.
UNLESS OTHERWISE INSTRUCTED, PROXIES SOLICITED BY THE
BOARD WILL BE VOTED IN FAVOR OF INCLUDING AN ADVISORY VOTE ON EXECUTIVE
COMPENSATION IN THE COMPANYS PROXY STATEMENT EVERY THREE (3) YEARS.
46
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
There are
no related party transactions to disclose. The Companys Board of Directors
adopted a related party transaction policy in October of 2006. This policy
requires that the Companys General Counsel, together with outside counsel as
necessary, evaluate potential transaction before the Company enters into any
agreements with a related party. Certain transactions may require the Board of
Directors and its Audit Committees approval. The policy defines a related
party as: (i) the Companys directors or executive officers, (ii) the
Companys director nominees, (iii) security holders known to Plug Power to
beneficially own more than 5% of any class of Plug Powers voting securities,
or (iv) the immediate family members
1
of
any of the persons listed in items (i) (iii).
PRINCIPAL
STOCKHOLDERS
The following table sets forth information regarding
the beneficial ownership of Common Stock as of March 29, 2011 (except as
otherwise indicated) by:
-
all persons known by us to have
beneficially owned 5% or more of the Common Stock;
-
each director of the Company;
-
the named executive officers; and
-
all directors and executive officers as a group.
The beneficial ownership of the
stockholders listed below is based on publicly available information and from
representations of such stockholders.
|
|
|
|
Name and Address of Beneficial Owner (1)
|
|
Shares Beneficially Owned (2)
|
|
|
Number
|
Percentage (%)
|
|
|
|
|
OJSC OJK-3 (3)
|
44,626,939.00
|
33.7%
|
George C. McNamee (4)
|
858,044
|
*
|
Andrew Marsh (5)
|
628,729
|
*
|
Larry G. Garberding (6)
|
376,111
|
*
|
Gary K. Willis (7)
|
329,317
|
*
|
Maureen O. Helmer (8)
|
307,720
|
*
|
Gerald A. Anderson (9)
|
251,012
|
*
|
Gerard L. Conway, Jr. (10)
|
226,824
|
*
|
Adrian Corless (11)
|
162,396
|
*
|
Erik J. Hansen (12)
|
136,454
|
*
|
All executive officers and directors as a group (10 persons)
|
3,276,607
|
2.5%
|
* Represents less than 1% of the outstanding shares of
Common Stock
1) The address for OJSC OJK-3 is
Ermolayevsky pereulok, 25, 123001, Moscow, Russia. Unless otherwise
indicated, all other addresses for Beneficial Owners is c/o Plug Power Inc., 968 Albany Shaker Road, Latham, New York 12110.
2) The number of shares beneficially
owned by each stockholder is determined under rules promulgated by the SEC and
includes voting or investment power with respect to securities. Under Rule
13d-3 under the Securities Exchange Act of 1934, as amended, beneficial
ownership includes any shares to which the individual or entity has sole or
shared voting power or investment power and includes any shares as to which the
individual or entity has the right to acquire beneficial ownership within 60
days of March 29, 2011, through the exercise of any warrant, stock option or
other right. The inclusion in this Proxy Statement of such shares, however,
does not constitute an admission that the named stockholder is a direct or
indirect beneficial owner of such shares. The number of shares of Common Stock
outstanding used in calculating the percentage for each listed person includes
the shares of Common Stock underlying options, warrants or other rights held by
such person that are exercisable within 60 days of March 29, 2011 but excludes
shares of Common Stock underlying options, warrants or other rights held by any
other person. Percentage of beneficial ownership is based on 132,434,673 shares of Common Stock outstanding as of March 29, 2011. Unless
otherwise indicated, each of the stockholders has sole voting and investment power
with respect to the shares of Common Stock beneficially owned by the
stockholder.
__________________
1
For purposes of this policy, a person's immediate
family should include such persons child, stepchild, parent, stepparent,
spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, sister-in-law or any other person (other than a tenant or
employee) sharing the household of such person.
47
3)
Under an Investor Rights Agreement dated as of June
29, 2006, as amended, until June 29, 2011, OGK-3 is prohibited from taking
certain actions to influence or obtain control of the Company, including but
not limited to acquiring additional shares of common stock and making
shareholder proposals or director nominations. In a Form 3 filed with the SEC
on March 29, 2011, INTER RAO UES reported that it directly owns 81.9% of OGK-3.
By virtue of its ownership interest in OGK-3, INTER RAO UES could be deemed to
have the power to vote, or direct the voting of, and the power to dispose, or
direct the disposition of, the shares of Common Stock held by OGK-3, and as
such could be deemed the beneficial owner of such shares of Common Stock.
4) Includes 353,325
shares of Common Stock issuable upon exercise of outstanding options at a
weighted average exercise price of $3.81.
5) Includes 401,667 shares of Common
Stock issuable upon exercise of outstanding options at a weighted average
exercise price of $3.57.
6) Includes 218,325
shares of Common Stock issuable upon exercise of outstanding options at a
weighted average exercise price of $4.85.
7) Includes 181,570
shares of Common Stock issuable upon exercise of outstanding options at a
weighted average exercise price of $2.86.
8) Includes 166,325
shares of Common Stock issuable upon exercise of outstanding options at a
weighted average exercise price of $3.00.
9) Includes 73,667 shares of Common
Stock issuable upon exercise of outstanding options at a weighted average
exercise price of $3.01.
10) Includes 112,788 shares of
Common Stock issuable upon exercise of outstanding options at a weighted average
exercise price of $4.48.
11) Includes 58,667 shares of Common
Stock issuable upon exercise of outstanding options at a weighted average
exercise price of $2.80.
12) Includes 51,667 shares of Common
Stock issuable upon exercise of outstanding options at a weighted average
exercise price of $0.86.
48
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities
Exchange Act of 1934, as amended, requires the Companys officers, as defined
by Section 16, and directors, and persons who own more than 10% of the
Companys outstanding shares of Common Stock (collectively, Section 16
Persons), to file initial reports of ownership and reports of changes in
ownership with the SEC. Section 16 Persons are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
A Form 5 was filed
late on February 16, 2010 for Gerard L. Conway, Jr. to account for a sale of shares
initiated by the broker to pay for the brokerage annual fee. Five Form 4s
were filed late on February 19, 2010 for each of the Officers of the Company to
account for the stock grants pursuant to the Plug Power 1999 Stock Option and
Incentive Plan and the Executive Incentive Plan as amended July 30, 2008 and as
approved by the Board of Directors on February 8, 2010. A Form 3 was filed
late on February 25, 2010 for Adrian Corless once he was established as a
Section 16 Person. Five Form 4s were filed late on July 20, 2010 for each
of the Directors of the Company to account for quarterly stock compensation.
EXPENSES OF SOLICITATION
The Company will pay the entire expense of soliciting
proxies for the Annual Meeting. In addition to solicitations by mail, certain
directors, officers and regular employees of the Company (who will receive no
compensation for their services other than their regular compensation) may
solicit proxies personally, by telephone, by e-mail or by other form of
electronic communication. Banks, brokerage houses, custodians, nominees and
other fiduciaries have been requested to forward proxy materials to the
beneficial owners of shares held of record by them and such custodians will be
reimbursed for their reasonable expenses by the Company.
