Incredimail 2011 Annual Report Download - page 59

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.
The board of directors of the Company has determined that it is in the interests of the Company to allow our employees in the United States to participate in
our stock option plans for employees. According to the laws in the United States (particularly the U.S. Internal Revenue Code of 1986, as amended) in order for a
grant of options to qualify as an “incentive stock option”
it must, amongst other requirements, be granted pursuant to a plan which is approved by the stockholders of
the granting corporation within 12 months before or after the date such plan is adopted. Therefore, the board of directors has resolved to seek shareholder approval for
the adoption of an amendment for U.S. taxpayers to the 2003 Plan (the "U.S. Appendix"), for the award of options to purchase Shares under the 2003 Plan, all of
which may be issued under the U.S. Appendix pursuant to "incentive stock options" within the meaning of the U.S. Internal Revenue Code of 1986, as amended. In the
annual shareholders meeting of the Company, held on October 27
th
, 2011, the 2003 Plan has been amended, in order to adopt the US Appendix for U.S taxpayers.
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. 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 December 2011, the Company's board of directors adopted a compensation policy according to which the eligibility of 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 SHA R EHOLDERS AND RELATED PARTY TRANSACTIONS
A. MAJOR SHAREHOLDERS
The following table sets forth information regarding the beneficial ownership of our ordinary shares as of February 29, 2012 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 Perion Network Ltd., 4 HaNechoshet
Street, Tel Aviv 69710,
Israel.
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