COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT
Compensation Philosophy
We believe it is important to align the interests of our directors and management with those of our shareholders. In this regard, we have determined that it generally is beneficial to us and to our shareholders for our directors and management to have a stake in our long-term performance. We expect that a meaningful component of the compensation packages for our directors and management will consist of equity interests in Ardmore in order to promote this alignment of interests.
Equity Incentive Plan
We currently have an equity incentive plan, the 2013 Equity Incentive Plan (the “plan”), under which directors, officers, and employees (including any prospective officer or employee) of us and our subsidiaries and affiliates, and consultants and service providers (including persons who are employed by or provide services to any entity that is itself a consultant or service provider) to us and our subsidiaries and affiliates, as well as entities wholly-owned or generally exclusively controlled by such persons, may be eligible to receive incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, unrestricted stock and other equity-based or equity-related awards that the plan administrator determines are consistent with the purposes of the plan and our interests. Subject to adjustment for changes in capitalization, the aggregate number of shares of our common stock with respect to which awards may at any time be granted under the plan will not exceed 8% of the issued and outstanding shares of our common stock at the time of issuance of the award. The plan is administered by the Compensation Committee of the Board. For additional information about the plan please see Item 6.B of our Annual Report on Form 20-F for the year ended December 31, 2021.
Director and Senior Management Compensation
We paid $1.9 million in aggregate cash compensation to our five senior executive officers for 2021. This amount excludes equity-based compensation.
Stock Appreciation Rights (“SARs”)
As at December 31, 2021, we had granted 3,710,473 SARs (inclusive of 5,779 forfeited SARs) to certain of our officers and directors under the plan. Under an SAR award, the grantee is entitled to receive the appreciation of a share of our common stock following the grant of the award. Each SAR provides for a payment of an amount equal to the excess, if any, of the fair market value of a share of our common stock at the time of exercise of the SAR over the per share exercise price of the SAR, multiplied by the number of shares for which the SAR is then exercised. Payment under the SAR will be made in the form of shares of our common stock, based on the fair market value of a share of our common stock at the time of exercise of the SAR.
On March 4, 2021 we granted 610,691 SARs to our officers.
The SARs vest in three equal annual tranches, have a contractual term of seven years and provide for certain dividend equivalent rights pursuant to which the holder will be entitled upon vesting of the SARs to payment in the form of additional shares equal to the value of any cash dividends declared and payable during the applicable vesting period with respect to the shares underlying the portion of the SARs that vest.
Restricted Stock Units (“RSUs”)
On March 4, 2021, we granted 56,957 RSUs to certain of our directors that will vest in 12 months from the date of grant. On the same day, we granted 302,923 RSUs to certain of our officers that will vest in three equal annual tranches. On June 7, 2021, we granted 95,583 RSUs to certain of our directors that will vest in twelve months from the date of grant.
Under an RSU award, the grantee is entitled to receive a share of our common stock for each RSU at the end of the vesting period. Payment under the RSU will be made in the form of shares of our common stock. The RSU awards include dividend equivalent rights equal in number to the number of shares underlying the award of RSUs granted.