SUBMISSION
OF STOCKHOLDER PROPOSALS FOR 2012 ANNUAL MEETING
Any stockholder proposals
submitted pursuant to Exchange Act Rule 14a-8 and intended to be presented at
the 2012 Annual Meeting of Stockholders must be received by the Company on or
before December 12, 2011 to be eligible for inclusion in the Companys proxy statement and form
of proxy to be distributed by the Board of Directors in connection with that
meeting. Any such proposal should be mailed to: Corporate Secretary, Plug Power
Inc., 968 Albany Shaker Road, Albany, New York 12110. Such proposal must also
comply with the requirements as to form and substance established by the SEC
for such a proposal to be included in the proxy statement and form of proxy.
Any stockholder proposals (including recommendations
of nominees for election to the Board of Directors) intended to be presented at
the Companys 2012 Annual Meeting of Stockholders, other than a stockholder
proposal submitted pursuant to Exchange Act Rule 14a-8, must be received in
writing at the principal executive office of the Company not less than 90 days
nor more than 120 days prior
to Saturday, May 12, 2012,
which dates are
February 12,
2012 and
January
13,
2012, respectively. If the date of the 2012 Annual Meeting is subsequently
moved more than 30 days before or more than 60 days after May 12, 2012, such proposals must be received not later than
the close of business on the later of the 90
th
day prior to the
scheduled date of the 2012 Annual Meeting or the 10
th
day following
the day on which publish announcement of the date of the 2012 Annual Meeting is
first made, as set forth in the Companys By-laws. Stockholder proposals must
include all supporting documentation required by the Companys By-laws. Proxies
solicited by the Board of Directors will confer discretionary voting authority
with respect to these proposals, subject to SEC rules governing the exercise of
this authority.
DELIVERY
OF PROXY MATERIALS AND ANNUAL REPORT
Electronic Delivery
The notice of Annual Meeting and Proxy Statement and
2010 Annual Report is available at www.proxyvote.com.
Instead of receiving paper copies of the Annual Report and Proxy Statement in
the mail, stockholders can elect to receive these communications electronically
at www.proxyvote.com.
Many brokerage firms and banks are also offering
electronic proxy materials to their clients. If you are a beneficial owner of
Plug Power stock, you may contact that broker or bank to find out whether this
service is available to you. If your broker or bank uses Broadridge Investor
Communications, you can sign up to receive electronic proxy materials at www.proxyvote.com.
Householding is the term used to describe the
practice of delivering one copy of a document to a household of shareholders
instead of delivering one copy of a document to each shareholder in the
household. Stockholders who share a common address and who have not opted out
of the householding process should receive a single copy of the Notice of
Internet Availability of Proxy Materials for each account. If you received more
than one copy of the Notice of Internet Availability of Proxy Materials, you
may elect to household in the future; if you received a single copy of the
Notice of Internet Availability of Proxy Materials, you may opt out of
householding in the future.
49
In any event, you may obtain a copy of this Proxy
Statement by writing to the Company at the following address: Plug Power Inc.,
968 Albany Shaker Road,
Albany, New York 12110.
ANNUAL REPORT ON FORM 10-K
The Companys 2010 Annual
Report was mailed to stockholders with this Proxy Statement. Upon request, the
Company will furnish without charge a copy of the Companys Annual Report on
Form 10-K, which has been filed with the SEC. Stockholders may receive a copy
of the Form 10-K by:
(1) Writing
to Investor Relations at Plug Power Inc., 968 Albany Shaker Road, Latham, NY 12110;
(2) Calling
(518) 782-7700;
(3) Accessing
the Companys website at
www.plugpower.com
;
or
(4) Accessing the SECs website at
www.sec.gov
.
50
APPENDIX A
SECOND CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION
OF
PLUG POWER INC.
Plug Power Inc., a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
Corporation), hereby certifies as follows:
FIRST: That the Board of
Directors of the Corporation has duly adopted resolutions (i) authorizing the
Corporation to execute and file with the Secretary of State of the State of
Delaware this Second Certificate of Amendment of Amended and Restated
Certificate of Incorporation (this Second Amendment) to combine each [ ]
outstanding shares of the Corporations common stock, par value $0.01 per share
(the Common Stock), into one (1) share of Common Stock; and (ii) declaring this
Second Amendment to be advisable, submitted to and considered by the
stockholders of the Corporation entitled to vote thereon for approval by the
affirmative vote of such stockholders in accordance with the terms of the
Companys Amended and Restated Certificate of Incorporation, as amended by the
Certificate of Amendment of the Amended and Restated Certificate of
Incorporation dated June 21, 2000 (collectively, the Certificate of
Incorporation) and Section 242 of the General Corporation Law of the State of
Delaware (the DGCL) and recommended for approval by the stockholders of the
Corporation.
SECOND: That this Second
Amendment was duly adopted in accordance with the terms of the Certificate of
Incorporation and the provisions of Section 242 of the DGCL by the Board of
Directors and stockholders of the Corporation.
THIRD: That the capital of
the Corporation shall not be reduced under or by reason of this Second
Amendment.
FOURTH: That upon the
effectiveness of this Second Amendment, the Certificate of Incorporation is
hereby amended such that the following paragraph shall be added after the first
paragraph of ARTICLE IV of the Certificate of Incorporation:
As of 5:00 p.m. (eastern time) on
[ , ] (the Effective Time), each [ ] shares of Common Stock
issued and outstanding at such time shall be combined into one (1) share of
Common Stock (the Reverse Stock Split). The par value of the Common Stock
following the Reverse Stock Split shall remain $0.01 per share. No fractional
shares of Common Stock shall be issued and, in lieu thereof, the Corporation's
transfer agent shall aggregate all fractional shares and sell them as soon as
practicable after the Effective Time at the then prevailing prices on the open
market, on behalf of those stockholders who would otherwise be entitled to
receive a fractional share. After the transfer agent's completion of such sale,
such stockholders shall receive a cash payment from the transfer agent in an
amount equal to their respective pro rata shares of the total net proceeds of
that sale. A stockholder who holds shares in certificated form will receive
such net proceeds as soon as practicable after the Effective Time and after the
stockholder has submitted a transmittal letter and surrendered his or her Old
Certificates (as defined below), while a stockholder who holds shares in
book-entry form will receive such net proceeds as soon as practicable without
need for further action by the stockholder. Each certificate that immediately
prior to the Effective Time represented shares of Common Stock (Old
Certificates), shall thereafter represent that number of shares of Common
Stock into which the shares of Common Stock represented by the Old Certificate
shall have been combined, subject to the elimination of fractional share
interests as described above.
IN WITNESS WHEREOF, the Corporation has caused this Second
Certificate of Amendment of Amended and Restated Certificate of Incorporation to
be executed by Andrew Marsh, its President and Chief Executive Officer, this [
] day of [ ], 2011.
PLUG POWER INC.
By: _________________________________
Name: Andrew Marsh
Title: President and Chief Executive Officer
51
APPENDIX B
PLUG POWER INC.
2011 STOCK OPTION AND INCENTIVE PLAN
1. GENERAL
PURPOSE OF THE PLAN; DEFINITIONS
The
name of the plan is the Plug Power Inc. 2011 Stock Option and Incentive Plan
(the Plan). The purpose of the Plan is to encourage and enable the officers,
employees, Non-Employee Directors and other key persons (including consultants
and prospective employees) of Plug Power Inc. (the Company) and its
Subsidiaries upon whose judgment, initiative and efforts the Company largely
depends for the successful conduct of its business to acquire a proprietary
interest in the Company. It is anticipated that providing such persons with a
direct stake in the Companys welfare will assure a closer identification of
their interests with those of the Company and its stockholders, thereby
stimulating their efforts on the Companys behalf and strengthening their
desire to remain with the Company.
