Incredimail 2010 Annual Report Download - page 58

The tax treatment with respect to options granted to employees and directors under the 2003 Plan is the result of our election of the
capital gains tax track under Section 102 of the Tax Ordinance. Section 102 also provides for an income tax track, under which, among other
things, the benefit to the employees will be taxed as income, the issuer will be allowed to recognize expenses for tax purposes, and the minimum
holding period for the trustee will be 12 months from the date upon which such options are granted. We are able to change our election with
respect to future grants under the 2003 Plan as of the close of 2004.
Our board of directors has the authority to administer the 2003 Plan and to grant options under the plan. However, the compensation
committee appointed by the board provides recommendations to the board with respect to the administration of the plan and also has full power,
among other things, to alter any restrictions and conditions of the options, accelerate the rights of an optionee to exercise options and determine
the exercise price of the options.
Options granted to date under the 2003 Plan in the past generally vest in three equal parts annually. One of the grants to the directors
vested in four equal parts annually. Options under the 2003 Plan prior our initial public offering were generally granted at an exercise price of
$1.72 per share. Since the Company’
s initial public offering all options are granted with an exercise price equal to the closing market price, on
the day the grant is approved. However, on February 21, 2008 the board of directors of the Company approved the re-
pricing of all the existing
options, granted to employees under the 2003 Plan and with an exercise price greater than $3.00, to $3.00, which was confirmed by the Israeli
Tax Authorities on July 3, 2008. See Note 10 to the Company's Consolidated Financial Statements. These changes did not apply to the options
held by our directors. See "Item 6.B Compensation" for a description of options granted under the 2003 Plan to our directors.
The 2003 Plan does not provide for any other acceleration of the vesting period upon the occurrence of certain corporate transactions.
However, the board or compensation committee may provide in individual option agreements that if the options are not substituted or exchanged
by a successor company, then the vesting of the options shall accelerate.
Adjustments to the number of options or exercise price shall not be made in the event of rights offering on outstanding shares.
In November 2010, the Company's board of directors adopted a compensation policy according to which the eligibility of managerial
level employees for option grants under the 2003 Plan was established. The compensation policy also sets forth guidelines regarding employee
salaries and bonuses.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. MAJOR SHAREHOLDERS
The following table sets forth information regarding the beneficial ownership of our ordinary shares as of February 28, 2011 by each
person or group of affiliated persons that we know beneficially owns more than 5% of our outstanding ordinary shares. Other than with respect
to our directors and officers, we have relied on public filings with the SEC. Unless otherwise stated herein, each shareholder’
s address is c/o
IncrediMail Ltd., 4 HaNechoshet Street, Tel Aviv 69710, Israel.
Beneficial ownership of shares is determined in accordance with the rules of the SEC and generally includes any shares over which a
person exercises sole or shared voting or investment power. Ordinary shares that are subject to warrants or stock options that are presently
exercisable or exercisable within 60 days of a specified date are deemed to be outstanding and beneficially owned by the person holding the
stock options or warrants for the purpose of computing the percentage ownership of that person, but are not treated as outstanding for the
purpose of computing the percentage of any other person.
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