Juno 2015 Annual Report Download - page 27

Table of Contents
In general, the deductibility of any compensation deemed paid by us in connection with the vesting of restricted stock units will be subject to the
$1.0 million annual limitation per covered officer. The 2010 Incentive Compensation Plan has been structured to allow for performance-based incentive
awards that qualify as “performance-based compensation” exempt from the $1.0 million annual limitation under Section 162(m) of the Code. Therefore,
compensation paid pursuant to equity awards granted under the 2010 Incentive Compensation Plan and compensation paid under management bonus plans
implemented under the 2010 Incentive Compensation Plan may potentially qualify as performance-based compensation that will be fully tax deductible by
us with respect to one or more participants.
However, the Compensation Committee believes that in establishing the cash and equity incentive compensation programs for our executive
officers, the potential deductibility of the compensation payable under those programs should be only one of a number of relevant factors taken into
consideration, and not the sole governing factor. For that reason, the Compensation Committee may deem it appropriate to continue to provide one or more
executive officers with the opportunity to earn incentive compensation, whether through cash incentive programs or equity incentive programs, which may
be in excess of the amount deductible by reason of Section 162(m) or other provisions of the Code.
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Our stock option grant policies have been impacted by the implementation of ASC 718. Under ASC 718, we are required to value our stock option
awards at their grant-date fair value and to amortize that expense over the applicable vesting period. The Compensation Committee has, in the past, limited
the number of stock option grants and primarily relied on restricted stock and restricted stock units instead. The Compensation Committee believed this
strategy would provide a more direct correlation between the financial accounting to us of providing those awards and the actual value delivered to our
executive officers and would require fewer shares to fund the grant-date fair value of the award. However, the Compensation Committee retains complete
discretion to grant stock options, from time to time, depending on the circumstances, as it has done in recent years. In 2015, our Compensation Committee
approved grants to our named executive officers of both stock options and restricted stock units. In 2016, as of the date of this Form 10-K/A filing, our
Compensation Committee has approved grants to our named executive officers of restricted stock units.
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The Compensation Committee, with the assistance of management, undertook a comprehensive review of the various compensation programs
maintained throughout our organization in 2015 to determine whether any of those programs encouraged excessive risk taking that might create a material
risk to our economic viability. As part of that review process, the Compensation Committee also conducted a risk assessment of our executive officer
compensation programs. The findings reached by the Compensation Committee with respect to our executive officer compensation programs are discussed in
more detail in the “Compensation Discussion and Analysis” section of this Form 10-K/A.
The Compensation Committee noted the following points with respect to the plans and programs reviewed:
· Our compensation structure is applied uniformly throughout the organization, except that our equity incentive awards are made primarily to our
vice presidents and our more senior executives, including our executive officers. The cash component of our compensation structure consists of
base salary and an annual performance-based bonus opportunity. Base salaries are fixed in amount and do not involve any element of risk
taking. The performance-based annual bonus awards made to our non-executive officer employees are dependent upon the achievement of
annual goals. While programs tied to annual goal achievement may encourage a focus on short-term performance results, the annual bonuses
under those programs generally do not represent the predominant component of the individual’s total compensation opportunities and, for that
reason, are not likely to encourage excessive risk taking. The annual performance-based bonus opportunity for our executive officers also
focuses on the achievement of annual corporate performance goals, which have been historically tied to both revenue and adjusted operating
income. In addition, in 2015, the annual performance-based bonus opportunity for our executive officers was also tied to the achievement of
individual performance goals, which goals were approved by the Compensation Committee. However, as noted in the “Compensation
Discussion and Analysis” section that appears earlier in this Form 10-K/A, the annual bonus opportunity for executive officers, whether the
payout is in shares of our common stock as in prior years or in cash under the 2015 Bonus Plan and the 2016 Bonus Plan, is not likely to lead to
excessive risk taking by our executive officers. At all levels of performance goal attainment, there are limits in place for the potential bonus
payout. In addition, a maximum bonus amount is established for each participant such that no participant may earn more than a fixed
percentage of his or her base salary. For those reasons, the Compensation Committee believes that our various bonus programs have been
appropriately structured to balance the risk element with the desire to focus our employees on specific annual goals important to both our
annual and multi-year financial success.
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