The
following terms shall be defined as set forth below:
Act
means the Securities Act of 1933, as amended, and the rules and regulations
thereunder.
Administrator
means either the Board or the compensation committee of the Board or a similar
committee performing the functions of the compensation committee and which is
comprised of not less than two Non‑Employee Directors who are
independent.
Award
or Awards, except where referring to a particular category of grant under the
Plan, shall include Incentive Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights, Deferred Stock Awards, Restricted Stock Awards,
Unrestricted Stock Awards, Cash-Based Awards and Performance Share Awards.
Award
Agreement means a written or electronic agreement setting forth the terms and
provisions applicable to an Award granted under the Plan. Each Award Agreement
is subject to the terms and conditions of the Plan.
Board
means the Board of Directors of the Company.
Cash-Based
Award means an Award entitling the recipient to receive a cash-denominated
payment.
Code
means the Internal Revenue Code of 1986, as amended, and any successor Code,
and related rules, regulations and interpretations.
Covered
Employee means an employee who is a Covered Employee within the meaning of
Section 162(m) of the Code.
Deferred
Stock Award means an Award of phantom stock units to a grantee.
Effective
Date means the date on which the Plan is approved by stockholders as set forth
in Section 20.
Exchange
Act means the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder.
Fair
Market Value of the Stock on any given date means the fair market value of the
Stock determined in good faith by the Administrator; provided, however, that if
the Stock is admitted to quotation on the National Association of Securities
Dealers Automated Quotation System (NASDAQ), NASDAQ Capital Market or another
national securities exchange, the Fair Market Value of the Stock shall be the
closing price of the Stock on such exchange on such date. If there are no
market quotations for such date, the determination shall be made by reference
to the last date preceding such date for which there are market quotations.
52
Incentive
Stock Option means any Stock Option designated and qualified as an incentive
stock option as defined in Section 422 of the Code.
Non-Employee
Director means a member of the Board who is not also an employee of the
Company or any Subsidiary.
Non-Qualified
Stock Option means any Stock Option that is not an Incentive Stock Option.
Option
or Stock Option means any option to purchase shares of Stock granted pursuant
to Section 5.
Performance-Based
Award means any Restricted Stock Award, Deferred Stock Award, Performance
Share Award or Cash-Based Award granted to a Covered Employee that is intended
to qualify as performance-based compensation under Section 162(m) of the Code
and the regulations promulgated thereunder.
Performance
Criteria means the criteria that the Administrator selects for purposes of
establishing the Performance Goal or Performance Goals for an individual for a
Performance Cycle. The Performance Criteria (which shall be applicable to the
organizational level specified by the Administrator, including, but not limited
to, the Company or a unit, division, group, or Subsidiary of the Company) that
will be used to establish Performance Goals are limited to the following:
earnings before interest, taxes, depreciation and amortization, net income
(loss) (either before or after interest, taxes, depreciation and/or
amortization), changes in the market price of the Stock, economic value-added,
sales or revenue, acquisitions or strategic transactions, achievement of
project development milestones, operating income (loss), cash flow (including,
but not limited to, operating cash flow and free cash flow), return on capital,
assets, equity, or investment, total stockholder returns, return on sales,
gross or net profit levels, productivity, expense, margins, operating
efficiency, capital raising transactions, debt transactions, working capital,
earnings (loss) per share of Stock, sales or market shares and number of
customers, any of which may be measured either in absolute terms or as compared
to any incremental increase or as compared to results of a peer group.
Performance
Cycle means a calendar year period over which the attainment of one or more
Performance Criteria will be measured for the purpose of determining a
grantees right to and the payment of a Restricted Stock Award, Deferred Stock
Award, Performance Share Award or Cash-Based Award.
Performance
Goals means, for a Performance Cycle, the specific goals established in
writing by the Administrator for a Performance Cycle based upon the Performance
Criteria.
Performance
Share Award means an Award entitling the recipient to acquire shares of Stock
upon the attainment of specified Performance Goals.
Restricted
Stock Award means an Award entitling the recipient to acquire, at such
purchase price (which may be zero) as determined by the Administrator, shares
of Stock subject to such restrictions and conditions as the Administrator may
determine at the time of grant.
Sale
Event shall mean (i) the sale of all or substantially all of the assets of the
Company on a consolidated basis to an unrelated person or entity, (ii) a
merger, reorganization or consolidation in which the outstanding shares of
Stock are converted into or exchanged for securities of the successor entity
and the holders of the Companys outstanding voting power immediately prior to
such transaction do not own a majority of the outstanding voting power of the
successor entity immediately upon completion of such transaction, or (iii) the
sale of all of the Stock of the Company to an unrelated person or entity.
Sale
Price means the value as determined by the Administrator of the consideration
payable, or otherwise to be received by stockholders, per share of Stock
pursuant to a Sale Event.
Section
409A means Section 409A of the Code and the regulations and other guidance
promulgated thereunder.
Stock
means the Common Stock, par value $0.01 per share, of the Company, subject to
adjustments pursuant to Section 3.
Stock
Appreciation Right means an Award entitling the recipient to receive shares of
Stock having a value equal to the excess of the Fair Market Value of the Stock
on the date of exercise over the exercise price of the Stock Appreciation Right
multiplied by the number of shares of Stock with respect to which the Stock
Appreciation Right shall have been exercised.
Subsidiary
means any corporation or other entity (other than the Company) in which the
Company has at least a 50 percent interest, either directly or indirectly.
53
Ten
Percent Owner means an employee who owns or is deemed to own (by reason of the
attribution rules of Section 424(d) of the Code) more than 10 percent of the
combined voting power of all classes of stock of the Company or any parent or
subsidiary corporation.
Unrestricted
Stock Award means an Award of shares of Stock free of any restrictions.
2. ADMINISTRATION OF PLAN; ADMINISTRATOR
AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS
(a) Administration
of Plan. The Plan shall be administered by the Administrator.
(b) Powers
of Administrator. The Administrator shall have the power and authority to
grant Awards consistent with the terms of the Plan, including the power and
authority:
(i) to select the individuals to whom Awards
may from time to time be granted;
(ii) to determine the time or times of
grant, and the extent, if any, of Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Restricted Stock Awards, Deferred Stock
Awards, Unrestricted Stock Awards, Cash-Based Awards and Performance Share
Awards, or any combination of the foregoing, granted to any one or more
grantees;
(iii) to determine the number of shares of
Stock to be covered by any Award;
(iv) to determine and modify from time to
time the terms and conditions, including restrictions, not inconsistent with
the terms of the Plan, of any Award, which terms and conditions may differ
among individual Awards and grantees, and to approve the form of written
instruments evidencing the Awards;
(v) to accelerate at any time the
exercisability or vesting of all or any portion of any Award, including but not
limited to termination of employment or a Sale Event;
(vi) subject to the provisions of
Section 5(c), to extend at any time the period in which Stock Options may
be exercised; and
(viii) at any time to adopt, alter and repeal
such rules, guidelines and practices for administration of the Plan and for its
own acts and proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including related written instruments);
to make all determinations it deems advisable for the administration of the
Plan; to decide all disputes arising in connection with the Plan; and to
otherwise supervise the administration of the Plan.
