Health InsuranceInnovations Inc. received a letter from a law firm on behalf of a stockholderalleging that the company violated the terms of its current long-term incentiveplan by granting stock appreciation rights in excess of the annual per-person limitsto its president and CEO, Patrick McNamee, and did not disclose it in its proxystatement for the annual meeting.
The company argued that under the current long-term incentiveplan, it can award up to an aggregate of 2.25 million shares, with an annual per-personlimit of 200,000 shares underlying options and stock appreciation rights and anannual per-person grant limit of 525,000 shares underlying other stock-based awardsintended to serve as performance-based compensation.
The board's compensation committee granted 725,000 stock appreciationrights to McNamee. The committee interpreted the current plan to permit the awardof up to 200,000 stock appreciation rights and up to 525,000 other stock-based awardsthat may consist of stock appreciation rights or any other type of award that qualifiesas performance-based compensation, the company said.
The company believes that the stock appreciation rights awardedto McNamee are fully consistent with the terms of the long-term incentive plan.