All
decisions and interpretations of the Administrator shall be binding on all
persons, including the Company and Plan grantees.
(c) Delegation
of Authority to Grant Options. Subject to applicable law, the Administrator,
in its discretion, may delegate to the Chief Executive Officer of the Company
all or part of the Administrators authority and duties with respect to the
granting of Options, to individuals who are (i) not subject to the reporting
and other provisions of Section 16 of the Exchange Act and (ii) not
Covered Employees. Any such delegation by the Administrator shall include a
limitation as to the amount of Options that may be granted during the period of
the delegation and shall contain guidelines as to the determination of the
exercise price and the vesting criteria. The Administrator may revoke or amend
the terms of a delegation at any time but such action shall not invalidate any
prior actions of the Administrators delegate or delegates that were consistent
with the terms of the Plan.
(d) Award
Agreement. Awards under the Plan shall be evidenced by Award Agreements that
set forth the terms, conditions and limitations for each Award which may
include, without limitation, the term of an Award and the provisions applicable
in the event employment or service terminates.
(e) Indemnification.
Neither the Board nor the Administrator, nor any member of either or any
delegate thereof, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with the Plan,
and the members of the Board and the Administrator (and any delegate thereof)
shall be entitled in all cases to indemnification and reimbursement by the
Company in respect of any claim, loss, damage or expense (including, without
limitation, reasonable attorneys fees) arising or resulting therefrom to the
fullest extent permitted by law and/or under the Companys articles or bylaws
or any directors and officers liability insurance coverage which may be in
effect from time to time and/or any indemnification agreement between such
individual and the Company.
54
(f) Foreign
Award Recipients. Notwithstanding any provision of the Plan to the contrary,
in order to comply with the laws in other countries in which the Company and
its Subsidiaries operate or have employees or other individuals eligible for
Awards, the Administrator, in its sole discretion, shall have the power and
authority to: (i) determine which Subsidiaries shall be covered by the Plan;
(ii) determine which individuals outside the United States are eligible to
participate in the Plan; (iii) modify the terms and conditions of any Award
granted to individuals outside the United States to comply with applicable
foreign laws; (iv) establish subplans and modify exercise procedures and other
terms and procedures, to the extent the Administrator determines such actions
to be necessary or advisable (and such subplans and/or modifications shall be
attached to this Plan as appendices); provided, however, that no such subplans
and/or modifications shall increase the share limitations contained in Section
3(a) hereof; and (v) take any action, before or after an Award is made, that
the Administrator determines to be necessary or advisable to obtain approval or
comply with any local governmental regulatory exemptions or approvals.
Notwithstanding the foregoing, the Administrator may not take any actions
hereunder, and no Awards shall be granted, that would violate the Exchange Act
or any other applicable United States securities law, the Code, or any other
applicable United States governing statute or law.
3. STOCK ISSUABLE
UNDER THE PLAN; MERGERS; SUBSTITUTION
(a) Stock
Issuable. The maximum number of shares of Stock reserved and available for
issuance under the Plan shall be equal to the
sum of (i) 10,000,000, plus (ii) the number of shares of Stock underlying any
grants pursuant to this Plan or the Plug Power Inc. 1999 Stock Option and
Incentive Plan that are forfeited, canceled, repurchased or are terminated
(other than by exercise). Shares tendered or held back upon exercise
of an Option or settlement of an Award to cover the exercise price or tax
withholding shall not be available for future issuance under the Plan. In
addition, upon exercise of Stock Appreciation Rights, the gross number of
shares exercised shall be deducted from the total number of shares remaining
available for issuance under the Plan. Subject to such overall limitations,
shares of Stock may be issued up to such maximum number pursuant to any type or
types of Award; provided, however, that Stock Options or Stock Appreciation
Rights with respect to no more than 2,000,000
shares of Stock may be granted to any one individual grantee during any one
calendar year period and no more than 10,000,000
shares of Stock shall be issued in the form of Incentive Stock Options. The
shares available for issuance under the Plan may be authorized but unissued
shares of Stock or shares of Stock reacquired by the Company.
(b)
Effect of Awards. The grant of any full value Award (i.e., an Award other
than an Option or a Stock Appreciation Right) shall be deemed, solely for
purposes of determining the number of shares of Stock available for issuance
under Section 3(a) and not for any purpose outside of the Plan, as an Award of
1.5 shares of Stock for each such share of
Stock actually subject to the Award. The grant of an Option or a Stock
Appreciation Right shall be deemed, for purposes of determining the number of
shares of Stock available for issuance under Section 3(a), as an Award for one
share of Stock for each such share actually subject to the Award.
(c) Changes
in Stock. Subject to Section 3(d) hereof, if, as a result of any
reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar change in the Companys capital
stock, the outstanding shares of Stock are increased or decreased or are
exchanged for a different number or kind of shares or other securities of the
Company, or additional shares or new or different shares or other securities of
the Company or other non-cash assets are distributed with respect to such
shares of Stock or other securities, or, if, as a result of any merger or
consolidation, sale of all or substantially all of the assets of the Company,
the outstanding shares of Stock are converted into or exchanged for securities
of the Company or any successor entity (or a parent or subsidiary thereof), the
Administrator shall make an appropriate or proportionate adjustment in (i) the
maximum number of shares reserved for issuance under the Plan, including the
maximum number of shares that may be issued in the form of Incentive Stock
Options, (ii) the number of Stock Options or Stock Appreciation Rights that can
be granted to any one individual grantee and the maximum number of shares that
may be granted under a Performance-Based Award, (iii) the number and kind of
shares or other securities subject to any then outstanding Awards under the
Plan, (iv) the repurchase price, if any, per share subject to each outstanding
Restricted Stock Award, and (v) the price for each share subject to any
then outstanding Stock Options and Stock Appreciation Rights under the Plan,
without changing the aggregate exercise price (i.e., the exercise price
multiplied by the number of Stock Options and Stock Appreciation Rights) as to
which such Stock Options and Stock Appreciation Rights remain exercisable. The
Administrator shall also make equitable or proportionate adjustments in the
number of shares subject to outstanding Awards and the exercise price and the
terms of outstanding Awards to take into consideration cash dividends paid
other than in the ordinary course or any other extraordinary corporate event.
The adjustment by the Administrator shall be final, binding and conclusive. No
fractional shares of Stock shall be issued under the Plan resulting from any
such adjustment, but the Administrator in its discretion may make a cash
payment in lieu of fractional shares.
55
(d) Mergers
and Other Transactions. Except as the Administrator may otherwise specify with
respect to particular Awards in the relevant Award documentation, in the case
of and subject to the consummation of a Sale Event, all Options and Stock
Appreciation Rights that are not exercisable immediately prior to the effective
time of the Sale Event shall become fully exercisable as of the effective time
of the Sale Event, all other Awards with time-based vesting, conditions or
restrictions shall become fully vested and nonforfeitable as of the effective
time of the Sale Event and all Awards with conditions and restrictions relating
to the attainment of performance goals may become vested and nonforfeitable in
connection with a Sale Event in the Administrators discretion, unless, in any
case, the parties to the Sale Event agree that Awards will be assumed or
continued by the successor entity. Upon the effective time of the Sale Event,
the Plan and all outstanding Awards granted hereunder shall terminate, unless
provision is made in connection with the Sale Event in the sole discretion of
the parties thereto for the assumption or continuation of Awards theretofore
granted by the successor entity, or the substitution of such Awards with new
Awards of the successor entity or parent thereof, with appropriate adjustment
as to the number and kind of shares and, if appropriate, the per share exercise
prices, as such parties shall agree (after taking into account any acceleration
hereunder). In the event of such termination, (i) the Company shall have the
option (in its sole discretion) to make or provide for a cash payment to the
grantees holding Options and Stock Appreciation Rights, in exchange for the
cancellation thereof, in an amount equal to the difference between (A) the Sale
Price multiplied by the number of shares of Stock subject to outstanding
Options and Stock Appreciation Rights (to the extent then exercisable (after
taking into account any acceleration hereunder) at prices not in excess of the
Sale Price) and (B) the aggregate exercise price of all such outstanding
Options and Stock Appreciation Rights; or (ii) each grantee shall be permitted,
within a specified period of time prior to the consummation of the Sale Event
as determined by the Administrator, to exercise all outstanding Options and
Stock Appreciation Rights held by such grantee.
(e) Substitute
Awards. The Administrator may grant Awards under the Plan in substitution for
stock and stock based awards held by employees, directors or other key persons
of another corporation in connection with the merger or consolidation of the
employing corporation with the Company or a Subsidiary or the acquisition by
the Company or a Subsidiary of property or stock of the employing corporation.
The Administrator may direct that the substitute awards be granted on such
terms and conditions as the Administrator considers appropriate in the
circumstances. Any substitute Awards granted under the Plan shall not count
against the share limitation set forth in Section 3(a).
4. ELIGIBILITY
Grantees
under the Plan will be such full or part-time officers and other employees,
Non-Employee Directors and key persons (including consultants and prospective
employees) of the Company and its Subsidiaries as are selected from time to
time by the Administrator in its sole discretion.
5. STOCK OPTIONS
(a) Grants
of Stock Options. Any Stock Option granted under the Plan shall be in such
form as the Administrator may from time to time approve.
Stock
Options granted under the Plan may be either Incentive Stock Options or
Non-Qualified Stock Options. Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a subsidiary corporation
within the meaning of Section 424(f) of the Code. To the extent that any
Option does not qualify as an Incentive Stock Option, it shall be deemed a
Non-Qualified Stock Option.
The
Administrator in its discretion may grant Stock Options to eligible employees
and key persons of the Company or any Subsidiary. Stock Options granted
pursuant to this Section 5(a) shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Administrator shall deem
desirable. If the Administrator so determines, Stock Options may be granted in
lieu of cash compensation at the optionees election, subject to such terms and
conditions as the Administrator may establish.
(b) Exercise
Price. The exercise price per share for the Stock covered by a Stock Option
granted pursuant to this Section 5(a) shall be determined by the
Administrator at the time of grant but shall not be less than 100 percent of
the Fair Market Value on the date of grant. In the case of an Incentive Stock
Option that is granted to a Ten Percent Owner, the option price of such
Incentive Stock Option shall be not less than 110 percent of the Fair Market
Value on the grant date.
56
(c) Option
Term. The term of each Stock Option shall be fixed by the Administrator, but
no Stock Option shall be exercisable more than ten years after the date the
Stock Option is granted. In the case of an Incentive Stock Option that is
granted to a Ten Percent Owner, the term of such Stock Option shall be no more
than five years from the date of grant.
(d) Exercisability;
Rights of a Stockholder. Stock Options shall become exercisable at such time
or times, whether or not in installments, as shall be determined by the
Administrator at or after the grant date. The Administrator may at any time
accelerate the exercisability of all or any portion of any Stock Option. An
optionee shall have the rights of a stockholder only as to shares acquired upon
the exercise of a Stock Option and not as to unexercised Stock Options.
(e) Method
of Exercise. Stock Options may be exercised in whole or in part, by giving
written or electronic notice of exercise to the Company, specifying the number
of shares to be purchased. Payment of the purchase price may be made by one or
more of the following methods to the extent provided in the Option Award
Agreement:
(i) In cash, by certified or bank check or
other instrument acceptable to the Administrator;
(ii) Through the delivery (or attestation to
the ownership) of shares of Stock that have been purchased by the optionee on
the open market or that have been beneficially owned by the optionee for at
least six months and are not then subject to restrictions under any Company
plan. Such surrendered shares shall be valued at Fair Market Value on the
exercise date; or
(iii) By the optionee delivering to the
Company a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company cash or a check
payable and acceptable to the Company for the purchase price; provided that in
the event the optionee chooses to pay the purchase price as so provided, the
optionee and the broker shall comply with such procedures and enter into such
agreements of indemnity and other agreements as the Administrator shall
prescribe as a condition of such payment procedure.
Payment instruments will be
received subject to collection. The transfer to the optionee on the records of
the Company or of the transfer agent of the shares of Stock to be purchased
pursuant to the exercise of a Stock Option will be contingent upon receipt from
the optionee (or a purchaser acting in his stead in accordance with the
provisions of the Stock Option) by the Company of the full purchase price for
such shares and the fulfillment of any other requirements contained in the
Option Award Agreement or applicable provisions of laws (including the
satisfaction of any withholding taxes that the Company is obligated to withhold
with respect to the optionee). In the event an optionee chooses to pay the
purchase price by previously-owned shares of Stock through the attestation
method, the number of shares of Stock transferred to the optionee upon the
exercise of the Stock Option shall be net of the number of attested shares. In
the event that the Company establishes, for itself or using the services of a
third party, an automated system for the exercise of Stock Options, such as a
system using an internet website or interactive voice response, then the
paperless exercise of Stock Options may be permitted through the use of such an
automated system.
(f) Annual
Limit on Incentive Stock Options. To the extent required for incentive stock
option treatment under Section 422 of the Code, the aggregate Fair Market
Value (determined as of the time of grant) of the shares of Stock with respect
to which Incentive Stock Options granted under this Plan and any other plan of
the Company or its parent and subsidiary corporations become exercisable for
the first time by an optionee during any calendar year shall not exceed
$100,000. To the extent that any Stock Option exceeds this limit, it shall
constitute a Non-Qualified Stock Option.
6. STOCK
APPRECIATION RIGHTS
(a) Exercise
Price of Stock Appreciation Rights. The exercise price of a Stock Appreciation
Right shall not be less than 100 percent of the Fair Market Value of the Stock
on the date of grant.
(b) Grant
and Exercise of Stock Appreciation Rights. Stock Appreciation Rights may be
granted by the Administrator independently of any Stock Option granted pursuant
to Section 5 of the Plan.
(c) Terms
and Conditions of Stock Appreciation Rights. Stock Appreciation Rights shall
be subject to such terms and conditions as shall be determined from time to
time by the Administrator. The term of a Stock Appreciation Right may not
exceed ten years.
7. RESTRICTED STOCK
AWARDS
(a) Nature
of Restricted Stock Awards. The Administrator shall determine the restrictions
and conditions applicable to each Restricted Stock Award at the time of grant.
Conditions may be based on continuing employment (or other service relationship)
and/or achievement of pre-established performance goals and objectives. The
grant of a Restricted Stock Award is contingent on the grantee executing the
Restricted Stock Award Agreement. The terms and conditions of each such Award
Agreement shall be determined by the Administrator, and such terms and
conditions may differ among individual Awards and grantees.
57
(b) Rights
as a Stockholder. Upon execution of the Restricted Stock Award Agreement and
payment of any applicable purchase price, a grantee shall have the rights of a
stockholder with respect to the voting of the Restricted Stock, subject to such
conditions contained in the Restricted Stock Award Agreement. Unless the
Administrator shall otherwise determine, (i) uncertificated Restricted Stock
shall be accompanied by a notation on the records of the Company or the
transfer agent to the effect that they are subject to forfeiture until such
Restricted Stock are vested as provided in Section 7(d) below, and (ii)
certificated Restricted Stock shall remain in the possession of the Company
until such Restricted Stock is vested as provided in Section 7(d) below,
and the grantee shall be required, as a condition of the grant, to deliver to
the Company such instruments of transfer as the Administrator may prescribe.
(c) Restrictions.
Restricted Stock may not be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of except as specifically provided herein or in the
Restricted Stock Award Agreement. Except as may otherwise be provided by the
Administrator either in the Award Agreement or, subject to Section 17 below, in
writing after the Award Agreement is issued if a grantees employment (or other
service relationship) with the Company and its Subsidiaries terminates for any
reason, any Restricted Stock that has not vested at the time of termination
shall automatically and without any requirement of notice to such grantee from
or other action by or on behalf of, the Company be deemed to have been
reacquired by the Company at its original purchase price (if any) from such
grantee or such grantees legal representative simultaneously with such
termination of employment (or other service relationship), and thereafter shall
cease to represent any ownership of the Company by the grantee or rights of the
grantee as a stockholder. Following such deemed reacquisition of unvested
Restricted Stock that are represented by physical certificates, a grantee shall
surrender such certificates to the Company upon request without consideration.
(d) Vesting
of Restricted Stock. The Administrator at the time of grant shall specify the
date or dates and/or the attainment of pre-established performance goals,
objectives and other conditions on which the non-transferability of the
Restricted Stock and the Companys right of repurchase or forfeiture shall
lapse. Notwithstanding the foregoing, in the event that any such Restricted
Stock granted to employees shall have a performance-based goal, the restriction
period with respect to such shares shall not be less than one year, and in the
event any such Restricted Stock granted to employees shall have a time-based
restriction, the total restriction period with respect to such shares shall not
be less than three years; provided, however, that Restricted Stock with a
time-based restriction may become vested incrementally over such three-year
period. Subsequent to such date or dates and/or the attainment of such
pre-established performance goals, objectives and other conditions, the shares
on which all restrictions have lapsed shall no longer be Restricted Stock and
shall be deemed vested. Except as may otherwise be provided by the
Administrator either in the Award Agreement or, subject to Section 17
below, in writing after the Award Agreement is issued, a grantees rights in
any shares of Restricted Stock that have not vested shall automatically
terminate upon the grantees termination of employment (or other service
relationship) with the Company and its Subsidiaries and such shares shall be
subject to the provisions of Section 7(c) above.
8. DEFERRED STOCK
AWARDS
(a) Nature
of Deferred Stock Awards. The Administrator shall determine the restrictions
and conditions applicable to each Deferred Stock Award at the time of grant.
Conditions may be based on continuing employment (or other service
relationship) and/or achievement of pre-established performance goals and
objectives. The grant of a Deferred Stock Award is contingent on the grantee
executing the Deferred Stock Award Agreement. The terms and conditions of each
such Award Agreement shall be determined by the Administrator, and such terms
and conditions may differ among individual Awards and grantees.
Notwithstanding the foregoing, in the event that any such Deferred Stock Award
granted to employees shall have a performance-based goal, the restriction
period with respect to such Award shall not be less than one year, and in the
event any such Deferred Stock Award granted to employees shall have a
time-based restriction, the total restriction period with respect to such Award
shall not be less than three years; provided, however, that any Deferred Stock
Award with a time-based restriction may become vested incrementally over such
three-year period. At the end of the deferral period, the Deferred Stock
Award, to the extent vested, shall be settled in the form of shares of Stock.
To the extent that a Deferred Stock Award is subject to Section 409A, it may
contain such additional terms and conditions as the Administrator shall
determine in its sole discretion in order for such Award to comply with the
requirements of Section 409A.
(b) Election
to Receive Deferred Stock Awards in Lieu of Compensation. The Administrator
may, in its sole discretion, permit a grantee to elect to receive a portion of
future cash compensation otherwise due to such grantee in the form of a
Deferred Stock Award. Any such election shall be made in writing and shall be
delivered to the Company no later than the date specified by the Administrator
and in accordance with Section 409A and such other rules and procedures
established by the Administrator. Any such future cash compensation that the
grantee elects to defer shall be converted to a fixed number of phantom stock
units based on the Fair Market Value of Stock on the date the compensation
would otherwise have been paid to the grantee if such payment had not been
deferred as provided herein. The Administrator shall have the sole right to
determine whether and under what circumstances to permit such elections and to
impose such limitations and other terms and conditions thereon as the
Administrator deems appropriate.
58
(c) Rights
as a Stockholder. A grantee shall have the rights as a stockholder only as to
shares of Stock acquired by the grantee upon settlement of a Deferred Stock
Award.
(d) Termination.
Except as may otherwise be provided by the Administrator either in the Award
Agreement or, subject to Section 17 below, in writing after the Award
Agreement is issued, a grantees right in all Deferred Stock Awards that have
not vested shall automatically terminate upon the grantees termination of
employment (or cessation of service relationship) with the Company and its
Subsidiaries for any reason.
9. UNRESTRICTED
STOCK AWARDS
Grant
or Sale of Unrestricted Stock. The Administrator may, in its sole discretion,
grant (or sell at par value or such higher purchase price determined by the
Administrator) an Unrestricted Stock Award under the Plan. Unrestricted Stock
Awards may be granted in respect of past services or other valid consideration,
or in lieu of cash compensation due to such grantee.
10. CASH-BASED
AWARDS
Grant
of Cash-Based Awards. The Administrator may, in its sole discretion, grant
Cash-Based Awards to any grantee in such number or amount and upon such terms,
and subject to such conditions, as the Administrator shall determine at the
time of grant. The Administrator shall determine the maximum duration of the
Cash-Based Award, the amount of cash to which the Cash-Based Award pertains,
the conditions upon which the Cash-Based Award shall become vested or payable,
and such other provisions as the Administrator shall determine. Each
Cash-Based Award shall specify a cash-denominated payment amount, formula or
payment ranges as determined by the Administrator. Payment, if any, with
respect to a Cash-Based Award shall be made in accordance with the terms of the
Award and may be made in cash or in shares of Stock, as the Administrator
determines.
11. PERFORMANCE
SHARE AWARDS
(a) Nature
of Performance Share Awards. The Administrator may, in its sole discretion,
grant Performance Share Awards independent of, or in connection with, the
granting of any other Award under the Plan. The Administrator shall determine
whether and to whom Performance Share Awards shall be granted, the Performance
Goals, the periods during which performance is to be measured, which may not be
less than one year, and such other limitations and conditions as the
Administrator shall determine.
(b) Rights
as a Stockholder. A grantee receiving a Performance Share Award shall have the
rights of a stockholder only as to shares actually received by the grantee
under the Plan and not with respect to shares subject to the Award but not
actually received by the grantee. A grantee shall be entitled to receive
shares of Stock under a Performance Share Award only upon satisfaction of all
conditions specified in the Performance Share Award agreement (or in a
performance plan adopted by the Administrator).
(c) Termination.
Except as may otherwise be provided by the Administrator either in the Award
agreement or, subject to Section 17 below, in writing after the Award
agreement is issued, a grantees rights in all Performance Share Awards shall
automatically terminate upon the grantees termination of employment (or
cessation of service relationship) with the Company and its Subsidiaries for
any reason.
12. PERFORMANCE-BASED
AWARDS TO COVERED EMPLOYEES
(a) Performance-Based
Awards. Any employee or other key person providing services to the Company and
who is selected by the Administrator may be granted one or more
Performance-Based Awards in the form of a Restricted Stock Award, Deferred
Stock Award, Performance Share Awards or Cash-Based Award payable upon the
attainment of Performance Goals that are established by the Administrator and
relate to one or more of the Performance Criteria, in each case on a specified
date or dates or over any period or periods determined by the Administrator.
The Administrator shall define in an objective fashion the manner of
calculating the Performance Criteria it selects to use for any Performance
Cycle. Depending on the Performance Criteria used to establish such
Performance Goals, the Performance Goals may be expressed in terms of overall
Company performance or the performance of a division, business unit, or an
individual. The Administrator, in its discretion, may adjust or modify the
calculation of Performance Goals for such Performance Cycle in order to prevent
the dilution or enlargement of the rights of an individual (i) in the event of,
or in anticipation of, any unusual or extraordinary corporate item,
transaction, event or development, (ii) in recognition of, or in anticipation
of, any other unusual or nonrecurring events affecting the Company, or the
financial statements of the Company, or (iii) in response to, or in
anticipation of, changes in applicable laws, regulations, accounting
principles, or business conditions provided however, that the Administrator may
not exercise such discretion in a manner that would increase the
Performance-Based Award granted to a Covered Employee. Each Performance-Based
Award shall comply with the provisions set forth below.
59
(b) Grant
of Performance-Based Awards. With respect to each Performance-Based Award
granted to a Covered Employee, the Administrator shall select, within the first
90 days of a Performance Cycle (or, if shorter, within the maximum period
allowed under Section 162(m) of the Code) the Performance Criteria for
such grant, and the Performance Goals with respect to each Performance
Criterion (including a threshold level of performance below which no amount
will become payable with respect to such Award). Each Performance-Based Award
will specify the amount payable, or the formula for determining the amount payable,
upon achievement of the various applicable performance targets. The
Performance Criteria established by the Administrator may be (but need not be)
different for each Performance Cycle and different Performance Goals may be
applicable to Performance-Based Awards to different Covered Employees.
Payment of Performance-Based
Awards. Following the completion of a Performance Cycle, the Administrator
shall meet to review and certify in writing whether, and to what extent, the
Performance Goals for the Performance Cycle have been achieved and, if so, to
also calculate and certify in writing the amount of the Performance-Based
Awards earned for the Performance Cycle. The Administrator shall then
determine the actual size of each Covered Employees Performance-Based Award,
and, in doing so, may reduce or eliminate the amount of the Performance-Based
Award for a Covered Employee if, in its sole judgment, such reduction or
elimination is appropriate.
(c) Maximum
Award Payable. The maximum Performance-Based Award payable to any one Covered
Employee under the Plan for any Performance Cycle is 2,500,000 Shares (subject to adjustment as provided in
Section 3(c) hereof) or $1,850,000
in the case of a Performance-Based Award that is a Cash-Based Award.
13. TRANSFERABILITY
OF AWARDS
(a) Transferability.
Except as provided in Section 13(b) below, during a grantees lifetime,
his or her Awards shall be exercisable only by the grantee, or by the grantees
legal representative or guardian in the event of the grantees incapacity. No
Awards shall be sold, assigned, transferred or otherwise encumbered or disposed
of by a grantee other than by will or by the laws of descent and distribution
or pursuant to a domestic relations order. No Awards shall be subject, in
whole or in part, to attachment, execution, or levy of any kind, and any
purported transfer in violation hereof shall be null and void.
(b) Administrator
Action. Notwithstanding Section 13(a), the Administrator, in its
discretion, may provide either in the Award Agreement regarding a given Award
or by subsequent written approval that the grantee (who is an employee or
director) may transfer his or her Awards (other than any Incentive Stock
Options or Deferred Stock Awards) to his or her immediate family members, to
trusts for the benefit of such family members, or to partnerships in which such
family members are the only partners, provided that the transferee agrees in
writing with the Company to be bound by all of the terms and conditions of this
Plan and the applicable Award.
(c) Family
Member. For purposes of Section 13(b), family member shall mean a
grantees child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the grantees household (other than
a tenant of the grantee), a trust in which these persons (or the grantee) have
more than 50 percent of the beneficial interest, a foundation in which these
persons (or the grantee) control the management of assets, and any other entity
in which these persons (or the grantee) own more than 50 percent of the voting
interests.
(d) Designation
of Beneficiary. Each grantee to whom an Award has been made under the Plan may
designate a beneficiary or beneficiaries to exercise any Award or receive any
payment under any Award payable on or after the grantees death. Any such
designation shall be on a form provided for that purpose by the Administrator
and shall not be effective until received by the Administrator. If no
beneficiary has been designated by a deceased grantee, or if the designated
beneficiaries have predeceased the grantee, the beneficiary shall be the
grantees estate.
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14. TAX WITHHOLDING
(a) Payment
by Grantee. Each grantee shall, no later than the date as of which the value
of an Award or of any Stock or other amounts received thereunder first becomes
includable in the gross income of the grantee for Federal income tax purposes,
pay to the Company, or make arrangements satisfactory to the Administrator
regarding payment of, any Federal, state, or local taxes of any kind required
by law to be withheld by the Company with respect to such income. The Company
and its Subsidiaries shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise due to the
grantee. The Companys obligation to deliver evidence of book entry (or stock
certificates) to any grantee is subject to and conditioned on tax withholding
obligations being satisfied by the grantee.
(b) Payment
in Stock. Subject to approval by the Administrator, a grantee may elect to
have the Companys minimum required tax withholding obligation satisfied, in
whole or in part, by authorizing the Company to withhold from shares of Stock
to be issued pursuant to any Award a number of shares with an aggregate Fair
Market Value (as of the date the withholding is effected) that would satisfy the
withholding amount due.
15. SECTION 409A
AWARDS
To
the extent that any Award is determined to constitute nonqualified deferred
compensation within the meaning of Section 409A (a 409A Award), the Award
shall be subject to such additional rules and requirements as specified by the
Administrator from time to time in order to comply with Section 409A. In this
regard, if any amount under a 409A Award is payable upon a separation from
service (within the meaning of Section 409A) to a grantee who is then
considered a specified employee (within the meaning of Section 409A), then no
such payment shall be made prior to the date that is the earlier of (i) six
months and one day after the grantees separation from service, or (ii) the
grantees death, but only to the extent such delay is necessary to prevent such
payment from being subject to interest, penalties and/or additional tax imposed
pursuant to Section 409A. Further, the settlement of any such Award may not be
accelerated except to the extent permitted by Section 409A.
16. TRANSFER, LEAVE
OF ABSENCE, ETC.
For
purposes of the Plan, the following events shall not be deemed a termination of
employment:
(a) a
transfer to the employment of the Company from a Subsidiary or from the Company
to a Subsidiary, or from one Subsidiary to another; or
(b) an
approved leave of absence for military service or sickness, or for any other
purpose approved by the Company, if the employees right to re-employment is
guaranteed either by a statute or by contract or under the policy pursuant to
which the leave of absence was granted or if the Administrator otherwise so
provides in writing.
17. AMENDMENTS AND
TERMINATION
The
Board may, at any time, amend or discontinue the Plan and the Administrator
may, at any time, amend or cancel any outstanding Award for the purpose of
satisfying changes in law or for any other lawful purpose, but no such action
shall adversely affect rights under any outstanding Award without the holders
consent. Except as provided in Section 3(c) or 3(d), without prior stockholder
approval, in no event may the Administrator exercise its discretion to reduce
the exercise price of outstanding Stock Options or Stock Appreciation Rights or
effect repricing through cancellation and re-grants. To the extent required
under the rules of any securities exchange or market system on which the Stock
is listed, to the extent determined by the Administrator to be required by the
Code to ensure that Incentive Stock Options granted under the Plan are
qualified under Section 422 of the Code, or to ensure that compensation
earned under Awards qualifies as performance-based compensation under
Section 162(m) of the Code, Plan amendments shall be subject to approval
by the Company stockholders entitled to vote at a meeting of stockholders.
Nothing in this Section 17 shall limit the Administrators authority to
take any action permitted pursuant to Section 3(d).
18. STATUS OF PLAN
With
respect to the portion of any Award that has not been exercised and any
payments in cash, Stock or other consideration not received by a grantee, a
grantee shall have no rights greater than those of a general creditor of the
Company unless the Administrator shall otherwise expressly determine in
connection with any Award or Awards. In its sole discretion, the Administrator
may authorize the creation of trusts or other arrangements to meet the
Companys obligations to deliver Stock or make payments with respect to Awards
hereunder, provided that the existence of such trusts or other arrangements is
consistent with the foregoing sentence.
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19. GENERAL
PROVISIONS
(a) No
Distribution. The Administrator may require each person acquiring Stock
pursuant to an Award to represent to and agree with the Company in writing that
such person is acquiring the shares without a view to distribution thereof.
(b) Delivery
of Stock Certificates. Stock certificates to grantees under this Plan shall be
deemed delivered for all purposes when the Company or a stock transfer agent of
the Company shall have mailed such certificates in the United States mail,
addressed to the grantee, at the grantees last known address on file with the
Company. Uncertificated Stock shall be deemed delivered for all purposes when
the Company or a Stock transfer agent of the Company shall have given to the
grantee by electronic mail (with proof of receipt) or by United States mail,
addressed to the grantee, at the grantees last known address on file with the
Company, notice of issuance and recorded the issuance in its records (which may
include electronic book entry records). Notwithstanding anything herein to
the contrary, the Company shall not be required to issue or deliver any
certificates evidencing shares of Stock pursuant to the exercise of any Award,
unless and until the Administrator has determined, with advice of counsel (to
the extent the Administrator deems such advice necessary or advisable), that
the issuance and delivery of such certificates is in compliance with all
applicable laws, regulations of governmental authorities and, if applicable,
the requirements of any exchange on which the shares of Stock are listed,
quoted or traded. All Stock certificates delivered pursuant to the Plan shall
be subject to any stop-transfer orders and other restrictions as the
Administrator deems necessary or advisable to comply with federal, state or
foreign jurisdiction, securities or other laws, rules and quotation system on
which the Stock is listed, quoted or traded. The Administrator may place
legends on any Stock certificate to reference restrictions applicable to the
Stock. In addition to the terms and conditions provided herein, the
Administrator may require that an individual make such reasonable covenants,
agreements, and representations as the Administrator, in its discretion, deems
necessary or advisable in order to comply with any such laws, regulations, or
requirements. The Administrator shall have the right to require any individual
to comply with any timing or other restrictions with respect to the settlement
or exercise of any Award, including a window-period limitation, as may be
imposed in the discretion of the Administrator.
(c) Stockholder
Rights. Until Stock is deemed delivered in accordance with Section 19(b), no
right to vote or receive dividends or any other rights of a stockholder will
exist with respect to shares of Stock to be issued in connection with an Award,
notwithstanding the exercise of a Stock Option or any other action by the
grantee with respect to an Award.
(d) Other
Compensation Arrangements; No Employment Rights. Nothing contained in this
Plan shall prevent the Board from adopting other or additional compensation
arrangements, including trusts, and such arrangements may be either generally
applicable or applicable only in specific cases. The adoption of this Plan and
the grant of Awards do not confer upon any employee any right to continued
employment with the Company or any Subsidiary.
(e) Trading
Policy Restrictions. Option exercises and other Awards under the Plan shall be
subject to the Companys insider trading policies and procedures, as in effect
from time to time.
(f) Forfeiture
of Awards under Sarbanes-Oxley Act. If the Company is required to prepare an
accounting restatement due to the material noncompliance of the Company, as a
result of misconduct, with any financial reporting requirement under the
securities laws, then any grantee who is one of the individuals subject to
automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 shall
reimburse the Company for the amount of any Award received by such individual
under the Plan during the 12-month period following the first public issuance
or filing with the United States Securities and Exchange Commission, as the
case may be, of the financial document embodying such financial reporting
requirement.
20. EFFECTIVE DATE
OF PLAN
This
Plan shall become effective upon approval by the holders of a majority of the
votes cast at a meeting of stockholders at which a quorum is present. No
grants of Stock Options and other Awards may be made hereunder after the tenth
anniversary of the Effective Date and no grants of Incentive Stock Options may
be made hereunder after the tenth anniversary of the date the Plan is approved
by the Board.
62
21. GOVERNING LAW
This
Plan and all Awards and actions taken thereunder shall be governed by, and
construed in accordance with, the laws of the State of Delaware, applied
without regard to conflict of law principles.
DATE APPROVED BY BOARD OF
DIRECTORS:
DATE APPROVED BY STOCKHOLDERS:
63
FOR SECURITY PURPOSES, PLEASE BRING A VALID PICTURE ID IF YOU PLAN TO ATTEND
THE MEETING
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Form 10-K, Notice & Proxy Statement is/are available at
www.proxyvote.com
.
Annual Meeting of the Stockholders of
PLUG POWER INC.
May 12, 2011 at 10:00 AM Eastern Time
The stockholder(s) hereby appoint(s) Gerard L. Conway, Jr. and Gerald A. Anderson or either of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse side of this ballot, all of the shares of Common stock of PLUG POWER INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholder(s) to be held at 10:00 AM, EDT on May 12, 2011, at the Offices
of Plug Power Inc., 968 Albany Shaker Road, Latham, New York 12110. and any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" THE NOMINEE NAMED IN ITEM 1, "FOR" THE APPROVAL OF
THE COMPANY'S SECOND CERTIFICATE OF AMENDMENT OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION IN ITEM 2, "FOR" THE APPROVAL OF THE 2011 STOCK OPTION AND INCENTIVE PLAN IN ITEM 3, "FOR" THE APPROVAL OF AN ADVISORY RESOLUTION REGARDING EXECUTIVE OFFICER COMPENSATION
IN ITEM 4, AND FOR "THREE YEARS" ON AN ADVISORY PROPOSAL REGARDING THE FREQUENCY AT WHICH AN ADVISORY COMPENSATION VOTE IS HELD IN ITEM 5.
Address change/comments:
______________________________________________________________________________________
______________________________________________________________________________________
_______________________________________________________________________________________
(If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side. PLEASE SIGN, DATE AND PROMPTLY MAIL YOUR PROXY.
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